Sitting of 10 May 1989

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

PRIVATE BUSINESS
  SCRABSTER HARBOUR ORDER CONFIRMATION BILL
  Considered; to be read the Third time tomorrow.
Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Nicaragua
    Mr. Tony Banks: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the recent visit of the President of Nicaragua.
    Mr. Loyden: To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the President of Nicaragua; and what subjects were discussed.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Eggar): President Ortega visited the United Kingdom from 6 to 8 May in the course of an extensive European tour. My right hon. Friend the Prime Minister met him on 8 May. My right hon. and learned Friend the Secretary of State and I saw Foreign Minister d'Escoto on the same day.
    Mr. Banks: May I through you, Mr. Speaker, thank all hon. Members for the warm and courteous welcome they gave President Ortega on Monday, which was in stark contrast to the ill-advised, offensive, abusive and graceless way in which the Prime Minister treated him? As she always speaks on Nicaragua from a position of profound ignorance, will she be accepting the invitation extended by President Ortega to send a Government delegation to Nicaragua to study the situation there prior to next year's election?
    Mr. Eggar: My right hon. Friend the Prime Minister made it clear during the President's visit that our attitude to Nicaragua will continue to be based on our assessment of its moves to genuine democracy, its determination to remove foreign advisers, its determination or otherwise to reduce its armed forces and its determination to stop the destabilisation of neighbouring countries. Those are exactly the four criteria by which we made it clear that we would judge Nicaragua when my right hon. and learned Friend met its vice-president over three years ago.
    Mr. Loyden: Instead of using language that has been used by Foreign Office Ministers since time immemorial and criticising its Government without understanding
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    what is going on, why does not the Minister think more positively and send a delegation to Nicaragua to see developments at first hand?
    Mr. Eggar: We have an excellent embassy and chargé d'affaires who regularly report what is happening Nicaragua. The hon. Gentleman appears to be unaware that all Nicaraguan opposition parties from the far Left to the far Right have condemned the changes to the electoral law that were introduced by the Sandinistas on 5 May, of which President Ortega appears to be unaware.
    Mr. Ashby: As someone who is not profoundly ignorant of Nicaragua and has seen its steady deterioration over the past four years as a result of the nature of its Government, will my hon. Friend welcome steps towards further elections and explain to President Ortega some of the prerequisites for fair and free elections? It is no good having an Sandinistan army or police force, and it is no good local committees run by Sandinistas distributing food to everyone, expecting them to believe that there will be fair and free elections.
    Mr. Eggar: I agree with my hon. Friend, who echoes the points made by President Arias of Costa Rica, among others. The present Nicaraguan constitution ensures that the armed forces and apparatus of the state owe allegiance not to the country but to the Sandinista party.
    Mr. Robert G. Hughes: Does my hon. Friend agree that there is an interesting contrast between the attitude of the Opposition in this House, who seem to regard Nicaragua as a gentle democracy, and the fact that in Nicaragua, the Sandinista Government do not allow the Opposition free and fair access to the media?
    Mr. Eggar: I agree completely with my hon. Friend. The Sandinista party controls all the television stations.
    Mr. Foulkes: Why do not the Government for once use their undoubted influence with the United States in a positive way and persuade the United States to use the money that it is planning to give to terrorists to resettle people in Nicaragua for the free and fair elections to be held in February 1990? Why are our Government the only Government in Europe not attending the Stockholm conference on aid to Nicaragua, which is beleaguered by war and the recent hurricane? Why will the Minister not consider visiting Nicaragua to find out the truth about it, instead of hearing the ignorance displayed by the Prime Minister at her meeting with Daniel Ortega?
    Mr. Eggar: We are not attending the Stockholm conference because we believe that the economic collapse which is a feature of Nicaragua at present was brought about by the Sandinista regime and we see no reason to provide additional aid. As the hon. Gentleman knows, we have provided humanitarian aid to assist with the effects of the hurricane. We support, of course, the new bipartisan policy of the United States.

    President Bush
    Mr. Couchman: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will report on the outcome of his recent meeting with President Bush.
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): When I met President Bush in

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    Washington on 17 April, we discussed a number of current issues including East-West relations, short-range nuclear forces, the middle east, Lebanon, southern Africa and Latin America.
    Mr. Couchman: I thank my right hon. and learned Friend for that answer. In the course of his wide-ranging discussions, did he have an opportunity to discuss the initiative by President Bush in seeking to control narcotics, especially in relation to south American countries, and did he discuss the possibilities of further co-operative action between our two countries on this serious problem?
    Sir Geoffrey Howe: We certainly welcome the initiative of President Bush to which my hon. Friend refers. As he knows, it is an accepted part of our common policy for co-operation that we are engaged in a partnership in the worldwide war against drugs, with particular reference to Latin America. The first agreement, which I signed myself, for bilateral co-operation for the tracing, freezing and confiscation of the proceeds of drug transactions, was signed with the United States and came into force last night.
    Mr. Denzil Davies: During the discussions on short-range and battlefield nuclear weapons, did the Foreign Secretary explain the British Government's policy? Is it the British Government's view that short-range and battlefield nuclear weapons are necessary to counter Soviet conventional superiority and would they still be necessary if there were parity of conventional forces?
    Sir Geoffrey Howe: It is the view of the whole Alliance that we need to maintain short-range nuclear weapons, among others, in a capable and up-to-date condition. The Alliance agrees in rejecting a third zero and that remains the position in all circumstances.
    Sir Peter Blaker: Can my right hon. and learned Friend say whether President Bush shares the view that there is one question in East-West relations that is even more important than disarmament—whether the Soviet Union has abandoned its desire to expand at the expense of other countries and to dominate them? Does he agree that that has not yet been established?
    Sir Geoffrey Howe: The President of the United States and his Administration, together with the other members of the NATO Alliance, share the view that it is necessary for the Alliance to maintain a firm and effective defensive capability against the risks of deployment or the threat of the use of military resources, and one cannot regard that threat as having come to an end.
    Mr. Alex Carlile: Are we to accept reports that President Bush believes that the cold war is now over? If not, in the light of the Foreign Secretary's meeting with Mr. Bush, will he tell us how he would apportion blame for the continuance of the cold war?
    Sir Geoffrey Howe: The continuance of the tension, which gives the North Atlantic Alliance its continuing purpose, is due to the overwhelming preponderance of forces, and the capability to threaten the use of those forces, in Europe among other places. The fact that most of the countries of eastern Europe are still host to Soviet
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    occupation forces is only one of many reasons for thinking that there are still powerful reasons for being apprehensive about the security of western Europe.

    Refuseniks
    Mr. Brandon-Bravo: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has made on the current position of refuseniks in the Soviet Union; and if he will make a statement.
    The Minister of State, Foreign and Commonwealth Office (Mr. William Waldegrave): My right hon. and learned Friend has raised the problem of refuseniks with Mr. Shevardnadze on three separate occasions this year, most recently during Mr. Gorbachev's visit. The Soviet authorities have been left in no doubt that the problem of long-term refuseniks will continue to cast a shadow over Anglo-Soviet relations until a satisfactory and lasting solution is reached.
    Mr. Brandon-Bravo: I welcome my hon. Friend's effort in this regard and I acknowledge that he has had many successes. Is it not true, however, that, much as we hope and pray that Mr. Gorbachev will turn out to be a true reformer, the Soviet concept of human rights—the right to believe, to practise one's own religion and even to emigrate—is a different concept from ours in the West? Given the difference, should not we continue to be careful to try to match practice and theory, to hope for the future and to press on with the campaign?
    Mr. Waldegrave: My hon. Friend is right. It would be churlish not to acknowledge that the system is being operated more humanely than it was, but it is the system that is wrong. People's rights should not depend upon the intervention of my right hon. and learned Friend, myself or Opposition Members but on an independent judiciary and law in the Soviet Union.
    Mr. Sumberg: I pay tribute to the work of my hon. Friend and the Government in supporting the refuseniks in the Soviet Union. May I raise with my hon. Friend the case of George Belitsky of Vilnius, who has been waiting for his visa since 1980? His wife and two sons, one of whom I met this afternoon, are now free, but he still waits in vain. Will my hon. Friend see what he can do to help in this case? [Interruption.]
    Mr. Waldegrave: I am sorry that Opposition Members do not seem to be taking the question seriously, as some of them have an honourable record in fighting for individual cases. I shall certainly look into the case that my hon. Friend mentioned. In New York, Mr. Gorbachev said that secrecy would not be used in future to block exit permits, but that is not what is happening in individual cases, I am afraid. It is still being used in far too many cases.

    Pakistan
    Mr. William Powell: To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the Prime Minister of Pakistan; and what matters were discussed.
    Sir Geoffrey Howe: I met Miss Bhutto on 27 March in Islamabad. I congratulated her on her election and the restoration of democracy in Pakistan. We discussed a wide

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    range of issues including Anglo-Pakistan relations, Afghanistan and other developments in the region, and the possibility of Pakistan's re-entry to the Commonwealth.
    Mr. Powell: Did my right hon. and learned Friend manage to impress upon the Prime Minister of Pakistan the undesirability of the continuation of the civil war in Afghanistan? The people who are suffering now are the population of that unfortunate and unhappy country. Did my right hon. and learned Friend agree any proposals with the Prime Minister of Pakistan involving our assistance in putting an end to that civil war?
    Sir Geoffrey Howe: The Prime Minister of Pakistan has good reason to be more aware than almost anyone of the penalties imposed upon her country and on Afghanistan as well as the wider region, by the continuation of the conflict in Afghanistan. She and her Government wish nothing better than to see the establishment of conditions in Afghanistan that enable the millions of refugees to return to their own country. She and her country realise the importance of securing the establishment in Afghanistan of a broad-based Government that is truly representative of the people of Afghanistan. That is the way to bring the conflict to an end.
    Mr. Worthington: In the continuing discussions with the Prime Minister of Pakistan, will the Foreign Secretary initiate further discussions about the success of the project in the Dir district in the north-west of Pakistan which is concerned with the reduction of the heroin trade from that area and with rural development and crop substitution? That is the kind of aid that we can give, which we give in too stinting a way at the moment. I am conscious of the success of that project and I am interested to learn whether the Foreign Secretary intends to extend such projects both in Pakistan and India to which I gather the focus of the heroin trade has moved.
    Sir Geoffrey Howe: The hon. Gentleman is right to draw attention to the importance of co-operation against the drugs trade. We sustain that co-operation with the Governments of India and Pakistan. Miss Bhutto herself has made a firm public commitment to continuing a tough stance on narcotics, and has recently appointed a Minister of State to deal with that subject. We help to fund the crop substitution programme at Dir in the north-west frontier province. We would look sympathetically at any further Pakistani request for help of that kind.
    Mr. Wilkinson: Did my right hon. and learned Friend discuss with the Prime Minister of Pakistan the dispute in Kashmir? It would be a development of the utmost gravity for Pakistan if, in addition to extreme instability in Afghanistan, there were to be conflict in Kashmir.
    Sir Geoffrey Howe: We certainly discussed the importance of improvements in relations between India and Pakistan. There was no need for me to emphasise to Miss Bhutto the need for increased co-operation. I welcomed several positive steps in that direction, including, for example, the agreement not to attack each other's nuclear installations and the successful meeting between the two Prime Ministers in December of last year. In that context, we believe that the same method should be adopted towards the possible resolution of the Kashmir dispute.
    Mrs. Clwyd: Did the Secretary of State discuss the continuing plight of the Kurds within Iraq and the renewed threat forcibly to deport 20,000 of them? If he did not discuss that matter, will he take it up with the Iraqi embassy and with the Government—
    Mr. Speaker: Order. that question is somewhat wide of the topic, which is Pakistan.
    Hon. Members: Answer.

    Namibia
    Mr. Pike: To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the South African Government and the United Nations for the publication of a full electoral roll prior to the forthcoming elections in Namibia.
    The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): We have made no specific representations on this subject. The United Nations and the South African Government are both well aware of our concern that the elections in Namibia should be free and fair, as set out in the United Nations plan for Namibian independence.
    Mr. Pike: I am sure that the Foreign Minister will recognise the problems if those elections are carried out on lines identical to those of the 1978 South African-controlled elections in Namibia, which the Government have repeatedly condemned as a sham. Does she recognise that representations must be made by 16 May, to ensure that the credibility of the United Nations is maintained and that the people of Namibia accept that the elections that are to take place are genuine, free and democratic?
    Mrs. Chalker: I understand what the hon. Gentleman has said. However, the election arrangements are a matter for the United Nations and the South African Administrator General. We have made both of them well aware of our concern that the election should be free and fair, as set out in the United Nations plan. The draft registration of voters proclamation was published on 24 April, and comments and representations on the draft have been invited from the interested parties.
    We note considerable differences between what was discussed way back in 1978 and what is now under discussion, particularly that there is a minimum voting age of 18, and that is certainly a step forward. I agree with the hon. Gentleman that it will need close and constant supervision by the United Nations, and I am glad to say that that is well recognised both in New York and by the special representative in Windhoek.
    Mr. Cyril D. Townsend: Does my right hon. Friend agree that, sadly, it is all too clear that, because of cost, UNTAG was set up with too few soldiers and that one possibility is that, in the long run, the cost will be greater? Will she confirm that she is still prepared to consider increasing the size of that force and that British troops might be used in such an endeavour?
    Mrs. Chalker: We must take careful note of what members of the United Nations on the ground are saying. Cedric Thornberry made it quite clear that, until the full deployment which is taking place has been made, it is not the time to consider additional personnel. Now that armed incidents are reduced, that may not be necessary.

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    However, as I have said on many occasions, if the United Nations Secretary-General goes to the Security Council to ask for additional personnel, we stand ready to supply them. In fact, we were asked for 10 additions to the signals unit that Britain has already sent, and those 10 will join their fellows, who are already doing excellent work in Namibia.
    Mr. Robert Hughes: Does the Minister agree that there is great concern that South Africa is dominating the agenda for the implementation of UN resolution 435? As there have been severe hiccups, which we certainly hope will not be repeated, will the right hon. Lady accept that, in any future discussions about the preparations for the supervision of free and fair elections and law and order, SWAPO should be included as a free and equal partner in any discussions, instead of its views being put secondhand by third parties?
    Mrs. Chalker: I believe that it is for all parties to resolution 435 to ensure that the December agreements and the United Nations plan are fully implemented. That means dealing carefully with the situation as it occurs, which is what the United Nations special representative on the ground is there to do. Not only do he and the Administrator General have to carry out their commitments under the UN plan, they must proceed with the refugee work. The British Government have given £500,000 to help in the return to Namibia of those Namibian refugees, which, indeed, will need to be handled carefully.
    Provided that SWAPO remains north of the 16th parallel and that it keeps in communication with the United Nations, there will be far fewer problems than if it makes incursions and excursions that can cause only problems to the peace plan.
    Mr. Lester: I have listened carefully to the remarks of my right hon. Friend about UNTAG and the necessary reinforcements. Clearly, the role of the police will be critical in reinforcing free and fair elections. Have we had any requests for advice or help in policing, rather than for military help?
    Mrs. Chalker: We have not had such requests up to now. Should such requests be made by the United Nations, of course we shall consider them sympathetically. However, there is an increase in the observer force, and I am certain that the special representative, if he believes it to be necessary, will make such a request via the secretary-general in New York.
    Mr. Anderson: Are the Government now honest enough to accept that they have colluded in a massive underfunding of the United Nations exercise in Namibia? Is it not correct, for example, that the Secretary-General has already asked for an increase in the UN police force above 500? How can an adequate electoral roll be established if the UN High Commissioner for Refugees does not have the funds to organise reception centres for exiles, who should return to Namibia within six weeks from 15 May? Will the Government provide funds to send parliamentary observers and monitors to the election in Namibia, as many of our European partners have done already?
    Mrs. Chalker: To the best of my knowledge none of our European partners have yet sent observers of any sort. Should that be desirable, of course we will consider it.
    I repeat to the hon. Gentleman that we have made it absolutely clear that the refugee work must proceed, which was why we were the very first country to give resources for the United Nations High Commissioner for Refugees to get on with that important job. On the hon. Gentleman's point about underfunding, we have consistently backed the recommendation of the United Nations Secretary-General on the numbers that his adviser told him were necessary to start the process. The delay in the start of the process was due solely to the arguments being protracted until 1 March, before which no arrangements for deployment could be made. I repeat that we have further said that if the United Nations Secretary-General believes that there is a need for a further increase in the number of police and military observers, we shall, of course, consider that with our partners in the Security Council.

    Middle East
    Mr. Andrew MacKay: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the peace process in the middle east.
    Mr. Waldegrave: We continue to believe that a settlement of the Arab-Israel dispute must be based on Security Council resolutions 242 and 338 and that an international conference, at the right time, will be necessary. We look forward to discussing with Mr. Shamir how his proposal for elections in the occupied territories can contribute to this process when he visits the United Kingdom later this month.
    Mr. MacKay: As the PLO appears belatedly to have recognised the existence of the state of Israel, does my hon. Friend agree that it is now not inconceivable that at some appropriate time in the future our Prime Minister might meet Mr. Arafat?
    Mr. Waldegrave: We unequivocally welcome the steps forward that have been taken by the PLO. As my right hon. and learned Friend told my hon. Friend the Member for Arundel (Mr. Marshall) on 8 February, we are certainly ready to promote further meetings when they can serve a useful purpose.
    Mr. Ernie Ross: Under exactly what conditions would the Prime Minister be prepared to meet Yasser Arafat?
    Mr. Waldegrave: Any upgrading of meetings would undoubtedly involve my right hon. and learned Friend before they would involve the Prime Minister. The principle on which we have taken such steps has been that they should be seen to be carrying the peace process forward. Meetings should not take place just for the sake of having meetings.
    Mr. Temple-Morris: Does my hon. Friend agree that the middle east peace process is certainly not helped by extremist exhortations to violence emanating from Tehran? In connection with that, what steps is my hon. Friend taking to prepare an international cohesive response and to prepare the necessary contingency measures?
    Mr. Waldegrave: I have no doubt that the condemnation of the whole House, the European Community and

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    nations throughout the world has been clear. Incidentally, there has been a clear rejection of Mr. Rafsanjani's remarks by Mr. Arafat and by the PLO for, which I thanked Mr. Bassam abu Sharif, Mr. Arafat's representative, when he was in London recently. We are taking steps within the Community, with our allies and with other friendly countries to get the widest and clearest possible rejection of that intolerable threat.
    Mr. Nellist: Given that the weekend saw the bloodiest single day's fighting in the 18-month intifada against Israel's occupation of the West Bank and the Gaza strip, with four deaths, 343 injuries, including 147 gunshot wounds, the youngest of which was to a seven-month-old baby, has not the time come for the Government to respond as sharply as they have done in the past to Libya and to Iran and to cancel the state visit of Prime Minister Yitzhak Shamir which is due in 10 days' time?
    Mr. Waldegrave: That would be exactly the wrong step to take. Without in any way disagreeing with the hon. Gentleman that the events in Gaza over the weekend were, as our statement at the time said, deplorable and another step downwards, that would make the whole situation worse. At a time when there is just a glimmer of light and a proposal on the table from Mr. Shamir, it is surely right for us to follow the example of the PLO and to try to make something of that statement and to make progress on the basis of what, I recognise, is a minimal proposal. It would be better to do that than to slam the door and not talk.
    Mr. Rhodes James: As my hon. Friend is aware, I am a strong friend of Israel, but I have been and remain highly critical of certain actions of the Israeli Government, especially the brutal and indefensible response to the intifada. However, that having been said, does my hon. Friend agree that there are now clear signs that the Israeli Government are responding to the criticisms from inside as well as outside Israel and that they are moving towards negotiation? Surely that should be welcomed and encouraged.
    Mr. Waldegrave: Any signs of movement towards negotiation by the Israeli Government will receive not only the support of Her Majesty's Government but, I am sure, that of the whole House. It is to investigate whether there are such signs and to encourage any that exist that it is right for us to welcome Mr. Shamir here.
    Mr. Winnick: While I accept the essential need for Israel to recognise the realities and start negotiations with the PLO, should not steps taken by European countries over the latest incitement to mass murder from the Iranian regime be effective, unlike on the previous occasion?
    Is it not the case that, to a large extent, Iran is the ringleader of international terrorism, while at home it engages in the murder of political opponents? Is it not time for the international community to recognise that much more needs to be done to punish and isolate this terrorist regime?
    Mr. Waldegrave: I agree wholeheartedly with the hon. Gentleman. We in this country can say to some of our colleagues, friends and allies round the world, "We told you so." After the Salman Rushdie affair we urged people to take seriously the irresponsible threats from Iran—some did and some did not. Those who did not now seem
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    to stand indicted. In the face of this further threat the civilised international community must surely unite in practical condemnation.
    Mr. Michael Marshall: I am grateful to my hon. Friend for his comment about an earlier question in which the Yasser Arafat meeting was mentioned. Will he take on board the fact that when Yasser Arafat was invited to the IPU conference in Budapest in March, it was felt that the exchanges that followed were valuable. When parliamentarians and western journalists considered matters such as the responsibility for the Lockerbie air disaster it resulted in some fruitful discussion.
    Mr. Waldegrave: My hon. Friend is quite right. Such meetings between parliamentarians, journalists and other concerned citizens across the sectarian divide are extremely useful. A useful meeting was held at Ditchley over the weekend.
    Mr. Kaufman: When Ministers meet Mr. Shamir when he comes to London this month, will they voice the dismay of the House at the daily toll of killings and repression in the Israeli occupied territories? Will they tell him that the House of Commons condemns the Israeli policy that brings about such killings and repression? Will they ask Mr. Shamir why, when the Israeli Government calls for the renunciation by the PLO of its charter and Mr. Arafat then makes a statement of renunciation, instead of welcoming it, the Israeli Government brush it aside, as they do every concession that Mr. Arafat has made? Will they tell Mr. Shamir that his excuses and the patience of the world are running out?
    Mr. Waldegrave: Yes, Sir. When we do so, we shall do so with all the greater strength because of the unity shown by the House.

    Bophuthatswana
    Mr. Lawrence: To ask the Secretary of State for Foreign and Commonwealth Affairs what criteria Bophuthatswana would need to satisfy in order to be recognised by Her Majesty's Government as an independent nation state.
    Mrs. Chalker: The same criteria that have been followed by successive British Governments and which are based on international law. Other factors, including relevant United Nations resolutions, are also taken into account.
    Mr. Lawrence: Why does my right hon. Friend not agree that, in international law, Bophuthatswana does fulfil the criteria laid down for recognition? It has a definable territory, a permanent population, a Government, and the capacity to enter into relations with other states. Does not my right hon. Friend's policy have the rather ludicrous effect of driving Bophuthatswana to stay inside the sphere of influence of South Africa and thus strengthen apartheid, while the Government's policy is to woo South Africa's neighbours away from South Africa's sphere of influence and weaken apartheid? Cannot my right hon. Friend see the total inconsistency of the Government's policy?
    Mrs. Chalker: My hon. and learned Friend should remember that Bophuthatswana is a homeland which was set up by the South African Government within South

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    Africa. We bear no ill will to those who live there. We are seeking to get rid of apartheid throughout South Africa. I take up my hon. and learned Friend on what he said about the criteria for recognition. He subtly altered the wording of the third criterion, which involves independence in external relations. That is one of our criteria. These criteria have been used by successive British Governments and are recognised by international law. I know that my hon. and learned Friend has been researching Judge Friedman's views and I understand that, under the terms of the Montevideo convention, they may be different. Our prime cause must be to help South Africa get rid of apartheid throughout the territories, including Bophuthatswana. Until there is a democratic system in South Africa, we cannot consider change.
    Dr. Reid: I share the Minister's aim of getting rid of apartheid from South Africa and express my gratitude to her for having the courage to express it, but is it not hypocritical of the Government to set out the criteria in international law that they deem acceptable for independent sovereign nation-statehood while, at the same time, openly and blatantly to support American intervention in, and infringement of, the independent nation-statehood of sovereign Nicaragua?
    Mrs. Chalker: I can see no connection between Bophuthatswana and Nicaragua. It is absolutely right that any country that wishes to look after its own affairs must show that it can do so. Bophuthatswana is not an independent country; it remains a homeland of South Africa.
    Mr. Baldry: Does my right hon. Friend agree that Bophuthatswana is a creation of South Africa for the convenience of South Africa in South Africa and has no right to independence, either de jure or de facto, in international law, and that to try to pretend otherwise is a fraud?
    Mrs. Chalker: We have been over this ground many times, and my hon. Friend is absolutely right. These seven territories are in no way independent of the rest of South Africa. They do not fulfil the criteria for recognition as an independent country and I do not see any likelihood of their doing so. I hope that when there is a democratic system in South Africa as a whole, in which all people can have a say, the situation may be different for the people of Bophuthatswana—but it will not be so earlier.
    Mr. Morgan: Will the right hon. Lady confirm that it is not a criterion for recognition as an independent country that it should offer free trips to select groups from this House or any other part of the country, although that is a well-established tradition of the South African Government? The South African ambassador was in Cardiff on Monday trying to bribe Welsh rugby players to go to South Africa. Will she tell the ambassador that, only days after three members of his staff were expelled for good reason from this country for involvement in terrorist organisations in Northern Ireland, it was wholly improper for him to come to Cardiff to a reception at the Holiday Inn, as if it was business as usual with South Africa? It very much is not.
    Mrs. Chalker: Neither the South African ambassador in London nor the South African Government are in any doubt about what we think about the last issue the hon. Gentleman mentioned.
    It will always remain up to individual Members to decide what invitations they accept. Some may choose to go to South Africa and others to Nicaragua—that is an hon. Member's responsibility.

    NATO
    Mr. Hayes: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to meet the secretary-general of the North Atlantic Treaty Organisation; and what matters will be discussed.
    Sir Geoffrey Howe: I met the secretary-general when he was in London on 24 April. I will see Dr. Woerner again at the end of this month at and for the NATO summit meeting.
    Mr. Hayes: Does my right hon. and learned Friend think that our NATO allies might well agree with the Daily Mirror's editorial this morning, which says that Labour's defence policy is as confusing as it is unbelievable? When the laughter finally subsides, and NATO realises that it is nothing more than a policy for flexible surrender, would not the only honourable course left to a Labour Government—
    Mr. Speaker: Order. The hon. Gentleman must try to relate his supplementary question to the original question.
    Mr. Hayes: Would not NATO be of the opinion that the only honourable course for a Labour Government would be to withdraw from NATO before they were thrown out?
    Sir Geoffrey Howe: My hon. Friend draws attention to a sound point, although he takes his fantasy rather far. The fact on which I am sure the NATO Alliance would agree is that the Labour party's new proposals for defence will be as ineffective for the defence of the Alliance as they have been for the uniting of the Labour party.
    Mr. Menzies Campbell: Does the Secretary of State agree that there is a need for NATO to present a united front to the initiatives taken by Mr. Gorbachev? Does he agree that that would be best achieved through a sympathetic understanding of the views of all our allies and is not likely to be achieved by hectoring and browbeating the Federal Republic of Germany over its attitude towards the modernisation of short-range weapons?
    Sir Geoffrey Howe: The Alliance has responded and will continue to respond effectively and with unity to the prospects for progress on arms control. I was able to announce those proposals when I spoke first to the Alliance at the beginning of the Vienna conference just two months ago. On the last point, the Alliance has agreed that for the foreseeable future there is no alternative to a strategy of deterrence based on an effective mix of nuclear and conventional forces which will be kept up to date where necessary. That mix includes a continuing requirement for land-based, sea-based and air-launched short-range nuclear forces in Europe. A third zero for land-based missiles is therefore not acceptable. Lance will become obsolete in 1995 and a deployment decision on a

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    successor will be needed in 1991–92. In order to keep open the necessary options, support for United States efforts to develop a follow-on to Lance is necessary. We will seek from the NATO summit confirmation of all those points that have already been agreed by the Alliance.
    Mr. Churchill: I recognise the importance to NATO doctrine of maintaining and modernising our short-range nuclear forces. None the less does the NATO Alliance not have a clear interest in reaching agreement with the Soviet Union on coming down to a common ceiling? For example, if that were to be set at 100 on either side, we could maintain and modernise our own capability and the Soviets would have to abandon 1,300 of their launchers.
    Sir Geoffrey Howe: There is bound to be a substantial difficulty about verification of any conclusion of the kind to which my hon. Friend refers, if that were to be reached by agreement. I agree with him absolutely that there is no reason why the Soviet Union should not reduce its weapons of that kind unilaterally to NATO levels. So far it has undertaken to cut only 24 of 1,608 short-range missile systems. It can do a great deal better than that minimal reduction. It could do it unilaterally and at once.
    Mr. Kaufman: When the right hon. and learned Gentleman meets Manfred Woerner, the secretary-general of the North Atlantic Treaty Organisation, will he discuss with him and take into account the statement made by Mr. Woerner last week that he wishes a middle way to be found on the modernisation of short-range nuclear weapons at the NATO summit this month? Will he take into account also the statement of the Italian Prime Minister, Mr. de Mita, this week who said:
    "Other governments … basically agree, but not Mrs. Thatcher. The obstacle is there."
    Will the Government explain to the House and to NATO why the Prime Minister is the only obstacle to agreement within the North Atlantic Treaty Organisation? Will the right hon. and learned Gentleman explain why her bellicosity and obstinacy result in Britain being the only country either in NATO or in the Warsaw pact that wishes to halt the process of nuclear disarmament?
    Sir Geoffrey Howe: In his passion to present a totally false picture the right hon. Gentleman seems, unusually for him, to have overlooked completely the position, for example, of the United States. He will find no difference between the case that we are putting forward and that which the United States is putting forward. We shall be ready to go to the NATO summit, as we have done in the past, to secure an outcome consistent with the security of the Alliance in the long and in the short term.

    EC (Fraud)
    Mr. Greg Knight: To ask the Secretary of State for Foreign and Commonwealth Affairs what progress is being made by the European Commission to detect and deter fraud in the European Community.
    Mrs. Chalker: At the meeting of Economic and Finance Ministers on 13 March the Commission undertook to
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    propose fresh measures to combat fraud and mismanagement, notably in agricultural export refunds and intervention storage.
    Ministers will take this further at the June meeting of the Economic and Finance Council.
    Mr. Knight: Can my right hon. Friend tell the House what steps have been taken by the European Commission to follow up the call of the Court of Auditors to bring about better financial control in respect of existing abuses of the common agricultural policy? Do not some estimates indicate that fraud in the European Community is costing up to £6 billion a year? That being the case, is it not right that the Government should continue to take the lead and press for further action on this outrageous scandal?
    Mrs. Chalker: I, too, have seen the figure of £6 billion as being the cost of fraud to the Community. I understand that it was published in The Independent and is a speculative figure based on surmise, not on fact. But that does not alter the fact that this is a serious problem and that large sums are involved, even if we cannot give precise figures at the moment. That is why the British Government welcomed the Court of Auditors' report and ensured that its reports were discussed regularly in Council. At the 13 March meeting that I mentioned, the Commission promised a number of new and revised proposals, including concrete measures to improve controls over export refunds and intervention storage. The head of the anti-fraud unit is discussing the means of operation this month ready for the June meeting of Ecofin where we shall decide on the actual measures.
    Mr. Cryer: If the Common Market is so keen and zealous in tracking down fraud and fraudsters, would it not be likely to have an idea of how much fraud is involved? Has the Minister any information to combat the figure of £6,000 million? As over the past four years membership has cost us £5,000 million and we have a deficit in manufactured goods of £11,000 million, does it not behove any Government to keep open the back door of withdrawal from the Common Market as a useful negotiating posture?
    Mrs. Chalker: I am not surprised to note that some Opposition Members still favour an out-of-date attitude towards our future. With regard to our deficit on manufactured goods, 75 per cent. of equipment imported is for the re-equipping of factories for their modernisation. Companies are now investing in new plant and equipment in order to become more efficient. If we cannot provide the equipment ourselves, we must import it, and it is better that we import if from the Community which will serve us well. Wherever there is fraud, it must be sought out. However small or large, it must be deterred and detected. We shall put all our energies into doing just that.

    Human Rights (Eastern Europe)
    Mr. Kirkhope: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent progress there has been in the development of human rights in eastern Europe; and if he will make a statement.
    Mr. Waldegrave: Performance is varied. Hungary and Poland are continuing to take measures to improve human

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    rights and political freedoms. There has been little or no improvement in Bulgaria or Czecholsovakia or the GDR. Romania is, I am sorry to say, in a class of its own.
    Mr. Kirkhope: Does my hon. Friend agree that the Soviet Union's record on human rights is still falling behind its social and economic achievements? Does he also agree that our foreign policy must take into account the individual records of each of the countries of eastern Europe and our assessment of them should be reflected in our general foreign policy decisions?
    Mr. Waldegrave: I agree with both my hon. Friend's points. In particular, on his latter point, it is surely right that we in the United Kingdom and the EC should try to establish trading and other relations with the countries that are making progress and respond to that progress as it develops.
    Mr. Eastham: Will the Minister advise the House whether human rghts include the unification and unity of families? A lady in my constituency with a British passport has two children and her Pakistani husband has been denied the right to join her? Is that human rights in the United Kingdom?
    Mr. Waldegrave: Unless the hon. Gentleman is arguing for the abolition of all immigration controls—[HON. MEMBERS: "No."] It has always been the right of any country to maintain immigration controls. The Helsinki final act makes it clear that all signatory countries have the duty to allow people who want to leave a country to do so.
    Sir Bernard Braine: Does my hon. Friend agree that the repellent and corrupt Ceausescu regime in Romania sticks out like a sore thumb in eastern Europe, that it has the worst human rights record in Europe and that it has caused a major refugee problem for its Warsaw pact neighbours? Does he further agree that this is a case where the West and the Soviet Union are caused common embarrassment? Is it possible to bring extra pressure to bear on that appalling regime?
    Mr. Waldegrave: I agree with every word that my right hon. Friend says. The situation in Romania is tragic and shows no signs of getting better. The regime defends, with a mixture of childish and Stalinist arguments, the most appalling repression which is clearly an embarrassment to its friends. It would be gratifying to see more overt pressure being put on that regime from countries—other than Hungary, which has its own special reasons for being concerned about Romania—on the eastern side of the iron curtain, which we know are very embarrassed indeed.
    Mr. Robertson: Will the Minister accept that hon. Members in all parts of the House warmly applaud and welcome the developments which are taking place in Poland and Hungary and feel that the European Community support that has already been offered should be real and appropriate for the circumstances there? Is he equally aware of our concern for the continuing human rights violations in Czechoslovakia? As hon. Members have pointed out, the indecent and unpardonable activities of the Romanian Government deserve and demand wide and vocal condemnation. Will he ensure that the view of the whole House is reflected in urgent Government action in this matter?
    Mr. Waldegrave: Again, I can welcome wholeheartedly the position being taken by the Opposition Front Bench on this issue. There are many violations at present in Czechoslovakia. In particular, it is a scandal that Mr. Havel—perhaps the leading playwright in eastern Europe, some might say in Europe as a whole—is in gaol. We will continue to press very hard indeed on these matters, and we can do so again with redoubled force in view of the support of Opposition Members.

    Bophuthatswana
    Mr. Colvin: To ask the Secretary of State for Foreign and Commonwealth Affairs how many visits by Foreign and Commonweatlh Office officials have been made to Bophuthatswana over the last decade.
    Mrs. Chalker: British embassy officials pay regular visits to all the South African homelands, including Bophuthatswana. The details of individual visits are not recorded.
    Mr. Colvin: Will my right hon. Friend acknowledge that because it is politically difficult for Ministers to visit Bophuthatswana, it is even more important for their officials to do so to bear out what hon. Members have been reporting for years, which is that this is a rare example of an African multi-racial democracy—[interruption.]— which is attempting to stand on its own two feet economically, which is more than can be said for the front-line states? It is, therefore, a model of what we would like to see the Republic of South Africa become. [Interruption.]
    Mr. Speaker: Order. We often hear things in this House with which we disagree.
    Mrs. Chalker: We recognise what my hon. Friend says—that it appears that apartheid as practised elsewhere in South Africa is not practised in Bophuthatswana—and in that sense the South African Government have something to learn from Bophuthatswana. That does not alter the fact that the whole creation and existence of that homeland is itself an expression of the apartheid that the South African Government forced on it, and nothing that anybody says, here or in Bophuthatswana, will alter that situation.

    Fascism
    Mr. Janner: To ask the Secretary of State for Foreign and Commonwealth Affairs whether he will initiate discussions with his EEC counterparts concerning recent trends in organised Fascist activity throughout Europe; and whether he will make a statement.
    Mrs. Chalker: Any trend in the direction of Fascist revival would be deeply disturbing, and I have no doubt the electorates of western Europe would reject it. I see no need to initiate intergovernmental discussion on the subject.
    Mr. Janner: Does the Minister know that this weekend a gathering and camp of neo-Nazis from all over Europe is planned to be held in the east midlands? Does she agree that the bringing to this country of Nazi criminals, many of them with records of violence, for a meeting organised by an evil man named John Peacock, who runs the Nazi British National party in Leicester, should be banned, and

    859
    that such people should not be allowed into this decent country? In view of the urgency of the matter and of the Home Secretary's failure to reply to my communication about it, will the right hon. Lady undertake to speak to him immediately?
    Mrs. Chalker: I am aware of The Observer report of 23 April and I am concerned by it. As the hon. and learned
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    Gentleman says, the matter is one for the Home Secretary. We do not have a visa regime for EEC nationals, but I shall certainly draw the hon. and learned Gentleman's comments to the attention of my right hon. Friend the Home Secretary. The way to defeat such occurrences is through debate and elections, not by banning.

Community Charge (Leaflet)
3.31 pm
Mr. Speaker: Before calling the hon. Member for Copeland (Dr. Cunningham) to ask his private notice question, I should inform the House that the main issue with which it deals is to be the subject of judicial review in the High Court on or before 25 May and is therefore sub judice. The terms of the relevant sub judice resolution allow me to exercise my discretion and to waive the rule if I see fit, and I have decided to do so on this occasion. Dr. Cunningham.
Several Hon. Members rose—
Mr. Speaker: Order. The whole House knows that points of order are taken after questions.
Dr. John Cunningham: I would like to ask the Secretary of State for the Environment—[HON. MEMBERS: "Where is he?"]
Mr. Speaker: Order. Such behaviour takes up a lot of time. Dr. Cunningham.
Mr. Dennis Skinner rose—
Mr. Speaker: Order. I remind the hon. Member for Bolsover (Mr. Skinner) that he is in the House of Commons.
Dr. Cunningham: I should like to ask the Secretary of State for the Environment a question of which I have given him private notice; namely, if he will now abandon the distribution at the taxpayers' expense of the misleading leaflet entitled "The Community Charge (The So-Called `Poll Tax'): How it will Work for You."
The Minister for Local Government (Mr. John Gummer): Mr. Speaker—[Interruption.]
Mr. Speaker: Order.
Mr. Gummer: Pending the—[Interruption.]
Mr. Speaker: Order. The Minister's answer is one for which the House has been waiting. Mr. Gummer.
Mr. Gummer: Pending the hearing before the Divisional Court—[Interruption.]
Mr. Speaker: Order. I shall find it very difficult to call hon. Members shouting from a sedentary position.
Mr. Gummer: Pending the hearing before the Divisional Court of the substantive application by the London borough of Greenwich, my right hon. Friend the Secretary of State for the Environment gave instructions yesterday to the Department's contractor, the Post Office, to halt distribution of the leaflet in compliance with the terms of the order made on 9 May. My right hon. Friend made immediate application to the court for the earliest possible hearing, and a little more than one hour ago the court agreed to hear the case next Monday.
Dr. Cunningham: Given that the Secretary of State for the Environment has on six previous occasions been found to be acting illegally, is it surprising that on this seventh occasion on which he has fallen foul of the courts he has sent Postman Pat to answer in his place? Does not this latest humilitating exposure of the Secretary of State's
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attempt to present people in England with misleading and inaccurate information demonstrate once again his cynical abuse of high office?
Why does the leaflet omit any reference to the highly controversial issue of joint and several liability, when the leaflet issued by the Secretary of State for Wales includes it? Does not that contrast prove that the Secretary of State for the Environment is guilty of a deliberate omission of important and objectionable facts about the poll tax?
Given that the judgment in favour of the Labour London borough of Greenwich was delivered at about 3 pm yesterday, will the Minister of State tell the House exactly when his right hon. Friend instructed the Post Office to halt delivery of the leaflets? Is he aware that throughout the day, all over England, the Post Office has continued to deliver it? It has been delivered in my home town of Chester-le-Street—which is in the constituency of my hon. Friend the Member for Durham, North (Mr. Radice)—and in the constituency of the Secretary of State for the Environment himself.
Does the Minister of State know that his right hon. Friend's constituents have been telephoning Labour party headquarters and my office to complain? Is that not evidence of flagrant contempt of the High Court decision? How can a decision announced at 3 pm yesterday still not have been implemented by lunchtime today? What is the explanation?
Has not the Secretary of State's political trickery already cost taxpayers several millions of pounds, and will not his incompetence and prevarication cost them several million more? Is it not about time to stop making taxpayers foot the bill for this squalid and incompetent exercise of Tory party propaganda?
Mr. Gummer: In my experience, the more offensive the hon. Gentleman is, the weaker is the case whose weakness he is trying to cover up. The hon. Gentleman knows perfectly well that with the hearing taking place on Monday it would be wholly inappropriate for me to enter into the merits of the case—[Interruption.] I shall, however, be happy to give the hon. Gentleman any details that he would like about the timing, if he will kindly be quiet enough to listen.
The court made its order at 2.45 yesterday afternoon, without hearing any representations from my right hon. Friend the Secretary of State. Counsel for Greenwich faxed a copy of the order to the Treasury Solicitor two hours later, at 4.45 pm. [Interruption.]
Mr. Speaker: Order. These are important matters of great interest to the House and to those outside.
Mr. Gummer: It is important for the House to hear the full details for which the hon. Member for Copeland asked. When the hon. Gentleman has heard the figures, the dates and the times, he will be sorry for the form in which he framed his question. Perhaps that is why he is trying not to listen to the answer. The order reached the Department 20 minutes later and the Secretary of State immediately considered its implications with his advisers. As a result of that consideration, he instructed lawyers to seek as early a hearing of the case as possible and at the same time instructed officials—[HON. MEMBERS: "When?"]—I will tell exactly the moment.
At the same time my right hon. Friend instructed officials to tell the Post Office to stop distribution until further notice—[HON. MEMBERS: "When?"] The Secretary

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of State gave that order at about 6.20 pm. The COI was telephoned at 6.30 pm. The COI, as agent for the Department, telephoned the Royal Mail immediately, and subsequently the Royal Mail's solicitor, and told them to stop distribution immediately. That was confirmed by fax to the Royal Mail's solicitor shortly after 7.30 pm and the COI then gave instructions to Post Office Counters not to display leaflets in Crown post offices. A letter was delivered by hand from the COI to the Royal Mail at 9 o'clock confirming those instructions.
Therefore, the House will note that at no point from the first delivery of the order to the Government was there any delay whatsoever.
Mr. Terence L. Higgins: Is my right hon. Friend aware that the London borough of Greenwich issued with its rate demand and at ratepayers' expense this year a leaflet which was pure propaganda against the community charge? Will he look carefully into the matter? [Interruption.]
Mr. Gummer: I am aware of that fact. I am also aware that the London borough of Hammersmith and Fulham sent out at ratepayers' expense a document which said —[Interruption.]
Mr. Speaker: Order. The Minister has been asked a question and he must be allowed to answer it.
Mr. Gummer: The document said that the poll tax or community charge will require all adults
"to pay the same amount irrespective of their income, size of property or ability to pay."
when there is a rebate which covers 9·5 million people.
Mr. Matthew Taylor: The House will agree that the Minister has shown contempt for the people of this country and for the use of public funds, and that nothing he says about any local authority will scrape over the fact that he has acted improperly at a national level. Can the Minister explain to the House the series of delays in notifying the Post Office that it should not deliver the leaflet, which is being delivered all over the country today? Can he explain why the Department was not represented in court, and if it was represented in court, why the message was not sent directly to the Department of the Environment?
Mr. Gummer: The hon. Gentleman is not a lawyer; I am not a lawyer but I know what an ex parte injunction is. The hon. Gentleman shows as much ignorance of the law as he does of the nature of the document. He has clearly neither read the document nor understood what is in it.
Sir George Young: Is my right hon. Friend aware that many of us wish that the Post Office would deliver our election addresses as promptly as they have delivered the leaflet? Is my right hon. Friend aware that while some Conservative Members did not share the Government's enthusiasm for the measure last year, that debate is now over, the Bill is an Act and the public have a right to be informed about it? While the courts will decide the accuracy of the leaflet, does not the standard registration form that is recommended by the Department, which will be signed by members of the public, make it clear that there is joint liability between husband and wife?
Mr. Gummer: The standard registration form makes it perfectly clear that there is joint and several liability between husband and wife, so anyone filling it in, unless
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they cannot read it, will be in no doubt about that fact. If my hon. Friend lived in the London borough of Islington, he would have received a guide which says,
"Scream And Scream Again Poll Tax on Upper Street"
which was paid for by ratepayers. Under the heading,
"What happens if I live with my girlfriend/boyfriend?"
the London borough of Islington fails to mention that if one lives with someone of the same sex one is not liable for their community charge.
Mr. Paul Murphy: Has the Minister discussed this matter with his right hon. Friend the Secretary of State for Wales? Is this leaflet being distributed in Wales? Has the Attorney-General given clearance for it to be distributed in Wales? Does the Minister agree that in last week's by-election the people of Wales decisively rejected the poll tax?
Mr. Gummer: The hon. Gentleman's last comment shows that this is a political rather than legal argument. Opposition Members should realise that the leaflet that is being distributed door-to-door in Wales is honest, clear and concise, as is the leaflet that will be distributed throughout the rest of Britain.
Mr. John Heddle: In view of the Labour party's quest for the truth, will my right hon. Friend challenge it to come clean with the public and explain how much the wealth tax, on top of the local income tax, on top of national income tax—[Interruption.]
Mr. Speaker: Order. The hon. Gentleman's question must be confined to the subject of the private notice question.
Mr. Gummer: The House would take more kindly the comments of the hon. Member for Copeland (Dr. Cunningham) if he had answered questions put to him about his two-tax policy, which he has failed to do, letting down the British people as a result.
Mr. Alex Salmond: As the Minister has been caught with his hands in other people's letter boxes, will he take immediate steps to consult his Scottish colleagues to determine how much misinformation was distributed in Scotland last year at public expense? Do 80 per cent. of Scottish people remain bitterly opposed to the poll tax in spite of or because of the Government's campaign of misinformation?
Mr. Gummer: The community charge leaflet that has been distributed in England, like the material that was distributed in Scotland, is accurate, wholly true and entirely without misinformation. The Government will stand and fight on that.
Mr. Robert G. Hughes: Does my right hon. Friend agree that the leaflet is one of a series of nine being distributed that give the true picture of the community charge? The reason for the smokescreen thrown up by the Opposition is that they recognise that the more people know about it the more popular it will be.
Mr. Gummer: My hon. Friend is entirely right. The more people know about the community charge, the more they will support it. The Opposition are so frightened of the community charge that they are not prepared to call it by its proper name.
Mr. Peter Snape: Will the Minister tell the House how many judgments have been entered against the Secretary of State for the Environment since 1979? In the event of appeal being dismissed, will the Conservative party meet the cost of the leaflets and the legal charges? Who decided that the Central Office of Information was the proper organisation to inform the Post Office not to distribute the leaflets further, bearing in mind that the normal function of the COI is to arrange lunches for hon. Members?
Mr. Gummer: The COI is the agent for the Department of the Environment in its dealings with the Post Office. That is why it was properly asked to carry out its job as agent. The Government are utterly confident that the document that has been put out is wholly fair and concise and, without question, we shall win the case.
Mr. Teddy Taylor: If the pamphlet is withdrawn, will my right hon. Friend appeal to the leader of the Labour party—I mean this sincerely—to use what influence he has over the Labour London boroughs to persuade them to stop handing out leaflets, such as the one I have in my hand, which cause distress and anxiety to pensioners and poor people, describe the poll tax as a kind of plague and, unfortunately, tell people to deny that they have received an official form and urges the general public, when someone comes to the door, to deny who they are. Does my right hon. Friend agree that it would be better if the Labour party was to start having pamphlets which were acceptable because they told the whole story rather than this rubbish, which genuinely upsets simple people, poor people, and pensioners?
Mr. Gummer: My hon. Friend would agree that the Opposition's case is undermined when we see the material that has emerged from, for example, the Lambeth and Norwood Labour party, which says:
"If canvassers come round to question you, say you are the baby-sitter or looking after the premises while your friend is away … Wait a week or two and then write back saying your dog ate the form, it fell in the washing-up, or you never received a form … any excuse will do."
That is what the Labour party wants to tell the people. We want to tell them the truth.
Mr. Bob Cryer: First, on the Minister's own account, is it not true that the first reaction of the Secretary of State to the decision was not to carry out the terms of the injunction, but to discuss a challenge to it in the courts? Should not the first response of any law-abiding Minister, particularly a Minister belonging to a party that claims a special position on law and order, have been to contact the Post Office immediately to give the court's instructions? Secondly, does there not appear to have been some deliberate delay so that it would be more difficult for the Post Office to carry out those instructions? Thirdly, can the Minister explain—
Mr. Speaker: Order. Briefly, please.
Mr. Cryer: Can the Minister explain why the Parliamentary Under-Secretary of State, the hon. Member for Surrey, South-West (Mrs. Bottomley), failed to notify hon. Members adequately of her visit to Leeds and Bradford to distribute the leaflets personally? Should she not be involved in getting them back so that the injunction is carried out?
Mr. Gummer: The hon. Gentleman is suggesting that it was somehow improper for my right hon. Friend to spend an hour and 35 minutes discussing with lawyers the precise import of the order. If he had not spent that time, he might have made a decision that broke the contract we had with the Post Office. I am sure that the hon. Gentleman would accept that it was proper to decide what the order demanded and then to do it, which is what my right hon. Friend did. The hon. Gentleman has never run anything in his life, so he is not in a position to make complaints.
Mr. David Shaw: Is my right hon. Friend aware that—[Interruption.]
Mr. Speaker: Order. The hon. Gentleman has as much right to be heard as anyone else.
Mr. Shaw: Is my right hon. Friend aware that we discussed the community charge in Committee for 143 hours, considering an immensely complex Bill, and that the Bill is so complex that he has my congratulations on getting his Department to produce an excellent summary of it? Is he aware that the Act is 179 pages long and that it goes on for 100,000 words? Is he aware that his summary is only about 2,000 words and is extremely efficient? Furthermore, is he aware that his summary leaflet deals with the issues about which my constituents want to hear?
Mr. Gummer: It is clear that a large number of people in Britain want to know more about the community charge, including the borough of Scunthorpe, which has distributed to its ratepayers a leaflet that says:
"The poll tax will be a flat rate charge for local services payable at the same rate by all adults."
That is a lie.
Mr. Peter L. Pike: The Minister will recall that yesterday afternoon on this very issue the Prime Minister told my hon. Friend the Member for The Wrekin (Mr. Grocott) that it was
"vital … that people have accurate information".—[Official Report, 9 May 1989; Vol. 152, c. 722.]
The Minister will also recognise that we do not need courts or lawyers to tell us that the leaflet is both misleading and inaccurate. To avoid wasting any further public money, will the Government agree to withdraw the leaflet immediately? In view of what the Prime Minister said yesterday, would not the honourable thing for the Secretary of State to do be to resign before he is sacked by the Prime Minister?
Mr. Gummer: As always, my right hon. Friend is right and the hon. Gentleman is wrong.
Mr. Ian Gow: As the Divisional Court has seen fit to grant an injunction in respect of a leaflet which was in every respect accurate, why does not my right hon. Friend make similar applications to the Divisional Court to prevent the publication of the appalling leaflets to which he has referred?
Mr. Gummer: Because I believe that the public will see through the nonsense of the Opposition and recognise the difference between the truth as presented clearly and concisely by the Government and the party political propaganda presented by the Opposition.
Mr. Tony Banks: I am sure that the House will join me in congratulating the London borough of Greenwich on bringing this matter to the

867
court. Will the Minister tell the House how much this piece of Tory party propaganda cost the taxpayer, and if the appeal is turned down, what will happen to the leaflet? If it was a local authority that had been caught out, there would be demands for surcharge. Will the Secretary of State be surcharged or will he add hypocrisy to recidivism? Surely the best defence for the Secretary of State is to go into court and cop a plea of guilty but insane.
Mr. Gummer: No public funds have been used for Tory party propaganda; that would be entirely wrong. A great deal of public funds appear to have been used by local authorities for Labour party propaganda.
Several Hon. Members rose—
Mr. Speaker: Order. This is an extension of Question Time. I shall allow three more questions from either side and then we must move on.
Miss Ann Widdecombe: Can my right hon. Friend confirm that not a single line of the document in question has been challenged on its factual content, that all the furore is about an omission and that, without printing the entire Act, there was no possible method of avoiding omissions? Will he also confirm that this is an interim injunction and not a final judgment and that the baying and bawling from the Opposition show that they are making hay while the sun shines and are dubious about the final judgment?
Mr. Gummer: I think that my hon. Friend is wrong. The furore is not about an omission; it is an attempt to stop people knowing about a charge that they are to pay and to hide the fact that the Opposition do not dare tell people about the two taxes that they would introduce instead.
Mr. Roy Hughes: Can the Minister shed any light on the reason for the different wording of the leaflet in England as compared with that in Wales? Is it not time that the Government realised that the poll tax is regarded as equally pernicious in both countries?
Mr. Gummer: Happily, in this country we have three Secretaries of State who are responsible for environmental matters. Each leaflet was written separately. Each leaflet is different. That is proper, because each country is different.
Mr. Patrick McLoughlin: Will my right hon. Friend confirm that that action will in no way impede the introduction of the community charge and, therefore, will mean that the recent local elections were the very last in which there was no full accountability of what local councils do? That is why the Labour party is concerned about the introduction of the community charge.
Mr. Gummer: The reason Opposition Members hate the community charge is that, for the first time, they will be responsible to the electorate instead of to their local management committees.
Mr. Stuart Bell: The Minister said that the document was accurate, wholly true and entirely right. In fact is is full of disinformation, inaccurate and entirely untrue. It states that, if a local council wishes to spend more, the community charge will go up. It does not state that 75 per cent. of local council expenditure is controlled by the Government through the business rate and the revenue support grant. If either of them goes down, local council expenditure will go up. Why does the document not state that?
Mr. Gummer: The hon. Gentleman knows perfectly well that 75 per cent. of the money which local councils spend comes from taxpayers and business ratepayers. That is not control; that is paying the price of local government.
Mr. Tony Baldry: Is it not essential that there is accurate and fair information on the community charge? This week, the Labour party distributed in my constituency leaflets which stated that the new tax will be the same for the rich and the poor. That is a deliberate lie, because the leaflet takes no account of the fact that, for poor people, there will be rebates of up to 80 per cent. As half of local government funding comes from national taxpayers, the top 10 per cent. of wealthy families will pay 15 times more for local government than the bottom 10 per cent. of families.
Mr. Gummer: The truth is clear. Those who need help to pay the community charge will get it. The truth is stated in the document that was put out by the Government. If anyone wants to see anything misleading, all that they have to do is to look at what local branches of the Labour party have put out. It is because Labour Members are ashamed of what they put out that they tabled this private notice question today.
Mr. Brian Sedgemore: How does the Minister respond to statements by senior civil servants at the Central Office of Information at lunchtime today that there are lies, damned lies and the Secretary of State for the Environment?
Mr. Gummer: The hon. Gentleman now has the worst reputation but one in this House for making statements under the cover of privilege which he dare not make outside.

Points of Order
4.2 pm
Mr. Frank Dobson: On a point of order, Mr. Speaker. In case there has been any inadvertent misleading of the House, I should be grateful if you would ask the Minister whether, although not formally represented, Government officials were present at the court hearing.
Mr. Speaker: It is not for me to ask that question.
The Minister for Local Government (Mr. John Gummer): To make it absolutely clear, the Government were not able to make their representations to the court. [HON. MEMBERS: "Were you in court?"] The Government were not able to make their representations in the court—[HON. MEMBERS: "Answer."] I will answer the question—simply because it was an ex-parte injunction. Therefore, the Government were not able—the Government had the advantage of the fact that an official was present in the court. [HON. MEMBERS: "Ah!"] The situation is perfectly clear. The court's order has to be received as an order in its fulness, otherwise no lawyer will advise on it. I know that to be true because I asked for advice when the material was not in front of us. Advice was not forthcoming because no lawyer worth his salt will give advice on an order the contents of which he has not got.
Dr. John Cunningham: Further to that point of order—
Mr. Nicholas Budgen: On a point of order, Mr.Speaker. May I remind you that during the one hour of Question Time there was only one question—No. 11—that directly concerned the House, and that was about the finances of the EEC? The taxpayer contributes £1·6 billion to the EEC and is directly concerned about the fraud in the EEC. On the other hand, for instance, you allowed a discussion of about 10 minutes on the situation in the middle east. I have no doubt that every citizen of the middle east will be waiting to hear tomorrow what the House of Commons has said about its problems. Surely it is wrong to have a truncated discussion of the EEC in questions to the Foreign Office. It is a disgrace that we, on behalf of the British taxpayer, could discuss that issue for only two minutes. Is there not a very strong case for a reconsideration of our procedures, so that, at the very least, we get the old quarter of an hour in which we can discuss this country's most important alliance?
Several Hon. Members rose—
Mr. Speaker: I shall hear hon. Members, further to that particular point of order.
Mr. Tony Marlow: Further to that point of order, Mr.Speaker. I am on your side. I am sure that my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) does not mean to criticise you, Mr.Speaker, and it is very difficult, but we had two questions on a place called Bophuthatswana. I think about 5 per cent. of hon. Members in the House know where it is. As a result of those two questions, we had five supplementary questions. On the European question we had—
Mr. Speaker: Order. I do not think we should have a debate on the matter. I thank the hon. Gentleman for what he has said. If he had been present, he would know that there was no further supplementary question apart from that of the hon. Gentleman who asked the question on the second of those two questions on that country, which I too find it difficult to pronounce.
Several Hon. Members rose—
Mr. Speaker: Order. I am on my feet. On the point made by the hon. Member for Wolverhampton, South-West (Mr. Budgen), it is a difficult judgment at Question Time. We went slowly today, because there were very long answers, and some supplementary questions with very long answers, too. I shall bear in mind what the hon. Gentleman has said.
On the EEC question, if the hon. Gentleman wishes to go back to what happened in, I think, the last Parliament, he should pursue the matter through the usual channels.
Dr. Cunningham: On a point of order, Mr. Speaker. Is it not now clear from the Minister's answer to my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) that Government officials were present yesterday in the Queen's Bench Division of the High Court? Is it not also clear from the Minister's answer that the Government, and especially the Secretary of State, prevaricated, obfuscated and delayed for six hours before ensuring that the decision of the court was put into practice, thus ensuring that, in spite of the decision of the judge, deliveries of the leaflet went ahead throughout today? Is not that a constructive contempt of court? Is it not a further contempt of the House that the Secretary of State is not here to answer for all those matters?
Mr. Gummer: Further to that point of order, Mr. Speaker. The hon. Gentleman's point of order, if it is one, is entirely without foundation. The situation is that, the moment that we had any inkling that Greenwich had obtained some kind of order, I sought immediately to get the details of that order. The moment I got them, I immediately took action upon them. If Greenwich had wanted us to deal with it earlier, it could have arranged its affairs in a way which would have meant that we would have known—[Interruption.]
Mr. Speaker: Order. We cannot have an extension of Question Time now.[Interruption.] Order. We shall doubtless return to this matter on other occasions.
Mr. Dave Nellist rose—
Mr. David Winnick rose—
Mr. Alex Carlile rose—
Dr. John Reid rose—
Mr. Bob Cryer rose—
Mr. Jeff Rooker rose—
Mr. Speaker: Order. I am on my feet and I must ask the House to listen to me. We have a Committee stage today, followed by a Ways and Means resolution, followed by a prayer. We have a long day ahead of us and we should now move on.
Mr. Rooker: I have a point of order for you, Mr. Speaker, on this matter, not for the Minister. It involves

871
your decisions and your control of the Order Paper. Until today I had never been seriously questioned at the Table Office about the term "poll tax" in a written question, but today I was. I raise this with you, Mr. Speaker because I was told, "Soon, Mr. Rooker, decisions will have to be taken about this," and clearly those decisions will have to be taken by you. I do not ask you to rule on this now, but point out the words "poll tax" appear twice on the front cover of the leaflet about which the previous exchanges occurred. Indeed, it is commonly known as the "poll tax".
Hon. Members: No, it is not.
Mr. Speaker: Order. The House should allow me to hear.
Mr. Rooker: I am asking you, Mr. Speaker, to give a ruling so that hon. Members are free to use expressions and to table questions in the common parlance of our constituents—as agreed by the Government, who now know it as the poll tax. I ask for your consideration of this matter.
Mr. Speaker: This is the first that I have heard of it, but I shall look into that matter.
Mr. Edward Leigh: Since when has a point of order been an extension of Question Time?
Mr. Speaker: Very frequently, I am afraid.
Several Hon. Members rose—
Mr. Speaker: Order.[Interruption.]I am not hearing any more questions on this matter under the guise of a point of order, but if they are on a different matter, I shall hear them.
Mr. Nellist rose—
Mr. Speaker: Is it a different matter, Mr. Nellist?
Mr. Nellist: It is a point of order, Mr. Speaker—[Interruption.]
Mr. Speaker: Order. I will hear any points of order that are not concerned with the poll tax, or the community charge, or whatever any Member of the House likes to call it.
Dr. Reid: My point of order does not specifically concern the poll tax or the community charge, but I ask your guidance on procedure in the House, Mr. Speaker. If a statement were to be made and a long question session followed on a matter of great national importance, such as the Government's handling of taxpayers' money, and if, after an hour and a half of such questions it was discovered, following the closure of that question session on a point of order raised by the Opposition Front Bench, that all those questions had been predicated on an initial statement that had concealed information from Members of the House, would it be in order, in circumstances concerning the poll tax, or whatever, for an Opposition Member to be justified in demanding that we should have a further extension of questions to elicit the true information on that subject?
Mr. Speaker: That is a hypothetical matter.
Mr. Alex Carlile rose—
Mr. Cryer rose—
Mr. Winnick rose—
Mr. Brian Wilson rose—
Mr. Speaker: Order. I am not taking any more points of order on the private notice question, but I will take points of order on a different matter.
Mr. Carfile: On a point of order, Mr. Speaker.
Mr. Speaker: I will take Mr. Carlile's point of order if it is on a different matter.
Mr. Carlile: My point of order, Mr. Speaker, concerns the position of Ministers who may have acted in contempt of court. If it happened—and from what has been said it appears that it happened—that a Minister who had knowledge of an injunction ignored it for six hours, will you, Mr. Speaker, ask the Attorney-General to advise this House in a statement whether that Minister was in contempt of an order of the House?
Mr. Speaker: That would be a matter for the courts.

Control of Electronic Surveillance Devices
4.14
Mr. James Cran: At long last, I beg to move,
That leave be given to bring in a Bill to control the manufacture and sale of electronic surveillance equipment in the United Kingdom.
Although this matter is less sensational than what has gone before, the Bill's supporters and I believe that it is no less important. The Bill is necessary because of the growing availability in this country of electronic surveillance devices, which are commonly known in this and other countries as bugging equipment. There is no real impediment to the use of such equipment in this country. It can be sold over the counter in the relevant retail outlets for relatively modest prices. The equipment can be used to invade the privacy of third parties. The Bill's supporters and I regard that practice as grossly offensive. In line with other pieces of legislation introduced by other Back Bench Members, my Bill discourages that practice.
Technical developments are making the position a great deal worse. These devices are now becoming technically miniaturised and can be hidden in everyday office equipment and other equipment in houses and offices. These devices can be attached to the outside of buildings and walls, to windows, glass panes or whatever. When they are in place the conversations taking place inside the building can be picked up from anything from 1,000 yards to a few miles away.
My Bill questions why law-abiding citizens in this country should wish to use such devices to eavesdrop on other people's affairs. These devices are such that those people who are being snooped upon—for that is exactly what it is—may not know what is happening.
If hon. Members consult the advertising material for these devices, as I have done in some considerable detail, they will find that the equipment is sold for the purpose of, "discreet listening". Do hon. Members believe that the House should support discreet listening by the use of such equipment? We should not support it. The use of such devices could lead to a massive invasion of privacy. The Bill rectifies that position. It is much the same as the Anti-Hacking Bill introduced by my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson), which is before the House and which deals with eavesdropping on computer-held information.
Eavesdropping is occurring in many guises. My Bill will ensure that, from the time of enactment of the Bill, all such devices would be licensed by the Home Office. The Act would apply not only to home manufactured devices but to a considerable number of devices imported into this country. Therefore, unlicensed equipment could not be sold in this country, and that would equally apply to another growth industry in this country: counter-surveillance equipment. We need such equipment to discover whether surveillance equipment is being used against us.
The Bill's supporters also strongly believe that the offence should be made a criminal offence. Prosecutions would occur far more easily and, perhaps just as important, a clear signal would go out to the community that the invasion of privacy about which I am talking will not be tolerated by the House.
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This matter is of particular significance for companies. One company taking over another would be at a considerable advantage if it knew what the other company was thinking about the takeover. The same applies to new products brought out by companies. Should not new products before they are launched be the business of the company that thought of them rather than the business of everyone else who can use this equipment?
This must be a criminal offence because there is almost no legal protection at present. I do not know how it strikes other hon. Members, but it came as a surprise to me to learn that it is not illegal to listen in to other people's conversations—I do not mean in the street, but in their homes or offices. An Englishman's or a Scotsman's home is no longer the castle that it used to be. The only slender protection—this is disgraceful—in this country lies in the fact that if these devices transmit unauthorised radio signals their use is illegal. The same occasionally applies when they are used in conjunction with telephone lines or equipment. Only those instances are illegal, not stealing information from a third party. My Bill will rectify that.
My right hon. Friend the Home Secretary recognised these weaknesses in his letter to me of 4 August 1988:
"Radio surveillance devices are unlikely to cause interference to other radio users simply because if they did their use would quickly be detected and their purpose defeated."
We are entitled to wonder why, if he believes that, he does not act on it. [HoN. MEMBERS: "Hear, hear."] I am grateful for that support.
My Bill would also provide another measure of protection, in the form of ensuring that registers are kept of those who manufacture, sell and buy the equipment. We need to know where the equipment is going and for what purposes it is being bought. My impression is that the Home Office thinks the equipment is being bought for legitimate purposes; I do not believe it. Such registration would give a clear signal to the community that abuse will not be tolerated in this country. That abuse is occurring is evident in the words of a major retailer and manufacturer of this equipment, who said:
"I never sit in judgment on or moralise about why a company or individual should be buying surveillance equipment."
My sponsors and I are of the same mind: retailers should exercise judgment. In its absence, we believe that legislation is necessary. For these reasons and in that spirit I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. James Cran, Mr. David Porter, Mr. Timothy Kirkhope, Mr. Matthew Carrington, Mr. Tim Boswell, Mr. Andrew Hargreaves, Mr.Dudley Fishburn, Mr. Alan Amos, Miss Ann Widdecombe, Mr. David Martin, Mr.Douglas French and Mr. James Paice.

Control of Electronic Surveillance Devices
  CONTROL OF ELECTRONIC SURVEILLANCE DEVICES
  Mr. James Cran accordingly presented a Bill to control the manufacture and sale of electronic surveillance equipment in the United Kingdom: 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 137.]

Point of Order
4.24 pm
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. May I record with you, in regard to the questions asked today on Bophuthatswana, that in evidence given to the Select Committee on Members' Interests by the person who represents that area of South Africa in London, we were informed that 36 Members of the House of Commons, all Conservatives apart from one, have been sent there free of charge, all expenses paid, within the last few years. That information was given in the evidence to the Committee.
We were also told that the airport to which they flew was based within the fuller Republic of South Africa, that is to say, not within the area that we are talking about, and that most people went on to other towns and cities in South Africa. It seems that Bophuthatswana is no more than a freebie stopping-over place for people wishing to visit South Africa.
Mr. Speaker: Those facts would have been recorded in the Register of Members' Interests.
Mr. Campbell-Savours: They are not.
Mr. David Winnick: On a point of order, Mr. Speaker, about what was said earlier. If you allow a private notice question, I accept that on a number of occasions the Secretary of State to whom the question is addressed is not present. Where the Secretary of State is directly involved, should he not be here to answer the question'? Failing that, should there not be an apology from the Minister who answers in his place? On a matter where the Secretary of State has been directly involved in the court and in Parliament, since he was not here to answer the private notice question, should not the Minister of State at least have given an explanation?
Mr. Speaker: It is not a matter of order in the Chamber. It is a matter for the Government which Minister answers questions or makes statements.
Mr. Patrick McLoughlin: On a point of order, Mr. Speaker.
Mr. Speaker: I hope the point of order is not about the matter that has just been raised.
Mr. McLoughlin: No, Mr. Speaker; it is further to the point of order raised by the hon. Member for Workington (Mr. Campbell-Savours). In regard to hon. Members declaring foreign travel, it might be useful for clarification to be included in the Register of Members' Interests about what foreign travel hon. Members should declare. Certain hon. Members have been on foreign trips that do not appear in the Register.
Mr. Speaker: I have always understood that trips paid for on behalf of hon. Members should be recorded.

Orders of the Day

  (Clauses Nos. 1, 32, 33, 44, 51 and 138)
  Considered in Committee.[Progress 9 May.]
  [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]

  Clause 44

    CLOSE COMPANY LOANS: BUSINESS EXPANSION SCHEME.
    4.27 pm
    Mr. Chris Smith: I beg to move amendment No. 4, in page 32, line 14, leave out `14th March 1989' and insert '15th March 1988'.
    It is important at the outset to sketch the background to the clause and the amendment that we are discussing. By means of clause 44 the Government are closing a loophole that gives enormous scope for abuse. We welcome the change but we wish to see the restriction biting harder and operating retrospectively to Budget day 1988 rather than Budget day this year.
    We have long been highly sceptical of the merits of the business expansion scheme. It was established under the Finance Act 1983, supposedly to encourage risk investment by individuals in new equities. It was designed supposedly to close the equity gap that everyone agreed existed at that stage and that still exists. It provided for substantial tax incentives, with tax relief on income tax at the highest marginal rate. The highest rate is now 40 per cent. At that time it was 60 per cent. It is worth noting that the 60 per cent. provision persisted until 5 October last year, six months after the band itself had disappeared in the Budget changes.
    In addition to income tax relief on business expansion scheme investment, there is full capital gains tax relief on disposal, provided that the investment was taken out after 1986. For investment before 1986, slightly different rules apply. In other words, the business expansion scheme gives scope for two lots of tax relief—tax relief on income in relation to the initial investment, and tax relief on capital gains in relation to the profit made by the investment over a five-year period. Not surprisingly, as a result of the generous double relief thereby available, the business expansion scheme has become a means of tax avoidance for higher rate taxpayers rather than of raising capital for risky but good quality new companies.
    Last year, in debate on the Floor of the House and in Committee, we spelled out our concerns about the business expansion scheme and the way in which it was developing. We highlighted research which was published last year by the Small Business Research Trust. That research revealed a number of worrying factors in relation to BES investment. First, it noted that there was an increasing use of the business expansion scheme for

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    asset-backed and non-risky enterprises, predominantly in the wholesale, retail, real estate and leisure sectors of the economy, not in manufacturing.
    Secondly, the report revealed that BES investment was increasingly the preserve of top rate taxpayers. It started out in the first year of operation as a relatively low percentage of top rate taxpayers; it is now almost exclusively the preserve of people in that economic bracket.
    Thirdly, the Small Business Research Trust revealed that there were profound regional inequalities in BES investment. For example, 51 per cent. of all BES investments and 65 per cent. of invested BES capital went to the south-east and East Anglia between 1983 and 1986—way above the proportion of normal investment and capital in those regions" share of the overall national economy.
    Fourthly, the Small Business Research Trust revealed that, as well as having the lion's share of BES investment, the south-east and East Anglia were attracting BES investment funds from the north. In other words, the BES was ensuring a north-south flow of capital, precisely the reverse of what we should be endeavouring to achieve in our economy with an underheated north and an overheated south. Most investors in the BES live in the south-east, but an even higher proportion of BES investment is placed in the south-east.
    The authors of the Small Business Research Trust document published last year have since updated their work and, in a report in the Financial Times last Monday, they confirm that changes that were purportedly made by the Government last year to encourage greater investment outside the south-east have not had that effect.
    The Financial Times on Monday reports:
    "A limit of £500,000 per BES issue per year imposed by Mr. Nigel Lawson … in the 1988 Budget"
    that was the principal change for the better introduced by the Government last year—
    "will not have much effect, the researchers say. The limit was designed to encourage more investment outside the south-east but the region had 352 investments worth under £500,000 in its first five years out of a national total of 712."
    In other words, despite the Government's intention of using the £500,000 limit brought in last year to encourage investment under the BES outside the south-east, it is extremely unlikely, according to the research carried out by Southampton university and the university of Ulster, that it is having that effect.
    The fifth point that that report last year drew out was that the cost per job created by BES investment was increasing as the scheme developed year by year. Even in 1983–84, the cost per job created was higher than that for other small firm schemes, and in subsequent years that disparity got worse.
    All those criticisms of the BES—the regional inequality, the north-south flow of capital, the increasing use of asset-backed non-risky enterprise, the increasing preserve of the top rate taxpayers and the increase in the cost per job created—still apply. They apply the more so because of the principal change that the Chancellor made last year.
    That change was to expand the BES, and the tax relief available under it, to the acquisition and letting of private rented property under the assured tenancy scheme introduced under the Housing Act 1988. The great
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    majority of BES investment now goes into precisely that form of investment—into the private rented property scheme.
    That is not surprising. There is, for a start, a much higher limit on the overall BES investment for private rented property than there is for any other sector, with one exception. That higher limit for private rented property is £5 million per scheme, rather than the limit of £500,000 which exists for other sectors of the economy.
    Secondly, investment in property is almost entirely asset-backed; it is far less risky than investment in other sectors. Thirdly, it is virtually entirely non-productive. Fourthly, it rests on the prospect of escalating property values.
    The impact of interest rates currently means that property values may not be escalating as fast as they have in the last three years, but that position will not last for ever. Since 1978, the retail price index has risen by just under 100 per cent., whereas property values have risen by nearly 400 per cent. The return from investment in property, as opposed to investment in most other sectors of the economy, is considerably more lucrative.
    Investment under the private rented property scheme of the BES is based on assured tenancies, which in fact are anything but assured. For example, schedule 2 of the Housing Act 1988, which applies specifically to assured tenancies, reveals that there are 16 different grounds on which a landlord letting property under assured tenancy rules can obtain possession of that property from the tenant.
    Indeed, those facts were spelled out in many of the documents promoting BES investment put out by BES financiers during the last year, and I will give just one example. Chancery Securities plc, in its description of the investment that is available to the BES investor, sets out in clear detail the grounds for claiming possession, either on mandatory or discretionary grounds, as spelled out in the Housing Act.
    It is clear from the way in which BES investment in private rented property has been marketed that investors are expected to use those grounds to obtain possession from tenants when they wish to do so. Those same prospectus spell out the ease with which a BES company can at the end of the five-year period, after which capital gains tax relief becomes available, transfer the property that it owns, thereby releasing the capital gains to the benefit of its investors.
    The Johnson Fry plc "Bulletin" for July 1988 set out on page 6 the details of how it is effectively possible to buy out tenants at the end of a five-year period. The Assured Property Management plc prospectus sets out a number of exit routes, as it describes them, whereby a company can be sold to a third party for cash, exchanged for shares in another company, or its assets realised and the proceeds distributed to its shareholders in a liquidation. Alternatively, it is suggested that the company might seek a public quotation on the stock market and merge with other companies for that purpose. A variety of different devices are available whereby a BES company's profits can be realised at the end of the five-year period, thereby freeing the investment for profiteering by its individual investors.
    The entire scheme is a recipe for bad landlordism, for tenant insecurity, and for pocketfuls of tax relief for top rate taxpayers. When that change to the scheme was

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    announced in last year's Budget and private rented property was included, even the Evening Standard noted that various commentators were saying that the scheme
    "could become Britain's number one tax shelter."
    Referring to the provision for private rented property, the article concluded:
    "Rachman, one suspects, would not have been slow to take advantage of the scheme if it had been around in the 1960s."
    The predictions made in the Evening Standard in March 1988 are coming true. The opportunities offered by the BES to invest in private rented property have totally distorted the BES market. The vast majority of such investment is now being made in assured tenancy properties. That is the background to the specific subject of the clause and the amendment.
    Mr. Matthew Carrington: The hon. Gentleman makes a number of allegations about BES landlords. Can he produce evidence to show that BES landlords are behaving anything remotely like the way in which Rachman behaved?
    Mr. Smith: The hon. Gentleman represents a constituency in which a number of private landlords already operate, so he ought to know the answer to that question better than most.
    Mr. Carrington: I do.
    Mr. Smith: The BES scheme offers an opportunity for bad landlordism in a way that no previous tax shelter opportunity did. The hon. Gentleman will be aware that, because of the five-year rule applying to BES investments, there is no point in a landlord seeking to regain possession of his property during the first year of the scheme's operation —and it is only in its first year of operation now. Only in the fifth year will such action have any point. I suspect that landlords who have established property under the BES will use all sorts of devices to get their tenants out. I also suspect that a good deal of that will be happening in the hon. Gentleman's constituency, and his constituents—who, we hope, will have voted in a different Member of Parliament by then—will doubtless reflect on his remarks.
    4.45 pm
    It has become obvious over the past year that a massive abuse has been in operation—even by the standards of the already "abusive" device of the private rented property scheme. Through the use of a close company structure with a total of nine shareholders, tax relief was becoming available not only on BES investment itself, but on the interest on the borrowing. Triple tax relief was available, especially to an investor putting his money into private rented property: relief on income tax on the investment, on income tax on the borrowing and on the tax on the capital gain after five years.
    An additional bonus available to the investor, indirectly rather than directly, was the small company rate of corporation tax, which, in the case of close companies, would be applicable rather than the large company rate. Some of the BES marketing plans attempted to link BES investment with pension fund investment to provide even more scope for relief. With such enormous scope for tax relief, it is not surprising that the BES, with the use of the close companies' device, was being marketed aggressively in the latter part of the last financial year, and in the run-up to the Budget in particular.
    880
    Let us consider exactly what this scheme would mean. It is worth dwelling in some detail on an example that reveals the exact nature of the abuse. Let us suppose tha someone invests £40,000 of his income, at a top marginal tax rate of 40 per cent., in a BES property venture. On that investment he receives tax relief at the highest marginal rate, amounting to a total relief on the investment of £.16,000.
    To invest his £40,000 the investor borrows the entire amount, using the close company device, incurring interest payments of £6,000 a year and receiving tax relief on the interest as well as on the investment. He receives £2,400 a year in tax relief, amounting over five years to a total of £12,000. In the course of five years, he has thus obtained £28,000 in tax relief. The total cost of the interest that he has paid out is £30,000. The net cost to the investor, who has not put one penny of his own money into his BES investment of £40,000, is £2,000.
    The investor requires a return of 5 per cent. over five years on that investment to recoup its entire cost. Of course, a growth of only 1 per cent. in that investment is extremely unlikely. Let us be moderate in our projection and assume that the investment grows by 10 per cent. a year. At the end of five years that £40,000 investment is worth £64,420. That represents a capital gain of £24,420. The cost to the investor who has not put in a penny of his own money has been £2,000 over five years and his tax-free capital gain after five years, on a conservative estimate, is £24,420. That profit will have been made almost entirely at the expense of the taxpayer, as it will have been made on the back of £30,000-worth of lax relief by using the device of the close companies system.
    The people who were responsible for devising and marketing the operation have not been blind to its attractions for those who invest. Mr. Charles Fry, the chairman of Johnson Fry, which has been in the lead in marketing such operations in the past six months, in a press release on 10 January 1989 said:
    "The opportunity to invest in our … Companies, with their tax advantages, guarantees and no requirement to invest a penny of the client's own cash, must broaden the market tremendously. Indeed, there would seem to be no way in which a high rate taxpayer can make a case for not investing; unless, of course, he believes that residential property will fall over the next five years."
    That is an extremely unlikely eventuality, the risk is extremely low and the use of the close company device has become money for old rope for an investor who takes advantage of it.
    I wrote to the Chancellor on 3 March demanding that he took action to close the loophole in the Budget. The final paragraph of my letter stated:
    "This cannot possibly have been your intention when introducing the scheme last year. Variations of this scheme are being marketed in a pre-Budget frenzy by—amongst others—Johnson Fry, Allied Dunbar and Centreway Development Capital. They are, not surprisingly, being snapped up. Frankly, this is a gravy-train for top-rate taxpayers and has nothing whatsoever to do with risk investment to close the equity gap which is what BES was supposed to be all about when it was launched. I very much hope that you will take action to end this abuse on 14 March."
    Therefore, we were very pleased that the Chancellor took action on 14 March to end that abuse. Clause 44 of the Finance Bill does away with close company relief where it is being sought in connection with a BES investment. However, we do not believe that clause 44 goes far enough. That is why we have tabled amendment No. 4, which seeks to backdate the closing of the loophole.

    881
    Some will doubtless argue that retrospective tax legislation is always wrong. We agree that in general terms it is to be avoided, but Governments of all political persuasions have used it in the past. Indeed, the Finance Bill contains one provision which might be deemed retrospective. The close company abuse of the business expansion scheme represents so much of an abuse that it is a special case because, first, it is not just one tranche but two of evasive relief. Secondly, quite clearly, when the Government introduced the private rented property scheme last year, they did not intend to enable close companies to be used in that way. Thirdly, the abuse has been especially focused on the assured tenancy operation; to my knowledge it has not been focused on any other sector of the economy using BES provisions. Finally, it has enabled top-rate taxpayers to profiteer at the expense of the generality of ordinary taxpayers.
    There is no logical, moral, social or financial justification for that loophole; nor was there any last year. That is why we believe that the loophole should be closed not just now but from last year's Budget day, and I urge my hon. Friends and Conservative Members to support amendment No. 4.
    The Financial Secretary to the Treasury (Mr. Norman Lamont): The hon. Member for Islington, South and Finsbury (Mr. Smith) began by saying that the Opposition have long been sceptical of the business expansion scheme. I am not sure how long he meant. I well remember that the Leader of the Opposition welcomed the expansion of the business expansion scheme in 1986 and 1987. It was only in 1988, when we placed some restrictions on the business expansion scheme, that he began to criticise it. When we expanded the scheme he was in favour of it, but when we restricted it a little he became more critical. I do not think that that stands up to what the hon. Gentleman said.
    It is a pity that the Opposition cannot take a more positive view of the business expansion scheme, which has altered the venture capital business in Britain. It has encouraged more people to invest in the stock market and in unquoted companies and small businesses. One of its main functions has been to educate the investing community and the City institutions. More than £1 billion has been raised since the scheme started, and that is a welcome development.
    The hon. Gentleman quoted a number of points from the Small Business Research Trust reports of last year and this year, but he did not quote from the Peat Marwick study into the scheme that we commissioned and which produced its findings in 1985. It is significant that Peat Marwick discovered a high degree of additionality. It discovered that 70 per cent. of the money invested in small businesses and small companies would never have been raised if the BES had not existed. The figures for individuals were even higher, showing that 94 per cent. of the amount invested by individuals under the BES would not otherwise have been invested in those companies.
    Not only has the venture capital business with tax relief developed, but a venture capital business that is not dependent on tax relief has developed in Britain. The venture capital business in Britain is more advanced and bigger than that in other European countries, and is probably the biggest outside the United States.
    Mr. Chris Smith: The Financial Secretary cannot get away with continually quoting the Peat Marwick report, which considered only the BES's first year of operation. The Small Business Research Trust report, which was published last year, on the first five years of the scheme's operation revealed that profound changes had been made in its nature and scope since the Peat Marwick report.
    Mr. Lamont: The hon. Gentleman has anticipated that I am about to deal with the report of the Small Business Research Trust.
    Mr. Denzil Davies: The Financial Secretary said that without tax relief those investments would not have been made. Given that this is a tax-cutting Government and given their dedication to the market and popular capital, why was it necessary to have additional tax relief? Why did not entrepreneurs invest anyway?
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    Mr. Lamont: For many years, institutions have been geared to stock market investment. Britain has been hampered by a lack of development institutions investing directly in unquoted companies. Although we have a highly developed capital market for large business, the fact that the capital market has not functioned quite so well for small and unquoted businesses has been recognised as a long-standing problem.
    The hon. Member for Islington, South and Finsbury referred to a number of comments made by the Small Business Research Trust. It said that the BES had produced more investment in the south-east. That may be regrettable, but it is hardly surprising, because the report states that there are more entrepreneurs and industry in the south. A common feature of national tax allowances is that take-up is greatest in the south-east. The limit on the size of investment to £500,000 that we made last year may, in the long term, spread investment more widely. The assured tenancy is already spreading interest more widely. The hon. Gentleman is not in favour of the extension of the BES to assured tenancies, but—perhaps to a surprising degree—it is producing much interest in property investment not only in the south-east but in the north and Scotland. There have been many BES schemes for housing in the regions and Scotland.
    The other point that the hon. Member for Islington, South and Finsbury made about the Small Business Research Trust report was the cost per job of the BES. The BES is not, and was never intended to be, a regional or employment aid. It is designed to encourage entrepreneurship and investment in small companies.
    Last year, when we made changes to the assured tenancy and introduced the £500,000 cap, some people predicted that, taken together, the two measures would effectively mean the end of the BES as a source of equity finance for non-assured tenancy companies. It was thought that they would swamp the BES, but that has not happened. Preliminary figures show that over £50 million was raised by BES trading companies. Of course, a considerable amount of that has gone into assured tenancies—and we are pleased about that—but £50 million is a lot of money when one bears in mind that it has been invested in projects with an investment limit of £500,000.
    Interestingly, the latest figures show that investment in projects of £500,000 and less has held up extraordinarily

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    well and is higher than two years ago, which is an encouraging development. As my hon. Friends will recall, we made that change because we thought that the purpose of this tax relief should be to concentrate help on the smallest companies. To a considerable extent, the signs are that that is beginning to happen.
    Mr. David Shaw: Will my hon. Friend accept, from a practitioner who has started new companies under the BES and been involved in companies that would not have started without it, that it has been a major success? It has helped many companies get going for the first time that would not otherwise have done so. It has helped many young people to get into business who would have been unable to do so because they did not have a track record.
    Does my hon. Friend accept—he mentioned this during consideration of the Finance Bill in Committee last year —that the £500,000 limit needs to be kept under constant review so that it can be improved to enable more people to put more money into high-risk companies?
    Mr. Lamont: We shall keep the £500,000 cap under review. We made many changes to the BES last year and therefore wanted it to settle down a bit. One of the criticisms that have been made of us, which is quite telling, is that we have made an awful lot of changes. There is something to be said for letting the scheme settle down. My hon. Friend rightly said that the £500,000 cap must be judged not only against the size of a business and inflation but against the costs of making a prospectus issue, which is the point that my hon. Friend had in mind.
    We estimate that in 1988–89 about £400 million was raised for the scheme, a large part of which was invested in private renting, which has built up more rapidly than we forecast. It is too soon to know how much was raised privately for assured tenancies, but the signs are that many schemes were set up by small groups of individuals. The money will go to a wide variety of properties over a wide geographical spread. The precise number of dwellings provided depends on the price paid, but it could easily be in excess of 6,000. The first BES rented homes are available, so the benefits of the policy are already being felt.
    The reason for such tax relief is similar to the answer to the question asked by the right hon. Member for Llanelli (Mr. Davies) about encouraging people to invest in small companies—to alter attitudes and investing habits. For decades, there has been a hostile climate to investment in privately rented property, which is why we introduced this relief. We are pleased that it has been dramatically successful.
    One development that has not been so welcome, which leads me to the proposed change, is that a substantial proportion of the money raised this year was invested in public offers that made use of close controlled companies. Under existing law, an individual can obtain tax relief on the interest paid on loans taken out by shares in a close company. Interest relief is important to help close companies, which are often small family concerns, raise money for growth. Previously, the relief was available even if shares qualified for tax relief under the BES. The combination of tax relief on the investment and the interest is excessive. The schemes that were being marketed were not small family businesses for which interest relief was justified but artificial arrangements. A degree of ingenuity was used to create the schemes, but they were
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    artificial. I agree with the hon. Member for Islington, South and Finsbury that this relief is excessive, which is why we have decided to end it.
    Amendment No. 4 goes further and removes interest relief for shares acquired on or after 15 March. The hon. Gentleman will not be surprised to hear that I do not think that that could be justified. I may object to the success of tax relief, but there is no doubt that the people who framed the schemes acted within the law. The development of and rush of money into this device occurred in the last couple of months of the financial year. It was good of the hon. Gentleman to write to us on 3 March, but it was only about a week later that we chose to act. The provision would have been retrospective if we had brought it in before the end of the financial year. I do not think that that could have been justified.
    The hon. Gentleman has said that there are cases in which retrospection can be justified. Those cases are rare and in tax matters, the only circumstance in which retrospection can be justified is where it remedies a technical defect so that the law is altered retrospectively to what everyone thought it was. Occasionally, there have been such alterations in tax law. However, one cannot penalise individuals who have made investments and commercial decisions on the basis of existing law. It is up to Parliament to ensure that the law is right and that is why we propose to alter the relief, which is excessive—as the Opposition say.
    Mr. Chris Smith: The Financial Secretary made an interesting point when he said that retrospection appeared to be sensible only when it was a matter of altering the law to be what everyone thought it was. He has already admitted that it was only through the ingenuity of certain individuals and financial houses that the close companies route was discovered last year. It was only in the last couple of months before the Budget that there was a sudden marketing of that route as an option. Are those not precisely the circumstances that the Financial Secretary has said would justify retrospective legislation?
    Mr. Lamont: No. The people who used the scheme were quite clear about the law and felt that they were using the law in a legitimate way—as they were. But the tax relief available was excessive. That was a new phenomenon. The hon. Gentleman said that he had spotted it, although he did not write to us until 3 March. It was very much a rush of money in the last two or three months before the Budget. I should point out that the tax loss was about £5 million a year, but I do not think that the principle can be compromised by the amount of money, because the principle itself is important. That is why I cannot accept the Opposition amendment, although we favour the ending of this excessive relief.
    Mr. A. J. Beith: I share the Minister's view in one particular. I do not think that it would be right to accept a retrospective amendment. I agree with hon. Members of both parties who have spoken so far that—
    Mr. John Battle: A typical Liberal.
    Mr. Beith: It is typically Liberal. I do not know why it should be thought funny or undesirable that all members of the Committee should agree. Many people outside the House would find their lives easier if all hon. Members

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    could agree on more matters. On matters of tax law, people would find their lives simpler if we could reach a reasonable degree of agreement.
    It is agreed generally that the ability to take advantage of close company tax relief and the business expansion scheme tax relief at the same time provides an unacceptable degree of tax relief. It is not odd that we all agree on that. However, the difference between us on retrospection is important. As a typical Liberal, I believe in the rule of law, that people should be able to know what the law is and that they should not be penalised if they abided by the law as it was at the time. I know that that is not the view of the Labour party and that if there were a Labour Government, they might wish to legislate retrospectively on a variety of matters. Clearly, the Labour party believes that retrospection is undesirable, but I take a stronger stand against it.
    Let us consider the Secretary of State for the Environment. If we were to accept the proposition that we should all be happy that the law was changed if it turned out not to be what the Government thought it was, the Secretary of State for the Environment would be here day after day because he is always getting the law wrong—as he has this week. He would constantly wish to indemnify himself by retrospective legislation. The Financial Secretary went too far when he said that it seemed reasonable to have retrospective legislation when it was a question of what people thought the law was at the time. The law is what it says. It may be that no one noticed that the close company provisions could be tied up with the business expansion scheme, but that was within the law. If the Inland Revenue had looked it up in its books, it would have been found to be the law. The final judgment would be for the courts, but the Revenue would have had to accept that that was the law and that it simply had not noticed what it was. The proposition for retrospective legislation to bring the law back to what people thought it was is dangerous and I hope that the Financial Secretary will revise his form of words in future speeches. I cannot support the Labour amendment, although I share the objection to the abuse.
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    Mr. Norman Lamont: I must make myself clear. The form of words I used was that the only examples I could think of where retrospection had been used in recent years in tax law were of the kind I described. I would, of course, in no way advocate retrospection that had an adverse effect on individuals.
    Mr. Beith: There is an interesting example of retrospection going through the House at present, which is the Police Officers (Central Services) Bill, which contains retrospective provisions deeming the law some years ago to have been what it is now and which have been included because they are thought to be to the benefit of individuals. Retrospection is dangerous territory and we are right to keep out of it until there are overwhelming reasons for it, which are rare.
    I do not share the Labour party's general hostility to the principles behind the business expansion scheme. There are many things wrong with it, but it is highly desirable that we should encourage more direct investment in industry and business, that we should widen the range
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    of shareholders and that we should widen the sources from which venture capital can come to help small businesses in particular. The scheme has had a number of serious shortcomings, although none of them seems to add up to a reason not to persist in trying to bring its advantages to those for whom it was originally intended.
    I hope that the Government will accept that there are a number of loopholes apart from the one with which they have dealt. One has been mentioned already, which is the unsatisfactory aspect of the use of the business expansion scheme for assured tenancies. It would be open to a company whose main business activity was to acquire rented property and rent it out under the business expansion scheme to put up the rents after five years to such a grotesque extent that no tenant would wish to remain. By that means, the company could acquire properties quickly and dispose of them, thus defeating the Government's objective for the scheme to be a means of attracting venture capital into privately rented housing.
    Again, I have a different approach from some Labour Members. It is desirable to attract more capital to rented housing because there is a great shortage of it. There are several ways in which we could deal with that shortage. More public housing could be provided—I object to the Government's great restriction on the provision of publicly rented housing—but the private sector has a part to play. The rules of the business expansion scheme provide insufficient protection and that is why I tabled amendment No. 6, whose purpose is to ensure that the business expansion scheme relief will not go to landlords whose assured tenancy provisions include an opportunity for a rent review at the end of five years, taking rents above the market level. I hope that the Financial Secretary will look more carefully at that aspect of the business expansion scheme.
    It would also be desirable for the Financial Secretary and his colleagues to look at other ways of making the scheme attractive to non-property companies. Although there is merit in expanding the rented housing sector, it is so much more attractive an investment, because it combines the reliefs with the tangible assets of property, that the purpose of the scheme—to bring venture capital to risk areas of manufacturing industry—is likely to be wholly defeated. The capacity of the business expansion scheme to attract new capital will be largely used up in the area where the risks are least and the potential gains are greatest. The Minister should recognise that and do something about it.
    We suggest that the rate of tax relief on schemes involving property should not be as high as that on the rest of the business expansion scheme. At the moment, the scheme is heavily tilted towards property investment.
    As was spelt out clearly in an article in the Financial Times, the scheme is still not working to the benefit of the regions in which there is a serious need for venture capital for new businesses—particularly areas such as the north of England. It is noticeable that, even with a £500,000 limit, the south-east has almost 50 per cent. of the qualifying investments, and some of the capital for those investments comes from the very regions where it is most needed.
    One of the failings of our economy is that we still do not seem to be able to relate capital generated in deprived regions to investment in an expansion of those regions. Some of the regions with the most serious economic problems—the north of England, Scotland and Wales—have a strong tradition of savings; a degree of capital is

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    maintained by the thrifty and careful. An obvious illustration of that is the power and strength of the Trustee Savings bank in Scotland, which testifies to the willingness of the Scottish people to save.
    We have somehow failed to match savings and investment in business in the regions where it is most needed. The business expansion scheme should be the vehicle for that purpose, but it is not yet meeting the needs.
    I hope that the Minister will consider ways of making the business expansion scheme more effective and less heavily tilted towards investment in property. If he does not do that, it will cease to fulfil its most important purpose. Having said that, I must advise my right hon. Friend and hon. Friends to oppose amendment No. 4 because it would yet again introduce retrospective legislation.
    Mr. Battle: We are entitled to ask for a clear and detailed statement of the evidence of the impact of the business expansion scheme, and what contribution it is making to the economic restructuring that we all know is taking place. Is it contributing to geographically unequal and uneven economic development? The Financial Secretary said that the scheme was not an aid to tackle unemployment or an instrument of regional aid. That being so, where is the investment going and what sort of businesses are being invested in? To use a word that the Government regularly use, where is the targeting in this instrument of intervention?
    The business expansion scheme is beginning to expose not only the Govenment's total lack of regional policy but the fact that the only instrument of intervention that they are prepared to use is tax relief that is indiscriminate except that it goes to those with the most means. It is ironic that the only form of intervention that the Government will make in their free market experiment is by means of tax relief to those who do not need it.
    Where is the detailed evidence of the effects of the business expansion scheme? I seem to remember that the Government were very concerned about the spending of public money locally when it came to another instrument of intervention—urban policy and the urban programme. Let me give an example from my own city of Leeds, where the urban programme money accounted for 1 per cent. of the council's budget, or £4 million a year. Yet two years ago the city council, the voluntary bodies and the private sector bodies which took funds in partnership from the urban programme were required to fill in forms to spell out precisely how every penny of that money had been spent. I am inclined to ask the Financial Secretary to provide us with a similar annual monitoring report on the business expansion scheme. As tax relief, the money comes from the Treasury; it is public money and we ought to be able to ask that it be accounted for.
    I agree with my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) that the research done at Southampton university and at the university of Ulster at Jordanstown shows not that the scheme has proved to be a neutral or indiscriminate form of intervention but that it has reinforced the existing social and economic divisions in our society. It has acted as a bulwark in building those divisions into our economic structure. In other words, the BES is worsening the north-south divide in Britain, which seems to be the opposite of the Government's declared intention.
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    There is a drift from north to south in equity investment raised under the business expansion scheme, and the researchers at Southampton are reported as having said:
    "In terms of its geographical impact, the BES is reinforcing the economic advantages of southern England and discriminating against the economically-lagging regions of northern Britain."
    Apparently, the research shows
    "a difference in the type and quality of investments, with more `sunrise' and service-based investments in the south-east compared with more of the older type of manufacturing investments in the north. The scheme is not therefore helping the north to restructure and widen its industrial base".
    At the turn of the century, Leeds was a city of 5,500 firms. It was not dominated by one industry or one company. It was built of medium-sized and small family firms spread across the manufacturing sector—in textiles, engineering and in printing in particular. With the restructuring of the economy that has occurred during the past 20 years, many of those manufacturing firms have been taken over or rescheduled—"rationalised", as the phrase went. Jobs have been lost and plants and factories closed.
    With the decline of the manufacturing sector, there has been a clear shift to the service sector. Although there was an expansion of the public service sector in the 1970s, more recently it is the financial services sector that has expanded and developed. That has done nothing to tackle the unemployment that has resulted from the decline of the manufacturing base in cities such as Leeds. Jobs are supposed to have been "recreated" in the service sector. In the 1970s, 17,500 jobs in manufacturing were lost in Leeds and in the same decade, 17,500 new jobs became available in the service sector. The difficulty was, that many of the new jobs were temporary part-time jobs, and even lower-paid than the jobs in manufacturing had been.
    Such developments have not helped to strengthen and regenerate the economy. Instead, they have built on the divisions and contributed to the continued existence of classic low-wage economies such as that of West Yorkshire. They have done nothing to take such regions up to the wealth of the M4 belt, for example. It is interesting to consider whether the business expansion scheme has had anything like the impact in Yorkshire that it has had on the M4 belt between Reading and London, which is now one of the wealthiest areas in Europe. That is the real question that the Government have to answer. Is the scheme being targeted? Is it merely reinforcing economic divisions? Is it contributing to growth throughout the economy and for all those in Britain, or is it only of benefit to a few in the south east who latch on to it?
    A second aspect of the role of the BES should be monitored. We should consider carefully the measure in last year's Budget, under which the Chancellor applied the relief to the acquisition and management of private rented sector property under the assured tenancy scheme.
    I served on the Committee on the Bill that became the Housing Act 1988. I see that the hon. Member for Fulham (Mr. Carrington) has left the Chamber. He seemed to suggest that there was no evidence that the scheme was being misused. We resisted the introduction of the scheme at that time because, while we were discussing the Housing Bill in Committee, at the very same time as the Budget was being presented, we were discussing the fact that a landlord in the City of London was being taken to court

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    by Chelsea and Kensington council because of the way in which he treated tenants in his properties. That landlord is Mr. Nicholas Hoogstraten.
    There was a long trial because it was felt that the way in which he treated his tenants was totally unacceptable. The then Minister with responsibility for housing, who has moved on to the Foreign Office for his efforts, regularly used the phrase in Committee that there should be social, good landlords who do not give people the conditions that that man expected his tenants to live in. All were expecting the outcome of the trial to be that that man would be found guilty for keeping tenants in conditions that they should not be in.
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    What was the outcome? Because that man did not have his name on the rent book and used close company structures—he had so many companies set up that the authorities could not catch him under company law—he got away with offences under the housing law. We should pay attention to where the business expansion scheme is being applied. That same person declared on the television that he welcomed the business expansion scheme as a means of extending his property empire. I should be interested to receive a report from the Department spelling out whether parts of that empire have applied for and received money from the business expansion scheme. Clearly, it would be a demonstration that the money is not going to the kinds of people whom even Conservative Members believe should manage housing.
    Mr. Chris Smith: My hon. Friend is making a powerful point. However, does he agree that the very nature of the business expansion scheme, involving a tax-free capital gain at the end of five years, will put a powerful momentum into the system to discourage landlords from being good, social landlords and encourage them instead to maximise their profit?
    Mr. Battle: I am grateful to my hon. Friend for that intervention. During the debate on the Finance Bill last year, it became clear that the Government's intention was to give the kind of tax concession that my hon. Friend has outlined. It was only then that the real and genuine intentions of the Housing Act were revealed. Throughout the debate, we argued that the Housing Act 1988 was clearly a landlord and property charter. It had nothing to do with giving tenants rights and improving the stock of housing or tackling homelessness. It was about pushing the market place in terms of the provision of housing.
    We must examine the concessions that are given under the Treasury's arrangements and the statements that were made in Committee about housing conditions and the need to enable landlords to have more power over their tenants. The Government were nervous simply to let the market rip in terms of being able to treat tenants as they wished. It is worth reminding hon. Members that tenants' rights were significantly eroded under the legislation. As my hon. Friend the Member for Islington, South and Finsbury mentioned, schedule 2 altered the grounds on which a landlord could winkle out tenants. The two grounds were redevelopment and the non-payment of rent.
    Despite the fact that a person's rent may not have been paid on time because he was on housing benefit and the money had to be claimed through the local authority and
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    from the Department, as it stands now, the law says that the landlord can mandatorily evict the tenant and repossess the dwelling. The tenant has lost the right to go to court to appeal and state why he could not pay his rent. Similarly, if a landlord wants to redevelop the property, he must serve notice on the tenant and the tenant must leave, without a right of appeal to ask where they should go. As my hon. Friend suggested the conditions exist for landlords simply to take a tax handout and make a profit on property at the expense of tenants and under the guise of providing housing for the people.
    It is incumbent on the Government now to tell us clearly how the close company structure will be used. Will it be, as the Minister said, that the business expansion scheme will be exploited by small groups of individuals? Where is the language of the previous Minister with responsibility for housing, that only those with a track record in tenant management should be allowed to be landlords? That language seems to have disappeared. People can use the business expansion scheme as a means of becoming a landlord.
    Is the Minister checking who is receiving the money? Is he checking whether a monitoring report will be plainly published and available to all, so that the money that is spent from the tax system and given in handouts to people to provide money is clearly and publicly accounted for? If not, the Government have no excuse. They can say, "We must welcome the business expansion scheme as a means of intervening in the economy," but we want clear evidence that the intervention is appropriate and that it does something about the uneven and equal development of our economy. We need an assurance that, if it is the Government's intention to free the private sector to provide rented housing for people, it is not simply a cover for people to speculate with and make money from property that they prefer to be kept empty, rather than have people living in conditions that are suitable for the late 20th century in Britain and at a rent that they can afford. If the Minister cannot tell us that he can provide a publicly available monitoring report, there is unfair discrimination going on.
    When it comes to local authorities spending public money and budgeting and implementing schemes such as the urban programme, they are expected publicly to account for every penny in a record that is sent to Marsham street. Every tree that is planted under the urban programme is accounted for, and every journey that is made by a mini bus to take elderly people to and from luncheon clubs is accounted for. I do not object to such amounts being accounted for, but I demand parity of treatment of public money as a whole. It will be incumbent upon the Treasury to publish the report and tell us where the business expansion scheme money is going. The Financial Secretary has suggested that, so far, the evidence is conflicting. It would not be too difficult for him to use his civil servants to find out where the money is going and make the details available to all.
    Dr. Kim Howells: I have no objection to the business expansion scheme. It seems to be a good idea, especially when we often lack mechanisms for regional aid for areas such as mine. As the Financial Secretary stated, it has a proper, educative role to play in the business community. I have no quarrel with legislating for education of any sort, as long as it is progressive education. Constituencies such as mine have long needed

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    an expansion of small businesses. They have needed injections of what the Financial Secretary referred to as venture captial to help to diversify our manufacturing and service base. However, I am afraid that the tax relief which should have been focused on small companies as a result of the provision of the business expansion scheme, does not appear to my constituents to be applied precisely to those companies and businesses which could have helped diversification.
    The amendment would rectify abuses of tax relief and shift the focus of relief back to those areas for which it was designed in the first place. If the educative role to which the Financial Secretary referred is to function properly, it must begin to show more equitable results in terms of the geographical spread of the investment. I do not fully understand why the regional disparities which have already been referred to should exist. I trust that the Financial Secretary is not employing any kind of genetic basis to his argument about why the take-up should be greater in the south-east than, for example, Scotland or the north of England?
    The Chief Secretary to the Treasury (Mr. John Major): One reason is that there are more people in the south-east.
    Dr. Howells: Let me modify that and say that proportionately the take-up is not so great.
    The object must be to close the loopholes which appear to be preventing the business expansion scheme from fulfilling the aims for which it was first designed. I fully appreciate that the business risk will continue to be greater in areas on the so-called periphery of the British economy—for example, in coalfields—where there continue to be declining staple industries. We hope that the scheme will work to rectify that situation.
    The business expansion scheme should be, and could still be, a boon, although not a great boon, to constituencies such as mine. However, I am afraid that it is not viewed in that way in my constituency. I am afraid that it is seen as another way of massaging the profits of those concerns and businesses in the south-east that do not fall into the original categories for which the BES was designed.
    My constituency would like the BES to help push it even further along the road of the remarkable transformation that it has already experienced during and since the decline of its basic industries.
    I believe that the BES should help to revive that spirit of innovation—often a small but vigorous spirit of innovation—that makes a reality in terms of new products and jobs of the brave title, "venture capital". The amendment serves to remind us of the original purpose and would bring some discipline back into the business expansion scheme, which would be most welcome in constituencies such as mine.
    Mr. Peter L. Pike: I intend to speak briefly on the amendment moved by my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith). I shall be echoing some of the comments made by my hon. Friend the Member for Pontypridd (Dr. Howells). My hon. Friend the Member for Leeds, West (Mr. Battle) spoke with considerable expertise, having served on the Committee that considered the Housing Bill, which created the assured tenancies, and which, in turn, was one of the reasons that the business expansion scheme has proved to be a boon. My hon. Friend was also involved in
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    housing matters in Leeds prior to becoming a Member of Parliament. I believe that my hon. Friend made important points that the Financial Secretary should consider. Even if he does not respond to them today, they are worth considering in depth. The Department of the Environment should also consider some of the implications of my hon. Friend's comments.
    I, too, have some fears that some of the Government's assurances at the time that the Housing Bill was going through Parliament last year have not been fulfilled under the business expansion scheme, and that the scheme has been used in a way that was not anticipated.
    I recognise that the amendment seeks to change the effective date of the blocking of a loophole. We all recognise that the Government have acted correctly, as it would have been completely wrong to allow people to get a tax concession on their investment and to receive additional tax relief if they were borrowing money to invest. The debate today is about whether the blocking of the loophole should be backdated for 12 months. One must remember that, when there is such an investment in property, a capital growth is almost assured. There has been continued capital growth in housing property over many years. In such a scheme, the investor would make a considerable amount of money.
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    I am not completely opposed to the principle of the business expansion scheme, because it has some welcome features. I have recognised for many years that one of our failings is that we make it extremely difficult for venture capital to be invested. At times our actions militate against venture capital. This scheme goes part of the way towards rectifying that. One of the problems of getting investment, for example, into industry is that we fail to take long-term investment views in the same way as our competitors in other countries, especially those in Germany. It is regrettable that to some extent our financial institutions militate against that.
    We want to see investment in our areas, so it is important that we have a scheme such as the BES. However, we want investment in sectors that will create jobs and will help to rectify the balance of payments situation. We should get our manufacturing industries on to a better basis. It is appalling that we still import so much more than we export. After all, at the end of the day, this nation's bread and butter depends on its manufacturing industries.
    Investing in assured tenancies by means of the business expansion scheme, which appears to be the main issue emerging in the debate, does not create jobs in the way in which we would wish. Of course, last year a £500,000 limit was introduced on the business expansion scheme, but there was an extension to £5 million for property. One could have argued that it was wrong to do that. One must of course ensure that the system is not abused and money wrongly made by receiving tax concessions. The least worthy cause was allowing people to invest in the private rented sector. Some of us fear that, perhaps, the Government, with their determination and obsession for creating a private rented sector, have had to consider means whereby people can put money into it.
    I was surprised that in my constituency the business expansion scheme and the Housing Act 1988 have been used. We have surplus housing stock in Burnley of some 6 per cent., both in the private and public sectors. There are

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    semi-detached houses on council estates and private houses standing empty because of the declining population. I was surprised that a company was buying every property initially under £10,000, then £20,000 and now up to £30,000. To many hon. Members those figures will appear surprising, but in an area such as mine a house costing £30,000 is expensive. That company, Northern Renewals, is buying those houses and then improving them. I do not criticise it, because the agents involved, Ingham and Bulcock, are a reputable company. I shall be meeting them in a week's time to discuss their plans. I am criticising the Government for making that scheme available, because I do not believe it is needed.
    I recognise that the company must make management judgments. I believe, however, that it may have made a wrong judgment, because it is difficult to believe that it will find the tenants for those houses. I recognise, however—the Government will say this—that it will stop some houses becoming derelict and it will ensure that work is carried out on those old stone-built terrace houses and stop them declining. If that happens, I shall welcome it.
    However, instead of the tax concession being used in that way, I would prefer it to be used to give money for grants to enable people to buy such houses and to improve them. Many people do not buy such houses because of the non-availability of improvement or repair grants with which to do them up.
    Because of the laws of supply and demand, another problem that is caused when companies buy houses is that they increase demand, and that is bound to increase the price of houses and to reduce the housing stock available to younger married couples.
    As the debate has made clear, there has been a considerable growth in and use of the business expansion scheme, especially in the past few months, and I am not surprised by that, because the growth has been the result of the enactment of the Housing Act 1988 which tied in with last year's Finance Bill. That has led to the surge of investment in this scheme to which the Financial Secretary referred. However, when he replies to the debate, the right hon. Gentleman must say whether he believes that that is what the Government want.
    I can see the difficulty about whether the provision should be applied retrospectively. One could argue that point for some considerable time. I recognise that on other occasions we could be arguing equally well against retrospective legislation and that is the danger in advocating an amendment such as this.
    However, even more important than the principle of the date is whether the Government really believe that there are any fundamental errors in the business expansion scheme. I am sincere in saying that I am not totally opposed to the scheme and recognise that it has some good points. Nevertheless, I should like it to be used to encourage venture capital and the growth of small manufacturing industries, jobs and employment. I had hoped that it could play a small part in improving our balance of payments and thus the country's financial position. The way in which it is being used for assured tenancies in conjunction with the Housing Act 1988 is not the best way forward.
    Although it could be argued that those points are not directly related to the amendment, I hope that the Minister
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    will recognise that they are important points which could have been argued in a stand part debate. I am glad that those important points have been put on the record and hope that the Financial Secretary will respond to them.
    Dr. Lewis Moonie: As the outset it would be churlish not to say that I welcome clause 44 and the Government's attempt to put right a clear wrong in the working of the business expansion scheme, just as in the past they have put right other wrongs in other schemes, especially those relating to forestry and, in 1984, to agriculture.
    On the surface, it seemed a perfectly good idea to raise capital for small businesses, to help to create employment and to reward enterprise through encouraging equity investment in what, by the Government's own definition, were higher risk organisations, and to help them, in turn, to acquire money for expansion without the severe loan charges that they would otherwise incur as a result of the Government's high interest rate policy. Therefore, in theory the business expansion scheme is consistent with a strong supply side macro-economic policy. However, problems arise and it is incumbent on us to point them out in the debate.
    The cost has been high since tax relief on investment is given at the top rate. Obviously, since the top rate was reduced last year, that cost is less than formerly. However, the scheme has been costly, at over £100 million per year in recent years. It has been used as a tax shelter and for tax avoidance whereas the original intent was to reward and facilitate enterprise. The scheme has been widely abused in speculative building, a sector that is concentrated largely in London and the south-east. Therefore, the scheme has been concentrated on the sector of the economy that is most hurt at present by the supply side constraints and the capacity constraints that we have experienced and which are evident in our current account deficit of over £2 billion last year in materials related to construction. The construction sector is the worst hit sector, and the worst hit area of that worst hit sector is where the money and investment have principally been concentrated in the past year. Therefore, there is a wide distortion in the market and an accentuated drift of investment from Scotland and the north towards London and the south-east.
    Because the money has been used largely for speculative building, it is incumbent on the Financial Secretary to try to tell us that this is the best way to invest in house construction and that it is the most cost-effective way of using public money—that is what it amounts to, because of the subsidy that is given. I do not believe that it is the best way. If a similar sum had been invested in the public sector, I believe that we should have seen a far greater return for our money, and housing far more appropriate to the needs of those who are without it at present. That in turn would have served to reduce the capacity constraints that are arising in the south-east.
    All that underlines the fact that a poorly directed supply side policy is a danger not a benefit to our economy. The Government are reaping the harvest of their own somewhat narrow definition of supply side policies.
    I have referred to the labour and housing shortages in London and the south-east that are a direct result of such policies and to the capacity constraints that are leading to excess imports. At a time when there is a surplus of labour and skills in the north-east and Scotland, surely a proper effective supply side policy would concentrate on the

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    whole economy; as my hon. Friend the Member for Leeds, West (Mr. Battle) has said, that requires a strong regional policy. However, it also requires investment in other aspects of the supply side, especially in training. We must redress the skills shortages that our economy is now facing and encourage more young people to stay on at school and to go on into higher and further education. We must not forget that we have the lowest levels of participation in higher and further education in western Europe—and that, again, is hurting our economy.
    Mr. Rhodri Morgan: Yes, lower than in South Korea.
    Dr. Moonie: Yes, we must always remember that labour is as important as capital in supply side economics. The Government are finding that out only too clearly as industrial unrest rises in the economy and as the former surplus of labour is eroded by demographic change.
    Much of the United Kingdom is still suffering from under-investment, for example, in our infrastructure. That can be seen most clearly in my own area of Scotland where we have a great need for roads and for a motorway from Leeds to Edinburgh and from Carlisle to Glasgow. We need better intercontinental air links for Scotland and the north-east of England, and electrification of the north-east line, not only to Edinburgh as intended, but further north to Aberdeen and Inverness.
    An effective supply side policy requires proper regional development otherwise the shortage of capacity and the overheating in the south-east, which is slowing down the movement of people and goods, which London is now experiencing, and which has been mentioned by many manufacturers as a key element in their rising costs, will rapidly worsen until London will start to choke to death under the burden of its own population and enterprise. That is the real challenge to the Government on the supply side which, to date, the business expansion scheme has failed to address.
    The Financial Secretary said that in the past the Opposition have been inconsistent and that we now appear to criticise a scheme that we formerly supported. There is no inconsistency. It was right to support what was, after all, the only limited measure of help that was being given to help industry to expand. If it is a question of take it or leave it, thanks very much, we will take it. However, surely it is also right for us to conduct a proper critical analysis of what has happened as a result of the implementation of the policy. We must point to deficiencies in their policy and ask the Government to come forward with some means of redressing them.
    The principle was not unsound. It was supported by people such as myself when I was in local government before I came to this place. When I was one of the trustees of our pension fund in Fife regional council, I supported its investment in venture capital schemes. The only money going into venture capital schemes in Scotland at that time came from local authorities. It certainly did not come from the private sector. We welcomed this as a principle and a means of perhaps enticing more money into valuable areas. Unfortunately, it has turned out to be a shyster's charter and a home for fast buck merchants that bedevils our economy.
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    6 pm
    Yesterday, in another debate, I criticised the principle of widening tax rates on income. I still believe that this scheme has produced more problems than it has solved, as has the scheme about which I talked yesterday. It needs to be modified, if not abolished. It is a warning to us to be careful when we try to influence market decisions in this manner.
    I have welcomed clause 44 and I also support the amendment of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). I do so for one simple reason. I believe that a genuine mistake was made and that the Government's intention was to ensure that the scheme had its present and not its past form. It is wrong that people should be allowed to profit doubly from a mistake such as this. Although I would not normally support retrospective legislation, there are reasonable grounds for us to do so tonight.
    Mr. Morgan: The Opposition are trying to put over the fact that we have sought to give the business expansion scheme a fair trial. We are expressing on behalf of the communities that we represent Leeds, Kirkcaldy, Pontypridd and Cardiff—
    Mr. Dennis Turner: And Wolverhampton.
    Mr. Morgan: I am talking only about my hon. Friends who have spoken. We have given the business expansion scheme a fair trial, but have had to draw a sorry conclusion about it.
    There are Conservative Members present, although not many seem to want to speak. That could be for two possible reasons: first, that there is a news blackout on "Today in Parliament" and secondly, that they are deeply ashamed of the performance of the business expansion scheme because they know that it has not achieved what it was cracked up to do.
    The Financial Secretary was good enough to agree that when the business expansion scheme was first introduced, the Leader of the Opposition welcomed it. Certainly, when I came to the House I said that I had been a fan of the scheme. Many others, including my hon. Friend the Member for Kirkcaldy (Dr. Moonie) also said that they wanted the business expansion scheme to be given a fair trial. The scheme was supposed to encourage people to take risks with their money in a way that would contribute to the expansion of enterprise in this country and, therefore, to the expansion of jobs and the correction of our chronic balance of payments deficit.
    The Financial Secretary also said that he thought that the business expansion scheme had been part of the amazing resurgence of venture capital industry in this country. He boasted that we had a venture capital industry that was bigger than that of any other European country and second only to the United States of America. He completely misunderstands what the business expansion scheme was originally cracked up to do and the difference between venture capital and seed capital.
    The business expansion scheme is not about venture capital. The companies involved in it are far too small and young. By and large, the gap that the business expansion scheme was supposed to fill was the seed capital gap and not the venture capital gap. The scheme was supposed to say to people, "Would you like to put your money at risk? You could lose the lot or make a lot of money. This is not

    897
    a safe investment, and if you want a safe investment you should put your money in the Post Office. This is a high risk investment." High-risk investment is for companies that either do not yet have products to market, or that have just got a product to the market place that still needs an enormous amount of working capital spent on it to market it properly so that it is capable of being sold overseas, not merely within the company's home town or region.
    These are not the sort of industries that have been funded by the business expansion scheme. The scheme should be a million miles away from putting money into old people's homes, private cleaning and contracting companies and other enterprises that are largely asset based. It should be a million miles, if not light years, away from putting money into the provision of private residential accommodation under the assured tenancy scheme.
    This is one of the failures of the scheme and I hope that the Minister will address that problem when he returns to the Dispatch Box. If the scheme was supposed to involve venture capital, surely, there has been a complete misunderstanding. We should have been talking about high-risk, high-growth companies, which could be funded and from which the investor's money could either be returned 10 times over at the end of five or seven years, or he could lose the large bulk of it, if not the lot. Such companies have not benefited from the scheme.
    We have to educate the Financial Secretary about the regions. He has failed to understand our point about venture and seed capital. He has also failed to understand our point about regional drift. He does not have the facts straight in his head about this country's geography. When asked why more than 50 per cent. of the schemes and more than 65 per cent. of the money had been invested in enterprises based in the south-east and East Anglia, which we considered to be one of the scheme's failings, he said that there was more business in those regions. In response to my hon. Friend the Member for Pontypridd (Dr. Howells), he said that there were more people in those regions.
    The Financial Secretary should listen to the facts about this country's geography. The number of people who live in the south-east and East Anglia totals about 19·5 million, which is almost one third—33 per cent. —of the country's population. The fact that 65 per cent. of the money is invested in the south-east and East Anglia, which is where 33 per cent. of the population live, creates a massive disparity of almost 100 per cent. between the regional share of this country's population in the south-east and East Anglia and the money invested there under the business expansion scheme. That is a massive failure of the scheme and it is no good his saying that there is more business in the south-east. That is palpably not true. There is no evidence to suggest that there are fewer new business formations or enterprises in the outer regions of the country than in the south-east and East Anglia. However, there is more capital in the south-east.
    The fundamental problem with the business expansion scheme is that it is not attuned to where there is enterprise, to the needs of the risk taker, inventor or person willing to invest in a new business, but to the needs of capital. It is attuned to the needs of people with money in their pockets.
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    They are told that they can double their money through the scheme, that they will not have to take any more risks than they want, and that the taxpayer will give them a bonus on top of that.
    The regional disparity in this country is not simply that the south-east of England is a large region, although clearly it is. In fact, it is the biggest region. If East Anglia is thrown in, the south-east region contains one third of the population. Another disparity is the fact that it contains about 50 per cent. of the middle classes and 90 per cent. of the wealthy people. It is where, by and large, the millionaires live, apart from a few wealthy landowners who live in Scotland and the south-west. If a scheme is attuned to the needs of millionaires, and people interested in the tax breaks for higher rate tax payers, clearly those areas with more wealth will be where it operates most strongly. The scheme is not targeted on areas where there is more enterprise.
    There is no evidence of less enterprise in Pontypridd, Kirkcaldy or Cardiff or in the outlying regions. The problem is that those places cannot get together with the owners of capital, because the owners do not live there. In the south-east, capital, is easily available because, historically, it has accumulated there for various reasons —it has agricultural wealth, the capital city is there, Parliament is there, and so on.
    If the Government persist in misunderstanding the deeply risk-averse nature of British capitalism—the failure of the business expansion scheme to remedy it over the past five years is further evidence of that misunderstanding—they will never devise a set of policies that will close the trade gap and bring it back to parity and beyond; for we shall need surpluses in the 10 or 15 years after the deficits to pay off the colossal debt that we are now running up.
    All Opposition Members were keen to see the BES have a fair trial. We are deeply disappointed by the way in which it has been pushed further in the direction of risk aversion rather than risk taking by the inclusion of residential property under the assured tenancy scheme. Now, even more than before, the BES has become a political gimmick. Last year it meant the Secretary of State for the Environment suddenly reflecting, when considering the Housing Act 1988, that he should not approach the next election without a single scheme having been put in place and with no private capital having flowed into assured tenancies. That would have made him look even more foolish than he usually looks when the courts declare his leaflets illegal. He wanted belts and braces to ensure that a couple of schemes—assured tenancy and private capital funded schemes—were brought forward, thinking that he would not pay for them himself but would get the British taxpayer to do so. Rather than depend on the willingness of British capital to put risk money into private rented property, he decided that, if it were given the extra bonus of a tax break on the top rate, British capital might get some schemes going.
    Well, there may be some schemes, so the right hon. Gentleman will be able to claim that there are some at the next election. They cannot be compared on a fair and equal basis with schemes for developing new laser beams or new silicon chip factories that might produce products to sell to Japan or the United States. The BES projects are a straight tax break to ensure that the Secretary of State's few remaining shreds of political reputation can be held together respectably when it comes to writing the next

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    Tory election manifesto. The scheme always carried the risk of being a political gimmick and this has proved that more true than before.
    We are now retrospectively trying to put close companies in order. The Government feared that financial manipulation was going on, and so it was. I welcomed the Financial Secretary's expression of horror at the way in which certain financial middlemen were abusing the scheme, but that is in the nature of the scheme—that is what it is all about. It is not filling the gap that it was meant to fill. It is not putting people into manufacturing industry. In America, a person starting a new silicon chip company can go to his local rotary club or masonic lodge and get people to give him a couple of thousand dollars each to help him get started, knowing that they can lose all the money. That does not happen here, and the BES does not fill that gap.
    Instead, curiously, the scheme presents a free gift to a certain breed of financial middlemen who can sell safe little earners—this is supposed to be high-risk new venture capital, but it is proving the reverse. The middlemen promise to fix people up with nice little earners; all they have to do is answer the advertisement, tear off the coupon and a salesman in the latest sharkskin suit will call round to see them. I advise people to watch out for these salesmen.
    I said in an earlier intervention that the scheme was providing packed lunches for sharks, but I forgot that I am deeply interested in marine wildlife. I should have said packed lunches for vultures—vulture capital, not venture capital.
    The Minister must give serious consideration to the failure of British small businesses to take risks. He must understand that if the money from the tax break goes into residential property, DIY warehouses, old people's homes, and private caterers and contractors, which take over on a sweetheart basis from local authorities and hospitals, that will do nothing to solve our balance of payments. It will redouble all the economic difficulties from which the country has suffered and continues to suffer. We have a£15 billion balance of payments deficit, and this scheme in no way contributes to solving our severe economic problems.
    6.15 pm
    Ms. Diane Abbott: I support the amendment. The extension of the business expansion scheme to private rented accommodation under the assured tenancy arrangements is cruel and irrelevant. It is irrelevant because, as my hon. Friends have already said, the purpose of the scheme was to encourage risk investment and create jobs. It will create very few jobs. It is also irrelevant and cruel because of the effects it will have on the housing market and on people in housing need, especially in London and the south-east.
    In London and the south-east, the private housing market has for many years been the prey of sharks, vultures and people such as Rachman. There is already a terrible problem in London; private landlords try to winkle out sitting tenants so that they can sell off flats and transform accommodation into assured tenancies. Now that private landlords receive a tax break to do up such accommodation, the financial pressure on them to get rid of private tenants will be even greater.
    900
    I know that the Minister takes no interest in these matters, but he has only to go half a mile down the road to Westminster, Bayswater, Pimlico or Maida Vale to see elderly sitting tenants who have lived all their lives in mansion blocks—many of them in marginal Conservative constituencies—living in fear and leading unhappy lives—
    Mr. Morgan: Their Members of Parliament, too.
    Ms. Abbott: Indeed. The Minister would not have to go far to find such people, or to find families being harassed by landlords who want to remove them so that they can transform the accommodation to assured tenancies. This tax break will provide an additional financial incentive for such harassment.
    The growth of the assured tenancy sector to which this extension of the scheme will lead will make no practical contribution to the housing problems of London. These assured tenancies will be offered at prices way beyond the reach of the average person who works and lives in London. They will be offered to businesses, tourists and rich people who want a pied-a-terre in London. The tenancies do nothing to help the average family who want somewhere to live or the homeless. The scheme will only put money into the pockets of speculators and the heirs of Rachman. To bring it forward under the guise of encouraging enterprise and creating jobs is hypoCritica I, bogus, cruel and irrelevant, and I hope that even at this late stage the Government will see their way clear to withdrawing the idea.
    Mr. D. N. Campbell-Savours: I try each year to take an objective position in Budget debates. Over the years I have invariably supported the Government when I thought that they were right, and I have been open in my support; I have been critical when I have thought that they were wrong. Last year we had a debate on these matters. If I recall correctly, we were debating the possibility of abuse of assured tenancies where people might enter into arrangements with those who took out the tenancies over a period of five years and where the investor might have a direct pecuniary and, indeed, occupational interest later.
    I persisted in raising the matter last year. If I recall correctly, my hon. Friends may have raised it in Committee upstairs. I persisted in the hope that this year the Minister might be able to report on how things had developed. I should like to know whether abuse has taken place or been reported to him. If it has not been reported, will he consider my original predictions about how the scheme might be abused and make a statement to the House during the debate that may take place on Report? There may not be much chance to discuss the matter in Committee upstairs, and I will not be on that Committee this year.
    I want to speak more specifically to the whole question of the intellectual base on which the BES scheme was submitted originally to the House and argued by Ministers publicly. As I understand the Government's position, it is generally that Government need not intervene directly to create jobs, that they can reduce their commitment to regional policy and that, by a system of tax aids, individuals will be given the opportunity to take decisions and invest where, in other conditions and under other Governments, those decisions might be taken by Ministers or by civil servants in conjunction with industrialists.

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    The premise is that as a substitute for a regional policy of state intervention we should rely on individuals to take decisions which will have the same effect in creating employment in the regions. Ministers will recall that I have supported aspects of the BES scheme over the years. I put it to the Minister today that the scheme is not working in the way that the Government originally hoped it would. They may feel that it has had some success, but a report on the Peat Marwick report of 1986 said:
    "With the benefit of a longer time-period this report has also been able to reveal the high loss rates amongst fund investments made under the BES (over 50 per cent.) and in the early years of the BES (over one-quarter of investments made in 1983–84 and 22 per cent. of the capital invested in that year had been lost by late 1987). Overall, of the £175 million invested by funds and managed schemes in the seven years to April 1987, 17 per cent. had been lost by late 1987."
    As I understand it, that report was fairly favourable to the scheme.
    I cannot believe that the Government ever intended such losses on the scheme. That must indicate a deficiency in it. I cannot believe that the Government, if they were being reasonable on these matters, would have been so willing to support some of the schemes. Earlier, there were references to wine merchants and art dealers. I cannot believe that it was ever the intention of Ministers that such people should be involved. The scheme should have been geared far more to manufacturing industry.
    The 1986 Peat Marwick report made a point about the regional base for investment. The document from which I am quoting said:
    "Finally, the report highlights the significant regional inequalities in the impact of the scheme. The South East and East Anglia contain considerably more than their 'fair share' of BES investments relative to their shares of the total stock of UK businesses (51 per cent. of investments and 65 per cent. of the invested capital in the period 1983–84 to 1985–86 inclusive)."
    The scheme has failed because of its emphasis on the south-east, although I accept that there are pockets of high unemployment in Kent, in some of the Medway towns. I recognise, as I am sure my hon. Friends do, that those problems need resolving. Indeed, Labour's case is that we would single out many of those areas and target them for special treatment. We would ensure that they are given the support that they need to develop.
    In wealthy Kent and wealthy south-east England generally, those areas stand out as blots on the employment landscape. In some of them unemployment is as high as it is in Yorkshire and Lancashire. I am sure that the people in Kent, Surrey, Sussex and all those areas would accept that in the main they are affluent counties. Yet they are getting the lion's share of the BES investment. If Ministers want to substitute for a regional policy, by way of state intervention, schemes that are tax-based they must find a regional basis on which to give tax concessions.
    I have had correspondence with Ministers who say that it is not possible to build into the tax system a regional basis for tax concessions.I do not subscribe to that. The Prime Minister may have done things that I do not like, but she has proved in many ways that things can be done when the will is there. If Ministers set out to find a way, I am sure that they could establish in finance law principles that would benefit areas of high unemployment through the tax system. In that climate and under that regime, Labour, without any sense of equivocation or adding any
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    condition, would wholeheartedly support the scheme in the same way as I did when it was much narrower in its early days after its introduction in 1983–84.
    There is work that can be done. It would be nice if the Minister, in reply to the debate, could say, "I have never conceded the case before but I will ask my officials to see whether it is possible somehow to incentivise regional investment through the tax system on the basis of a scheme akin to the principles laid down in the business expansion scheme." It might be geared to the manufacturing sector. The Government would not be compromising any principle. They would not be conceding the case for Government intervention in a way that might lead to an ideological backlash from Government supporters or that might offend the views set out in the Conservative campaign guide for the last election when they were preaching vigorously about the need for as little state intervention as possible. I am asking them to use what they accept are the weapons—no, the tools—that the state has at its disposal: that is, a tax system, in trying to drive a greater regional incentive into small business investment.
    Another matter irritates me. I want to read to the House an advertisement. This is what discredits Government tax policy. The advertisement was put in by a firm called Johnson Fry Corporate Finance Limited. It is taken from The Times of the—the Economic Secretary smiles. Perhaps he will tell me why he does so or, after I have read this, whether he still feels like smiling.
    The Economic Secretary to the Treasury (Mr. Peter Lilley): A sedentary smile.
    Mr. Campbell-Savours: That is an original term.
    The advertisement appeared in "The Times" of 25 February 1989. Its headline is:
    "High earner pays no tax".
    It goes on to say:
    "Peter Fletcher is a successful entrepreneur who will earn £200,000 in this tax year. Last year, his tax bill was a frightening £105,000 +. This year Peter will pay nothing at all. He is taking advantage of special tax concessions offered through Business Expansion Schemes (BES) and Enterprise Zone property investment"—
    I am not condemning that; I am just drawing attention to the way in which such investment schemes can be abused and how that can anger people such as myself who see the mistreatment of millions of people in our society within tax law and the benefit system—
    "which together will completely eliminate his tax liability."
    6.30 pm
    I supported the original enterprise zone proposal, as the Financial Secretary will recall. My efforts were rewarded with one in my constituency which has been a glowing success. I do not dissent from my original view, but, unfortunately, the whole scheme has gone over the top.
    The advertisement goes on:
    "What's more, he won't have to dig deep into his pockets to do this as all his investments are totally self-funding, through specially arranged bank loans."
    I understand that, with the support of my hon. Friends, the Government are now closing that gap.
    "Peter has invested £140,000 in Enterprise Zone property, £40,000 in BES and his remaining tax liability is mopped up by personal allowances and mortgage and pension tax relief."
    No doubt my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) will be dealing with those

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    matters in Committee. I shall not be there to play my part on this occasion, but I am sure that my hon. Friend will make a good job and an effective case.
    The advertisement continues:
    "But good news for the Fletcher family doesn't stop here. Peter's brother Michael, who is 28"—
    I presume, a yuppie Porsche man—
    "works in the City and takes home"—
    maybe not—
    "£35,000 a year, has found that he too can eliminate his entire higher rate tax liability by investing in a Smaller Companies Assured Tenancy (SCAT) BES Scheme, with a 100 per cent. loan."
    I understand that that is elegible for tax relief if it is done through a close company.
    "Michael will receive tax relief on the interest"—
    yes, he is doing it; it is coming out now—
    "on his loan and, in five years' time, he will be able to sell his BES investment, which is not subject to Capital Gains Tax. Charles Fry, Chairman of Johnson Fry,"—
    the corporate finance company whose advertisement I am now quoting—
    "a company that specialises in BES and Enterprise Zone investment, comments 'All higher rate tax payers should be examining BES and Enterprise Zones very closely. The Assured Tenancy Scheme effectively enables investors to invest, at a 40 per cent. discount, in companies that buy and rent out residential property. This is the first year that this type of investment has been available. BES has a £40,000 limit per person, so the wealthier individual should also be looking at Enterprise Zone investment which enjoys full tax relief on approximately 95 per cent. of the investment.'"
    I am slightly out of order, Sir Michael, but I shall go on.
    "'One important point to stress, however, is that people should invest now before possible Budget changes. Why pay money to the taxman when you can utilise the same money (without any further capital outlay) to make good quality property investments instead?'"
    I am sure that my hon. Friend the Member for Hackney, North and Stoke Newington (Ms. Abbott) will find those remarks offensive. She knows what will happen when such tenancies get off the ground. My hon. Friend the Member for Leeds, West (Mr. Battle) turns in his seat to grab my copy of the advertisement. I can tell him that I located it with great difficulty. However, having spent several hours doing so, it now features in every speech that I make wherever I go in the United Kingdom as an example of how tax law has got a little out of hand. It cannot be right for someone to offset a liability to tax on £200,000, taking allowances into account, by using such schemes.
    All that I say to Ministers in my modest contribution today is that they should target this scheme more effectively. It should be geared more to genuine service trade and manufacturing industry and it should be limited, perhaps to a lower level than it is today, unless it applies to manufacturing industry in the regions. I am talking about regions or localities of high-level unemployment, depending on how one draws the line. One could almost support an amendment for a considerable extension of the scheme if it had a firm manufacturing regional base. I should be willing to support further and greater tax concessions if that were the case.
    Mr. Win Griffiths: I had not intended to intervene and I apologise for not having been here at the start of the debate but I was attending the Select Committee on Education, Science and Arts. I want to ask one or two questions which I hope the Financial Secretary will answer. I apologise if he dealt with them when he opened the debate.
    904
    The Government have always been concerned to target help on those who need it most and where it can be most effective, whether it be in housing, industry or social security benefits. Therefore, can the Financial Secretary say how much money has gone to those areas where unemployment is higher than average through the business expansion scheme by way of tax relief, and so on? The Government should be able to do that by reference to travel-to-work areas in the United Kingdom. I should be interested to know whether the Government have any figures about the effectiveness of the business expansion scheme in areas of high unemployment and how that compares with the business expansion scheme in areas where the unemployment rate is below average.
    Secondly, how effective has the business expansion scheme been in providing jobs in those sectors which contribute to British exports? It is obvious that, if the Government have two target areas in terms of trying to encourage enterprise and create jobs, they should be those areas where unemployment is highest and those sectors where a contribution can be made to taking on the immense balance of payments problem which the Chancellor's other policies have created.
    I hope that the Financial Secretary will be able to give some information on those points and that he will consider a more radical reform of the business expansion scheme to take account of my questions.
    Mr. Chris Smith: We have had a wide-ranging and lengthy debate about some of the major issues that lie behind the abuse with which the amendment seeks to deal. The debate has been characterised by the fact that, apart from the Financial Secretary, no Conservative Members have taken part. Clearly, they are not interested in the problems of the BES, in the tax abuse which the clause addresses, in the equity gap which exists or in the desperate need for more investment, especially in the manufacturing sector.
    The only Conservative Back Bencher to intervene at all for most of the debate was the hon. Member for Dover (Mr. Shaw), who absented himself for much of the discussion, perhaps to conduct more research with his researcher into the net book agreement. He seemed to imply that he wished the Government to keep under review the £500,000 cap on non-property or shipping-based BES schemes. The Minister said that he would do so. I hope that he will not be tempted too far down that road, because the restriction to £500,000 was welcomed by the Opposition last year and we hope that it will he kept in place.
    It is worth noting that the hon. Member for Dover., as he himself said, is an expert on the BES. Last year, when I checked on these matters, I discovered that he was a director of four BES-financed companies—City Gate Estates, Hoskins Brewery, Private Investor Publications and Palladian Estates—all four of them, I am sure, making a major contribution to the manufacturing needs of the nation. He was, in addition, a director of three further companies, all of which were involved in the raising of BES finance. Those were Sabrelance Ltd., Sabrelance Business Service Limited and South Cumbria and North Lancashire Management Limited. He is indeed an expert on the BES, and as a result he appears to be benefiting substantially.
    I was disappointed that the Financial Secretary—as he did last year—trotted out the Peat Marwick report, which

    905
    dealt only with the first year of operation of the BES. The favourable nature of that report must be modified in the light of further research, especially that done by the Small Business Research Trust, which saw major changes in the nature of BES investment from 1984 to 1988. The trust said in its report:
    "the economic impact of the scheme is less favourable than suggested by Peat Marwick."
    The Financial Secretary must not attempt to convince us that Peat Marwick is the whole picture: it is not. It shows the picture in the initial stages of the BES and not the subsequent development of the scheme.
    Many of my hon. Friends have said that we are not opposed in principle to the idea of the BES. However, we object to the way in which the scheme is being used, and the close companies mechanism is the most obvious of the deficiencies in the way in which the BES has turned out since 1984.
    6.45 pm
    My hon. Friend the Member for Workington (Mr. Campbell-Savours) said, for example, that the BES was not working in the way that had originally been hoped. My hon. Friend the Member for Burnley (Mr. Pike) said that he was not totally opposed to the scheme in its conception and recognised the need to raise capital to close the equity gap. I agree with my hon. Friend in that approach. My hon. Friend the Member for Pontypridd (Dr. Howells) also said that the BES was a good idea.
    The problem is that the reality does not match the principles with which the scheme was introduced, the reason being that it has become a device for sheltering high rate taxpayers' incomes. It has become distorted from the original intention of the BES, which was focused on the raising of capital for small-scale risk enterprise.
    It has changed in nature. The primary purpose of the scheme now is tax avoidance rather than the raising of equity finance, and the problems that have flowed in train include the north-south flow of funds, the increasing emphasis on property and the increasing emphasis on asset-backed enterprise. The use of the close company device is a clear sign of the problems that come when a good idea turns sour and becomes used entirely for the purposes of tax avoidance.
    The debate is primarily about an amendment which seeks to make the closing of the loophole retrospective for a year. Towards the end of his earlier remarks, the Minister—I fear that I must disagree with the hon. Member for Berwick-upon-Tweed (Mr Beith) on this—said that there had been occasions during the last 20 years when retrospective tax legislation had been regarded as worth introducing because the original situation that everyone had assumed to be the case had become distorted.
    The use of the close companies device is such an instance. The Minister said that the private rented application of the BES had grown much more quickly than he had forecast this time last year. Indeed, the use of the close company device in the three months leading up to the Budget, specifically linked to the rented accommodation scheme, was not forecast at the time.
    Nobody expected that that would happen and nobody realized—certainly not the Financial Secretary—that it could be used in that way. The ingenuity which some
    906
    bright financial operators put into developing a device which gave not just the BES tax relief but, in addition, extra slices of tax relief to top rate taxpayers, should not be rewarded; it should be penalised retrospectively.
    Let us remind ourselves of the exact nature of the abuse that we are debating. We are talking about a top rate taxpayer who can make a payment of interest over five years of £30,000, can get tax relief in return for that payment of interest of £28,000, making a total payment of only £2,000 in return for an investment worth £40,000. We are therefore referring to somebody who, by that means, makes a profit at the end of the day—tax-free, with no capital gains tax to be paid—of £24,000.
    That is only a modest estimate of the increased value of the company's assets. A situation in which an individual can literally make money out of this country's taxpayers must be considered intolerable and be dealt with as severely as possible. That is why, in those special circumstances, we ask the Committee to close that tax loophole retrospectively. Unless the Financial Secretary is prepared to accept our amendment, I shall urge my right hon. and hon. Friends to vote in favour of it.
    Mr. Norman Lamont: As the hon. Member for Islington, South and Finsbury (Mr. Smith) observed, the Committee's debate has been very wide-ranging. In fact, the hon. Gentleman's comment is something of an understatement. It emerged from the debate that a number of Opposition Members have some kind things to say about the business expansion scheme. They include the hon. Members for Pontypridd (Dr. Howells), for Burnley (Mr. Pike) and for Workington (Mr. Campbell-Savours) and, to some extent, the hon. Member for Cardiff, West (Mr. Morgan). They all had words of praise for certain aspects of the scheme.
    A number of Opposition Members wanted more detail about the scheme's effects, though at the beginning of the debate I outlined the information at my disposal about the direction of the scheme, about the proportion of it devoted to small businesses having a turnover of less than £500,000, and about assured tenancies—and I gave a general report on the scheme's progress.
    The hon. Member for Cardiff, West made an interesting speech in which he compared some people with sharks but then withdrew that remark because he rather likes sharks. I was then dismayed that he made a comparison with vultures because I rather like vultures. [HON. MEMBERS: "Oh!"] I spent most of my summer in Crete watching them, and I hope to return to see more of them. I would have preferred the hon. Gentleman to stick to his original metaphor.
    The hon. Member for Cardiff, West drew a useful and valid distinction between seed capital and venture capital. He will recall that the business expansion scheme began as a start-up incentive, but the development of the venture capital market since 1983, when we extended the scheme to larger companies, enables us again to place the emphasis on smaller companies having a turnover of less than £500,000, which is more in line with the hon. Gentleman's thoughts in respect of seed capital.
    The hon. Gentleman gave several reasons why he feels that the scheme is concentrated in south-east England, and disagreed with my views on that aspect. I was impressed by some of the hon. Gentleman's arguments, but I emphasise that it was never intended or marketed as an instrument of

    907
    regional or employment policy. It was always specifically designed as a national economic tool to encourage enterprise.
    Mr. Morgan: Our complaint is that the scheme has become an instrument of reverse regional policy.
    Mr. Lamont: There is always a tendency for any tax allowance scheme to be taken up in areas where economic activity is at its highest. As the hon. Gentleman said, sometimes take-up occurs where there is more capital available. I agree that it would he better to have a spread of financial services throughout the country, but I feel certain that the scheme has brought benefits to many regions.
    The hon. Member for Workington referred to a matter that he raised last year concerning connected persons. I have seen no evidence to support the claim that he makes, but I shall look further into the matter and may write to him.
    The hon. Gentleman said that he cites the Johnson Fry advertisement in every speech that he makes, and I hope that he is receiving a commission from that company for doing so, because he seems to be an active salesman for its services. He referred to the tax loopholes that Johnson Fry advertises. When he makes speeches quoting that advertisement, I am sure that he mentions also that it was perfectly possible for higher rate taxpayers to avoid paying any tax under a Labour Government. By using universally available 100 per cent. capital allowances, a higher rate taxpayer could easily avoid paying any tax under Labour, because similar schemes were being marketed at that time.
    Mr. John Smith: Those schemes related only to capital allowances.
    Mr. Lamont: The right hon. and learned Gentleman makes the point that the schemes related to capital allowances. One hundred per cent. capital allowances were used in conjunction with leasing agreements by higher rate taxpayers to avoid paying tax. That happened frequently under a Labour Government and was a direct response to the very high marginal rates that they imposed.
    The debate touched also on assured tenancies and on the Housing Act 1988. The hon. Member for Leeds, West (Mr. Battle) gave several examples of bad landlords, but seemed to argue against any privately rented accommodation, which is where I part company with him. Assured tenancies are subject to general law, which the Housing Act 1988 strengthens both in respect of harassment and illegal eviction, which has led to some recent convictions.
    The hon. Member for Berwick-upon-Tweed (Mr. Beith) mentioned the possibility of a rent review provision being used to drive out a tenant. Even at this early stage, I think that the problem mentioned by the hon. Gentleman is unlikely to arise, for there is no evidence to suggest otherwise. However, we shall keep an eye on that aspect.
    The Opposition amendment would simply build on clause 44, which will end a tax loophole that has been exploited to excess. The only difference between us is that the Opposition contend that that loophole should be closed retrospectively, but no argument has been advanced to justify that contention. The Government are blocking the loophole because it is now thought to be excessive, but there is no doubt that those who have already exploited it did so perfectly legally, and it would be wholly wrong for Parliament to legislate on it retrospectively. Nothing said
    908
    by the Opposition justifies such a draconian measure, and I urge my right hon. and hon. Friends to reject the amendment.
    Question put, That the amendment be made:
    The Committee divided: Ayes 161, Noes 237.

    Division No. 193]

    [6.58 pm

    AYES

    Abbott, Ms Diane

    Hood, Jimmy

    Adams, Allen (Paisley N)

    Howarth, George (Knowsley N)

    Allen, Graham

    Howells, Dr. Kim (Pontypridd)

    Anderson, Donald

    Hughes, John (Coventry NE)

    Archer, Rt Hon Peter

    Hughes, Robert (Aberdeen N)

    Armstrong, Hilary

    Hughes, Roy (Newport E)

    Ashley, Rt Hon Jack

    Hughes, Sean (Knowsley S)

    Ashton, Joe

    Illsley, Eric

    Banks, Tony (Newham NW)

    Ingram, Adam

    Barnes, Harry (Derbyshire NE)

    Janner, Greville

    Barnes, Mrs Rosie (Greenwich)

    Jones, Barry (Alyn & Deeside)

    Barron, Kevin

    Jones, Ieuan (Ynys Môn)

    Battle, John

    Jones, Martyn (Clwyd S W)

    Beckett, Margaret

    Kaufman, Rt Hon Gerald

    Bell, Stuart

    Kinnock, Rt Hon Neil

    Benn, Rt Hon Tony

    Lamond, James

    Blair, Tony

    Leadbitter, Ted

    Blunkett, David

    Leighton, Ron

    Boyes, Roland

    Lestor, Joan (Eccles)

    Brown, Gordon (D'mline E)

    Lewis, Terry

    Brown, Nicholas (Newcastle E)

    Lloyd, Tony (Stretford)

    Buchan, Norman

    Lofthouse, Geoffrey

    Buckley, George J.

    Loyden, Eddie

    Campbell, Ron (Blyth Valley)

    McAllion, John

    Campbell-Savours, D. N.

    McAvoy, Thomas

    Cartwright, John

    McFall, John

    Clark, Dr David (S Shields)

    McKelvey, William

    Clarke, Tom (Monklands W)

    Madden, Max

    Clay, Bob

    Mahon, Mrs Alice

    Clelland, David

    Marek, Dr John

    Clwyd, Mrs Ann

    Marshall, Jim (Leicester S)

    Cohen, Harry

    Meacher, Michael

    Cook, Robin (Livingston)

    Meale, Alan

    Corbett, Robin

    Michael, Alun

    Corbyn, Jeremy

    Michie, Bill (Sheffield Heeley)

    Cousins, Jim

    Mitchell, Austin (G't Grimsby)

    Cryer, Bob

    Moonie, Dr Lewis

    Cunliffe, Lawrence

    Morgan, Rhodri

    Darling, Alistair

    Morris, Rt Hon A. (W'shawe)

    Davies, Rt Hon Denzil (Llanelli)

    Morris, Rt Hon J. (Aberavon)

    Davies, Ron (Caerphilly)

    Mowlam, Marjorie

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

    Mullin, Chris

    Dixon, Don

    Murphy, Paul

    Douglas, Dick

    Nellist, Dave

    Duffy, A. E. P.

    Oakes, Rt Hon Gordon

    Eastham, Ken

    O'Neill, Martin

    Evans, John (St Helens N)

    Orme, Rt Hon Stanley

    Ewing, Mrs Margaret (Moray)

    Pike, Peter L.

    Fatchett, Derek

    Powell, Ray (Ogmore)

    Field, Frank (Birkenhead)

    Quin, Ms Joyce

    Fisher, Mark

    Radice, Giles

    Flannery, Martin

    Randall, Stuart

    Flynn, Paul

    Redmond, Martin

    Foot, Rt Hon Michael

    Rees, Rt Hon Merlyn

    Foster, Derek

    Reid, Dr John

    Foulkes, George

    Richardson, Jo

    Fraser, John

    Roberts, Allan (Bootle)

    Fyfe, Maria

    Robertson, George

    Garrett, John (Norwich South)

    Rogers, Allan

    Godman, Dr Norman A.

    Rooker, Jeff

    Gordon, Mildred

    Ross, Ernie (Dundee W)

    Graham, Thomas

    Rowlands, Ted

    Grant, Bernie (Tottenham)

    Sedgemore, Brian

    Griffiths, Win (Bridgend)

    Shore, Rt Hon Peter

    Grocott, Bruce

    Short, Clare

    Haynes, Frank

    Skinner, Dennis

    Healey, Rt Hon Denis

    Smith, Andrew (Oxford E)

    Henderson, Doug

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

    Hinchliffe, David

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

    Holland, Stuart

    Smith, John P.

    Home Robertson, John

    Snape, Peter

    909

    Soley, Clive

    Welsh, Michael (Doncaster N)

    Spearing, Nigel

    Williams, Rt Hon Alan

    Steinberg, Gerry

    Williams, Alan W. (Carm'then)

    Strang, Gavin

    Wilson, Brian

    Straw, Jack

    Winnick, David

    Turner, Dennis

    Worthington, Tony

    Vaz, Keith

    Wray, Jimmy

    Wall, Pat

    Walley, Joan

    Tellers for the Ayes:

    Wardell, Gareth (Gower)

    Mrs. Llin Golding and

    Wareing, Robert N.

    Mr. Jimmy Dunnachie.

    Welsh, Andrew (Angus E)

    NOES

    Adley, Robert

    Fishburn, John Dudley

    Aitken, Jonathan

    Fookes, Dame Janet

    Alexander, Richard

    Forman, Nigel

    Alison, Rt Hon Michael

    Forth, Eric

    Amess, David

    Fox, Sir Marcus

    Amos, Alan

    Franks, Cecil

    Arbuthnot, James

    Freeman, Roger

    Ashby, David

    French, Douglas

    Ashdown, Rt Hon Paddy

    Gardiner, George

    Atkins, Robert

    Garel-Jones, Tristan

    Baker, Nicholas (Dorset N)

    Gill, Christopher

    Banks, Robert (Harrogate)

    Glyn, Dr Alan

    Batiste, Spencer

    Goodhart, Sir Philip

    Beaumont-Dark, Anthony

    Goodson-Wickes, Dr Charles

    Beith, A. J.

    Gow, Ian

    Bellingham, Henry

    Grant, Sir Anthony (CambsSW)

    Bendall, Vivian

    Greenway, Harry (Ealing N)

    Biffen, Rt Hon John

    Greenway, John (Ryedale)

    Blackburn, Dr John G.

    Griffiths, Peter (Portsmouth N)

    Blaker, Rt Hon Sir Peter

    Grist, Ian

    Body, Sir Richard

    Ground, Patrick

    Bonsor, Sir Nicholas

    Grylls, Michael

    Boscawen, Hon Robert

    Gummer, Rt Hon John Selwyn

    Boswell, Tim

    Hague, William

    Bottomley, Peter

    Hanley, Jeremy

    Bottomley, Mrs Virginia

    Hannam, John

    Bowis, John

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

    Boyson, Rt Hon Dr Sir Rhodes

    Harris, David

    Braine, Rt Hon Sir Bernard

    Haselhurst, Alan

    Brandon-Bravo, Martin

    Hayes, Jerry

    Brazier, Julian

    Hayward, Robert

    Bright, Graham

    Heathcoat-Amory, David

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

    Heddle, John

    Bruce, Ian (Dorset South)

    Heseltine, Rt Hon Michael

    Buck, Sir Antony

    Hicks, Robert (Cornwall SE)

    Budgen, Nicholas

    Higgins, Rt Hon Terence L.

    Burns, Simon

    Hind, Kenneth

    Butler, Chris

    Hogg, Hon Douglas (Gr'th'm)

    Butterfill, John

    Howard, Michael

    Campbell, Menzies (Fife NE)

    Howarth, G. (Cannock & B'wd)

    Carlile, Alex (Mont'g)

    Howe, Rt Hon Sir Geoffrey

    Carlisle, Kenneth (Lincoln)

    Howell, Rt Hon David (G'dford)

    Carrington, Matthew

    Hughes, Robert G. (Harrow W)

    Carttiss, Michael

    Hughes, Simon (Southwark)

    Chapman, Sydney

    Hunt, David (Wirral W)

    Clark, Dr Michael (Rochford)

    Hunter, Andrew

    Clark, Sir W. (Croydon S)

    Irvine, Michael

    Clarke, Rt Hon K. (Rushcliffe)

    Irving, Charles

    Colvin, Michael

    Jack, Michael

    Coombs, Anthony (Wyre F'rest)

    Jackson, Robert

    Coombs, Simon (Swindon)

    Janman, Tim

    Cope, Rt Hon John

    Jones, Gwilym (Cardiff N)

    Couchman, James

    Jones, Robert B (Herts W)

    Cran, James

    Kellett-Bowman, Dame Elaine

    Currie, Mrs Edwina

    Kennedy, Charles

    Curry, David

    Key, Robert

    Davis, David (Boothferry)

    Kilfedder, James

    Dover, Den

    King, Roger (B'ham N'thfield)

    Durant, Tony

    Kirkhope, Timothy

    Dykes, Hugh

    Kirkwood, Archy

    Evans, David (Welwyn Hatf'd)

    Knapman, Roger

    Evennett, David

    Knight, Greg (Derby North)

    Fallon, Michael

    Knox, David

    Favell, Tony

    Lamont, Rt Hon Norman

    Fearn, Ronald

    Latham, Michael

    Field, Barry (Isle of Wight)

    Lawson, Rt Hon Nigel

    910

    Leigh, Edward (Gainsbor'gh)

    Redwood, John

    Lester, Jim (Broxtowe)

    Rhodes James, Robert

    Lightbown, David

    Riddick, Graham

    Lilley, Peter

    Ridsdale, Sir Julian

    Livsey, Richard

    Roberts, Wyn (Conwy)

    Lloyd, Peter (Fareham)

    Rost, Peter

    Lyell, Sir Nicholas

    Rowe, Andrew

    McCrindle, Robert

    Rumbold, Mrs Angela

    Macfarlane, Sir Neil

    Ryder, Richard

    MacGregor, Rt Hon John

    Sackville, Hon Tom

    MacKay, Andrew (E Berkshire)

    Sayeed, Jonathan

    Maclean, David

    Shaw, David (Dover)

    McLoughlin, Patrick

    Shaw, Sir Giles (Pudsey)

    McNair-Wilson, Sir Michael

    Shephard, Mrs G. (Norfolk SW)

    McNair-Wilson, P. (New Forest)

    Shepherd, Colin (Hereford)

    Madel, David

    Skeet, Sir Trevor

    Major, Rt Hon John

    Smith, Tim (Beaconsfield)

    Malins, Humfrey

    Speller, Tony

    Mans, Keith

    Spicer, Sir Jim (Dorset W)

    Maples, John

    Spicer, Michael (S Worcs)

    Marlow, Tony

    Squire, Robin

    Marshall, John (Hendon S)

    Steen, Anthony

    Marshall, Michael (Arundel)

    Stevens, Lewis

    Martin, David (Portsmouth S)

    Stewart, Andy (Sherwood)

    Mates, Michael

    Stradling Thomas, Sir John

    Maude, Hon Francis

    Summerson, Hugo

    Mellor, David

    Tapsell, Sir Peter

    Michie, Mrs Ray (Arg'l & Bute)

    Taylor, Ian (Esher)

    Miller, Sir Hal

    Taylor, John M (Solihull)

    Mills, Iain

    Taylor, Matthew (Truro)

    Mitchell, Andrew (Gedling)

    Thurnham, Peter

    Mitchell, Sir David

    Townend, John (Bridlington)

    Moate, Roger

    Townsend, Cyril D. (B'heath)

    Montgomery, Sir Fergus

    Trippier, David

    Moore, Rt Hon John

    Trotter, Neville

    Morrison, Sir Charles

    Vaughan, Sir Gerard

    Moss, Malcolm

    Waddington, Rt Hon David

    Moynihan, Hon Colin

    Walker, Rt Hon P. (W'cester)

    Neale, Gerrard

    Wallace, James

    Nelson, Anthony

    Waller, Gary

    Neubert, Michael

    Wardle, Charles (Bexhill)

    Nicholson, David (Taunton)

    Wheeler, John

    Onslow, Rt Hon Cranley

    Whitney, Ray

    Oppenheim, Phillip

    Widdecombe, Ann

    Page, Richard

    Wolfson, Mark

    Paice, James

    Wood, Timothy

    Patnick, Irvine

    Woodcock, Mike

    Patten, Chris (Bath)

    Yeo, Tim

    Patten, John (Oxford W)

    Young, Sir George (Acton)

    Pattie, Rt Hon Sir Geoffrey

    Younger, Rt Hon George

    Pawsey, James

    Porter, David (Waveney)

    Tellers for the Noes:

    Powell, William (Corby)

    Mr. Alan Howarth and

    Price, Sir David

    Mr. Stephen Dorrell.

    Raison, Rt Hon Timothy

    Question accordingly negatived.
    Clause 44 ordered to stand part of the Bill.

  Clause 138

    POWER TO CALL FOR DOCUMENTS AND INFORMATION
    Sir William Clark: I beg to move amendment No. 23, in page 103, line 45, at end add—
    '(7A) In subsection (8B) after the words "under subsection (8A) above" there shall be added the words "or under subsection (3) above".'.
    I shall not detain the Committee for long. The amendment is rather technical, but it impinges on the rights of taxpayers vis-a-vis the Inland Revenue. The Committee will recollect that, following the Keith report, the Inland Revenue has taken powers to require third parties to disclose documents and information about individual taxpayers. Not only does the Inland Revenue have that right, but it does not necessarily have to name the taxpayer. For example, the Inland Revenue could ask

    911
    an insurance company how many insurance policies covering inheritance tax had been taken out in the past six or 12 months. That can put a tremendous cost on third parties.
    7.15 pm
    The amendment endeavours to give the taxpayer the right of appeal because the Inland Revenue has to go before the commissioners to get permission to ask a third party for information about individual taxpayers, whether or not they name them. "Keith: Further Proposals", which came out last year, recommended that all third parties who were asked for information about a particular taxpayer, whether identified or not, should have the right of appeal, as some of the costs of complying with some of the Inland Revenue's requests to third parties could be pretty onerous. One could envisage that a third party might be asked by the Inland Revenue something about a taxpayer that happened 10 or 15 years ago. That would put an onerous and costly responsibility on that third party.
    I hope that my right hon. Friend the Financial Secretary will not resist the amendment, as it gives the third party another appeal to which he should be entitled. In my view, the Inland Revenue should not have the right to ask a third party to produce information about a taxpayer if that third party does not have the right to say that the request is far too onerous without being allowed to go before the special commissioners. I am asking only that the third party should be able to go before the special commissioners.
    I am sure that my right hon. Friend will say that the third party has the right not to comply with the Inland Revenue's request, and the non-compliance of that request then puts that third party into the penalty area. When that third party is subject to a penalty, he has the right to a hearing. It seems rather ridiculous that a third party, having been asked by the Inland Revenue to supply information, and having replied that the request is far too onerous and that it would be far to expensive to go back five or 10 years, then has to be in the penalty area before he can get a hearing in which he can say to the commissioners that the request is far too onerous.
    I hope my right hon. Friend will consider the matter. It is a simple amendment, but it seeks to give more flexibility and certainly more rights to the third party who may have nothing whatsoever to do with the taxpayer being investigated.
    Mr. Norman Lamont: My hon. Friend the Member for Croydon, South (Sir W. Clark) has asked an extremely important question. The provisions that we are discussing relate not to unnamed but to named taxpayers. I make that clear, because I think that my hon. Friend bracketed the two together.
    For many years, the Revenue has been allowed to require a third party to provide access to documents in his possession relating to the tax affairs of a named person. This power is not altered by the Bill, other than to remove a small loophole that allows some third parties, in certain circumstances, to be used as safe havens if taxpayers are intent on frustrating the Revenue.
    That power is subject to stringent controls. The inspector can require access only to documents that, in the inspector's reasonable opinion, contain information relevant to a tax liability of the person whose affairs are under inquiry. The inspector must first ask the third party
    912
    to provide access to the documents voluntarily, and give him a reasonable time to comply. Only if this fails can the inspector proceed further. The inspector must next apply to an appeal commissioner, who is independent of the Revenue, for permission to issue a formal notice. The commissioner is required to be satisfied that in all the circumstances the inspector is justified in requiring access to the documents in question before he can give his consent. Only if the commissioner is satisfied can the inspector give a formal notice to the third party requiring him to provide access to the documents in question.
    The existing procedures provide protection against any unnecessary or excessive invasion of privacy. In particular, they provide protection against unreasonable burdens on third parties.
    The commissioner is required to be satisfied that in all circumstances the inspector is justified in proceeding with his request. This means that he must inquire into whether the request is reasonable and must take account of all representations which have been made. In particular, the informal request by the Revenue to the third party provides the third party with an opportunity to raise any objections that he has to the notice, including objections on the ground that it would be burdensome, which must be reported to the commissioner by the inspector and taken into account.
    The Keith committee agreed that this information power should continue to be subject to oversight by the independent appeal commissioners, but Keith thought that the public would be better safeguarded if the present procedures for an informal request and review by the commissioners, in every case before a notice was given, were replaced by a right of appeal to the commissioners after the notice had been given. Most of the respondents in the consultations on the recommendations of the Keith committee disagreed. The overwhelming majority of respondents, including all the bodies representing businesses and the accountancy and legal professions, believed that the existing provisions—with oversight by the commissioners before the event—would provide better safeguards for the taxpayer than oversight after the event through a separate right of appeal.
    The Inland Revenue proposed, in the consultative paper published last July, to leave the procedures unchanged. The majority of respondents to that consultative paper agreed. A few suggested that there should be both oversight before the event and oversight after the event with a new right of appeal. The majority of respondents recognised that this was not necessary, and would put an unreasonable burden on the Revenue and the commissioners. The present procedures provide full safeguards for the taxpayer and it is not necessary to introduce further complications.
    My hon. Friend the Member for Croydon, South suggests that a limited right of appeal should be introduced to allow third parties to appeal on the ground that it would be onerous to comply with the notice. When we introduced a new power, in last year's Finance Bill, allowing the Revenue to require access to documents about unnamed taxpayers, we included such a right of appeal. However, there is a distinction in the circumstances. A notice requiring information relating to an unnamed taxpayer can be in respect of a possibly large class of taxpayers. This means that the Revenue and the appeal commissioners may inadvertently require access to documents relating to a much larger class of taxpayers

    913
    than was intended. For this reason, we provided a limited right of appeal on the ground that it would be onerous to comply with the notice. The circumstances are different for a notice in respect of a single, named taxpayer.
    I am reluctant to accept the amendment. Although the third party does not have a direct right of appeal to the commissioners, he has full and proper right of appeal under the present procedures. First, the third party can appeal directly to the courts by way of judicial review. The Revenue is entitled to require access to documents that may reasonably be required for the purposes of determining the tax liabilities of the named taxpayer. A notice requiring access to more documents than could reasonably be required would be struck out by the courts, as was established in 1974 in Clinch v. Commissioners of Inland Revenue.
    Secondly, the third party has an indirect right of appeal to the appeal commissioners. If the third party considers that the notice is unreasonable, he can object to the Revenue, explaining his reasons. The Revenue can accept his reasons and withdraw or modify the notice, or reject them and insist that he complies with the notice. If he refuses to do so, the Revenue can let the matter drop or institute penalty proceedings before the appeal commissioners. The proceedings give the third party an opportunity to appeal against the notice to the appeal commissioners by explaining his reasons for refusing to comply. If the taxpayer's appeal is upheld, there will obviously be no penalty.
    I am not persuaded by the amendment. The subject was discussed in consultations on the recommendations of the Keith committee. It was widely recognised that one had a choice of oversight before or after the event, but not both. Although my hon. Friend made some comments about penalty proceedings, there is a longstop by which the taxpayer can gain access to the appeal commissioners.
    My hon. Friend was as persuasive as he always is, but I cannot accept the amendment.
    Mr. William Clark: My hon. Friend did not say that the third party is not represented before the commissioners. I cannot understand my right hon. Friend saying that the third party has access to the courts. Of course he has, but that is terribly expensive. If I am a third party and the Revenue is inquiring into the tax affairs of someone I knew years ago, I cannot understand why I should be put to the burdensome cost of complying. Who will pay the legal fees? They will fall on me. It would be simpler if my right hon. Friend were to reconsider the issue. It is simple to allow the third party a right of immediate appeal to the commissioners, whereby everyone is protected. It is convoluted to say that there is a longstop and that the third party can argue his case in the penalty proceedings. I do not think that my right hon. Friend can justify that.
    Why can the inspector of taxes request a third party's documents from the commissioners without the third party or the named taxpayer being present?
    Mr. Norman Lamont: The recommendations are based on the recommendations of the committee under Lord Keith. They were the subject of widespread consultation and there was a degree of consensus for them. However,
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    my hon. Friend is clearly unhappy. I will reflect further on what he has said, but I hope that he will not take that as a commitment to bring a proposal forward on Report.
    Sir William Clark: I accept that, and I am most grateful to my right hon. Friend. He said that there had been considerable consultation and that the consensus was that this provision was perfectly all right under the Keith proposals. However, the Confederation of British Industry, which represents a tremendous number of the business interest in this country, is not happy. As my right hon. Friend has promised that he will consider my proposal—I realise he will do so without commitment—I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    7.30 pm
    Question proposed, That the clause stand part of the Bill.
    Mr. Nicholas Brown: On behalf of the Opposition Treasury Front Bench, I welcome you, Mr. Mc William, to the Chair of the Committee on the Finance Bill. It is a pleasure to see one of my colleagues from the northern region in the Chair. The uncharitable might say that if I have to go through the Finance Bill, it is nice to know that I am taking someone with me—at least part of the way.
    This debate is an opportunity for us to discuss on the Floor of the House some of the principal issues involved in a range of clauses which implement the recommendations of the Keith committee. Clause 138 deals with the Inland Revenue's right to information, and it is therefore an appropriate introductory vehicle to the more detailed examination that will take place in Committee upstairs. I must say at the outset that we welcome the clause and have no intention of voting against it. However, I regret that it has taken the Government from 1984 until now to introduce the important recommendations of the Keith committee into legislation.
    The Keith committee was set up in 1980 and responses to its proposals were made in 1984 and 1985. It is significant that it has taken the Government so long to evaluate the Keith proposals and the responses. The time they have taken gives an insight into, among other points, the energy of the tax avoidance lobby.
    Several issues arise directly out of clause 138. I want to highlight two of them, the first of which is the Revenue's right of access to accountants' working papers. The accountancy profession itself has mixed views about the proposed treatment under this clause. If Accountancy Age, is to be believed, and I am sure it is, some accountants have seen the clause as going some way to meet the reservations that the profession has expressed, whereas others in the profession are still concerned that the Revenue's powers may be too wide and that that could lead to an infringement of taxpayers' legitimate rights.
    Many who have commented on this aspect of the clause have made the point that the proposal puts the accountancy profession on the same footing as solicitors —in other words, that the relationship that accountants have with their clients is privileged. I am not sure that the analogy with solicitors is helpful in this context or that it is the right way in which to proceed. A solicitor has a duty to represent his client's interests to the best of his professional ability and there can be no ambiguity about which side a solicitor is on. The position for the

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    accountancy profession is less clear-cut. There has been discussion in the profession about the balance that has to be struck between an accountant's duty to the ethics of the profession and his natural desire to maximise the money accruing to his client—who is, after all, paying for the accountant's services—and those factors may sit uneasily alongside each other. Such issues are not always clear-cut, just as the dividing line between tax avoidance and tax evasion is not always plain to see.
    Mr. Beith: I am not sure whether the hon. Gentleman intended to suggest that the dilemma between the ethics of the profession and the interest of the client does not arise in the case of solicitors. The hon. Gentleman seemed to suggest that there was no analogy between accountants and solicitors, but solicitors face the same problem. A solicitor must ensure that in pursuing the interests of his client, he does not offend the ethics of his profession or the law itself.
    Mr. Brown: If the hon. Gentleman will allow me to develop the argument a little further, he will see the distinction I am trying to make. The intervention was premature.
    The working papers of accountants are professionally prepared documents which show clearly how a particular decision or conclusion has been reached. Such papers might also show what other conclusions were under consideration, but were rejected. It is not hard to understand why the Revenue would like access to those documents or why the accountancy profession is uneasy about such Revenue access. To put it no more strongly, it would be quite understandable for accountants to think twice about what they would commit to paper if they knew that one day their views would be exposed to scrutiny by their opposite number in the Revenue, perhaps in an adversarial setting.
    The decision that is made on clause 138 has an important impact on the debate about the balance between an accountant's duty towards the profession and professional ethics, and the accountant's much narrower duty towards his client. The clause places the emphasis firmly on the accountant's role as a professional adviser, who is clearly on the side of the person employing him. If that is the intention, the analogy with the legal profession to which l referred earlier begins to look better. However, there are implications for the future of the accountancy profession and, in particular, implications for its self-regulatory status and its relationship with the Revenue.
    The other important issue in the clause is the Revenue's right to information—a right that can be exercised only if the Revenue has sufficient staffing to exercise it in all the cases in which it is necessary. The clear result of inadequate staffing in the Inland Revenue is that tax avoidance is encouraged because tax avoiders know that they have a better chance of getting away with it.
    Tax inspectors are probably the most cost-effective employees of the Government. In 1987–88, the uncovering of tax frauds and undeclared tax raised just over £2 billion for the Exchequer, which was a 20 per cent. increase on the 1986–87 figure. The average yield brought in by a grade 7 inspector undertaking accounts work in one of the specialist tax offices dealing with large commercial firms was, on average, almost £1 million per head in 1987–88. It
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    is perfectly clear that growth in that area would be cost-effective for the Government, and for the British taxpayer.
    The other side of the coin is that it is also perfectly clear that failure to staff the Inland Revenue adequately is costing the country a great deal of money. In a parliamentary answer given to me last Monday, the Financial Secretary himself told me—[Interruption.] The Financial Secretary himself told me that the amount of tax written off as impossible to recover has risen fivefold, from £60 million in 1979 to just over £333 million in 1987. The number of non-taxpayers involved increased over the same period from 57,191 to 119,520 by 1987.
    The Select Committee on the Treasury and Civil Service has recently considered manpower losses in the Inland Revenue and has expressed its concern at the loss of tax inspectors from the Inland Revenue. In 1987–88, 260 left, and 170 left the year before that. According to the Committee, resignation rates have jumped significantly, especially in London and the south-east. Some of the blame for that has been put on the rates of pay, which have not kept pace with the remuneration offered in the private sector. If there are particular difficulties in London and the south-east, surely it is time for the Inland Revenue to look again at the relocation of some of its activities to the regions.
    It is also time for the Government to look again at the rates of pay for Revenue employees. It is no good putting more power into the hands of the Revenue if it does not have sufficient staff to allow it to exercise that power. Sadly, it is said that careers officers at universities ace advising graduates to join the Inland Revenue for training and then move across to the private sector for the money. The Treasury and Civil Service Committee was told that it costs £50,000 or more to train a skilled tax inspector. I greatly resent the fact that the British taxpayer is paying 1.0 train tax inspectors only to watch them move across to the private sector to use that training for the opposite purpose to that for which it was intended. It cannot be in the interests of the British taxpayer to train experts in tax avoidance if they then go to work for the tax avoiders rather than the tax collectors.
    The issue of manpower losses is serious—the more so when the initial understaffing of Revenue divisions is taken into account. In 1984 the Government said that they proposed to set up a new division to clamp down on schedule D evasions. The unit was to have 780 staff in post by April 1988. By mid-1988 there were only 588 staff in post.
    It is important to set the Government's attitude to tax evasion in its wider context—their attitude to other types of evasion. The Public Accounts Committee has an important role to play in that regard. The PAC has alerted the House to similar problems in other Departments in a number of its reports. Last November, we debated staff levels—which we have just discussed in relation to the Inland Revenue—at Customs and Excise, which was dealt with in the Committee's 33rd report. Surprisingly—perhaps not surprisingly—that report made similar observations to those that I have made about the Revenue. Again, emphasis was placed on the difficulty of recruiting staff in London and the south-east. The House was told that one serious consequence of understaffing seemed to be that Customs and Excise found it easier to pursue smaller

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    and more readily discerned evasion than tackling the larger issues. Our fear must be that exactly the same applies to the Inland Revenue.
    In that context it is instructive to compare the lack of resources put into pursuing income tax evasion with the strenuous efforts that the Government are making to combat benefit fraud in England, Wales and Scotland—although not, according to the Public Accounts Committee, in Northern Ireland. There has been a steady increase in the number of fraud investigators employed by the Department of Employment. Since 1984–85, when the figure stood at 450, it has increased to 820 in 1988–89 with an attendant increase in support staff.
    The figures for the Department of Social Security show a similar increase since 1979–80. In that year 2,311 people in full-time equivalent posts were directly employed in fraud-related work. The figure has grown to 2,940 in 1988–89. The Department of Employment can also report a substantial increase in the number of presecutions over the same period—2,250 in 1984–85, rising substantially to 4,045 in 1988–89. That substantial emphasis on combating state benefit fraud sits unhappily alongside the Government's failure adequately to staff the Inland Revenue or Customs and Excise which could both return far greater sums to the Exchequer if resources were properly applied.
    It is with those reservations that the Labour party approaches the clause, although we do not oppose any measure that will tighten up the current regulations and make tax evasion more difficult. We only wish that the Government shared our enthusiasm for such measures.
    Mr. Tony Worthington: I shall elaborate on some of the points made by my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown). It was interesting to hear, during our previous debate on amendment No. 23, the considerable concern expressed by the hon. Member for Croydon, South (Sir W. Clark) about the rights of accountants and their clients and the need to ensure that they were treated fairly and dealt with by approved methods. If only the same concern were shown for those who are being investigated for social security fraud. Let us be blunt about this. We are talking about stealing, and I believe that stealing should be treated in the same way whether it is stealing from a gas meter, from the Department of Social Security or from the Inland Revenue, yet we have very different ways of investigating and treating those different forms of stealing.
    7.45 pm
    Let me give the House an example from my constituency. A number of my constituents—who were very vulnerable because they were recovering alcoholics or drug abusers or were mentally ill—were living in a hostel and it was recommended that as part of their treatment they should go to work in another hostel and help the addicts there. They were given expenses. Someone at the Department of Social Security deemed that they were workers and receiving an income. That income was immediately confiscated—in the form of deductions from their benefits. Some 13 months later their case had still not been heard. During the investigation they were treated in what they described as in a thuggish way by the fraud squad, who made all kinds of threats.
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    My constituents approached me and I wrote to the Department of Social Security asking it to investigate the case. Several months later, I received a letter from the Department saying that the allegations had been investigated and found to be groundless. The investigation did not even involve a representative of the Department of Social Security interviewing my constituents and asking them about the basis of their complaints. That was the quality of the investigation.
    In contrast, it has taken the Government nine years to implement this tiny part of the Keith committee report on fraud and the Inland Revenue. As my hon. Friend the Member for Newcastle upon Tyne, East pointed out, the Government seem indifferent to the fact that in 1987–88 we were 200 tax inspectors short, and the Government have not said how they propose to fill those vacancies. It is the economics of Passchendaele. We are training people at a cost of £50,000 to perform a public service but that money is wasted because they go to work elsewhere.
    Mr. Eric Illsley: There is a knock-on effect.
    Mr. Worthington: As my hon. Friend says, there is a considerable knock-on effect. Nine years ago there was a 1·8 per cent. wastage rate among Inland Revenue inspectors in London, and in 1987–88 that figure had risen to 11·9 per cent.
    According to the Select Committee on the Treasury and Civil Service, we could reduce income tax by 2p in the pound simply by recruiting enough tax inspectors. Perhaps the House could unite on that. The Inland Revenue admitted losing £5 billion in uncollected taxes and that 16 per cent. of tax inspectors resign each year. Surely it is not beyond the Government's wit to see what a splendid money-making venture these could be. All we need to do is to find a way of recruiting tax inspectors, and everybody could pay 2p in the pound less in income tax each year.
    Why does that proposal not come forward from the Government? Why is there an absence of innovation and enterprise? Why can Lord Young's energies not be set free in this matter? We could have a wondrous advertising campaign to find tax inspectors. It would not matter what we paid them; it would be extremely cost-effective. I suspect that energy has not been put into the matter because too many Conservative Members think that too many stones might be overturned.
    Nevertheless, hon. Members should ask the Minister for an explanation of how the Inland Revenue will be adequately staffed. The matter cannot be left to the Civil Service Commission. It could not fill a pint glass, never mind rapidly fill a job vacancy. We need to do something more innovative than leave it to the Civil Service Commission to find an adequate number of tax inspectors. What will be done to fill the vacancies? It is clear that the country is losing a great deal of money by the failure to act energetically.
    Mr. Beith: The appearance on the statute book of a chapter of Revenue powers might give cause for some concern, but deliberations of the Keith committee and the wide consultations that surrounded it have led to a set of provisions that have met with general satisfaction because of the combination of new provisions and new safeguards and the analogous way in which they have been related to the powers of other agencies. It seems a strange fact of life that, as Members of Parliament, we tend to come into

    919
    contact with tax cases, when the powers of the Revenue have been inadequate properly to discharge a task and someone has got away.
    That applies to other matters. One has the vision of the Barlow Clowes affair and documents being shredded in an upstairs room—incidentally, just across the road from where I was born—while the Department investigators were coming in the front door. It conjures up pictures of Miss Fawn Hall going out of the Pentagon with documents in her boots, as I believe she confessed to having done. Powers have either been insufficient or insensitively used. The taxpayer who may have made an error, rather than seek to defraud the nation, suddenly finds the apparatus descending on him with a degree of thuggishness, as the hon. Member for Newcastle upon Tyne, East (Mr. Brown) described in relation to a benefit fraud case. The powers seem to be necessary and accompanied by appropriate safeguards.
    I served on the Treasury Sub-Committee of the Treasury and Civil Service Select Committee that looked into the staffing problem at the Inland Revenue, and I listened to the arguments that were put forward. Like all members of the Sub-Committee, I was struck not only by the vast amount of money that is being lost by the lack of staffing but by the need for more radical thinking about how to deal with the problem. Several points came to light. One was that, to be successful, it would be necessary for the Government to devote a lot more attention to making it possible to recruit and retain women tax inspectors. That argues for part-time work, opportunities for career interruption, child-care facilities and a range of matters that would make the job one in which women could be retained. The private sector will certainly look for ways to make tax consultancy a suitable option for trained female tax inspectors.
    There seems to be a lack of flexibility in the payment system, as I remember from my questioning of an Inland Revenue official. Any private concern faced with the drift away of such large numbers of people would move quickly to provide appropriate incentives and remuneration when required. I am thinking particularly of the south-east of England. I agree with the hon. Member for Newcastle upon Tyne, East that substantial relocation is desirable. Some work has been done, but more could be done. When there is an immediate crisis and staff are moving away quickly, the payment system in the public service must have the flexibility to respond as the private sector would respond. We will waste our time by adding powers to the statute book if we do not ensure that the Revenue has enough staff to carry them out.
    Mr. Norman Lamont: I am grateful to the hon. Member for Berwick-upon-Tweed (Mr. Beith) for his comments about the background to the Keith committee's conclusions and their implementation. When a series of clauses such as this are put in the Finance Bill it is not always appreciated to what extent they modernise and build safeguards into the powers that already exist. The hon. Gentleman summed it up fairly and accurately. I do not think that the proposals have caused alarm. They have been widely supported by professional bodies. I am glad that the hon. Gentleman confirmed that view—I like to hear that other people have that view. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) said the same thing.
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    The only point with which I quarrel slightly is about the delay in introducing the recommendations. The hon. Member for Clydebank and Milngavie (Mr. Worthington) talked about these "tiny" provisions. They represent almost the last instalment of the Keith committee recommendations. We have been implementing them year by year. We have done so gradually for precisely the reason that the hon. Member for Berwick-upon-Tweed highlighted: they are sensitive matters. The Revenue has been right to move on the basis of consultation and consensus.
    The hon. Member for Newcastle-upon-Tyne, East talked about legal and accountancy privilege. It is a controversial issue—one that I hesitated at the time to stray into in any way. There is no change in legal privilege. There is a change in the focus on the privilege of accountants. I was slightly surprised at what the hon. Gentleman said about accountants' concern. I do not think that that is true of representative bodies. They saw the clauses in the consultation exercise and did not express concern.
    The Bill introduces a new and better-focused protection for confidentiality. The Revenue will not be able to require accountants to disclose their audit papers or the tax advice that they give their clients. That would broadly give the same protection for confidentiality to the taxpayer's accountant as to his lawyer. The Keith committee recommended that privilege, subject to the override, should be extended to tax advice given by accountants. As we decided against the override for legal professional privilege, it was not possible to extend legal professional privilege subject to the override to professional accountants as Keith recommended. The Government's approach is to provide a separate form of protection for accountants that is distinct from but similar to that given to lawyers. The present protection for accountants' papers needs a balance to ensure that the Revenue can see the papers that it needs to see, while properly protecting the confidentiality of the professional relationship.
    In some instances, the protection is too broad. In many small businesses, accountants' working papers include most of the books of the business. In such cases it would be impossible for the Revenue to check and understand the accounts of a business if it were refused access to the accountant's working papers. On the other hand, the present protection for accountant working papers will fail to cover some of the papers that Keith thought should remain confidential. I believe that there is a degree of consensus for the proposals.
    The hon. Members for Clydebank and Milngavie and for Berwick-upon-Tweed talked about the loss of tax inspectors in the Revenue. Of course I take the level of staff losses, especially in London and the south-east, extremely seriously. Steps are being taken to stem the losses. Some of the ideas mentioned by the hon. Member for Berwick-upon-Tweed are precisely ones that are being implemented in the Revenue. The Revenue is taking a number of steps, and the signs are that they are beginning to pay off. We are having special increases in pay targeted to groups with particular problems of recruitment and retention. Relocation was one of the points mentioned by the hon. Member for Berwick-upon-Tweed. We have a continuing and large programme to move work out of London to areas where costs are less. The Revenue is well in the van there.

    921
    We have also done a lot in terms of moving staff into the areas where they can concentrate resources on those areas that have the highest yield in relation to staff costs. The number of inspectors investigating accounts has increased 10 per cent. in the last three years. We have increased the resources and effectiveness in areas of compliance work by clerical staff below inspector level. The number of higher grade tax officers dealing with the black economy has nearly doubled in three years and the annual yield per officer on PAYE audit has doubled, coverage has trebled and the yield has increased fivefold. Yield from Inland Revenue counter-avoidance and evasion activities is worth £2 billion a year, which is equivalent to saving £80 for every taxpayer or a reduction of 1½p in the basic rate, which is not short of what the hon. Member for Clydebank and Milngarvie spoke about.
    8 pm
    Turning to what we are meant to be talking about, the Keith committee and the reforms in detail, I should emphasise that they do not give sweeping new powers to the Revenue nor do they place new burdens on the taxpayer. They generally update and simplify the procedures while setting out clearly in law the limits on the power of the Revenue in establishing a full system of safeguards for the public.
    Clause 138 is the first group of about 30 clauses whose purpose relates to the reform of the information of the Revenue. As I have said several times, they have been the subject of extensive consultation. Keith found that the powers of the revenue were neither excessive nor misused, but were out of date and needed revision. We need a balance between the interests of the tax gathering agency and its duty to the wider body of taxpayers. After Keith published its report in 1983, we invited parties to write in with comments. The revised proposals were well received. The consultative paper received a wide circulation. More than 800 copies were issued and there were many articles in the accountancy press on the proposals. There was a strong response from bodies representing the professions, businesses, firms of accountants and many individuals.
    The vast majority of the proposals enjoyed the support of respondents. For example, the British Bankers Association
    "welcome the pragmatic response displayed by the Revenue."
    The Institute of Chartered Accountants of Scotland said —it is not often that we hear all these compliments to the Revenue—
    "We wish to take this opportunity of commending the Inland Revenue. The consultation process which the Revenue has adopted for the introduction of the Keith Committee proposals has proved helpful. It has, we believe, been useful both to the Revenue and to the taxpayer."
    The message has come through loud and clear that the right balance is rather difficult to reach. The solution of pleasing all of the people all of the time has perhaps not been reached, but I do not believe that there is any real reason for alarm or fierce criticism of the proposals. I am grateful to Opposition Members for what they have said about them.
    Question put and agreed to.

  Clause 1

    RATES
    Dr. John Marek: I beg to move amendment No. I, in page 2, line 2, leave out £0·0272' and insert '£0·0292'.
    The Temporary Chairman (Mr. John McWilliam): With this it will be convenient to take the following amendments: No. 11, in page 2, line 2, leave out £0·0272' and insert 10.0383'.
    No. 2, in page 2, line 2, at end insert—
    '(2A) In section 13A of the Act (rebate on unleaded petrol for "£0·0272" there shall be substituted "£0·0292".'.
    No. 12, page 2, line 2, at end insert—
    '(2A) In section 13A of that Act (rebate on unleaded petrol) for "£0·0272" there shall be substituted "£0·0383".'.
    No. 3, in page 2, line 8, leave out subsection (4) and insert—
    `(4) Subsections (1), (2), (3) and (4) shall be deemed to have come into force at 6 p.m. on 14th March 1989. Subsection (2A) shall come into force at 9 a.m. on 10th May 1989.'.
    Dr. Marek: I must point out that with amendment No. 1 we can discuss several other amendments that have been put down by Democrat Members who are not here at present, but who I hope will return quickly.
    Hon. Members will notice that there is a bidding auction as to how much we should increase the rebate on unleaded fuel. Again, there may be a Division in the House on how far we should go in order to introduce unleaded petrol as quickly as possible. I do not believe, however, that there is any dispute about the desirability of doing so. The Opposition have reservations about how far the Government have gone. Perhaps we have even more reservations about the Government not doing anything about it until recently. To be fair, they have taken some measures, but we believe that they should have taken more.
    The amendment is a moderate one, because we are a moderate party. We intend to continue along that path, but I will be interested to hear what the Minister says about the Government's programme and where it could be improved.
    There is no doubt that lead poisons the brain. Lead additives in petrol find their way into all our bodies, and retard the development of children. Nearly all children are now affected to some extent by lead poisoning. Some recent research even suggests that lead is the primary risk factor for impairing the development of children.
    Of course, large particles of lead emitted by cars will fall out by the roadside, and small ones will permeate the atmosphere. That is not a local problem. Lead gets into the air and it can be blown from here to nearly every country within the European Community. All of us suffer damage because we breathe it. We can do no other than breathe the atmosphere. Of course, when lead settles on plants and in the environment, we eat it through our food.
    Unborn children are especially at risk because they are still developing in their mother's womb. It is interesting that the fatal dose for a woman is a blood level of 40 mg per 100 ml and the fatal dose for a man is 100 mg per 100 ml. Recent research found that in London schoolchildren suffered a seven point handicap in their IQ when their blood level was more than 13 mg per 100 ml. We must be clear that we do not need large amounts of lead in our blood. Certainly children do not need to have large

    923
    amounts of lead in their blood to suffer in their development and to suffer permanent damage for the rest of their lives.
    I should like to examine what the Government have done and how they are doing it compared with the action in other countries.
    Mr. Keith Mans: Will the hon. Gentleman point out the research that shows that higher levels of lead in the atmosphere lead to higher levels of lead in the blood of adults rather than children? I am not aware of any evidence to the contrary.
    Dr. Marek: I was not comparing adults with children. I was saying that both were involved. I am relying on the words of Professor Smith, who is professor of organic chemistry in the chemistry department at Reading university. The hon. Gentleman can obtain all the evidence that he needs from that source.
    Mr. Mans: I understand that that research was limited to children, but the most substantive research on adults concentrated on taxi drivers in London, who were reckoned to inhale a considerable amount of lead. Surprisingly, however, there was no evidence that the amount of lead in their bloodstream was greater than that of the control group.
    Dr Marek: The hon. Gentleman is talking about one set of experiments and all I can say is that that result is unexpected and, therefore, it is likely to be wrong. We need a lot more research into adults and —
    Mr. Matthew Taylorrose—
    Dr. Marek: I shall give way to the hon. Gentleman if he will allow me to finish my reply to the hon. Member for Wyre (Mr. Mans).
    Many more experiments are required to establish exactly what is happening. Although the metabolism of children is different from that of adults, it is not all that different and there could be a change in the relative intake of lead. However, what is certain is that most informed opinion would say that adults living in a lead environment would experience an increase in lead poisoning.
    Mr. Matthew Taylor: The hon. Gentleman might be interested to know that in America between 1976 and 1980 there were substantial decreases in the lead emitted into the atmosphere through petrol and a substantial decrease—of 36 per cent.—in the amount of lead in average blood samples there. Therefore, there seems to be some evidence that runs contrary to that of the hon. Member for Wyre (Mr. Mans).
    Dr. Marek: I am grateful to the hon. Gentleman for giving that evidence. I had hoped that we would have a discussion in which all hon. Members would be in general agreement about the problem so that we could simply seek a solution. Indeed, I think that we are probably all agreed that there is a problem that must be addressed and that the central question is whether the Government are approaching it in the right way and whether they are doing enough to get rid of the serious problem that we all agree exists, at least for children, and, some of us would add, for adults also.
    It is a European if not a global problem because air circulates and I am fairly sure that lead emitted in this country would probably find its way right across Russia.
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    One piece of research from a Surrey university research group looking into the hazards of lead pollution on the M25 and M 1 has recently caught my eye. The group found that the entire length of the M 1 was littered with lead sediment—perhaps that is to be expected after 20 years. It also reported a huge rise at many of the intersections and found that even after only two years conditions on the Surrey section of the M25 were generally worse than those on the M1.
    The group also found high concentrations of lead in Parliament square. I hope that none of us eats anything grown in Parliament square—I do not think that we do —but when we leave this building we go out into an atmosphere with possibly one of the highest concentrations of lead in the country. I think of that every time I leave the House and try to cross at the traffic lights at Bridge street and Parliament street. Many vehicles in that enormous roar of traffic are still emitting lead that we breathe in before the huge particles settle on the ground.
    Let us compare what the Government have been doing with what has been happening in other European countries. In the Netherlands, unleaded petrol is available in every garage. In Denmark, the coverage figure is 90 per cent. and in West Germany it is 75 per cent. In March 1988, 700 garages in Britain sold unleaded petrol. By the end of January this year, that figure had increased to 4,300 that is, if my sources of information are correct. That represents about 22 per cent. of garages. The latest figure is that 38 per cent. of garages sell unleaded petrol. I am sure that the proportion here is higher than in countries such as Spain or Greece, although I do not have the figures for the number of garages selling unleaded petrol in those countries. Nevertheless, the figure for this country is well below those for countries such as the Netherlands, Denmark and West Germany.
    The first question I want to ask the Minister is whether he confidently expects—
    8.15 pm
    Mr. Quentin Daviesrose—
    Dr. Marek: I shall certainly give way to the hon. Gentleman in a minute. Perhaps he will just let me ask my question.
    Does the Minister confidently expect that the good rates of increase that we have seen in the past few months will be kept up, so that, standing at the Dispatch Box in a year's time, I shall be able to give credit to the Government because instead of 38 per cent. of our garages selling unleaded petrol, the proportion will be over 60 per cent. or even higher?
    Mr. Davies: The hon. Gentleman is known as a distinguished mathematician so I wonder whether he can calculate for the benefit of the House the rate of increase from January last year until now in the number of garages selling unleaded petrol that the figures that he has just quoted to the Committee represent. Does he agree that it would be churlish not to give the Government a great deal of credit for the remarkable rate of increase, which I know he will be able to calculate with greater accuracy and greater speed than myself?
    Dr. Marek: I do not want to depart from the spirit of unanimity in the House about the fact that everybody wants to do something about this problem. Nevertheless, the hon. Gentleman must realise that rates of increases in

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    themselves do not show exactly what is happening in any particular situation. At Treasury Question Time last Thursday, the Chancellor of the Exchequer said that the rate of increase in inflation in West Germany was 300 per cent. when it increased, if my memory serves me correctly, from 0·5 per cent. to 1·5 per cent. That is a high figure, and the Chancellor was prepared to use it, but most people would still say that inflation in West Germany is a lot less, at 1·5 per cent., than inflation in this country, where it is 7·9 per cent. The hon. Gentleman should not try to mislead me by appealing to a selected statistic and saying that, if it sounds good, everything in the country must be rosy.
    I am glad that the Government have done something and I am pleased that they have done what they did in connection with the rebate on unleaded petrol in the Budget. My reservation is that they should have done a little more and I shall suggest later what they could have done.
    Mr. David Martin: Perhaps the hon. Gentleman would like to know another statistic, which is that, instead of unleaded petrol representing 1 per cent. of all petrol sales as it did a year ago, 6 per cent. of petrol sales are now unleaded. That is a substantial increase and I hope that credit will be given for that also.
    Dr. Marek: That may be right, but the hon. Gentleman's party's research department has been a little lackadaisical in not giving him the right figures. I thought that the Under-Secretary of State for the Environment announced a figure of 14 per cent. a few days ago—[Interruption.] Well, like us all, the hon. Gentleman must first try to get his facts right and secondly, he must give me time to develop my case because I intend to come to the question of total petrol sales in this country.
    At the moment, I am considering the number of garages or the percentage of garages in this country that sell unleaded petrol. The fact is that the proportion is about 38 per cent. at present, whereas in West Germany it is 75 per cent. In Denmark it is 90 per cent., and in the Netherlands every garage must sell unleaded petrol. Therefore, I want to ask the Economy Secretary whether he can do more to increase the number of garages that are selling unleaded petrol in this country. Why will he not ban or say that he intends to ban the sale of two-star and three-star petrol in a year or two so that those pumps can then be used to sell unleaded petrol?
    I turn now to what the hon. Member for Portsmouth, South (Mr. Martin) said about the percentage of unleaded petrol that is sold. I have a few figures. In the Netherlands and Switzerland, over one third of the petrol sold is unleaded, in Denmark and Sweden it is one third and in West Germany about half is lead-free. In Britain, over a year ago about 0·1 per cent. of petrol sold was unleaded. In February of this year, 5 per cent. of petrol sold was unleaded and, if I am right, the Parliamentary Under-Secretary of State for the Environment announced on 1 May that 14 per cent. of petrol was unleaded.
    That is a creditable increase, but will the Government confirm that it will continue and that, if we have the same debate in a year's time, that 14 per cent. will have risen to more than 33 per cent.? If that were so, I would certainly compliment and congratulate the Government. However, 14 per cent. is low compared to the figures in other
    926
    developed, responsible and evironmentally conscious countries such as the Netherlands, Denmark, West Germany, Switzerland and Sweden.
    Some countries do have lower figures than the United Kingdom. The sale of unleaded petrol in Spain is still only about 1 per cent. of its total petrol sales, and in Luxembourg, for other reasons, the figure is about 4 per cent. We should be leaders in Europe, but, as in so many other ways, we never are; we are always trying to catch up from the back.
    I repeat my question to the Economic Secretary: is he confident that the 14 per cent. will have risen to more than 30 per cent. in a year's time? If not, the Government must take on board extra measures to try to increase the sale of unleaded petrol. Will all new cars be able to run on lead-free petrol after October 1989? Have there been any hitches in that process? Is the Government's relationship with car manufacturers and companies good?
    I have already referred to prohibiting the sale of two-star and three-star petrol. The Government could take some action because such petrol is necessary in only a few restrictive circumstances. The Government could not only prohibit the use of two-star and three-star petrol and say that those pumps should sell unleaded petrol, but could go further and say that every garage should sell unleaded petrol. I wonder how much hardship to garages would result from that? Perhaps it would mean some increases in their costs, but the Government should consider that matter now, so that the industry has plenty of time in which to adjust. One or two garages may not be able to sell unleaded petrol simply because they do not have room, but that could be overcome if the Government had a mind to do it.
    The Government could substantially reduce the tax on unleaded petrol for a temporary period, perhaps two or three years. That would reduce the price far more than the amendment tabled by the Opposition, and perhaps even more than the amendment tabled by the Democrats.
    The Government should make it abundantly clear to car owners that they can, by spending £20, have their car adjusted to run on unleaded petrol. At the moment, there is a difference of perhaps 10p per gallon. The sales and availability of unleaded petrol are rising, but if they start flattening off, a big increase in the rebate for unleaded petrol should be seriously considered as a temporary measure to help people to adjust their cars for unleaded petrol. Two out of three cars can, with a small adjustment, run on unleaded petrol.
    Exhortation should play a part in this process, as should appealing to the environmental spirit in the country. We should exhort people to think about the welfare of others. That is something which the Government are not particularly good at doing. We must make it worth while for people to run their cars on unleaded petrol. There would be nothing wrong in increasing the price of four-star petrol, because once enough motorists use enough unleaded petrol, the tax on leaded petrol can be increased.
    Mr. Mans: Is that the Labour Party's policy?
    Dr. Marek: No, it is a suggestion from the Opposition to the Government.
    Mr. Michael Brown: I am seriously worried about the hon. Gentleman's suggestion. Many of my constituents do not frequently change their

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    cars and many of them may well vote for the Labour party. People who have fairly old cars often cannot afford to change them very often and it would be an unfair imposition on them to force them to change their cars when they probably cannot afford to do so. I wonder if the hon. Gentleman really means what he is saying.
    Dr. Marek: I expect that the hon. Gentleman is trying to make the price increases in four-star petrol, to which I am alluding, seem far better than they would be. Petrol should be valorised each year. At the moment, it is at an historically cheap level, but it will not continue to be so for many more years.
    I would always make the health of our nation and children a higher priority than cost. I am not saying that my suggestion is the only way of bringing unleaded petrol into general use throughout the country. There are various ways, and I have suggested three or four. If other ways fail, my last suggestion should not be dismissed by any Government. I hope that the hon. Member for Brigg and Cleethorpes (Mr. Brown) is now satisfied about what I mean.
    I do not want to take up too much time because we want to finish the debate by about 10 o'clock. We must advertise and let motorists know that unleaded petrol is available in garages, that is is cheaper and that their car can, with minor alterations, be adjusted to take it.
    Have the Government carried out any market research on the effect of their recent publicity campaign, which I welcome? Has it been effective? I know that the Campaign for Lead-Free Air has received £20,000 or £30,000 over three years. That is not very much and I wonder how much money the Government are putting into publicity.
    The Government must be careful to ensure that the recent increases in the amount of unleaded petrol being sold do not flatten off and that the number of garages selling unleaded petrol continues to rise. The country would not like the reasonably good figures for the past five or six months to level off and nothing to be done about it. If that were to happen, the Government would have no excuse for not listening to what the Opposition are saying. That is why we have tabled the amendment.
    Mr. Robert Adley: The hon. Member for Wrexham (Dr. Marek) has just made a fairly long and, he may judge when he reads it, slightly controversial speech. Nevertheless, we would all agree with some of the things that he said. He made the important point that pollution, which is what this debate is about, is no respecter of national boundaries. He also suggested—a suggestion which I welcome—that we should try to tackle these matters on a partisan basis. He talked about the sales of unleaded petrol in other countries. Will my hon. Friend the Economic Secretary—either when he replies to the debate or at a later date—contemplate the proposition that some of those countries' Governments are possibly less influenced by their motor manufacturers or by the oil companies than our Government are? We have continually heard from the oil companies, and often from the motor manufacturers, that anti-pollution proposals made in connection with the motor car will cost the consumer unspeakable amounts of money. I frequently have grave doubts about the validity of some of those claims.
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    8.30 pm
    I think I am right in saying that this is the third successive Budget in which the Chancellor has introduced inducements to purchase lead-free petrol, but this is the first time that the changes introduced have really bitten or resulted in significant take-up by the motoring public. We need to see the amendments in the context of the levels of inducement that should be offered by the Government to direct the public's purchasing power into environmentally desirable areas.
    This brings us to the question of judgment. The hon. Member for Wrexham listed the policies of a number of Governments. He will be aware that the Dutch Government, to whom he referred, recently sought to impose swingeing environmental costs on motorists in Holland, the result of which has been that the Dutch Government are now unable to sustain themselves arid face a general election. I can well understand that the hon. Gentleman might want to bring that about in this country, but I suspect that the Government are right to be cautious in order to avoid falling into the trap that the Dutch Government have set for themselves.
    In his Budget speech, my right hon. Friend the Chancellor said that the proposals which relate specifically to reducing the duty on lead-free petrol would cost the Revenue £40 million. Some of us with long memories recall that Labour Governments have an unrivalled ability to spend money, but not always to raise it or run a buoyant economy. The Government have a good track record and should be left to judge the level at which the duty on unleaded petrol should be set.
    The environmental tinge to be seen in the motoring components of this Budget is entirely welcome. All these environmental changes are expensive. We would all agree in principle with the remark by the hon. Member for Wrexham that people's health is of paramount importance. He was also correct to say that this country has a lot of catching up to do. But no Government or political party would be doing justice to themselves or the electors if they failed to point out to people that environmental improvements—to do with petrol, water or anything else—are expensive.
    I welcome what my right hon. Friend the Chancellor said about unleaded petrol in the Budget speech, in which he said that he hoped his proposals
    "will contribute to a marked increase in the use of unleaded petrol over the next 12 months."—[Official Report, 14 March 1989; Vol. 149, c. 306.]
    He went on to say that the level of vehicle excise duty on buses and coaches should cover their track costs. That is a means of ensuring that the environmental pollution created by certain forms of road vehicle is reflected in the taxation that they pay. I do not want to embarrass my hon. Friend the Economic Secretary by reminding him that we discussed track costs of coaches a few months ago and had a minor disagreement about them. I am sure that he shares my joy and satisfaction that the Chancellor accepted my proposition that coaches were not covering their track costs.
    The purpose of clause 1—it is strange to debate it at the end of two days' discussion on the Floor of the House —is to use taxation policy as an instrument of environmental protection, which I strongly welcome. It is a significant change of Government policy which has a potential application in many other areas. As was clearly shown in the intervention made by some of my hon.

    929
    Friends in the speech of my hon. Friend the Member for Wrexham, we are short of facts and knowledge about lead-free petrol—[Interruption.] I am not making a point against the hon. Member for Wrexham. We can all produce learned professorial quotations that inform us of different facts about lead-free petrol or any other subject.
    We are short of facts not only about lead-free petrol but particularly about pollution and the damage to health caused by diesel vehicles. I think particularly of diesel vehicles that are heavily used in urban areas, such as coaches. The Royal Commission on environmental pollution in 1984 tackled the issue of pollution from motor vehicles. Its report was referred to in an article by Colin Dryden in The Sunday Times of 2 April this year. He said that smoke from diesel vehicles was
    "in many circumstances at an unacceptable level … the vehicles themselves have got bigger and more powerful."
    He went on to refer to what other countries are doing, much as the hon. Member for Wrexham did, and to quote the American experience of diesel-free and lead-free petrol:
    "American requirements are far tougher, particularly for buses, on the grounds that they put health more at risk through operating in cities."
    My hon. Friend the Member for Wyre (Mr. Mans) spoke about a taxi driver. If that taxi driver had attached himself to the back of his vehicle and inhaled the fumes from it the levels of lead in his blood might well have been significantly different from those which apparently showed up in the "research" to which my hon. Friend referred.
    In relation to hydrocarbon oil duties and vehicle excise duties, the proposition that the polluter pays is enshrined in clause 1. Air pollution, particularly from the internal combustion engine, is a significant factor in the problem known colloquially as the greenhouse effect. Large vehicles such as buses and coaches cause other forms of pollution —noise, congestion and damage to the road surface. I therefore hope that the first cautious step that the Government have taken along the road of using taxation policy to force environmental change is but the beginning, and that that policy will be pursued more vigorously in many other areas as the years go by.
    Mr. Turner: As always in debates like this, it may be dangerous to take too wide a view on environmental pollution and the problems that people face not just in this country but throughout the world. My contribution will be simple and to the point. I recognise the efforts that the Government are making on this narrow facet of creating a healthier and more pleasant environent by encouraging the use of lead-free petrol. The Government have a reasonable and desirable objective. If we agree with their proposal, we must consider the incentives being built into the policy to achieve that objective.
    The contribution of the Labour party is modest, in that we want to urge the Government to go further. That is why we have tabled the amendment. In Wolverhampton a local newpaper, the Express and Star, which has been mentioned in the House several times already, has run an excellent campaign to encourage the use of lead-free petrol. I have tabled an early-day motion congratulating the newspaper on what it has done. Over 1,000 private cars in Wolverhampton have been converted within a short period to use lead-free petrol. The local authority, neighbouring local authorities, the Midlands electricity
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    board and numerous companies, large and small, all took part in the campaign and have contributed by converting their fleets of vehicles to lead-free petrol.
    If the Government gave a greater concession, the campaign would be even more successful. I am speaking in the context of Wolverhampton but no doubt the same is happening in other areas. The Minister of State, Department of the Environment has taken an interest in the subject. There is widespread knowledge about how the campaign in Wolverhampton was orchestrated and the success that it has had.
    There is a great role for the Government to go much further because transport is involved in so many facets of government. They could also play a useful part in encouraging other agencies to convert their vehicles. I make no modest claim; I had my car converted to use lead-free petrol, and it is running smoothly. I am pleased to have made that contribution to the campaign in Wolverhampton and to the policy of the Government. That is the essence of what we are trying to achieve.
    I hope that we can persuade the Government to accept our modest amendment. Despite the success of the Express and Star's campaign and of campaigns in other parts of the country, and the Government's taxation concession, we should create further incentives for people to convert their vehicles. That would make an important contribution to a better environment for us all and a healthier environment in which to bring up our children. In addition to the other steps that we might take to improve the environment, the amendment would make this country a better place for future generations.
    8.45 pm
    Mr. Nicholas Budgen: I am sure that the hon. Member for Wolverhampton, South-East (Mr. Turner) and I can achieve a fair amount of cross-party agreement on this issue. Pollution is important in Wolverhampton, which is close to the M6 and the M1. Within the next four to six years there will be a major new motorway to the west of Wolverhampton. It will go round our part of the west midlands. That means that children in Wolverhampton will run a greater risk of lead pollution.
    The hon. Gentleman was right to recommend warmly the way in which the Express and Star has drawn attention to the advantages in the Budget for those who use lead-free petrol. I join him in saying what a good job the Express and Star has done be its exhortations. Ironically, by drawing attention to the success that the Express and Star has achieved, the hon. Gentleman has to some extent undermined his case for further tax reliefs. It is not the exhortation from the Express and Star—important and influential though the newspaper is—that is causing people to convert their motor cars; they are doing it because they believe that it is in their financial interest to take account of the already generous concession.
    It is a matter of judgment what exactly the financial concession should be. There is no objective way of saying whether the more substantial concession proposed in the amendment is right or whether the slightly meaner concession—as the hon. Gentleman would put it—proposed by the Government is right. All we can do is wait and see. Since the Budget and the campaign by the Express and Star, 95 per cent. of garages in Wolverhampton are offering lead-free petrol for sale. We do not know how

    931
    many of our constituents are taking advantage of the offer, but presumably the garages in Wolverhampton, like those who have converted their vehicles to lead-free petrol, are selling lead-free petrol not just because they wish—in schoolboy language—to suck up to the Express and Star but because they believe that there is money in it. Presumably they believe that because people are buying the stuff. So far as one can see at present, it seems that the problem is being addressed, as the Foreign Secretary would put it. It may even be partially solved.
    There is an element of menace about what the Labour party says. The hon. Member for Wrexham (Dr. Marek) talked about other measures. Let us be careful about that. It would be possible to introduce a law which made it a criminal offence not to convert one's car to lead-free petrol within x months. It would then be possible to make it an offence to use leaded petrol. Cars could then be stopped at random by the police and their fuel tested. For those who believe in the extension of the criminal law that would no doubt be a splendid demonstration of the power of the state over the citizen, but it would be most unwise.
    Every time that a citizen is stopped by the police, there is a tendency for him to say that he is not sure whether he likes being stopped by the police, that he feels rather uncomfortable about it.
    Mr. Adley: I hesitate to stop my hon. Friend's splendid flow, but a simple way to achieve his objective without involving the police would be for the Government to say that in 10 or 20 years only lead-free petrol will be sold. That is precisely what has been proposed in California. I understand that in about 20 years it intends to do away with the internal combustion engine altogether. Is not that the way that we should be going?
    Mr. Budgen: You still need some nark, whether it be a police officer or a man from weights and measures, to go round and see whether the stuff is being sold by somebody.
    The Temporary Chairman: Order. I do not have any nark.
    Mr. Budgen: When I say "you", I mean the nation. Whether the narks would be men from the Customs and Excise or from the constabulary, there would have to be narks of some sort to enforce the criminal law.
    The more our objectives are achieved by encouragement and by tax incentives and the less we use the criminal law the better. I hope that the Labour party will stop waving the banner of other measures in a somewhat menacing way and—
    Dr. Marek: Let me put the hon. Gentleman's mind at rest. I have in no way suggested that we should employ the criminal law to stop motorists to see whether they are using unleaded petrol. I hope that that helps him.
    Mr. Budgen: It is all very well saying that, but when the price of petrol went up enormously in the great days of the Administration of my right hon. Friend the Member for Bexley and Sidcup (Mr. Heath) under his prices and incomes policy, it was not considered enough to allow the market to discourage people from going fast in their motor cars. The House will recall that an extra limitation was imposed, in that speed limits were reduced, not for reasons of safety but to control fuel consumption. In other words, the criminal law was used not to maintain safety but for economic reasons.
    932
    I remember travelling at 60 mph when the limit was 50 mph and being stopped by the police. I was only warned, but I felt extremely resentful. If the criminal law is extended for the wrong reasons, it creates such resentment and the House should remember that the most important condition for the enforcement of the criminal law is that the House and the country should have the consent and co-operation of the public. I repeat that, if the criminal law is used for economic reasons, it creates resentment. Let us by all means think of other measures and talk about ways of giving further financial inducements to whomever one likes, but let us not use the criminal law.
    Mr. Illsley: I listened with interest to my hon. Friend the Member for Wolverhampton, South-East (Mr Turner) and the hon. Member for Wolverhampton, South-West (Mr. Budgen). I was beginning to think that I had stumbled into the wrong debate, as I do not have the opportunity to read the Express and Star.
    The criminal law is already used to control the sale of diesel fuel. It is a crime to use agricultural diesel in an ordinary motor vehicle. Therefore, although my hon. Friend the Member for Wrexham (Dr. Marek) did not mention the criminal law, the point made by the hon. Member for Wolverhampton, South-West is already upon us.
    I should have thought that there would be unanimity on both sides of the Committee about the dangers of lead poisoning. I was surprised to hear the hon. Member for Wyre (Mr. Mans) ask about studies on lead poisoning in adults. One study that I have been made aware of was carried out in Romania and relates to the male reproductive cycle. If that is not a good enough reason to be worried about lead poisoning, I do not know what is.
    Mr. Roger King: There might be a problem in Romania, but would the hon. Gentleman care to comment on the reproductive abilities of a normal Glaswegian given the problems of lead in water pipes?
    The Temporary Chairman: Order. I hope that the hon. Member for Barnsley, Central (Mr. Illsley) will not follow that line. The amendment relates to the narrow issue of lead in petrol.
    Mr. Illsley: I was going to compare the number of vehicles in Romania with those in London, but I do not want to comment on the reproductive systems of Londoners or of people from any other part of the country. I simply want to reinforce the point that recent studies have uncovered the effects of low doses of lead on the male reproductive system.
    There is enough information from studies to show the danger of lead poisoning, in particular lead poisoning from petrol. There is an urgent need for the average motorist to use unleaded fuel. However, the only incentive for a higher take-up of unleaded fuel is a financial one. The best way to achieve our objective seems to be to widen the difference in price between leaded and unleaded petrol. I agree that the Government's action since 1987 has gone some way towards achieving our objective. Between 1988–89 the increased take-up was about 1 per cent., but, since the Budget, that figure has more than doubled.
    However, some account should be taken of other taxpayers. We must, when introducing legislation to

    933
    promote the use of unleaded petrol, take note of the effect of the new measures on the public in general, including non-motorists. The result of the Chancellor's action was that the oil companies simply increased the price of leaded fuel. That resulted in the users of public transport, non-motorists and others having to bear the increased cost.
    9 pm
    The medical evidence in favour of using unleaded petrol is clear, and I await with interest any further remarks of the hon. Member for Wyre on that matter. Lead is a poison which, in large enough doses, causes heart disease, various cancers, respiratory disorders, insanity and other nervous disorders. The two additives in leaded petrol designed to prevent what is called the knocking effect—tetramethyl and tetraethyl—can be lethal. A drop or two on the skin can cause insanity. A few drops more can cause death.
    For obvious reasons, most of the research has been concerned with children and expectant mothers, for they are most seriously at risk from lead in petrol. But there is a general case on behalf of the whole human race for the widespread use of unleaded petrol. Lead can be ingested, inhaled and in other ways absorbed into the body. Leaded fuel is responsible for 90 per cent. of the lead pollution in the atmosphere, which in this country, means that about 7,000 tonnes per annum of that type of pollution is pumped into the atmosphere.
    To add to the evidence that other hon. Members have adduced to show that lead is a poison, I cite a survey that was carried out in my constituency at the Barnsley district general hospital. A report produced there by, among others, doctors Ward, Watson and Bryce-Smith, found a direct correlation between foetal growth and levels of lead found in placentae.
    That survey was carried out 10 years ago. Even then, it said that leaded petrol was a threat to unborn children. Since then, not enough has been done to encourage motorists in the extended use of unleaded fuel. The Government are crowing about the measures they have implemented in recent months, but more could have been done since that report was published.
    Nor is enough being done to encourage the petrol companies to supply unleaded petrol to garages. The first unleaded fuel went on sale in my constituency only last year. It is clear, therefore, that only in the last 12 months have many people been able to avail themselves of unleaded fuel.
    Mr. Mans: Can the hon. Gentleman point to one occasion, prior to the Government initiative about 18 months ago to promote the use of unleaded fuel, when a Labour Member warned about the dangers of lead in fuel for children? The Government have not been lethargic in their approach to this matter. Prior to the first introduction of the differential, there was not enough evidence to show the sort of effects that the hon. Gentleman has been describing.
    Mr. Illsley: The fact that I have cited a report that was produced in my constituency 10 years ago pointing out the dangers of using unleaded petrol shows that such evidence was available. I am sure that there was evidence predating that survey.
    Mr. Pike: My hon. Friend may care to know that, before the hon. Member for Wyre (Mr. Mans) came to this place, the Select Committee on the Environment examined this issue. Before the 1987 general election, Opposition Members were expressing concern about lead and other emissions from vehicles. It is wrong, therefore, to suggest that the matter was not raised in Parliament before the Government's recent action.
    Mr. Illsley: I am grateful to my hon. Friend for that intervention.
    Let us not forget the evidence that is and has been for some time available from other countries. It shows that lead-free petrol has been available for a number of years. EEC recommendations on the subject date from 1973. Japan was promoting unleaded fuel as long ago as 1975. If it is claimed that evidence was not available in this country —and my hon. Friend the Member for Burnley (Mr. Pike) has explained that it was—the Government could have paid attention to the evidence available in other, including EEC, countries, and taken a lead from them.
    The take-up levels abroad far outweigh those in Britain. My hon. Friend the Member for Wrexham emphasised this point. In the Netherlands, the availability rate is virtually 100 per cent., as is the take-up. In Denmark the take-up rate is 90 per cent. In West Germany it is 75 per cent. But until recently in the United Kingdom only 5 per cent. of garages were able to supply unleaded petrol.
    In West Germany, nearly 42 per cent. of all petrol sold is lead-free; in the Netherlands it is 36 per cent.; in Switzerland, 34 per cent.; in Denmark, 32 per cent.; and in Sweden, 30 per cent. Sales of unleaded fuel in this country increased between 1988 and 1989 from about 1 per cent. to 5 or 6 per cent. Since March, they have increased to about 14 per cent., and all credit to the Government for achieving that increase. I should like to see the figure increased beyond the 20 per cent. that Government spokesmen have been hinting will be achieved by the end of this year. We should try to push it up to the levels of our European counterparts.
    Mr. Roger King: The hon. Gentleman has given figures for Switzerland and Germany, two countries which have introduced legislation making it mandatory to provide exhaust catalysts on cars. Those vehicles can run only on unleaded fuel. That is why the take-up in those countries is so much higher than it is here. Similarly in Japan, where they had a totally different problem of atmospheric pollution, not just from lead but from exhaust emissions generally. That obliged the Japanese to switch to exhaust catalysts in an attempt to clean up the atmosphere. So the hon. Gentleman is not being strictly fair in comparing the take-up rates in those countries with the rate in this country, where the fitting of catalysts is not mandatory.
    Mr. Illsley: I defer to the hon. Gentleman's superior knowledge of the motor industry. We are not, in considering the amendment, debating the fitting of catalytic converters. That is why the comparisons that I was making are valid. It is a question of deciding how we are to achieve a greater take-up. Remembering that Japan has been dealing with this problem since 1975, we in Britain have had ample time in which to promote, by financial incentives, persuasion or legislation, the use of unleaded fuel. As the hon. Gentleman probably knows,

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    EC regulations to be introduced by October 1990 will require the majority of motor vehicles produced in this country to run on lead-free petrol.
    As to the costs of converting a vehicle, obviously my constituents are in the same position as those of many other right hon. and hon. Members—particularly those of the hon. Members for Brigg and Cleethorpes (Mr. Brown). No one is urging them to convert their vehicles overnight, but the point has been made already that two out of three vehicles can run on unleaded petrol without alteration—and while a conversion cost of about £20 has been mentioned, in my own constituency one major dealer is undertaking that work for only £4.95. Given that there is a lop differential between leaded and unleaded fuel, the savings to be made from using the latter will start to be seen very rapidly.
    Research by other countries shows that there is no increase in fuel consumption, no real need for engine modifications by manufacturers, no major increase in prices, and no great changes in refinery operations.
    Sir Hal Miller: Does the hon. Gentleman agree that some time was needed to allow British manufacturers to develop the lean burn technology as an alternative to the catalytic converter? One of the problems with the catalytic converter is the need for maintenance, adequate inspection and replacement. Britain was looking to a different route in the form of the lean burn engine. Another reason why we have not progressed at the same pace is that a large number of the vehicles currently on the road are not capable of the comparatively cheap conversion to unleaded fuel to which the hon. Gentleman draws attention. On the one hand there was a desire to make unleaded petrol more widely available, and on the other the interests of the car manufacturer and the car owner. What was the car owner to do with a vehicle that could not be converted? At the same time, manufacturers were exploring a different route.
    Mr. Illsley: Since 1975—1973 in the case of the EEC —car manufacturers in other countries have been looking to greater use of unleaded. That was sufficient time to consider the introduction of unleaded fuel to this country. I do not disagree with the hon. Gentleman's argument, but greater pressure over the next few years to adopt unleaded fuel will compel motor manufacturers to comply. In recent years, when vehicle safety or other features were introduced by legislation—one thinks of front and rear seat belts, for example—it was left to manufacturers to incorporate them in future production rather than to the motorist to fit them himself. It may be that over the next few years motor manufacturers will be forced to develop models that use unleaded fuel over a much shorter time scale than would otherwise be the case.
    More steps must be taken to encourage a better take-up of lead-free fuel. They include the scrapping of two-star petrol to free storage capacity for unleaded, more advertising campaigns about the benefits of unleaded fuel, and steps to encourage more motorists to convert their cars, even though two out of three vehicles are already capable of using lead-free fuel. Perhaps the best way of achieving those objectives is further to increase the price differential between leaded and unleaded fuel.
    9.15 pm
    Mr. Mans: The Government's present policy is the right one, and little would be gained by increasing the price differential between leaded and unleaded fuel to the extent suggested by Opposition Members. Before I introduced my ten-minute Bill last October on the provision of unleaded petrol and, specifically, engine adjustment, I too believed that the best way of achieving greater take-up was by cutting the price of unleaded petrol considerably.
    However, I examined the subject closely last summer and it is now clear to me that many other limitations and reasons are to blame for take-up being slower than we should like. It was a chicken-and-egg argument. There were fewer unleaded petrol outlets, and very few car manufacturers were producing vehicles capable of using it. Of the new vehicles registered last August, 50 per cent. could have been adjusted for unleaded at the point of manufacture but, for a number of reasons, were not.
    One reason was the type approval regulations. I am pleased that my hon. Friend the Minister for Roads and Traffic changed those regulations last September. However, the problem associated with those same regulations in a European context remains. Another problem was sheer ignorance in the motor trade and among the general public about which cars could be converted and about whether, having been so converted, they could still use unleaded. I make the point that simply decreasing petrol duty on unleaded fuel would not have the effect that Opposition Members suggest. However, I am pleased that so many of them are taking such a great interest in the subject.
    Perhaps I misled the hon. Member for Barnsley, Central (Mr. Illsey) when I suggested that, prior to 1977, there was no evidence that something needed to he done about unleaded petrol. I was trying to make the point that at that time there was an insufficient number of right hon. and hon. Members who understood the problem in all political parties—not just in one particular party.
    Also missing was a decent advertising campaign explaining to the public the problems of lead poisoning and that their cars could be converted. Today, we have all those activities up and running. Manufacturers are increasingly producing cars that can run on unleaded petrol. Virtually all the new cars from the Rover Group, for example, do so, and the same applies to many other major groups. That was not the case one year ago.
    Garages are making increasing provision for unleaded petrol. It is noticeable that whereas six months ago, only one pump dispensing unleaded petrol would be available on a garage forecourt with virtually no one making use of it, even before the Budget a considerable number of extra outlets were provided, with a noticeably larger number of unleaded pumps installed on the forecourts of certain garages. It is noticeable that there are now queues for unleaded petrol, whereas before there was none. All that occurred without the extra incentive provided in this year's Budget.
    I fear that, if we increased the differential, cars that could not be converted or that—for a number of mechanical reasons—it would be wrong to convert would be converted, simply because of a lack of knowledge in the motor trade about which engines could be converted and which could not.
    Mr. Robert B. Jones: My hon. Friend mentioned the problem of queueing at unleaded petrol pumps, which has certainly been visible over the past few months since the big swing to unleaded petrol. Garages have also been running out of such petrol at an increasing rate. There is clearly an opportunity for garages and petrol companies to encourage its use by converting more capacity as quickly as possible.
    Mr. Mans: My hon. Friend has made his point very well. Supply and demand must be balanced: simply changing one side of the equation rapidly will not necessarily increase the take-up rate over a finite period. I think that the present differential is about right. Motor cars are increasingly being converted to run on unleaded petrol, and there are more and more extra pumps able to provide it. I am not convinced that an increase in differential will add to the take-up rate.
    I was interested by some of the figures that the hon. Member for Wrexham (Dr. Marek) came up with. In the Netherlands, where the hon. Gentleman maintains that every garage must have an unleaded petrol pump, the take-up rate—according to the hon. Gentleman's figures —is only 33 per cent., whereas in Germany, where only 70 per cent. of garages have such pumps—
    Dr. Marek: I suspect that the reason is the one given by the hon. Member for Birmingham, Northfield (Mr. King). In Germany, legislation has just been introduced requiring catalytic converters.
    Mr. Mans: I accept that. I do not think, however, that simply making unleaded petrol pumps compulsory in all garages will necessarily mean a large increase in take-up. There are many other factors, including the type of engine involved. As I have said, I think that the differential is about right; the important thing is to achieve a complete programme to ensure that take-up increases progressively and reaches a much higher level. I am confident that within the year it will reach at least twice the present level of 14 per cent.
    Mr. Matthew Taylor: I am pleased to be able to speak to the Social and Liberal Democrat amendments, which provide a stronger financial incentive than any of the others that have been tabled. The starting point—on which everyone seems agreed tonight—is that, while much can be done to promote understanding of the need to turn to lead-free petrol, a financial incentive is needed for a rapid rather than gradual transfer as legislative requirements come to apply to motor manufacturers in any case.
    I welcome the Government's recognition of that need through the provision to increase the rebate on excise duty on unleaded petrol, in tandem with changes in the duty levels on two-star and three-star petrol. That has resulted in a differential of perhaps as much as 10p a gallon, since it is not always passed on to the full extent. It has also resulted in considerable publicity, and there has clearly been an impact on the use of lead-free petrol.
    The problem is that that is not enough; we would not have put our name to the amendments if we felt otherwise. The full value of the Government rebate will not be passed on to the consumer. I believe that the larger rebate that we propose would guarantee a greater differential on the forecourts, and that scale of differential will be needed to
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    convince the many motorists who will have to convert their cars that such action is not only environmentally but financially advantageous.
    Savings made through the use of lead-free petrol must provide immediate—or as near immediate as possible—compensation for the costs involved in the change. It must be made clear to motorists that they will stand to gain. I wish that we could persuade them without resorting to a financial incentive, but that is clearly not possible, as the Government have accepted by drawing up these measures. I think that they should go further.
    Mr. Robert B. Jones: Can the hon. Gentleman explain why, when the Select Committee on the Environment was taking evidence on the matter only two years ago, neither he nor his party submitted any evidence to that effect?
    Mr. Taylor: The hon. Gentleman has made a good party point, but it is not a very good point in practice. It is almost impossible from a practical point of view to make submissions on every subject; what we are doing is tabling a constructive amendment tonight.
    The amendment would contribute towards a differential of about 15p at the pumps, which would mean a saving of about £45 a year for the average motorist. That is not much in itself, but should be sufficient to motivate many people to convert their cars. In my view, anything else would be inadequate. The Labour amendment adds nothing to what the Government are doing: it is not sufficient to make any real change.
    There is no doubt that motorists understand in theory the need for change; a recent survey suggested that four out of five drivers considered that air pollution from car exhausts represented a serious threat to the environment. Yet, although 10·5 million cars on our roads could run lead-free, in February 1989 only about 250,000 had been altered—although the figure will have increased since then. That is where the economic incentives come in.
    There is also a need to convince independent retailers that it is in their interests financially—or even that the risk is worth bearing—to promote lead-free petrol in their outlets. Otherwise, we cannot really explain why Britain lags so far behind many of the leading countries; we have heard many figures proving that that is the case.
    It is an environmental issue that Governments can tackle effectively. Earlier in the debate, we discussed some of the evidence of the impact that changing to lead-free petrol can have in the health of adults and children. I referred to evidence from America which showed that, between 1976 and 1980, there was a 55 per cent. decrease in the amount of lead in petrol and a 37 per cent. reduction in the average level of lead in blood. That suggests a clear and immediate link between lead in petrol and people's health.
    The problem is that, given the current rate of conversion, I am not sure that there will be any reduction whatsoever in the amount of lead in people's blood or in the health hazards. Although cars are undergoing conversion, more cars are coming on to our roads and more mileage is being covered. I wonder how much impact the Government's present measures are having on the problem we are seeking to tackle.
    Mr. Roger King: I have been listening to the hon. Gentleman and I think that he is painting an unduly pessimistic picture. He will recall that the European Commission decreed that the amount of lead in leaded fuel

    939
    should be reduced dramatically from 1982 onwards from something like 0·04 mg/ml down to 0·015. That is a dramatic reduction of about 70 per cent. in lead emissions into the atmosphere, without taking into account the impact of the general provision of lead-free petrol. So over a number of years, the Government, with the European Commission, have been playing an active part in addressing the issue, and lead levels have reduced dramatically. We are seeking to eliminate the final few per cent.
    9.30 pm
    Mr. Taylor: I accept what the hon. Gentleman says, but I do not consider that we have gone far enough. I do not believe that the measures in the Bill will achieve what the Government consider necessary. I do not think that we should be debating whether there is a problem. Certainly Ministers believe that there is a problem. I am trying to encourage a Government who take a certain amount of pride in radical solutions to be a little more radical in addressing the problem. The Prime Minister could gain publicity points by saying that she is putting a tiger, or a tigress, into people's tanks—she would think that that would be an appropriate expression for her. I hope that the hon. Gentleman does not seek to use the debate to reopen the discussion on whether we need to do something about it. The public and the Government appear to acknowledge that.
    I turn from the financial incentives to the need to generate adequate information and publicity. There remains too much ignorance among motorists and others about the costs involved in making the necessary changes and the ease with which those changes can often be made. I do not believe that the problem is simply financial, although I have discussed that at some length. Despite the fact that, according to the survey to which I have referred, four out of five people acknowledge the problem, I suspect that there is insufficient recognition of how easy it is to tackle it, and the fact that, once converted, a car can still use four-star petrol and there are unlikely to be problems unless a car is fitted with a catalytic converter. All those subjects are insufficiently explained.
    Our debates tend to concentrate on four-wheeled vehicles, but in my constituency two-star petrol has virtually disappeared as petrol companies will not deliver it, so most garages provide four-star petrol or lead-free petrol and nothing else. Many people are getting in touch with me—and I have written to Ministers at the Department of Energy—about their motor cycles, their lawn mowers and garden implements that they have wheeled out in the recent sunshine; they cannot get the fuel that they have been buying for years. There is virtually no information available to them. A local newspaper recently published an article asking the local motor cycle garage and lawn mower sales point for advice. Their advice was that they were considering the matter, that they were reasonably sure about modern machines being able to run on lead-free petrol, but, apart from that, they did not like to advise anyone and they said that people should refer to the manufacturer. Clearly, that is not a good position for those people.
    The Government should adopt the recommendations of CLEAR and spend money on advertising to explain the benefits and the costs of conversion and put in the same efforts that they are making to explain the poll tax that we
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    debated earlier today. Hon. Members acknowledge the problem, but we must decide how to solve it as rapidly as possible. Amendments Nos. 11 and 12 show clearly that we can move forward by giving people a financial incentive within a time scale to which they are likely to respond.
    Mr. Neil Hamilton: I am afraid that I shall have to disappoint the hon. Member for Truro (Mr. Taylor), because I believe that there is an issue that should divide us. I am against not only the proposed amendments but clause 1, for reasons that I have had the opportunirty on previous occasions to dilate on in the House.
    I apologise to the hon. Member for Wrexham (Dr. Marek) for not being present at the beginning of his speech. I do not know whether he played a significant part in the Labour party's policy review, but as Socialism has been declared off the agenda it will no longer be appropriate to sing the "Red Flag" at the end of its annual conference. We can assume from his speech that it will be replaced by the green flag.
    When Ministers and Opposition Front Bench spokesmen unite in favour of a proposal, hon. Members should regard it with the deepest suspicion. 1 never thought that my hon. Friend the Economic Secretary to the Treasury would be charged with the high crime and misdemeanour of seeking to be fashionable. I am afraid that that is the charge that I shall have to lay against him this evening. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) made one of the most shameless speeches that I have heard in the six years that I have been an hon. Member. It was a truly disgusting performance, crawling on all fours before the editor of his local newspaper for some cheap mention on a matter that, in other circumstances, he would have disdained. Even he—in what for him was an idiosyncratic speech because it was not idiosyncratic—followed the fashionable nostrums of the time.
    Sir Hal Miller: Is not my hon. Friend being a little ungenerous to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), who made his maiden constituency speech and should not therefore attract unduly robust criticism?
    Mr. Hamilton: I always regarded the constituency of my hon. Friend the Member for Wolverhampton, South-West as being principally himself. One should not confuse his electorate with his constituents. That is something to be avoided, and I understand that my hon. Friend avoids it as often as possible.
    There is no case for a differential in the tax rate between leaded or unleaded petrol.
    Mr. Budgen: That has finished my hon. Friend's chances of getting a little job.
    Mr. Hamilton: I say to my hon. Friend that for him, as for me, it is far too late to be careful.
    There is no case for discriminating between leaded and unleaded petrol because there is no evidence that lead in petrol poses any health risk. An article appeared in a journal which I am sure lies on the bedside of all hon. Members—the British Journal of Developmental Psychology—about relationships between blood lead, behaviour, psychometric and neuropsychological test performance in young children. A sample of 201 inner-city-dwelling children aged five and a half was taken by the university of Birmingham's environment, research

    941
    and behaviour research group. I commend it to my hon. Friend the Member for Wolverhampton, South-West. It says:
    "Results show that the initial correlations between blood lead and the outcome measures were generally few and low. No significant relationship was found between overall IQ and blood lead and the one marginally significant association found when the sample was split by father's occupation proved non-significant on multivariate analysis."
    This latest study merely backs up the numerous studies published over the years to which I referred in a previous speech in this House, made to a somewhat smaller audience at 1.14 am on 4 December 1984. 1 gave a number of examples of scientific studies which conclusively proved nothing in relation to this matter.
    I will remind the Committee briefly of some of those examples. The Medical Research Council, to which the Government listen carefully, reviewed the subject between 1979 and 1983. It said that the published evidence showed that there was no statistically significant association between body lead burdens and IQs after allowance had been made for the confounding factors. In 1983, the "Digest of Environmental Protection and Water Statistics" reviewed 35 surveys carried out in the European Community. Of those, in only three instances was the reference level set by the EC for the lead content of the blood breached. It was shown that in each of the studies, the reason for the breaches had nothing to do with lead emissions into the atmosphere.
    Mr. Budgen: Surely all that my hon. Friend is saying is that there may be some doubt about the technical and scientific evidence used to support the incentives that the Government have put into the fiscal system. He is doing a perfectly good service in drawing attention to the uncertainty of the scientific evidence, but as long as the Government give an incentive merely by way of fiscal encouragement and not by the use of the criminal law, there is nothing to complain about. My hon. Friend may, of course, wish to draw this matter to the attention of the wider public, so that they can take his views into account when deciding whether they wish to avail themselves of the fiscal incentive or to buy what they may regard as more effective petrol.
    Mr. Hamilton: That is true, but this tax change costs the Treasury £170 million in a full year. 1 contend that we could have had other tax reductions in its place, such as exempting all Members of Parliament from income tax, which would have had far more demonstrable benefits to society in general by encouraging men of high ability, but of otherwise of no earning power, to come into the House.
    There is no evidence for justifying a tax differential of this kind. It is wrong for the burden of proof to be placed on those who say that there is no evidence. The Government are saying that we should try to prove a negative, which we cannot. This is one more unfortunate instance, which we have seen too often in recent years with Governments of all parties, in which the taxation system is being used to dictate the preferences of the consumer.
    Mr. Mans: To guide the consumer.
    Mr. Hamilton: Perhaps to guide, but in effect to dictate, if we take the same basic attitude about human motivation. The Government are making a mistake—
    942
    perhaps not a large mistake—and I am sorry that on this occasion we have decided to be slaves to fashion and have moved in an unfortunate direction.
    Mr. Pike: The hon. Member for Tatton (Mr. Hamilton) often expresses minority views in an extreme way. I will say only that to be speaking in opposition to his convinces me that we must be moving in the right direction.
    I do not intend to refer to the problem of other vehicle emissions, although lead is only one of the many problems, because the other emissions are not relevant to the debate. The hon. Member for Wyre (Mr. Mans) and other hon. Members referred to the obstacles that prevent people from converting to lead-free petrol and that is valid. But in view of the time, I will not pursue those matters, nor the fact that there are causes of lead poisoning other than vehicle emissions.
    This simple amendment deals with a principle that is accepted by both the Government and the Opposition—that to encourage the use of lead-free petrol, an incentive should be provided in the price. We are debating a question of degree. The Labour party's amendment would increase the size of that incentive slightly, while the SLD amendment would make an even greater concession.
    9.45 pm
    Given that there is such a degree of agreement, I suggest that the best course for the Government to take would he to accept amendment No. 1, which embodies the middle-of-the-road approach. They could thus avoid dividing the Committee. It would be sensible not to argue on this occasion about which party is the greener and about whether the SLD is greener than the Greens. We are talking about very small sums. I hope that, in view of the Government's Budget surplus, they will see the wisdom of conceding that the Labour party is right and accepting the amendment.
    On 21 February the hon. Member for Hornsey and Wood Green (Sir H. Rossi), the Chairman of the Select Committee on the Environment, sent the Chancellor a letter which was issued as a press release. The Select Committee was not politically divided; the Chairman's letter received the support of both sides of the Committee. The Chairman of the Select Committee told the Chancellor that he supported the action previously taken by the Government but that he was concerned that there had not been a sufficient increase in the take-up of lead-free petrol. The letter said:
    "The purpose of this letter, which has the support of my Committee, is to urge you to make a substantial increase in the duty differential, namely, to at least 12p per gallon, which the oil companies should be required to pass on to the motorist in full."
    The amendment would bring us nearer to that figure of at least 12p. The Government should acknowledge the unanimity of the Select Committee on the Environment. They should accept our amendment and thus avoid the need for a Division.
    Mr. Michael Brown: Unfortunately, my views and those of my hon. Friend the Member for Tatton (Mr. Hamilton) are not the same on this occasion. Perhaps I can explain why. In December 1984, my hon. Friend presented a petition from the residents of Tatton and Eddisbury for redundancy payments for Associated Octel workers who had been made redundant due to the Government's policies on lead in petrol. My hon. Friend was representing

    943
    his constituency interests. I. on the other hand, represent a constituency that contains the Conoco and Lindsey oil refineries.
    Hon. Members have spoken about the need to move more quickly. I have to point out to the hon. Member for Truro (Mr. Taylor) that we could not move more quickly in my constituency until we had built that catalytic cracker at Immingham in my constituency at a cost of £80 million. We had to do that so that we could make unleaded petrol for use in the tanks of garages all round the country. It takes two years to build a catalytic cracker for oil refineries such as Conoco, so the Government must be acquitted of the charge of not moving quickly enough.
    The amendments should be rejected. The Government have been shown the way to encourage people, but we should be careful about going too far too fast.
    The hon. Member for Barnsley, Central (Mr. Illsley) talked about the cheapness of conversion. I will willingly take my 20-year old Land-Rover and my eight-year old Jaguar to his constituency if they can be converted to use unleaded petrol for £4.95 each.
    It has been a good debate. The Government have struck just the right balance, and we should congratulate my right hon. Friend the Chancellor of the Exchequer on what he is doing.
    Mr. Lilley: The amendments call for us to do more of what my right hon. Friend the Chancellor has done in the past three Budgets. Most amendments are critical. However, Miss Boothroyd, like your colleague Mr. McWilliam, you are a noted music lover. You will know that the calls of "encore" at the end of a concert are primarily expressions of praise rather than demands for an action replay of Mahler's Fifth. I take the spirit behind the amendments primarily as praise for what my right hon. Friend the Chancellor has done in increasing the differential to about 14p, not the lower figures that were given by the hon. Members for Burnley (Mr. Pike) and for Truro (Mr. Taylor).
    The reason the pump price differential tends to be only about 10p is, as my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) said, that there are considerable costs in producing lead-free petrol as against leaded petrol.
    Praise from any quarter is welcome, particularly when it comes from the Opposition. It is most unexpected when it comes from my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen). I am grateful to him for it. I suspect that his praise is in the same spirit as that of the great Bacon, from my constituency, who talked of "laudande praecipere"—to praise in order to teach. I agree that we should not use the criminal law to encourage the use of lead-free petrol and are right to proceed by the means we have adopted.
    We have got it right and been successful. Since the Budget, the response to the announced changes has been more dramatic than we dared hope. The market share of lead-free petrol has more than doubled—from 6·4 per cent. immediately before the Budget to 14·4 per cent. a month later. The number of filling stations selling lead-free petrol increased dramatically from 30 per cent. before the Budget to about 50 per cent. After the Budget. I assure the hon. Member for Wrexham (Dr. Marek) that it is continuing to increase at the rate of about 250 a week. The hon. Gentleman will be able to work out that that is about 1,000
    944
    a month. Given about 20,000 filling stations, that is an extra 5 per cent. a month. The hon. Gentleman's target of 60 per cent. by next year seems to be easily attainable.
    The major reason for the rapid increase in the number of petrol stations stocking lead-free petrol is the measure that the Financial Times described as a masterstroke, whereby the price of two-star petrol has increased to that of four-star petrol. As a result, the share taken by two-star, which was already falling and had fallen to 6 per cent. before the Budget, has fallen to about 0·6 per cent. and it has effectively disappeared from most forecourts in the country. Customs and Excise has had to introduce special concessions to petrol companies that have had to return unsaleable two-star and three-star petrol and sought duty remission on it.
    Mr. Adley: What will we do for our lawn mowers in two or three years if we cannot get two-star petrol?
    Mr. Lilley: It is almost unprecedented for any hon. Member to ask a question for that reason. Most motor cycle and similar engines can take two-star petrol. If they cannot, they can take four-star leaded petrol, but it is appropriate to ask a dealer or garage if one has a particularly rarefied form of engine.
    Mr. Matthew Taylor: The Minister will recall that I referred to that matter. The picture is not quite as straightforward as he paints it. Many people who use four-star petrol will see a considerable reduction in the life expectancy of their machines. Simply to refer people to manufacturers is somewhat inadequate. Much effort has been made for motor vehicles. Will the Minister see whether some effort can be made to help those who are concerned about motor cycles and garden machinery?
    Mr. Lilley: Perhaps the hon. Member for Truro will welcome the fact that we have not accepted the advice of the hon. Member for Wrexham to ban the sale of two-star petrol. It will remain on sale, so there is the possibility that it will continue to exist.
    Another important measure of the changes since the Budget is that Halfords earlier this year was adjusting to lead-free petrol some 200 cars a week. Since the Budget, as a result of its excellent campaign with the Today newspaper, it is adjusting some 6,000 a week at a cost of less than £10 each.
    As a result of those changes, I can inform the House that we have increased our estimate of the likely share taken by lead-free petrol by the end of this year, which we had expected to rise to about 15 per cent. It has already reached 14·4 per cent., so we expect that by the end of the year it will have risen to 20 to 25 per cent. I see no reason why by this time next year it should not have reached the target of 30 per cent. that was suggested by the hon. Member for Wrexham.
    Mr. Brian Wilson: Will the hon. Gentleman give way?
    Mr. Lilley: I apologise to the hon. Gentleman, but I have not enough time to take further intervention.
    We are already the fourth highest country in the list of users of lead-free petrol and we are rising rapidly up that list. I hope that that will be welcomed by hon. Members. It is still, nevertheless, necessary for us to dispel the myths about the use of lead-free petrol, and thereby increase 1.he uptake of the fuel. Two thirds of all vehicles on the road

    945
    at present can make use of lead-free petrol either already or as a result of a cheap adjustment, which is sometimes available free, but rarely costs more than £20. Those who switch to lead-free petrol can mix with it or change back to leaded petrol if they wish or if lead-free petrol is not available. Most tests have shown no discernible loss of performance in vehicles using lead-free petrol.
    The Government since the Budget have given a boost to lead-free petrol with a £1 million publicity campaign. I believe that the Opposition will welcome that use of Government money to get the facts over.
    The differential in price at the pumps should in due course widen. At present, about lop of the 14p cost advantage is generally passed on to the customer. As the uptake of lead-free petrol increases and the overheads of the original cost of producing it are more widely spread, it should be possible for the petrol companies to pass on an increased proportion of that 14p differential.
    Mr. Wilson: Will the hon. Gentleman give way?
    Mr. Lilley: I have already said that I shall not.
    We believe that the United Kingdom has now reached a position where the rate of improvement in the take-up of lead-free petrol has reached a process of self-sustaining growth and that the present level of benefit for lead-free petrol is at about the desirable level. It is the highest in Europe, apart from Denmark, and therefore quite satisfactory.
    Dr. Marek: I have already said what the Labour party policy is, but I must say at this stage that I am not completely against what the Economic Secretary has said. In his statement there has been the expectation that the Government will reach the targets that I set them for the sale and the availability of unleaded petrol. I welcome that statement and I look forward to those targets being achieved.
    The Chairman of the Select Committee on the Environment asked the Government to ensure that there would be a 12p differential between leaded and unleaded petrol and to require the oil companies to pass that on to the motorists. In that respect, we do not believe the Government have gone far enough.
    Two Aunt Sallies have been raised. First, the hon. Member for Wolverhampton, South-West (Mr. Budgen) said that I had talked about further measures and then implied that we would set the police on the motorists to check whether they had unleaded petrol in their tanks. Nothing could be further from the truth. There are far better ways of ensuring that motorists use unleaded petrol. Secondly, the hon. Member for Tatton (Mr. Hamilton) declared his interest, or had it declared for him by his hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown). He said that he had employees involved in making the lead for leaded petrol. Perhaps he should have tried to redeploy those employees instead of allowing them to be made redundant.
    We do not think that the Government have gone far enough. That is why we shall seek to press our amendment.
    Question put, That the amendment be made:—
    The Committee divided: Ayes 149, Noes 215.

    Division No. 194]

    [10 pm

    AYES

    Abbott, Ms Diane

    Jones, Martyn (Clwyd S W)

    Adams, Allen (Paisley N)

    Kaufman, Rt Hon Gerald

    Allen, Graham

    Kennedy, Charles

    Anderson, Donald

    Kinnock, Rt Hon Neil

    Archer, Rt Hon Peter

    Kirkwood, Archy

    Ashdown, Rt Hon Paddy

    Lamond, James

    Ashton, Joe

    Leadbitter, Ted

    Banks, Tony (Newham NW)

    Lewis, Terry

    Barnes, Harry (Derbyshire NE)

    Livsey, Richard

    Barnes, Mrs Rosie (Greenwich)

    Lofthouse, Geoffrey

    Barron, Kevin

    Loyden, Eddie

    Battle, John

    McAllion, John

    Beckett, Margaret

    McAvoy, Thomas

    Beith, A. J.

    McFall, John

    Bell, Stuart

    McKay, Allen (Barnsley West)

    Bermingham, Gerald

    McKelvey, William

    Blunkett, David

    McNamara, Kevin

    Boateng, Paul

    Madden, Max

    Boyes, Roland

    Mahon, Mrs Alice

    Bradley, Keith

    Marek, Dr John

    Brown, Gordon (D'mline E)

    Marshall, Jim (Leicester S)

    Brown, Nicholas (Newcastle E)

    Martin, Michael J. (Springburn)

    Buchan, Norman

    Meacher, Michael

    Buckley, George J.

    Meale, Alan

    Campbell, Menzies (Fife NE)

    Michael, Alun

    Campbell, Ron (Blyth Valley)

    Michie, Bill (Sheffield Heeley)

    Carlile, Alex (Mont'g)

    Michie, Mrs Ray (Arg'l & Bute)

    Clark, Dr David (S Shields)

    Mitchell, Austin (G't Grimsby)

    Clarke, Tom (Monklands W)

    Moonie, Dr Lewis

    Clay, Bob

    Morgan, Rhodri

    Clelland, David

    Morris, Rt Hon J. (Aberavon)

    Cohen, Harry

    Mullin, Chris

    Cook, Frank (Stockton N)

    Murphy, Paul

    Cook, Robin (Livingston)

    Nellist, Dave

    Corbett, Robin

    Orme, Rt Hon Stanley

    Cousins, Jim

    Pike, Peter L.

    Cryer, Bob

    Powell, Ray (Ogmore)

    Cunliffe, Lawrence

    Quin, Ms Joyce

    Darling, Alistair

    Radice, Giles

    Davies, Rt Hon Denzil (Llanelli)

    Randall, Stuart

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

    Redmond, Martin

    Dixon, Don

    Reid, Dr John

    Doran, Frank

    Richardson, Jo

    Douglas, Dick

    Robertson, George

    Duffy, A. E. P.

    Rogers, Allan

    Dunnachie, Jimmy

    Rooker, Jeff

    Ewing, Mrs Margaret (Moray)

    Ross, Ernie (Dundee W)

    Fatchett, Derek

    Ruddock, Joan

    Fearn, Ronald

    Shore, Rt Hon Peter

    Field, Frank (Birkenhead)

    Skinner, Dennis

    Fisher, Mark

    Smith, Andrew (Oxford E)

    Flynn, Paul

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

    Foster, Derek

    Smith, John P.

    Foulkes, George

    Snape, Peter

    Fraser, John

    Soley, Clive

    Fyfe, Maria

    Spearing, Nigel

    Godman, Dr Norman A.

    Steinberg, Gerry

    Golding, Mrs Llin

    Stott, Roger

    Gordon, Mildred

    Taylor, Matthew (Truro)

    Graham, Thomas

    Turner, Dennis

    Grant, Bernie (Tottenham)

    Vaz, Keith

    Griffiths, Win (Bridgend)

    Wall, Pat

    Grocott, Bruce

    Wallace, James

    Henderson, Doug

    Walley, Joan

    Holland, Stuart

    Wardell, Gareth (Gower)

    Home Robertson, John

    Welsh, Andrew (Angus E)

    Hood, Jimmy

    Welsh, Michael (Doncaster N)

    Howarth, George (Knowsley N)

    Williams, Rt Hon Alan

    Hughes, John (Coventry NE)

    Wilson, Brian

    Hughes, Robert (Aberdeen N)

    Winnick, David

    Hughes, Roy (Newport E)

    Worthington, Tony

    Hughes, Sean (Knowsley S)

    Wray, Jimmy

    Illsley, Eric

    Ingram, Adam

    Tellers for the Ayes:

    Janner, Greville

    Mr. Robert N. Wareing and

    Jones, Barry (Alyn & Deeside)

    Mr. Ken Eastham.

    Jones, Ieuan (Ynys Môn)

    947

    NOES

    Adley, Robert

    Garel-Jones, Tristan

    Aitken, Jonathan

    Gill, Christopher

    Alexander, Richard

    Glyn, Dr Alan

    Alison, Rt Hon Michael

    Goodhart, Sir Philip

    Amess, David

    Goodson-Wickes, Dr Charles

    Amos, Alan

    Gow, Ian

    Arbuthnot, James

    Grant, Sir Anthony (CambsSW)

    Arnold, Tom (Hazel Grove)

    Greenway, Harry (Ealing N)

    Ashby, David

    Greenway, John (Ryedale)

    Atkins, Robert

    Gregory, Conal

    Baker, Nicholas (Dorset N)

    Griffiths, Peter (Portsmouth N)

    Banks, Robert (Harrogate)

    Grist, Ian

    Batiste, Spencer

    Ground, Patrick

    Beaumont-Dark, Anthony

    Grylls, Michael

    Bellingham, Henry

    Gummer, Rt Hon John Selwyn

    Bennett, Nicholas (Pembroke)

    Hague, William

    Biffen, Rt Hon John

    Hamilton, Neil (Tatton)

    Blackburn, Dr John G.

    Hanley, Jeremy

    Body, Sir Richard

    Hannam, John

    Bonsor, Sir Nicholas

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

    Boscawen, Hon Robert

    Harris, David

    Boswell, Tim

    Haselhurst, Alan

    Bottomley, Peter

    Hayes, Jerry

    Bottomley, Mrs Virginia

    Hayward, Robert

    Bowis, John

    Heathcoat-Amory, David

    Braine, Rt Hon Sir Bernard

    Heddle, John

    Brandon-Bravo, Martin

    Heseltine, Rt Hon Michael

    Brazier, Julian

    Higgins, Rt Hon Terence L.

    Bright, Graham

    Hind, Kenneth

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

    Hogg, Hon Douglas (Gr'th'm)

    Bruce, Ian (Dorset South)

    Howard, Michael

    Budgen, Nicholas

    Howarth, G. (Cannock & B'wd)

    Burns, Simon

    Howell, Rt Hon David (G'dford)

    Burt, Alistair

    Hughes, Robert G. (Harrow W)

    Butler, Chris

    Hunt, David (Wirral W)

    Butterfill, John

    Hunter, Andrew

    Carlisle, Kenneth (Lincoln)

    Irvine, Michael

    Carrington, Matthew

    Irving, Charles

    Carttiss, Michael

    Jack, Michael

    Channon, Rt Hon Paul

    Jackson, Robert

    Chope, Christopher

    Janman, Tim

    Clark, Dr Michael (Rochford)

    Johnson Smith, Sir Geoffrey

    Clark, Sir W. (Croydon S)

    Jones, Gwilym (Cardiff N)

    Colvin, Michael

    Jones, Robert B (Herts W)

    Coombs, Anthony (Wyre F'rest)

    Kellett-Bowman, Dame Elaine

    Coombs, Simon (Swindon)

    Key, Robert

    Couchman, James

    Kilfedder, James

    Currie, Mrs Edwina

    King, Roger (B'ham N'thfield)

    Davis, David (Boothferry)

    Kirkhope, Timothy

    Devlin, Tim

    Knapman, Roger

    Dorrell, Stephen

    Knight, Greg (Derby North)

    Dover, Den

    Knowles, Michael

    Dunn, Bob

    Knox, David

    Durant, Tony

    Lamont, Rt Hon Norman

    Dykes, Hugh

    Latham, Michael

    Evans, David (Welwyn Hatf'd)

    Lawson, Rt Hon Nigel

    Evennett, David

    Lightbown, David

    Fallon, Michael

    Lilley, Peter

    Favell, Tony

    Lloyd, Peter (Fareham)

    Field, Barry (Isle of Wight)

    Lyell, Sir Nicholas

    Fishburn, John Dudley

    McCrindle, Robert

    Fookes, Dame Janet

    MacGregor, Rt Hon John

    Forman, Nigel

    MacKay, Andrew (E Berkshire)

    Forth, Eric

    Maclean, David

    Fox, Sir Marcus

    McLoughlin, Patrick

    Franks, Cecil

    McNair-Wilson, Sir Michael

    Freeman, Roger

    McNair-Wilson, P. (New Forest)

    French, Douglas

    Major, Rt Hon John

    Gardiner, George

    Malins, Humfrey

    948

    Mans, Keith

    Ryder, Richard

    Maples, John

    Sackville, Hon Tom

    Marlow, Tony

    Sainsbury, Hon Tim

    Marshall, Michael (Arundel)

    Sayeed, Jonathan

    Martin, David (Portsmouth S)

    Shaw, David (Dover)

    Mates, Michael

    Shaw, Sir Giles (Pudsey)

    Maude, Hon Francis

    Shephard, Mrs G. (Norfolk SW)

    Mellor, David

    Shepherd, Colin (Hereford)

    Miller, Sir Hal

    Skeet, Sir Trevor

    Mills, Iain

    Smith, Tim (Beaconsfield)

    Mitchell, Andrew (Gedling)

    Speller, Tony

    Mitchell, Sir David

    Spicer, Sir Jim (Dorset W)

    Montgomery, Sir Fergus

    Stanley, Rt Hon Sir John

    Morrison, Sir Charles

    Steen, Anthony

    Moss, Malcolm

    Stevens, Lewis

    Neale, Gerrard

    Stewart, Andy (Sherwood)

    Needham, Richard

    Stradling Thomas, Sir John

    Nelson, Anthony

    Summerson, Hugo

    Neubert, Michael

    Tapsell, Sir Peter

    Nicholson, David (Taunton)

    Taylor, Ian (Esher)

    Onslow, Rt Hon Cranley

    Taylor, John M (Solihull)

    Oppenheim, Phillip

    Thompson, D. (Calder Valley)

    Page, Richard

    Thurnham, Peter

    Paice, James

    Townend, John (Bridlington)

    Parkinson, Rt Hon Cecil

    Tredinnick, David

    Patnick, Irvine

    Trippier, David

    Pattie, Rt Hon Sir Geoffrey

    Trotter, Neville

    Pawsey, James

    Vaughan, Sir Gerard

    Porter, David (Waveney)

    Waddington, Rt Hon David

    Powell, William (Corby)

    Waller, Gary

    Price, Sir David

    Wheeler, John

    Raison, Rt Hon Timothy

    Whitney, Ray

    Redwood, John

    Widdecombe, Ann

    Rhodes James, Robert

    Wolfson, Mark

    Riddick, Graham

    Wood, Timothy

    Ridley, Rt Hon Nicholas

    Younger, Rt Hon George

    Ridsdale, Sir Julian

    Roberts, Wyn (Conwy)

    Tellers for the Noes:

    Rost, Peter

    Mr. Alan Howarth and

    Rowe, Andrew

    Mr. Sydney Chapman.

    Rumbold, Mrs Angela

    Question accordingly negatived.
    It being after Ten o'clock, THE SECOND DEPUTY CHAIRMAN left the Chair.

BUSINESS OF THE HOUSE
Ordered,
That, at this day's sitting, the Ways and Means Motion may be proceeded with, though opposed, until any hour.— [Mr. Maclean.]

FINANCE BILL

  (Clauses Nos. 1, 32, 33, 44, 51 and 138)
  Considered in Committee.
  [MISS BETTY BOOTHROYD in the Chair]
  Clause 1 ordered to stand part of the Bill.
  Bill (Clauses 1, 32, 33, 44, 51, and 138), reported without amendment; to lie upon the Table.

WAYS AND MEANS

  VALUE ADDED TAX (OVERPAYMENTS)
  Resolved,
  That provision may be made about refunding overpayments of value added tax.—[Mr. Maclean.]

Personal Equity Plans
10.16 pm
Mr. Chris Smith: I beg to move,
That the Personal Equity Plan Regulations 1989 (S.I., 1989, No. 469), dated 14th March 1989, a copy of which was laid before this House on 14th March, be revoked.
The statutory instrument consolidates the position in relation to personal equity plans. It also enshrines within the consolidation changes announced by the Chancellor in his Budget in March. The changes formed a major part of the Chancellor's Budget speech, yet they are not formally part of the Finance Bill, because personal equity plans are covered by regulation rather than by primary legislation. However, the House should debate PEPs and, in particular, the changes which the Chancellor has brought in, in order, if nothing else, to expose just how generous the Government are in their provisions for equity portfolios, to a certain extent to the disadvantage of other forms of saving.
Let me for a moment chart the history of personal equity plans. The Chancellor announced the introduction of the plans in his Budget on 18 March 1986. They were brought in as a tax incentive to encourage savings through the purchase of shares. Anyone over 18 could invest at that stage up to £2,400 a year in a PEP. Provided the shares were held for a minimum period of between 12 months and two years, any capital gains and reinvested dividends were to be free of tax. The scheme started on 1 January 1987.
In his Budget speech three months later, the Chancellor reported on the progress of PEP schemes:
"In the first month of the scheme, more than 2,000 people a day took out personal equity plans, many of them first-time investors, as I had hoped."—[Official Report, 17 March 1987; Vol. 112, c. 824.]
A year later, in his 1988 Budget speech, the Chancellor again reviewed progress on PEPs:
"Over a quarter of a million people took out PEPs in 1987". —[Official Report, 15 March 1988;, Vol. 129, c. 1004.]
One can tell immediately from the figures that the take-up of PEPs had fallen off in the later months of 1987 compared with the early months.
The annual limit was raised in the 1988 Budget from £2,400 to £3,000, and the amount which could be invested in a unit trust or an investment trust in Scotland was increased from £420 to £540. A number of other changes took place in August 1988 and January 1989, but despite the changes that were made in the Budget last year, and despite the changes that have subsequently occurred, the take-up of PEPs has noticeably flagged in recent years.
In that respect, let me quote from a note on personal equity plans supplied to my hon. Friend the Member for Edinburgh, South (Mr. Griffiths) by the Library:
"Despite the Chancellor's optimism over the introduction of PEPs, other commentators view them as less successful. The Independent described 1987 as the year PEPs 'fell flat', and the Times headed its article 'Birthday blues for unpopular PEPs'. Figures for 1988 given by the Inland Revenue are that 100,000 schemes were taken out and £150 million invested in such schemes. No effort is made to distinguish first-time investors but according to a number of financial journalists, the general feeling of the institutions involved in PEPs is that very few are first-time investors. On the whole the main attraction of PEPs is to the richer investors who find PEPs a useful way of repackaging existing portfolios."
Mr. Ian Taylor: I am not sure whether the hon. Gentleman is pleased or displeased by the fact that there
950
has been a less than dramatic take-up of PEPs, but does he accept that one reason for the relatively low figures is simply the administrative problems that many City firms have had in introducing them? Therefore, does he accept that the proposals in the Finance Bill are to be more than welcomed and should lead to a dramatic increase in their acceptability?
Mr. Smith: There are, as the hon. Gentleman will know, no proposals in the Finance Bill this year, because it does not cover PEPs. There are proposals in the regulations that we are debating which, to a certain extent, ease the administration of the PEP schemes. On some of those I have little quarrel with the Government, but on some of them I do, and I shall deal with those in a moment.
One reason for the relatively low take-up of PEPs by first-time investors is that the capital gains tax advantages which apply to PEPs are only of any use to investors who have already used up their £5,000 capital gains tax-free allowance. For many small savers, certainly virtually all first-time perchasers of equities, such a proviso does not exist.
The Chancellor announced a number of changes in his Budget this year which are enshrined in the regulations. Let me briefly outline those changes. First, the annual contribution limit goes up by a substantial amount, from £3,000 to £4,800. Secondly, the allocation to unit trusts or to investment trusts goes up by an even more substantial percentage from within that overall total—£.540 before to £2,400 now.
Thirdly, the form of contribution changes. Before, all contributions to PEPs had to be in cash. Now, under these regulations, they can be either in cash or in new issue shares.
Fourthly, the minimum holding period which was, under the previous regulations, one year, is now abolished. Fifthly, the cash holding rules which used to provide for a figure of £300 after the first year, has also been abolished.
Those changes represented an attempt on the part of the Chancellor to revive a scheme that was flagging before the Budget, and a number of commentators in the immediate aftermath of the Budget noted precisely that. The Financial Times on 18 March headed its article:
"PEPs are given the kiss of life."
The Times on the same day headed its article:
"Personal equity plans pepped up thanks to Chancellor's tinkering."
Before coming to the criticisms that my hon. Friends and I have of a number of aspects of the regulations, I have two questions for the Financial Secretary. The first relates to the fifth report of the Select Committee on Statutory Instruments. That Committee found that the wording of regulation 5(1) was unclear. It requested a memorandum from the Department on the subject. That memorandum was forthcoming, after which the Select Committee concluded:
"The Committee feels that although the intention of the Regulations is sensible, the drafting is not and that the provision can certainly be read as requiring a plan manager to carry out all transactions at the price he could obtain for the investments, namely the bid price."
Will the Government amend regulation 5(1) to clarify the meaning, in accordance with the advice of that Committee?
My second question relates to the press release issued by the Inland Revenue on 3 May, in which it announced that it would be relaxing the 75 per cent. United Kingdom

951
equity requirement for unit trusts and investment trusts. This issue has been causing concern to many in the equities industry, especially in Scotland, in relation to investment trusts. My attention had already been drawn to the subject by my hon. Friend the Member for Edinburgh, Central (Mr. Darling). Will the Government introduce the further regulations in due course, and, if so, when? When we see the contents of those regulations we will know whether to express doubts about the proposed relaxation.
We have three main criticisms of the regulations. The first concerns the inclusion of new privatisation shares in PEP portfolios. The Financial Secretary wrote on 26 April to my hon. Friend the Member for Cardiff, West (Mr. Morgan) and I fear that his letter was somewhat disingenuous on the subject. He said that it had always been possible in theory within personal equity plans to include privatised issues of shares. But under the processes of privatization—the need to bid for shares and the uncertainty over the allocation that one will receive—the inclusion of such portfolios of shares within PEPs was difficult to arrange.
The regulations before us make it easier to include privatised issues within a portfolio. They enable an application to be made, and however great the allocation turns out to be—provided the overall ceiling is not exceeded—that can then be included within the PEP portfolio. That is unacceptable to us. Tax relief will effectively be given both on dividend income and on capital gains income, especially if the £5,000 threshold has already been exceeded, when purchasing privatisation shares. It is nothing more than a bribe to encourage a greater take-up of privatisation issues.
A scrutiny of the performance of privatisation shares in the period since their original issue can be instructive. I put aside the oil and gas industries, which have performed particularly badly because of the impact of the world fuel market, and also British Petroleum, which was affected equally dramatically by the rather gauche timing of the flotation. However, the price of Rolls-Royce shares in April 1987 was 170p but six months later was 136p. The Trustee Savings bank share price on its flotation in September 1986 was 100p, but six months later was 86½p. When the British Airports Authority was floated in July 1987, its share price was 100p, but six months later was 109p. None of them could be described as performing particularly well.
The potential purchaser of a water or electricity share will enjoy not just a knockdown price—we can be certain that the Government will ensure that—but tax bonuses as well.
Mr. Ian Taylor: I find it increasingly difficult to follow the hon. Gentleman's line of argument. If the Treasury offered those shares at such a knockdown price, why is it that their prices have fallen further? Is it not the case rather than the Treasury negotiated an extremely good deal, in a variety of market conditions, that was also good for the British taxpayer?
Mr. Smith: The hon. Gentleman should have allowed me to develop my argument. In privatisation issues, we have consistently seen an initial under-valuation and a subsequent considerable increase over a short period, but then a downward trend over a longer period.
The Financial Secretary to the Treasury (Mr. Norman Lamont): If those shares were consistently under-valued,
952
how can the hon. Gentleman maintain his argument that the public get a very bad deal when they invest in privatisation issues?
Mr. Smith: The pattern has been one of initial gains, but in the longer term a number of privatisation issues —not all, because British Telecom, for example, has done very nicely for the people who originally purchased its shares—have not presented such a good picture.
It must also be remembered that the tax relief available under PEPs will be given at the expense of all other taxpayers. The public, who own water and electricity at present, will themselves pay for stripping their own assets; the owners will pay for the disposal of what they now own. It is like paying a burglar a subsidy to raid one's own home. I am sure that there will be some aggressive marketing of PEP packages as part of the forthcoming privatisation issues. The inclusion of those shares within personal equity plans, with all the tax advantages that go with them, is something that we cannot possibly accept.
Mr. James Paice: If the hon. Gentleman is so anxious that privatisation shares should not be part of PEPs, can he explain why such shares should be considered to be in a separate class from any other investment? If an investor wants to buy shares, he must take the rough with the smooth, and we are giving him tax relief through PEPs on that basis. Why should he be disadvantaged through buying a particular set of shares?
Mr. Smith: Privatisation shares should be regarded differently precisely beause they are public assets being sold to private investors. I do not believe that the public, through their taxes, should subsidise that disposal.
We are very concerned about two further issues. The first is the removal of the one-year rule. The concept of the mature portfolio, which was part of the original thinking behind PEPs, has gone with this change, which could mean a substantial immediate tax-free capital gain from a new share issue, whether privatised or not. Management fees will, of course, place a limit on the benefit to be gained, but the removal of the one-year rule nevertheless offers scope for large-scale wheeling and dealing in shares, to the detriment of the Exchequer and hence of all taxpayers.
Mr. Tim Smithrose—
Mr. Smith: I will not give way to the hon. Gentleman. Time is limited, and I know that a number of hon. Members want to speak.
Our other worry is that preferential treatment will be given to equities as compared to other forms of saving. We were told in advance that the Budget would be one for the saver, but the only action that the Chancellor took was to make generous provision in the regulations for equity purchase. Of course we must encourage saving: the Government ought to be all too well aware that personal savings appear to be at an all-time low. But where were the measures in the Budget to stimulate building society investment and sort out some of the inequitable rules relating to building society interest? Where were the provisions to establish regionally based schemes for the more effective financing of industry? Where were the provisions to assist the friendly societies? The preference for equities that the regulations are building into the tax system is, in our view, neither sensible nor just.

953
For all those reasons, we believe that the Government must go back to the drawing board. The economy as a whole, and ordinary people wanting to save and invest, deserve better than these regulations.
10.38 pm
The Financial Secretary to the Treasury (Mr. Norman Lamont): I welcome the opportunity of a debate on the changes announced in personal equity plans. I must say that I marvel at the boldness of the Opposition's promise to vote against the regulations, and I am delighted that they are going to do so.
As the hon. Member for Islington, South and Finsbury (Mr. Smith) has said, PEPs were first introduced in the 1986 Budget, and despite some pessimistic articles in the financial press, they have played a successful part in achieving our objective of reversing the long-term decline in individual shareholding. Whereas, 10 years ago, only 7 per cent. of the adult population held shares, the figure is now 20 per cent.—one in five of the population—pushing hard to reach a level similar to that in the United States. We regard that as a tremendous achievement, on which we want to build.
In the first year of the scheme, 270,000 schemes were started. As the hon. Gentleman said, in 1988, only 120,000 schemes were taken out. That was a setback, but considering that there had been the biggest correction to the stock market since 1929, it was not all that surprising or disappointing.
I take issue with the Opposition's conviction that we are providing tax relief only for wealthy existing shareholders. The hon. Gentleman chose to quote a stockbroker. I quote a plan manager not from the City of London but from the Bradford and Bingley building society, who found that most investors had never owned shares before, that a majority were women, that semi-skilled and unskilled workers bought more PEPs than managers and professionals, and that most invested well below the maximum possible.
Nevertheless, it was clear from discussions at the end of last year that a number of managers wanted changes in the administration of the scheme and felt that some requirements were unnecessary and added to the cost of administration. Unit trust groups keen to market the idea found that it was uneconomical to offer unit trust—only PEPs with a limit of £540 a year. That is why we introduced changes increasing the overall limit to £4,800 and substantially increasing the annual limit on a unit or investment trust to £2,400. The philosophy behind those changes was that we had increased the overall limit for direct investment in shares, that unit and investment trusts were a good way to get into the market and that we wanted a total limit that was economic for plan managers.
At the same time, we thought it only right to require that unit and investment trusts should invest mostly in United Kingdom equities. I know that that has created disappointment in some quarters, but that was the original requirement of the scheme for direct investment, and it would have been inconsistent not to apply it to unit trusts and investment trusts.
As the hon. Member for Islington, South and Finsbury said, in future, investors may subscribe to a new public issue of shares, and then transfer them into a PEP. As my
954
hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice) asked in an intervention, why not? We want to help not only privatisation new issues but all new issues, and it is right that they should be allowed in PEPs. Finally, we simplified the administration in a number of ways, so that it will no longer be necessary to take out a new plan each year. I believe that the administrative changes that we have introduced, in addition to the changes in the aggregate amounts that may be invested, will do a tremendous amount to boost the popularity of the scheme.
Mr. Tony Worthington: The Minister will recall that in the Budget debate in 1986, the Chancellor said that PEPs were
"specially designed to encourage smaller savers, and particularly those who may never previously have invested in equities in their lives."—[Official Report, 18 March 1986; Vol. 94, c. 178.]
Will the Minister contradict the findings of the Institute of Fiscal Studies that only one third of those investing in PEPs were first-time investors in equities?
Mr. Lamont: Learned though the Institute of Fiscal Studies is on tax matters, I am not quite sure that its opinion should be considered better than that of PEP managers at the Bradford and Bingley building society who are actually promoting the scheme, know who their customers are and have stated that in their part of the market many investors are new, first-time investors.
Although the hon. Member for Islington, South and Finsbury tried to assert the contrary, I stress that the tax relief does benefit small investors. The income tax relief can certainly benefit those paying the basic rate of tax. For example, someone with £4,800 invested and paying the basic rate of income tax would save about £60 a year, based on a return of 5 per cent. producing dividends of £240 a year.
We notice that a number of plan managers are marketing high-income plans and investing PEPs in shares offering high yields. That will be of special importance and attraction to the small investor. As regulations now make it possible for investment trusts to offer capital and income shares in a PEP, the attraction to small investors will increase further.
The Budget changes have caught the imagination and enthusiasm of plan managers and investors. The largest plan manager, Lloyd's, has taken £12 million of new investment since the Budget. A number of firms that had stopped offering PEPs have announced that they will return to the market—such as Framlington, Fidelity and Barclayshare. A number of new plan managers have entered the market offering a range of new products. I welcome the new mood of confidence, which shows that the changes have been welcomed and will be a considerable success.
We have received representations from the investment trusts about the new rule that from April 1990 unit or investment trusts must be 75 per cent. invested in shares that qualify for direct investment in a PEP. I gave the explanation for that change and believe that it is a reasonable requirement, given the greatly increased opportunities for trusts. We obviously do not wish to harm existing investment trusts within the original limit of £750, which used to be the alternative to a full plan. Some of those investment trusts did not meet the 75 per cent.

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requirement. We did not wish to harm the investment trusts that marketed their product under the old regime by suddenly imposing a new rule on them.
We therefore announced that it will be possible to continue to invest £750 in a unit or investment trust that does not meet the 75 per cent. United Kingdom requirement. It will be an alternative to investing up to £2,400 with the 75 per cent. restriction. We announced that unquoted shares in a unit or investment trust portfolio may count towards the 75 per cent. requirement, which will especially help those who specialise in venture capital.
Mr. Alan Beith: Will not the Financial Secretary have increasing difficulties squaring the United Kingdom equity limitation with movement to free capital in Europe? Will it not increasingly be regarded as discriminatory for non-United Kingdom shares to be singled out in this way?
Mr. Lamont: We are not infringing any EC law. A number of countries that offer fiscal incentives for investment have imposed the same limits as we have.
The hon. Member for Islington, South and Finsbury referred to the comments by the Select Committee on Statutory Instruments about the drafting of the regulations, which of course I take seriously. It is a relatively minor point, but we shall consider making a drafting change.
The hon. Member for Islington, South and Finsbury asked whether we shall amend regulations to deal with the other changes that we have made. The answer is yes, and we shall be doing so well in advance of the April 1990 start date for the new 75 per cent. content and the other aspects of the regulations.
Mr. Roger Knapman: Will my right hon. Friend deal with the allegation that the Government are having to bribe investors on privatisation issues? I spent most of January and February on the Committee considering the Water Bill listening to the hon. Member for Copeland (Dr. Cunningham) suggesting that we are giving away assets. I therefore cannot follow why it is necessary to bribe investors.
Mr. Lamont: It is hardly worth considering that allegation, but as it has been raised I should deal with it.
The hon. Gentleman is living in something of a dream world. He claims that there are people making vast capital gains on the stock market and privatisation issues, yet in the next breath he says that all the privatisation issues have been an enormous flop. I was interested to note that his speech corresponded with the press release he distributed this afternoon. He regarded the fact that we were removing the one-year rule as an enormous gift to our friends in the City, and said that getting rid of the rule would allow substantial tax-free capital gains for all those who
"wheel and deal in shares".
The hon. Gentleman is obviously not aware that it has always been possible to sell shares with a PEP either in the first year or subsequently. I assume that he objects to the fact that in future the proceeds need not be kept in the plan
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for a full 12 months. That is true, but tax relief in a PEP continues to grow the longer people keep their investments in the plan. We got rid of the 12-month rule simply because it was a wholly unnecessary and bureaucratic imposition on plan managers. The average amount invested in a PEP is £1,700. If the hon. Gentleman believes that there are geniuses around who can invest £1,700 in any year, walk away with huge tax-free sums and live happily ever after, he is living in an unreal world. The hon. Gentleman has muttered many incantations from the book of common prejudice, but he has not given us a serious analysis of PEPs tonight.
The Opposition are terrified about ownership. A few weeks ago, in an article in The Independent, the hon. Member for Birkenhead (Mr. Field) described how, when he was canvassing, people came up to him in his constituency. As they owned a handful of British Telecom shares, they talked to him as though they were relatives of the Duke of Westminster. What a terrifying development!
The Labour party is terrified of ownership, because it will make people independent. Worse than that, ownership will make the Labour party's own policies utenable. What was it that forced Labour to change its policies on housing? It was ownership in housing. What forced it recently to change its industrial policy on social ownership and nationalisation? It is now committed only to taking back into public ownership British Telecom and water. What is the reason for that? Privatisation and wider share ownership have brought about that change. When water is privatised, Labour will have to retreat from its promise to renationalise it as well if it wishes to have a slight chance of being elected again. The trouble is that Labour Members are half-converted. They are not fully converted to the post-Socialist society, but they should become full converts and follow the logic of their own doubts and quandaries.
My hon. Friend the Member for Stroud (Mr. Knapman) asked about the tax reliefs being made available for privatisations and new issues. I have already said that tax relief is being made available for all new issues. It is not necessary for us to give tax relief to make privatisation issues a success, as our record in getting issues away in the companies we have privatised demonstrates clearly. If Opposition Members believe that the privatisation of water depends on tax relief, that shows how little they have learnt. I have not the slightest doubt that there will be tremendous interest in the privatisation of water. Our changes will enlarge the scope of PEPs. They are designed not specifically for privatisation, but to improve the product of PEPs.
The Opposition have the wrong idea about PEPs and they have a wholly wrong idea about how valuable the tax relief is. Some of them have shown that they do not even understand how the tax relief works; they are under the impression that one receives tax relief simply for investing. That is not true; there is no subsidy for investing and no front-end relief—which is a criticism that some of my hon. Friends have made in the past. In the short term, there is no saving for investors; they have to obtain the dividends and capital gains first. One has to be a long-term investor to benefit from the tax reliefs. The idea that the tax relief on dividends—on £1,700—is absolutely to the rich shows that, despite all their efforts to catch up with the changes in the world and to change their policies, Labour Members are still miles and miles away from reality.

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Personal equity plans are playing an important part in widening and deepening individual share ownership. I
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believe that the changes that we have made will give them a tremendous boost, and I am utterly confident of their success.
10.55 pm
Mr. A. J. Beith: The Minister will know that I have been a critic of the PEP scheme from the start—but entirely from the standpoint of someone who thinks that it is the basis of a very good idea and that its essential purpose is right. I would argue that the Minister is only half converted to the objective of wider share ownership or he would develop the PEP scheme further.
Two excellent objectives form the basis of the PEP scheme. The first—increasing saving—is of immediate economic importance. There are overriding reasons why we should seek to attract more saving at present. It is one of the instruments that we could put into the Chancellor's golf bag to add to his one-club interest rate policy.
The second purpose of the PEP scheme is not merely to deepen but to widen share ownership. Although the widening of share ownership made significant progress with the privatisation issues, it seems to have stopped at around the 20 per cent. mark and at a point where most of the new shareholders hold only one or two stocks. A real widening of share ownership would result in a large proportion of the population having a direct stake in the ownership of individual British companies and a direct involvement in their success. That objective is still to be attained, and I hope that the Minister will address himself to it.
PEPs have not gone far enough to help in meeting that objective, for two reasons. One reason is dealt with to a large extent in the present proposals—to date, the high management costs of the scheme have been a disincentive even to offering and marketing PEPs and must have played a part in the very low take-up rate in the past year. I welcome the improvements that the Government are making, which remove a whole lot of unnecessary limitations on the way in which a PEP scheme is operated.
The other main reason why the scheme is not fulfilling its purpose is that the reliefs available under it have been mainly advantageous to those who have sufficient capital gains tax opportunities to benefit from it—those who have exhausted their other sources of relief. It is not a real advantage to those who come nowhere near to using up their capital gains tax limit. No new investor is likely to need the extra capital gains tax relief. It is the investor who has used up his £5,000 worth of capital gains tax relief who is the primary beneficiary. Other investors have only the tax relief on their dividends which, in any stock market investment, must be only a small part of the investor's expectation of reward.
The Minister came right to the point when he said that he had been criticised—he has certainly been criticised by my party—for not considering the possibiity of a front-ended form of relief for the PEP scheme. The changes that the Government are making will lead to an increased take-up of PEPs—because of the reduction in management costs, the changes in the total investment limit and the time limit. The marketing of PEP mortgages will take off rapidly and they will be widely used by those who are aware of their tax advantages and likely to benefit from them. But the PEP scheme will still not be attracting the large numbers of people whom we want to induce to save and whom we want to own British industry. Although there are arguments in favour of the unit trust aspect of the proposal, that will also probably dilute the extent to which the scheme introduces people to ownership of shares in
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individual companies. Therefore, we should examine the scheme again to see whether we can still fulfil that objective at the same time.
It remains my view that the most likely way of achieving that real widening is to offer a form of front-end relief as a supplement to the PEP scheme—perhaps a secondary scheme—a scheme alongside it, or an alternative scheme. Unless the Treasury does that, we will find from the PEP scheme, in the Chancellor's words, not a widening but a deepening of share ownership. That is a much more limited objective. The Minister should look at the original objectives.
Mr. John Redwood: Given the hon. Gentleman's party's conviction about wider share ownership, does he agree that privatisation has been the main means of widening share ownership in this country? Therefore, his party should accept that as the most likely way of continuing the share ownership revolution.
Mr. Beith: It is a means of widening share ownership, but it has fundamental disadvantages, one of which is that it has transferred monopolies from the public sector to the private sector without changing their monopolistic character. We had that experience with British Gas. We are experiencing it with the electricity industry—a badly conceived privatisation, the details of which it would he out of order for me to go into now.
There are good arguments for taking some industries out of the public sector, particularly if the income generated by doing so is reinvested in other parts of the economy. One of the Government's failings is that they see the gains from privatisation as something out of which to make a Budget surplus to be used on current expenditure, rather than as a means of reinvesting in the economy.
There is no gainsaying that one of the consequences of privatisation has been the widening of share ownership. It would be ridiculous to deny that. But I want to see it go much further. I want to see wider ownership of shares in British manufacturing industry, which has never been in public ownership and which therefore cannot be reached by that means.
The advantages of front-end tax reliefs are that they would prove a more immediate attraction to people who have not previously contemplated saving at all or putting their savings into industry. They would apply directly to those who have no prospect of using up capital gains tax relief and, therefore, do not regard that relief as a particularly important incentive.
If the Government are serious about widening share ownership to a larger number of people and also making it a means of increasing savings, they must change or extend the character of the PEP scheme. For those reasons, I am critical of some of the things that the Government have not done. My criticisms are not because of hostility to the scheme's objectives; in its modified form it can at least play some part.
11.2 pm
Sir John Stanley: I welcome the Opposition's decision to initiate this debate, if only to demonstrate that the Labour party has not changed one whit, judging by the speech of the hon. Member for Islington, South and Finsbury (Mr. Smith) about privatisation issues. I found his remarks quite extraordinary. Just as members of the Labour party were

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conspicuous in queueing up for the benefits of privatisation when council houses were offered for sale, so I have every confidence that they will queue up to take advantage of privatisation issues to put them into the PEP mark 2. They will be surprised if Opposition Members vote against the regulations.
I welcome the PEP mark 2. As my right hon. Friend was frank enough to admit, the PEP mark I did not completely fulfil our expectations. I recognise that the stock market crash in 1987 certainly was a factor in that, but it was not the only factor, and the PEP mark I was undoubtedly too complex and restrictive. There was too great an element of Inland Revenue nannying. Certainly, several fund managers—probably the great majority—found that it simply was not an economic proposition for them to run PEP schemes because of the administrative costs involved compared with the relatively small volume. PEP mark 2 is certainly an improvement.
I ask my right hon. Friend to consider two further changes that would remove two restrictions.
My right hon. Friend announced on 3 May in an answer to my hon. Friend the Member for Newbury (Mr. McNair-Wilson) that PEP mark 3 is around the corner, and he has confirmed that tonight. That being so, I hope that he will give consideration to the matters to which I wish to draw attention, especially the two that came within regulation 6(3—the 50 per cent. and 75 per cent. rules. The 50 per cent. rule prevents an individual investor from investing more than half of his annual PEP investment in investment trusts and unit trusts. The rule is unnecessary, anomalous and pretty undesirable. If it is possible for someone to put 100 per cent. of his annual investment into ordinary shares, why should he be restricted to only 50 per cent. of his investment for unit trusts and investment trusts?
My right hon. Friend has made some welcome changes for investment trusts and he has referred to the benefits of widening the changes to embrace split level trusts and the attraction of high-income trusts for first-time investors. If unit and investment trusts are a good investment medium for first-time investors, and they are, surely we should not place a 50 per cent. limit on that form of investment. I think that my right hon. Friend will be the first to agree that many first-time investors who go to their independent financial advisers with only £1,000 or £2,000 to invest will be advised by those advisers to put their money into investment trusts or unit trusts so that they may enjoy a reasonable spread of investment without incurring high initial purchase changes, which is the result of putting penny packets of investment into ordinary shares.
As the regulations are drafted, I believe that they will run contrary to the advice that independent financial advisers will give to those who come to them, especially if they are first-time investors or those of relatively modest means.
I ask my right hon. Friend to consider again the 75 per cent. rule. I suggest that it, too, is highly anomalous. As I understand it, the intention behind the regulations is to produce some form of direct imperative to invest in the United Kingdom. As my right hon. Friend knows, however, the ordinary shares that can be part of any PEP portfolio can include a huge range of United Kingdom-quoted companies. Many of those companies, not least oil
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companies, natural resource companies and internatonal conglomerates, have the majority of their assets and earnings outside the United Kingdom. As the regulations are drafted, it would be possible to construct a PEP where the entire investment was placed in United Kingdom quoted companies which had 75 per cent. or more of their assets and earnings outside the United Kingdom. However, when one came to invest in a unit trust or investment trust that had 74 per cent. of its investments inside the United Kingdom, the regulations would debar the investment. I suggest that that is anomalous.
I have some sympathy with the argument advanced by the hon. Member for Berwick-upon-Tweed (Mr. Beith) in an intervention. As the Government have, rightly, been radical enough to abolish exchange controls, and as they are on the brink of entering into a single capital market within the European Community, fiscal nationalism on a pretty small issue seems to be rather unecessary. I hope that my right hon. Friend will examine closely the 75 per cent. rule. The PEP scheme will be much improved if that and the 50 per cent. restriction on unit trusts and investment trusts are abolished.
11.9 pm
Mr. Denzil Davies: We are debating another example of what used to be called social engineering. Perhaps I should be sorry to revert to that phrase, but I see that the Financial Secretary is amused. Social engineering means the use of the tax system to further various political, economic and ideological ends for the purposes and aims of the Government of the day.
This is not a debate on the Finance Bill but it is closely allied to such legislation. Yesterday we debated the use of the tax system to encourage private health care and this afternoon we debated clause 44 of the Finance Bill and the use of the tax system both for the business expansion scheme and to try to encourage the provision of rented accommodation in the private sector. Again, the tax system is apparently to be used to iron out anomalies and to try to revive the private rented sector.
The tax system is now to be used to enable certain individuals to buy shares on the stock exchange and to get tax relief for doing so. Perhaps most Conservative Members were not Members of the House in those days, but some of us—[Interruption.] Of course it is tax relief—
Mrs. Edwina Currie: There is no tax relief for buying shares.
Mr. Davies: If one gets tax relief on dividends from the shares, one is paying no tax—[Interruption.] Well, perhaps it is not tax relief; it is tax exemption. I am sorry, I had better be more precise in my language. We are talking about total tax exemption on dividends on the PEP scheme. If the hon. Member for Derbyshire, South (Mrs. Currie) wants to be pedantic, she can be. The policy is to grant tax reliefs.
The Conservative party used to tell us that tax reliefs, tax incentives or tax breaks, as the Americans call them, were justified only because of the high rates of taxation under Labour Governments. The Conservative party said that they were justified then because they ameliorated the harsh tax rates. We can all remember that what used to be called "unearned income" was taxed at 95 or 97 per cent. when the investment income surcharge was applied to it

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—[Interruption]. I am advised that the rate was 98 per cent. It was argued that because of those rates we must have all these reliefs. However, we were told that once the tax rates came down to reasonable levels there would be no need for the reliefs. We were told that everything would be neutral and that incentives would not be given to either one group or another.
We have had those tax reductions. Unearned income became known as investment income and the tax on it was no longer any different from the tax on earnings. That is the position today, except that the top tax rate has gone down to 40 per cent. Yet we apparently still need the reliefs and the incentives. Indeed, under this scheme there is no tax at all on dividends—I am correct in that, am I not? —yet there are taxes on earnings at 25 and 40 per cent. We are moving in the opposite direction—we are taxing unearned income in certain categories at a level lower than that at which we tax earnings.
That is extraordinary coming from the Conservative party which has preached tax and fiscal neutrality. However, we know what this is really all about. Although a few people at the lower end of the scale will benefit from such schemes, the schemes will most benefit those whom the Prime Minister describes as "our own people". I notice that the hon. Member for Derbyshire, South is agreeing with that.
As I have said, no tax will be paid on dividends and no tax will be paid on capital gains. The Financial Secretary told us that that is to encourage savings. I thought that the function of the interest rate system was to encourage savings. I should have thought that interest rates at twice the rate of inflation and the highest in Europe—it is possible to get 13 per cent. today—would encourage savings. I do not see why it is necessary to try to get more. Why be more greedy? Why try to find more tax reliefs and more income from savings?
The scheme is, in fact, a confession that popular capitalism has failed to deliver savings. Popular capitalism —the free market, and no interference in the market whatsoever—has not delivered savings under this Government; it has delivered spend, spend, spend. That means that we now have to use the tax system and to pay money to institutional managers and to the fund managers in the City to try to ameliorate the failure of popular capitalism to encourage saving.
The right hon. Member for Tonbridge and Mailing (Sir J. Stanley) talked about the "nannying" of the Inland Revenue. There are 13 pages in these regulations which I read through earlier. They talk of plans, plan managers, plan investments, qualifying individuals, plans managed in accordance with the regulations, planned investors. There are 13 pages of gobbledegook from the Government who told us that the tax system would be simplified, not complicated. We are also debating this week the longest Finance Bill in history.
The Government talked about fiscal neutrality and tax simplicity, but we received neither. A Government who were, apparently, in favour of fiscal neutrality and tax simplicity, have given us less of both. The main reason for that is that the Government want to assist those they choose to help, and they will try to do so through the tax system.
I do not know whether the Government's policy will encourage savings. It will shift savings from one sector of the economy to another. I doubt whether it will generate extra savings, because that depends on the general
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economy. Savings cannot be created overnight. As a result of this system, money will leave building societies and go into the new PEP scheme. I doubt whether it will encourage savings, but it will assist a number of people.
The reason for the scheme and for the Financial Secretary talking about savings is that, over the past few years, the Government have run a slack monetary and fiscal policy. If the Government had practised what they preached about monetary discipline, there would be no need for these schemes to try to encourage savings, because the economy would not be run on that basis. The scheme is a consequence of the Government's failure properly to manage their economy and of the Conservative party's desire to use the tax system to assist its own people. Conservative Members who troop into the Lobby tonight to support the regulations will do so because there is money in it for their own people.
11.17 pm
Mrs. Edwina Currie: May I say how much Conservative Members welcome the various improvements to the PEP.
I originally intended to come merely to listen to the debate, but I heard so much guff from the hon. Member for Islington, South and Finsbury (Mr. Smith) and more guff from the hon. Member for Berwick-upon-Tweed (Mr. Beith), and then I heard my right hon. Friend the Financial Secretary speaking with such approbation about the unskilled women of the north of England who are now buying PEPs in such numbers. When I heard this I thought to myself, "My right hon. Friend is talking about me " I am an unskilled woman from the north of England arid I have never owned any shares in my life, and on 30 March this year I marched into Lloyds bank in Victoria street and bought a PEP.
I think that PEPs are wonderful, and I would like my right hon. Friend to know that he is absolutely right in what he says about the attractiveness of the PEP scheme to first-time buyers and investors, the person who knows nothing about the stock exchange, does not have a financial adviser, does not read the Financial Times, but wants to get into the stock exchange and the stock market to benefit from the tremendous improvement in the capitalist society over which the Government have presided.
In future, this will be the real value of the PEP. It will be one of the best ways into the system for the first-time buyer. On that basis, the changes that are being prayed against today are very important, much more important than the tax incentives that have been described and which are being derided by the Opposition. They are particularly important as privatisation issues gradually draw to a close. We shall reach the stage when we have privatised everything that stays still long enough. It will then be harder for the public, unless they have some easy access to the system, to buy shares. In any case, why should they be restricted to buying shares merely in old, nationalised industries? It is marvellous that, through the PEP system, they should be able to have access to shares in a much wider range of companies.
I share the view of my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) that the old PEP rule on the proportion that goes into unit trusts is a

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bureaucratic and undesirable element of restriction that my right hon. Friend the Financial Secretary should look at.
The old PEP was hampered by excessive bureaucracy and, perhaps, a half-hearted approach. Listening to the Opposition Members who have spoken, I wondered why they oppose the PEPs and have bothered with this prayer. They are wrong about them on one count—no doubt my right hon. Friend will tell them they are wrong on many others, too. They are wrong to think that PEPs are attractive only to people who have used up their existing £5,000 tax exemption on the capital gains tax. The person buying a PEP for the first time who does not own shares has a tremendous incentive to buy one the next year—and the next—and to stay in the system until he accumulates a substantial benefit. That is a major incentive.
My right hon. Friend was undoubtedly right to say that the average tax benefit from the dividends will be about £60 a year. I agree that that is not exactly exciting for most people, including those on average earnings or below. But that is not the incentive; the incentive is to get into the stock exchange system and stay there until the day comes when a person has built up a large portfolio.
The hon. Member for Islington, South and Finsbury (Mr. Smith) must make up his mind. Perhaps the Labour party's policy review will help him to do so. Everything that he said about PEPs amounted to an advertisement for them and I should have thought that he would welcome them for that reason. The Opposition say that they believe in a share-owning democracy; if so, they should consider PEPs, and the changes to them, marvellous. Either they should make up their minds whether they favour share-owning, or they know what they really think about it and are not telling us, in which case they are lying through their teeth—[Interruption.] I said, "Either, or."
I must tell the hon. Member for Islington, South and Finsbury, who is a nice bloke—I like him—[Interruption.] that when it comes to the next election, and the hon. Gentleman and his hon. Friends start talking about share ownership and a share-owning democracy, he will have to make it absolutely clear whether he means to leave our shares with us or to take them off us by re-nationalisation and taking away all the rights that we are now acquiring. If he chooses the latter course, he will find it about as popular as taking away our nuclear deterrent, and the people will not vote for it.
I offer my right hon. Friend this thought: we have spent a lot of time considering incentives to the purchasers of PEPs, but we need to think about incentives for the banks, building societies and others who will take on the management of these funds on our behalf. I had to persuade the nice young ladies at the branch of Lloyds in Victoria street to sell me a PEP. They had never heard of it. Having heard my right hon. Friend's Budget speech, I decided that a PEP would be nice to have. A few days later Lloyds took full-page advertisements in the press, telling us that we must buy our PEPs immediately and sign our cheques by 4 pm on the last Friday in March. If not, we could not obtain the current plant.
I marched in, clutching my copy of the advertisement in one hand and cheque book in the other. No one at the branch of Lloyds knew anything about PEPs. They managed to find me a leaflet, and I read through the details
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of the old scheme, which were all wrong. I told the staff that everything had changed; they said that it had not. The young lady brought her supervisor to see me—also, marvellous to relate, a woman—and she insisted also that the details had not changed. I said to the girl, "Here's my cheque. I want a receipt now, with the date-stamp on it." Three weeks later I received a stereotyped letter from a minion in Lloyds bank stating that I now possessed a PEP.
I have done the bank the honour of giving it my hard-earned £3,000, and I reckon that it should be keener to take our money off us. Somewhere along the line, if the PEP is to be what I hope—the easy way into the stock exchange for the first-time buyer and for people who have no experience of the stock exchange—the people who are managing and selling the schemes had better pull their socks up and do the selling. They should make it easier and more attractive for unskilled northern women like me to go into the banks and get PEPs.
I commend what my right hon. Friend is doing. I look forward to the PEP being an even greater success in future.
11.24 pm
Mr. Tim Smith: When my hon. Friend the Member for Derbyshire, South (Mrs. Currie) approached the sign of the black horse and got into the bank, she discovered that it was the listening bank and she was able to advise it on PEPs. I hope that it gets its act together soon.
The changes announced in the Budget offer an outstanding marketing opportunity for financial advisers of all kinds. When I listened to the Budget statement I concluded that this was one of the most exciting series of changes made for a long time. The changes in personal equity plans offer people for the first time a real opportunity to build up a tax-free equity portfolio.
The right hon. Member for Llanelli (Mr. Davies) talked about encouraging savings. I do not believe that that is the object of the scheme. It is to encourage investment in equities, which is a different proposition. There is plenty of encouragement for savings with interest rates at their present levels. Building societies do not have a problem, and savings are rising.
The purpose of the scheme is to encourage people to put their money into direct savings in equities, investment trusts and unit trusts. We can make a direct comparison between the tax advantages of putting money into an occupational pension scheme, where it is locked up for a long time but where all the dividends and capital gains are tax-free, and personal equity plans.
I agree with the hon. Member for Berwick-upon-Tweed (Mr. Beith) that there will be a big change in this area of the savings market. When people take out a mortgage, they will not go for an institutional way of paying it back through a life policy where the money is locked up. They will put their money into personal equity plans on a regular basis. Over a period of years, as anyone who looks at the tables for unit trusts will see, there will be a rapid accumulation in the value of their investment. They will find that they are in a position to pay off their mortgage much earlier than they might otherwise have been. They will have considerable flexibility which is not available under present arrangements.
That is why the scheme is so exciting. It is not for a month, for six months or even for a year, as the hon. Member for Islington, South and Finsbury (Mr. Smith)

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thinks; it is for a long period to encourage long-term savings in the equity market. That is what it will do. With modest monthly payments, people can accumulate considerable capital. It is the next step to a property-owning democracy. The Government have been successful in achieving a high percentage of home ownership. The next stage in giving people more security and independence is to give them the opportunity to build up a reasonable amount of equity capital.
I welcome the changes, which will be significant in the long run. Opposition Members do not know how to react to all this, or whether to welcome it. We saw that in the speech of the hon. Member for Islington, South and Finsbury from the Front Bench. I think that they will see that there will be considerable benefits and that many new investors will come into this area of the savings market.
I have two detailed comments. First, on the vexed question of the 75 per cent. limit which will apply to unit trusts and investment trusts, I understand why the Treasury wants to introduce a limit. It is right that, primarily, people should be encouraged to invest in United Kingdom equities, but there is the difficulty to which my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) drew attention—that many United Kingdom companies invest heavily overseas. For example, Hanson plc has about 50 per cent. investment in the United Kingdom and 50 per cent. in the United States. If I chose to invest all my PEP in Hanson shares, I would get full relief even though half the money is going to overseas investment. We can probably think of examples, such as BAT Industries plc, where the proportion of overseas investment is even higher. I could invest in plantation or other companies, where investment is completely overseas. My right hon. Friend might review the limit. A 50 per cent. limit might be more reasonable.
On my second point I am not too sure of my facts, but I want to ask whether, under the scheme, one is confined to investing in quoted shares. If so, is there any reason why the scheme should not be extended to unquoted shares? Is there any reason why all equity investment should not be eligible? 1 shall be grateful for an answer to that question. It may not be unreasonable to allow people to invest in unquoted investment, more risky though that may be.
At the end of the day, the changes encourage more people to put more of their money into equity investment. The Government have been successful in increasing share ownership. Literally millions of people are now investors, and with these changes, encouraging people to put their privatisation shares into the schemes, we shall see PEPs take off over the next 12 or 24 months.
11.30 pm
Mr. Chris Smith: The hon. Member for Derbyshire, South (Mrs. Currie) has obviously spotted the fact that my reselection comes later this year and has decided to do me the greatest possible damage by being nice about me. However, I am grateful for her comments, if not for the general content of what she had to say about PEPs.
The hon. Member for Beaconsfield (Mr. Smith) said that there was plenty of encouragement for savings at the moment through the movement in interest rates. That is broadly true, but it is worth noting in passing that the rates generally available for savers through financial institutions such as building societies have gone up proportionately less than the rates that are charged to borrowers as a result
968
of the increase in the base rate. There are important questions to be asked about where the difference between those two movements in rates has gone, but that is for another debate.
Two points that arose in this debate are worth highlighting. First, there appears to be a clash of opinion between the two sides of the Chamber about the overall profile of investors in PEPs. Opposition Members have the evidence from financial journalists, from the Institute of Fiscal Studies and from the general feeling among the financial institutions in the PEP market, the overwhelming impression from which is that relatively few first-time investors are now taking advantage of PEPs, that on the whole PEPs are taken out by richer investors and that much PEP investment is the repackaging of existing portfolios.
From Conversative Members we have the impressions of one branch of the Bradford and Bingley building society; or perhaps one region of it. I would tend to believe the Institute of Fiscal Studies and other financial institutions before I believe the impression that the Financial Secretary was trying to give.
The other point that is worth re-emphasising is a simple point of principle. For all the talk of popular capitalism, ownership and so on that we have had from Conservative Members tonight, the fact remains that the inclusion of privatised issues within PEPs in effect gives a tax relief which is ultimately expenditure by the Exchequer, because it is income forgone. It is giving Exchequer subsidies to those who purchase public assets.
Bitterly opposed as Labour Members are to the sale of those public assets, we cannot possibly accept that it is right, on top of the disposal of those public assets, to assist their disposal by means of a tax subsidy—expenditure from the Exchequer, which is paid for by the generality of taxpayers.
11.36 pm
Mr. Norman Lamont: My right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley) raised two points. The first was about what he called the 50 per cent. rule. There is not actually a 50 per cent. rule. Somebody investing in unit trusts or investment trusts can invest all his portfolio in unit or investment trusts.
I think that my right hon. Friend was referring to the fact that the £2,400 is half the limit. Regulation 6(3) is concerned only with somebody who has first invested in shares and then wants to switch to unit trusts. There is also the point, which my right hon. Friend may have been making, that £2,400 is half the limit that may be invested in shares directly.
As I explained at the beginning of the debate, our original concept was designed to encourage direct ownership in individual shares, although we also allowed some investment in unit and investment trusts. We have increased that considerably, to a level that is more economic from the point of view of plan managers, but we still want to maintain the idea of direct investment in individual shares with the investor actually following the company. So we are trying to do both—to have a generous amount for unit and investment trusts and a higher amount for direct investment.
My right hon. Friend the Member for Tonbridge and Malling also referred to the 75 per cent. rule, as did my hon. Friend the Member for Beaconsfield (Mr. Smith).

969
The point was made—which, after many representations from the unit and investment trusts, has become a familiar one—that there are many British companies with assets throughout the world and that there is a degree of artificiality at the margin in saying that a company which is quoted and registered in London is necessarily a United Kingdom company, even if its activities are spread internationally.
Most hon. Members will agree that it would be odd if we gave a tax relief for people to invest largely overseas. It is difficult to distinguish one company from another and try to look at the underlying assets, whereas with a collective investment vehicle one can do that easily. But it would be odd to give tax relief for, say, M & G Japan.
Sir John Stanley: Will my right hon. Friend explain how it is meant to work in a situation where an individual plan holder invests in an investment trust that is just more than 75 per cent. invested in the United Kingdom? The board of directors of the investment trust is bound by the Companies Act to do its best by its shareholders. Let us assume that it is an international investment trust and it decides that it should switch a proportion of its investments out of the United Kingdom into companies overseas, and it falls below the 75 per cent. level. The plan holders will no longer be in a qualifying investment trust. What will happen to such plan holders?
Mr. Lamont: For an investment trust to qualify to be part of a PEP, it must satisfy the 75 per cent. requirement, and it will be able to be in a plan only if that is one of its investment objectives. The directors of the company will know that when they decide whether they wish to put their investment trust into a PEP.
My hon. Friend the Member for Beaconsfield asked whether PEPs are confined to quoted shares. They are, but my hon. Friend may have noticed that we extended that provision to include the USM as well. We regard the BES as being more suited to encouraging investment in unquoted shares.
The right hon. Member for Llanelli (Mr. Davies) made another engaging speech. He has become the spokesman and interpreter of the new Right on the Opposition Benches. After the Budget, the right hon. Gentleman gave the House a lecture on monetarism, saying that if we were true believers in monetarism we would not have been worried about the surplus but would have cut taxes and let monetary policy take the strain. The right hon. Gentleman has also been lecturing on fiscal neutrality, and has been reading publications by Milton Friedman and the Adam Smith Institute well into the night.
The right hon. Gentleman has become very learned on Right-wing theory. However, as my hon. Friend the Member for Derbyshire, South (Mrs. Currie) pointed out, despite all the right hon. Gentleman's education from the Right and the new Right, he does not understand how PEP tax relief works. My hon. Friend the Member for Derbyshire, South made it clear that one does not benefit from tax relief just by the act of investing. She emphasised, as did my hon. Friend the Member for Beaconsfield, that the advantage of PEP tax relief comes only to the person who invests consistently and holds shares for a period of time.
970
The right hon. Member for Llanelli stated that the regulations, the changes and the whole concept of PEPs simply complicate the tax system. Perhaps stemming from his misunderstanding of the relief, the right hon. Gentleman overlooks the fact that, because there is total exemption on dividends, one of the beauties of the system, and one of its greatest attractions, is that the investor does not need to have any contact with the Inland Revenue. That is a major advantage, and very different from the scheme proposed by the hon. Member for Berwick-upon-Tweed (Mr. Beith), who yet again suggested tax subsidy for investment; front-end relief on the Loi Monory model.
That would help the richer investor and be open to abuse on a considerable scale, because it would be possible for a person to recycle his investments each year, thus qualifying for relief. They would be able to put existing investments through a plan and qualify for relief just on the basis of their existing investments. That would be much more expensive than the existing form of relief, which is well targeted.
My hon. Friends the Members for Derbyshire, South and for Beaconsfield made the point that the strength of the scheme is that it rewards the long-term investor who sticks with his or her portfolio, and not—as Opposition Members seem to think—short-term speculators. The plan encourages investment in equity markets and encourages people to stay in them for the long term. That is its purpose, and our Budget changes strengthen the scheme and will prove to be very popular.
Question put:
The House divided: Ayes 88, Noes 165.

Division No 195]

[11.43pm

AYES

Abbott, Ms Diane

Hughes, Robert (Aberdeen N)

Adams, Allen (Paisley N)

Illsley, Eric

Barnes, Harry (Derbyshire NE)

Ingram, Adam

Battle, John

Jones, Barry (Alyn & Deeside)

Beckett, Margaret

Jones, Martyn (Clwyd S W)

Boateng, Paul

Kinnock, Rt Hon Neil

Bradley, Keith

Lamond, James

Brown, Gordon (D'mline E)

Lewis, Terry

Brown, Nicholas (Newcastle E)

Lofthouse, Geoffrey

Buckley, George J.

Loyden, Eddie

Campbell-Savours, D. N.

McAllion, John

Clark, Dr David (S Shields)

McAvoy, Thomas

Clarke, Tom (Monklands W)

McFall, John

Clay, Bob

McKay, Allen (Barnsley West)

Clelland, David

McNamara, Kevin

Clwyd, Mrs Ann

Mahon, Mrs Alice

Cook, Robin (Livingston)

Marek, Dr John

Cousins, Jim

Marshall, Jim (Leicester S)

Cryer, Bob

Martin, Michael J. (Springburn)

Cunliffe, Lawrence

Meale, Alan

Darling, Alistair

Michael, Alun

Davies, Rt Hon Denzil (Llanelli)

Michie, Bill (Sheffield Heeley)

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

Moonie, Dr Lewis

Dixon, Don

Morgan, Rhodri

Dunnachie, Jimmy

Mullin, Chris

Ewing, Mrs Margaret (Moray)

Orme, Rt Hon Stanley

Fisher, Mark

Pike, Peter L.

Foster, Derek

Powell, Ray (Ogmore)

Foulkes, George

Quin, Ms Joyce

Fyfe, Maria

Redmond, Martin

Godman, Dr Norman A.

Robertson, George

Golding, Mrs Llin

Ross, Ernie (Dundee W)

Gordon, Mildred

Rowlands, Ted

Graham, Thomas

Ruddock, Joan

Griffiths, Win (Bridgend)

Skinner, Dennis

Henderson, Doug

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

Hinchliffe, David

Smith, John P. (Vale of Glam)

Home Robertson, John

Soley, Clive

Hughes, John (Coventry NE)

Spearing, Nigel

971

Steinberg, Gerry

Welsh, Michael (Doncaster N)

Turner, Dennis

Worthington, Tony

Vaz, Keith

Wray, Jimmy

Wall, Pat

Walley, Joan

Tellers for the Ayes:

Warded, Gareth (Gower)

Mr. Robert N. Wareing and

Welsh, Andrew (Angus E)

Mr. Ken Eastham.

NOES

Aitken, Jonathan

Devlin, Tim

Alexander, Richard

Dorrell, Stephen

Alison, Rt Hon Michael

Dover, Den

Amess, David

Dunn, Bob

Amos, Alan

Durant, Tony

Arbuthnot, James

Evans, David (Welwyn Hatf'd)

Arnold, Tom (Hazel Grove)

Fallon, Michael

Ashby, David

Favell, Tony

Baker, Nicholas (Dorset N)

Fishburn, John Dudley

Batiste, Spencer

Forman, Nigel

Beith, A. J.

Forth, Eric

Bennett, Nicholas (Pembroke)

Fox, Sir Marcus

Biffen, Rt Hon John

Franks, Cecil

Blackburn, Dr John G.

Freeman, Roger

Bonsor, Sir Nicholas

French, Douglas

Boscawen, Hon Robert

Gardiner, George

Boswell, Tim

Garel-Jones, Tristan

Bottomley, Peter

Gill, Christopher

Bottomley, Mrs Virginia

Goodhart, Sir Philip

Bowis, John

Greenway, John (Ryedale)

Brandon-Bravo, Martin

Gregory, Conal

Brazier, Julian

Griffiths, Peter (Portsmouth N)

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

Grist, Ian

Burns, Simon

Ground, Patrick

Burt, Alistair

Gummer, Rt Hon John Selwyn

Butterfill, John

Hague, William

Campbell, Menzies (Fife NE)

Hamilton, Hon Archie (Epsom)

Carlile, Alex (Mont'g)

Hamilton, Neil (Tatton)

Carrington, Matthew

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

Chapman, Sydney

Harris, David

Chope, Christopher

Hayes, Jerry

Clarke, Rt Hon K. (Rushcliffe)

Heathcoat-Amory, David

Coombs, Anthony (Wyre F'rest)

Hind, Kenneth

Coombs, Simon (Swindon)

Howard, Michael

Cope, Rt Hon John

Howell, Rt Hon David (G'dford)

Couchman, James

Hughes, Robert G. (Harrow W)

Cran, James

Hughes, Simon (Southwark)

Currie, Mrs Edwina

Hunt, David (Wirral W)

Davis, David (Boothferry)

Hunter, Andrew

972

Irvine, Michael

Raison, Rt Hon Timothy

Jack, Michael

Redwood, John

Janman, Tim

Rhodes James, Robert

Jones, Gwilym (Cardiff N)

Riddick, Graham

Jones, Robert B (Herts W)

Ridley, Rt Hon Nicholas

Kennedy, Charles

Ridsdale, Sir Julian

Kilfedder, James

Roberts, Wyn (Conwy)

King, Roger (B'ham N'thfield)

Rost, Peter

Kirkhope, Timothy

Rumbold, Mrs Angela

Knapman, Roger

Ryder, Richard

Knight, Greg (Derby North)

Sackville, Hon Tom

Knowles, Michael

Sainsbury, Hon Tim

Lamont, Rt Hon Norman

Sayeed, Jonathan

Latham, Michael

Shaw, David (Dover)

Lawson, Rt Hon Nigel

Shephard, Mrs G. (Norfolk SW)

Lennox-Boyd, Hon Mark

Shepherd, Colin (Hereford)

Lester, Jim (Broxtowe)

Skeet, Sir Trevor

Lightbown, David

Smith, Tim (Beaconsfield)

Lilley, Peter

Speller, Tony

Livsey, Richard

Spicer, Michael (S Worcs)

Lloyd, Peter (Fareham)

Stanley, Rt Hon Sir John

Lyell, Sir Nicholas

Steen, Anthony

McCrindle, Robert

Stevens, Lewis

MacGregor, Rt Hon John

Stewart, Andy (Sherwood)

Maclean, David

Stradling Thomas, Sir John

McLoughlin, Patrick

Summerson, Hugo

McNair-Wilson, Sir Michael

Taylor, Ian (Esher)

McNair-Wilson, P. (New Forest)

Taylor, John M (Solihull)

Malins, Humfrey

Thompson, D. (Calder Vally)

Mans, Keith

Thorne, Neil

Martin, David (Portsmouth S)

Thurnham, Peter

Mates, Michael

Townend, John (Bridlington)

Miller, Sir Hal

Trippier, David

Mills, Iain

Trotter, Neville

Mitchell, Andrew (Gedling)

Waddington, Rt Hon Davic

Mitchell, Sir David

Wheeler, John

Montgomery, Sir Fergus

Whitney, Ray

Morrison, Sir Charles

Widdecombe, Ann

Neale, Gerrard

Wolfson, Mark

Neubert, Michael

Wood, Timothy

Nicholson, David (Taunton)

Yeo, Tim

Onslow, Rt Hon Cranley

Paice, James

Tellers for the Noes:

Pattie, Rt Hon Sir Geoffrey

Mr. Alan Howarth and

Porter, David (Waveney)

Mr. Kenneth Carlisle.

Powell, William (Corby)

Question accordingly negatived.

Metropolitan Trust Estate, Hemel Hempstead
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sakville]
11.54 pm
Mr. Robert B. Jones: I welcome the opportunity to introduce this short debate on the supervision of housing associations and the importance of ensuring that bodies entrusted with public money are well run and considerate to their tenants.
Housing associations are like local authorities; some are good—I have been involved with some in my constituency, the performance of which is excellent—and some are bad. The debate is about the performance of one housing association—the Metropolitan housing trust, which is known to me because of its ownership of a small estate in my constituency, Woodhall farm, Hemel Hempstead. The history of the estate is substandard building, negligent maintenance, botched workmanship and complete contempt by the trust for the views and conditions of my constituents who have the misfortune to be its tenants.
I have been dealing with tenants' problems since I was elected in June 1983, often with a bewildering succession of officials and at least two chairmen. Correspondence has been protracted and fills half a drawer of my filing system. I have had numerous meetings with representatives of the trust, individual tenants and their leaders and the local authority. On one occasion, I chaired a public meeting of the tenants, at which trust representatives were present. I am sorry to say that all this effort appears to have made little difference to the trust's attitude. My last resort, therefore, is to place the facts in the public domain and rely on the reputation of my hon. Friend the Minister for concern about the problems of public sector tenants, when their landlords are indifferent to their plight.
The estate at Woodhall farm was built by Fairview Estates in the late 1970s as a speculative development. The majority of the housing there is owner-occupied, but certain areas were acquired by outside public bodies. Those formerly owned by the Greater London council are now in the hands of Dacorum borough council, although many have now been bought under the right to buy. This debate is about the smallest group—those acquired by the Metropolitan housing trust, a charitable housing association set up and funded by the Labour-controlled London borough of Haringey.
The Metropolitan housing trust owns 117 three and four-bedroom houses, which are occupied primarily by families originating from north London. In fairness to it, it must be said that there is substantial circumstantial evidence that the housing was substandard at purchase. Tacit recognition of this is evident from Fairview Estates' agreement to carry out certain remedial works and the company's financial compensation paid to another housing association on the estate, the Circle 33 housing trust, despite the passage of 10 years since construction. It must, nevertheless, be obvious that the trust did not take the prudent steps necessary to know what problems might lie ahead. The elementary piece of advice, caveat emptor, seems not to have been followed.
Residents have watched the steady decline of the condition of their homes in contrast to the generally
974
well-maintained and managed local authority and owner-occupied parts of the estate. Although all the properties were built to the same specification, there is a clear difference between their condition now. The initial poor workmanship has therefore been exacerbated by the Metropolian housing trust's failure to carry out effective repairs over the past 10 years.
Most obvious of the defects in maintenance is the condition of the paintwork, which is a disgrace. A casual visitor to the estate would be struck forcibly by the peeling paintwork and rotten woodwork. No effective painting cycle has ever been in effect. As a result, comparatively trivial maintenance problems have deteriorated through inattention. I will give one example of what I mean. My constituent, Mrs. A, had occasion to report three years ago that part of her door frame was rotten. Without attention in the meantime, it has now become necessary to replace the entire porch.
There are many other such problems, and during the past few years I have taken officials and members of the trust on inspection tours. All of them have been shocked by what they have seen. I should not want my hon. Friend the Minister to think that this was a problem that only a lick of paint could cure. My constituent Mr. L has had to put up with his garden wall collapsing on to a parked van. Even after part of the wall was demolished and rebuilt at the instigation of the trust, Dacorum borough council's chief planning officer had to write in March 1988 in these terms:
"The defects referred to have not been rectified by the works and are likely to constitute a danger to the public in the near future under the provisions of the Building Act 1984".
Yet another botched job! Simple repairs have taken three to five years. Kitchen cupboards have crashed to the floor having been fixed to the wall by four floorboard nails instead of screws. Typical of the trust's approach, even now, is the repainting of a rotten frame by one workman, followed a few weeks later by a carpenter who has cut out the rotten wood, leaving the new wood unpainted. No doubt that will be rotten by the time it is painted again.
My constituents are reasonable people driven to the point of despair. One of them, Mr. Fred Rantle, has led an excellent campaign to get the Metropolitan housing trust to face up to its responsibilities and to provide an acceptable repair service. He is now chairman of the residents' group and has been helping other tenants with advice. I would like especially to thank him for his work and encouragement.
The trust itself recognises the repair backlog. It commissioned a professional survey between April and June 1986, which concluded that £500,000 needed to be spent. That amount must be higher now because of the passage of time. As a result of this survey by the trust, the officers of the trust reported to its members in October 1986:
"Members have been aware for a considerable length of time of significant defects to the dwellings at the above estate. These defects, due to their severity, have never been able to be handled in a comprehensive manner."
We then come down to the basic problem of money. The trust itself is in deficit by a reputed £500,000. No doubt that is due to mismanagement, as always. It has, therefore, three basic options. First, it approached the London borough of Haringey, which predictably shirked its responsibilities. I feel, as do my constituents, that this attitude owes much to the fact that they have no votes in Haringey and can therefore safely be treated with

975
contempt. That failure by Haringey was confirmed by the trust's director in a letter to me dated 21 June 1988, in which he said:
"First of all it has become clear that the London Borough of Haringey have no intention or capability of providing major repairs funding for the estate at the moment."
The second option to be examined was to ask the Housing Corporation for more money. That is quite unacceptable as the taxpayer has already paid for the houses and is entitled to expect them to be properly maintained. I believe that the trust has had a dusty answer from the Housing Corporation. The third option—the only practicable one—is for the trust to raise the money from sales of its property, which is what it is now doing. That brings me to a parallel, but related, bone of contention between the tenants and the trust.
Since moving to Hemel Hempstead, many of the tenants have prospered. They see around them council tenants who have become owner-occupiers and, quite naturally and justifiably, they themselves have aspirations to see their hard work rewarded by similar status. On behalf of a number of families, I have repeatedly pressed the trust to allow tenants to purchase. Predictably, the trust's members, who I believe are all owner-occupiers themselves, have denied that opportunity to their fellow citizens.
Given the financial circumstances, however, needs have triumphed over ideology and the need to raise £500,000 has moved minds. But that is the only silver lining in a very clouded sky and even that silver lining is tarnished. First, the discounts being allowed are mean in the extreme and are far inferior to those operating under the right to buy. It is grossly unfair to see similarly placed tenants in identical houses, funded entirely by public money, being faced with wholly different prices for a home of their own, depending on whether they are a council or housing association tenant. Much of that unfairness was discussed at length together with the repair problem, at a meeting for all tenants which I chaired in November 1987. It was attended by nearly every tenant and voted unanimously to request the same terms as those operating under the right to buy. Needless to say, the tenants' views were wholly ignored by the trust.
The trust went ahead with its own terms and circulated tenants in December 1987. The reaction was clear. Of the 30 families expressing an interest in purchase, only a handful could accept the terms. Some of these have now completed, but several other injustices have surfaced. One family which was originally unable to buy has since benefited from improved financial circumstances. With my support, it approached the trust to be reconsidered. The door was slammed in its face.
There is a sting in the tail, which will really shock my hon. Friend, if he has not already been disgusted enough by the trust's behaviour. The Metropolitan housing trust, a bastion of Stalinism to the end, has included a strict covenant in the contract imposing conditions on the new owners right down to the paint that they can use—a supreme irony in view of the trust's paint-free history. The conveyance also stipulates that purchasers should submit to the Metropolitan housing trust, with a fee, any request for alterations and extensions, despite the fact that these matters are properly dealt with under planning law. The ex-Metropolitan tenant will thus be left a semi-serf in his own home.
976
I am afraid that I have one more major complaint. Recently, tenants denied the opportunity to buy have been angered to see vacant houses on the estate sold on the open market. Perfect strangers can buy the association's houses, whereas long-standing tenants cannot. I am also told that the restrictive covenants do not apply to those sales, although I have been unable to confirm that point.
The evidence is damning in the extreme. In my view, the Housing Corporation should hold a full inquiry into the management of the Metropolitan housing trust and its finances. It should visit the estate and meet the tenants, who can add volumes of damning evidence. I have a petition signed by virtually every tenant, except those who were not in on three separate visits. The petition calls for a public inquiry—a call that I support. I would add a request that my hon. Friend looks closely at the principle of whether a housing body funded by a local authority should be allowed to own property beyond its own boundaries.
In its own conditions of tenancy the trust undertakes to obey these two conditions, among others:
"C. 1a) The Trust shall be responsible for all repairs and redecorations to the exterior of the premises
b) The Trust shall be responsible for the repair and maintenance of the structure of the premises."
In view of its abject failure to fulfil those conditions, I believe that the Housing Corporation should order the trust to be wound up and its assets transferred to another body that is more competent and considerate of its tenants.
Finally, I place on record my appreciation to the two Conservative councillors for this ward, Mike Griffiths and Denis Samuels, who have consistently supported the tenants' case, and, above all, to the tenants themselves, who have been prepared to fight for their rights.
In another debate on another subject, I might have used the phrase "battering one's head against a brick wall." In the context of the trust's shoddy masonry, I shall simply invite the Minister to give its tottering establishment one last shove.
12.8 am
The Parliamentary Under-Secretary of State for the Environment (Mr. David Trippier): I congratulate my hon. Friend the Member for Hertfordshire, West (Mr. Jones) on securing the debate. My hon. Friend has in his constituency many properties run by housing associations in a very proper manner and I am grateful to him for his kind remarks about those associations.
Naturally, I am sorry to hear that my hon. Friend thinks that the attitude of one association towards its tenants lacks the care that is traditional. I am sure that we all suffer from day-to-day worries about repairs to our homes but perhaps in this case there are more serious problems attributable to the original construction which are a worry to Metropolitan's management as well as to its tenants.
Having promoted housing associations, the Government want to be confident that they will continue in their tradition of being responsible landlords. Through its normal monitoring and reporting system, the Housing Corporation is prepared to get to grips with a registered association that is demonstrably remiss. It is aware of the problems at the Woodhall estate, and in view of the

977
concern that my hon. Friend has clearly expressed this evening, I shall ensure that the Housing Corporation makes proper inquiries.
My hon. Friend raised a specific point about ownership. We have always been cautious about interfering with the acquisition and disposal of housing association stock. The right to buy is deservedly popular with council tenants who wish to progress to home ownership.
I can understand why the home ownership scheme for tenants of charitable housing associations is close to my hon. Friend's heart. At this stage, he would not expect me to pass judgment on why one association has acted in a particular way on a particular estate. For all I know, its committee may be pressed by circumstances to take a line that is unpopular with several tenants to safeguard the interests of most. Again, in view of my hon. Friend's concern, I will see how the Housing Corporation views the matter.
Although the management of housing association grant has now been delegated almost entirely to the Housing Corporation, my Department was previously extensively involved in the details of new build and conversion schemes that attracted grant. Doubtless there were occasions when, for example, grant was withheld on work done when additional expenditure was incurred without proper consultation with the guardians of the public purse. Housing associations involved in building work with our
978
financial help need to understand that they must respect the same discipline over expenditure using public money as they will have to when spending the private funding that is increasingly flowing to them. Similarly, they cannot automatically assume that they can continue to make substantial calls on the public purse if they run into problems. They may need to take tough decisions on how to finance solutions from their own resources.
I will take seriously the information that my hon. Friend gave the House. My hon. Friend is a staunch supporter of the housing association movement and of the Government's policies as enshrined in the Housing Act 1988. For those reasons particularly, I am taking seriously what he said. The Government's provision of public money for housing associations and our responsibility for the nation's housing policy mean that we need to make sure that there is appropriate oversight of the process, and not just setting up and running housing associations. All too often, the anti-social activities of a minority are unreasonably used to condemn all private sector landlords, and I include housing associations.
We need to check that associations are not only properly motivated but will have all the financial, managerial, technical and social skills to manage and service property and investment and to serve their clients' needs. I repeat my assurance to my hon. Friend: when the Housing Corporation has carefully examined the points that he has raised, I will be in touch with him.
Question put and agreed to.
Adjourned accordingly at twelve minutes past Twelve o'clock

SCOTLAND

  Electricity Privatisation
  Dr. Thomas
  To ask the Secretary of State for Scotland what volume of radioactive wastes in the categories of(a) low level, (b) intermediate level and (c) high level, respectively, will be transferred to the ownership of Scottish Nuclear Limited under privatisation of the South of Scotland electricity board; and what volume of unreprocessed spent nuclear fuel and reprocessed plutonium will be transferred to Scottish Nuclear Limited on its creation.

  Mr. Lang
  The Government's intention is that Scottish Nuclear Limited should inherit all the SSEB's nuclear assets and liabilities.

  AIDS
  Mr. Robertson
  To ask the Secretary of State for Scotland if he will list in the Official Report the names of each of the advertising agencies used by his Department on the AIDS campaign, with the payments made to each.

  Mr. Michael Forsyth
  The Scottish Home and Health Department does not employ advertising agencies for the AIDS campaign.

  Buses (Privatisation)
  Mr. Bill Walker
  To ask the Secretary of State for Scotland (1) if he will list the fleet size and market share of the individual local authority bus public limited companies in Scotland;

  (2) what are the numbers and types of public service vehicles which are in service with local authority public limited companies in Scotland.

  Lord James Douglas-Hamilton
  [holding answer 2 May 1989]: The numbers and types of public service vehicles in service with local authority owned bus undertakings in Scotland are shown in the following table. Information on the market share of the individual companies is not available.

  Strathclyde Buses Ltd.

  Lothian Region Transport plc

  Tayside Public Transport Company Ltd.

  Double deckers

  757

  524

  141

  Single deckers

  10

  29

  4

  Coaches

  13

  21

  12

  Midibuses

  44

  4

  —

  Minibuses

  16

  —

  4

  Open top buses

  3

  2

  —

  All buses

  843

  580

  161

  Source: "Who's Who in the Bus Industry", 1989–90 Edition, published by Yandell Publishing Ltd.

  New Businesses
  Mr. Bill Walker
  To ask the Secretary of State for Scotland how many firms have set up new businesses in Scotland in the period May 1979 to April 1989; what type of businesses they were; how many jobs were created; and where those firms were located.

  Mr. Lang
  [holding answer 9 May 1989]: Between 1 January 1980 and 1 January 1989, the number of companies registered in Scotland rose by just under 20,000, or by more than one half.

  Information on jobs created from new openings is available only for the manufacturing sector. The definition used includes existing plants rising above the employment threshold of 11 and also includes in some cases existing businesses changing address or expansions to new sites.

  One thousand, three hundred and eighty-five manufacturing plants opened in Scotland between 1979 and 1987, and 994 were still open at the end of 1987 with a total employment of 44,001. Tables 1 and 2 show the industry breakdown and the local authority breakdown of these plants. Figures for the period after 1987 are not yet available.

  Table 1

  Local authority region

  Number of manufacturing plants opened January 1979 to 1December 1987

  21987 Employment

  Borders

  37

  1,115

  Central

  64

  2,072

  Dumfries and Galloway

  27

  972

  Fife

  106

  3.578

  Grampian

  107

  3.633

  Highland, Orkney, Shetland and Western Isles

  43

  818

  Lothian

  171

  7,084

  Strathclyde

  703

  20,779

  Tayside

  127

  3,950

  Total Scotland

  1,385

  44,001

  Source: Regional Data System.

  Notes:

  1 This figure includes plants closing prior to December 1987.

  2 Employment relates to 1987 or latest known employment if 1987 not available; figures are given for plants open at December 1987.

  Table 2

  (1)

  (2)

  1980 Standard Industrial Classification

  Number of manufacturing plants opened in Scotland January 1979 to December 19871

  1987 employment2

  Metal Manufacture (Classes 21–22)

  30

  912

  Other Minerals and Mineral Products (Classes 23–24)

  70

  1,637

  Chemicals and Man-made Fibres (Classes 25–26)

  40

  1,439

  Engineering and Allied Industries (Classes 31–37)

  585

  19,152

  Food, Drink and Tobacco Industries (Classes 41–42)

  180

  6,558

  Textiles, Footwear, Leather and Clothing (Classes 43–45)

  191

  7,137

  Other Manufacturing (Classes 46–49)

  289

  7,166

  Total Manufacturing

  1,385

  44,001

  429
  Source: Regional Data System.

  Notes:

  1. This figure includes plants closing prior to December 1987.

  2. Employment relates to 1987 or latest known employment if 1987 not available; figures are given for plants open at December 1987.

TRANSPORT

  M6 (Road Works)
  Mr. Franks
  To ask the Secretary of State for Transport why, during the recent bank holiday weekend, only one lane of the M6 northbound was open between junctions 16 and 17; how long it was closed prior to that weekend; when the present contraflow was set up increasing the number of lanes open in both directions to two; and whether he will ensure that where possible road works do not take place over bank holidays unless absolutely necessary and that, when such occasions arise, at least two lanes are open.

  Mr. Peter Bottomley
  One-lane working on the northbound carriageway was necessary from 9 pm to midnight on Sunday 30 April to set up the amended contraflow. Otherwise, two lanes have been available in both directions except when the contraflow system on the southbound carriageway was installed at the start of the contract on 15 April. We shall whenever possible ensure that road works do not take place at bank holidays, particularly on major holiday routes. If work has to be done, we shall keep as much road space open as possible.

  Motor Cyclists (Safety)
  Mr. Greg Knight
  To ask the Secretary of State for Transport whether he has any proposals to improve the safety of new motor cycle riders in the first six months of their riding career.

  Mr. Peter Bottomley
  Sales of motor cycles below 125 cc in the first four months of this year were 15 per cent. higher than during the same period in 1988.

  We welcome this change in the fortunes of the motor cycle industry. Unfortunately, only about 30 per cent. of new riders at present undergo any form of training.

  Today, the motor cycle industry launched 'bike fax': a personal organiser to be given free to all new provisional motor cycle licence holders by motor cycle dealers. This will help to establish motor cycle dealers as new rider information centres.

  `Bike fax' seeks to influence the would-be biker to choose the right bike, to take proper training, to develop the skills to survive the high-risk early months and to dress suitably and conspicuously.

  Although the Department of Transport has assisted in its production, 'bike fax' is funded entirely by the industry.

  Manufacturers and dealers support fully our proposals to introduce compulsory basic training for new riders from mid-1990.

ENVIRONMENT

  Urban Programme
  Mr. Redmond
  To ask the Secretary of State for the Environment how much is being spent in the parliamentary constituency of Don Valley under the urban 430
  programme; on what schemes it is being spent; and if he will list the percentage of the budget that is allocated for (a) publicity, (b) information and (c) public relations.

  Mr. Trippier
  During 1988–89, schemes totalling £932,944 were approved in Don Valley under the urban programme. These were:

  Mexborough Industrial Improvement Area Schemes

  Mexborough Grammar School Conversion

  Mexborough Resource Centre

  Conisbrough Castle Interpretative Centre

  Mexborough Under-fives Resource Centre

  Mexborough Publicity

  Schemes approved for start in 1989–90 in Don Valley currently total £245,070. These were:

  Mexborough Industrial Improvement Area Schemes

  Balby Street School, Conisbrough, Environmental Works

  Clayfield Court, Mexborough

  Crags Road Flats, Denaby Main

  First Interpreters

  Highwoods Crescent, Mexborough

  Landscaping of Dumpit Sites

  Maple Leaf Court, Mexborough

  Mexborough Resource Centre

  Mexborough Under-fives Resource Centre

  Shepherds Close, Denaby Main

  Wellgate Flats, Conisbrough

  However it is up to Doncaster metropolitan borough council to determine scheme and spending priority within its total UP resources which stood at £1·75 million in 1988–89 and are £1·795 million for 1989–90. Actual spending figures for 1988–89 have not yet been received and figures for 1989–90 will not be available until after the end of the financial year.

  There is no allocated budget for publicity, information or public relations. A one-off grant of £3,000 was approved in 1989–90 to publicise UP development grants in Mexborough.

  Advisory Committee on Works of Art
  Mr. Baldry
  To ask the Secretary of State for the Environment if he will appoint a new member to the advisory committee on works of art in the House of Commons following the appointment of the hon. Member Member for Chipping Barnet (Mr. Chapman) as an Assistant Whip.

  Mr. Ridley
  I am pleased to announce that, with Mr. Speaker's agreement, I have appointed my hon. Friend the Member for Milton Keynes (Mr. Benyon) to the advisory committee.

  Afforestation Grants
  Mr. Baldry
  To ask the Secretary of State for the Environment what changes he proposes to make in the payment of compensation under management agreements in cases where afforestation grant is refused solely on nature conservation grounds.

  Mr. Ridley
  Following consultations with my right hon. Friends the Secretary of State for Scotland, the Secretary of State for Wales, the Minister of Agriculture, Fisheries and Food and the Chief Secretary to the Treasury, I have agreed with the Nature Conservancy Council that it should not longer offer compensation for the refusal of afforestation grant where it is refused solely on nature conservation grounds.

  Compensation will still be available for the profit forgone, excluding any grant element, in any case where planting would otherwise proceed.
  431
  In considering applicatons for grant for afforestation, the Forestry Commission will continue to pay full regard to nature conservation interest, and in particular to designations of sites of special scientific interest made by the NCC. While there will normally be a presumption against giving grants for afforestation in sites of special scientific interest, it must remain the case that each application will be considered on its merits.

  This decision reflects the recent radical changes in support for forestry introduced in the 1988 Budget and the subsequent increases in planting grant under the new woodland grant scheme. These changes have made the grant element a very significant factor in determining the profitability of afforestation proposals and therefore in the compensation paid under management agreements. This is in marked contrast with the position in agriculture, where recent changes in the grant arrangements mean that it will now seldom be the case that these grants will form a significant element in the profit forgone calculation of management agreements offered by the NCC.

  The withdrawal of compensation in these cases will be consistent with the developing policies of locational guidance for forestry illustrated by the indicative land use strategies under consideration by some local authorities in Scotland. My right hon. Friend the Secretary of State for Scotland is currently considering the nature and scope of any advice he might offer to local authorities in preparing indicative forestry strategies. I shall be considering with my right hon. Friend the Secretary of State for Wales the guidance to he offered to English and Welsh authorities on the form that locational guidance should take in appropriate cases. The Forestry Commission and the NCC stand ready to assist local authorities in this task.

  I am satisfied that, taking all these factors into account, it is in the public interest that the NCC's policy should be changed. The forestry industry can take confidence in their long term investment considerations from knowing at a very early stage the areas of land with potential for afforestation.

  A revision of the financial guidelines will be issued as soon as possible.

  United Nations Environment Programme
  Mr. Hanley
  To ask the Secretary of State for the Environment what proposals he will put forward at next week's governing council meeting of the United Nation's Environment Programme.

  Mr. Ridley
  My noble Friend the Minister for Housing, Environment and Countryside, will represent the United Kingdom at the governing council and will set out the Government's views on the major global environmental issues on United Nations Environment Programme's agenda, including global warming.

  To ensure that these issues are given the priority they deserve we want to strengthen the United Nations Environment Programme both in regard to existing functions and in preparing for the major United Nations conference on the environment in 1992.

  In order to help to provide the United Nations Environment Programme with the resources it needs to carry out the task we require of it, the United Kingdom has more than doubled its financial contribution. We will be urging other countries to follow our lead.

  We will call for the urgent consideration of a framework convention on the subject of climate change.
  432
  This would establish general principles or guidelines and allow more specific measures to be developed in the form of protocols as scientific and other information becomes clearer.

  We will also reiterate the Government's support for the intergovernmental panel on climate change set up by the United Nations Environment Programme and the World Meteorological Office.

  Correspondence
  Dr. Cunningham
  To ask the Secretary of State for the Environment when he will reply to the letter of 17 January from Councillor Martin Doughty, chairman of the planning and countryside committee of Derbyshire county council.

  Mr. Ridley
  [holding answer 5 May 1989]: My hon. and learned Friend the Minister for Water and Planning replied on 2 May to Councillor Doughty's letter concerning observations on the legal basis of discharge consent requirements for sewage treatment works. These issues have been under active consideration by my Department. That is why we were not able to give him an earlier substantive reply.

  EC (Meetings)
  Mr. Wray
  To ask the Secretary of State for the Environment if he will list all the European Community meetings on matters concerning his Department held in 1985, 1986, 1987 and 1988.

  Mr. Ridley
  [holding answer 8 May 1989]: The European Council met on three occasions in 1985 and 1988 and twice in 1986 and 1987. The Environment Council met formally on four occasions in 1985, three in 1986, four in 1987 and four in 1988. There were also occasional informal meetings of Environment Ministers. In addition, there were numerous meetings of officials. Information on the number of such meetings could be provided only at disproportionate cost.

  Sewerage Incinerator, Yelland
  Mr. Speller
  To ask the Secretary of State for the Environment whether the sewerage incinerator at Yelland, North Devon will be tested(a) to comply with EC directive 84/360, (b) under the Health and Safety (Emissions into the Atmosphere) Regulations 1983 (SI, 1983, No. 943) and (c) under the Clean Air Acts before it is permitted to operate.

  Mrs. Virginia Bottomley
  [holding answer 9 May 1989]: Because the sewage screening incinerator at Yelland has a capacity of less than 1 tonne an hour, it will be controlled for air pollution purposes by the North Devon district council; it is for the council to determine what atmospheric emission testing is required.

  Public Airport Companies
  Mr. Ron Davies
  To ask the Secretary of State for the Environment what response he has made to representations about the application of the Local Government and Housing Bill to public airport companies; and if he will make a statement.

  Mrs. Virginia Bottomley
  [holding answer 9 May 1989]: The Department has made it clear that the provisions of

  433
  part V of the Local Government and Housing Bill—local authority interests in companies—do not need, in general, to be applied to public airport companies since the Airports Act 1986 covers most of the points at issue. There may, however, be some aspects where, after consultation with local airport companies, it will seem sensible to extend the provisions to cover them.

TRADE AND INDUSTRY

  EC Consumer Ministers
  Mr. Sean Hughes
  To ask the Chancellor of the Duchy of Lancaster what matters he proposes to discuss at the forthcoming meeting of the European Economic Community Consumer Ministers.

  Mr. Forth
  The Spanish presidency have indicated that they provisionally plan to include the following topics on the agenda for the Council of Consumer Ministers planned for 1 June.

  Proposal for a Council directive amending Directive 87/102/EEC for the approximation of laws, regulations, and administrative provisions of Member States concerning Consumer Credit.

  Draft resolution on future priorities for consumer protection.

  Commission presentation of a further draft of the general product safety directive.

  Consideration of the Commission's report on the European home and leisure accident surveillance system.

  Consideration of a report by the Commission on consumer education in primary and secondary schools.

  Exports
  Mr. Tom Clarke
  To ask the Chancellor of the Duchy of Lancaster what is the most recent United Kingdom share of world exports of manufactured goods; and what was the level in 1979, 1969 and 1959.

  Mr. John Evans
  To ask the Chancellor of the Duchy of Lancaster what is the most recent United Kingdom share of world exports of manufactured goods; and what was the level in 1979, 1969 and 1959.

  Mr. Alan Clark
  The information is as follows:

  United Kingdom Share of MMCs1

  Exports of Manufactures2

  Per cent.

  1988

  38·2

  1979

  9·1

  1969

  11·2

  1959

  17·9

  1 Main manufacturing countries—Belgium, Luxembourg, Canada, France, Federal Republic of Germany, Italy, Japan, Netherlands, Sweden, Switzerland, United Kingdom and the United States of America.

  2 Standard international trade classification, sections 5–8.

  3 Figures based on the first three quarters of 1988.

  Source: "Monthly Review of External Trade Statistics."

  Departmental Statistics
  Mr. Nicholas Bennett
  To ask the Chancellor of the Duchy of Lancaster if he will publish the report on the review of Department of Trade and Industry statistics; and if he will make a statement.

  Mr. Maude
  Last July, an efficiency scrutiny was set up in the Department of Trade and Industry to examine the 434
  arrangements for the collection of economic statistics by DTI, and the methods by which statistical inquiries are undertaken. The scrutiny team, Alan Armstrong of Bristol university and David Rees of the DTI, was asked specifically to consider whether these arrangements struck a satisfactory balance between minimising the burdens placed on business in providing the information required, and meeting the needs for which the data are to be used by Government and other customers, and if not, to make recommendations accordingly. The report of this scrutiny is being published today, and copies have been placed in the Libraries of the House.

  The report recommends a number of changes which, by shifting resources in data collection to the areas where they are most needed, will improve the quality of information used in macro-economic statistics. At the same time, the form-filling burden on business will be substantially reduced. Changes being made include conducting surveys less often, approaching fewer people and making forms simpler to complete. The cost to business will be reduced by about a quarter, resulting in savings of about £1·7 million on Government form filling. Further savings of over £500,000 per annum could be expected if EC requirements for statistics can be reduced, and I will be seeking ways of achieving this.

  The report's recommendations will be implemented over the next three years, and this has begun. In the light of machinery of Government changes announced to the House by the Prime Minister on 5 April, responsibility for implementation of the recommendations still outstanding will transfer to the Central Statistical Office when these changes take effect. DTI Ministers, who have the lead responsibility for deregulation policy, will agree with the enlarged Central Statistical Office specific objectives to ensure that the burdens on industry are minimised.

  USSR and China
  Mr. Fisher
  To ask the Chancellor of the Duchy of Lancaster how many British companies have set up joint ventures in(a) the Union of Soviet Socialist Republics and (b) China.

  Mr. Alan Clark
  [holding answer 8 May 1989]: (a) Joint ventures, USSR: My Department is aware of 33 joint ventures signed to date between British companies and Soviet organisations. In addition, we are aware of a number of British companies presently involved in negotiations to set up joint ventures in the USSR, so the figure is likely to continue to grow.

  (b) Joint ventures, China: My Department is aware, through the British embassy in Peking, of some 60 United Kingdom joint ventures covering a wide range of commercial activities.

WALES

  Mental Health
  Mr. Martyn Jones
  To ask the Secretary of State for Wales what information he has on problems in the replacement of mental health provision in Clwyd as a result of the run down of North Wales hospital, Denbigh.

  Mr. Grist
  My right hon. Friend has not been informed of problems with alternative provision in Clwyd in the context of the future of the North Wales hospital,
  435
  Denbigh. Welsh Office officials will be discussing with Clwyd district health authority and Clwyd county council the nature and range of services required for mentally ill people in developing the county plan to be produced under the mental illness strategy which is about to be published.

  Mr. Martyn Jones
  To ask the Secretary of State for Wales if he will list the recent changes in the staff of his Department responsible for mental health provision in Wales.

  Mr. Peter Walker
  There have been two recent changes, one at grade 5 level and one at grade 7 level.

  Community Health Councils (Gwynedd)
  Mr. Wigley
  To ask the Secretary of State for Wales how many letters he has received opposing plans for reducing the number of community health councils in Gwynedd; what further consultation he intends to undertake on this matter; when he proposes to make a final decision; and if he will make a statement.

  Mr. Grist
  Fifty-eight letters have been received by the Department up to 5 May. A consultation document will be issued later in the summer. A decision will be taken once the consultation exercise has been completed and the matter fully considered in the light of the comments received.

  DHAs (Capital Projects)
  Mr. Robin Cook
  To ask the Secretary of State for Wales if he will give, for each DHA, details of proposed capital development costing more than £1 million which have been cancelled for each year since 1979.

  Mr. Grist
  I regret that comprehensive information is not available centrally on the adjustments made by health authorities to their capital programmes over this period.

  Ecclesiastical Exemption
  Mr. Giiilym Jones
  To ask the Secretary of State for Wales whether he has any proposals for an order under section 58AA of the Town and Country Planning Act 1971, which provides for the restriction of the ecclesiastical exemption.

  Mr. Wyn Roberts
  The Welsh Office has today issued a consultation paper to interested parties setting out our proposals. A copy has been placed in the Library of the House.

  Publicity
  Mr. Dobson
  To ask the Secretary of State for Wales 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 for Information, together with a note of the intended objectives in the campaigns in 1989–90.

  Mr. Peter Walker
  [holding answer 2 May 1989): For the years 1985–86 and 1986–87, the Welsh Office mounted no major publicity campaigns. Major campaigns undertaken/planned by the Welsh Office in the following years were:
  436
  1987–88

  (a) European Year of Environment
  Objective To promote the aims of the European Year of Environment to farmers and rural communities by an exhibition at major agricultural shows throughout Wales. Audience Farmers and people working and living in rural communities. (Cost £111k)

  1988–89

  (b) Enterprise Wales Roadshow
  Objective To promote the various schemes offered under the Enterprise Initiative, especially those unique to Wales, through paid advertising, and a travelling exhibition at industrial estates (42) throughout Wales.
  Audience All types of business looking for assistance to develop. (Cost £70k)
  Measure of Effectiveness Unit cost of "serious" inquiry (ie one that was followed up by Welsh Office Industry Department) was measured. This was approximately £100 per inquiry.

  (c) Valleys Initiative
  Objective To launch the Valleys Initiative through a Print and Press launch.
  Audience Press, local authorities and businesses within Valleys. (Cost £40k)

  1989–90

  (d) Festival of Food and Farming
  Objective To promote Welsh food and crafts in England and Wales through an exhibition at Hyde Park, followed by displays at major agricultural events in Wales.
  Audience Retail and wholesale buyers, general public. Number of trade inquiries being measured. (Cost £200k)

  (e) Community Charge
  Objective To make people aware of the legal requirements and rebates of the community charge through bilingual paid advertising and leaflets, via postal drop to all households in Wales
  Audience All households in Wales. (Cost £400k)
  Measure of effectiveness Estimated cost of informing each household 33p.

  (f) The Welsh Office also took part in the following major campaigns initiated by other Whitehall Departments:

  1988–89

  1989–90

  £k

  £k

  Drugs/AIDS

  60

  180

  Education

  100

  150–200

  Transport and Highways

  30

  35

  Housing

  —

  92

  No research by COI has been commissioned by the Welsh Office for any of these campaigns.

HOME DEPARTMENT

  Animals (Research)
  Dame Janet Fookes
  To ask the Secretary of State for the Home Department what funding has been allocated for 1989 for projects for refinement of technology and replacement of animals in research in the United Kingdom; and how much of the 1989 budget will be spent on projects initiated in 1988 and continuing into 1989.

  Mr. Douglas Hogg
  One hundred and twenty thousand pounds; of which nearly £48,000 is committed to projects already being funded. More will be provided if this can be justified to support particular work of high merit and outstanding value.

  Dame Janet Fookes
  To ask the Secretary of State for the Home Department how many(a) unsuccessful and

  437
  (b) successful applicants there were in 1988 for funding for projects for refinement of technology and replacement of animals in research; how much of the 1988 grant was spent on advertising; and how much of the 1988 grant was spent on administration of the funds.

  Mr. Douglas Hogg
  As I informed the hon. Member for Birmingham, Erdington (Mr. Corbett) on 6 March at column 383, there were 120 unsuccessful and four successful applicants. One thousand and fifty pounds was spent on assessor's fees; no advertising or other administrative costs fell on the research budget for 1988–89.

  Dame Janet Fookes
  To ask the Secretary of State for the Home Department what was the total number of project licences for animal experiments in 1988; and how many were in each severity banding.

  Mr. Douglas Hogg
  This information will be contained in the report of the Animal Procedures Committee for 1988, due to be published in July.

  Postal Votes
  Mr. Allen
  To ask the Secretary of State for the Home Department what research his Department has done on extending the use of a postal vote to all electors who request it.

  Mr. Douglas Hogg
  None specifically. A summary of our inquiries in this area is set out in a Home Office consultation paper, made available following the reply to a question from my hon. Friend the Member for Battersea (Mr. Bowis) on 2 March at column 274.

  Prisons (Car Travel)
  Mr. Alexander
  To ask the Secretary of State for the Home Department what was the total expenditure on car travel for members of prison boards of visitors in each year from 1985 to date.

  Mr. Douglas Hogg
  Information is not available in the form required and could be obtained only at disproportionate cost.

  Prisons (Catering)
  Mr. Barry Field
  To ask the Secretary of State for the Home Department what progress the working party on prison catering has made in relation to prisons on the Isle of Wight.

  Mr. Douglas Hogg
  The working party is to visit the Isle of Wight this month. It will then consider and cost alternatives including central civilianised or contracted out kitchens as proposed by Her Majesty's chief inspector of prisons following his visit to Parkhurst last year. Because two of the three prisons house prisoners for whom the very highest conditions of security are necessary the working party is taking account of operational as well as catering considerations.

EDUCATION AND SCIENCE

  Nottingham CTC
  Mr. Allen
  To ask the Secretary of State for Education and Science what proposals he has received from the Nottingham city technology college to end the traditional pattern of school hours and three term years.

  Mrs. Rumbold
  The CTCs are expected to have a longer school year and a longer working week than is normal in maintained schools. It will be for each college to decide how best to fit this pattern to its own circumstances. We are aware that the Djanogly CTC in Nottingham is considering a move from a three-term to a five-term year, and a working day beginning rather earlier than is common.

  Assisted Places
  Mr. Redmond
  To ask the Secretary of State for Education and Science if he will list for the three counties of Yorkshire the number of preparatory schools to be included in the assisted places scheme in 1989–90 and the amount of fee remission grant to be allocated to them.

  Mrs. Rumbold
  Preparatory schools are not eligible for admission to the assisted places scheme in their own right. However, in certain cases where a clear link with a participating independent secondary school is demonstrated, it may offer assisted places between the ages of 11 and 13 under the terms of the main school's participation agreement. St. Olave's preparatory school, York offers places which are subsequently tenable at St. Peters school, York under such an arrangement. It is not possible to identify separately the amount of fee remission paid annually to pupils at St. Olave's.

  Teachers (Devon)
  Mr. Steen
  To ask the Secretary of State for Education and Science why he has not yet authorised Devon county council to pay the teachers employed by the council the 6 per cent. increase in their salaries from 1 April; and if he will make a statement.

  Mrs. Rumbold
  The draft school teachers' pay and conditions document 1989 was issued for consultation on 27 April. Many teachers are likely to receive their salary increases by the end of May.

  Advertising
  Mr. Grocott
  To ask the Secretary of State for Education and Science how much has been spent by his Department on advertisements on commercial television in each of the last five years, listed by each television company.

  Mr. Rumbold
  The Department has not advertised on commercial television during the last five years.

  Geography
  Mr. Franks
  To ask the Secretary of State for Education and Science when he intends to set up a working group to recommend attainment targets and programmes of study for geography within the national curriculum; and if he will make a statement.
  439
  Mrs. Rumbold
  [pursuant to the reply, 5 May 1989, c. 256]: I am pleased to announce the appointment of Mr. Roger Davies, chairman of Thomson Travel Group to complete the membership of the national curriculum geography working group,.

EMPLOYMENT

  Jobcentre and Benefit Offices
  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment (1) if he will make a statement on progress of the programme to integrate jobcentres and unemployment benefit offices;

  (2) how many prime-site jobcentres it is intended to vacate under the jobcentre/unemployment benefit offices integration scheme.

  Mr. Lee
  I refer the hon. Member to the reply my right hon. Friend the Secretary of State gave to the hon. Member for Stretford (Mr. Lloyd) on 21 April,Official Report, column 349. No decisions have been taken about the future of the employment service local office network.

  European Tourism Year 1990
  Mr. Wigley
  To ask the Secretary of State for Employment what will be the financial contribution of his Department towards his implementation of the European Tourism Year 1990.

  Mr. Lee
  The Department is not directly funding the implementation of European Tourism Year 1990. The United Kingdom initiative is being led by the British Tourist Authority and it is not yet clear what its total spending on activities connected with the year will be.

  YTS
  Mr. Redmond
  To ask the Secretary of State for Employment if he will show for England and Wales(a) how many YTS trainees are on schemes run by local authorities in each region, (b) what is the total number of YTS trainees in each local authority region and (c) how many trainees are on transitional funded YTS run by local authorities for each region before 1 April.

  Number of YTS schemes in England and Wales by type at 31 March 1989

  Region

  Voluntary and community organisation

  Local Authority

  Other

  Total

  Northern

  62

  75

  505

  642

  North West

  99

  159

  1,175

  1,443

  Yorkshire and Humberside

  60

  92

  784

  936

  West Midlands

  90

  110

  924

  1,124

  East Midlands and Eastern

  68

  140

  923

  1,131

  South West

  36

  79

  566

  681

  South East

  55

  128

  997

  1,180

  London

  68

  70

  676

  814

  Wales

  51

  85

  424

  560

  Total England and Wales

  589

  938

  6,974

  8,501

  Mr. Redmond
  To ask the Secretary of State for Employment if he will make a statement on the numbers of YTS trainees, during the last 12 months, who obtained employment within six months of completing their training in(a) the Doncaster area and (b) the
  440
  Mr. Cope
  The numbers of YTS trainees in training on schemes run by local authorities and in total are shown in the table.

  Trainees who are in schemes that attract transitional funding are not separately identified and, therefore, the information requested could be made available only at disproportionate cost.

  Number of young people in training in England and Wales at 31 March 1989

  Region

  Local authority including local education

  Total number of trainees in each region

  Northern

  7,147

  30,298

  North West

  11,415

  60,445

  Yorkshire and Humberside

  11,182

  45,029

  West Midlands

  10,480

  43,493

  East Midlands and Eastern

  9,861

  46,446

  South West

  9,254

  30,426

  South East

  7,876

  39.988

  London

  3,565

  21,131

  Wales

  6,096

  23,666

  Total England and Wales

  76,876

  340,922

  Mr. Redmond
  To ask the Secretary of State for Employment if he will show for England and Wales for each region(a) how many YTS schemes are run (1) by voluntary and community organization and (2) by the local authorities, (b) what is the total number of YTS schemes are run by voluntary and community organizations which received a transitional funding grant before 1 April, (d) how many YTS schemes are run by local authorities which received a transitional funding grant before 1 April and , (e) how many YTS schemes were paid a transitional funded grant in respect of training before 1 April.

  Mr. Cope
  The information that identifies types of schemes in each region of England and Wales is shown in the table. Schemes that attract a transitional funding grant are not separately identified and, therefore, the information requested could be provided only at disproportionate cost.

  Mexborough area of South Yorkshire; and what percentage this represents of those who completed their training.

  Mr. Cope
  This information is not available in exactly the form requested. The latest results from the YTS follow-up survey shows that 396 trainees in the Doncaster
  441
  area, including Mexborough who completed their training in the period December 1987 to November 1988 were in employment three months later. This represents 79 per cent. of all trainees in the area who completed their training.

  Training
  Mr. Allen
  To ask the Secretary of State for Employment when he plans to visit Nottingham, North to discuss employment training.

  Mr. Nicholls
  My right hon. Friend has no immediate plans to visit Nottingham, North.

  Ferranti (Job Losses)
  Mr. Alfred Morris
  To ask the Secretary of State for Employment when he will reply to the letter sent to him by the right hon. Member for Manchester, Wythenshawe on 6 April concerning the impending job losses at Ferranti's Wythenshawe factory.

  Mr. Fowler
  A reply was sent to the right hon. Gentleman on 8 May 1989.

ENERGY

  Plutonium
  Dr. Thomas
  To ask the Secretary of State for Energy, pursuant to the statement made by the hon. Member for

  European Community

  Thames House South

  Maximum admissable concentration

  Recorded Maximum

  Recorded minimum

  Sulphate

  250mg/litre

  482mg/litre

  405mg/litre

  Fluoride

  2500ug/litre

  2,120ug/litre

  l,400ug/litre

  Potassium

  12mg/litre

  13·6mg/litre

  12·6mg/litre

  Sodium

  175mg/litre

  204mg/litre

  190mg/litre

  Magnesium

  50mg/litre

  51·3mg/litre

  46mg/litre

  less than

  Iron

  50ug/litre

  3,120ug/litre

  5ug/litre

  less than

  Manganese

  50ug/litre

  84ug/litre

  20ug/litre

  Nickel

  50ug/litre

  94ug/litre

  59ug/litre

  Conductivity

  l,500us/cm

  l,729us/cm

  1,660us/cm

  Turbidity

  4NTU

  21 NTU

  0·2 NTU

  Since the introduction of the point of use filters the levels of iron and colour have been consistently below 5ug/litre and 4NTUs respectively. The other elements have remained between the recorded maximum and minimum. I am also advised by PSA that the presence of these elements, either singly or in combination, is not considered to be a health hazard. As I explained in my earlier answer the water for my Department's headquarters building is supplied from a borehole and from the public mains supply.

NORTHERN IRELAND

  Siemens Printers
  Ms. Walley
  To ask the Secretary of State for Northern Ireland how many Siemens ND3 printers are used by his Department, either in-house or through a private contract; and what is the location of each.
  442
  Worcestershire, South (Mr. Spicer) Official Report, 13 April, column 1135, if he will set out in detail each of the stages of the nuclear cycle to which he makes reference wherein reports of plutonium stocks and measures are made; to whom these reports are made available; how regularly they are forwarded; and if any irregularities have been discovered in the reports.

  Mr. Michael Spicer
  Regular reports are submitted to Euratom. These reports are confidential.

  Drinking Water (Thames House)
  Mr. John Garrett
  To ask the Secretary of State for Energy, if he will set out in the Official Report a copy of the 1988 analysis of the drinking water supply in his Department's head office, Thames house, showing the amount by which this water supply failed to meet the European Economic Community drinking water quality criteria.

  Mr. Parkinson
  I am advised by the Property Services Agency that the results of analyses of drinking water supplied to my Department's headquarters building, Thames house south, in 1988, showing the comparisons with the European Community maximum admissible levels are:

  Mr. Ian Stewart
  None.

  Parades
  Rev. Martin Smyth
  To ask the Secretary of State for Northern Ireland how many parades were notified to the Royal Ulster Constabulary under the Public Order (Northern Ireland) Order in(a) 1986, (b) 1987 and (c)

  Mr. Ian Stewart
  This is a matter for the Chief Constable. However, I understand that the information is not available in the form requested. Statistics are compiled on the basis of parades notified to the RUC which actually took place. The Chief Constable's annual reports indicate that 1,950 parades were held in 1986, 2,112 in 1987 and 2,055 in 1988, but these figures do not include parades by youth organisations, churches and other similar bodies.

  Mental Health (Grants)
  Mr. Hume
  To ask the Secretary of State for Northern Ireland what grants have been made by each of the area boards or Government Departments to branches of the Northern Ireland Association for Mental Health in each of the past three years.

  Mr. Needham
  [holding answer 3 May 1989]: The information requested is as follows:

  1986–87

  1987–88

  1988–89

  £

  £

  £

  Department of Health and Social Services

  165,290

  131,738

  127,100

  Eastern Health and Social Services Board

  54,459

  109,843

  168,348

  Northern Health and Social Services Board

  771

  495

  69,740

  Southern Health and Social Services Board

  962

  7,222

  44,876

  Western Health and Social Services Board

  3,600

  22,000

  20,450

  Department of Economic Development'

  5,501

  7,764

  13,112

  Total

  230,583

  279,062

  443,626

  1 Payments made whether directly or indirectly under the Action for Community Employment (ACE) Scheme.

  Children (Financial Support)
  Sir Ian Gilmour
  To ask the Secretary of State for Northern Ireland how many children in Northern Ireland depended on(a) SB/IS and (b) FIS/FC in each year since 1978–79, (i) in total and (ii) as a percentage of all children in Northern Ireland.

  Mr. Needham
  [holding answer 4 May 1989]: The available information is as follows:

  Dependants under 19 years of people on:

  Supplementary benefit/IS

  FIS/FC

  Year

  Numbers1

  Per cent.2

  Numbers1

  Per cent.2

  1978

  70,545

  14·57

  30,402

  6·28

  1979

  64,790

  13·28

  27,493

  5·63

  1980

  80,308

  16·42

  28,857

  5·90

  1981

  93,595

  19·55

  36,378

  7·60

  1982

  109,863

  23·17

  38,734

  8·17

  1983

  117,083

  24·88

  39,557

  8·41

  1984

  116,256

  24·86

  40,813

  8·73

  1985

  —3

  —

  42,613

  9·16

  1986

  135,254

  29·20

  42,233

  9·12

  1987

  134,052

  29·14

  40,982

  8·91

  1988

  —4

  —

  537,500

  8·19

  1 Supplementary benefit/IS 5 per cent. sample and FIS 30 per cent. sample.

  2 Represents the percentage of all children entitled to child benefit.

  3 There was no survey in 1985.

  4 Figures not yet available.

  5 Estimated figure—incomplete date.

  General Practitioners
  Mr. Hume
  To ask the Secretary of State for Northern Ireland if he will make a statement indicating the nature of any cash limits on the total expenditure on general 444
  practitioner trainers' allowances and trainees' remuneration, and the respective votes from which such funding is derived.

  Mr. Needham
  [holding answer 4 May 1989]: The funding of GP trainers' allowances and trainees' remuneration is contained in subhead BI of the Department's health and personal social services vote 1, which in turn forms part of the cash limit on Northern Ireland's departmental services (NID 1). However, the Secretary of State has flexibility to reallocate resources within the cash limit, for example, to cover unavoidable pressures in this sector.

  Mr. Hume
  To ask the Secretary of State for Northern Ireland what weight is given to what factors in determining the number of general practitioner trainees who are to be remunerated by the Department of Health and Social Security in Northern Ireland in a given year.

  Mr. Needham
  [holding answer 4 May 1989]: The number of general practitioner trainees selected in Northern Ireland in a given year is determined by the estimated future demands of the Province for general practitioners.

  Mr. Hume
  To ask the Secretary of State for Northern Ireland what information is available to indicate the number of prospective general practitioner trainees who were recommended by the relevant selection body in the current year and the number which were approved by the Department; what factors determined the decision by the Department; and how selection of the numbers approved by the Department proceeds.

  Mr Needham
  [holding answer 4 May 1989]: Ninety-seven prospective trainees were interviewed by the selection panel this year and placed in order of merit. The Department determined that 50 doctors should be trained for general practice this year, but in the event 52 were accepted because a number were considered of equal merit by the selection panel. The number approved by the Department was determined by the estimated future demands of the Province for general practitioners. The procedures for selection of trainees are contained in circular HSS (TM) 3/80 supplement No. 1, copies of which have been placed in the Library.

SOCIAL SECURITY

  Family Expenditure Survey
  Mr. Chris Smith
  To ask the Secretary of State for Social Security when he intends to publish the latest take-up figures based on the family expenditure survey.

  Mr. Peter Lloyd
  We expect to publish take-up estimates for 1985 this summer.

  Housing Benefit
  Mr. Pike
  To ask the Secretary of State for Social Security what representations he has received regarding the changes in method of payment for housing benefit for those in board and lodging accommodation.

  Mr. Peter Lloyd
  Since 10 April we have received a small number of letters from organisations and individuals
  445
  about the change in providing help with board and lodging charges which took place on that day. The change, which abolishes special rates of income support for boarders and allows people in board and lodging accommodation to receive housing benefit for their accommodation costs, was proposed in a consultation document issued in December 1986. Over 170 responses to that document were received. These expressed widespread acceptance of the principle that there should be parity both in the treatment of people in similar types of accommodation, whether or not board was provided, and between people in identical accommodation, whether or not they were working.

  Mr. Pike
  To ask the Secretary of State for Social Security whether his Department is monitoring the implementation of the new method of housing benefit payment for those in board and lodging accommodation.

  Mr. Peter Lloyd
  The Government are committed to monitoring the effects of the social security reforms on all groups. This monitoring is a continuous process which draws on a wide range of information sources, including local authorities, who administer housing benefit.

  Overpayment
  Mr. Clay
  To ask the Secretary of State for Social Security if he will provide the most recent figures broken down by (i) year and (ii) section on(a) the number of overpayments recovered under section 53 of the Social Security Act 1986, section 119 of the Social Security Act 1975 and section 20 of the Supplementary Benefit Act 1976, (b) the number of standard letters sent indicating that recovery may be pursued through civil proceedings, (c) the number of cases actually pursued for recovery of overpayments through civil proceedings and (d) the number of cases pursued under (c) which are successful.

  Mr. Peter Lloyd
  The information requested is not held centrally and could be obtained only at disproportionate cost.

  Social Security Appeals
  Mr. Wallace
  To ask the Secretary of State for Social Security what information he has regarding the average time over the last three years between the lodging and hearing of an appeal to the social security appeals tribunal in(a) Lerwick, (b) Shetland and (c) Scotland; and if he will make a statement.

  Mr. Peter Lloyd
  National administrative statistics for social security appeal tribunals are not disaggregated for areas smaller than a social security region.

  The table gives the information for Scotland from 1986 to the quarter ending September 1988 (the latest figures available).

  Social security appeal tribunals Lodgement to hearing Scotland

  Period

  Average weekly clearance time

  12 months ending December 1986

  14·0

  12 months ending December 1987

  23·3

  3 months ending March 1988

  25·9

  3 months ending June 1988

  23·7

  3 months ending September 1988

  23·3

HOUSE OF COMMONS

  European Community Business
  Mr. Gill
  To ask the Lord President of the Council what proposals he has concerning the consideration of European Community business by Parliament.

  Mr. Wakeham
  I am discussing these matters with the Chairman of the Select Committee on European Legislation.

  Fire Exercises
  Mr. Allen
  To ask the hon. Member for Berwick-upon-Tweed, as representing the House of Commons Commission, what was the response of hon. Members to the fire exercises listed in his answer of 24 April,Official Report, column 408; and if he is satisfied with their level of participation.

  Mr. Beith
  The records of fire exercises do not distinguish hon. Members from other participants. It is therefore not possible for me to comment on the level of Members' participation.

  Late-night Staff
  Mr. Allen
  To ask the hon. Member for Berwick-upon-Tweed, as representing the House of Commons Commission, what is the approximate or average cost of 128 staff on duty after 10 pm.

  Mr. Beith
  Non-industrial staff with a commitment to remain on duty as a direct consequence of sittings of the House receive either an annual allowance which in most cases is calculated from 6 pm according to an agreed formula; or night duty pay which varies according to the lateness of the hour. Industrial staff, in general, are paid at overtime rates for the actual number of hours worked. Details of these allowances are set out in the annual report of the House of Commons Commission.

  The varying times of adjournment of the House and difficulty in extracting the appropriate proportion of some of the costs involved make the provision of any meaningful figure possible only at disproportionate cost.

  Ten-minute Bills
  Mr. Allen
  To ask the Lord President of the Council, further to his reply to the hon. Member for Nottingham, North of 24 April,Official Report, column 408, when he expects to be able to state when he will bring forward proposals relating to ten-minute Bills.

  Mr. Wakeham
  I have nothing to add to the reply given to the hon. Member on 24 April at column 408.

HEALTH

  Hospital Beds
  Mr. Dobson
  To ask the Secretary of State for Health if he will give for each district health authority in England in 1987(a) the total number of beds, and the number of beds per 100,000 population, in institutions registered under the Nursing Homes Act 1984, (b) the total number of beds for care of those over 65 years requiring long-stay nursing care

  447
  in institutions registered under the Nursing Homes Act 1984 and (c) the number of beds for the care of the elderly per 100,000 population aged over 65 years in institutions registered under the Nursing Homes Act 1984.

  Mr. Mellor
  Residential care homes, registered under part I of the Registered Homes Act 1984, are registered by local authority social services departments. Information on these is therefore available by local authority, not by district health authority.

  Tables placed in the Library show provisional information as at 31 March 1987, by local authority, on the total number of places, the number of places in homes for elderly people, and the respective rates per 100,000 population. The number of places in homes registered under part I of the Act is published annually in "Residential Accommodation for Elderly and Younger Physically Handicapped People: All Residents in Local Authority, Voluntary and Private Homes year ending 31 March England" and "Homes and Hostels for Mentally III and Mentally Handicapped People at 31 March England"; copies of which are available in the Library.

  Hospitals and nursing homes, registered under part II of the Registered Homes Act 1984, are registered by

  Type of whole scanner in use

  Location in Trent

  Installation date

  Main source of funding

  CT

  Chesterfield and North Derbyshire Royal Hospital

  1984

  Public appeal

  CT

  Derby Royal Infirmary

  1985

  Public appeal

  CT

  Doncaster Royal Infirmary

  1986

  Health authority allocation

  CT

  King's Mill Hospital

  1987

  Public appeal

  CT

  Leicester Royal Infirmary

  1982

  Public appeal

  CT

  Lincoln County Hospital

  1985

  Public appeal

  CT

  Nottingham City

  1988

  Public subscription

  CT

  Nottingham University Hospital

  1984

  Health authority allocation

  CT

  Sheffield Royal Hallamshire

  1985

  Health authority allocation

  CT

  Sheffield Royal Hallamshire

  1985

  Public appeal

  Magnetic resonance

  Queen's Medical Centre Nottingham

  1985

  Department of Health

  In the next 12 months, new whole body CT scanners are planned at the Pilgrim hospital, south Lincolnshire and the children's hospital, Sheffield and two replacements at Leicester royal infirmary. Only the south Lincolnshire scanner is being funded by public appeal.

  Halton DHA
  Mr. Butler
  To ask the Secretary of State for Health what is the cost of domestic services in Halton district health authority; and what is the national average.

  Mr. Mellor
  For 1987–88 the annual accounts of the Halton health authority recorded current expenditure of £355,824 on domestic cleaning services representing 1.9 per cent. of the authority's total current expenditure. Average current expenditure on these services by all district health authorities in England was £1,798,723, representing 3·2 per cent. of their current expenditure.

  Mr. Butler
  To ask the Secretary of State for Health whether he has any plans to subsume Halton district health authority in other districts; and if he will make a statement.

  Mr. Mellor
  We have no such plans.

  NHS Reform
  Mr. Gerald Bowden
  To ask the Secretary of State for Health whether the child immunisation target of 90 per
  448
  district health authorities. My hon. Friend's reply to the hon. Gentleman on 4 May at columns 223–30 show as at 31 March 1988, by district health authority, the total number of beds, the number nominally assigned to elderly people, and the respective rates per 100,000 population. The information available on beds assigned for use by elderly people does not distinguish between long and short-term care.

  Whole Body Scanners
  Mr. Redmond
  To ask the Secretary of State for Health which National Health Service hospitals in the Trent regional health authority at present have whole body scanner facilities; when the equipment was installed in each case; which hospitals it is planned to provide with such facilities as new or to replace obsolete facilities in the next 12 months; and which hospitals have paid for equipment in whole or part from voluntary and charitable sources.

  Mr. Freeman
  The information requested is given in the table.

  cent. and the cervical cytology screening target of 80 per cent. are still figures open for negotiation as part of the general practitioners' contract.

  Mr. Mellor
  We have no intention of changing our policy that coverage levels should be raised to 90 per cent. for childhood immunisation and 80 per cent. for cervical cancer screening. For childhood immunisation, this is the level recommended by the WHO, which this Government have adopted.

  We have agreed with the general medical services: committee's negotiators that we will make target payments to GPs who achieve those levels. We will also make target payments at one third of the value of the higher payments to GPs who achieve lower target coverage levels; the lower levels will be 70 per cent. coverage for childhood immunisation and 50 per cent. coverage for cervical cancer screening.

  Midwives (Regrading)
  Mrs. Peacock
  To ask the Secretary of State for Health if he is yet in a position to implement the recommendations in the recent Select Committee on Social Services report, "Resourcing the National Health Service: Midwives Regrading 1988–89"; and if he will make a statement.

  Mr. Ted Garrett
  To ask the Secretary of State for Health if he will make a statement on the Select Committee on Social Services' recommendations on the regrading of midwives.
  449
  Mr. Mellor
  The Government's response to the Committee's report will be laid before the House in the usual way as soon as possible.

  Smoking
  Mr. Foulkes
  To ask the Secretary of State for Health, pursuant to his reply of 13 March,Official Report, column 64, if he plans to increase the frequency of such meetings; whether he will inform the representatives of the medical professions of the outcome of meetings with the tobacco industry; and whether he will invite the representatives of the medical professions to attend as observers at future meetings with the tobacco industry.

  Mr. Mellor
  Meetings between Department of Health Ministers or officials and our expert advisory committees or other bodies with an interest in the health aspects of smoking are already frequent, and we do not consider an increase in frequency necessary. If pressing matters arise on which advice is needed, additional meetings are arranged. Meetings with representatives of the tobacco industry are confidential. This is the most effective way of carrying out negotiations or discussions on issues where there are strong commercial or trade interests involved. As a result, no reports can be issued to the medical profession, nor can representatives of the medical profession be invited to attend such meetings as observers. The Government have not, in any case, received any requests from members of the medical profession to be informed of the content of such meetings.

  Halton Hospital
  Mr. Butler
  To ask the Secretary of State for Health (1) whether the Mersey regional health authority members' panel set up to consider the viability of the proposed phase III development of Halton district general hospital took any verbal representations from members of Halton district health authority before reaching their conclusions;

  (2) whether Mersey regional health authority members' panel set up to consider the viability of the proposed phase III development of Halton district general hospital contained a representative of Halton district health authority;

  (3) if he will state the names, occupations and addresses of the Mersey regional health authority members panels of (a) 1987 and (b) 1989 set up to examine the future of Halton district general hospital.

  Mr. Mellor
  We do not hold this information centrally. My hon. Friend may therefore wish to contact the chairman of the Mersey regional health authority.

  Non-metropolitan Districts (Electorates)
  Mr. Simon Coombs
  To ask the Secretary of State for Health if he will list the 30 English non-metropolitan districts which have shown the greatest percentage growth in their electorate since 1977; and what has been the percentage growth and actual figures in each case.

  Mr. Freeman
  The information requested is as follows:

  Non-metropolitan districts in England

  1977 electorate

  1989 electorate

  Percentage increase

  Milton Keynes

  65,821

  123,394

  87

  Redditch

  37,437

  56,259

  50

  Wokingham

  75,249

  106,314

  41

  450

  Non-metropolitan districts in England

  1977 electorate

  1989 electorate

  Percentage increase

  Tamworth

  36,522

  50,400

  38

  Peterborough

  82,443

  111,696

  35

  The Wrekin

  75,830

  102,315

  35

  Hart

  47,486

  63,851

  34

  Bracknell

  49,045

  65,644

  34

  Huntingdonshire

  75,503

  100,734

  33

  East Dorset

  48,193

  64,131

  33

  Selby

  53,256

  70,431

  32

  Eastleigh

  60,844

  79,403

  31

  Northampton

  104,813

  135,009

  29

  Basingstoke and Deane

  83,726

  107,806

  29

  Fareham

  59,643

  76,766

  29

  South Staffordshire

  64,020

  82,316

  29

  Aylesbury Vale

  84,028

  107,930

  28

  East Hampshire

  60,501

  77,703

  28

  Newbury

  80,397

  102,786

  28

  Caradon

  47,018

  59,681

  27

  Thamesdown

  101,525

  128,337

  26

  Crawley

  52,831

  66,455

  26

  South Cambridgeshire

  71,785

  90,295

  26

  Woodspring

  112,291

  140,951

  26

  Cherwell

  66,599

  83,326

  25

  Test Valley

  61,063

  76,366

  25

  Chelmsford

  93,611

  116,707

  25

  Basildon

  99,792

  123,516

  24

  Glanford

  44,892

  55,494

  24

  Daventry

  38,872

  48,049

  24

  Mr. Simon Coombs
  To ask the Secretary of State for Health if he will list the 20 English non-metropolitan counties which have shown the greatest percentage growth in electorate since 1977; and what has been the percentage growth and actual figures in each case.

  Mr. Freeman
  The information requested is as follows:

  Non-metropolitan Counties in England

  1977 electorate

  1989 electorate

  Percentage increase

  Buckinghamshire

  367,962

  471,784

  28

  Cambridgeshire

  397,410

  487,942

  23

  Shropshire

  256,612

  310,173

  21

  Berkshire

  460,726

  554,177

  20

  Northamptonshire

  364,561

  435,831

  20

  Hereford and Worcester

  436,878

  521,824

  19

  Somerset

  303,750

  362,634

  19

  Wiltshire

  360,645

  427,764

  19

  Cornwall and Isles of Scilly

  310,500

  366,452

  18

  Dorset

  445,468

  522,355

  17

  Lincolnshire

  387,833

  454,040

  17

  Hampshire

  1,021,220

  1,190,957

  17

  Norfolk

  503,241

  584,031

  16

  West Sussex

  483,064

  560,073

  16

  Suffolk

  413,062

  478,846

  16

  Bedfordshire

  337,682

  389,043

  15

  North Yorkshire

  486,059

  554,028

  14

  Isle of Wight

  89,477

  101,864

  14

  Gloucestershire

  360,765

  410,678

  14

  Oxfordshire

  371,292

  421,729

  14

  District Health Authorities (Chairmen)
  Dr. Goodson-Wickes
  To ask the Secretary of State for Health when he will be appointing new chairmen to district health authorities; and if he will make a statement.

  Mr. Mellor
  The term of office of 128 chairmen of district health authorities ends on 31 March 1990 and we are currently seeking nominations for new chairmen. If hon. Members wish to recommend any individuals as chairmen, I invite them to write to me over the next month or so. Reappointments and changes will be announced in due course.

  Constituencies (Electorates)
  Mr. Simon Coombs
  To ask the Secretary of State for Health if he will list the 25 largest parliamentary constituencies by electorate, with their electorates; and what is the average constituency electorate on the current register.

  Mr. Freeman
  The information requested is as follows:

  1989

  Parliamentary constituency

  Electorate

  Milton Keynes

  107,011

  Isle of Wight

  101,859

  East Hampshire

  91,737

  Huntingdon

  91,315

  Eastleigh

  90,119

  Swindon

  89,939

  Devizes

  88,792

  The Wrekin

  88,467

  Westbury

  88,234

  Peterborough

  87,573

  East Berkshire

  87,432

  Wokingham

  87,393

  Cirencester and Tewksbury

  87,111

  Ryedale

  86,907

  South Colchester and Maldon

  86,631

  Dudley West

  85,955

  South Suffolk

  85,888

  North Colchester

  85,241

  Crosby

  84,907

  North Wiltshire

  84,610

  Horsham

  84,501

  Waveney

  84,319

  South West Cambridgeshire

  83,964

  Mid Bedfordshire

  83,854

  Chelmsford

  83,799

  Average constituency electorate:

  United Kingdom

  67,098

  England

  69,533

  Wales

  57,753

  Scotland

  54,624

  Northern Ireland

  65,912

  Trent RHA (Pay Gradings)
  Mr. Redmond
  To ask the Secretary of State for Health if he will detail the pay gradings of each district health authority general manager in the Trent regional health authority.

  Mr. Mellor
  The gradings of district general manager posts in the Trent region, and the salary grade rates from 1 September 1988, are set out in the table. In addition, district general managers are eligible for a discretionary addition of up to 10 per cent. of the grade rate (to reflect differences in job weight) and performance-related pay. Details of the performance-related pay awarded to individual general managers are confidential between them and their employer.
  452

  Districts

  Grade

  Grade rate at 1 September 1988 (£)

  Southern Derbyshire

  Leicestershire

  Nottingham

  Sheffield

  1

  37,110

  Barnsley

  North Derbyshire

  Doncaster

  North Lincolnshire

  South Lincolnshire

  Central Nottinghamshire

  Rotherham

  2

  35,450

  Bassetlaw

  3

  33,790

  Nursing (Recruits)
  Mr. Spearing
  To ask the Secretary of State for Health if he will state the reasons for his decision to permit, or require, the chief nursing officer of the Department to send a standard letter to potential recruits to the nursing service asking them to enclose a fee of £6 for an application package; and if he will review this decision.

  Mr. Mellor
  Applications for pre-registration nurse training are handled not by the Department but by the Nurses Central Clearing House (NCCH). The NCCH is managed by the English National Board for Nursing, Midwifery and Health Visiting on behalf of health authorities. It is for the board to determine what, if any, administrative charge should be made to potential applicants.

  GPs (Overprescribing)
  Mr. Michael Morris
  To ask the Secretary of State for Health how many prosecutions of general practitioners for overprescribing have taken place in England since the National Health Service Committee's Tribunal Regulations (S.I. 1974 No. 455) came into effect.

  Mr. Mellor
  [holding answer 8 May 1989]: In the period 1974–88 inclusive the Department's regional medical service made a total of 12,068 visits to discuss with practices their prescribing costs and patterns. These visits are made largely to practices whose total costs exceeded their FPC average by a significant amount. Some practices were visited more than once. None of these visits resulted in a reference for formal investigation of excessive prescribing under the terms of the National Health Service Committee and Tribunal Regulations. However, visits to such high prescribing-cost practices are very cost-effective. We estimate that on average each visit saves around £12,000 per practice in the first full year.

  AIDS
  Mr. Robertson
  To ask the Secretary of State for Health if he will list each of the advertising agents used for any aspects of the Government AIDS campaign, with the payments made in each case.

  Mr. Mellor
  The advertising agents used for the Government's AIDS campaign and the payments made exclusive of VAT were as follows:
  453

  Year

  Agency

  Payment (£ million)

  1985–86

  TBWA

  0·35

  1986–87

  TBWA

  2·79

  1987–88

  TBWA

  16·43

  1988–892

  TBWA

  0·76

  BMP Davidson Pierce

  2·30

  Total

  TBWA

  10·33

  Total

  BMP Davidson Pierce

  2·30

  1 This figure includes a joint AIDS-Drugs Misuse anti-injecting campaign

  2 Excludes spending on anti-injecting advertisements in the Drug Misuse campaign run by Yellowhammer.

  Type

  1984–85

  1985–86

  1986–87

  1987–88

  1988–89

  £

  £

  £

  £

  £

  Woollen

  203

  224

  238

  246

  261

  Cotton

  112

  121

  132

  144

  150

  Nylon

  54

  58

  63

  69

  74

  All types1

  123

  134

  144

  153

  162

  Note: Since 1 July 1987, the Disablement Services Authority has been responsible for the supply of stump socks. Any further information should be sought from the Authority

  1 Cost weighted according to the average mix of type of yarns per 100 stump socks.

  Hospital Admissions
  Mr. Dobson
  To ask the Secretary of State for Health if he will give for each year since 1970, and for each health region, the total number of hospital admissions on a day-case basis.

  Day cases attendances, NHS hospitals, by region, 1972 to 1987–88

  19721

  1973

  1974

  1975

  1976

  1977

  1978

  1979

  1980

  1981

  1982

  1983

  1984

  1985

  1986

  1987–882

  Northern

  32,170

  31,308

  31,001

  29,316

  33,573

  37,875

  41,341

  46,416

  54,023

  56,219

  52,833

  66,093

  68,658

  75,473

  81,047

  83,335

  Yorkshire

  32,557

  33,646

  38,457

  38,252

  46,741

  54,683

  55,097

  55,060

  60,680

  62,788

  58,883

  70,869

  72,718

  76,174

  81,635

  74,933

  Trent

  37,354

  30,743

  35,449

  33,061

  38,453

  40,532

  42,083

  48,511

  57,314

  61,260

  58,140

  72,003

  80,159

  85,691

  95,092

  67,866

  East Anglian

  12,956

  13,663

  14,735

  17,253

  23,319

  26,092

  28,093

  28,314

  32,675

  33,916

  30,768

  33,235

  35,818

  39,572

  42,022

  28,955

  North-West Thames3

  23,998

  31,853

  23,843

  20,992

  24,733

  28,471

  29,460

  37,649

  41,028

  44,219

  43,330

  49,494

  58,558

  63,170

  67,766

  50,091

  North-East Thames3

  32,623

  23,643

  34,607

  35,282

  33,396

  36,813

  38,294

  39,871

  41,910

  47,208

  48,744

  51,725

  57,850

  67,472

  70,304

  51,924

  South-East Thames3

  21,257

  25,808

  27,010

  23,909

  30,012

  38,272

  40,903

  42,706

  44,705

  45,117

  49,717

  59,983

  72,702

  66,323

  71,323

  48,855

  South-West Thames3

  13,252

  15,285

  17,315

  18,807

  22,585

  23,795

  20,406

  23,519

  28,827

  37,867

  32,836

  33,676

  39,613

  45,395

  56,449

  53,391

  Wessex

  20,367

  21,780

  28,009

  26,698

  34,297

  35,816

  37,695

  36,962

  43,210

  44,029

  44,665

  49,226

  54,300

  59,340

  63,297

  46,876

  Oxford

  15,864

  15,930

  18,780

  17,967

  18,203

  21,216

  23,146

  21,656

  23,882

  23,824

  23,585

  27,183

  29,931

  35,184

  39,901

  43,809

  South Western

  31,321

  29,716

  32,790

  30,923

  32,257

  38,104

  39,397

  40,037

  40,099

  43,095

  44,685

  48,878

  51,614

  62,168

  63,375

  55,306

  West Midlands

  34,998

  42,962

  48,517

  41,810

  46,477

  49,793

  51,614

  51,769

  61,532

  64,847

  64,973

  74,215

  80,097

  83,251

  93,403

  60,500

  Mersey

  41,625

  43,890

  44,062

  36,741

  39,193

  40,285

  41,787

  44,460

  55,556

  54,509

  55,490

  62,979

  70,554

  69,403

  79,098

  79,740

  North Western

  47,726

  48,271

  51,532

  46,613

  53,471

  60,068

  68,080

  70,608

  79,217

  88,143

  85,874

  99,994

  115,410

  116,317

  125,564

  120,368

  1 Day case figures were not collected before 1972

  2 Some patients previously classified as day cases may since April 1987 be newly classified as ward attenders.

  3 Figures for these regions are not strictly comparable over the whole period, due to NHS restructuring in 1982.

  "Working For Patients"
  Mr. Strang
  To ask the Secretary of State for Health if he will make a statement on how co-ordination of local authority community care services and health services are to be maintained once local authorities are no longer represented on health authorities as described in paragraph 8.6 of "Working For Patients" (Cm. 555).

  Mr. Mellor
  [holding answer 9 May 1989]: Local authorities and health authorities are statutorily obliged to collaborate in the development of services, and mechanisms exist for encouraging liaison between them. Ways in which these mechanisms can be made to work more effectively are being examined as part of our

  Advertising
  Mr. Grocott
  To ask the Secretary of State for Health how much has been spent by his Department on advertisements on commercial television in each of the last five years, listed by each television company.

  Mr. Mellor
  Information on television advertisements in the form requested is commercially confidential.

  Stump Socks
  Mr. Dobson
  To ask the Secretary of State for Health what has been the average cost per hundred stump socks to the National Health Service in each of the last five years.

  Mr. Mellor
  [holding answer 26 April 1989]: The average cost per hundred stump socks by type of yarn and for all yarns is as follows:

  Mr. Freeman
  [holding answer 26 April 1989]: The available information is given in the table.

  consideration of Sir Roy Griffiths' report on community care, and we shall take account of "Working For Patients" in those deliberations.

  Mr. Strang
  To ask the Secretary of State for Health whether, in the light of paragraph 3·7 of "Working For Patients" Cm. 555, people with multiple pathology or conditions which are difficult to treat, will be expected to transfer from centre to centre if a health authority has contracts for different services with different hospitals.

  Mr. Mellor
  [holding answer 9 May 1989]: Differences in the services available may mean that, as now, some patients need to attend more than one hospital for different forms of treatment. However, district health

  455
  authorities will be expected to arrange contracts so that health care services are provided flexibly and in a way that is responsive to patients' needs and wishes.

  Prescription Charges
  Mr. Fearn
  To ask the Secretary of State for Health how much prescription charges have risen in cash and real terms between April 1979 and April 1989.

  Mr. Mellor
  [holding answer 9 May 1989]: The information requested is set out in the table.

  £

  1979–80

  0·20

  11989–90

  2·80

  21989–90

  1·41

  1 Current prices.

  21979–80 prices.

  Nursing Students
  Mr. Matthew Taylor
  To ask the Secretary of State for Health when he intends to announce the level of bursary for a nursing student enrolling on a course under the project 2,000 nursing education reforms.

  Mr. Mellor
  [holding answer 9 May 1989]: My right hon. and learned Friend hopes to do so shortly.

  Food Contamination
  Mr. Ron Davies
  To ask the Secretary of State for Health when he will reply to the questions asked by the hon. Member for Caerphilly on 18 January concerning the possible contamination of farmed food.

  Mr. Kenneth Clarke
  I replied to the hon. Member on Monday 20 February.

THE ARTS

  Office Art Collection
  Mr. Fisher
  To ask the Minister for the Arts whether he will publish a table showing the(a) paintings, (b) prints, (c) sculptures and (d) other artefacts in his Office's art collection.

  Mr. Luce
  [holding answer 8 May 1989]: The information requested is as follows:

  Artist

  Title

  (a) Paintings

  Ann Redpath

  The Pink Decanter

  James Robertson

  Hills in Spain

  Melvyn Chantry

  Stream, Derwent Water

  James Northcote

  Mr. John Culme

  View of Cheltenham: Montpelier

  John Piper

  Walk

  View of Bath: Composite of Bath Street and corner of Camden

  John Piper

  Crescent

  John Craxton

  Landscape with Returning Shrimper

  Frank Averbach

  Mornington Crescent

  Peter Coker

  The Gorsebush

  Patrick George

  Hick Bush

  Ishaq Kohbji

  Untitled

  Richard Gilbert

  Departure 1987

  456

  Artist

  Title

  (b) Prints

  Joe Tilson

  Moon Signatures

  Richard Edwards

  Santorini

  Glen Baxter

  Brenda

  Glen Baxter

  Saturday morning shopping

  David Freed

  Richard III

  Jennifer Dickson

  Le Septieme Jour

  Juan Martinez

  Untitled 1969

  Cecil King

  Bagot Street

  (c) Sculptures

  None

  (d) Other artifacts Photographs:

  John Davies

  Isle of Skye towards Loch Brittle

  Paul Wakefield

  River Orchy, Scotland

  Paul Wakefield

  Afon Hondu

  Other items:

  Sutton Taylor

  Large lustre bowl

  Judith Trim

  Two Oval oxidised porcelain bowls

  Michael Casson

  Two stoneware articles

  Michael Lloyd

  Silver bowl

  Alistair McCallum

  Mokume Gane bowl

  Fiona Salazar

  Earthenware pot

  Janice Tchalenko

  Stoneware teapot

  Peter Chatwin

  Laminated bowl

  The articles are all on loan except the painting by Ishaq Kohbji which was a gift from the Bahrainian Arts Society.

AGRICULTURE, FISHERIES AND FOOD

  Yorkshire (Environmentally Sensitive Areas)
  Mr. Redmond
  To ask the Minister of Agriculture, Fisheries and Food if he will list by name for the three counties of Yorkshire the total land area per site designated as an environmentally sensitive area.

  Mr. Ryder
  No ESA is wholly within the three counties of Yorkshire. Some 8,200 hectares (52 per cent.) of the Pennine Dales ESA lies in North Yorkshire, while 6,390 hectares (13 per cent.) of the North Peak ESA lie in South Yorkshire and 4,200 hectares (8 per cent.) lie in West Yorkshire.

  Salmonella
  Mrs. Ann Winterton
  To ask the Minister of Agriculture, Fisheries and Food what plans he has to ensure that following the establishment of the single market in 1992 thorough checks will be made at United Kingdom ports, airports and rail links to ensure that any consignment of eggs which is contaminated with salmonella is detected and dealt with.

  Mr. Donald Thompson
  Because the arrangements that will control the movement of eggs within the European Community after 1992 have yet to be decided upon, it would be unhelpful to spell out our plans for that period. However, I assure my hon. Friend that it is our intention to secure equivalence between the standards and inspections in member states to ensure that the interests of our egg producers and consumers are safeguarded.
  457
  Mrs. Ann Winterton
  To ask the Minister of Agriculture, Fisheries and Food what action is taken by his Department when consignments of imported eggs are found to be infected with salmonella.

  Mr. Donald Thompson
  If a case of salmonella contamination is found in imported eggs, my Department will inform the EC Commission and the member state where the eggs were packed. Where appropriate I will also take the matter up with my opposite number in the member state concerned.

  Mrs. Ann Winterton
  To ask the Minister of Agriculture, Fisheries and Food on how many occasions in the latest 12 months for which figures are available consignments of imported eggs have been(a) checked for salmonella infection and (b) found to be infected with salmonella.

  Mr. Donald Thompson
  Systematic monitoring of imported eggs for salmonella commenced only last month.

  Mrs. Ann Winterton
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement outlining the checks which are made to ensure that salmonella-infected eggs and poultry are not imported into the United Kingdom from other European countries and from other non-European countries.

  Mr. Donald Thompson
  The systematic monitoring of imported eggs by the port health authorities in conjunction with the public health laboratory service has recently been introduced. Imports are being sampled at a rate which will provide a valid assessment of their bacteriological status. Similar arrangements would not be appropriate for poultrymeat.

FOREIGN AND COMMONWEALTH AFFAIRS

  Namibia
  Mr. Hunter
  To ask the Secretary of State for Foreign and Commonwealth Affairs what progress is being made towards a peaceful settlement in Namibia.

  Sir Geoffrey Howe
  Agreements have been reached on a framework for the return of SWAPO forces to positions north of the 16th parallel in Angola. South African troops and South West African territorial forces will be once again restricted to base. It is vital that these agreements are put into effect and that all parties abide by their undertakings in the United Nations plan.

  Mr. Robert Hughes
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on the implementation of United Nations Security Council resolution 435 on Namibia.

  Mrs. Chalker
  We have been active in support of efforts to put the United Nations plan firmly back on track. We welcome the series of agreements reached by the joint commission which have this as their aim.

  Dr. Goodson-Wickes
  To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he has to meet the Administrator General of Namibia or his officials to discuss the future of Rossing uranium in the context of an independent Namibia.
  458
  Mrs. Chalker
  My right hon. and learned Friend has no present plans to do so. We hope that Rossing uranium will continue making its important contribution to the Namibian economy after independence.

  Mr. Yeo
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will pay an official visit to Namibia to discuss the transition to independence.

  Mrs. Chalker
  My right hon. and learned Friend has no present plans to do so. We are in regular contact with all those involved in the implementation of the United Nations plan for Namibian independence.

  Angola
  Sir Russell Johnston
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions representatives of Her Majesty's Government have had with the MPLA Government of Angola and UNITA regarding an end to the civil war in Angola.

  Mrs. Chalker
  We have regular contact with the Angolan Government. We also have occasional contact with UNITA at official level. We have impressed on both sides the need for flexibility if internal peace is to be achieved in Angola.

  OECD
  Mr. Roger King
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the Secretary-General of the Organisation for Economic Co-operation and Development; and what matters were discussed.

  Mrs. Chalker
  My right hon. and learned Friend last met the OECD Secretary-General on 13 February. They discussed current and future areas of work for the OECD, and preparation for the ministerial council.

  EC-EFTA Relations
  Mr. Quentin Davies
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the relations between the European Community and the European Free Trade Association.

  Mrs. Chalker
  Relations between the EC and EFTA are excellent. A joint ministerial meeting on 20 March agreed to discuss possibilities for further strengthening and extending co-operation. There will be a further ministerial meeting in the autumn. Meanwhile the programme of co-operation stimulated by the 1984 Luxembourg declaration continues.

  Export Promotion
  Mr. Patnick
  To ask the Secretary of State for Foreign and Commonwealth Affairs what resources were committed in 1988–89 via the diplomatic wing to supporting export promotion and inward investment.

  Mrs. Chalker
  Figures for the financial year 1988–89 are still being collated and should be available in October. We expect them, however, to be approximately 10 per cent. Up on the figures for 1987–88 which were as follows:Total commercial work: £69 million of which approximately 91·7 per cent. (£63·27 million) for export promotion, 3·4 per cent. (£2·5 million) for inward investment and the remaining 4·9 per cent. (£3·38 million) for trade policy.

  Nigeria
  Mr. John Marshall
  To ask the Secretary of State for Foreign and Commonwealth Affairs what is the current state of Anglo-Nigerian relations.

  Mrs. Chalker
  We enjoy close and cordial relations with Nigeria. President Babangida's state visit to the United Kingdom now taking place is evidence of that.

  Eastern Europe
  Mr. Thurnham
  To ask the Secretary of State for Foreign and Commonwealth Affairs, if he will make a statement about relations with eastern Europe.

  Mr. Waldegrave
  Our relations with the countries of eastern Europe are as varied as the countries themselves. We naturally have the closest relations with those whose systems and values come closest to our own. In this context we welcome the substantial steps towards freedom and democracy taken recently in Poland and Hungary.

  Drug Trade
  Mr. Knapman
  To ask the Secretary of State for Foreign and Commonwealth Affairs what further practical measures have been agreed with the countries of Latin America to combat the international drug trade.

  Mr. Eggar
  I discussed measures to combat the international drugs trade with the Foreign Ministers of Colombia and Peru during their visits to the United Kingdom in April, and during my recent visit to Mexico. These measures include continued United Kingdom bilateral and multilateral assistance, and the negotiation of bilateral agreements to trace, freeze and confiscate the assets of drugs traffickers.

  Mr. Irvine
  To ask the Secretary of State for Foreign and Commonwealth Affairs what further progress is being made in the international fight against the drugs trade.

  Mr. Eggar
  We have bilateral agreements or arrangements with six countries for tracing, freezing and confiscating traffickers' assets. We are negotiating similar agreements with about 20 countries and have approached some 20 others. Next week, my right hon. Friend the Home Secretary will host a meeting of Pompidou group Ministers to discuss, inter alia, asset confiscation and measures against cocaine.

  Mr. Adley
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on moves towards Palestinian self-determination.

  Mr. Latham
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the peace in the middle east.

  Mr. Robert B. Jones
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the peace process in the middle east.

  Sir Dennis Walters
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on progress towards a middle east peace settlement.
  460
  Mr. Waldegrave
  We continue to believe that a settlement of the Arab/Israel dispute must be based on Security Council resolutions 242 and 338 and that an international conference, at the right time, will be necessary. We look forward to discussing with Mr. Shamir how his proposal for elections in the occupied territories can contribute to this process when he visits the United Kingdom later this month.

  Mrs. Dunwoody
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make it his policy to hold urgent talks with the United States Government and the Government of the Union of Soviet Socialist Republics in preparation for an international conference on the middle east.

  Mr. Waldegrave
  We remain in close touch with the two Governments and with others concerned about the prospects for peace in the middle east. My right hon. and learned Friend the Secretary of State discussed these with both Mr. Shevardnadze and Secretary Baker last month.

  Mr. Home Robertson
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has made to the Israeli Government concerning President Arafat's peace initiative.

  Mr. Waldegrave
  We are in close touch with the Israeli authorities and look forward to further discussion of all aspects of the peace process with Mr. Shamir later this month.

  Mr. Ernie Ross
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the effect of the recent killings on the West Bank and Gaza on the peace process in the middle east.

  Mr. Waldegrave
  Violence, from whatever quarter, can make the search for peace in the middle east only more difficult. The Israeli authorities are well aware of our concern at their use of excessive force in the occupied territories.

  Argentina
  Mr. Rogers
  To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he is taking to improve relations between Britain and Argentina.

  Mr. Eggar
  Since the Falklands conflict in 1982 we have consistently striven to restore more normal relations with Argentina. To this end we have taken a number of important initiatives.

  The Argentine response to all of these has been disappointing. Indeed Argentina has recently formalised discrimination against British exporters, and continues to refuse access to our ships and aircraft.

  Mr. Norman Hogg
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the current state of relations between Britain and Argentina.

  Mr. Eggar
  Since the Falklands conflict in 1982 we have consistently striven to restore more normal relations with Argentina. To this end we have taken a number of important initiatives.

  The Argentine response to all of these has been disappointing. Indeed Argentina has recently formulated discrimination against British exporters, and continues to refuse access to our ships and aircraft.
  461
  Mr. Haynes
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether he has any plans to visit Argentina.

  Mr. Eggar
  No.

  Jordan
  Mr. Harry Greenway
  To ask the Secretary of State for Foreign and Commonwealth Affairs when next he expects to meet King Hussein of the Hashmite Kingdom of Jordan for discussions on matters of mutual interest; and if he will make a statement.

  Mr. Waldegrave
  My right hon. Friend the Prime Minister and my right hon. and learned Friend the Secretary of State held very useful discussions with King Hussein last month. They have at present no plans for a further meeting. I myself met the King in Amman in March.

  Beirut
  Mr. Tredinnick
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has made concerning the Christian community in Beirut; and if he will make a statement.

  Mr. Waldegrave
  None. The recent fighting has affected members of all communities in Lebanon. In common with our partners in the Twelve we fully support the efforts of the Arab League to arrange a ceasefire and to seek a negotiated solution.

  Internal Border Control
  Mr. David Evans
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with his west European counterparts regarding the proposals put forward by the Schengen group of countries to abolish internal border controls.

  Mrs. Chalker
  In the context of the wider frontiers discussion within the European Community, we have naturally discussed with our partners the practical experience of the Schengen group, and the problems they have encountered.

  Nuclear Weapons
  Mr. Cohen
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Her Majesty's Government's policy of opposing the West German Government's proposals for early negotiations to reduce nuclear weapons in Europe.

  Mr. Waldegrave
  The stated objective of the Warsaw pact is the elimination of nuclear weapons from Europe. NATO is committed to maintaining an adequate and effective mix of conventional and nuclear forces, including land-based missiles in Europe. Given this conflict of objectives, it is hard to see how there could be a fruitful outcome to any negotiations.

  Iraq
  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs what continuing representations are being made to the Iraqi Government about persistent allegations of the torture, ill-treatment, execution and arbitrary arrest of children in Iraq.
  462
  Mr. Waldegrave
  As my right hon. Friend the Minister of State said on 28 April, at column 686 the Government have repeatedly made clear to the Iraqi authorites our concern at Iraqi human rights violations and will continue to do so. The Iraqis know that we expect them to abide by their obligations under international agreements, which, in particular, prohibit the use of the death penalty against minors.

  Nicaragua
  Dr. Reid
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the President of Nicaragua; and what subjects were discussed.

  Mr. Eggar
  President Ortega made a private visit to the United Kingdom from 6 to 8 May in the course of an extensive European tour. My right hon. Friend the Prime Minister received him on 8 May. My right hon. and learned Friend the Secretary of State and I saw Foreign Minister d'Escoto on the same day.

  Mr. Eadie
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to visit Nicaragua.

  Mr. Eggar
  My right hon. and learned Friend the Secretary of State has no plans to visit Nicaragua.

  Air Fares (Europe)
  Mr. Michael Brown
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the implication of the recent European Court of Justice judgment outlawing price fixing among European airlines for bringing down air fares in Europe.

  Mrs. Chalker
  We strongly support action within the European Community which ensures that air travellers are charged fair prices. We expect the Commission to take the recent European Court of Justice judgment into account in preparing new proposals for liberalising air transport.

  Mr. David Shaw
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the implications for European integration of the latest ruling by the European Court of Justice on air transport fares.

  Mrs. Chalker
  We would expect the Commission to take full account of the recent European Court of Justice ruling on air fares in preparing proposals for the second phase of air transport liberalisation. The United Kingdom fully supports further liberalisation in this field, because of the great practical benefits it will bring, especially to consumers.

  Air Transport
  Mr. Anthony Coombs
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he expects the European Economic Community to make further progress in liberalising air transport.

  Mrs. Chalker
  The aviation liberalisation package of December 1987 commits the Council of Ministers to adopt further measures by June 1990. The Commission has to bring forward proposals by 1 November this year. The United Kingdom's support for further effective measures
  463
  has been made clear in a memorandum to the Commission. A copy of this has been placed in the Library of the House.

  E1 Salvador
  Mr. McKelvey
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of whether the human rights situation in E1 Salvador is improving.

  Mr. Eggar
  Regrettably, recent months have seen a deterioration in the human rights situation in E1 Salvador.

  We are particularly concerned that the escalation of violence and violation of human rights by the FMLN guerrillas appears to be provoking a response from extreme elements on the Right.

  European Monetary and Economic Union
  Mr. Alex Carlile
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to meet Mr. Jacques Delors to discuss the findings of the Delors committee on the European monetary and economic union.

  Mrs. Chalker
  The report of the Delors committee will be discussed at the informal meeting of Economic and Finance Ministers in Gerona on 19 to 21 May at which I understand M. Delors will be present.

  Kurdish People
  Mr. Archer
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether he will make representations to the Iraqi regime over its policy of repression against its Kurdish citizens.

  Mr. Corbyn
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Government of Iraq concerning their treatment of Kurdish people.

  Mr. Waldegrave
  We have regularly raised with the Iraqi authorities our concerns over their Kurdish population and human rights violations against the community.

  Most recently I did so with the Iraqi ambassador on 19 April, and in particular made clear that we would view with grave concern any evidence to support recent reports of mass deportations of Kurds.

  We have urged the Iraqi Government to allow diplomats and journalists to visit Iraq to see for themselves.

  Brady Plan
  Dr. Twinn
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has received from Third world countries on the proposals in the Brady plan to relieve international debt.

  Mrs. Chalker
  There has been general interest among both debtors and creditors in the United States proposals. We are examining the possible involvement of the international financial institutions in debt and debt service reduction. The discussion will continue further in the boards of the IMF and World Bank.

  Protection of the Environment
  Mr. Patrick Thompson
  To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he is undertaking to enhance United Nations co-operation on protection of the environment.

  Mr. Eggar
  The United Nations Environment Programme (UNEP) is the focus for environmental co-operation within the United Nations. We recently more than doubled our voluntary financial contribution to UNEP, and are now the second largest contributor. We urge all other countries to take similar action and will reinforce this at the UNEP governing council on 15 to 26 May.

  Hong Kong
  Mr. Michael J. Martin
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with the Government of China concerning the future of Hong Kong.

  Mr. Darling
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with the Government of China concerning the future of Hong Kong.

  Mr. Eggar
  I refer hon. Members to the answer I gave on 5 April at column 195.

  Mr. Devlin
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has received about the future of British nationals overseas living in Hong Kong; and if he will make a statement.

  Mr. Eggar
  We have recently received a number of representations from hon. Members and from members of the public both here and in Hong Kong. We have also taken note of the views expressed during the hearings held in Hong Kong last month by the Foreign Affairs Select Committee.

  Mr. Tom Clarke
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he next expects to visit Hong Kong to discuss the arrangements for implementing the 1977 agreement.

  Mr. Eggar
  My right hon. and learned Friend the Secretary of State has at present no plans to visit Hong Kong.

  Lebanon
  Mr. Mans
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on United Kingdom policy towards the restoration of peace in the Lebanon.

  Mr. Robert G. Hughes
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Her Majesty's Government policy on the establishment of peace in the Lebanon.

  Sir Fergus Montgomery
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on British policy on the restoration of peace in the Lebanon.

  Mr. Waldegrave
  We hope that all parties concerned in the fighting will work towards a peaceful settlement. We
  465
  and our European partners fully support the efforts of the Arab League to arrange a ceasefire and to help in achieving a negotiated solution.

  Central America
  Mr. Buckley
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to meet the Government of the United States of America to discuss central America.

  Mr. Eggar
  We have regular discussions with the United States Administration on a wide variety of topics, including central America.

  South Africa
  Mr. Grocott
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent assessment has he made of the effectiveness of his policy of ending apartheid in South Africa.

  Mrs. Chalker
  I refer the hon. Gentleman to the answer I gave to his identical question on 3 February 1988 at column 965. Our assessment remains unchanged.

  Mr. Anderson
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he next expects to meet the South African Foreign Minister.

  Mr. Bellingham
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to meet the South African ambassador; and what matters will be discussed.

  Mrs. Chalker
  My right hon. and learned Friend the Secretary of State has no present plans to do so.

  West Germany
  Mr. Andrew Smith
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to meet representatives of the West German Government; and what matters will be discussed.

  Mrs. Chalker
  My right hon. and learned Friend expects to meet Dr. Wolfgang Schauble, the Federal German Minister of the Interior on 18 May when he visits this country to participate in a conference marking the 40th anniversary of the Federal Republic of Germany. A range of subjects of mutual interest will be discussed.

  Southern Africa
  Mr. Riddick
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether he has any plans to visit southern Africa; and if he will make a statement.

  Mrs. Chalker
  My right hon. and learned Friend the Secretary of State has no current plans to visit southern Africa.

  United States
  Mr. Redmond
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met representatives of the Government of the United States; and what subjects were discussed.

  Mr. Wilshire
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will report on the outcome of his visit to the United States on 17 April.
  466
  Mr. Eggar
  When I met President Bush in Washington on 17 April we discussed a number of current issues including East-West relations, SNP, the middle east, Lebanon, southern Africa and Latin America.

  Refuseniks
  Mr. Gillian Shephard
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has made on the current position of refuseniks in the Soviet Union; and if he will make a statement.

  Mr. Summerson
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has made on the current position of refuseniks in the Soviet Union; and if he will make a statement.

  Mr. Waldegrave
  We have raised the problem of refuseniks with Mr. Shevardnadze on three separate occasions this year, most recently during Mr. Gorbachev's visit. The Soviet authorities have been left in no doubt that the problem of long-term refuseniks will continue to cast a shadow over Anglo-Soviet relations until a satisfactory and lasting solution is reached.

  Vietnamese Refugees
  Dr. Moonie
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has received about the conditions under which Vietnamese refugees are being held in Hong Kong.

  Mr. Eggar
  We have received a number of representations from members of the public and some voluntary organisations about conditions in the centres for Vietnamese boat people in Hong Kong.

  Both we and the Hong Kong Government attach great importance to ensuring that conditions in these centres are as good as they can be in the circumstances.

  Conditions in the centres for those categorised as refugees have already been liberalised but the recent flood of new arrivals is putting the facilities available for those awaiting screening under great strain.

  Sri Lanka and India
  Mr. Pawsey
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he has any plans to visit(a) Sri Lanka and (b) India.

  Mr. Eggar
  My right hon. and learned Friend the Secretary of State has no plans at present to visit Sri Lanka. He was in India from 28 March to 1 April.

  Turkey
  Mr. Flynn
  To ask the Secretary of State for Foreign and Commonwealth Affairs what fresh initiatives he plans to seek to reduce human rights violations in Turkey.

  Mrs. Chalker
  The Turkish Government are aware that we expect them to respect and abide by the terms and conditions of the human rights conventions to which they are parties. We shall continue to follow developments closely.

  Conventional Arms Reductions
  Mr. Paice
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress of negotiations towards conventional arms reductions in Europe.

  Mr. McLoughlin
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress towards conventional arms reductions in Europe.

  Mr. David Nicholson
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress of negotiations towards conventional arms reductions in Europe.

  Mr. Waldegrave
  NATO/Warsaw pact negotiations on conventional armed forces in Europe (CFE) opened in Vienna on 9 March. The first round was encouraging. The atmosphere was serious and constructive with the Warsaw pact apparently willing to negotiate seriously and to find common ground. Much complex negotiation lies ahead. The second round began on 5 May.

  Horn of Africa
  Mr. Hind
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the prospects for peace in the Horn of Africa.

  Mrs. Chalker
  While the parties to the conflicts in Ethiopia and Somalia maintain their present positions, there seems little prospect for peace in the Horn of Africa. Our policy is to work for negotiated solutions, internal reconciliation, improved economic management and greater respect for human rights.

  Human Rights
  Mr. David Martin
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the maintaining of progress in establishing human rights in eastern Europe.

  Mr. Curry
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the Monitoring of progress on the establishment of human rights in eastern Europe.

  Mr. Waldegrave
  Performance is varied. Hungary and Poland are continuing to take measures to improve human rights and political freedoms. There has been little or no improvement in Bulgaria or Czechoslovakia or the GDR. Romania is, I am sorry to say, in a class of its own.

  East-West Relations
  Mr. John Greenway
  To ask the Secretary of State for Foreign and Commonwealth Affairs what further discussions he proposes to hold with NATO colleagues on East-West relations.

  Mr. Waldegrave
  We are in close and constant touch with our NATO colleagues over East-West policy. We share a broad measure of agreement in our analysis of the present situation and of the way forward.

  Commonwealth Citizens (Admission)
  Mr. Wigley
  To ask the Secretary of State for Foreign and Commmonwealth Affairs what representations he has received from the Indian Government on the 468
  admission of citizens from Commonwealth countries to the United Kingdom for holidays or short stays and the need to ensure that appropriate flexibility is allowed to help cases where such citizens wish to visit Britain urgently because of the chronic illness or death of a relative resident in the United Kingdom.

  Mr. Eggar
  None.

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

  Mr. Page
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on progress towards an agreement on a worldwide ban on chemical weapons.

  Mr. Waldegrave
  I refer my hon. Friends to the reply that I gave to my hon. Friend, the Member for Chelmsford (Mr. Burns) on 9 May.

  Cyprus
  Mr. Cox
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with the Secretary-General of the United Nations on the present position in Cyprus; and if he will make a statement.

  Mrs. Chalker
  My right hon. and learned Friend the Secretary of State last met the United Nations Secretary-General in Tokyo on 25 February. During their discussion they reviewed progress in the intercommunal talks on Cyprus. The talks continue, with our full support.

  Single Market
  Mr. Butterfill
  To ask the Secretary of State for Foreign and Commonwealth Affairs in what ways the European Community and the European Free Trade Association are working together towards the development of the single market.

  Mrs. Chalker
  The United Kingdom believes that the EFTA countries should, as far as is practicable and mutually beneficial, have access to the single market. The programme of EC/EFTA co-operation initiated by the Luxembourg declaration of 1984 is continuing. Following a joint ministerial meeting on 20 March, the Commission is exploring with EFTA options for further extending co-operation. A further ministerial meeting is planned for the autumn.

  Eastern Europe (Reforms)
  Mr. Sumberg
  To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he is taking to encourage a unified western response to the reforms taking place in eastern Europe and the Soviet Union.

  Mr. Waldegrave
  We are in constant touch, bilaterally and multilaterally, with our allies over East-West policy. There is a broad agreement on analysis of the situation in eastern Europe and the Soviet Union and on the way forward.

  Prime Minister Shamir
  Mr. Nellist
  To ask the Secretary of State for Foreign and Commonwealth Affairs what will be the principal matters Her Majesty's Government intend to discuss with Prime Minister Shamir of Israel when he visits the United Kingdom in May; and if he will make a statement.

  Mr. Waldegrave
  We look forward to discussing a wide range of bilateral and regional issues, including all aspects of the peace process, with Mr. Shamir.

  EC Summit (Madrid)
  Mr. Dykes
  To ask the Secretary of State for Foreign and Commonwealth Affairs what current discussions he is holding with his European Economic Community counterparts on preparations for the forthcoming European Economic Community summit meeting of Heads of Government in Madrid.

  Mrs. Chalker
  It is for the Spanish presidency to make the preparations for the European Council in June. The agenda will be discussed in advance in the Foreign Affairs Council in the usual way. My right hon. and learned Friend the Secretary of State discusses current items of Community business with his colleagues in the Council and at other meetings.

  EC Foreign Ministers
  Mr. Ian Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he is next due to meet other European Community foreign Ministers: and what matters will be discussed.

  Mrs. Chalker
  The next meeting of the Foreign Affairs Council is on 22 and 23 May. Matters for discussion include preparation for the EC/Israel Co-operation Council; preparation for the ACP/EC ministerial meeting in June; the EC-US dispute over hormones in meat; the GATT Uruguay round (Tropical Products); a draft mandate for negotiations with the USSR on a trade agreement; and preparation for the OECD ministerial meeting at the end of May. An EC/Israel Co-operation Council will be held in the margins of the Council.

  Development Assistance
  Sir Russell Johnston
  To ask the Secretary of State for Foreign and Commonwealth Affairs, what was the total value of the United Kingdom overseas development assistance in 1979–80, and in 1988–89 at constant 1979 prices.

  Mr. Chris Patten
  The United Kingdom net aid programme in 1979–80 was £798 million. The equivalent figure for 1987–88, at 1979–80 prices, was £700 million. The figure for 1988–89 is not yet available.

  Councils of Ministers
  Mr. Salmond
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list(a) the number and character of Council of Ministers meetings in each of the past two years, (b) the Ministers who represented the United Kingdom by Department and (c) by Department and grade of the civil servants who attended.
  470
  Mrs. Chalker
  The information requested at(a) and (b) is provided in the relevant six-monthly White Papers on developments in the European Community, copies of which are deposited in the Library of the House. But details of attendance by civil servants by Department and grade could be provided only at disproportionate cost.

  Antarctic Treaty
  Mr. Bowis
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he plans to hold with the co-signatories to the antarctic treaty about its review option in 1991.

  Mr. Eggar
  Ther are no plans to hold discussions on this issue.

DEFENCE

  Exercises
  Dr. Thomas
  To ask the Secretary of State for Defence if he will list Royal Air Force participation in(a) Red Flag, (b) Green Flag, (c) Copper Flag and (d) Maple Flag exercises during 1988, giving the number and type of Royal Air Force aircraft involved and the dates of the exercises on each occasion.

  Mr. Neubert
  The Royal Air Force did not participate in Copper Flag exercises during 1988. Otherwise the information requested is as follows:

  Date

  Aircraft involved

  Royal Air Force participation in Red Flag exercises

  8 October to 19 November 1988

  Nine Tornado

  Eight Phantom

  Two Hercules

  Royal Air Force participation in Green Flag exercises

  15 March to 16 April 1988

  Nine Tornado

  Royal Air Force participation in Maple Flag exercises

  30 April to 11 June 1988

  Eight Harrier

  Dr. Thomas
  To ask the Secretary of State for Defence if he will make a statement on planned RAF participation in the Maple Flag exercise in Canada in 1989.

  Mr. Neubert
  Nine Royal Air Force Tornado aircraft are currently participating in Exercise Maple Flag at Canadian forces base, Cold Lake, Alberta.

  NATO Tactical Fighter Weapons Training Centre
  Dr. Thomas
  To ask the Secretary of State for Defence when he expects a decision to be made on the location of the proposed NATO tactical fighter weapons training centre.

  Mr. Neubert
  I have nothing to add to the answer given by my predecessor, my hon. Friend the Member for Kettering (Mr. Freeman), on 22 April 1987 at column 583. The matter is still being studied by the North Atlantic Treaty Organisation.

  Goose Bay, Canada
  Dr. Thomas
  To ask the Secretary of State for Defence (1) how many low-level sorties were carried out by the RAF from Goose bay, Canada in 1988;
  471
  (2) what is the planned number of sorties to be conducted by RAF aircraft on training detachment to Goose bay, Canada during 1989.

  Mr. Neubert
  The total number of low-flying training sorties carried out by Royal Air Force aircraft from Goose bay, Canada in 1988 was 1,423. It is not expected that the amount of activity in 1989 will vary greatly from that carried out in recent years.

  Dr. Thomas
  To ask the Secretary of State for Defence how many RAF Tornado aircraft are currently deployed at Goose bay, Canada; on what date they arrived there; and what is their planned date of return to the United Kingdom.

  Mr. Neubert
  None at present.

  Low Flying
  Dr. Thomas
  To ask the Secretary of State for Defence what proportion of the total number of military low-level training sorties flown over the United Kingdom in 1988 was accounted for by(a) fast jets, (b) light jet trainers, (c) heavy propeller-driven aircraft, (d) light propeller-driven aircraft and (c) helicopters.

  Mr. Neubert
  The information requested is as follows:

  Category

  Proportion of sorties flown

  Per cent.

  Fast jets

  59

  Light jet trainers

  9

  Heavy propeller-driven aircraft

  2

  Light propeller-driven aircraft

  1

  Helicopters

  29

  Dr. Thomas
  To ask the Secretary of State for Defence if he will list the total numbers of complaints received about low flying in 1988 from addresses in(a) England, (b) Wales, (c) Scotland and (d) Northern Ireland.

  Mr. Neubert
  No fixed-wing low flying training is carried out in Northern Ireland. However, helicopters do undertake low-flying operations in Northern Ireland and although no central records are available of complaints received, headquarters Northern Ireland received 38 complaints in 1988. The numbers of complaints and inquiries about military low flying received by the Ministry of Defence during 1988 for the remaining areas were:

  Number

  England

  3,955

  Wales

  856

  Scotland

  875

  Dr. Thomas
  To ask the Secretary of State for Defence what was the percentage change in the number of low-level flights authorised at less than 250 ft between 1979 and 1980.

  Mr. Neubert
  I refer the hon. Member to the reply that my predecessor gave him on 2 November 1987 at column 487.

  Dr. Thomas
  To ask the Secretary of State for Defence how many low flying sorties were flown over the United Kingdom by United States F-111 and EF-111 aircraft in(a) 1987 and (b)
  472
  Mr. Neubert
  United States Air Force F-111 aircraft flew 11,147 low-flying sorties during 1987 and 11,303 during 1988. Central records are not kept separately of low-flying sorties by EF-111 aircraft.

  Dr. Thomas
  To ask the Secretary of State for Defence if he will list the number of low-flying sorties flown over the United Kingdom between the hours of 11 pm and 7 am in each year since 1979.

  Mr. Neubert
  The information requested is not available. Central records of night low-flying do not separately distinguish flying between the hours of 11 pm and 7 am. It is aimed to complete low-flying training before 11 pm wherever possible because it is recognised that aircraft noise can be particularly intrusive at night, and no more such activity is authorised than is necessary.

  Dr. Thomas
  To ask the Secretary of State for Defence how many low-level sorties were flown over the Federal Republic of Germany by RAF aircraft in 1988.

  Mr. Neubert
  Royal Air Force Germany carried out some 16,000 fixed-wing low-level sorties over the Federal Republic of Germany in 1988.

  Dr. Thomas
  To ask the Secretary of State for Defence what proportion of the aircrew in front-line RAF Tornado strike/attack squadrons is currently authorised to fly at less than 250 ft minimum separation distance.

  Mr. Neubert
  I have nothing further to add to my predecessor's letter of 15 December 1987 to the hon. Member in response to his question of 2 November 1987 at column 486.

  Dr. Thomas
  To ask the Secretary of State for Defence, if he will list the names and dates of all military air exercises held in the United Kingdom since 1974 in which flying at less than 250 ft was permitted over land.

  Mr. Neubert
  Military air exercise held in the United Kingdom do not involve the use of the United Kingdom low-flying system for flying below a level of 250 ft over land. Exercises involving ultra-low flying, that is below this and down to 100 ft, are normally held in the United States of America and Canada. Some strictly limited work-up training for these exercises does take place in the United Kingdom but within specially designated, sparsely populated areas.

  Dr. Thomas
  To ask the Secretary of State for Defence what was the total number of low-flying sorties over the United Kingdom in 1988, calculated by the pre-1985 method of logging movements between low flying areas.

  Mr. Neubert
  The approximate total number of sorties flown, as recalculated from movements by the pre-1985 method, was 127,000.

  Dr. Thomas
  To ask the Secretary of State for Defence what proportion of RAF Germany low-flying training activity has been carried out in the United Kingdom in each year since 1979.

  Mr. Neubert
  Precise figures are not available prior to 1988. It is estimated that some 20 per cent. of RAF Germany fixed-wing low-level sorties made use of the United Kingdom low-flying system in 1988.

  Dr. Thomas
  To ask the Secretary of State for Defence what was the total number of low-flying sorties over(a) England, (b) Wales, (c) Scotland and (d) Northern Ireland in 1988.
  473
  Mr. Neubert
  I refer the hon. Member to the answer that my predecessor gave him in response to a similar question on 15 April 1988 at column 249.

  Dr. Thomas
  To ask the Secretary of State for Defence what proportion of the low-level sorties over the United Kingdom in 1988 were flown by(a) British military aircraft, (b) the United States Air Force aircraft and (c) other air forces.

  Mr. Neubert
  The information requested is as follows:

  Operating Authority

  Proportion of sorties flown

  Per cent.

  British Military

  84

  United States Air Force

  15

  Others

  1

  Dr. Thomas
  To ask the Secretary of State for Defence what requests have been received from foreign air forces for permission to fly in the United Kingdom low-flying system at less than 250 ft minimum separation distance.

  Mr. Neubert
  There are no records of foreign military aircraft having been authorised to carry out low-flying training in the United Kingdom at less than 250 ft or of any formal request having been made for such training.

  Advertising
  Mr. McKelvey
  To ask the Secretary of State for Defence if he will give the total budget for advertising on the armed forces, showing separately the cost of advertising of the Territorial Army for 1989–90.

  Mr. Neubert
  The information is as follows:

  £

  Royal Navy/ Royal Marines

  4,965,000

  Army

  9,405,000

  Royal Air Force

  5,891,000

  The figure for the Army includes our current estimate for the cost of advertising for the Territorial Army for 1989–90 which is £2,403,000. This sum excludes local advertising expenditure commissioned by TA Voluntary Reserve associations who make their own allocations from a block grant received from the Ministry of Defence.

  Port of London
  Ms. Gordon
  To ask the Secretary of State for Defence whether there is any military function performed by courtesy calls by naval vessels to the port of London.

  Mr. Archie Hamilton
  So far as Royal Navy vessels are concerned, such visits are arranged to foster good relations between the Royal Navy and the civil community. Foreign warship visits to the Pool of London are tangible expressions of mutual goodwill between the United Kingdom and the Governments concerned.

  Thames (Naval Accidents)
  Ms. Gordon
  To ask the Secretary of State for Defence (1) if he will outline the plans prepared for the possibility of a naval accident on the Thames, in particular accidents which may affect vessels carrying nuclear weapons;
  474
  (2) what special steps he takes to reassure people living in London, particularly by the Thames, in relation to the safety implications of the mooring at Greenwich or HMS Belfast of naval ships carrying nuclear weapons.

  Mr. Archie Hamilton
  It has been the policy of successive British Governments neither to confirm nor to deny the presence of nuclear weapons on HM ships. There are, however, detailed contingency plans for dealing with the extremely remote possibility of an accident involving the release of radioactive material from a weapon while in the custody of the Royal Navy, and these include plans to deal with such an accident on board a warship. The plans involve similar organisational arrangements to those which would apply in the event of an accident involving a naval nuclear propulsion reactor, and are designed to enable the organisations concerned to cope with the rather different technical problems that would be faced in a weapons accident.

  Publicity
  Mr. Dobson
  To ask the Secretary of State for Defence if he will place in the Library details of each major publicity campaign mounted by the armed services 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 them by the Central Office of Information together with a note of the intended objectives in the campaigns in 1989–90.

  Mr. Archie Hamilton
  [holding answer 2 May 1989]: The armed services' publicity campaigns are primarily concerned with recruitment. They are not a series of separate campaigns but rather a continuing campaign to keep the services in the public eye and to promote them, to both parents and young people, as a potential employer.

  The impact of the campaign is continuously monitored. Adjustments are made in reaction to the response from the target audience and to reflect the manpower requirements of the services. There are no plans to change this practice in the foreseeable future but, in response to the increased competition for suitable applicants which all employers are likely to experience with the onset of the demographic trough, the services do expect to increase the level of advertising over that of recent years.

  In addition to their recruiting campaign, the armed services are also sponsoring the national employers liaison committee's publicity campaign, the main aim of which is to promote public awareness of the reserve forces especially amongst employers.

  Mr. Dobson
  To ask the Secretary of State for Defence 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 in 1989–90.

  Mr. Archie Hamilton
  [holding answer 2 May 1989]: The aim of the Ministry of Defence's public information effort is to increase public awareness of defence policies and the role and achievements of the armed forces.
  475
  This is achieved by a continuous information programme of press briefings and media visits to establishments and service units, films, exhibitions, and publications. Emphasis is given in this programme from time to time to matters of particular public interest and to specific occasions. These have included the European Year of the Environment in 1988, to which the Ministry of Defence contributed, and the 40th anniversary of NATO in 1989. The latter occasion was marked by an exhibition
  476
  on British defence policy held in London in April, which is also due to visit several regional events later this summer, a NATO briefing tour of public meetings in six major towns and cities, and the issue of a special postal slogan.

  The Central Office of Information was commissioned to undertake a market research survey on the MOD touring defence policy exhibition in 1988 and reported most favourably on its content and on the public response.

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.

Food Irradiation: Regulations
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they are considering making changes in the regulations concerning the irradiation of food.
The Earl of Dundee: My Lords, we have accepted scientific advice that this technology, properly applied, may give real benefits to the consumer without affecting the safety and wholesomeness of food. As has already been made clear, it is appropriate to draw up a framework of controls before the current general prohibition could be removed. We shall be considering the advice from officials on the controls that may be necessary and hope to announce our intentions shortly.
Lord Campbell of Croy: My Lords, I thank my noble friend for that Answer. When the Government decide to allow irradiation—which many countries already allow, clearly regarding it as safe and effective against bacteria—will they insist on strict regulations to prevent it being used as camouflage for substandard food?
The Earl of Dundee: My Lords, irradiation is unable to mask unfit food in any way. It cannot make food good once it has been spoilt. Equally, it cannot disguise the smell or flavour of food which has become bad. Certainly it will be important for the control system to ensure that treated food is of the right quality.
Lord Lloyd of Kilgerran: My Lords, the noble Earl said that an announcement will be made shortly. Is he in a position to say how long "shortly" is likely to be?
The Earl of Dundee: My Lords, it is always interesting to try to interpret how long "shortly" will be. However, I cannot be of much assistance to the noble Lord.
Lord Carter: My Lords, is the Minister aware that considerable concern has been expressed by, among others, the British Medical Association and the Institute of Environmental Health Officers that the irradiation process does not kill toxins in contaminated food and that the organism which causes botulism is an example? Is the Minister able to tell the House whether research into the irradiation of food is regarded by the Government either as being for the public good and therefore will be funded by the taxpayer, or as being near market and therefore suitable for funding by the food industry?
The Earl of Dundee: My Lords, I cannot answer the noble Lord's last question but I shall let him know. His first question raised the possibility that poisons may be left in irradiated food. That is equally true of pasteurisation or any other food process short of complete sterilisation. As with pasteurisation, protection lies in restricting the food which you treat to that of good hygienic quality. It also lies in the observation of good manufacturing practice.

Youth Training Scheme: Young Disabled People
2.40 p.m.
Lord Dormand of Easington Lord Dormand of Easington asked Her Majesty's Government:
What percentage of young disabled people, having completed training under the YTS, have taken up full-time employment.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, 42 per cent. of young disabled people who complete their YTS course obtain full-time employment within three months.
Lord Dormand of Easington: My Lords, that is a very disappointing Answer but is—
Noble Lords: No!
Lord Dormand of Easington: My Lords, it is a very disappointing Answer indeed. Is the Secretary of State aware that nationally twice as many disabled young people are unemployed as are able-bodied young people? Is it not obvious that the Government are not aware of the severe difficulties which arise from the double handicap of being young and disabled? Will the Secretary of State look again at what is happening in this scheme and, among other things, consider the probability of positive discrimination in favour of young disabled unemployed people?
Lord Young of Graffham: My Lords, I am sorry that the noble Lord should believe, first, that the figures are disappointing because I do not believe that they are—
Noble Lords: Hear, hear.
Lord Young of Graffham: My Lords, secondly, I was sorry to hear the rather incredible assertion that the Government are unaware of the position. I was responsible for the introduction of YTS five or six years ago. From the beginning we were aware of the position of disabled people and young disabled people in particular. We have made arrangements to enable young disabled people to enter into YTS later, to stay longer and to take steps which are unequalled. We have done so in order to help young people who suffer from some form of disability to join the world of work.
I rejoice in the fact that 42 per cent. of young disabled people find work within three months of

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completing their course. We shall continue to help young disabled people because the world has found that those with a disability are very good employees.
Baroness Turner of Camden: My Lords, can the Secretary of State tell the House whether the quota system which was in operation for disabled employment still exists and whether it is being effectively monitored? It was my experience that it was not effectively monitored and that there was not a great deal of inspection. Can the same kind of system be applied in relation to disabled young people?
Lord Young of Graffham: My Lords, I agree with the noble Baroness that the quota system is not very effective. I vividly recall that some years ago I endeavoured to persuade those concerned with disabled people to abandon the system. Such was the protest that it did not then occur.
However, that is another question concerning YTS and the general disablement lobby. If the noble Baroness cares to table a Question I shall be happy to answer it.
Lord Hailsham of Saint Marylebone: My Lords, considering the disadvantages which young disabled people necessarily find in obtaining employment, is it not extremely encouraging to discover that, while it is not the only way to help them, the YTS has managed to obtain full employment for between 40 and 50 per cent.: in fact, 42 per cent.?
Lord Young of Graffham: My Lords, I think it is. I do not feel that we should be satisfied yet; we should continue to do more. However, we have seen steady improvement in the employment of young, disabled people through this scheme.
Baroness Seear: My Lords, can the noble Lord say how many disabled young persons who wished for a YTS place were unable to gain one? It could be that the 42 per cent. represents those among disabled people who are easiest to place. I am not however denying that 42 per cent. is, in many ways, unexpectedly good.
Lord Young of Graffham: My Lords, there are some 146,000 unfilled places on YTS in the country at present. Unless the disability was so severe that it would prevent employment in the conventional sense, I should be very surprised if any young person were unable to gain a place. However, I shall inquire and write to the noble Baroness.
Lady Kinloss: My Lords, can the Secretary of State say whether the employment prospects for disabled young people leaving YTS schemes will be improved once the training and enterprise councils come into being? Can he say when those councils are likely to start?
Lord Young of Graffham: My Lords, I very much hope that the establishment of training and enterprise councils will provide a sharp focus not only on training but also on employment prospects in the areas in which they start. I expect that as they
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come into being and become experienced they will improve the employment prospects of disabled people as well as young people and the general population. The first TEC will be established towards the end of this year and we shall be closely watching its progress.
Lord Molloy: My Lords, acknowledging that his department has a great deal of expertise at its fingertips, is the noble Lord prepared to consider the possibility of getting in touch with a few national organisations which represent nearly every form of disability in the UK? I am quite sure that they would be only too pleased to help him.
Lord Young of Graffham: My Lords, from what I know of those national organisations, although for the past year or two I have not actually dealt with them, I doubt very much whether they are not already in constant touch with the department.
Lord Glenamara: My Lords, the noble Lord is so pleased with the fact that 42 per cent. have jobs, but that means that 58 per cent. do not have jobs. Can he say how many obtain jobs six months or a year after completing the course?
Lord Young of Graffham: My Lords, I believe the fact that 42 per cent. obtain jobs within three months is commendable; it is rather better than the general position of disabled people.
Lord Glenamara: My Lords, it is appalling.
Lord Young of Graffham: My Lords, many young people go in and out of jobs after leaving YTS as young people have since time immemorial to find the sort of occupation which suits them best. However, I shall inquire into the figures. I do not agree that they are appalling. However, I shall write to the noble Lord and place the information in the Library.
Viscount St. Davids: My Lords, will the noble Lord draw to the attention of industry the fact that those who are crippled in one way or another may become much stronger in another way? The man with one arm is likely to be much stronger in that arm than if he had two arms. The supreme example is Professor Stephen Hawking who, having only his magnificent brain and the power to move one finger, is our leading scientist and famed throughout the world.
Lord Young of Graffham: My Lords, I hear what the noble Lord says. I completely agree.

Pressurised Water Reactors
2.46 p.m.
Lord Hatch of Lusby Lord Hatch of Lusby asked Her Majesty's Government:
How many pressurised water reactors they plan to build in the foreseeable future and what form public inquiries will take in the selected localities.
The Parliamentary Under-Secretary of State, Department of Energy (Baroness Hooper): My Lords, it is for the electricity supply industry, not the Government, to build power stations. Magnox stations representing about three gigawatts of capacity are due to retire between now and the turn of the century. The Government are aware of the intention of the CEGB to construct three further PWR stations after Sizewell B replacing this capacity. Applications for consent to build PWRs will be handled in accordance with the relevant electricity and planning legislation. Any public inquiry that may be necessary will be held under the appropriate inquiries procedure rules.
Lord Hatch of Lusby: My Lords, is it the case that the Prime Minister intends to announce on Friday at Torness that there will be another 10 to 12 power stations built in the near future? Secondly, is the noble Baroness aware that research from the Rocky Mountain Institute in Colorado has shown, as regards the greenhouse effect, that energy conservation is seven times as efficient as the production of electricity through nuclear power stations?
Baroness Hooper: My Lords, I am not in a position to confirm or deny what the Prime Minister may or may not do or say on Friday. As to the relevant part of the supplementary question, perhaps I may say that, of course, we are concerned with the environment. It is an important part of the nuclear industry's projected future that nuclear energy is in many ways beneficial to the environment in a way that fossil fuels are not. That relates to the greenhouse effect. Nevertheless, as the noble Lord knows from previous occasions when we have discussed this subject, the Government's response is that there is not one solution to the greenhouse effect and environmental problems. We are taking into account the effects of energy efficiency and conservation as well as the nuclear programme in our plans.
Lord Ezra: My Lords, will the noble Baroness indicate to what extent she considers economic considerations would be taken into account in any future planning inquiries for new nuclear stations? Does she not agree that whereas in past years nuclear was deemed to be more economic than other forms of electricity generation, that is no longer the case? Therefore, while it is perfectly desirable to diversify sources of electricity, there must be a limit where cost is concerned.
Baroness Hooper: My Lords, the fact is that the cost of nuclear energy has always been there. What has happened recently is that the public have become more aware of the cost, and that is largely as a result of our privatisation proposals. I have no doubt that the economics of the case figure as an important factor in any public inquiry.
Lord Mellish: My Lords, will the Minister confirm that it is much better to have nuclear power stations than any other form of producing energy? Nuclear produced energy is safer, better and in the long run cheaper.
Baroness Hooper: My Lords, there is a great deal to be said for the view expressed by the noble Lord, Lord Mellish. I simply reiterate that the Government's attitude is that the solution to both our future energy requirements and to many of the environmental problems facing us is that we should have a package of a broad and diverse supply.
Lord Harmar-Nicholls: My Lords, is my noble friend prepared to speculate that if the noble Lord, Lord Hatch, is right in telling us what the Prime Minister is to say on Friday he is either the recipient of a leak or psychic?
Baroness Hooper: My Lords, I leave my noble friend to speculate on that.
Lord Williams of Elvel: My Lords, if the noble Baroness agrees so forcefully with the noble Lord, Lord Mellish, that the more nuclear power stations the merrier, will she explain why we need PWR technology, which, after all, is imported? What is wrong with the British AGR technology?
Baroness Hooper: My Lords, PWR technology is a well tried, economic and efficient means of nuclear generation. The case for PWRs was exhaustively discussed and examined in the course of the Sizewell inquiry. I think it is clear that PWR technology is the right solution in view of some of the difficulties that have arisen over the AGR programme.
Lord Taylor of Gryfe: My Lords, is the noble Baroness aware that 60 per cent. of Scotland's electricity requirements are now met by nuclear generation and that the British AGR system is the basis of that policy? Is she further aware that electricity is being produced from nuclear stations using AGR reactors at less than half the cost of the expected price of electricity from the PWR ordered by the CEGB?
Baroness Hooper: My Lords, I am of course aware of the capacity now being generated in Scotland. Nevertheless, the scientific arguments and the advisability of going for the pressurised water reactor programme have been well considered and discussed.
Lord Cledwyn of Penrhos: My Lords, can the noble Baroness say whether the Government's plans include building two PWRs in Wylfa and Trawsfynydd in Gwynedd? As regards public inquiries, will the Government through the appropriate departments be calling these proposals in for public planning inquiries?
Baroness Hooper: My Lords, each application for a power station is treated on its merits. I am certainly aware that the CEGB submitted an application on 18th April for consent to construct a PWR station at Wylfa, but I am not aware of any further direct applications.
Lord Cledwyn of Penrhos: My Lords, what does that reply mean? What different merits can there be in various parts of the country? If a PWR is proposed

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in one area as against another, what difference in merit can there be to differentiate in the need for a local public inquiry?
Baroness Hooper: My Lords, I believe that there must always be some sort of geographical influence, as the processes of public inquiries have shown that there are local reactions to proposals in a particular area. I believe that that and considerations of supply are among the criteria taken into account.
Lord Lloyd of Kilgerran: My Lords, the noble Baroness in response to that part of the Question which asks,
"what form public inquiries will take",
replied in general terms about procedures. In view of the great delays arising from such procedures in the past, have the Government any proposals to modify those procedures in any way to help save some time, money and expense?
Baroness Hooper: My Lords, to be a little more specific, the relevant rules are the Electricity Generating Stations and Overhead Lines (Inquiries Procedure) Rules of 1987 and Statutory Instrument No. 2182 of 1987. I realise that that does not necessarily help the noble Lord, but clearly the effect of the public inquiries that have already taken place—particularly the Sizewell B inquiry, which was extremely lengthy—will have some bearing on the length of subsequent inquiries into PWRs because many of the general arguments will already have been satisfied and discussed.
Lord Stoddart of Swindon: My Lords, the Minister appears confident that the pressurised water reactor is preferable to our own AGR. Is the noble Baroness aware that in the United States, the home of that type of reactor, no PWR has been constructed for the past 11 years and nor is there one planned? Is she also aware that in this country the advanced gas-cooled reactor has achieved load factors—the key to the future of reactors—particularly in Scotland, that are far in advance of the world power factor of PWRs?
Baroness Hooper: My Lords, I am not a great scientist; therefore, I take the advice of experts. Experts have been consulted in this matter and, as I said, the Sizewell B inquiry went thoroughly into all the arguments. I can say that PWRs are well tried in other parts of the world and have proved to be an effective and economic method of producing nuclear power.
Lord Glenamara: My Lords, is the noble Baroness aware of the perfectly outrageous proposal to build a nuclear power station on one of the most beautiful beaches in Northumberland? If she is not aware of that proposal and cares to visit the area, I shall be happy to take her round. She can bring my noble friend Lord Mellish with her if she wishes. She will then see what a catastrophe such a power station would be from an environmental point of view.
Baroness Hooper: My Lords, I am grateful to the noble Lord for his suggestion and invitation. No
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doubt if the case is being treated on its merits I will be able to accept that invitation if I am in the same position as I am in now.
Lord Hatch of Lusby: My Lords, the noble Baroness said this was not a matter for the Government; but it is a matter for the Government because they have included the protection of the nuclear industry within their Electricity Bill. The noble Baroness also said that energy conservation will be taken into account. May I therefore repeat this question? Is she aware that it has now been established by research that energy conservation is seven times as effective as nuclear energy for the provision of electricity? In regard to the second part of my Question concerning public inquiries, will the noble Baroness promise the House that for future public inquiries the kind of evidence now being collected by geologists on the seismic effect, particularly in the Irish Sea basin, will be available and open to consideration?
Baroness Hooper: My Lords, in the Government's proposals contained in the Electricity Bill non-fossil fuel obligation is intended to provide security of supply as a result of encouraging diversity of supply. In that respect we are not speaking only of nuclear power but also of the renewable forms of energy which the obligation will encourage. The distribution companies, on whom the obligation will rest, will not be restricted in any way in meeting that obligation. As to the points raised by the noble Lord concerning energy efficiency and public inquiries, there is of course nothing to prevent these matters being raised as evidence in the course of a public inquiry.
Lord Hailsham of Saint Marylebone: My Lords, will my noble friend explain to the noble Lord, Lord Hatch, that there is no comparison between energy conservation, which is a means of conserving energy, and the various different methods of generating energy, of which nuclear generation is one? Is it not a rather simple concept? Has not the noble Lord misled the House by thinking that the two are comparable?
Baroness Hooper: My Lords, I agree with my noble and learned friend that the important objective in all this is to keep the lights on. We have to ensure that these factors are taken into account both in terms of supplying electricity and any other methods that are taken to make the production and use of electricity efficient.
Lord Williams of Elvel: My Lords, is it not possible to explain to the noble and learned Lord, Lord Hailsham, that a reduction in the demand for electricity means that we need fewer new power stations?
Baroness Hooper: My Lords, greater efficiency with electricity can have two effects; it can mean not only that less electricity is consumed, but also that people demand higher standards of comfort in the use of their electricity. Therefore it does not necessarily mean that the level of production of electricity has to be lowered.
Lord Mellish: My Lords, in order to get the record straight, is the Minister aware that I shall be delighted to go to Northumberland especially with her?

Nurses and Health Visitors: Recruitment
3.1 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
What plans they have to improve the recruitment of all grades of nurses and health visitors.
Lord Henley: My Lords, a number of steps have already been taken which are designed to improve the recruitment of nurses and health visitors. These include improvements in pay scales which on average have risen by more than 25 per cent. since April last year, and the introduction of the new clinical grading structure. Important changes are being made in nurse training, and we are taking steps to improve career development for nurses. The national nurse recruitment publicity campaign is being further developed. So far it has resulted in over 30,000 requests for information about nursing as a career.
Lord Molloy: My Lords, is the noble Lord aware that the possibility of increasing nurses' pay will be very much welcomed? Is he also aware that by the mid-1990s we shall have the lowest number of school leavers in this country? On the other hand, is the Minister aware that the ageing population will have increased between 40 per cent. and 50 per cent.? I believe that it is called a demographic time bomb. Is this matter being taken into consideration by the department?
Lord Henley: My Lords, I did not speak about the possibility of improving nurses' pay, but about the fact that it has been increased by on average 25 per cent. since last year. As regards what the noble Lord terms the demographic time bomb, we accept the decline in the number of suitably qualified school leavers will lead to problems if the situation remains unaltered. We have asked health authorities to improve recruitment and retention by increasing male recruitment, making greater efforts to recruit mature entrants, organising back-to-nursing campaigns, which includes refresher training, establishing nurse banks and providing more opportunities for flexible working and job sharing.
Baroness Platt of Writtle: My Lords, as regards recruitment it is equally important to retain the staff who put so much effort into acquiring qualifications and experience, representing considerable public and private experience. Perhaps I may congratulate my noble friend on the new report—
Noble Lords: Question!
Baroness Platt of Writtle: My Lords, I am coming to a question. Perhaps I may congratulate my noble friend on the new report that has just been published
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on equal opportunities for women in the National Health Service. Can the Minister say what the Government intend to do to see that the report is put into effect?
Lord Henley: My Lords, I welcome the remarks of my noble friend. My honourable friend the Minister for Health about a month ago welcomed the two new reports on health service managers which call for further action to be taken by health authorities to ensure equal opportunities for women. He is commending those reports to health authorities.
Lord Winstanley: My Lords, does the noble Lord recollect that his predecessors at the Dispatch Box agreed that the provision of affordable living accommodation is crucial to the recruitment and retention of nurses in London? Does he also recollect that Ministers have told us of interesting and encouraging developments whereby some of the nurses' homes that have been closed, sold off or put to other uses, are being reopened? Is he further aware that some building societies are arranging to make accommodation available for nurses on advantageous terms? Can he say what further progress has been made as regards those two matters?
Lord Henley: My Lords, a mortgage package has been introduced involving the Nationwide Anglia Building Society in the London area. I gather that other health authorities have made similar agreements with other building societies.
Lord Ennals: My Lords, despite what the noble Lord says, with the fall of 13 per cent. in the numbers joining the professional register last year and the fall of 4 per cent. in those entering nursing training besides the fall in the total number of nurses employed in the National Health Service—the first time for many years that the figure has actually decreased—does he not agree that we are facing a real crisis in nursing manpower at the present time? Is the noble Lord aware that the nursing organisations, including the Royal College of Nursing, are very dissatisfied with the Government's response despite what the Minister has said? What is the use of appointing an extra 100 consultants if there are not the nurses to serve them? How is the waiting list problem to be dealt with if the nurses are not available?
Lord Henley: My Lords, I am not sure how many questions the noble Lord asked. As regards numbers, I do not believe that they have fallen since last year. The noble Lord was probably thinking of a report in the Guardian last week. In the department we are not aware of where the newspaper got those figures; certainly they are not the figures relating to the National Health Service workforce in England that were issued recently. Those figures indicate that the situation has remained static since last year.
Baroness Seear: My Lords, does the noble Lord not agree that in the attempt to get experienced women nurses back into the service the provision of child care is of the very greatest importance? Is the noble Lord further aware that it can cost as much as

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£100 per week for a woman to arrange for child care which is quite an impossible sum unless some assistance is given? It will be a great economy to give that assistance if it results in getting women back into nursing.
Lord Henley: My Lords, the noble Baroness knows perfectly well that I cannot give her the assurance that that will happen. I shall certainly draw her remarks to the attention of my right honourable friend.
Lord Denham: My Lords, I should—
Lord Taylor of Gryfe: My Lords, can the Minister comment on the impact of the poll tax; for example, on nurses who live in nursing hostels and who, although generally exempt from rating impositions at the moment, will pay the poll tax? Does the Minister not agree that this will make the profession less attractive?
Lord Henley: My Lords, that is entirely another question. Nurses will be receiving a salary and therefore they will be in a position to pay the poll tax or the community charge.
Lord Molloy: My Lords, the noble Lord has acknowledged that the department is aware of the problem. I am very pleased to hear that. Is he prepared to consider the views of the leaders of the great professions such as Mr. Hector McKenzie of CoHSE, the secretary general of the Royal College of Nursing—
Noble Lords: Order, order!
Lord Molloy:—and Miss Shirley Goodwin of the Health Visitors' Association, who want to help the Government and indeed anyone who wishes to make certain that we have a secure NHS and a good supply of nurses? That provision is always demanded by doctors, surgeons and specialists who value immensely the help and aid of nurses.
Lord Henley: My Lords, I shall certainly draw the attention of my right honourable friend to the comments made by the noble Lord.

Business
3.8 p.m.
Lord Denham: My Lords, I should like to say a word about the arrangements for the two short debates standing in the names of my noble friends Lord Kinnoull and the noble Earl, Lord Longford. On the principle that the mover is allowed approximately 15 minutes and that the Minister should rise to reply not less than 20 minutes before the scheduled end of the debate, in the case of the short debate in the name of my noble friend, the number of speakers is such that it is not necessary to propose a formal time limit. But I am sure that the House will agree that it would conform with the spirit of these short debates if they would keep their
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speeches within limits compatible with the spirit of short debates. In the case of the debate of the noble Earl, Lord Longford, it means that all other speeches should be limited to a maximum of eight minutes. If any noble Lord were to speak at greater length he would do so at the expense of subsequent speakers in the debate.

Compulsory Purchase: Compensation
3.9 p.m.
The Earl of Kinnoull The Earl of Kinnoull rose to call attention to the case for revision of the current rules of compensation in cases of compulsory purchase, in particular for the proposed rail link to the Channel Tunnel; and to move for Papers.
The noble Earl said: My Lords, the purpose of this short debate is to discuss the workings of the compensation provisions under the compulsory purchase powers. As it is a complicated subject and there are only six speakers, as my noble friend the Chief Whip has just reminded us, I was about to say that each of us has the luxury of 25 minutes. That would effectively empty the Chamber fairly quickly.
The House will recall that the origins of compulsory purchase and compensation date back before 1845 when the first consolidation Acts were brought in to accommodate the acquisition of land for undertakings of a public nature. At that time they were principally to assist the construction of railways and canals which was work being undertaken by private companies. The compensation rules were not spelt out in any detail, and for the next 70 years it was left to arbitrators and case law to define the parameters. By 1919, with land and house values rising rapidly, there were criticisms of excessive compensation being paid equivalent to what were described as compulsory sacrifice figures, whatever that might mean. A Bill was then introduced setting out for the first time in legislation certain fundamental rules of compensation which even today still form the foundation of the present-day code, the principal rule of compensation being that it should be based on the open market value as if sold by a willing seller but taking no account of the particular scheme proposed by the acquiring body.
Throughout the subsequent Acts of 1961, 1963, 1973 and 1981, the principle of equivalence—no more or no less than what has been taken away in value—has remained the root of statutory compensation. The fairness of this principle cannot be criticised in its theoretical objectiveness, but in practice it has not always lived up to its high ideals, either through the fault of loose drafting and the often seemingly unsympathetic interpretation of the courts or perhaps through the failure of valuers. The practical problem was compounded by the word "compulsory", with the opposite actually happening in reality on the assumption of a willing seller and the open market value. It was further heightened by personal and emotional distress and financial worry for people whose very homes, the centre of their lives, were possibly being taken away. So despite the general fairness of the rules of compensation set out

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in the 1919 Act there have been tragic consequences where loopholes in the system have caused grossly unfair compensation to be offered to claimants.
I recall as a student the case of Mr. Pilgrim in 1950, who purchased with the help of a large mortgage a vacant plot of land adjoining his home in Romford. Within a year the local council served a compulsory purchase order on the plot and the district valuer announced the value at only one-tenth of the purchase price a year before. Mr. Pilgrim was left with a large mortgage which he could not pay off and a deep feeling of injustice and grievance. It proved a direct cause of his taking his life. The case demonstrated that the principle of equivalence had failed completely, to the shame of the compulsory purchase laws. I am glad to say that that part of the law was subsequently amended, but at a high price.
It is true to say that over the years a number of identified unfairnesses in compensation have been mitigated: in areas of disturbance, injurious affection and to some degree blight, although this is still an area of grievance which needs urgent examination. Despite these improvements in the code of compensation, the whole subject is facing increasing criticism, of which my noble friend is well aware and to which his department has recently responded by issuing a consultation paper. Perhaps it is timely that we should be debating this subject today. I am grateful to those noble Lords who have indicated that they will take part in the debate and grapple with this complicated and sensitive subject.
The criticism of the present compensation code stems from a number of quarters. First, no recent proposal has caused more individual grievance and protest to Members of another place, as evidenced in their post bags, than the Channel rail link. The main issue of this grievance has been the level of compensation offered to would-be claimants—this despite the positive efforts by British Rail to go beyond the statutory compensation. It is clear that the level of compensation under the present code does not give any confidence that an equivalent property in size, location and setting could be found without the claimant being out of pocket.
The second body of criticism comes from the professional bodies, notably the Royal Institution of Chartered Surveyors, in which I must declare an interest, the CLA and the NFU, which not surprisingly are together on this issue. The RICS produced last December a comprehensive "Blue Book" setting out the case for simplifying and strengthening the compensation code and calling for reform to clarify its present obscurity, consolidate its fragmented code and amend its provisions, particularly where the principle of equivalence is at present failing. Both the CLA and the NFU support its views.
The third body of criticism comes from those who have experience of being involved in large schemes, either as retired civil servants or former Ministers, and who have witnessed wasted years of frustration and delay caused directly by complicated arguments over compensation. I have in mind the M.25 and M.40 proposals. Lastly, there is the body of criticism,
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in and out of Parliament and voiced particularly in the debates in the House during the passage of the Channel Tunnel Bill, of the possible misuse of compulsory purchase powers by private or recently privatised companies to include more land in a scheme than is necessary and which is subsequently used for commercial development. I know that the Government are well aware of this last criticism.
The recent government circular showed a positive approach and an encouraging awareness over the large number of issues but was strangely silent over the one main issue—the level of compensation offered to claimants, particularly when they lose their homes. The Royal Institution of Chartered Surveyors was not so silent on this important criticism of the present code. It argued cogently the case for compensating the factor of "compulsion" and recognising the claimant as an unwilling seller. It recalled that prior to 1919 it was the accustomed practice to add an additional percentage for this. It recommended a sliding scale in addition to open market value. Others support a flat 10 per cent. addition, as set out in the Petroleum (Production) Act 1934 under the provisions of compensation in that Act. The bolder go for a 20 per cent. addition in line with the French system, which I understand takes the view that being compelled to sell one's house should be a small financial bonus; not a rip-off but an ease of mind payment on rehousing oneself comfortably. Whatever is decided, there is a strong case for a change in the present code to meet this fundamental grievance. The level of compensation is clearly not adequate and leads to unnecessary disputes and delays. One feels that a little more generosity of compensation on the table could avoid this.
The Government's circular makes proposals on improving home loss payments, introduced in 1972, as a payment for personal distress and inconvenience. The proposal is to relax the rules of qualification and make it easier for people to qualify. However, while this is excellent and welcome, it is a little disappointing that the spirit becomes niggardly with regard to the new flat payment which the Government suggest. It is proposed that it should remain at the same level. The present level is a minimum payment of £1,200 or a maximum payment of £1,500. In today's terms that seems not overgenerous. I hope that my noble friend will look again and perhaps offer what today would be an equivalent value of what Parliament considered appropriate 17 years ago—£5,000.
The chartered surveyors have put forward a strong recommendation on site value compensation in the case of unfit houses. The Government's proposals do not refer to this issue, despite the fact that undertakings have been given in the past to alter the basis of compensation. It is possible that that has already been done; if that is so, then I must apologise to my noble friend. However, I should be most grateful if he could confirm that when he comes to reply.
I turn now to the complicated question of private companies, especially those recently privatised, which might be found promoting a scheme with an element of commercial development but which are

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acquiring the land at non-commercial values at the expense of another private owner. The Government have indicated that they recognise this concern and have reiterated that any element of incidental commercial development will be outside the powers of compulsory purchase. They also stated—quite rightly—that Parliament should scrutinise the scope of any scheme which is set out in the form of a Private Bill.
I believe that the Government's new policy on this issue needs a good deal of clarification. For example, how do you distinguish what is an incidental commercial development from what is part and parcel of a scheme? Should a motorway service station be considered as part and parcel of a new motorway, especially as it will undoubtedly be leased or sold off at considerable commercial gain? Further, should water boards be able to create a new sewerage works to release existing works for redevelopment? Moreover, should a scheme for a terminal have any relevance in incidental development when it includes offices, shops, restaurants and an hotel?
Does Parliament really have the ability to assess how much land is required in a major scheme and what land is surplus for statutory purposes? The chartered surveyors have stated that in their view there is past evidence which shows that acquiring authorities have purchased land for one form of development and subsequently applied for a different, more valuable, form, presumably outside the scope of their powers.
In order to mitigate such unfairness to the landowners, the chartered surveyors have suggested the restoration of additional compensation provisions under Part IV of the Land Compensation Act, which was reprealed in 1967 under the Land Commission Act. I hope that my noble friend will be able to elucidate more clearly how the Government see this area of compensation working fairly in the future so as to meet the well-known fears which have already been expressed.
The Government have indicated in their consultative document that they will seek to improve claims for injurious affection in any new legislation. I know that that indication is most welcome. I hope that my noble friend will comment later on two recommendations which have recently been put forward arising out of this matter. The first is that a claimant should be given the right to a subsequent claim where a relevant nuisance—for example noise—has increased more than was anticipated at the time when the claim was settled. One has in mind the M.25 motorway. Secondly, where it can be proved that material detriment or loss of value to a property has been suffered due to public works—even when no land has been taken—the owner should be able to serve a purchase notice on that body.
I shall not go into any more specifics but shall conclude by congratulating the Government on responding so quickly and in a positive way—by means to their circular—to the criticisms of shortfalls in the present compensation procedures. A major reform is necessary. I believe that it is urgent and I hope my noble friend will be able to
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say that he expects to be able to introduce a Bill in the next Session to restore confidence in the fairness of the provisions for compensation in cases of compulsory purchase. I beg to move for Papers.
3.24 p.m.
Lord Cornwallis: My Lords, I am most grateful to the noble Earl, Lord Kinnoull, for initiating the debate. During the Committee stage of the Channel Tunnel Bill I moved an amendment to alter the basis of compensation for land acquired for commercial purposes by plcs with compulsory purchase powers. The amendment was lost on a Division, but the noble Lord the present Leader of the House gave an undertaking that he would look at the situation in the light of the Government's privatisation programme.
I see that the Secretary of State, in answer to a Question in another place, has said:
"Compulsory purchase powers should not be available to acquire land for incidental commercial development".
That is most interesting. May I ask the Minister what is "incidental commercial development", and who will decide whether a particular project falls into that category?
As there is no definition and no reference to this matter in either the Water Bill or the Electricity Bill, I can only assume that decisions about this will fall to the Secretary of State. In my view that is a very unsatisfactory method of dealing with the matter. Is this provision to apply retrospectively so far as concerns those privatisation Acts which are already on the statute book? Surely the very fact of privatisation, thereby creating a public limited company, must make all the activities of that company commercial. Therefore any land which the company needs to acquire should be bought at open-market value.
The implication of the present situation appears to be that there is a better reason for development benefit to accrue to a commercial company than for it to accrue to the original owner. I cannot see why that should be. The owner of the land did not purchase it in order to profit from some unknown development. His business and life are probably seriously disrupted, if not destroyed; yet an artificial financial gain will go to the shareholders of a commercial enterprise.
I also question whether the present system of acquisiton is either cost-effective or efficient. Because of the rules, protracted negotiations often have to take place for the owner to obtain what he or she considers to be the existing use value. One man held up a section of the M.25 for over a year at a cost of £9 million to the public purse. The resultant delays can cost far more money than would be needed to pay the full market value.
Two of this country's major civil engineers to whom I have spoken confirm that in their view the financial restrictions relating to compulsory purchase should go. Moreover, taking into account the consequential speed of settlement, that would be cheaper in the long run. Compulsory powers would have to remain to deal with those who would not settle reasonably; but surely the knowledge that, if those powers were invoked, they would stand to

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receive less rather than more would be a powerful incentive to settle.
The Government have brought forward a consultation paper in which there are many good recommendations. However, before those recommendations can be implemented a number of further privatisation Acts will be on the statute book. There is no reference to those recommendations in either of the Bills currently before your Lordships' House. Can we, as the noble Earl asked, expect a Bill in the next Session of Parliament to bring such recommendations forward? Further, will there be provision for them to be applied retrospectively with regard to those Acts already passed?
When the railways were originally constructed, I believe that the companies concerned paid the full market value plus 10 per cent. That situation continued until 1919. In the United States that system is still used and is claimed to save money because of the cutback in delays and in legal fees. The Société nationale des Chemins de Fer and the French nuclear industry go out and purchase the land they need with an added bonus. I know that they do not have the population density which we have, but many of their projects have enthusiastic supporters rather than disgruntled protesters.
If we do not revise our ideas about the Channel rail link and the necessary infrastructure to service both it and the Channel Tunnel, while we haggle all the much heralded benefits of the tunnel will end up in the Pas De Calais. If we have to have the tunnel and high speed rail link, please let us be realistic and efficient about it and let us get on with it. To date, no one from British Rail or Terraguest has been anywhere near any of the landowners along the proposed route.
Would it not be better if all the negotiations for the link were to be carried out in line with the conditions laid down in the Pipe-Lines Act 1962? Part I of the first schedule to that Act, which was headed,
"Application for Grant of Pipe-line Construction Authorisations",
states in paragraph (1)(c) that, when an application is made to the Minister for an authorisation, the application must state, among other things, whether the grant, or giving thereof, has been or can be obtained. In other words, the company must confirm to the Minister that it has negotiated, or tried to negotiate, with the owners of the land before the Minister will issue an authorisation. There is therefore, within the Act, a compulsion to negotiate first. Any company operating in the private sector should be required to deal at arm's length with any other party.
There will be many additional claims for compensation in the vicinity of the rail link which are not part of the route itself or of the corridor suggested by British Rail. Members of the House from the South East, and no doubt many others, will be aware that a considrable part of the tunnelling and cutting to be carried out for the line will take place where the subsoil is chalk. Those areas are also areas of considerable market garden activity. There
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will be serious problems with chalk dust. Chalk dust settling on horticultural produce cannot be washed off. It simply becomes a rather nasty slimy grey mud. It will also settle on glasshouses, thereby affecting the admission of light and heat. Some producers may be effectively put out of business for two years or more. Some will be closed down by access works which will no longer be required after the link is completed.
Part I of the Land Compensation Act 1973 states that where no land is taken but "physical factors"—that is the expression used in the Act—cause injurious affection there can be a claim for compensation. Physical factors are noise, vibration, smells, fumes, smoke, artificial lighting or the deposit on the land of a liquid or solid substance. Many people are worried about the solid substance. Will the Minister give an assurance that that part of the Land Compensation Act will be faithfully applied to the Channel rail link?
The revision of compensation terms for land purchase would fall entirely within the Government's free market economy philosophy, so what is the difficulty? I spent 12 years going backwards and forwards to Brussels for British horticulture. I believe that the old adage about the Greeks should now be, "Beware of the French when they come bearing gifts". The French are already building and advertising all sorts of facilities at their end of the tunnel. If we do not revise our methods of getting things done, we will lose out to the French, both over the tunnel and 1992. There cannot be a more urgent reason for doing everything possible to facilitate the provision of these very important developments.
3.34 p.m.
Lord Mountevans: My Lords, I too am grateful to the noble Earl, Lord Kinnoull, for raising this issue today. I found especially interesting his remarks about what one might call "good will" or "intangibles"—those that lie outside the fair market value of the property in normal circumstances.
As the noble Earl said, this subject, whichever way one looks at it, is complex. We are all somewhat ambivalent about it. I think that we all use petrol, but we should resent any proposal for a refinery in our immediate vicinity; we use power, but we should resent a Fawley B being put down nearby; we eat fish, but we should hate having a fish dock on the doorstep, or even a proposal for one; we eat meat, but we hate having slaughterhouses. I am trying to say that we all wish to consume and buy goods and services but we do not always take account of the consequences that the provision of those goods and services lay upon someone else.
The issue is even more complicated because we are talking about a project of great magnitude. Whether one takes British Rail's figure of a cost of £1·7 billion, including £500 million for environmental considerations, or even the £2·5 billion that was quoted in the press today as being the cost of the project, it is a massive one. To those directly affected by it—the noble Earl also hinted at this—it is perhaps the end of an era, the end of a

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lifestyle or even the end of civilisation as such people have known it. It may be a matter of a localised duel between an uncaring British Rail—a monster as perceived by many—and people who individually do not have the resources to cope. But there are others—my noble friend mentioned them in his final remarks—who see the project as one of the utmost national importance and would agree with the chairman of British Rail, Sir Robert Reid, who said yesterday that the construction of the link is of crucial importance to the nation and its prosperity in a single European market.
There are other complications: there is the Government's Green Paper on land compensation and compulsory purchase. We are discussing an infrastructure of national importance against a background where the compensation terms arising out of the construction of that piece of infrastructure are in the course of change. As an additional complication, we have the fact that the Department of Transport is the sponsoring department for the proposed rail link and the motorway which, in some places, run side by side.
My understanding of the present situation is that British Rail is not obliged to do anything until it gets its Act. As noble Lords will be aware, it has not yet tabled a Bill. It is being not inequitable in offering to negotiate immediately in respect of any property situated within 120 metres of either side of the centre line of the corridor along which its route will eventually be built. It is a corridor which must be defined when the Bill is tabled.
British Rail is offering to pay a fair market value, without reference to the consequences of the link; in other words, as I understand it, the fair market value even if the link had never been thought of. It is offering arbitration where fair market value cannot be agreed. It is offering disturbance, nuisance and all manner of other payments—almost a fixture and fittings payments. Within the framework of the present legislation, it is being generous. It is to be praised for putting those terms on the table while, as I say, under no obligation to do so.
Alternatively, British Rail is offering noise compensation—noise compensation is an extremely complicated subject because no one seems to use the same yardstick or unit—on terms which sit fairly equitably between those which govern the conduct of airports, which are divided: there are those relating to day-time noise and those to night-time noise, and those relating to the more ongoing problems created by major road developments. My noble friend Lord Cornwallis touched upon this point: British Rail is offering to negotiate, once it has a defined line of route, with those who are subject to nuisance—closing down one's business for two years is hardly a nuisance—and to make such provisions and recompense as are reasonable to compensate those people for the transient or permanent loss of income that they may suffer.
British Rail, as I have said at least twice before, is under no obligation to do any of that. But it seems to have done very well to make these commitments, to make these offers and, as far as I am aware, has agreed to stick by them until such time as the link
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is completed or it abandons the project, provided that the law of the land still permits that. Again, we come back to the Green Paper and the proposals for changing the laws on compulsory purchase.
It surprises me, in fact it delights me, that all three speakers in the debate so far have managed to avoid reference to acronyms which refer to backyards. But if one thinks of front gardens and the Garden of England, one has to have sympathy with those who are affected. It is interesting to me that on many occasions when many of these transport infrastructure proposals are tabled, the property market promptly not only goes flat but collapses. Yet once the infrastructure is in place quite often property values go up at a level greater than one might have expected if the infrastructure had not been put in place. Perhaps I may cite two examples. One example I have in mind is Edinburgh airport, where the proposal to extend the runway had the most dreadful consequences for anyone trying to sell a property nearby. But if they had sat tight for two or three years until the runway was developed they would have done far better than if they had tried to sell in the first place. The same applies to a considerable amount of property in the corridor surrounding the M25.
The noble Earl's Motion is in some respects a cart and horse Motion. The horse is British Rail's proposals and I feel it would be wrong for us to use British Rail's proposals for this link as a stalking-horse for the whole wide-ranging issue of compensation. The cart seems to me to be the Government's proposals. We are all hoping for some offer or some undertaking from the Minister as to progress being made on the Green Paper and eventual legislative proposals. I think we need them quickly because by getting them quickly we shall solve the problems to which all three of us who have spoken so far have addressed ourselves.
3.42 p.m.
Lord Tordoff: My Lords, the House will be grateful to the noble Earl for introducing this Motion. I am sure that the noble Earl would have been more grateful if he had more support in this debate from all sides of the House. I cannot but observe that he has been somewhat let down as regards support from his own side of the House on this occasion. I believe that is a pity. I do not make that as a party point; but it is sad to see that nobody is prepared to support him in what is an important matter.
I was interested to hear the noble Earl focus on planning blight because that is something that I want to come to in a few moments' time. One of the things that both he and the noble Lord, Lord Cornwallis, referred to is the problem of excess purchase of land. I remember when we were having discussions on the Channel Tunnel Bill—the debate to which the noble Lord, Lord Cornwallis, referred—we were told that nothing could be done about it because this was a law relating to petrol stations on motorways, so we had better like it or lump it. I am glad that it is back on the agenda again.
The other misuse of compulsory purchase orders of which noble Lords will be aware, was that to

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which the noble and learned Lord, Lord Simon of Glaisdale, constantly referred in relation to Beverley Minster some years ago. In that instance the local authority put a compulsory purchase order on land from which could be seen an aspect of the Minster and then sold it off to private developers, despite it being referred to the ombudsman on two occasions and the finding of the ombudsman going against them. So there are problems in this whole area of the excess purchase of land.
It is interesting that two of the speakers today have dealt with this matter from what I might call a Department of the Environment point of view. The noble Lord, Lord Mountevans, and I are tackling it from the transport point of view, and the Labour Party has put up its Department of the Environment spokesman, but I am glad to see that he is supported by the transport spokesman. I am not being critical of the noble Earl, but we work at an interface on this debate and that may be the reason for some of us being a little confused. I do not pretend to be an expert on planning applications, but I wish to refer to a specific part of the Motion; namely, that relating to the Channel Tunnel.
Before I do that, I should like to mention the note that many of us will have received this morning from the NFU which refers to its view on the reform of land compensation. The note says:
"[Yet] Government proposes, except for those commercial developments which are "incidental", the traditional basis of compensation should apply"—
that is to the private funding of roads, particularly.
"Under this basis, farmers and landowners will usually receive only current use value, and most of the commercial value of the land will accrue to the developers".
One must have sympathy with that point of view. If benefit is to accrue at a subsequent stage, some of it should accrue to the original owners of the land. This goes back to the question of the excess purchase of land, does it not? It is a similar principle.
I shall suggest one or two first principles on this that we view from these Benches. We start from the point of view that if the nation is to benefit from a project and that project involves the necessary compulsory purchase of land or property, it must be the nation which pays the cost. That does not necessarily apply only to the public sector; it can be indirect. In other words, if the Channel Tunnel is for the good of the nation as a whole, then the people who bear the cost of it should not be the residents along the track but the nation as a whole. Therefore, as a matter of principle, compensation should be adequate and should be seen to be adequate, if not erring on the side of generosity. We must not allow the cost of the Channel Tunnel to fall on the people of Kent and the people of Peckham more than it falls on the rest of the community.
The second thing we must recognise is that part of the present problems in relation to the Channel Tunnel stem from a lack of foresight from the Government. Their insistence on having the whole construction funded from the private sector was a mistake from the start. We said so during the passage of the Bill and the results of that decision are now coming out, as we see in relation to the problems of
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compensation. What has happened is that British Rail held back for a long time. The Government, and I think British Rail too, believed that there was not likely to be too much need for improvement in the rail service south of London in the next few years. It has now become perfectly apparent that if, as the noble Lord, Lord Cornwallis, has said, the Channel Tunnel is to be of benefit on this side of the Channel as well as on the other side we have to improve our connections to that tunnel both between London and the Channel and in my view—and we said this all the way through the Channel Tunnel Bill—to the north of England to where industry can benefit.
I say again that the Channel Tunnel is not about passengers going through on their holidays to France. If it is to mean anything to the country, it must provide the ability to move freight from the industries of this country to the markets of Europe. We must hold that firmly in our minds. To do that we must have a proper rail system.
Because of that confusion I believe that there has been a sudden rush in recent months by British Rail, and by the Government pressurising British Rail, to put some of these things in place. That has led to the fear and frustration, particularly in Kent. There was a terrible fear a few months ago when suddenly lines appeared on maps drawn with as much accuracy as the original map of Trans-Jordan, which was drawn on a murky night in the middle of the First World War by Winston Churchill in a map room somewhere in the bowels of London.
It has now been fined down, but we still have the uncertainty of King's Cross, and whether the terminal will be situated at King's Cross or at Stratford as some people would wish. So there is still considerable uncertainty. But apart from the uncertainty in Kent, there is now also grave uncertainty in the whole area of Peckham and Warwick Gardens. In those areas there is undoubtedly a considerable amount of planning blight.
My policy is not to knock British Rail. I agree in a considerable measure with what the noble Lord, Lord Mountevans, said. I think British Rail has now got its act together and is behaving as generously as it can in relation to the 240 metre corridor through which the link will run. British Rail is offering to purchase houses at a reasonable level, and is offering other compensation too. I do not know whether that would amount to the 110 per cent. that people have talked about as having been the case before 1919, or whether it would amount to the 120 per cent. that people would obtain in a similar situation in France. However, I agree with noble Lords who have spoken that that is the kind of level at which compensation should be pitched. I suspect that British Rail may have approached the matter by a different route and may be in that ball park. I do not criticise British Rail for that.
However, the problem in that area is that the compensation is only applicable within the 240 metre corridor. If one's house is on the other side of the road, planning blight still affects one, although perhaps not to the same degree as someone who suddenly finds he has a house which backs on to

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the railway. Nevertheless, planning blight affects a greater area than just that corridor. We have to find some way of adopting a graduated system of percentages of compensation as it were, going out from the core of the area of the 240 metres. I know people who live in that area, but who have houses on the opposite side of the street. Those people are very worried about the effect the rail link will have on their general economics.
That really is the criticism that I have, not specifically of British Rail in this case, but of the system. I agree entirely with the comment that has been made that something needs to be done, and quickly, to set people's minds at rest. I think it must be within that kind of area.
That is about all that I need to say on this general subject. The Channel Tunnel is one of the largest projects on the stocks of this country today. It has been welcomed on all sides in this House. But it must not be constructed on the basis of ordinary people having to pay more than their fair share of the cost. We must all bear the cost. I am glad that the noble Earl has highlighted this problem today. I hope that the Minister will be able to give some reassurance to the people who are involved.
3.54 p.m.
Lord McIntosh of Haringey: My Lords, some months ago when Questions were raised in this House before the final route of the Channel Tunnel rail link was anounced by British Rail, I suggested that it would be cheaper for British Rail to put the line underground than to face the delays and cost of compensation. A number of people thought I was making a joke. However, I was not, and British Rail did not take my comments as a joke. It became clear that British Rail had realised that we had been approaching that happy state, and that environmental protection by tunnelling was not only an environmentally desirable alternative to damage and compensation, but was also an economically viable alternative in a number of cases. In that sense perhaps the confusion of the compensation legislation is a benefit rather than a disadvantage. Clearly it must be better to prevent damage than to cause damage and pay for it afterwards.
I have no professional expertise of any kind in the matters under discussion today. I have no particular knowledge of compensation procedures. I started to try and read up on that, but when I realised I would have to start in 1845 with the Land Clauses Consolidation Act, I realised it was an impossible task and that I was not going to get anywhere with it. Therefore I listened with great interest, in particular to the speech of the noble Earl, Lord Kinnoull, who is professionally expert in this matter, and to the speeches of other noble Lords who have a well informed interest in the subject.
I come to the matter therefore with a reasonably fresh mind about the technicalities, but with certain fixed ideas about what the public interest should be. I want to talk about the public interest this afternoon. However, before talking about it in more general terms, I wish to say a few words about the Channel Tunnel. I wish to add my support to the words of the noble Lord, Lord Tordoff. The Channel Tunnel
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is, of course, in itself probably the biggest construction project undertaken in this country. I was going to say it was the biggest project undertaken this century, but it is almost certainly the biggest construction project ever undertaken. As the noble Lord, Lord Tordoff, rightly said, the justification for it in the long run must not be the convenience of people going on their holidays from the South-East of England, but the effect on the viability of our whole rail system. The justification for the Channel Tunnel must particularly be the ability of the tunnel, using our rail system, to bring the northern parts of our country into a more effective economic relationship with Europe, and through Europe with other parts of the world.
The argument behind the Channel Tunnel, which I fully support, is a public economic argument to which it would be very difficult to apply the ordinary commercial criteria of the cost of construction against the benefits to the construction organisation. It is therefore particularly unfortunate that the Government have insisted, first, that the Channel Tunnel itself should be constructed without any public infrastructure investment, and secondly, that British Rail should be forced to build the high-speed channel link without any public investment. That seems to me an extraordinary contrast with the fact that up until now road investment has been entirely financed by the public. However, there is talk now that the revision of the Ryrie rules may make a difference to that situation.
It is noticeable that other major investments similar to the Channel Tunnel in other parts of the world, are not being treated in that way. I hesitate to refer to the Hokkaido-Honshu tunnel in Japan because that not only involved public investment but was also a construction and financial disaster. However, certainly the tunnel link between Denmark and Sweden and the tunnel links between Jutland and the rest of Denmark which are either in contemplation or, in the latter case, already in construction, are being treated as public investment with the opportunity for the private sector to contribute, rather than being treated entirely as a private commercial project. I shall come back in a moment to the effect on that of the cost of investment and the cost of raising capital.
Having stated my own position and the position of my noble friends in principle as regards the desirability of the Channel Tunnel, I shall now consider the public interest in other ways. I must start by saying that it must be in the public interest to secure fairness to all citizens of this country, including the citizens who are affected by projects of this kind.
The fundamental principle must be that we have the same rules for everyone. In other words, there should not be particular rules for those affected by the Channel Tunnel or any other individual project which are not available to those affected by other construction projects. It would be totally absurd if, the first Dartford Tunnel having been a public investment and the second Dartford Tunnel being a private investment, those affected by the one should be treated differently from those affected by the other.

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Having said that, the nature of the public interest and the nature of our planning procedures lead to extraordinarily lengthy periods of blight. The periods of blight themselves cause great difficulty and pain, even if the construction project never goes ahead. I live within sight of the Parkland Walk proposed by consultants to the Department of the Environment as the route of a high speed link from Highgate to King's Cross. I have not tried to sell my house; therefore, I would not be eligible for compensation under the rules. I am not seeking compensation. I do not think that I am declaring an interest, although I shall gladly do so if anyone feels that I should. The very fact that the Department of the Environment has seen fit to employ private consultants, in this case Ove Arup and Partners, to investigate the possibilities of new motorway construction in London well in advance of any real government consideration of whether such motorway developments are feasible or desirable means that many of my neighbours are suffering from the effects of very serious blight.
The Department of the Environment knows very well, and perhaps the Department of Transport also knows, that my neighbour, Mr. Brian Simpson, has complained to his and my Member of Parliament, Sir Hugh Rossi, about the blight that he suffers on his property, which is even closer to the Parkland Walk in Highgate than mine. Mr. Simpson has had the misfortune to buy one property paying for it with a bridging loan while doing it up and not having sold his previous property. In the meantime, well over a year ago, Ove Arup and Partners announced the route of the proposed Parkland Walk. The result is that Mr. Simpson is not able to sell either of his houses and is losing substantial amounts of money in financing his bridging loan. That is quite apart from the misery for him of having two houses which he does not want and the loss to housing as a result of one house remaining vacant. It is clearly not a satisfactory procedure.
It is not satisfactory for any government department to allow unbridled speculation by consultants retained by the department about a number of different routes. That is one of the particular problems for which British Rail has been rightly criticised. It allowed debate on far too many different routes without carrying out environmental impact assessments on all of them, which it ought to have done, before publication. As a result a great deal of misery and anticipation of misery was caused in Kent and in south-east England. One way of dealing with the problem of compensation is not by changing the rules but by improving government procedures to remove unnecessary blight.
A number of noble Lords, starting with the noble Earl, Lord Kinnoull, have raised the question of privatised companies. In the technical terms of the debate on compensation and in the first of the issues raised by the Government Green Paper published in March this year, there is the question of subsequent use for commercial purposes. The noble Earl suggested, I think rightly, that any development by a privatised company is a commercial development and that the rules which apply to
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commercial development projects which have always been private should be applied to the privatised companies.
It is not just a question of the privatised companies. The Financial Secretary to the Treasury has suggested in the last few days that the Ryrie rules governing private investment for public infrastructure should be revised in order to make possible the use of private finance for public sector investments. That is a very interesting suggestion. I do not think that it has been fully thought out yet. One consequence will certainly be that the condition that compensation should be based on subsequent use for commercial purposes will be applicable to many more public sector projects to which it did not previously apply. That is in addition to the businesses which are themselves being privatised.
One noble Lord (I did not make a note of who it was) made the valid point that the Bills now going through on privatisation—the Water Bill, with which I have been very much concerned, and also the Electricity Bill, which enters Committee in your Lordships' House tomorrow—do not pay any attention to this problem. They should, because the cost of additional compensation under the compensation rules is an important consideration. It is a consideration which should affect our judgment as to whether privatisation is right or not. It may be that, like me, most noble Lords have already made a political judgment on that matter. It still behoves us, as a revising Chamber, to review all the considerations. The cost of compensation and the possibility of compensation constitute an important issue. It should not be one on which the Government are silent.
In talking about fairness to citizens and the same rules for everyone being a criterion for compensation, I must also say that the direction in which government policy has been moving in recent years means that there is one sense in which not all citizens will be treated the same. It is entirely proper to provide compensation for those who lose as a result of development projects. At the same time, in order to secure justice for all citizens, we ought to have retained the development land tax which a Labour government introduced. It secured that there should be public benefit from the gains which private citizens make as a result of improvements brought forward by the public sector. The two are not the same, but they are the mirror images of the same relationship between the public and the private good.
I do not believe that we can reach full achievement of the public good unless we retain the development land tax. I am sorry that the Government have now said formally, after a number of years, that all efforts—starting with Lewis Silkin in the 1940s until the last development land tax—to secure that aim are futile. I disagree. I believe that it is a consideration in respect of the right and just relationship between the Government and the citizen which ought not to be ignored.
The other consideration I have in mind, which may not be in the minds of chartered surveyors but ought to be in the public mind, is whether and how we are to achieve efficient investment in our infrastructure. The Government hold the view that

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investment in our infrastructure should as far as possible come from the private sector. That is the purpose of privatisation on the one hand and the revision of the Ryrie rules on the other.
That has two major economic effects. The first is a higher borrowing cost as a result of borrowing in the private sector on an equity basis rather than on a utilities basis or a public loans basis. That is bound to be more expensive. It will be more difficult to undertake the infrastructure investment which the country so badly needs. As we have seen from this afternoon's debate, the second effect is that compensation will be more expensive when it comes to development for commercial purposes.
In both respects, the debate this afternoon leads me to think that the Government ought not to treat the matter purely as a technical issue and one of land compensation law. They should look at the wider political issues and the effects of compensation and all the other considerations to which reference has been made on our ability to renew our infrastructure and make it suitable for our needs in the 21st century.
4.10 p.m.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, I am grateful to my noble friend Lord Kinnoull for raising this most important issue. Perhaps I may begin by setting out the Government's attitude to British Rail's proposals for a new rail link between London and the Channel Tunnel. It was in July of last year that BR published its report into the longer term requirements for track and terminal capacity for Channel Tunnel rail traffic. That report concluded that the best way of providing the additional capacity which would eventually be required was to build a completely new line between London and the tunnel. The report also identified three possible route corridors, and three possible sites for a second London terminal, as a basis for public consultation.
BR has now decided that it wants to put its second terminal at King's Cross. It is seeking powers for that in the King's Cross Railways Bill, which is currently being considered in another place. As for the route between the tunnel and London, BR published a further report at the beginning of March. That report identified a preferred route for the new line. The preferred route is significantly different from any of the options identified in the July report, and contains many more environmental protection measures than the original route options. Those changes have added £500 million to the original cost estimate of £1.2 billion for the new line. British Rail estimate that some 30 per cent. of the total cost is for environmental protection measures.
The Government accept British Rail's view that a new line will be needed sooner or later to provide additional capacity between London and the tunnel. What no one knows at this stage is exactly when a new line will be needed. There are still uncertainties about the traffic forecasts, the costs of the project and the revenues. BR cannot begin work on the new line until it has satisfied both itself and the
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Government that the investment will earn a proper commercial rate of return.
Nevertheless, we think it is right that BR should press ahead with the definition of its preferred route so that people who might be affected by it know exactly where they stand. British Rail is currently consulting on the detailed alignment of its preferred route, and is planning to seek powers to build the new line in a Private Bill which it aims to deposit in Parliament in November of this year. The Government believe that it should remain BR's responsibility to plan the details of the new line. It is BR which is responsible for planning rail services in the UK, and the investment that is needed in connection with those services. The Government have neither the resources nor the expertise to do the job for it.
The noble Lords, Lord Tordoff and Lord McIntosh of Haringey, talked about private sector funding of the Channel Tunnel in general rather than specifically of the new line. As the noble Lord, Lord McIntosh of Haringey, referred to a number of other tunnels being built around the world, I should remind noble Lords that, when the Channel Tunnel was a public sector project in the 1970s, it failed, as everyone will remember. However, it is not true to say that the Government have insisted that the new line be funded by the private sector.
British Rail, with the support of the Government, is in discussion with a number of private sector consortia which have expressed an interest in playing some role in the provision of the new line. It is too early to say what form that private sector involvement might take, but it does not affect the statutory procedures that need to be followed before work can begin. Even if a private sector promoter wanted to build a line without any BR involvement—and there is no sign of that at present—he would still need to seek powers to do so in a Private Bill. It is of course true that the Joint Committee has recommended a number of changes to that procedure. But Parliament has yet to take a view on the Joint Committee's recommendations. Until it has done so, there is no alternative but to plan on the basis of the existing Private Bill procedure.
In connection with the publication of its preferred route proposal, British Rail also announced the arrangements that it would be making for purchasing properties affected by the proposal—a matter to which the noble Lord, Lord Mountevans, referred. Where the new line runs on the surface, it has undertaken to purchase any property within a 240 metre corridor—about 100 metres either side of the proposed alignment. That goes considerably further than BR's statutory obligations and is a good illustration of BR's readiness to do what it can to minimise the impact of its proposals.
For properties outside the 240 metre corridor, to which the noble Lord, Lord Tordoff, referred, and properties inside the corridor, where people prefer to remain in their homes, BR will provide noise insulation for properties where the noise level exceeds 70 dB(A). All householders affected by the new line will be entitled to compensation in

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accordance with Part I of the Land Compensation Act 1973 for depreciation in the value of their properties caused by the use of the new line.
Lord Tordoff: My Lords, I know that one should not normally intervene in these short debates, but we have a little time in hand. I am most grateful to the Minister. However, that proposal does not deal with the question of planning blight in those areas. It deals with compensation for disturbance after the line is built, but it does not deal with the period leading up to that.
Lord Brabazon of Tara: My Lords, I take the noble Lord's point, although I am not quite sure what answer I can give him. Planning blight is a difficult issue, as has been recognised not only in this case but in others.
I turn now to the main issue which is concerning my noble friend; namely, the compensation payable for those properties which BR will need to purchase compulsorily before it can proceed with its proposals. The voluntary purchase arrangements which BR has announced may mean that it does not, at the end of the day, need to purchase many properties compulsorily. But that is no reason for us not to consider the terms that apply in cases of compulsory purchase. As I have already made clear, it is unlikely that the new line will be built entirely by a private sector promoter, without reference to BR. Nevertheless, I should like to begin by referring to the arguments as they relate to compulsory purchase by private sector bodies.
The question of the compensation payable when compulsory powers are used by, or for the benefit of, privately owned bodies has been giving rise to much comment recently. It was raised during the debates on the Channel Tunnel Bill when my noble friend the present Leader of the House gave an undertaking to your Lordships that the Government would review the issue. The Country Landowners' Association and the National Farmers Union provided a joint memorandum on the subject and have been assiduous in drawing the attention of Ministers in the various interested departments to their views.
The review was undertaken in the context of a wider consideration of land compensation issues. The Statement of 7th March by my right honourable friend the Secretary of State for the Environment is the Government's considered response on this particularly complex issue. On the same day, the Department of the Environment issued a consultation paper setting our proposals for a variety of detailed improvements to the land compensation provisions.
In the Government's view, there would be no justification for having two compensation codes—one for acquisitions for public bodies and the other for privately owned ones. I believe that the noble Lord, Lord McIntosh of Haringey, made that point in relation to Dartford.
From the point of view of the landowner, it does not matter who is taking the land from him
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compulsorily; the landowner's entitlement is to be compensated for what is being taken from him. The rule that the effect of the project on the value of the land should be ignored achieves just that effect. It means that compensation is based on what the landowner could have got for the land if he had chosen to sell it on the open market at the time of the compulsory acquisition, but in a situation in which the compulsory purchase itself was not contemplated. That has for many years been the basis of valuation for all compensation for compulsory purchases for all purposes including purchases for private development, for example, in urban development areas or by the existing statutory water companies. We see no reason to depart from that basis of valuation in the particular cases of privatised utilities or the high-speed rail link. It remains a fair way of calculating the landowner's loss.
A number of noble Lords have argued that the present provisions are unfair because they have no regard to the fact that private sector companies normally have to buy land on the open market in circumstances where their interest in acquiring the land may have the effect of pushing its value upwards so that, in effect, they have to pay a price which reflects the value attributable to their development proposals. It has been argued that that amounts to a subsidy by the landowner to the acquiring body. But since the landowner is compensated for his loss—that is to say, the amount that he could have obtained for his land in the absence of the compulsory purchase—I do not accept that he is providing a subsidy in any real sense.
The compensation payable for compulsory purchase reflects the planning status of the land (including any planning permission for development of the type proposed by the acquiring authority), so that if the land had potential for development which could be undertaken without compulsory powers, that potential would be taken into account in the compensation payable. The procedure for obtaining a "certificate of appropriate alternative development" under Section 17 of the Land Compensation Act 1961 is designed to ensure that the potential of the land for development can be established for compensation purposes. Thus, the value which is not to be taken into account under the compensation code is that which is attributable only to the scheme for which the compulsory powers are being used. This is by definition a value which the landowner could not have realised. That is why we do not accept the proposition that the compensation code amounts to a hidden subsidy.
The view that I have expressed has been supported by the Royal Institution of Chartered Surveyors in its recent memorandum on compensation for compulsory acquisition of land in which it says:
"The Institution believes that where an authority can demonstrate the need to purchase land for public purposes and exercises compulsory purchase powers, the principle of equivalence remains fair as between the parties and the general public".
The RICS (and indeed some noble Lords this afternoon) go on to argue that over and above market value compensation the fact that the acquisition is

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compulsory should be recognised by the payment of an additional allowance. The RICS's memorandum proposes a sliding scale for this purpose. Although we do not necessarily agree with the sliding scale, this is an interesting proposal which we will study carefully. I hope that that will be of encouragement to noble Lords.
We already of course make one payment—the home loss payment—in recognition of the distress of being required to move home, and noble Lords may be aware that an order was made substantially increasing the level of this payment in January of this year. The order increased the payment from three to 10 times the rateable value of the claimant's home and increased the minimum payment from £150 to £1,200. The Department of the Environment's consultation paper on land compensation and compulsory purchase legislation which I have already mentioned make proposals for further improvements to the home loss payments scheme. The paper invites comments on whether further provision should be made for owner-occupiers.
It has been suggested that a reason for changing the basis of compensation payable by private companies when they use compulsory purchase powers is that the companies obtain their land for less than they would otherwise have to pay. It has even been said that the possibility of acquiring land cheaply through the compensation code is being used as a way of attracting investors in privatised undertakings. That is nonsense. Privatised utilities have powers to acquire land compulsorily only for the purposes of their statutory functions, and the need to use those powers will not arise often. The price that such utilities pay for new operational land is not going to make a significant difference to their overall financial position.
More fundamentally, the fact that compulsory powers are involved in a transaction means in many cases that there is no reliable way of determining the value of the land for the purpose for which it is being acquired by reference to any established market. The high speed rail link, for example, could not be contemplated without compulsory powers, if only because of the opportunities which landowners would otherwise have to charge ransom prices to an undertaker who does not have such powers. There is in fact no realistic market in land for high speed rail links. In these circumstances it is fair to require the developer to pay the price specified in the compensation code which, as I have already explained, is based on the actual loss to the landowner.
It has also been argued that while the compensation code is reasonable where compulsory acquisition is for the benefit of a public body since any gain in value as a result of the proposed development accrues to the public, it does not operate fairly where that gain accrues to the shareholders of a private sector company. I hope that I have said enough to show that so far as the landowner is concerned the code does operate fairly: the code ensures that the landowner does not suffer loss. As to the position of the company, I think it would only be in the most unusual circumstances
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that it would be placed at any advantage vis-à-vis its competitors, and thus in a position to benefit its shareholders.
My noble friend Lord Kinnoull asked about unfit houses. Provision to change the compensation for unfit houses from a site value to a market value basis is being introduced by way of amendment to the current Local Government and Housing Bill.
The noble Lord, Lord Cornwallis, asked whether the Land Compensation Act would be applied to the new rail link and the answer is yes. I think that that is a point which I have covered already.
Noble Lords also asked when we would introduce legislation as a result of this consultation paper. I can go no further than to say that it will be introduced at a suitable opportunity. It is normal for such legislation to apply to cases in which the valuation date falls after the legislation has come into effect.
Compulsory purchase should of course never be undertaken lightly. There must always be good reason before private property rights are interfered with. Powers of compulsory purchase are always specified in primary legislation and are always for a specific purpose. In the case of privatised utilities this purpose will be the discharge of their statutory functions; in other words, the purpose of a compulsory acquisition must be to do the job which Parliament has given to the privatised undertaking. In such cases the undertaking can make a compulsory purchase order which must, however, be confirmed by a Minister whose task is to satisfy himself that the acquisition is necessary for the discharge of the statutory function concerned. Where a landowner objects, a public inquiry must be held. In the case of a project which is approved by private Act (for example the high speed rail link) the compulsory acquisition is authorised by the Act itself; here the affected landowner has the right to petition and Parliament itself can ensure that only land needed for the project is acquired. The main point is that in all cases the scope for compulsory purchase is limited to specific purposes envisaged by statute. There is no question of some privately owned companies being able to acquire land more advantageously than others simply because they happen to have compulsory powers.
The noble Lord, Lord Cornwallis, asked what is commercial and what is not. Whether or not compulsory powers are available for a particular purpose can only be a matter of fact in each case. If the purpose of the acquisition is not one that is envisaged by the relevant statute, there is no power for the land to be compulsorily acquired. British Rail, for example, would not have powers compulsorily to acquire land adjacent to a railway for an office block. However, there may be occasions when the land is needed for a purpose which is envisaged by the statute but it is also possible to undertake other development on the land. An example would be an office block above a railway station. In those cases the justification for the compulsory acquisition lies in the functional legislation. The land is needed for the railway and that remains the justification for the compulsory purchase.

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The question has been raised of whether a car park next to a railway station is incidental development that would be justified. That would of course depend on the terms of the relevant statute. In all cases compensation will be assessed on the basis that the value of the land takes into account the value which the landowner could have obtained in the absence of the scheme. If that could have included value attributable to an office block or car park, that will be taken into account; and for a development essentially unconnected with the scheme, such as the office block in my example, it is likely that the planning assumptions set out in Section 15 of the Land Compensation Act 1961 will have the effect of ensuring that the development value is taken into account in compensation. But if the landowner could simply not have secured this additional value in the absence of the scheme, he cannot be said to have made a loss. So the existing compensation provision produces a fair result here also.
In his statement of 7th March my right honourable friend the Secretary of State for the Environment said that it is the Government's view that compulsory powers should not be available to acquire land for incidental commercial development. So far, I think it is right to say that this principle has been observed; it is of course for Parliament to ensure that it continues to apply in future legislation. So long as it does, the existing compensation code will continue to be a fair way of assessing the loss to be compensated when land is compulsorily purchased.
The Earl of Kinnoull: My Lords, I am grateful to all noble Lords who have spoken and given us the benefit of their experience and wisdom in making this short debate the more valuable. The noble Lord, Lord Tordoff, chided me gently for the apparently small numbers taking part. I must say to him that I much prefer quality to quantity and on this occasion we have achieved it.
The noble Lord, Lord McIntosh, stated earlier on that he was no expert on the subject. However, he spoke for 13 minutes both fluently and cogently and managed to get in the development land tax plug at the same time, although I am not sure that it has anything specifically to do with this subject.
It is a complex subject. My noble friend has given a comprehensive reply at some speed, some of which is encouraging and some disappointing. It is encouraging that the Government are prepared to study the proposal to be more generous on compensation above market value, as I understand it. However, my noble friend's reply on the element of commercial development is disappointing. As I understand it, the Government have gone no further.
I hope that the Government will go further. I hope that the noble Lord will examine closely all the matters that have been raised today, and outside the House, and will find time, as the noble Lord said, for a suitable opportunity to bring in an amendment to this law. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

The Polytechnics
4.31 p.m.
The Earl of Longford The Earl of Longford rose to call attention to the case for increased emphasis on the polytechnics; and to move for Papers.
The noble Earl said: My Lords, I am very grateful to all those expert people who have agreed to take part in this debate. I cannot mention them by name. However, I found a passage in Macaulay's account of the trial of Warren Hastings, which describes them well. He wrote:
"There were gathered together…grace and feminine loveliness, wit and learning, the representatives of every science and every art".
That I think is a reasonable account of those who are participating today—leaving aside myself of course! However, I am only sorry that the noble and learned Lord, Lord Hailsham—whose family is so honourably associated with the history of the polytechnics—is not able to participate. I have a letter from the noble Baroness, Lady McFarlane, who had hoped to be present; and who is a leading person in the polytechnic world. Although it is detailed, it indicates quite a strong sympathy with the point of view that I shall be expressing.
I was just saying how sorry we were that the noble and learned Lord, Lord Hailsham, was not able to participate. However, he is here, which is half the battle.
Everyone is restricted by time. I have a little more time in which to speak than others, but 15 minutes is not a very long period in which to introduce this disgracefully neglected subject—neglected for all the time that I have been in this House. In order to make sure that the gong does not sound before I make my main contentions clear, I have summarised in advance the three main points that I wish to make. First, the polytechnics are a vital though much under-estimated element in our education system. Secondly, they have been disgracefully starved hitherto of adequate resources. Thirdly, they will never get fair play or achieve parity of esteem until the distinction is eliminated between them and the existing universities. The so-called binary system may have seemed a good idea at the time—I have an idea that I helped to defend it myself about 24 years ago in this House—but by now it has served its purpose. The binary system has had it.
There are now 30 polytechnics in England and Wales. Together with other public sector funded colleges and institutions they now provide the majority of higher education in this country. In 1987 53 per cent. of first year students on full-time courses were in the polytechnics and colleges; 47 per cent. were in universities. The number of part-time students in polytechnics and colleges vastly exceeds the number in universities. The figure is 232,000 against 40,000 or so. We must recognise the tremendous importance of the polytechnics and feel a sense of shame, if we have been in public life for any length of time, that we have not played our part in bringing them before the public. They also educate a very large number of students on short courses. For example, the Polytechnic of Central London alone educates some 16,000 of such students each

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year. The polytechnics serve other purposes, especially through their contacts with the local communities. I do not have time to dwell on that now.
I make one point quite emphatically after my small amount of research. However, I am quite sure that it is a point that cannot be disputed. Polytechnics provide diploma and degree education and research of a standard entirely comparable with universities. When we talk of research it is the quality that is comparable. The quantity, for reasons that I shall touch on in a moment, is much less. So much for the scale of the service being rendered.
I now turn to the adverse discrimination. The funding per student in polytechnics has been reduced by 20 per cent. in real terms in the last 10 years. The same figures show that university funding per student has increased by 3 per cent. or more. At the present time polytechnics receive £3,325 per full-time student. Universities receive £5,276. Even the crudest mathematics show what an enormous advantage the universities at present receive per student. There is no doubt that the polytechnics experience adverse discrimination from parents, employers, funding agencies and overseas institutions compared with universities. It stems from a historic legacy that universities are better known and understood. To put it crudely, in many people's eyes, the polytechnics are second class institutions. Part of my purpose today is to try to nail that lie forever.
The polytechnics are rightly proud of their achievements. However, they insist—and I agree—that if they could incorporate the word "university" in their titles, they would receive a much fairer deal all round. That is one aspect of the discrimination.
I turn to another. From what I am about to say, I do not want anyone to suppose that I am suggesting that the polytechnics should gain at the expense of the universities. I am suggesting that the total received by our education system should be increased. The polytechnics seek to compete on equal terms with universities and to be accorded parity of esteem. That has strong financial implications. They are seriously disadvantaged by not being able to compete for the £700 million of money for research handed to the universities. I put the question to a Government which for all their faults and virtues stand, I believe, for the free market at all costs. Why do not the Government agree to permit a free market in the world of academic research and allow the polytechnics to compete on equal terms with the universities?
We have now to ask ourselves whether there is anything fundamental that can be done. Here I make a suggestion that is revolutionary although it is in a way common sense. I believe that anyone who looks into the matter will agree with it. The Education Reform Act has removed polytechnics from local authority control and passed them into the hands of the Polytechnics and Colleges Funding Council. Whatever the merits of the binary system before, those merits have now ceased to exist. There is no doubt whatever that the polytechnics would be far
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more likely to receive justice—indeed this would be their only chance to receive justice—if the so-called binary system, with universities on one side and polytechnics on the other, were abolished. At the time the binary system seemed a good idea; but it is now an outmoded concept which causes nothing but divisiveness and maintains the general idea of the polytechnics as second class institutions. The case for it has finally disappeared since the education Act which was mentioned previously. If we really believe that the polytechnics deserve parity of esteem with the universities, and are not substituting disingenuous words, we shall say goodbye to the binary system—and the sooner the better!
There are many other topics that I might raise, but with this long list of distinguished speakers to come I think that if possible I should keep well within my time. I shall leave for other speakers, the whole problem of how the Government's latest proposals, for example, will affect the part-time students, and the danger that their fees might be increased. I know that the polytechnics take this matter very seriously and anxiously.
I shall conclude as I began. The polytechnics are an invaluable part of our system. They have not received anything like justice up until now. I hope that this message will go out from this House and from the Government, that at last they are going to receive justice. I beg to move for Papers.
4.41 p.m.
Baroness Seear: My Lords, the Council for Industry and Higher Education, in its valuable report Towards a Partnership, said:
"Government, higher education and industry need to become partners in developing a different kind of higher education system to provide for larger numbers, recruit them for a much wider segment of the population, and offer them a diversity of learning methods and opportunities, often work-related, at different stages of their lives".
The Government should be grateful to their predecessors who, 25 years ago, had the foresight to launch the polytechnics on a very much enlarged scale. They had of course started years before that. The polytechnics in fact are meeting those requirements laid down by the Council for Industry and Higher Education in all particulars. I would remind your Lordships that that council includes such dangerous radical spendthrifts as Sir John Clarke, Sir Alex Jarratt and Sir Hector Laing.
The polytechnics have a remarkable record in providing this diversity—this new type of opportunity, as the noble Earl, Lord Longford, has said. I want to give just two examples of the way in which valuable initiatives, peculiarly appropriate initiatives, have been taken by polytechnics. I should like to quote first the case of the Middlesex Polytechnic. I must confess that at one time I was on a very small scale an external examiner for Middlesex, but I do not think that that constitutes an interest. It has shown that it has a higher percentage of first-class degrees than any other polytechnic.
However, what I want to draw particularly to your Lordships' attention is not only the quality of the work that Middlesex is doing but the extent to

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which it has developed collaborative teaching for its students in a number of countries, which can only be particularly valuable as 1992 approaches. It has liaison arrangements in France, Italy, Spain and Germany to mention only a few. Surely this is exactly what we need to be developing. Although something of the same kind has developed in the universities—I do not deny that—they are much less quick to develop schemes of this sort and indeed have not the facilities to do so on quite the same scale.
The second example to which I should like to draw your Lordships' attention is Hatfield Polytechnic, where again I have a small degree of involvement. The case that I would use to illustrate the valuable intitatives that can be taken is that of courses to bring back into employment professional women who have been out of employment for anything from a year to 12 years on short, eight-week—now, I am glad to say, to be extended to nine-week—courses.
When the course was first started 12 women were selected: an architect, two pharmacists, an accountant, two engineers, a marketing executive, a dietician, a publisher, a teacher, a Chinese linguist and a disabled graduate with a varied occupational background. At the end of that course all except two of those people were quickly absorbed into employment and were being paid in that employment at what was a very good going rate. I am glad to say that these courses are continuing and that an increasing number of them will be undertaken, and not only at Hatfield.
This is surely precisely the sort of thing that we need. It is precisely what the Council for Industry and Higher Education is calling for. I would ask the Government to look at the polytechnics not with the eyes of penny-pinching bookkeepers but with the eyes of economists who can see the value of good investments. Surely if you can have a group of women with this kind of qualification coming back to fill jobs for which it is extremely difficult to recruit the people needed, at least the Government will be getting a very good return on their money from the taxes that these women at this level will be paying. I use this as an example, but of course there are many other groups of whom it would be equally true.
By doing this they would be doing not only the women and the economy but also the Treasury a very good turn. Will the Government look at this on a longer term basis, for indeed it is not very long term. As the noble Earl, Lord Longford, has said, the polytechnics are skimped for money. I know that the noble Lord, Lord Henley, will deny this, but in comparison with the universities—and the universities in all conscience feel themselves deeply skimped for money, and indeed are—they need investment, and the students need encouragement and financial assistance at the stage at which they are taking up these courses.
The handicaps placed on part-time students are quite ridiculous having regard to what can be done in terms of employment with people on a part-time basis who go through courses of this kind. Although I have mentioned it once already in another context this afternoon, women of the kind who are going
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through this particular course need short-term help with child care. One woman had to spend £60 a week on child care while she was doing this course. There are a large number of people who could come into the labour market very valuably. Can the Government not find ways to see to it that every encouragement is given and all obstacles are removed?
I should like to say one other thing. I greatly agree with the noble Earl, Lord Longford, that the time has come to get rid of the ridiculous binary divide. It may have made sense—I think perhaps it did—25 years ago, but the polytechnics have now proved themselves, and as such they should be given the opportunity to rank and compete (since that is the word that always rings so well in the Government's ears) with the universities on, shall be say, a level playing ground.
Then of course there is the question of the name. Perhaps we on these Benches have special reason for appreciating that a rose by any other name does not in fact smell as sweet. Nobody can possibly pretend that their pulses beat faster when they hear the word "polytechnic". Surely it is time that they were called universities.
4.49 p.m.
The Earl of Limerick: My Lords, this debate on polytechnics is timely, and for that we are beholden to the noble Earl, Lord Longford. I must declare an interest as chairman of the board of governors of the City of London Polytechnic, one of the five inner London polytechnics formerly supported by the Inner London Education Authority. I have held the position for five years and thus have been closely involved in a rather protracted transitional phase during which we lost progressively the top-up and completive funding from the ILEA. Over a three-year period our funding was reduced by around 25 per cent. in real terms, with the concomitant necessity to reduce both teaching and non-teaching staff likewise by 25 per cent. Payroll accounted for almost 80 per cent. of our budget. Non-payroll expenditure was cut even more severely. One can only be ashamed of the current state of provision of books in the library.
This position has not been achieved without anguish and sacrifice. We have lost many excellent members of staff and have been obliged to cease offering courses of admittedly high quality in the natural sciences. But we have survived. The sense of dual mission is strong for the professional, commercial and financial community in the City of London and, in parallel, for the provision mainly of further education in the East London boroughs. We are building a new basis of support with the PCFC and the City Corporation as our lead borough. We are developing new and relevant programmes of vocational and re-training courses, alongside the conventional 18-plus education and use of the modular degree and diploma scheme of which we are leading exponents, in order to attract into tertiary education many who will greatly benefit but who would not commit themselves to a single academic course.

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The new freedom given on vesting day last month to many polytechnics and colleges hitherto under direct local authority control has been widely applauded. The imagination and energy of academics and governors alike has been unleashed and much benefit can be anticipated. But the reverse of the "freedom" coin bears the word "responsibility". There are formidable questions to be addressed and formidable problems to be overcome.
As our counterpart and principle source of funding we have the new Polytechnics and Colleges Funding Council represented in this debate by the right reverend Prelate the Bishop of London who is to speak next. After a certain period of pre-marital dalliance, we are still in the honeymoon stage. We have high hopes for the relationship, coupled with a certain anxiety about the ambivalence of a dialogue which encourages sturdy independence yet also controls the purse strings. As parents we clearly recognise that particular dilemma.
The polytechnics have advanced enormously since 1970. Many now offer courses of international reputation far removed from their original local confines. Thus it must be absolutely right that they are now funded on a national, not a local, basis. Increasingly, young people are responding by choosing the course best suited to their needs without attaching undue weight to the assumed superiority of a university education. I have examples of that within my own family.
There are those who urge, as we have heard argued this afternoon, that all such higher education institutions should be styled "universities". I am in no way ashamed of the style "polytechnic". I believe that now it has an honour and a dignity of its own. But I do not believe that that is the important question. Given the acknowledged record of the polytechnics in developing high quality, relevant courses, I am less concerned with the nomenclature than with removing continuing anomalies in comparative funding, not least over research programmes.
I have described the necessarily painful steps which the City Polytechnic has taken and which other institutions are even now addressing to balance their revenue budgets. Here I wish to enter two very strong caveats concerning continuing viability. The first concerns the basis of funding for students. Despite increasing, and increasingly effective, efforts to find sources of additional revenue, student fees will rightly remain the underpinning for revenue budgets. After all, teaching students is what we are mainly about. The recent consultative paper flags an increase from £600 to £1,600 per annum from 1990 in the fee for home, full-time students with graduated further increases for the most expensive subjects. They are major increases which must raise questions.
A much greater concern would arise if it were suggested that such increases be applied pro rata to part-time students. The polytechnics have a distinctive mission for teaching part-time and mature students. For example, the City Polytechnic has approximately 5,500 part-time students virtually all of whom are on business-related courses. And,
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contrary to some belief, a great number of those are not funded by the employers, at least on anything approaching a reimbursement basis. Many such students would be excluded by major increases, and those are the very skills which we need in increased quantity to prosper in Europe post 1992. There is some acknowledgement of that point in the consultative document but a singular vagueness as to how it could be met. I need hardly stress that it is very difficult to recruit on to courses unless one can be precise about the fees payable throughout their duration. That is especially so in seeking students from overseas whose increasing numbers—happily so, after the shock of the massive fee increase 10 years ago—are greatly to be welcomed both for their benefit and for ours.
My second caveat concerns the availability of capital. That worry is simply but dramaticaly illustrated. On 1st April assets handed over to PCFC institutions—broadly, buildings and land—were valued at around £4 billion. The PCFC's budget on the other hand for 1989–90 for new buildings is a mere £15 million: that is one-third of 1 per cent. of the capital value. In any other context it would be regarded as a sum totally derisory for comparison. It would be inadequate even if all the buildings were purpose built and in tip-top condition. Anyone familiar with polytechnic buildings will know how woefully far that is from the truth. My own polytechnic will happily speak for that PCFC total on its own without coming close to giving us security of tenure in buildings of an acceptable standard. Over all it has been suggested that bids for those capital funds might exceed the £15 million available in 1990 by a factor of perhaps 20.
To avoid a charge of special pleading I shall finally make a general point about polytechnics carrying inner city costs, especially in London. Teaching, like anything else in London, is relatively expensive. Not all such teaching need be carried out in city centres, but much of it must. City centres are also the centres of demand, especially for the part-time courses. In our case those 5,500 students attend our courses in the evenings. For example, we are the main source of teaching for the Institute of Bankers' exams. It is just not possible to conduct such courses other than within a few minutes' journey of places of work.
When resources are scarce, judgment must be exercised. To make my point I should like to contrast two cases. The first is of a polytechnic amply endowed with good freeholds. No rents or mortgage payments appear in the accounts. But in those accounts neither is there any recognition for the opportunity costs of occupying such a site. Sadly, the second case is our own. Only one building in which we teach was vested in us as a freehold representing approximately 15 per cent. of our need. Of the balance, 60 per cent. of our space is occupied on leases with five years or less to run. If renewable, those leases will command substantially increased rents.
That situation has not arisen by foolishness or negligence on our part. The provision of buildings was a matter for the local authority and we had no control. Indeed, in some cases we could not even discover the rents which were being paid for our

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occupancy. We are acting with some determination to improve the situation but it cannot be done overnight and certainly it cannot be done without substantial cost.
The issue which I strongly urge on the PCFC, and perhaps even more strongly on the DES and HMG which provide the PCFC with its means, is this. In macro-economic as well as in educational and social terms, it must be perverse to make black and white distinctions between what is and what is not affordable in the short term. The higher test is that of educational need for each particular class of education, not least part-time courses, vocational training, retraining and adult education. I hope that we shall hear some acknowledgement of those matters at the end of this debate.
5 p.m.
The Lord Bishop of London: My Lords, as did the noble Earl, Lord Limerick, I too have to declare an interest as a member of the Polytechnics and Colleges Funding Council. Of course I do not speak in any way in this House on its behalf although I assure him and your Lordships that what is said here will be carefully studied by the members of that council.
When I was made a member I was well acquainted with the voluntary colleges having been associated with them for over 30 years and I have some knowledge and association with two polytechnics in London. Apart from that, my knowledge of the polytechnics was somewhat limited Therefore, having become a member I thought it my duty to visit them. In the past two months I have visited three and I shall visit a fourth in June. I should like to say straightaway that I have been enormously impressed by the quality of what I have seen in almost every respect except perhaps in some cases the buildings, but that is not their fault, as has just been said by the noble Earl. They inherit buildings from the past, many of which were not designed for the purposes for which they are now being used.
Perhaps I may make one point in passing. What impressed me—and I met not only staff but also students—was that I was shown figures in more than one polytechnic which demonstrated that the number of students who are putting polytechnics as their first choice is increasing. I believe that that is a very important factor which we must remember.
Three points struck me during those visits. The first was the quite remarkable academic standards which are being achieved. Of course the high standards have been recognised, for example by the fact of the grant of self-validation by the CNAA to the polytechnics. I found the standards particularly high in the modular degree courses. I have heard it said that if you have much inter-disciplinary study and if you have modular courses, it is very difficult to keep up standards and that no one subject will be able to be pursued at the depth at which you can pursue it if you are reading one subject at university. From what I saw, that is simply not true. The standard on some of the modular degree courses was extremely high and I was able to see that for myself.
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I believe that the inter-disciplinary provisions available in the polytechnics are extremely important in these days when I believe that in any form of higher education the need to relate the disciplines is more important than at any other time.
The second point which struck me was the awareness which the polytechnics had of their own identity. Again that is surprising when you consider the size of some of them and the fact that their buildings are not ideally situated to create that sense of awareness. I also noted, for example, the length of time which the staff stay and yet do not become staid. I inquired why that was and they said that over the years they have so often faced changes. I believe that the polytechnics have developed a splendid way of adaptation to meet changing situations. As one lecturer said to me, "When I had been here a few years I did not get a chance to settle down because a new challenge came along to which I had to respond, and that has happened during my years here in the polytechnic". I believe that that is a point which is very much to be welcomed.
Thirdly, I was surprised and encouraged by the place given to research both in relation to industry and in relation to the needs of the third world. I was very impressed by certain projects of which I was given detailed accounts which related to intermediate technology being available. For example, in one case in Egypt it enabled villages there to be irrigated within the cost available. Those are the three main points which struck me and I shall return to them in a few moments.
On this question of the binary system, it seems to me that the polytechnics provide four main characteristics. The first is the modular degree course, which I believe is extremely important. Secondly, there is the vocational aspect of higher education. One has only to look at the figures. They show the higher employment rate for those leaving polytechnics compared with those leaving universities. The third point is the link with the community. I could develop that at some length. I have seen it in London and elsewhere in this country. While drawing students from far afield, nevertheless the polytechnics have developed a very healthy and creative relationship with the community in which they are set. That also applies to some of the colleges. Here in London we have an urban studies centre which enables students at our colleges to spend part of their training in an inner city situation. That not only helps them in their training but they also see what is involved if they come, for example, to teach in an inner city situation.
All that leads me to believe that the polytechnics need the same funding as the universities. I should just like to mention one point and it concerns the relationship between research and teaching. Until you have left university you do not begin to realise how much you owe to the fact that you were taught by people who were working at the frontiers of knowledge in whatever subject it was. I believe that that applies right through teaching. I do not believe that you can be a good teacher unless you are continually seeking to educate yourself in whatever way is appropriate. I believe that the polytechnics do an amazing amount of high quality research, and

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if they are to keep the standards as they are now, that research must be encouraged and funded. Looking at the terms of reference of the committee of inquiry set up by the PCFC of which the noble Baroness, Lady Warnock, is to be chairman, I believe that those terms give her an opportunity to say something about the relationship of research to standards of teaching, and I hope that that matter will be taken up.
Perhaps I may now turn to the question of the title. I know because people have told me that particularly in Europe the title "polytechnic" causes problems. However, we live in an age where one of the great heresies is that equality must mean identity. I believe that to be totally fallacious. What worries me is this. I want to see the polytechnics treated in precisely the same way as universities but I do not want them all to become the same. They are different and have their own particular qualities and characteristics. If in order to obtain parity of funding it is necessary for polytechnics to be called universities, I suppose that I would accept that. However, I should want it to be made quite certain that in the process the polytechnics do not lose their distinctive character and quality which I believe has very much to give not only to this country but also to the education of our people.
5.9 p.m.
Lord Kilmarnock: My Lords, I recently heard the Secretary of State for Education and Science express a very ambitious aim for numbers in higher education. He wanted to see student numbers double to 2 million over the next 25 years. On that occasion Mr. Baker applauded the polytechnics for their growth over the past decade. He used that as something of a stick with which to beat the universities over the head. In my view that is not a fair or fruitful line to pursue as the universities are changing and adapting too. Also it side-steps the main questions of how expansion is best achieved, what the barriers are and how they can be removed.
In meeting this national challenge the polys—if I may refer to them in that affectionate way—actually enjoy a certain advantage over the universities through their long experience of post-traditional courses and non-traditional forms of entry due to their historic roots and early mission, which dates from the early 1880s, to attract evening students who would not normally have access to higher education. This tradition is of great relevance today, with a sharply declining 18-to-25 age group and an increasing demand for mature post-experience students.
Whatever the demand for short or sandwich courses and mature entry, which the polytechnics meet so admirably and to which a number of speakers have already referred, it must not be forgotten that the main supply of students will come from the 18-to-25 age group. Their interest in higher education will depend crucially on the staying-on rate at 16 plus after the end of compulsory education. Though there has been some improvement, that rate is still lamentably low by international standards.
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That brings me to two barriers I wish to single out. The first is financial. A student attending a sixth-form college, for example, in central London who lives within three miles of the institution will not receive a travel grant so his fares, meals and materials can easily cost £30 a week. That is a severe disincentive to lower income families who will be much more likely to encourage a child to seek paid work. In the past my party has advocated an educational maintenance allowance at the single supplementary benefit or income support rate, less child benefit if that continues to be paid. That would at least involve families in no net loss. However, it has to be recognised that this is an expensive option because it entails a deadweight of payment to those who would have continued in any case.
At the same time, leakage of basically unskilled fifth formers into the labour market is a serious danger, especially if and as unemployment falls. Therefore, the prudent position I put to the Government is to urge the Secretary of State that he and his officials keep a close eye on the labour market in the 16 to 18 year-old range. If it appears that, for example, the Norwich Union or similar companies are poaching large numbers of 16 year-olds fresh from O-levels or GCSE, the appropriate measures should be taken to encourage students financially to stay and to aim at higher education, which is what they and the country need in the long run.
A means-tested educational maintenance allowance should probably be introduced at this point. Can we be assured that the Secretary of State will keep this possibility very much in mind, because one of his most vital roles is to see that higher education aspirants are neither put off nor tempted into blind alleys and dead ends?
Another barrier, in my view, is the over-rigid divide—enshrined, I am afraid to say, in the last education Act—between academic and vocational subjects at 16-plus. If it is widely believed that staying on is only for high flyers and sixth forms, and sixth-form colleges get a reputation simply as forcing grounds for academic talent, thousands of bright but non-academic children will be put off. It is therefore very important that a wide sixth-form subject mix is not only permitted but encouraged so that not only A-levels but also B-Tech and similar qualifications are on offer in the same school or sixth-form college, because that is what is attractive to young people. It is counter-productive to hive off vocational subjects exclusively into the world of FE. That of course is what the National Association of Teachers in Further Education would like, but the Secretary of State ought to be, and is, I am sure, strong enough to stand up to them. I hope that he will jolly well do so.
A further barrier is being busily erected by the Government's proposals for student finance. There is nothing wrong in principle in loans for maintenance, but the Government's present proposals will undoubtedly act as a deterrent to students from lower income homes. It is widely admitted that there should be some contribution to higher education costs, but it would be much less off-putting in the form of an income-related graduate

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tax, as in Australia. Nobody wants to handle the Government's scheme and I hope that the Government will therefore think again.
What can be welcomed is the decision to increase the fee proportion of the higher education establishments' income which in effect makes them more sensitive to demand. There are two assurances that I should like to have in that respect. The first is that the fee element will remain covered by government grant; and that is not the thin end of the wedge for means-tested fees. The second is that in the administration of the rest of the money the funding councils—I was glad to learn that the right reverend Prelate is a member of the funding council that deals with polytechnics—will not be over-prescriptive in their allocation for particular subjects.
Manpower planning is always behind the times. Students and their families are not stupid; they know the skills that they will need for own futures. If the two or three barriers I have mentioned are removed, or lowered at the very least, and the market is listened to, the polytechnics will flourish and the Secretary of State or his successors will have some hope of achieving his target. If not, that hope will fade.
I believe that I still have time to make one final point. I refer to the nomenclature of polytechnics and universities. In their otherwise excellent briefing note the polytechnic directors say that they want to drop the honourable and well understood description "polytechnic" and become universities in the so-called interests of marketing. That is what they say in their paper and this has also been referred to by other noble Lords. My feeling is that that would simply reinforce the existing tendency towards folie de grandeur in our higher education system. I hope the Government will resist that suggestion. In that respect I agree with the noble Earl, Lord Limerick, and the right reverend Prelate the Bishop of London.
I do not disagree with the pleas that have been made for parity of esteem, for parity of funding, for level playing fields or for any of those things but, as the right reverend Prelate said, polytechnics have special and valuable characteristics. Their virtues are particularly those that are required at this time. Therefore, on balance, although I agree with what has been said about parity of esteem and funding, I tend to consider that that would not be the right route to follow and that the Government should resist it. My guess is—although I may be corrected—that both Quintin Hogg and Anthony Crosland would have wanted to stick with the original name of their creation.
5.17 p.m.
Lord Glenamara: My Lords, I wish to make two points. The first concerns the independence of the polytechnics and colleges and the second is about their resources. First, however, I welcome the independence given to the colleges and polytechnics in the reform Act. They have outgrown the local authorities, but of course their anchorage in the local authority system was one of the main justifications
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for the binary system. Therefore, I hope that 1st April this year will be a major step towards ending the binary system. I agree with my noble friend Lord Longford and the noble Baroness, Lady Seear, that there is no justification whatever for forcing the polytechnics to continue with this albatross of the name "polytechnic" around their necks.
The question I want to ask is this: how independent are the polytechnics? There is a widespread view in the polytechnic and college world that they have exchanged a local, known, often generous but often petty system of control in the local authorities for an impersonal, distant system of control in the funding council; and I am glad that the right reverend Prelate the Bishop of London is here. The funding council is a new young organisation. First impressions, which is what I shall be talking about, might well prove to be not well-founded. Nevertheless, protocols and style of a new organisation at the outset may well determine future relationships for good or ill. It is therefore extremely important to get both right at the beginning.
The polytechnics had expected when the reform Bill was going through Parliament that their relationship to the new funding council would be similar to that of the universities to their funding council; that is a partnership, but so far it has not proved to be the case. The PCFC record so far has been distinctly uneven. It has taken some positive steps, especially in capital provision, but in other areas there are fears that it is being insensitive, regulatory and failing to honour the spirit of the partnership. Perhaps I may give one or two examples. First, the promotion of the polytechnic and colleges sector is not a matter for the funding council but for individual institutions. The funding council should not seek to be a vehicle for providing publicity material on the institutions. There are signs that it wishes to do so, but its first attempts so far do very little service to the polytechnics and the colleges.
Secondly, in the matter of research, at the moment the polytechnics and colleges cannot match the universities in either funding or output. But as the polytechnics and colleges move into the market-place, their achievements should be admired and praised and not belittled.
Thirdly, there is a failure to relate to the two national organisations which are comparable to the Committee of Vice-Chancellors and Principals; namely, the CDP (the Committee of Directors of Polytechnics) and the Standing Committee of Principals which could and should have a very important advisory role with respect to the funding council in such matters as the composition of committees. It is not being accorded that role at present.
Fourthly, there are fears that the methods chosen by the PCFC to measure quality will not have the confidence of the institutions themselves. I believe it essential that they should have that confidence. Any attempt that the PCFC may make to measure quality will be crude and insensitive. There is concern that it will accept advice from others—for example, the validating bodies and the

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inspectorate—whose assessment of quality of provision is not made for relating quality to resources but for other purposes. The Lindop Committee said:
"The best assessment of quality is the self-critical academic community".
I agree with that and add to it the critical judgment of the marketplace. Those are the two factors needed for assessing quality.
Fifthly, the funding council demanded strategic corporate plans. The way in which its demand was put was insensitive, rigid and over-demanding in the amount of detail required. I have spent many hours sitting round a table working out one corporate plan. It imposed an enormous amount of work.
Perhaps I may make it absolutely clear and have it put on record that the only powers that the funding council possesses are set out in Section 132 of the Education Reform Act. They are not in the White Paper of April 1987 and neither are they in the Secretary of State's letter of guidance to the chairman of the funding council. Those two documents cannot add to the powers of the funding council. Its duty is limited to the allocation of funds for purposes strictly connected therewith. It has no general powers of surveillance over the polytechnics and colleges and it is not an overlord. The polytechnics and colleges are now independent, freestanding corporations and they have to resist the pushing out of clearly defined statutory powers by the funding council. Their independence must be made a reality and it must be respected by the Government and the funding council. I have the utmost confidence in the chairman of the funding council, who is a very old friend of mine, but the majority of his council has no experience of higher education. There are difficulties ahead if the Government do not heed this warning.
Perhaps I may say something about resources. The disparity of funding between the two sides of the system is a sheer disgrace. It is not getting less, it is increasing. I have taken a close interest in the polytechnics. I was involved in their launching; I designated most of them myself and I have been intimately concerned in the running of one of the largest ones. Therefore I know the deprivation from which they have suffered in recent years. I wish to quote two indices; first, the staff-student ratio. In the polytechnics it has increased by 4·5 since 1979–80; in the universities it has increased by 1·4 in the same period. In the polytechnics it now stands at 12·9 and in the universities at 10·7. There is not much parity of treatment there. The staff-student ratio is the result of the disparity in funding.
On 10th February a Minister in the other place gave some figures as regards institutional expenditure on full-time equivalent students in real terms at 1986 prices for the polytechnics and the universities. I believe that my noble friend Lord Longford quoted the figure for the polytechnics. It is £3,325, which is a decrease of 20 per cent. between 1979 and 1986. The figure for the universities is £5,276, which is an increase of 3 per cent. It is a decrease of 20 per cent. in the case of the polytechnics (to bring them down to £3,300) and an increase of 3 per cent. for the universities—I am not
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criticising that because they need more—which takes them up to £5,276.
I know the two arguments that some university courses such as medicine are very expensive, but some polytechnic courses are also very expensive where sophisticated equipment has to be used and kept up to date. I know the argument about research which is funded differently in the universities. Research in the polytechnics is now a major element of their work and failure to recognise this is another injustice. I believe, as the right reverend Prelate the Bishop of London said, that research, which is related to the quality of teaching, should have parity of funding in the universities and the polytechnics.
Finally, the polytechnics are one of the two outstanding successes in the story of education in the last two decades. The other is the Open University. They were both started in the government of my noble friend Lord Wilson of Rievaulx during the 1960s. In the polytechnics the standards are extremely high and at least as high as in comparable departments in universities. But the nation is getting this excellence at bargain prices. The polytechnics are paying the price in early retirements, posts not being filled, buildings not being maintained and equipment not being replaced. That is a deprivation that cannot and should not be allowed to continue.
The Lord Bishop of London: My Lords, before the noble Lord sits down perhaps I may ask him whether he is aware that at the last meeting of the Polytechnics and Colleges Funding Council it made clear that it was not its role to approve strategic plans; that was a matter for the governing body, and this fact was made public after that meeting.
Lord Glenamara: My Lords, I am very relieved to hear that, but throughout the country many of us have spent very many hundreds of man-hours drawing up the strategic plan.
5.28 p.m.
Lord Trafford: My Lords, in congratulating the noble Earl on raising this important question, I must apologise to the House for having missed the early part of this debate because of an unavoidable time factor. I agree very much with the noble Lord's last words in his tribute to the success of the polytechnics. I believe he put it very well indeed and I entirely agree with him on those points. I am referring of course to his final words before the intervention. They were absolutely correct.
We are conducting this debate at a time when I believe nearly everyone will agree that throughout the whole field of higher education there is not only a great need but a great acceptance of the necessity for expansion. I was glad that the Secretary of State for Education expressed this view in his Lancaster speech. At the present time polytechnics are responsible for slightly more than half of those in higher education. As has been pointed out, in recent years the expansion has been even faster. They have a critically important role to play.

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Perhaps I may in the broadest terms define their mission. It is to teach at a high level with a vocational bias. I fail to recall who originally devised the phrase "vocational education". It is not for the polytechnics to discuss 14th century court poetry at Avignon Palace. That is a role that can best come under the description of Sir Edward Boyle when he spoke of the necessity for what he called "disinterested education".
For that, as I am sure the House will agree, there must always be a place and a role. However, I do not believe that it is truly the role of the polytechnics. That is why I am not so concerned about titles. The polytechnics have done a first-class, splendid and necessary job and therefore whether one calls them polytechnics or universities does not matter very much. One could call them technical universities or many other things; but whatever name one gives them they should not lose sight of their essential mission, which is the type of education that I have described.
A century ago this country in large part sold the pass on education. It accepted a view of what would be called higher education, which in those days would be a 19th century Oxbridge tradition, and it rejected what was happening elsewhere on the Continent with the development of technical education in schools, and so on. Even in the Education Act 1902 the concept of any form of vocational or technical education was torpedoed by the then Permanent Secretary at the department. This unfortunately continued for many years. I pay tribute to Anthony Crosland, the noble Lord, Lord Glenamara, and others, who introduced and nurtured the polytechnics and brought them towards their present role. This was one of the most important corrective actions in the whole field of education. I agree with the noble Lord—it is not often that I can agree so readily with noble Lords opposite—that the polytechnics have been one of the successes in education.
This country has suffered as a result of this lack and as a result of the attitude in some areas of higher education that learning is something not to be sullied by trade. That is wrong. We have suffered from this for 20 years and more. The correction of it has rested to a certain extent with the polytechnics and to a certain extent with developments across higher education which I hope will continue to take place. It does not seem to me that titles are as important as mission; that names are as important as function. I do not see the need for categories of institutions. I do not like it. Many departments in polytechnics are just as good as those in universities; indeed better. One student, needing a certain qualification or looking to a certain future, will require a certain form of education, while another student will look elsewhere. That is what really matters; not the name of the place at which they attend.
I take issue with one point that was made about judgment by the academic of the academic and also by the market. We do not have in this country a true market in this field. Even in those areas where it is being expanded, with the suggestion of increasing
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tuition fees and so on, this is Monopoly money. The only market, where markets are defined, is where one uses something oneself, not somebody else's Monopoly money.
I cannot see why we need to make these categories. Colleges of higher education and of further education that were left out of the Bill last year are still in many ways under the control of the local authorities. They do a good job. We have a number of different institutions and levels of institution and types of education. At the end of the day what matters is that each of these provides a form of education that is not necessarily useful to society or the country as a whole (which incidentally is difficult to define) but meets the needs of the student in the role that he sees for himself in society. There are models of relationships. In California there is the Cal-Tech and the community colleges. Why are we not looking at that idea a little more closely? Why are we not seeing whether or not we can get away from this idea of divisions and divides?
I should like to see a larger choice of more autonomous, freestanding institutions offering a wide range of educational opportunities, tailored not just to some supposed national, economic, social or vocational role but also to the great variety of student requirements; and in the midst of this what we now call the polytechnics, adhering I hope to their special role and their special ethos, playing as important a part in the future as they have in the past.
5.35 p.m.
Lord Addington: My Lords, polytechnics are undoubtedly a vital part of our higher education system. However, they suffer from one fairly unique problem. They lack status in the current system. Why do they lack status? I gave this considerable thought and came to the conclusion that possibly people think that their degrees and diplomas are not of quite such a high standard as those of universities. I then turned to the handbook of the Council of National Academic Awards and found in section A(1)(i) this statement:
"The degrees, diplomas, certificates and other academic awards and distinctions granted and conferred under the council's charter are consistent in standard and are comparable with the standards of awards granted and conferred throughout higher education in the United Kingdom, including the universities".
It would appear that degrees and diplomas awarded by higher education establishments and polytechnics are as valid as those awarded by any other institutions in the higher education system. It would seem therefore, if I may make a slight aside from the main thrust of my speech, that the Government would only be playing fair if they were to let the lecturers and teachers involved in polytechnics know as soon as possible the terms of their new contracts.
I shall now try to make a stab in an area in which I have a unique advantage. I refer to my knowledge of students going into polytechnics and entering higher education as a whole. I stated on 12th April in the debate on higher education that I was probably the Member of the House who had most recently been an undergraduate. I do not think that that position has changed in the past month or so. When I was considering going into higher education I can

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remember being given piles of forms to fill in. The first forms I was given were the university application forms. It seemed that these were the places to go to. If I may refer back to that speech, I think I said that if one achieved x grades one went to university, if one achieved grades slightly lower than x one was expected to go to a polytechnic, and if one achieved still slightly lower grades one was expected to go to college. At the time it seemed to be the accepted wisdom and most followed this pattern, although some—possibly because they were better informed than others—took longer to look over the courses. In certain specific areas I am glad to say that people are looking at the courses offered and not the places they derive from.
This attitude that one should go to the institution with the highest status seemed to be prevalent. Indeed my younger brother and sister also seem to be following this course, as do their friends. Matters do not seem to have changed very much in the past few years. Why is there this lack of knowledge and why does this notion of status stick with us and result in so much channelling? I suggest that it is because we are in a tradition of universities being the best form of education regardless. We are not looking closely enough at their courses, at the way they are organised and at the individual who has to go into those courses. It is considered that one will take a degree if one has the academic qualifications to enter a degree course. Many people might benefit considerably more from an HND course. Some people might benefit from a full-time course while for others a sandwich course might be more beneficial. One finds out that certain courses fit certain types of person.
Polytechnics offer a very wide range of courses, which include some of the pure academic disciplines. I do not mean to say that they are better than those, for instance, in history, English or, to an extent, the sciences. However, such courses are at their greatest strength when they feature subjects which have a more practical air about them; that is, an air of being more "hands on". I find myself, somewhat surprisingly and pleasantly, in agreement here with the noble Lord, Lord Trafford. Such courses are certainly most beneficial and are certainly particularly beneficial to the workplace. Moreover, if it is the aim of higher education to provide people not only with better job opportunities but also with a training which is beneficial to the economy, I suggest that people should be encouraged to look closely at these courses. They should also be encouraged to look closer at the places offered to them in the light of the courses available and not merely be guided by status.
I could continue at some length on this subject but, as so much has already been covered, I should like to conclude by saying that the way to circumvent the problem would almost certainly be to ensure that there are more careers officers available. There should also be more teachers who have specific training in what certain institutes can offer by way of their courses at HND or degree level—or indeed, at any other course level. In that way we shall ensure that the appropriate people undertake such courses and thus avoid having to pay the price for people
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dropping out, or under-achieving, once they have achieved a place in higher education.
5.41 p.m.
Baroness Warnock: My Lords, I too am grateful to the noble Earl, Lord Longford, for initiating this debate which is extremely timely. I say that because hardly had the two new funding councils taken up their tasks than the funds which they have to distribute were radically diminished. That has made a difference to their status. Much of the money which the Government forward to the polytechnics, colleges and universities will now come indirectly through student fees. Whether that is a good change is not, I think, the point at issue today. However, it means that what the two funding councils have to do is to distribute the remainder of the funds to institutions according to two criteria: one is cost-effectiveness and the other is quality.
The record of the polytechnics on cost-effectiveness is extremely good. Indeed, it has had to be. They have learned the hard way, from their days under the local authorities, that they must be able to demonstrate value for money. However, those days are over: the particular financial local connection has gone, but they will doubtless carry on their tradition of financial prudence and caution and may even have lessons to teach some of the universities.
The point I wish to make is this. There is now no difference between the relation of the polytechnics to their locality and that of the universities. Both the polytechnics and the universities will need to explore and to enjoy—as they are exploring and enjoying—connections with their local industries, their local hospitals, and their local music and art centres. I think it is quite wrong to imagine that the universities are completely detached from their locality. Indeed, there are many examples which prove the contrary, including the University of Warwick which has been especially strong in developing local connections, particularly local connections with industry. Moreover, that is also true as regards the University of Cambridge.
In truth there no longer is a serious difference between the relation of universities to their locality and that of the polytechnics, now that the financial dependence on local authorities has gone from the polytechnics. Therefore, so far as concerns cost-effectiveness and using the locality, it seems to me that universities and polytechnics are, and ought to be, in the same boat.
I turn now to the second criteria; namely, quality. I hope that the noble Lord, Lord Glenamara, will give up some of his extreme suspicion—if I may put it that way—of the committee which has recently been set up by the Polytechnics and Colleges Funding Council, of which I have the honour to be chairman. There is no doubt whatever that that committee is not seeking in any way to oversee, or exercise power or control over, the quality of teaching in polytechnics—far from it. However, it is the case that quality of teaching has been laid down as one of the criteria according to which funds should be distributed. Therefore it is necessarily the task of the

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funding council to try to explore the concept of quality of teaching and to try to establish ways in which good practice may be identified to be used as a pointer in the distribution of funds.
I also had the honour of serving on the Lindop Committee. It was quite obvious from that experience that there were ways within the polytechnics in which one could identify good quality of teaching. Indeed, the committee recommended that those polytechnics which were extremely strong, and often stronger than their local university, should be released from the necessity of having to have their work validated. It seems to me that the committee is bound to determine once more where quality of teaching lies. I feel perfectly certain that the connection between quality of teaching and quality of learning will turn out to be very strongly connected with quality of research. That is something about which nearly everyone in universities, and in the polytechnics, feels strongly. However, it remains for someone to try to put that argument in a persuasive enough way. In my view, that is a point of enormous importance.
Because quality of teaching cannot be quantified—and it would obviously be contradictory to suppose that it could—the Universities Funding Council is not setting up a committee parallel with that set up by the Polytechnics and Colleges Funding Council. However, I believe that whatever value is discovered by the committee, if any, will also apply equally and exactly to universities. Indeed, there are already arrangements by which the two funding councils will share whatever knowledge they acquire in this field.
I do not believe that there is a special concept called quality of teaching or quality of learning in the polytechnics; it is quality within higher education. That also leads to the point that there is virtually no difference between what would count as good practice in the polytechnics and what would count as good practice in the universities. This is yet another reason for hoping that the binary division will—as I believe it will—wither away; it has lost any point which it had.
There is one final point which I should like to make. It is also a good reason for hoping that the binary line may be discontinued and that it may just die. The present discussion on higher education in general tends to be extremely confusing to the general public. I do not think that the general public is frightfully good at drawing distinctions between colleges of higher education, polytechnics, universities and any other kind of institution of post-school education. People tend to talk—and the press encourage them to do so—about colleges as a way of referring to all those different institutions.
There is a real danger in such a degree of confusion. I believe that it is of the utmost importance in higher education that we should distinguish between degress which though they may be partially vocational must, nevertheless, have a theoretical component and, on the other side, different qualifications which may be diplomas or certificates that need have no theoretical content
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whatever but which may be in such valuable skills as butchery, hairdressing or carpentry.
In my view the distinction between degrees and other qualifications must not be allowed to be overlooked. We must not talk about going out into the market, or talk in a rather loose, misleading way about how one can choose to read a degree in any subject one likes in America. Such talk confuses the public a great deal. I think that that is the final reason which I would put forward for taking away the cumbersome and, by now, outdated binary distinction and insisting instead on a distinction between degree-giving institutions, or degrees themselves, and other purely technical qualifications.
Technology is an expression which is totally ambiguous as between theory and practice. The Government have been guilty of encouraging that kind of confusion by talking about the desirability of having technology and science in degree courses. Engineering students in Cambridge, for example, who are some of the most highly qualified in the country, are not to be thought of as technicians. That is not a matter of snobbishness; it is a matter of what they are capable of doing. They are often not capable of doing simple technological tasks, as I know to my cost. That is my final reason for wanting to see the end of the binary distinction.
5.50 p.m.
Baroness Lockwood: My Lords, as we have already heard this afternoon, there is a different pattern in the polytechnics from that in the universities. That is especially so in relation to the numbers of part-time students, the numbers on sandwich, short and modular courses, and the types of entry qualifications into higher education. Nevertheless, it is remarkable that we hear, and underline the fact, that standards are comparable. That that is so is a strength of our higher education system and something that should be preserved, so long as the polytechnics are not regarded as a cheap and inferior alternative to universities—a sentiment which I fear still pervades many quarters.
I should like to say a word about the binary line, not on the principle of whether it should continue, but upon the fact that, in my view at any rate, it is on its way out. It is a strange irony that when the polytechnics were set up many people criticised their approach and said that they were aping universities. Now it might be said that the universities are aping polytechnics with their growing interest in part-time and non-traditional students. Demographic factors and pressure for a more highly qualified workforce are merging their approaches.
Other factors are also intervening, some of whose effects upon the polytechnics and upon the Government's declared intention to widen access to higher education are ambivalent. Arising from the Croham Report, the Government declined to take up the idea of an over-arching body for the universities and the polytechnics, but they set up the two separate funding councils. Those two bodies are now to be relocated in the same premises in Bristol. Common sense dictates that there must be more

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co-operation between them in that setting. Further, methods of funding are to be changed. In what way is not yet finally determined, but the change must have an effect upon the relative position of the two sets of institutions.
I refer to two consultative documents which have already been mentioned by other noble Lords. The first relates to student loans. As we have said before in the House, student loans could be a disincentive to the lower socio-economic groups, to ethnic minorities, to women and to mature students, and of course in that respect part-time students are not included. That would be a minus for the polytechnics because they have made greater inroads into those groups than have the universities. On the other hand, it could also deprive the universities of the variety of richness which expansion into those groups brings. That for them would be a loss.
Secondly, on the change in tuition fees, as the noble Earl, Lord Limerick, has said, the proposal is to increase the current undergraduate tuition fee of £607 to £1,600 per annum in 1990. Unless student loans take priority in policy making over that proposal, it would still mean that the students' tuition fee would be paid through the same mechanism—that is, through local government and the mandatory award system. That could mean a shift in polytechnic funding in their favour vis-à-vis universities. Their unit of resource, as has already been indicated, is much lower than that of universities and has been eroded to a much greater extent in the past decade. That type of funding would put them on a par with the universities in competition for full-time students. It would not however strengthen the incentive to increase the number of part-time students, because even on degree courses they would be excluded from the change in the system. So too would other students, both part and full-time, who were not receiving mandatory grants.
Paragraph 14 of the consultative document states that the Government will not reduce the funding available to the funding councils to support part-time places. That seems to be an ambiguous way of expressing the situation, and perhaps the Minister could explain it further. The amount paid to institutions will have to be increased or there will be no incentive to increase the number of part-time students in line with government thinking. Institutions like the polytechnics, 25 per cent. of whose undergraduate and HND students are part-time, and Birkbeck College, 100 per cent. of whose undergraduates are part-time, will suffer comparatively. I hope that the Government will look carefully at that point.
There is then the question of research funding. It has already been decided that funding for student fees and for research in universities will be separated. If the proposals for more or all research to be funded through the research councils, or through the suggested new research council, are accepted polytechnics would again be in a better position to compete for research grants. Here I would enter another caveat. Polytechnics have not only been less well resourced than universities for research purposes, they have been less well represented on
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the research councils. In any new structuring of research funding the polytechnics will need to be better represented if they are to retain a fairer share of resources.
6.58 p.m.
Baroness Cox: My Lords, I also congratulate the noble Earl, Lord Longford, on choosing this topic which is of such great importance for the future of higher education in this country. I suspect that I am one of only very few—perhaps the only one—from these Benches to have benefited from studying at a polytechnic and to have benefited from the greater flexibility of access to higher education to which polytechnics are committed, with their traditional emphasis on part-time, evening and sandwich courses, and to courses with a more vocational orientation.
Present government policy emphasises accountability for public money; competition to promote efficiency and cost effectiveness; and the development of wealth in an enterprise culture. On all those counts, I believe that polytechnics had a great contribution to make. I wish to address three topics. First, funding arrangements, especially for part-time and evening students and for research; secondly, nomenclature; and, thirdly, quality control.
First, funding: I ask my noble friend the Minister to consider certain anomalies in the methods of funding part-time students, especially those on evening courses. CNAA-validated evening degree and postgraduate courses have been declining—by 13 per cent. between 1985–86 and 1986–87 and that decline continues. That is serious because these courses are particularlybeneficialfor small businesses (who cannot afford day-release for their staff) and for women with family commitments.
However, funding formulae discriminate against evening only courses, with only 0·2 per cent. of the resources which are provided for a full-time student, although anyone who has run evening courses knows that the teaching and administration of these involve proportionately more than that. I ask my noble friend whether the Government will undertake an examination of the weighting of all part-time courses for 1989–90 as action is urgently needed if provision is not to decline further.
Secondly, I come to funding for research. As other noble Lords have said, I too should like to see polytechnics given the opportunity to compete on equal terms with universities. Research councils always carefully scrutinise applications before allocating funds. They require progress reports to ensure accountability to them and, through them, to the Secretary of State. Thus there is a systematic accountability for the £575 million allocated to research councils during 1987–88. In the same year £712 million was allocated to the University Funding Council (then the University Grants Committee) for research. The polytechnics receive no such comparable funding.
An alternative means of funding research in our academies, which would be more equitable and consistent with the Government's commitment to

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fair competition and accountability, would be for a greater portion of money for research to be allocated to research councils which could then disburse it, according to appropriate criteria, to universities, to polytechnics or to other relevant institutions. I sincerely hope that the Government will respond sympathetically to requests from polytechnics to incorporate the word "university" into their names, if they so wish, until or unless that binary divide dissolves. This does not mean that there is nothing in the name "polytechnic" of which to be proud. Indeed I believe that there is much of which to be proud. But many polytechnic directors have argued very strongly that unless they are allowed to use the word, "university", they are being compelled to compete on unequal terms to the detriment of their own well-being and that of their students.
For example there is evidence that many potential students, especially school leavers, are put off by the fact that polytechnics do not carry the title "university". There is also evidence that many employers prefer graduates with university degrees. As the CNAA strives so hard to ensure comparability of standards with universities, it is surely unfair that students who graduate with degrees obtained at polytechnics should be penalised in the marketplace for jobs.
There is also evidence that polytechnics suffer from discrimination in funding from external sources for developments such as science parks or the endowment of chairs. Finally, on this theme the title "polytechnic" causes confusion abroad. It has been suggested that the work of the British Council would be made easier if the term "university" could be used by polytechnics in their titles.
Of course that does not mean that every polytechnic is directly comparable to every university, but neither are universities directly comparable with one another. What such a change would allow would be the opportunity for polytechnics to be considered without the disadvantage of prejudice based solely on "what's in the name".
Similarly I hope that PCFC will give sympathetic consideration to requests for changes in name by other institutions of higher education which have developed their work to a level comparable with that offered by polytechnics. I must declare an interest here as a governor of Dorset Institute. I am deeply impressed by the calibre of staff and students there and by their high quality of academic work, which compares very favourably with polytechnics. I hope therefore that this college and others of comparable calibre can be designated polytechnics, should they so wish. It would only seem to be a matter of natural justice. I have one other point on natural justice. While there is effective and valuable representation of universities in your Lordships' House, there is not a single polytechnic director. I hope that that anomaly may be corrected in the near future.
Finally, I come to quality assurance. I must declare another interest here as chairman of the health studies committee for the Council for National Academic Awards. I should like briefly to pay tribute
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to the CNAA for the work it is doing and has done to ensure high standards in the non-university sector. Having taken part in CNAA-validation exercises, I must say how impressed I am with the care and attention to detail given by everyone involved. I believe that it might be no bad thing if all courses in higher education were to have the benefit of such rigorous self-examination and external endorsement. But there is strong pressure for some polytechnics in some quarters now to become entirely independent of CNAA. It can be pointed out that my own arguments in favour of polytechnics being allowed to use the word "university" should entail this. However I believe that there is greater benefit to be gained from retaining the CNAA connection, so that academic standards are not only maintained but are seen to be maintained.
Much of the old CNAA bureaucracy has disappeared. CNAA is now strongly encouraging innovation and flexibility. The chief executive, Dr. Malcolm Frazer, uses the term, "flexibility with quality". I believe he is achieving this. My appreciation of the contribution of the CNAA brings me back to where I began, for many of its achievements are closely interwoven with those of the polytechnics themselves.
The polytechnics have made a great contribution to the life of this country. They have a distinguished tradition of offering education opportunities to many who would not otherwise have had them; and they have achieved academic recognition, sometimes against the odds in terms of resources and prejudices. Now it is time, as the the noble Earl, Lord Longford, proposes, to give greater emphasis to them, to enable them to realise their full potential and to make an even greater contribution to the nation.
6.7 p.m.
Lord Kirkwood: My Lords, the polytechnics have a special role in higher education as community institutions. They can respond quickly to local needs with a variety of packages in addition to providing conventional degree courses. Historically polytechnics have been more flexible than universities as regards entrance qualifications. They have, for example, pioneered introductory courses for mature students and others requiring additional education before pursuing more advanced studies. This flexibility has been enhanced by the credit accumulation scheme which takes account of experience in industry. They also have a tradition of part-time and block release courses which again are a response to local needs.
All polytechnics are going down the road of modular courses with mutual recognition of modules spreading across a variety of institutions so that students may take credits at different polytechnics and at different times or stages in their careers, all finally contributing to a diploma or degree. Such collaborative ventures have begun to embrace some universities and these must be encouraged. While universities are essentially national and international institutions, polytechnics are and should continue to be strongly community centred.

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The emphasis within polytechnics is towards vocational and professional courses—as has been mentioned several times—business studies, accountancy, law, languages, architecture, computing, applied sciences, engineering, and so on. A good proportion of these courses, it should be said, are at post-graduate level. This emphasis on applied disciplines should be reinforced, but not at the expense of the educational content or intellectual rigour that should underpin all vocational and professional courses. There is a danger that polytechnics are becoming so market oriented that the goal of educational excellence is being sacrificed to short-term market expediency.
The Government have recently proposed to shift funding in both the polytechnics and the universities towards fees and away from block grants awarded through the new funding councils. As penalties for over-recruitment will be abolished, universities, particularly those in greatest financial need, will be encouraged to widen entry standards and poach in the traditional market of the polytechnics to boost their income. I think this could be disastrous for the polytechnics, and the Government should be encouraged to think through the consequences of such a free-for-all policy.
With the demise of the NAB, the polytechnics have lost an earmarked source of research funding. There is a tendency to regard them as essentially teaching institutions. However, as has been said, they have an important role to play in terms of applied research as they have close links with local industry, commerce and health authorities. Research itself feeds back into teaching. I must say that I sympathise with the sentiments of the right reverend Prelate the Bishop of London in this respect. There is nothing worse for students than lecturers who have no direct contact with their subject, either by scholarship, research or practice, and who cannot consequently communicate the excitement of their subject.
The polytechnics have always been more cost effective than the universities, mainly because research has been discouraged. The staff-student ratios should be improved and unit costs allowed to rise more in line with the universities in order to allow staff to engage in research for which, of course, there must be accountability.
Finally, I come to the matter of the name "polytechnic". This matter has been mentioned many times before. We all know how much trouble, time and expense companies devote to choosing a name to market a new product effectively. That is undeniably important. Much as I dislike the idea of renaming the package without altering the contents, I cannot help but sympathise with the frustration and annoyance of those in polytechnics who are trying to attract good staff and students when the nature and standards of these degree-giving bodies are misunderstood by the general public, who tend to confuse them with the old technical colleges. I, like the noble Baroness, Lady Cox, have been involved in discussions with the British Council. That body regards the name "polytechnic" as a positive hindrance in the recruitment of overseas students. It certainly lowers the prestige of polytechnics in the
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eyes of foreign officials who are making judgments as regards placing their students.
It has been represented to me by colleagues in polytechnics that they should be called "polytechnic universities" or "technical universities". I must admit to having doubts over this, although I do not think I have anything better to offer. However, there is a real and proper distinction of roles between polytechnics and universities. I fear that renaming of the kind I have mentioned would only lead to confusion. The attitude in this country is a product of particularly English snobbery. The institutes of technology in the United States and the Écoles polytechniques in France clearly do not suffer from this. However, we cannot deny that that exists here, and rightly polytechnics demand parity of esteem. Some consideration must be given to the matter of a name.
6.14 p.m.
Lord Annan: My Lords, hearing the noble Earl move this Motion this evening took my mind back to 1967 when, so it is said, Mr. George Brown asked the Secretary of State in Cabinet whether, if he had to make cuts, he would choose to cut the universities or to postpone raising the school leaving age from 15 to 16. Mr. Gordon Walker replied that if he had to choose, he would have to postpone raising the school leaving age. Mr. George Brown said, "May God forgive you". I daresay the noble Earl thought God would never forgive him if he took the same line as Mr. Gordon Walker, and, being a devout man, he resigned from the Government. I have always honoured him for doing so because the curse of this country has been our concentration on academic fliers and the century-long neglect in educating the people who will form the workforce of tomorrow.
But at this point I am afraid I part company from the noble Earl. When Tony Crosland set up the polytechnics, he did so because, I am glad to say, he was an egalitarian and he wanted disadvantaged boys and girls to have the chance of receiving higher education. But he made the mistake, in my view, of wanting institutions, as well as people, to be equal. So he made the polytechnics offer a three year bachelor degree which was to be the equal of the university degree and all were to be funded for research as well as teaching.
Higher education institutions should not pretend to be equal and all do the same thing. The country cannot afford that. I beg the Government to differentiate between institutions. Do not let us fall a victim to inverted snobbery. Everyone in America knows that Chicago and Berkeley are different institutions from Indiana, and that Indiana is a different institution from community colleges. If any noble Lord thinks that Cambridge, Massachusetts is funded in the same way and is on a par with Oxford, Mississippi, let him stand up in his shame. We are not as fortunate as America. In America all boys and girls go to, what everyone calls, college. I wish to heaven the same thing applied here.
However, I detect a change in the funding of higher education institutions. There is talk today of the funding councils dividing their grant between

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teaching and research. This would give us the opportunity to fund institutions on differing principles. There are some institutions, perhaps no more than 10, which should be regarded as major research establishments in all subjects and funded accordingly from the block grant. However, the vast majority of institutions, universities and polytechnics alike, should obtain funds from the research councils for specific departments of excellence. Some departments in the polytechnics would surely qualify for such support.
Here I do not see a difference between the funding of a polytechnic and a university. It may well be that a polytechnic would obtain more funds than a specific university. Even so, the main research support for polytechnics should surely come from industry—from the customer who requires and commissions the research. That was how the Land Grant Colleges in America began. They were set up to help the farmers in their communities. Then, as industry and business grew in those communities, they helped businessmen and industrialists.
The polytechnics should be the major re-trainers of the industrial workforce as well as the teachers of 18 year-olds. I hope that the Minister can this evening reassure us on two scores about the polytechnics. If under the new system of funding higher education, universities can bid for as many students as they like, is the Minister sanguine that the flow of science and technological students into the polytechnics will hold up? After all, we know of the shortage of science teachers in the schools. We also know that we shall never get enough students to study both technology and foreign languages unless the Higginson recommendations are accepted and A-levels are replaced by a baccalaureate. Will the Minister tell us, or ask his right honourable friend the Secretary of State, what safeguards exist as regards intake to the polytechnics under this new scheme of bidding for as many students as institutions wish? Or is everything to be left to the market?
My second question to the Minister is this: can he tell us whether all humanities courses in the polytechnics are now vocational?
I have absolutely no objection to philosophers and teachers of English having posts in polytechnics provided that the philosophers do not teach Wittgenstein or Marx. They should teach what Susan Stebbing used to call the difference between straight and crooked thinking. English teachers should not teach English literature but how to write clear and concise English free of jargon.
Indeed, one could combine philosophy and English. One has only to read the works of the father of the noble Earl, Lord Russell, to read the most pellucid English. Make students compare a passage by Russell with passages in almost any academic periodical written by dons today which abound in jargon, cliche and muddled exposition.
I remember well, when I was trying to create links between University College London and the Polytechnic of Central London, visiting the Polytechnic's German department. It was run by a
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fine refugee from Hitler's Germany. He said to me, "do you tell me that I may not teach my students Goethe?" I said, "Yes, but after hours. Surely what you ought now to be teaching is the kind of German which a marketing director needs to know", a kind of German I may say which I, to my shame, do not know.
If that is accepted, then let those polytechnics and universities training students in sandwich courses and re-training the workforce on short courses be given additional funds specifically for these vocational purposes. But note this: skew the funds to the polytechnics rather than to the universities, but do not spray the money over the whole polytechnic flower bed. Spray the plants you particularly want to bloom.
6.22 p.m.
Lord Stallard: My Lords, I too should like to congratulate my noble friend Lord Longford on inititiating this debate. Rather like the noble Baroness, Lady Cox, my own interest in the subject goes back to the time when I was an apprentice engineer when there was no such thing as a formal training scheme and apprentices had to find their own courses after work. I attended a number of polytechnics and benefited greatly from their courses, not only technically but from studying life in general.
Later, when I became a technical training officer, myself teaching apprentices in a training school, I had, with other instructors, to work very closely with local polytechnics. By that time day release, block release and sandwich courses had been negotiated between employers and the unions. We worked together on those courses as well as on examinations. Therefore my experience has been mainly practical; but I have maintained that interest.
I have also been aware for a very long time of the difficulties which the polytechnics have faced in constantly having to justify their existence and of their need for greater recognition and improved financial provision. I know, for example, that employers, particularly the larger ones, tend to concentrate their recruitment efforts on the universities while at the same time denying any prejudice against polytechnics. Schools also have tended to recommend polytechnics to their less clever pupils or to those pupils who are keen to attend a course which is not available at a university. In other words, the poly was second best. As a result, many parents too were conditioned into thinking that polys were second best and that they should direct their bright children towards the university rather than to the poly.
The Government praise polytechnics and their achievements; but we have heard this evening that they are not prepared to consider reducing the disparity between the unit of resource available to students in universities and polytechnics studying for identical qualifications. That is very hollow praise from the Government.
Despite all those difficulties and despite a 20 per cent. cut in their budgets in real terms over the past 10 years, polys have increased student numbers;

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they have encouraged older students and part-time students; and they have succeeded in encouraging more women students. As has already been mentioned, they have maintained very high standards in the process. That is a very creditable achievement by any standards.
I get the impression that the changes that have taken place have been unanimously accepted and endorsed by the majority, if not all, of the directors of the polytechnics. The changes under Section 30 of the 1988 Education Reform Act have been accepted at least in principle. Those to whom I have spoken expressed a general feeling of relief that the bureaucrats were now off their backs and they now had freedom to manage. However, there are naturally worries, mainly about resources.
I do not have time to develop that point but some of the problems have already been mentioned by other speakers this evening. However, I should like to mention two which seem to me to be the most urgent.
First, it has been mentioned that many buildings are dilapidated and in a poor condition. They will need immediate attention. That means that the polytechnics will need extra money over and above what is allocated for educational purposes. Will the Government be initiating a survey of those buildings and will they be prepared to finance the work that should be carried out as a result of that survey? Secondly, we know that the Government envisage an increase in the student population over the next 25 years. That will mean even more buildings are required. Will finance be made available for the provision of such buildings in order to meet the Government's own forecasts?
I have another worry about government policy and the Government's whole approach to education and training. There appears almost to be a deliberate attempt to separate the two. I have spent most of my life trying to bring them together. For example, the 1984 White Paper Training for Jobs envisaged a national programme for adult training controlled by the Department of Employment and largely outside the education services. The new employment training initiative replaces the old JTS with a unified system of adult training, again with the emphasis on industry-based provision. Local authorities and colleges are again largely ignored in those provisions.
The White Paper Employment For The 1990s contains proposals for the setting up of training enterprise councils dominated by employers with token representation from trade unions and educationists. Those councils, or more realistically perhaps given the part-time nature of the councils the officers of those councils, will determine the pattern of training and education because they will in effect by carrying out government policy.
Paragraph 4·19 on page 31 of the White Paper Higher Education: Meeting the Challenge states:
"The Secretary of State will provide general guidance to the PCFC on its work and will have reserve powers of direction".
In other words, it will be strictly controlled and will be virtually carrying out government policy, although it is alleged that it is independent. Now we have the latest consultative document Shifting the
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Balance of Public Funding of Higher Education to Fees containing proposals for huge increases in fees, in the region I understand of 300 per cent. In my view that must affect the access to education, particularly of full-time students and part-time students without mandatory awards.
I believe those to be serious worries. I hope that in his reply the Minister may be able to allay some of them and give us some hope. I am convinced that the debate must continue. Many of the aspects that have been mentioned tonight will have to be thoroughly debated in more detail. I look forward to further opportunities to participate in those debates.
6.30 p.m.
Lord Peston: My Lords, I am doubly grateful in joining with other noble Lords to thank the noble Earl for introducing this debate because I was unable to take part in the earlier higher education debate. This is therefore my opportunity to get back into the swim of education, so to speak. I can cover only a few of the topics that noble Lords have raised, but I shall do the best I can to express at least some of the views of the Opposition Front Bench on the matter.
Perhaps I may start with the question of parity of esteem. There should certainly be parity of esteem in the sense that a polytechnic graduate with a specific class of degree is, on average, just as good as his or her university counterpart. Those of us who admit students to graduate work are well aware of that fact. Indeed, I go further; in my own subject, there are polytechnic economics departments whose graduates are better prepared for masters degrees and PhD work than those from some university departments which I shall not name. We are perfectly well aware that the professional bodies fully recognise polytechnic degrees. I refer to the Law Society, the Bar, the Pharmaceutical Society of Great Britain and many others. That is another underpinning, as it were, of the quality of the work.
Furthermore, there are also employers who give polytechnic students a fair chance and are well aware of the standards there. However, as the noble Baroness, Lady Cox, and others have said, there are too many employers, and perhaps too may personnel directors, who, either through ignorance or prejudice, have a hierarchy even within the university institutions and, below that, of polytechnics. They seem to prefer inferior students from so-called better institutions to superior students from polytechnics. In doing so, they damage their own firms and the British economy. Noble Lords who have connections with business enterprise would do well to inquire about their firms' employment practices in that regard, if not on grounds of principle—although I hope that that would be so—at least on grounds of efficiency and economy.
That takes me on to the question of what polytechnics call themselves. In one way, I do not much mind what they call themselves. In that respect I am not very different from the noble Lord, Lord Trafford. Nonetheless, I must admit that, in practice, the title of universities does seem to be significant.

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I do not think that one can quite say what is in a name. I therefore believe that we must move in the direction of giving them a chance to call themselves by that name if they so wish. If they wanted to take a risk, they could call themselves institutes of technology, but I am not sure whether we have any institution in this country that could stand up to international comparison on that basis.
The main point that I wish to make, however, is separate from the question of names. The polytechnics need real academic independence. Here I take issue with the noble Baroness. I believe that that means granting them charters and, therefore, the ability to award degrees in their own right. I have been closely involved with the CNAA and am well aware of its achievements, but the time has now come once and for all to free the polytechnics from the CNAA. It can pursue its validating role elsewhere.
Those points concern the general question of prestige. A related point concerns the PCFC and independence to which the noble Lord, Lord Glenamara, referred. During the proceedings on the Education Reform Bill, we were promised—given what I and others thought was the bureaucratic nightmare of NAB—that the PCFC would not be like that. The noble Lord, Lord Glenamara, is right at least to warn that we must not go down that path. I am perfectly willing to believe that we shall not do so. I can only say that those bureaucracies have a tendency to produce vast numbers of incomprehensible bits of paper which it is impossible to believe will ever be used. That word of warning is of enormous importance and I am glad that it has been uttered.
Perhaps I may join with other noble Lords in making a few remarks about the Government's recent document on fees. It is a pity that we have had no opportunity to debate that document. On the face of it, it seems to me to be rather advantageous to the polytechnics. After all, this is one of those rare cases where they appear to be being treated in exactly the same way as universities. The fees are being offered in exactly the same way. However, like other noble Lords, I have two obvious queries to put: will the proposal lead to a free-for-all in which intense competition for students will lead to lowering of standards; and, more importantly, is it not a disincentive to the admission of part-time students? The document appears to suggest that the polytechnics and universities are still free to charge lower fees, as of now, for part-time students, but surely the incentive to do so will no longer be there. The incentive will be to admit full-time students on the new higher fee. I ask that simply as a question. I do not wish to dismiss the new document totally. I merely wish to know what the Government believe.
On the question of finance, it must be right that the polytechnics deserve a better deal. I simply do not see why a polytechnic student should have to make do with poorer library facilities or inferior laboratory facilities simply because he or she is a polytechnic student. I cannot think of any grounds whatever to justify that state of affairs. Viewing
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the polytechnics for the moment soley from their teaching function. I have no doubt that they must certainly be properly financed.
On the question of research, I, like other noble Lords, am old-fashioned enough to continue to believe that at the higher level students should be taught by scholars and researchers. That does not mean that the mix of research and teaching needs to be a constant across institutions or a constant over time, but it does mean that every teacher at the higher level must be an expert in his or her subject and a contributor to it. Again, some of us have used up our ability to contribute, but, at some time in one's career, one must be a contributor to it. Again, from my experience in economics—although that is only one example among many—I know that excellent research is undertaken in the polytechnics. It is certainly up to the highest academic standards in terms of access to the best academic journals. Apart from anything else, it would be extraordinarily wasteful if that sort of activity ceased to be undertaken.
I do not think that a debate like this should simply praise the polytechnics and suggest that there is no way in which they can be criticised. Although I would not necessarily use the language of the noble Lord, Lord Annan, and although I certainly believe overwhelmingly that the polytechnics have been a success, in my view it is worth noting that there is a gap that has not been filled by either the universities or the polytechnics; namely, the need for some institutions to play a part similar to that played by the great German technological universities.
Although some polytechnic courses are more practical and vocational, they have not gone as far down that path as the nation needs. I do not blame them for expanding the social sciences, law and the arts, because that is where student demand and prestige lie, but it is necessary to emphasise to some degree that a demand-based system may not be of full benefit to our nation.
As has been said before, if British industry is to raise the skill content of its output and we are to become leaders again in the manufacture of sophisticated products, we must employ and promote the kind of graduate manpower that is broadly defined under the heading of engineering and technology. I believe that polytechnics are ideally based to provide that manpower and to upgrade our existing managers and technologists. The problem is that they are not in a position to adopt what is nowadays called a strongly pro-active role in that respect. Apart from anything else, they do not have the resources to do so.
I take a lower view of British industry than do some noble Lords. I do not believe that, if we wait for British industry to demand all that, the polytechnics can be reactive. I do not believe that that will ever happen. Therefore, while partly criticising the polytechnics in saying that this is a role they can play, we must also say to the Government that they must do something about the matter. They must provide more resources. Indeed, in terms of showing a belief in technology and

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science, I should like to believe that the Government would react more strongly in terms of recruiting appropriate people of that kind into the administrative Civil Service. I do not wish to end on a critical note. I simply add that point because I believe that it is important.
One move on which we all ought to agree is to reiterate how important and valuable a set of institutions we possess in the polytechnics, and to say that they could play a most excellent additional role. We want from the Government at least a resource input which will encourage them to play that role and succeed in it.
6.40 p.m.
Lord Henley: My Lords, I should like to start by apologising to the House in advance because I do not think that I shall be able to cover all the points that have been raised by noble Lords. Bearing in mind the time limits on this debate, I should finish more or less on the dot of 7 o'clock—or two minutes before the hour. I shall probably have to omit a few of the points raised. However, I certainly give the assurance that I shall write to any noble Lords whom I do not manage to answer.
Like all other noble Lords, I am most grateful to the noble Earl, Lord Longford, for having moved this Motion today. As he pointed out in his notable contribution to the debate on higher education in this House last month, and again this afternoon, we have never had a debate specifically on polytechnics. The Motion calls for attention to be given to the case for increased emphasis on the polytechnics. Despite their major achievements in recent years—to which I shall return—the polytechnics and their achievements are not as widely appreciated as they should be. I am very glad that the noble Earl has seen fit to give this House an opportunity to contribute towards putting that right.
Compared with the universities, the polytechnics are relatively new institutions. They have been making sterling efforts to carve out and disseminate a distinctive and coherent image for themselves to complement the universities. They are making progress, to which today's debate bears witness, but there is still some way to go.
In many cases, they have grown from existing institutions and have rightly sought to build on the strengths of those institutions to create a new identity. The diverse origins of the polytechnics give diverse strengths; but it is essential that the common characteristics of polytechnics are better understood.
One reason for the lack of public perception of the role of the polytechnics is that their common characteristics do not fit the all too prevalent popular stereotype of higher education. I suspect that a significant proportion of the population associate higher education with a traditional and distorted view of university—of academic teaching and research conducted in a gentlemanly, even leisurely way; in other words, the ivory tower.
Of course, most universities—perhaps all—no longer fit that popular stereotype. The polytechnics emphatically do not. They are primarily teaching establishments, and very effective ones. They make
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a valuable contribution to research in some areas particularly in support of industry. But their fundamental mission is teaching. They are very much in the real world. Their courses have a distinctive vocational emphasis, and they give high priority to making a flexible and tailored response to the needs and demands of students and of their prospective employers.
A good deal has been said this evening to suggest that the difficulty which polytechnics face is essentially one of title; and that the Act passed last year with its clear legal distinction between them and universities has merely reinforced that difficulty. Several noble Lords have suggested that it could be overcome by the simple device of allowing polytechnics to include the word "university" in their title.
The Government recognise that the polytechnics have a real problem with attitudes, and particularly in marketing themselves overseas. Nevertheless, even if it were legally possible for the Government to allow the proposed change of title, it would not necessarily change public perceptions. But it would increase confusion and risk permanently casting first-class polytechnics as second-class universities. The distinctive and special contribution of the polytechnics to higher education might well be lost. The Government remain convinced that publicly expressed self-doubts about image and status are bound to be counterproductive. Last year's Education Reform Act is a great step forward for the polytechnics. It gives a new prominence and status to that sector. This opportunity should be exploited.
There is also a suspicion abroad, occasionally articulated, that polytechnic degrees are of a lower standard than university degrees. Like the noble Earl, Lord Longford, I too should like to give the lie to any such suggestions. Unlike the universities, the polytechnics have had to be publicly accountable for their academic standards to the Council for National Academic Awards which has validated their degrees. It is a mark of the polytechnics' coming of age that the CNAA has accredited all of them to validate their own courses for the award of the CNAA's degrees. Furthermore, many employers clearly regard polytechnic graduates in a favourable light, and professions such as the engineers now accept for membership polytechnic degrees in the same way as university degrees.
Of course uninformed prejudice continues; but, as polytechnic graduates gain positions of influence in our society, I am sure it will diminish. As the demographic downturn in the number of young people puts an increasing premium on qualified manpower, the country can ill-afford not to acknowledge the contribution which the polytechnics make.
It is especially apt that we should be discussing polytechnics now as they are, for the first time, masters of their own destinies. The Education Reform Act marks the coming to full maturity of the polytechnics and other major colleges of higher education. This is a watershed in the development of our higher education system.

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The polytechnic sector of higher education, as we now understand it, has a relatively short history. Its achievements are all the more admirable for that. Twenty-five years ago there was no real concept of a strong, coherent sector of higher education to run in parallel with and to complement the universities. Perhaps most significant of all, there were only 120,000 higher education students outside the universities. Twenty-five years have seen dramatic develoments. The English polytechnics and colleges now have about 300,000 students, which is roughly the same number as the universities. The growth in numbers has been phenomenal—30 per cent. in the 1980s alone.
The noble Earl, Lord Longford, referred in the earlier debate on higher education to the role of the grandfather of my noble and learned friend, Lord Hailsham, in establishing in central London over 100 years ago the first polytechnic. It is true that many of our polytechnics are built on a long and fine tradition of providing education for the less privileged in our society. Their particular strengths—their mission—have been very largely concerned with learning of practical application. At the same time they have brought the benefits of higher education to many who would not otherwise have enjoyed them. It is no coincidence that the polytechnics, with their commitment to part-time courses, have been the focus of the recent increases in the number of students who have entered higher education.
The new era brings new challenges. For the first time the polytechnics are wholly responsible for their own affairs and for charting their future development. There is every sign that they are squaring up to those challenges in a positive way.
Of course a change of this magnitude and complexity has given rise to some concerns. The polytechnics have had a great deal to do in a very short time to prepare themselves for independence. They have been particularly concerned about finance as a result of the removal of topping up, in some cases substantial, of institutional resources by local authorities. Nevertheless, the relative smoothness of the transition is a tribute to the maturity of the polytechnics.
The Government have provided a very significant increase in the resources available to the sector in 1989–90—6 per cent. higher than in the resources available in 1988–89 after taking account of various changes—including the ending of topping-up, inherent in the new status of polytechnics and colleges. We have earmarked some of the funds made available to the Polytechnics and Colleges Funding Council to assist institutions to make inroads into the problems that they have inherited. In particular, these funds will help in replacing and updating equipment, and in catching up on the maintenance problems of the building stock.
I am most pleased that the right reverend Prelate—a member of the PCFC—has been able to play a part in this debate. The PCFC has a vital role to play, in partnership with the institutions. The council is working with the institutions to get them
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through the early days of independence in good shape to face the future. For the longer term the council is looking to devise funding arrangements that are not excessively bureaucratic. It has made clear that its role should be that of a facilitator: it is not in the business of second-guessing institutions. The council's consultative document on approaches to funding institutions in 1990 and beyond bears witness to the council's approach.
The Government's view is that polytechnics and colleges should have substantial responsibility for setting and monitoring their own standards. But the PCFC has a very important role in quality too, central to its primary task of securing the effective investment of public money. The PCFC needs to work with the institutions, with validating bodies such as the CNAA, and with Her Majesty's inspectors to develop methods of assessing and monitoring the quality of output. This is a complex and difficult area which I know the PCFC is approaching carefully. But the fact remains that neither the PCFC nor indeed the institutions can do their jobs properly without reliable information on quality. The PCFC's efforts will be of benefit to higher education as a whole.
The 1990s will be a decade of challenge for higher education generally. Competition for 18 year-olds will be more intense. The demands from employers for qualified manpower able to cope with new challenges such as the single European market will grow. My right honourable friend the Secretary of State for Education and Science has made clear his concern to see many more students, young and mature, going into higher education. The polytechnics are well placed to respond positively.
Noble Lords have raised a number of points in this debate. I shall endeavour to deal with some of them. The noble Earl, Lord Longford, the noble Baroness, Lady Seear, my noble friend Lord Limerick, the noble Lord, Lord Glenamara, and others, raised the question of resources. The Government have provided over £1,100 million for the new sector. The £1,030 million available for recurrent expenditure includes some £32 million to cover costs of transition to the new sector of which £ 10 million is to help with restructuring. For future resources the Government will be considering the need for public expenditure including expenditure on the needs of the PCFC sector from year to year in the normal way. The PCFC is responsible for advising the Government on the resource needs of the sector and we shall take that advice into account on reaching decisions.
With regard to comparison with university resourcing, comparison of funding of universities and polytechnics is not a comparison of like with like. Universities and polytechnics are different types of institutions with different missions and different staffing and, typically, different kinds of premises and facilities to maintain. The essential difference is that universities are historically funded to undertake research as well as to teach. The research function adds considerably to the cost of the university system. The Government intend to take steps to distinguish more clearly between the funding of university teaching and research so that

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both activities will be seen to be carried out to the highest possible standard in a cost-effective way.
Lord Peston: My Lords, perhaps I may intervene. As I understand it, the noble Lord's department has undertaken work which shows that even when one makes the most generous allowance for the research effort of universities—leaving in the remainder as comparable for teaching—the universities are still excessively generously treated compared with the polytechnics; or, to put it the other way round, the polytechnics are not reasonably well treated. I understand that his department has done that work. Perhaps in due course he will let us know about it.
Lord Henley: My Lords, I shall have to write to the noble Lord on that matter. The noble Earl, Lord Longford, mentioned two figures, one of £3,200 received per polytechnic student; and the other of £5,000 received per university student. There is a big difference. My understanding is that most of that difference was for research. If I am wrong, I shall let the noble Lord know.
The noble Lords, Lord Glenamara and Lord Kilmarnock, mentioned the PCFC approach to funding. We look to the PCFC to develop funding arrangements but recognise that funds allocated are an exchange for the provision of teaching and research and are conditional upon their delivery. How this principle is put into practice is a matter for the PCFC.
The noble Lord, Lord Kilmarnock, was anxious to ensure that the funding arrangements were not excessively bureaucratic. We wish to ensure that they are not excessively bureaucratic but that they respect the distinctive characteristics of higher education, do not jeopardise the pursuit of research or scholarship, and do not deprive the institutions of the flexibility that they need to seize new opportunities.
Various noble Lords asked about tuition fees. The noble Earl, Lord Longford, referred to concern about the impact of the Government's tuition fee proposals on part-time students. It was also raised by my noble friend Lord Limerick, the noble Lord, Lord Kilmarnock, and others. The Government's proposal is to increase the full-time publicly funded undergraduate tuition fee to £1,600 in 1990–91, and to introduce a differentiated fee structure from 1991–92. The higher fee will continue to be met under the mandatory award arrangements.
There will be an associated shift of public funds from grant to fees across the system as a whole approaching £500 million in 1990–91. But both funding councils will retain a strategic role in the funding of, and provision in, the two sectors. This shift of funds is only in respect of mandatory awards. In other words, current public funding of places for students without such awards, including part-time students, will remain with the funding councils. We see no difficulty in their being able to maintain the current level of support for part-time courses thus obviating any need for fee increases. The Government are clear that their proposals should not discourage part-time students from entering higher education, and there is no reason why they should have to pay more. Beyond that the funding of
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part-time provision must be a matter for the funding councils.
Finally, I hope that our debate today will have shown the country that this House does not underestimate the very significant and distinctive contribution that the polytechnics and colleges sector has already made to higher education in this country. The institutions' records speak for themselves.
Continuing improvements to our higher education system have a key role in the continuing success and prosperity of the nation. The Government believe that the polytechnics and colleges have a vital contribution to make in securing those improvements and are confident of their ability to do so.
6.58 p.m.
The Earl of Longford: My Lords, in the two minutes left to me, I have time only to express my thanks and admiration to all the speakers. We have had a number of brilliant contributions and I shall not continue the argument. I express my especial gratitude to the noble Lord, Lord Peston, who wound up so effectively for us. I thank the Minister for the usual charm and courtesy of his reply—when I can get his attention!
The Minister will forgive me if I say that I found his answer disappointing—or I would find it disappointing if I thought that it was the Government's last word. Last week I ventured to send a draft of my speech to the Secretary of State. His secretary replied that he was abroad—I do not know whether he is still abroad—but that he will give full consideration to everything that is said today when he returns. I hope therefore that this is an interim reply due to the absence of the Secretary of State on holiday somewhere and that when he returns full weight will be given to all that has been said this afternoon.
Once again, I am very grateful to the Minister and to all the other speakers. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Schizophrenia After-Care Bill [H.L.]
7 p.m.
Lord Mottistone: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Mottistone.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD AMPTHILL in the Chair.]
Clause 1 [Assessment of needs of persons discharged from hospital after treatment for schizophrenia]:
Lord Mottistone Lord Mottistone moved Amendment No. 1:
Page 1, line 5, after ("be") insert ("formally").
The noble Lord said: I have several amendments, and I have endeavoured to group them, Most are

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concerned with improving the wording of the Bill, and I hope that the Committee will see them as technical. Some are to introduce amendments in response to people who have commented on the Bill since we had the Second Reading. I am most grateful to those noble Lords who are with us here, and I hope that they manage to stay.
In moving Amendment No. 1 I also speak to Amendment No. 6. The Royal College of Nursing has questioned what happens if the patient, being informed, takes his discharge in advance of the 14 days being completed. These amendments seek to clarify this point so as to enable the procedures to be followed in the case suggested. I beg to move.
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 2:
Page 2, line 25, after ("sent") insert ("and, where practicable and no request has been made under subsection (2) above, his nearest relative").
The noble Lord said: This amendment gives the nearest relative as well as the professionals some chance to suggest what the person's needs are. The relative may be the person who has by far the longest contact with the schizophrenic and the greatest knowledge of what has been tried, what has succeeded and what has failed in the past. He or she will know the person's interests and social contacts and the effects on the person's family, neighbours and friends. This of course does not apply if the provisions of subsection (2) have been invoked. I beg to move.
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 3:
Page 2, line 33, leave out ("as to the welfare benefits which he") and insert ("and, where practicable and no request in writing has been made under subsection (2), his nearest relative as to the welfare benefits which that person").
The noble Lord said: This amendment requires the health authority to brief the patient's nearest relative, as well as the patient, unless a request has been made under subsection (2), as to the welfare benefits that the patient can claim and as to his rights generally under the Act. This should help to ensure that the patient is properly provided for after his discharge from hospital. I beg to move.
On Question, amendment agreed to.
Baroness Faithfull Baroness Faithfull moved Amendment No. 4:
Page 2, line 37, at end insert—
("(4A) The Secretary of State shall make regulations which shall specify—

(a) the appropriate type of housing and other services under subsection (4) above;

(b) the persons by whom the necessary provision shall be made;

(c) the amount of resources which shall be provided;

(d) the authority or authorities by whom the services, including those under any of the welfare enactments, shall be administered.

(4B) Regulations under subsection (4A) above shall not be made unless a draft thereof has been laid before and approved by affirmative resolution of each House of Parliament.").
The noble Baroness said: I must apologise to the Committee for the fact that I could not be here
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at the Second Reading, and I wonder whether the Committee will permit me to make two points before I move this amendment. I would have made these points had I been here at Second Reading. First, I agree with the noble Lord, Lord Ennals, having read his speech at Second Reading, and I am sad that this Bill applies only to schizophrenics. It should apply to all mental patients coming out of mental hospitals and their after-care. My second point is that much of what I am going to have to say would not have been necessary had we had the Griffiths Report. But as we do not have it and the outcome of the report, I feel that I must make these points in moving this amendment.
Clause 117 of the Mental Health Act 1983 lays down that an after-care service must be carried out for all mental patients in the community. If that had been done, this Bill would not have been necessary. However, it is necessary because Clause 117 has not been carried out. I suggest that there are two reasons for this. One is that under the 1983 Act it is not clearly stated who is responsible for what service. At present after-care is a joint health and social service responsibility. It is also not clear from where the resources are to come. Because these two points have not been clear under the 1983 Act, we are grateful to the noble Lord, Lord Mottistone, for bringing forward the Bill.
This Bill recommends that health should be the lead authority in dealing with the after-care of schizophrenics, but that it should work in concert with the local authorities. That being so, which department is to be responsible for the practical implementation of after-care, and where are the resources to come from—health or social services? First, let us take housing. Is this to be the financial responsibility of housing associations, hostels and local authorities or health? Which is to be the lead authority?
We know that some money comes from the sale of big mental hospitals and that such money is being used partly to provide housing and hostels, but this will not cover all the needs. Not only will it not cover all the needs, but in time the money will run out. If health is to be the lead authority, who will supply the services and the resources for, for instance, meals on wheels, carers and home helps, which are now run by the social services? I repeat again, who will be responsible for the resources?
Daytime care and occupation is now run by the social services, particularly the industrial training centres. Again if health is to be the lead authority, who will be responsible for day-care work and who will give the resources? If there is to be after-care for all mental cases discharged from hospitals—and under this Bill of course it is schizophrenics—I submit that regulations must make clear which department is to be responsible for which sectors of after-care stated in the Bill, who is to pay and who is to administer the resources. The 1983 Act has not succeeded simply because, first, there has been no specific recommendation as to who is to be responsible for which sectors of after-care and, secondly, it does not state where the resources are to come from. It is for that reason that I move these amendments. I beg to move.
Lord Ennals: I should like to give my support to the amendment and to the terms in which it was moved by the noble Baroness. My own view would be that of the Griffiths Report—that the lead authority should not be the health authority but the local authority, of course in collaboration with the health authority but as the lead authority. However, it is no time to argue the central issue of Griffiths within the context of this Bill. The argument set forth by the noble Baroness is one with which I entirely agree, and thus I support the amendment that she has proposed.
Lord Mottistone: In a way I am surprised at this amendment, because I do not think that it is necessary. If the Bill were to take effect without this machinery to make sure it looks after the people who might fall through the net, so far as I can tell it would still be clear in the Isle of Wight to our social services department on the one hand and our district health authority on the other as to who does what. They discuss it between themselves all the time.
I am not against the amendment in broad principle and it may be as well to leave it in the Bill in order to emphasise the point which my noble friend skilfully made. However, I do not believe that the amendment is necessary; I certainly do not believe that the provision for affirmative resolution is necessary because I feel that the negative procedure is perfectly satisfactory here. On the other hand, I do not wish to enter into that argument and certain Members who would do so are not in the Chamber. I suggest that Members should agree to the amendment but should not be surprised if I return on Report with amendments to it.
Baroness Cox: I should like to ask a question for clarification. Forgive me if it is obtuse. I am not sure which Secretary of State is involved. At the moment we are in a state of uncertainty as to the Government's response to the Griffiths recommendations. We are not sure whether the care of people who have been diagnosed and treated as schizophrenic and discharged from institutional care will go to social service departments, primary health authorities or another formulation. Therefore, I wonder whether it is desirable to leave the Secretary of State unspecified.
I agree that this is not the right time to enter into a debate about which of the outcomes of the Griffiths Report should be followed. However, I must place on record the fact that many people strongly believe that individuals who have suffered in such a way should have primary contact and be under the primary care and responsibility of health professionals. That is an argument for another day, however. I ask for that clarification of the amendment and of the fact that the provision will in no way pre-empt the Government's decision vis-à-vis Griffiths.
Lord Winstanley: I do not wish to go into the merits or otherwise of the amendment or the extent to which it is clear. However, I say to the noble Lord, Lord Mottistone, that I do not believe there is any harm in leaving the amendment in the Bill. It may
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be tidied up later, as he has said, and it could be overtaken by events. One never knows, but the time will come when we shall hear what the Government will do about community care. It appears that the very word "community" in the ears of a Minister must be like a red rag to a bull especially when one considers the troubles with community care and the community charge. We have a Prime Minister who has said that there is no such thing as a community. No, I beg your pardon, she has said that there is no such thing as society. There must be a community because we have a community charge. We do not yet have a society charge, although perhaps we may.
By its very existence and as a result of Second Reading the Bill demonstrates that one particular group of mentally ill patients—those suffering from schizophrenia—have special needs. They are not at present met but they must be met. I believe that if and when we receive a final response to the Griffiths Report the needs of this special group may not be covered. Nor do I believe that when implemented Section 7 of the disabled persons' Act will provide for the needs of patients suffering from schizophrenia. Many are in hospital for a very short time and therefore will not be covered by the section. I believe that in general it is no bad thing to have the noble Baroness's amendment in the Bill.
7.15 p.m.
Lord Henley: As this is a Private Member's Bill, and as I set out the Government's view on Second Reading, I had not intended to take a large part in the proceedings. However, I said that I would make another statement when we dealt with the Question, that Clause 1 shall stand part of the Bill, which is to be moved by the noble Lord, Lord Ennals. Perhaps it would be appropriate if I spoke at this point.
Lord Ennals: Please do.
Lord Henley: The Government cannot support the amendment, which runs directly against current policy. That is to allow local and health authorities to determine their own priorities within broad guidelines, bearing in mind their statutory powers and duties to provide services for mentally ill people as a whole.
I must reiterate what I said in the Second Reading debate last month. The Government have real sympathy with and, I believe a growing understanding of, the problems faced both by sufferers from schizophrenia and by their relatives. We do care what happens to those able to be treated in the community, and certainly wish to avoid the kind of tragedies to which the television programmes by Marjorie Wallace and Esther Rantzen, for example, have drawn attention.
However, I think that it is worth repeating, too, the Government's basic objection to the Bill we are considering tonight. We think that it is generally undesirable to give priority by statute to services for the mentally ill (and particularly those suffering from a particular mental illness) over those for people suffering from a mental handicap or a physical illness. Rather, within broad national policy

723
guidelines, we believe that priorities between services should be settled locally by health authorities and local authority social services departments as they are the best placed to determine their own service requirements and expenditure priorities.
The Government certainly acknowledge the concern felt by many about the adequacy of services for mentally ill people in the community. We are looking at what needs to be done in the light of the Griffiths Report, to which we are actively considering our response, and in the light of work currently under way to give a clearer picture of service provision for mentally ill people across the country. It is important that policies on the care of mentally ill people should be set in the context of community care for all client groups. It would not be appropriate to pre-empt the Government's considered response to the Griffiths Report by supporting the Bill.
Nor, I think should we lose sight of the likelihood that the Bill would be very expensive to implement. The financial implications are considerable. Members may be interested to know that local authorities have estimated that the revenue consequences alone of implementing Section 7 of the Disabled Persons (Services, Consultation and Representation) Act 1986 could be in excess of £100 million a year. And of course, as several speakers pointed out in the Second Reading debate, Section 7 would only cover people discharged from hospital for a mental disorder of six months or more.
Finally, we find the whole approach of introducing legislation in the form of this Bill too centralised and prescriptive. We believe that there are practical steps which we can take that will deal more appropriately with problems than new legislation. To that end we have given an undertaking that we shall shortly issue additional guidance to health authorities on components of the care programmes for people with chronic mental illness discharged from hospital which they are required to draw up by 1991. We are currently consulting informally on these guidelines and we shall be consulting more formally before they are issued.
As a prelude to this work we held a working conference last year, organised jointly with the National Unit for Psychiatric Research and Development and attended by my noble friend Lord Skelmersdale, to bring together experts in the field of care for people with chronic mental illness. This conference built on the research funded by the department in Salford, Southampton and Hackney to investigate the use of computers in case management systems. A report of the conference was published by the National Unit last September and was widely circulated as a means of disseminating some of this accumulated expertise.
Also, with the encouragement of the department, the Royal College of Psychiatrists is drawing up guidelines on discharge and after-care of patients which will in effect amount to minimum acceptable standards of clinical practice. These should be available in the autumn. Previous Royal College
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guidelines have proved influential and effective in raising standards of clinical practice in other areas.
Perhaps I may say that the care and thought that has gone into my noble friend's Bill will undoubtedly be helpful in providing a model, but not the only model, of how we wish to see patients assessed and relevant authorities and carers notified and then contact being maintained with the patients. We shall be monitoring and evaluating how local district health authorities discharge their responsibilities for caring in the community for the mentally ill as all districts make progress to our 1991 goal of universal care plans. Our guidelines will help authorities to reach that goal and this Bill adds to that attainment.
However, I hope that I have said enough to make it clear why the Government feel that the Bill before the Committee today would be premature in the light of the range of the initiatives which are currently being actively pursued.
Lord Rea: The amendment stands in my name also and I support the noble Baroness, Lady Faithfull. The Minister said that he believed that the Bill would be taken as one of a number of models in drawing up recommendations and possibly legislation to include the care of the chronically mentally ill. I believe that if this amendment is incorporated in the Bill, that will make it an all the more useful a guide in the way he suggests, particularly when the Government are still considering their response to the Griffiths Report. I believe that the short and direct recommendations in this amendment would be very useful, and I certainly would like to support it.
Lord Henley: I said that we could not support this amendment just as we do not oppose the Bill. We merely say that we do not support it. I would not oppose this amendment.
Lord Ennals: As the Minister is being so forthcoming, perhaps I may follow up on the statement he made, which I found of great interest but which puzzled me. Of course I welcome the fact that there will be additional guidance to go out to the health authorities which will be relevant, in the context of this Bill, to mental after-care services for the treatment of those who are suffering or have suffered from mental illness. I do not understand how the Government will be in a position to give those guidelines until they have responded to the very specific proposals made in the Griffiths Report. Perhaps I can have the timing of this from the Minister. I know that he cannot say when the Government will make a decision on Griffiths; but surely he can say that they will not publish guidelines without having done so. Surely they must take a decision on Griffiths, and in the light of that send out guidelines.
Lord Henley: All I can say about Griffiths is that the response will be soon.
Lord Ennals: That was not the point, with great respect. I know that the Minister cannot say when the Prime Minister and her sub-committee will have

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completed their work which they started about 12 months late. Of course he cannot say that. If he announces to the Committee that there will be additional guidelines for health authorities which will be relevant to the subject of this Bill, surely he can assure me that those guidelines will not be prepared until the Government have taken their decision, good or bad and right or wrong, on the recommendations made in the Griffiths Report?
Lord Henley: I do not see that that quite follows. The guidelines can go out before we make any response to Griffiths. These are guidelines to the health authorities.
Lord Winstanley: I should like to know precisely what we are doing. I was interested to hear that the noble Lord, Lord Rea, is entirely in favour of an amendment to a clause which he later intends to have removed from the Bill. That seems to me a rather anomalous position. It occurs to me that at the moment we are debating the later Motion that Clause 1 shall stand part of the Bill. Are we debating that or are we to have a further debate on that later?
Lord Henley: I believe that I owe the noble Lord, Lord Ennals, an apology. I was becoming rather confused. Griffiths will come first and then the guidelines. Griffiths will come soon.
Lord Mottistone: I am delighted to hear about the guidelines, and I am sorry to hear that Griffiths must come first. That is the whole point. I did not gather from my noble friend whether, when the guidelines are prepared, consultations will be made with the sort of people who will be involved in the whole issue—for example, the charities concerned with schizophrenics and so on—so that the Government really make sure that the guidelines meet the needs of the people rather than meet the needs of the people who write them.
Baroness Faithfull: Perhaps I may come back to my amendment. First, when my noble friend Lord Mottistone says that this amendment is not necessary, I should like to say that while everything may be going well in the Isle of Wight, I know of mental hospitals where patients have been discharged without any after-care plan whatever. In fact, one big mental hospital just outside London closed and the patients were discharged. They were given clothes and money and were dispersed along the South coast. There was no after-care plan for them whatever. Therefore, we are very grateful for this Bill, produced by my noble friend Lord Mottistone, because it is absolutely necessary. I only wish that it applied to all mental patients. However, the fact remains that the present situation is unsatisfactory despite Clause 117 of the Mental Health Act.
My noble friend Lady Cox asked which Ministry was involved. Well might she ask! It seems as though we are waiting for Godot, and we cannot tell which Ministry will be concerned, whether it will be the Department of Health or the Department of Social Services. I am not really concerned about which it
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is. Whichever is the lead authority, then I still believe it needs to be clearly laid down who is responsible for what areas and where the money is to come from. I am not pre-empting Griffiths and I am not saying that it should be the Department of Health or the Department of Social Services. I am saying that whichever it is, there will be a cross-fertilisation of services. If it is the Department of Health, then the Department of Social Services has specific responsibilities; and if it is the Department of Social Services, then the Department of Health has specific responsibilities.
The Minister gave his case away. He said that we need not talk about resources because the local authority must administer its own resources. That is my point: many of the resources do not come from social services; they come from the Department of Health. The Department of Social Services finds itself administering this Act, or not as the case may be, without the resources which should be coming from the Department of Health. There is confusion worse confounded for the practitioners in this field. It really does not matter which department administers this. I believe that by regulation it must be made clear whose responsibility it is. That is why I feel very strongly about moving this amendment.
I do not believe it is for me to answer the Minister's later comments because that is for my noble friend Lord Mottistone to answer. I moved my amendment; but in the light of what the Minister said at this point in time, I shall withdraw it and see what my noble friend Lord Mottistone comes up with at the next stage of the Bill.
Amendment, by leave, withdrawn.
Lord Mottistone Lord Mottistone moved Amendment No. 5:
Page 2, line 45, leave out ("whether the notice in question was given") and insert ("where a notice was given whether").
The noble Lord said: This is a simple drafting amendment to bring the wording of subsection (5)(b) into line with subsection (5)(c). I beg to move.
On Question, amendment agreed to.
7.30 p.m.
On Question, Whether Clause 1, as amended, shall stand part of the Bill?
Lord Ennals: I gave notice that I wish to oppose Clause 1, and I want to make it quite clear that I did not give notice that I wish to oppose the Bill nor do I intend to push this matter to a Division. I had to use this as a device to make clear a situation which I find disturbing.
It was my wish to insert the words "mental disorder" wherever the word "schizophrenia" appeared in the Bill. However, both the Short and the Long Title of the Bill specified that the Bill dealt only with schizophrenia. That meant that any broadening of the Bill was out of order. Therefore my amendments could not be tabled, and the apparent willingness of the noble Lord, Lord Mottistone, to accept them could not be tested. So my only device was to come forward and lay out the arguments about which, like the noble Baroness, I feel very strongly.

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Perhaps I may argue the case. Certainly the general thrust of the Bill as set out in this clause is one which I warmly welcome. The concerns about the implementation of care in the community have been argued from all Benches, and very strongly by MIND and the National Schizophrenia Fellowship; and I believe that they are very widely shared. As the noble Baroness, Lady Faithfull, said, the failure of the Government to respond to the Griffiths Report and the Audit Commission's report on community care or to implement Section 7 of the disabled persons Act are indications of the importance or the lack of it which the Government attach to the problem raised by community care. In particular, the very broad definition given to after-care in the Bill (Clause 1(4)) to include housing, food, heating and so on, is very welcome. The Bill takes a broad view of the needs of people with schizophrenia. It recognises that the change from hospital care to the world outside is very great, that it is essential for it to be planned and for the person to be enabled to live in the community as an ordinary citizen. I shall come on to that a little later.
Fourteen days' notice to the relevant authorities indicates that discharge should be a planned process not—as it still too often is—an event that occurs with no notice at all. To that extent the Bill is much to be welcomed. Discharge, as the Mental Health Act Commission said,
"should be a process not an event."
That statement comes from its First Biennial Report for 1985. For all these reasons the general thrust of the legislation is broadly welcomed and I am most grateful to the noble Lord, Lord Mottistone, for bringing forward the Bill.
However, I must now put forward, as I did but perhaps without the same clarity on Second Reading, reservations about the Bill as at present drafted. The qualifying criterion for benefit under the Bill is the receipt of in-hospital medical treatment for schizophrenia. Schizophrenia is nowhere defined in the Bill. That is not surprising as it should not be forgotten that the same applies to "mental illness" in the Mental Health Act 1983 which the noble Lord, Lord Mottistone, and others, will recall did not include a definition, probably because it would have been very difficult to obtain agreement about a definition. Moreover, that is one of the reasons why schizophrenia is difficult to define and why doctors are often reluctant to define it in that same sense.
Qualification for benefit under the Bill will therefore depend on a professional decision: is a person schizophrenic or not schizophrenic? If the professional concerned is not certain, does that person receive or not receive the benefit? I suppose a little encouragement for a doctor to diagnose a person as schizophrenic is that the person will receive the benefits. That might happen, but it is not a happy situation to contemplate. Therefore, I ask: is it right that the provision of the Bill should be confined to this particular group of people, bearing in mind their great needs, their families, and so on?
The underlying intention of the Bill's promoters is to ensure adequate assessment and provision for
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those with serious mental health problems who will be socially vulnerable (as indicated in Clause 1(4)) on their discharge from hospital. Such serious mental health problems and social vulnerabilities are not confined to those labelled as schizophrenic. Those with severe organic based disorders (severe mental handicap, as referred to earlier, toxic confusion, brain damage and dementia), severe neuroses and other types of psychosis—for example, effective psychosis such as depression or mania—may well have exactly the same degree of vulnerability but under this Bill will not have the same rights to assessment and after-care as are provided for schizophrenics in the Bill.
I believe that it is wrong to draw distinctions in this way. There are certain categories of mental disorder which entitle one or one's family to certain types of benefit and if the diagnosis has gone another way, or there is no diagnosis, there is a denial of those benefits. It seems to me that those who suffer from schizophrenia, especially the more severe or chronic manifestations of it, fall within this group of people who are the proper target of this legislation. The group can be broadly defined as those who are discharged from hospital and are socially vulnerable.
The Housing Act 1985, especially in relation to those who are defined as having priority need for re-housing, may be helpful here. That Act refers to people vulnerable,
"as a result of mental illness or handicap".
Vulnerability means,
"less able to fend for oneself so that injury and detriment will result where a less vulnerable man will be able to cope without harmful effects".
I am not arguing that exactly these definitions should be deployed. When talking about the general principles of the Bill, however, it seems to me that this is a legitimate target.
As I said, I should have liked to have sought to amend the Bill but I am unable to do so and therefore I only put forward the arguments. Among part of the definiton is having been in hospital and about to be discharged. That also has some problems. Some may argue that, in itself, that indicates a degree of seriousness of condition that sets those people apart from the mass of people with mental health problems. Many people with serious mental health problems and social vulnerability, however, never actually get admitted to hospital. Indeed, some with severe schizophrenia are treated outside the confines of a hospital. That is another form of discrimination which I find difficult to accept. Is it right that those people who have not actually been into hospital but who have been treated in other ways in the community should be denied the benefit we are debating? Indeed, if community care is going to work is it not essential to have legislation that gives a similar right to a similar level of assessment and provision to those with mental health problems before they reach the stage of needing hospital treatment?
In broad terms, therefore, it seems to me that the Bill is discriminatory in so far as it is seeking to provide enhanced assessment and service rights to a particular group of people with mental health

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problems when there are many others with similar problems and similar vulnerabilities who will not benefit as a result of this legislation.
There are perhaps more immediate practical difficulties with using a clinical term such as "schizophrenia". Psychiatry is centred upon a diagnostic system that is well documented for not being reliable. That is not the fault of the psychiatrists. Diagnosis is extremely difficult and a diagnosis given by one doctor at one moment might, two or three weeks later, be given by another doctor in a totally different sense. That I understand and I cannot necessarily criticise practitioners for that. It is one of the reasons why other mental health legislation uses terms such as "mental disorder" or "mental illness" rather than including a definition.
Frequently, people are given a tentative diagnosis of schizophrenia which turns out to be something different. What exactly is their status under this Bill? They will have received in-patient treatment for schizophrenia, or tentative schizophrenia, and then for something else. Would they benefit under this Bill? These difficulties all point to the undesirability of using clinical diagnosis as the basis for the provision fo granting rights. In my view it is preferable to use existing categories, however vague they may be, and legal categories.
For the reasons given I cannot table an amendment and I do not intend to press this matter to a Division; nor would I think of doing so. However, I believe that the Bill, since we cannot amend it, will on present evidence proceed through this House in a way that I believe is counter to public interest and damaging to the interests of some patients who will be excluded. What the consequences will be, I do not know, but I felt that I had almost a responsibility to this Chamber to set out the reasons why I argued this case in a simple way on Second Reading.
Baroness Elliot of Harwood: I should like to make one or two brief comments. First, I am delighted to hear that the noble Lord, Lord Ennals, does not intend to push this matter to a Division because I believe that would be great mistake. This is a pioneering Bill. It is a Bill that is badly needed not only for schizophrenics but for other kinds of mental illness where after-care is vital. We all know that that is so.
I have for years been chairman of a social work committee and also a health committee. I do not know whether my noble friend Lady Faithfull will agree, but I believe that the best department to deal with after-care or mental illness, and so on, should be the social work department. It has the trained personnel and access to various ways in which to help and would be the most appropriate department.
The important point is that something must be done. This situation has existed for years and years. I have preached care and prevention in every town that I have been able to visit. I have succeeded in doing some things in my own area which are both caring and preventive. But the Government always say, "We must wait and everything must be covered". It cannot be done in one covering; but one has to start somewhere. I believe that this Bill is a
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very good start and we should give it all the support that we possibly can.
Lord Rea: In my speech at Second Reading I also pointed out the view of a practising GP of how difficult it was sometimes to define precisely when a schizophrenic is schizophrenic or suffering from some other mental disorder. I follow the reasoning of my noble friend in supporting his opposition to this clause. I can explain to the noble Lord, Lord Winstanley, why I supported an amendment in a clause which I apparently wished to abolish. That is not the case. It simply provides an opportunity to speak about this matter. I believe that we would run into a good deal of trouble if we were simply to look at the problems of those with the label of schizophrenia and leave out of account all the other people with many other serious mental disorders who are in equal difficulty.
I believe that many Members of the Committee who spoke at Second Reading will have received a letter from the Law Society of Scotland which has recently established a mental health working party. The law society feels,
"that what is required is a review of the law as it relates to all aspects of mental incapacity".
I wish to quote a couple of sentences from the final paragraph of the letter regarding Lord Mottistone's Bill. The letter states:
"We admire the ends which it seeks to secure for the specific group in Society [schizophrenics] but those ends should be available to everyone suffering from any form of mental incapacity who has been detained in hospital for less than 6 months. The need for after care is not limited to schizophrenics although we accept that their need is great but not necessarily greater than or different to the needs of others".
The letter concludes by saying:
"We believe that the Bill should be replaced with appropriate legislation dealing with the needs of all mentally incapacitated people".
That is the reason why I have put my name down to support my noble friend's opposition to this clause. It is not that I feel that the clause of itself is in any way faulty, but with the amendment of the noble Baroness I believe it might have been a little better. However, we shall be thinking about that at Report stage.
7.45 p.m.
Lord Winstanley: I seldom disagree at all with the noble Lord, Lord Rea; and I very frequently agree with the noble Lord, Lord Ennals. I put a slight difference between the two there. I am glad to hear that the noble Lord is not going to press to a Division his opposition to Clause 1 standing part of the Bill. I do not wholly accept the arguments that he has advanced, and before we leave this matter I believe it will be no bad thing to put some differing arguments on the record. What is the exercise on which we are engaged? We are all well aware that before this Bill arrives on the statute book (if it ever does) or before it gets very far in its proceedings in another place, without a shadow of a doubt many other things will have happened. I am much encouraged by what we have heard from the noble Lord at the Dispatch Box about the fact that we are

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to hear something concerning whose responsibility it is to provide community care. I am very glad of that news, and the sooner we get it the better.
As the noble Baroness, Lady Faithfull, has said, the present situation is entirely unsatisfactory. The noble Lord, Lord Henley, said that the Government's view is that these matters should be left to the two authorities—namely, the social services department and the health authority—to sort out the issues between themselves. The plain fact is that because neither department is responsible, neither accepts responsibility. Apart from perhaps the Isle of Wight (which seems to be singularly privileged in this regard) in many areas nobody takes responsibility. The noble Baroness, Lady Faithfull, is absolutely right, and this fact must be stressed.
The noble Lord, Lord Ennals, said that this Bill is discriminatory. I am opposed to discrimination of any kind, and I have fought hard against it. I have to accept that it is unfortunate that unhappily certain illnesses discriminate in that they strike some people and not others. Illnesses also differ in their precise nature. The one thing that this Bill is doing at the moment is drawing attention to the very special needs of a very special group of people suffering from schizophrenia. The noble Lord, Lord Ennals, said that this was difficult to diagnose. I do not wish to make light of certain of the difficulties. Undoubtedly it is true that in many cases it is difficult to arrive at a precise diagnosis of schizophenia when one is confronted with someone who may be suffering from a manic depression or a psychosis with obsessional features.
Nevertheless, I believe that sometimes a doctor or doctors responsible for a patient are perfectly aware of the diagnosis and they know that the patient is suffering from schizophrenia. They have made that diagnosis. However, they do not necessarily make it known publicly but to the patient and the relatives. As the noble Lord, Lord Ennals, said, if certain special facilities are available for those patients, it may be that that diagnosis would be arrived at in certain cases in which it has not been arrived at. The noble Lord knows that there are cases where there have been disastrous consequences because that diagnosis has not been arrived at by people who should have arrived at that conclusion.
Lord Ennals: I am grateful to the noble Lord for giving way. Does the noble Lord not recognise that this also happens the other way? I have a very close connection with a situation in which someone diagnosed as being schizophrenic was in no way a schizophrenic. It was later determined that his condition was something quite different which required quite different treatment. Therefore the confusion must be very substantial among doctors who really are not sure from what condition a patient is suffering.
Lord Winstanley: I do not dispute that; but I do not believe that this is the time or place at which to go into the question of diagnostic difficulties at great length. I accept what the noble Lord has said.
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However, it does not in any way take away from my general position regarding this Bill. I believe it is serving a very useful purpose. As I said, it will undoubtedly be overtaken by events. At the moment when those events take place and we hear precisely what are the government proposals concerning community care, I do not believe that those proposals will provide adequately for the group of patients with which this Bill is particularly concerned. As I said before, I believe that when Section 7 of the Disabled Persons (Services, Consultation and Representation) Act 1986, is implemented, that certainly will not provide for these patients because very many of them are in hospital for only very short periods. Of course the real needs of the patient must be assessed before his discharge. As the noble Baroness, Lady Faithfull, rightly said, when he has been assessed, those needs have to be provided for; and sooner or later someone has to say who will do the providing.
At the moment I believe that we should leave this Bill alone because it has served a very useful purpose. It may very well influence further measures that are to come forward from the Government. The fact that we have discussed it, and it has its various stages in your Lordships' House, will have done a great deal to increase our understanding of a problem which is of a very acute and disturbing nature. It has a very damaging effect on the individuals who suffer from this disease, on their families and very often on the communities in which they live. I am very glad that the noble Lord is not going to persist in removing Clause 7. I merely wished to put a contrary view on the record.
Baroness Faithfull: Perhaps I may make two points. The first is that I am grateful to my noble friend Lord Mottistone, supported by my noble friend Lady Elliot, in bringing to our attention the situation regarding schizophrenics. I regard this Bill perhaps as a forerunner to something else. The second point I wish to make in supporting the noble Lord, Lord Ennals, concerns the families of the patients. There are some families who are so stable and skilled that they are able to deal with their own schizophrenics. There are other families who are less able and more vulnerable, and they cannot deal with a much less serious condition. It is for that reason that I support the noble Lord, Lord Ennals. I also agree with all his other arguments. But it is very difficult to assess the situations of families that can cope and those that cannot. One is not going to help the patient unless one helps the families. Some families need more help than others even if the patient is less ill. Therefore I support the noble Lord, Lord Ennals.
Earl Haig: Clause 1 is vital to the Bill since it recommends a set of procedures for assessment before a patient leaves hospital. It seems sensible to me that a psychiatrist, or whoever has been responsible for looking after the patient in hospital, should have the chance to point out to the health authority making the assessment the kind of requirements which may be needed for some

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considerable time after discharge. It may well be that the degree of supervision required will not be great or there may be no need at all for any after-care treatment. If so, there should be immediate release so that the long delay of a lengthy assessment will be avoided. In opposing the Motion that Clause 1 stand part of the Bill, the noble Lord, Lord Ennals, is in danger of losing the crucial part of the Bill; that is the point when plans for assessment will be made. Any shilly-shallying over Clause 1 must help to bolster the doubt already expressed by my noble friend Lord Henley.
The noble Lord, Lord Ennals, is aware of the slowness of the Government in this matter. Indeed at Second Reading he welcomed the opportunity provided by my noble friend Lord Mottistone through this Bill. Now, with some justification, he seeks to widen the Bill so as to include more categories of the mentally ill. He does not try to amend the Bill with a widening proposal. Instead he argues to remove the more limited recommendations in Clause 1, and in doing so he weakens the chances of achieving a modest first step towards the wider goal which most of us share. Most of us agree that there should be basic after-care for all mentally ill patients.
I support Clause 1 because it provides for sufferers from schizophrenia the bridge between hospital treatment and the world outside. It is only after they cross this bridge that schizophrenia patients will be given the chance of assessment and of treatment. Many of them will go on suffering from their disability and will go on having to go back to hospital because of lack of after-care treatment. My noble friend Lord Henley in a caring speech spoke about the costs of implementing the Bill. Surely the process of regression and rehospitalisation must also be costly. The present situation is chaotic and urgently needs a solution. I therefore hope that the procedures set out in Clause 1 are followed.
Lord Mottistone: I am grateful to the noble Lord, Lord Ennals, for saying that he is not gunning for Clause 1 and is in fact gunning for the other factors. However, I would put forward this point in favour of why the Bill is in its present form. I said at Second Reading that it was important to us to tackle the problem for one group of people. Perhaps I may quote what the right reverend Prelate the Bishop of Sheffield said during that debate:
"I earnestly hope that we do not allow ourselves to be deflected from the course which this Bill represents. It is so tempting to believe that because we cannot help everyone, we must help no one".—[Official Report, 12/4/89; col. 333.]
Though I understand the sense behind what the noble Lords, Lord Ennals and Lord Rea, said, if one argues that one should not help just this one group, the next argument will be that we should cover not only the mentally ill but also the mentally handicapped, and then that we should cover not only the mentally ill and the mentally handicapped but also all the handicapped. This process will go on and on and the Government will see in their minds the cash register ringing up each time a new group is added. They will be much more cautious about doing anything if they feel that they have to do everything.
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I said at Second Reading and I say again now that this Bill could usefully be a trial to see what such provision will cost. My noble friend the Minister quoted some figures and said that one of the factors that puts the Government off is the high cost. I do not believe that that will necessarily be the case. As my noble friend Lady Faithfull and the noble Lord, Lord Ennals, said, some families can cope better than others. The families that cope well will be able to deal with their own schizophrenics and so the cost will be lower. However, the two groups will offset each other. The ones who are lost because they are not assessed under the Bill will cost a great deal more. They will probably end up in prison, which is terribly expensive, as we know.
Government departments tend to see things in parcels and not take an overall view. For all I know, the Treasury probably encourages them not to take the overall view. The overall balance of cost is probably nothing like as great as the Government fear. If they try it on a narrow front for a deserving group of people they will be able to see how the Bill works. I put this point to the Minister. However, he obviously did not pick it up or we would have heard a much brighter response from the Front Bench. That is why it is probably more worth while having a narrow Bill at this stage than a wider one.
I do not disagree that it needs to cover the wider issue in the long run, but in the short run we can have this Bill, we can see how it works and then we can widen it. I know of the technical problems of schizophrenia being identified and not being identified. However, one has to accept that point because if one always puts forward that argument one will end up, as the right reverend Prelate pointed out, helping nobody.
I am grateful to the noble Lord for not wishing to remove Clause 1, and I hope that the Committee will agree that it should remain in the Bill.
Lord Ennals: I am grateful to the noble Lord for recognising that I said at the beginning of my remarks that I had no intention of seeking to remove the clause from the Bill. I then congratulated the noble Lord and said that I hoped that the Bill would go through. I felt that the noble Earl, Lord Haig, was a little unfair to me. I made it absolutely clear in my introduction that I had wished to propose amendments but that they were not in order. Therefore my only way of stating what is a perfectly reasonable argument was by opposing the Motion that Clause 1 stand part of the Bill.
Clause 1, as amended, agreed to.
Clause 2 [After-care of persons discharged from hospital after treatment for schizophrenia]:
Lord Mottistone Lord Mottistone moved Amendment No. 6:
Page 3, line 27, after first ("of) insert ("formal").
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 7:
Page 3, line 33, leave out ("relevant").
The noble Lord said: In moving this amendment, I should like to speak to Amendments Nos. 8, 10 and 13. These amendments are designed to make it absolutely clear that no voluntary organisation need participate in the provision of after-care services unless it wishes so to do. It will presumably act only if it has the necessary resources. If it ceases to wish to participate, it need not do so and the responsibility for providing the services hitherto provided by the voluntary organisation will revert to the health and local authorities. Some voluntary organisations have expressed concern about the wording of the Sharon Campbell Report. They fear that duties which they cannot fulfil will be imposed on them by any legislation implementing that report. These amendments are designed to make the matter clear in relation to the Bill. I beg to move.
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 8:
Page 3, line 33, after ("organisation") insert ("which is prepared to participate").
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 9:
Page 3, line 41, after ("concerned") insert ("after consultation with the co-operating local authority and with any voluntary organisation concerned with the case").
The noble Lord said: This amendment requires the health authority to consult the co-operating local authority and any voluntary organisation concerned with the case before the complete termination of after-care services. Under the Bill the health authority has the last word, but it is less likely to have good reason for terminating the services, as the Bill calls on it to do, if the local authority and any voluntary organisation are against it. The amendment also brings subsection (2)(a) into line with subsection (2)(b). I beg to move.
On Question, amendment agreed to.
8 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 10:
Page 4, line 12, after ("basis") insert ("and in co-operation with any voluntary organisation which is prepared to participate").
The noble Lord said: I beg to move.
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 11:
Page 4, line 14, at end insert ("or ended in accordance with subsection (2)").
The noble Lord said: Subsection (2) of Clause 2 clearly applies where the health authority wishing to discontinue the services was the authority making the arrangements. If there is a change in health authority responsibility, there could be some doubt in the context of subsections (3), (5) and (7) as to whether the successor health authority could discontinue the services entirely. The amendments make it clear that it can.
I should add that in moving this amendment I am speaking also to Amendments Nos. 14 and 17. I beg to move.
On Question, amendment agreed to.
Lord Ennals Lord Ennals moved Amendment No. 12:
Page 4, line 15, leave out subsection (4).
The noble Lord said: I hope that no one will accuse me of being negative this evening, although this is a move to strike out a subsection. Indeed, I might well have concentrated my argument on several amendments which would have applied to Clause 2. I have a substantial reservation about what I may perhaps call the tracking provisions contained in Clause 2, in particular in subsection (4), and it is the latter upon which I have concentrated.
As I understand it, in the first instance the patient or the nearest relative can request that arrangements for assessment—under Clause 1(6)—are not made. There is a problem here, because that apparently means that the nearest relative can cause no assessment to be carried out even though the patient would wish for such an assessment. In my view the decision should rest with the patient and the patient alone.
Once an assessment is made, the relevant authorities have a duty to provide after-care as assessed. Presumably, although it is not specifically stated, if the patient says after an assessment has been made that he or she does not wish to receive the after-care proposed or being provided, he or she cannot be compelled to accept it. I am certain that the assumption would be that we cannot compel treatment under such circumstances.
Once an individual who has been provided with services can no longer be traced, the health authority is under a duty to try to find them—I am sure that that is right. In pursuit of that obligation any person who knows of the individual's whereabouts would if this provision is carried through be obliged to tell the authority if asked. While I understand the motive for this provision, I think that it poses major civil liberty problems which must be raised and discussed. For instance, it may be that an individual has told his or her GP confidentially that he or she is moving and that no one should be told. Indeed, I can well understand a set of personal circumstances in which an individual said just that to his or her GP.
It is difficult to see what the public interest is in knowing where the person is, although presumably it is to be able to provide them with after-care services, which almost by definition the move indicates that the person no longer wishes to receive. I do not see that that public interest is sufficient to override the obligations of confidentiality owed by the doctor to the patient. I hope that on this occasion I may carry the noble Lord, Lord Winstanley, with me.
If an individual moves without telling the after-care providers, that in most cases will indicate that he or she no longer wishes to receive after-care. Of course there may be an alternative scenario where the individual moves when extremely ill—I am certain that those are the sort of circumstances which

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the noble Lord, Lord Mottistone, had in mind—and when he or she was in need of treatment and help. Few could argue that those who care for the patient should not try to find that patient in order to provide such help. I am not arguing that we should not try to find patients who need help. In theory the services available in the areas to which they move should be able to provide assistance if such individuals come to their attention.
An attractive feature of subsection (5) is that the duty to provide after-care travels with the person. Again, however, I doubt whether the social objective of being able to provide care justifies imposing a duty upon others, who could be friends or relatives, to reveal a person's whereabouts. Underlying this issue is a clash between the in many ways understandable welfare objectives of continuing to provide care and the civil liberties argument concerning the right of an individual in the community to be left alone and to be free of social controls. I think that that right is one which should be paramount, despite the fact that a person may be suffering from some illness or condition. I am much concerned about this issue, and that is why I decided to table an amendment in this connection.
I do not think that the civil rights of patients should be undermined by particular forms of legislation or forms of treatment. Indeed, that is an issue which I argued in the debate on the Mental Health Act 1983 when we dealt with a certain number of cases where compulsory treatment was involved. No one would disagree that in certain circumstances it is proper for those providing care to try to trace a patient who has disappeared; but a duty to disclose—and it is not clear what are the penalties, if any, for failure to do so—is, in my view, not justified. It seems to me that the general disclosure requirement should apply, for instance, to escaped criminals but should not apply in other circumstances. I do not think that the public would wish to impose such an obligation; that is, a requirement to report someone's whereabouts. It is possible that they would wish to do so in relation to escaped criminals but certainly not in respect of mental cases.
In conclusion, there is the incremental argument in relation to civil liberties. If the duty to disclose is established, what happens next? Will a patient in receipt of after-care be obliged to report a change of address, or even have to seek permission for such a move? Once again, many questions precede the main issue substantially. I believe that the best way to deal with this clash is not to remove the whole clause but simply to remove subsection (4). I beg to move.
Lord Young of Dartington: I rise to support what has just been said about this amendment. I hope that it will be the case that the noble Lord, Lord Mottistone, will feel able to accept it. I thought the arguments presented were cogent. All I wish to do now is to instance one other circumstance which I think the noble Lord, Lord Ennals, passed over; in any event, he certainly did not dwell upon it.
Let us consider someone suffering from schizophrenia who is undergoing a remission and
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who is perhaps again living, at least for the time being, with the family. In those circumstances no one will know—that is, neither a member of the family nor certainly the former patient—how long that remission will last. Indeed, it could last a long time in which case it would not be necessary, at least during the relatively happy period through which the person might be living, for him to undergo treatment or be a special concern of the health authority.
I accept that such circumstances would not often apply; but it seems to me that they could. In that situation, not only would there be some threat to the civil liberty of the schizophrenic person, but in a sense there could also be a threat to the civil liberties of the members of the family, who could be placed in an extremely awkward position of conflict. That would arise if they were trying to do the best for the person concerned, believing quite firmly that it would be better if they tried to do it informally, without the support of the health services in their formal character; and yet they could be, if it was so decided, brought to book if this subsection is retained. It seems to me that that would be most unfortunate.
Beyond that argument, I fear that this subsection is the kind of thing which could be bandied about by people who would be against the Bill on quite different grounds. However, they could refer to the subsection and say, "Here is, on behalf of a very good cause, a tiny finger"—even though a very tiny finger—"of a kind of police state". I am sure that none of us would wish for such a state. Unless he has equally cogent arguments in favour of the subsection, I hope that the noble Lord will feel able to accept the amendment.
Lord Mottistone: I am most grateful to the noble Lords, Lord Ennals and Lord Young, for their contributions. I guessed that that was why the noble Lord, Lord Ennals, sought to remove subsection (4). My advisers and I have been looking at the point. It is a good idea to have the provision in the Bill provided that it is qualified so as to get over the points that have just been raised, and with which I entirely agree. If the noble Lord agrees, I suggest that we leave the subsection in the Bill and that I come back on Report with an amendment which I shall now try to describe to the Committee and which I believe gets over the problem. If on Report my amendment does not do that, we can take the matter a step further.
The subsection provides that:
"A person who has information as to the whereabouts of a person—

(a) for whom services were being provided…and

(b) who cannot be traced…shall be under a duty",

without any qualification. If the subsection provided the first part:
"for whom services were being provided…and who cannot be traced",
and then went on to provide that such a person considers that the disclosure of that information would be in the best interests of the person

739
mentioned in paragraph (a), one would be under a duty only if the circumstances are as provided in the Bill and also if the person with the information believes that it is in the best interests of the person receiving the services to disclose the information. That would be an essential qualification.
Perhaps we may leave the subsection in the Bill at the moment and seek to amend it along the lines that I have suggested. It would be helpful to have it, if only as a checkpoint, where the situation is not difficult and it is not important to keep the information away from other people. There will be such circumstances. I should be grateful if the noble Lord, Lord Ennals, would tell me whether he agrees in principle at any rate with the line that I am pursuing.
Lord Swinfen: Before my noble friend sits down, and purely as a point of clarification, is the subsection in the Bill merely so that a patient who needs medical help can be traced and given that help?
Lord Mottistone: Yes. The object of the subsection is merely so that the patient who cannot be traced, for whatever reason, shall be given the utmost help to be traced so as to receive the after-care which the Bill is all about. It is entirely in the patient's interests. If for some reason the person who has the special knowledge does not think that disclosure is in the interests of the patient, the amendment that I shall table on Report would take care of that position.
Lord Winstanley: When moving the amendment, the noble Lord, Lord Ennals, was kind enough to suggest that he would value my support. In those circumstances it would be churlish not to respond. I agree with him. I believe that his anxieties and those of the noble Lord, Lord Young, are soundly based. Nevertheless, I believe, as he said, that subsection (5) substantially covers the point. I believe that the ideal solution is for the noble Lord, Lord Mottistone, to try to arrive at a form of words which are acceptable to the noble Lord, Lord Ennals, and which remove the aspects of the subsection about which he is anxious. That would be the right course to pursue, and I hope it can be done.
Lord Ennals: In view of what the noble Lord, Lord Mottistone, has said, I shall not press the amendment to a Division. I am not certain whether he has gone far enough to meet my concerns. He referred to the best interests of the patient. When he does that, he has to refer also to the judgment of a person who may have some information, and consider the quality of his judgment as to the patient's best interests.
It is possible to have two antagonists. A brother may be concerned with the outcome of the will of a dying father. He may say, "My God, I have got to get hold of this chap. He is escaping. He has gone somewhere. I have to get hold of him. I know that the doctor knows. I know that his friend over the other side of the road knows. I am going to put the law on them. They must tell the authorities where
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my brother has gone so that I can track him down ruthlessly". That would be an exception; but when we legislate we must legislate for such circumstances.
I welcome the intervention of the noble Lord, Lord Winstanley. The noble Lord, Lord Mottistone, should try out his proposed amendment on me and the noble Lord, Lord Winstanley, and make it a trio. If we can reach agreement, let us do so. I have a genuine fear. If it were just a case of ensuring the best interests of the patient by someone qualified to judge those best interests, I would have no worry. I am worried about those who may say that they are concerned about the best interests of the patient but who have a totally different motivation.
Lord Young of Dartington: Perhaps I may add yet another point in support of the stand of the noble Lord, Lord Ennals. If words such as those suggested by the noble Lord, Lord Mottistone, were added, which would provide that a person should be under a duty where he thinks that it is in the best interests of the person concerned to give information and so forth, and the person in question thinks that way, that person would give the information in any case. The reasoning seems straightforward. If that were the case, it would look as though the subsection was unnecessary because it would be adding something which in practice would make no difference to what happened.
Lord Ennals: In the light of the debate, I shall withdraw the amendment. We shall want to come back to the matter in one form or another later in the Bill's progress.
Amendment, by leave, withdrawn.
Lord Mottistone Lord Mottistone moved Amendment No. 13:
Page 4, line 28, after ("basis") insert ("and in co-operation with any voluntary organisation which is prepared to participate").
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 14:
Page 4, line 30, at end insert ("or ended in accordance with subsection (2)").
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 15:
Page 4, line 36, leave out ("relevant voluntary organisation") and insert ("voluntary organisation concerned with his case").
The noble Lord said: The amendment provides more precise wording. A voluntary organisation will need to be consulted if it is providing services itself and also if its concern is shown by providing moral support to the case. The amendment also reflects the theme of Amendments Nos. 7, 8, 10 and 13. I beg to move.
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 16:
Page 4, line 40, after ("basis") insert ("and in co-operation with any voluntary organisation hitherto providing services (if it wishes to continue their provision and they are still required)").
The noble Lord said: The amendment provides for a voluntary organisation to continue to provide services if it so wishes and the services are still required after the review. I beg to move.
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 17:
Page 5, line 4, at end insert ("or ended in accordance with subsection (2)").
On Question, amendment agreed to.
Clause 2, as amended, agreed to.
Remaining clauses agreed to.
House resumed: Bill reported with amendments.

Prisons (Scotland) Bill [H.L.]
Reported from the Joint Committee without amendment.
House adjourned at twenty-one minutes past eight o'clock.

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