Sitting of 28 November 1989

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

    British Troops (Germany)
    Mr. McFall: To ask the Secretary of State for Defence whether contingency plans are being considered for the redeployment of British troops in Germany in the event of reunification of that country.
    The Minister of State for the Armed Forces (Mr. Archie Hamilton): No, Sir. The reform process in the German Democratic Republic is only in its initial stages, and it is not clear where it will lead.
    Mr. McFall: The Government tell us that they must do nothing to destabilise Europe. In effect, that means that they must do nothing because they have no vision other than the status quo, which renders the Prime Minister a pygmy on the world stage in comparison with Mr. Gorbachev. Are the Government considering renegotiating the 1948 Brussels treaty which commits us to four divisions in Europe? If not, what is the use of increasing the number of tanks and short-range nuclear weapons? Are they intended to deal with the 15-mile queue of East German motorists heading for the West in their Trabants? Is that the present state of Government thinking?
    Mr. Hamilton: The Government have taken the view all along that the NATO Alliance has treated us very well and has maintained peace in Europe for a long time. We are currently engaged in negotiations in Vienna to reduce Soviet troop levels on the other side of the border. That is the best way to deal with the problems.
    Sir Antony Buck: Does my hon. Friend agree that if, as we hope very much, there were to be a reunification of Germany there would still be a need for the deployment of our troops for the foreseeable future? The original question appears to be misguided.
    Mr. Hamilton: I take the point, but one must be guarded about this. At present it is extremely difficult to judge public opinion in East Germany. Indeed, from what one can see on the media, public opinion may be divided on the issue anyway.
    Mr. James Lamond: Despite what the Prime Minister said on "Panorama" last night, it is obvious that the reunification of Germany is very much on the agenda so far as Dr. Kohl is concerned and he is already outlining
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    steps towards it. Does not that development have some effect on our thinking about the future of our troops in that part of the world?
    Mr. Hamilton: We are considering the long-term implications of what is due to happen in eastern Europe, but it is extremely premature to start planning on the assumption that Germany will indeed reunify when there is nothing to support that assumption.
    Mr. John Browne: Does my hon. Friend accept that in essence Mr. Gorbachev's challenge to the West is to replace the peace of deterrence with a peace of detente even though detente does not fully exist? Talk of redeployment could thus be read as reduced commitment. Should we not be very careful in considering this so that we do not destroy the morale of our allies?
    Mr. Hamilton: Yes, indeed. My hon. Friend is absolutely right. We must bear in mind the capability of the Soviet Union rather than its intentions today, because those intentions could change tomorrow.

    Confidential Information
    Mr. Corbyn: To ask the Secretary of State for Defence what steps he has taken to ensure that confidential information held on individuals by all those for whom his Department is responsible is not passed on to other individuals or organisations who may do harm to the person concerned.
    Mr. Flannery: To ask the Secretary of State for Defence what steps he has taken to ensure that confidential information held on individuals by all those for whom his Department is responsible is not passed on to other individuals or organisations who may do harm to the person concerned.
    Mr. Archie Hamilton: There are strict regulations covering the security of all confidential papers and all information of a personal nature. Personal information held on computer is subject to the provisions of the Data Protection Act 1984 and disclosure of such information is made only in accordance with the Department's relevant registration.
    Mr. Corbyn: The Minister must be aware that confidential information held by the armed services in Northern Ireland has been leaked and was published in the press. The Stevens inquiry is looking into the matter at the moment. Will the Minister assure us that the Stevens inquiry will not be a cover-up or a whitewash? Will he ensure that the Ministry of Defence evidence to the inquiry is published?
    Mr. Hamilton: I cannot guarantee that the Ministry of Defence evidence will be published, but we are giving all our help and co-operation to the Stevens inquiry. There is no question of its being a whitewash.
    Mr. Allason: Is my hon. Friend aware that the Ministry of Defence retains a great deal of information which is not secret at all and which should be disclosed? In one recent case, a person claimed a commissioned rank which he did not hold, but the Ministry of Defence consistently declined to reveal that information although it would have prevented a criminal offence from being committed. Will

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    my hon. Friend give an undertaking that all information, even from the private files of second world war personnel, will be disclosed if it is not actually secret?
    Mr. Hamilton: We shall disclose as much information as it is humanly possible to disclose. I cannot give my hon. Friend an open-ended guarantee because much of the information that we have is confidential.
    Mr. John D. Taylor: Will the Minister consider introducing in Northern Ireland the practice of displaying photographs of wanted persons at police stations, as happens in police stations elsewhere in the United Kingdom?
    Mr. Hamilton: I cannot guarantee that that will happen, but I will certainly look into the matter.
    Mr. Cran: Will my hon. Friend confirm whether his Department uses electronic surveillance and listening devices to gather confidential information? If it does, what controls are exercised over the use of that equipment?
    Mr. Hamilton: Any information of that sort which is gathered is confidential and is treated as such.

    War Widows (Pensions)
    Mr. Boateng: To ask the Secretary of State for Defence what representations he has received about the level of pre-1973 war widows' pensions.
    The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Michael Neubert): War widows' pensions are a matter for the Department of Social Security. My Department has, however, received a substantial number of letters and other representations suggesting that eligibility for improvements made to the armed forces occupational pension scheme in 1973 should be extended retrospectively to include all war widows.
    Mr. Boateng: The Minister must be aware that the Government spend £25 million less today on war widows than they did in 1979 simply because the number of war widows has decreased through death. Why can that money not be applied to the benefit of war widows alive today? How many years must pass and how many more war widows must die in poverty before the Government realise their duty to the House and to the nation to ensure that those women who lost their husbands for us lead a decent life?
    Mr. Neubert: The war widow's pension, which is received by all war widows, is 30 per cent. higher than the standard widow's pension. It is increased by age allowances at ages 65, 70 and 80, and both the pension and the age allowances are tax free. In addition, a war widow is able to earn a separate state retirement pension in her own right, and three quarters of them have done so. In all those different ways, the Government have recognised the special sacrifice that war widows, especially those whose husbands died in action, have made for their country.
    Mr. Nicholas Winterton: Does my hon. Friend agree that wives whose husbands made the ultimate sacrifice for democracy and freedom deserve more justice from the Government of the United Kingdom? Does my hon. Friend agree also that, if we can pay off a large part of our national debt, we have a debt of honour to those ladies and their families?
    Mr. Neubert: From next April there will be significant increases for war widows. About 85 per cent. of them receive age allowances, and 75 per cent. of them have a state retirement pension in their own right, giving ranges of income up to nearly £128 per week. We recognise the sacrifice made by war widows, and on the record of this Government I am confident that there will be further significant increases for them in the future.
    Mr. Menzies Campbell: Last Thursday, when replying to the Adjournment debate, the Minister of State for the Armed Forces made accusations of hypocrisy against some of those who support the cause of war widows. Will the Under-Secretary take the opportunity to withdraw that charge? Does he agree that, on purely humanitarian grounds, reform is entirely justified? How does he think that hon. Members would resolve the issue if there were a free vote in the House?
    Mr. Neubert: The House should remember that the right hon. Member for Manchester, Wythenshawe (Mr. Morris) took exactly the same line as I am taking today when he stood at the Government Dispatch Box in 1975.
    Mr. Nelson: Does my hon. Friend accept that while the Government have argued that such a change in entitlement for pre-1973 widows would have implications for pensions elsewhere in the public sector, many hon. Members of all parties feel that he and we can defend a special case for the war widows and that some justice is now overdue?
    Mr. Neubert: War widows are a special case, but so are the war disabled. My hon. Friend should not so quickly set aside the interests of the war disabled, who also made their contribution and who make their sacrifice to this day. There would be a knock-on effect on other public sector pension schemes. The amount of £200 million for war widows would be increased by £400 million for the war disabled every year from now into the next century.
    Mr. O'Neill: Does the Under-Secretary of State not appreciate that the House and the rest of the country feel that when he is cast in the role of a heartless actuary he is failing to meet the requirements and what the country wants? Will he undertake a review both of the war widows and of the war disabled to see whether their plight can be met and their dignity restored in the autumn of their years?
    Mr. Neubert: We must first analyse the facts of the war widows' circumstances. As I have explained, 85 per cent. of them receive age allowances. At age 70 that will give a pension 58 per cent. higher than the standard widow's pension, and at age 80 it will give a pension 72 per cent. higher. If they have a state retirement pension on top of that, they have a very considerable income each week. We are concerned, however, that there might be some cases of hardship and my right hon. Friend the Minister for Social Security offered in Committee earlier this year to consider evidence of that hardship. That offer remains open.

    Nuclear Submarines
    Mr. Michael: To ask the Secretary of State for Defence whether he has reviewed emergency arrangements for visits of nuclear submarines to British ports following the recent incident at Cardiff docks when a number of towropes broke; and if he will make a statement.
    Mr. Archie Hamilton: There was a minor incident in Cardiff on 10 October when a rope, which was attached to one of two tugs handling HMS Sovereign, parted while the submarine was being berthed. This rope was not of the type specified by the Royal Navy for use by tugs involved in submarine berthing operations. Steps have been taken to avoid such an incident recurring.
    HMS Sovereign subsequently docked without further incident and in complete safety. There is no need for changes in our emergency arrangements as a result of the incident.
    Mr. Michael: May I ask the Minister to check his facts as my understanding is that more than one rope broke? Does he not understand that the area of the city of Cardiff or of any other port affected would be a considerably wider area of population than is covered by the Government's present emergency plans? As we are dealing with safety and not security, does the Minister agree that the matter should be dealt with far more openly and in public discussion with the relevant local authorities?
    Mr. Hamilton: I have checked my facts and the fact is that more than one rope did not break—the same rope was wrapped around three times. Opposition Members always cast aspersions on the safety of our nuclear-powered submarines, but if they are trying to revise their defence policy to bring it into line with NATO, they should place some value on our nuclear-powered submarines, which have to berth in ports around the country, and they should remember that the crews are very popular when they visit our ports.
    Mr. David Martin: Does my hon. Friend agree that those of us who represent ports used by nuclear-powered submarines or submarines capable of being armed with nuclear weapons deprecate those who use incidents, however minor, to further their obsessions against nuclear weaponry of all kinds? Does he further accept that we wish to see all safety procedures carried out to the best of the Government's ability, but not to be used as vehicles for those who support the Campaign for Nuclear Disarmament and other organisations, given that if we had listened to them we would not have the disarmament in Europe that we have seen in recent times?
    Mr. Hamilton: I could not agree more with my hon. Friend. The hunter-killer submarines are of great value to our nuclear-powered submarines and capable of operating for extensive periods under water. There is no way of carrying out this function without them and it is about time that the Labour party treated the crews of those boats much better.
    Mr. Wigley: Will the Minister look again at this matter and also consider the allegations that nuclear submarines have tangled with the nets of fishing boats in the Irish sea causing loss of life? Will he undertake an investigation into those incidents and their implications?
    Mr. Hamilton: There have been extensive investigations about nuclear submarines and other submarines snagging the nets of fishing boats. I assure the hon. Gentleman that all such claims are investigated with great care and that compensation is paid when it is proved that our submarines have been responsible. Such claims have always been investigated and we have always been happy
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    to come forward and admit when we have been wrong. A number of so-called incidents, however, have taken place in water far too shallow for submarines.

    RAF Chivenor
    Mr. Speller: To ask the Secretary of State for Defence what is the cost to his Department of the civilian use made of 22 Search and Rescue and other Royal Air Force facilities at RAF Chivenor.
    The Minister of State for Defence Procurement (Mr. Alan Clark): This question is almost identical to one put by my hon. Friend on 28 June 1988 and I must refer him to the answer given at column 219 on that date. I repeat that it is not possible to give an accurate assessment of the cost of civilian use of the military search and rescue service facilities at RAF Chivenor.
    Mr. Speller: I thank my hon. Friend for that not very far advanced reply. Is he aware that in north Devon and across the Bristol channel the RAF helicopters are seen as our first and strongest line of safety at sea? Should it ever be the case, as has been rumoured in the past, that finance becomes a problem in maintaining that service. I hope that funds will be sought to support the defence helicopters before anything is done to remove that vital service.
    Mr. Alan Clark: I recognise the prominent role that my hon. Friend has played in focusing public attention on the subject. If he is fair he will recognise that the service has been enhanced as the Wessex helicopters stationed, at Chivenor remain and have been supplemented by Sea King helicopters based at Royal Navy air station Culdrose and RAF Brawdy which have an overnight and foul weather capability.

    Military Security
    Mr. John Greenway: To ask the Secretary of State for Defence if he will undertake a review of security of all British military establishments and for all military personnel and their families; and if he will make a statement.
    Mr. Archie Hamilton: Security measures at all defence establishments are kept under constant scrutiny and review.
    Mr. Greenway: Does my hon. Friend agree that at this welcome time of reduced tension in East-West relations the threat to our armed forces from terrorists sadly remains undiminished? In the light of recent horrific attacks on members of the armed services and their families, will my hon. Friend take this opportunity to undertake a further substantial review of security at our military bases? If there is to be any further redeployment of troops and personnel, does he agree with me that it would be better to consider the needs of each station commander in terms of manpower and resources to see what can be done to improve security and protection at each of our bases?
    Mr. Hamilton: I can reassure my hon. Friend that all security measures are kept constantly under review. Much more money is being spent on different security measures, although I cannot go into them here. Commanding officers are in close contact with us in that respect.
    Mr. Jim Marshall: Does the Minister accept—
    Mr. Ron Brown rose—
    Mr. Speaker: Order. One at a time.
    Mr. Marshall: I hope that the Minister will accept that we all condemn terrorist action against service men and their families. As that threat will continue, will the Minister ensure that service men and their immediate families are constantly vigilant against such threats? As important, will he ensure that the armed forces are responsible for the security of their bases?
    Mr. Hamilton: We are always trying to ensure that service men and their families are constantly vigilant. We hope that that vigilance will extend outside the bases and camps to members of the local civilian population as they, too, have a great role to play in improving security. I am at odds with the hon. Gentleman on the question of service men doing all their own guarding. I believe that there is a role for civilian guards and security firms although they must obviously reach the high standards that we set for them.
    Mr. David Shaw: Does my hon. Friend agree that a balance should be struck between security needs and the friendships that are often established between military personnel and the community? In my constituency there was a terrible IRA outrage at the Royal Marines base earlier this year. Relationships between the Royal Marines and people in the community are so strong that the people of Deal would like that relationship to continue. Will my hon. Friend do all in his power to ensure that the Royal Marines base in Deal remains there for the foreseeable future?
    Mr. Hamilton: I certainly hear what my hon. Friend says. His comments were brought home sharply to me when I went to the memorial service for the marines at Canterbury cathedral at which many civilians from Deal made the point forcefully to me. I shall certainly bear it in mind.

    Trident
    Mr. Allen McKay: To ask the Secretary of State for Defence what is the cost to date of lobbying in the United States of America in favour of Trident.
    Mr. Alan Clark: The United Kingdom Government have not incurred any additional costs in lobbying for Trident.
    Mr. McKay: Does the Minister not think that if the United States is serious about strategic arms reduction, as I believe that it is, what he calls representations and what we call meddling in the internal politics of the United States proves two points? The first is that the nuclear deterrent Trident is not independent. Secondly, could we not be accused of trying to block the START agreement, of interfering and probably of increasing the time that it will take for a worldwide reduction in nuclear arms?
    Mr. Clark: I entirely disagree with the hon. Gentleman. The strategic nuclear deterrent has been the principal contributory factor in maintaining the peace for the past 45 years. Anyone who considers rejecting or diminishing that is culpably rejecting his duty for the security of this country. In terms of representations to the United States
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    authorities, I found that the chairmen of the appropriations committee and the armed services committee, both of whom I met recently, were entirely convinced of the necessity for the system. That has been shown by the fact that funding has been reinstated.
    Mr. Ian Taylor: Will my hon. Friend give us the latest progress on the trials of the Trident system in the United States? Does he agree that it is important that those trials are successful so that we can deploy Trident as early as possible according to the time scale of the 1990s to ensure the continued security of this country?
    Mr. Clark: The trials resumed at the beginning of December and my information from the United States Navy is that it assumes that the trials will be successful.
    Mr. Douglas: Will the Minister reflect not just on the costs of the representation to the United States but on its effectiveness? Has he seen the report from the Brookings Institute, which casts grave doubt on whether the United States should proceed with the D5? What happens to the so-called independent deterrent if the United States relinquishes the concept of going ahead with the D5 missile?
    Mr. Clark: I do not know about the Brookings Institute, but everyone I spoke to in Washington was entirely convinced about the necessity of the system. The fact that Congress withheld funds after three test firing failures seems a reasonable way to apply pressure, but the funding has been reinstated and the test programme resumes on 1 December.

    Force Levels
    Mr. Moate: To ask the Secretary of State for Defence what discussions he has had with his United States counterpart about the need to maintain adequate force levels in Europe.
    Mr. Archie Hamilton: My right hon. Friend will meet Mr. Cheney at the meeting of NATO's defence planning committee in Brussels, where NATO's force plans will be discussed.
    Mr. Moate: Is it not essential to remember that there are still more than 500,000 Russian troops in East Germany, Poland, Czechoslovakia and Hungary, and that any premature dismantling of our NATO defences would threaten and jeopardise the peace and freedom of Europe for which NATO has fought so hard in the past 40 years? Does my hon. Friend agree that it is vital for us to keep as close as possible to the United States Administration and to Congress to ensure that there is no weakening of our mutual resolve?
    Mr. Hamilton: My hon. Friend is absolutely right. We must always look at the capability of the Soviet Union and the Warsaw pact rather than at their intentions which, of course, can change at relatively short notice. Those capabilities have been further enhanced by the new production of Soviet war materials of one sort or another. That has improved the quality although the quantity may have come down a little.
    Mr. Ron Brown: Do not the Government always say that we must remember that individuals are important? An individual called Paddy Meehan wrote a book, which I have here—[Interruption.]
    Mr. Speaker: Order. Has it anything to do with the question?
    Mr. Brown: The House should consider its contents, or at the very least—[interruption.]
    Mr. Speaker: Order. Will the hon. Gentleman sit down, please?—[Interruption.] Order. The hon. Gentleman must ask his own question. We cannot have this approach.
    Mr. Ian Stewart: Conservative Members welcome the remark by our right hon. Friend the Secretary of State to his NATO colleagues—representing the United States and our European allies—that we should "gang warily" with the redeployment and reduction of forces in Europe. Ought not any move that we make in that direction be agreed thoroughly with our NATO colleagues rather than being a one-off on the part of individual countries, and should it not he firmly within the framework of agreement between East and West?
    Mr. Hamilton: That is absolutely right. We must continue to pursue rigorously the current talks in Vienna—the negotiations on conventional armed forces in Europe, or CFE. That will lead to major reductions in the superiority of Soviet numbers, and we may then be able to start considering significant reductions on the NATO side.
    Mr. O'Neill: Is the Minister aware that only the Secretary of State and the Prime Minister seem to be prepared to continue waging the cold war? Does he agree that, although it may take some time to reduce force levels through negotiation, it should be possible for the Government to follow the lead given by Lord Carrington—a former Foreign Secretary and Secretary General of NATO—who has said in the past week that there is now no case for short-range nuclear forces in the form of a follow-on to Lance? Will the Government make that contribution to ending the cold war, and abandon this folly?
    Mr. Hamilton: No. The Government feel that it is much better to do everything in co-operation with our allies. The hon. Gentleman knows as well as I do that we are all signed up for the comprehensive concept, which agrees that there is still a need for a mix of conventional and nuclear forces and for flexible response. Only the Labour party is out of step with the rest of Europe at present.
    Mr. Brazier: Does my hon. Friend agree that any such discussions must take full account of the Soviet Union's continuing massive chemical capability? That is underlined by both the continuing secrecy surrounding the Shikhany plant and the chilling revelation that lethal chemical weapons were used in Georgia for crowd control purposes.
    Mr. Hamilton: My hon. Friend is absolutely right. We have no evidence whatever that the Soviet Union has reduced its stocks of chemical weapons, and, as my hon. Friend has said, the injuries sustained at Tbilisi were not the kind that would be expected to result from the use of riot dispersal agents such as CS gas.

    Free-fall Nuclear Bomb
    Mr. Ron Davies: To ask the Secretary of State for Defence what expenditure has been incurred to date on the study of possible options for the replacement of the WE177 free-fall nuclear bomb.
    Mr. Alan Clark: We are continuing to study a number of options for the replacement of the United Kingdom's free-fall nuclear bomb. The expenditure to date has been negligible.
    Mr. Davies: Can the Minister explain why we are spending any money at all on developing a new nuclear weapon system that will probably be negotiated away before it is even commissioned? At a time when the Berlin wall is coming down, democracy is breaking out all over eastern Europe and peace is in the air, what sense is there in developing new nuclear weapons and keeping up the obsession with the cold war?
    Mr. Clark: The system is not covered, because it is not ground based. I believe that we cannot predict the pattern of diplomatic alignments within 20 years. I cannot say where the United Kingdom's adversaries may be found, or what part of the globe they inhabit, but any prudent Government are obliged to update all their weapon systems to ensure that their forces have the best equipment available, because the lead time for such systems—the time before they must next face an enemy—is so long.
    Mr. Wilkinson: Is it not the case that as it will probably become politically more difficult to modernise our short-range nuclear forces with a direct follow-on to Lance, it is all the more important to procure an air-launched system that is inherently more flexible and potentially of greater range? Will my hon. Friend therefore say what specific options are being studied as a replacement, particularly as the United Kingdom is not now pursuing the modular stand-off weapon programme?
    Mr. Clark: My hon. Friend reinforces the conclusion made in paragraph 92 of the Select Committee's report. As he will appreciate, I cannot go into much detail, but we are considering American and French options.
    Mr. Rogers: Today and in previous parliamentary questions, the Minister refused to comment on the replacement for a free-fall bomb. Will he affirm or deny that an agreement has been signed by the United Kingdom and the United States for a stand-off missile to be deployed on Tornado aircraft?
    Mr. Clark: No such agreement has been signed. Expenditure has been negligible because studies are at an extremely early stage.

    Eastern Europe
    Mr. Hanley: To ask the Secretary of State for Defence what are the implications for defence policy and costs of recent events in the Soviet bloc; and if he will make a statement.
    Mr. Archie Hamilton: We remain committed to NATO, whose policies of seeking dialogue with the East while maintaining a strong collective defence have contributed greatly to the change taking place in eastern Europe.
    Mr. Hanley: Whatever has been said this afternoon, is it not true that developments in the Warsaw pact have been most helpful and exciting? However, they will lead to uncertainty, because, as we have seen in Poland, Hungary, Czechoslovakia and China, there can be a most terrible response to reform. Will my hon. Friend ensure that he proceeds with caution, so that the hopes of those nations are not reduced because of the uncertainty that reform can bring?
    Mr. Hamilton: I can give my hon. Friend that reassurance. It would be almost a miracle if the road to reform were smooth and straightforward. We are faced with a period of definite uncertainty, during which we must keep our defences sound. We do not want to indulge in unilateral disarmament, as advocated by the Labour party.
    Mr. Cohen: Given the favourable political changes in Europe and President Gorbachev's enormous cuts in the Soviet Union, how can the Government justify a change in defence policy, as announced in the Autumn Statement, which will add £1 billion a year each year to our defence budget?
    Mr. Hamilton: As I said earlier, small reductions in Soviety capability of about 500,000 troops must be compared with the total of 5 million men under arms in the Soviet Union. During that time, Soviet arms production has continued apace. Many new tanks, aircraft, submarines and ships have been produced, which have enhanced its capabilities.
    Sir Richard Body: When considering this matter further, will my hon. Friend bear in mind that per capita, in relation to gross domestic product, Britain is spending four times more on defence than West Germany? Given the renewed economic strength of Germany, is that a reasonable distribution of the burden of defending central Europe?
    Mr. Hamilton: The percentage of our gross national product spent on defence is somewhat higher than that of the Germans, but one must bear in mind that they have a conscript army, which is paid much less than our professional forces. Given our commitments, the amount that we spend on defence is not out of line.

    Nuclear Test Veterans
    Mr. Doran: To ask the Secretary of State for Defence whether he will provide compensation for those ex-British service personnel whose health has suffered as a result of their participation in British nuclear tests.
    Mr. Neubert: The Government would be ready to pay appropriate compensation wherever the Crown's legal liability was established and where there was firm evidence to show that, on a balance of probabilities, ex-service men had suffered ill-health as a result of exposure to radiation during the course of their duties as members of the armed forces. In the absence of any such evidence, special compensation for the nuclear test veterans could not be justified.
    Mr. Doran: That is as grudging and as penny-pinching a response as the one that we heard on the war widows' pension issue. Is it not the case that these service personnel were injured in the course of their duties and that many
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    leukaemia cases have gone uncompensated? Does not the Government's recent response to the haemophiliacs who contracted HIV, grudging and minimal though it was, provide a precedent for the Government to act with a bit more compassion in this case?
    Mr. Neubert: The hon. Gentleman is not correct. The findings of the National Radiological Protection Board, which were published last year, support the Government's view that no harm due to ionising radiation was suffered by participants in the programme. However, the report shows a slight increase in the rate of occurrence of certain leukaemias and multiple myeloma, which, although providing no firm evidence of a link with radiation exposure, raised enough doubt to allow Department of Social Security medical advisers to regard such illnesses as attributable to service.
    Mr. Bellingham: Is my hon. Friend aware that a number of members of the Royal Norfolk regiment were involved in observing these tests? Many have since died, but there is evidence that many suffered ill-health. Can my hon. Friend assure the House that if a compensation scheme is introduced, the widows of those personnel will not be forgotten?
    Mr. Neubert: It is true that as we grow older, illnesses increase. I can only reiterate that the report shows no link with radiation from those tests in the Pacific. If such a link were established—a new report has been commissioned to update the figures for a further five years—appropriate compensation would be considered by the Government as a matter of legal liability.
    Mr. Ashley: Is the Minister aware of the deep, brooding sense of injustice in the British Nuclear Test Veterans Association? As its patron I know how deeply its members feel about the injustice of not being compensated. If the Minister is so certain of his answer, how does he explain the fact that the United States Government pay their nuclear test veterans compensation for 13 cancers and the British Government pay nothing?
    Mr. Neubert: The right hon. Gentleman's part in this campaign is well known. He pursues it with his customary vigour in the House and outside it. The belief that there is no link is not the Government's finding but the independent finding of the National Radiological Protection Board. Its report is endorsed by Sir Richard Doll, an eminent professor. As for the American experience, the circumstances are not comparable and, in any case, they are a matter for the American authorities.

    Challenger Tank
    Mr. Trotter: To ask the Secretary of State for Defence what progress is being made by Vickers in performing the development contract for the Challenger mark 2 tank.
    Mr. Alan Clark: Vickers Defence Systems has satisfactorily passed the first milestone in the Challenger 2 mk. 2 demonstration phase.
    Mr. Trotter: Does my hon. Friend accept that it would be wrong for the British Army to have to depend on imports for so important a part of its equipment as the main battle tank? Can he confirm that if Vickers continues

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    to make such good progress and achieves milestones two and three next year—as planned—a production contract for Challenger 2 will follow?
    Mr. Clark: I very much welcome the progress that Vickers is making, but I must refer my hon. Friend to what the former Secretary of State for Defence—my right hon. Friend the Member for Ayr (Mr. Younger)—said on 20 December 1988 when this subject was discussed at great length by the House. He told the House that we were taking a "staged approach" to this procurement which
    "will enable us to keep our options open for the future, if that proves necessary."—[Official Report, 20 December 1988; Vol. 144. c. 284]
    Mr. Clelland: The previous Secretary of State also said that he very much hoped that Vickers would produce an adequate prototype and win the contract. Is that the view of the current Secretary of State? If so, why does the Ministry of Defence actively support the Department of Trade and Industry in sponsoring a tour of Britain by Vickers' main rival, General Dynamics of the United States?
    Mr. Clark: The tour by General Dynamics—for which it is paying—is connected with the principle of banking offset arrangements, which is a good principle from which British industry benefits. Most of the subjects under discussion relate to offsets unconnected with armoured vehicle procurement.

    Defence Exports
    Mr. Amess: To ask the Secretary of State for Defence if he will outline the amount of defence exports achieved since 1979.
    Mr. Alan Clark: The total value of new contracts signed for United Kingdom defence exports from 1979 to the end of 1988 is approximately £31 billion at historic prices.
    Mr. Amess: Is my hon. Friend aware that many jobs in Basildon depend on defence contracts? Will he tell the House what he believes would he the impact on defence exports of the establishment of the defence conversion agency, as advocated by the Labour party?
    Mr. Clark: It is absolutely absurd that the most successful parts of British industry in exports should be forced to desist from what they do well and be diverted into work that is thought to be socially acceptable—whoever is the judge of "socially acceptable." It illustrates why the Labour party is so reluctant to go into detail about the agency in its various policy proposals.

  PRIME MINISTER

    Engagements
    Mr. Yeo: To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today. This evening, I hope to have an audience of Her Majesty the Queen. Later, I shall have talks with President Roh of South Korea, who is on an official visit to this country.
    Mr. Yeo: Has my right hon. Friend noticed, following a 45 per cent. increase in real terms in spending on the National Health Service since 1979, that next year, for the first time in British history, spending on health by central Government will exceed spending on defence? Does she agree that this is very timely, in the light of recent international developments, and that it makes absolutely clear which party in the House is genuinely concerned about improving the National Health Service?
    The Prime Minister: I agree with my hon. Friend. Next year spending on health in real terms will very nearly have doubled since we came to power. There are more doctors and more nurses, and more patients are being treated. It is a most excellent record, as is our record on defence. I noticed an article in a newspaper yesterday by a doctor who had not been of our political persuasion, but who said of our health reforms:
    "An examination of each aspect of the reforms would lead most intelligent and informed people to see that they make sense."
    He also said:
    "On health, Mr. Kinnock and his colleagues have nothing to offer."
    Mr. Kinnock: Is the Prime Minister aware that today's report from the National Audit Office shows that the Government sold Rover for at least £60 million less than it was worth? Will the Prime Minister now make a public apology for that gross incompetence?
    The Prime Minister: Apart from the year in which it sold Jaguar, Rover had not made a profit since 1976. To privatise that company successfully was a major achievement and the Government struck the best deal that they believed possible in all the circumstances of the sale.
    Mr. Kinnock: Does the Prime Minister not recall that it is the second time in two years that the Government have short-changed the British public by selling off assets? 1 t happened with Royal Ordnance, it is happening with Rover and tomorrow it will happen on a monstrous scale with the sell-off of water. When are the Government going to stop asset-stripping the country?
    The Prime Minister: No, Mr. Speaker. Rover-Leyland had not made a profit at all except in the year when it sold Jaguar. It was able to carry on only because of Government guarantees to trade creditors and to the banks. The liability mounting up on the British taxpayer was enormous. It was a good thing to privatise Rover under those circumstances.
    Mr. Kinnock: Does the Prime Minister think that that excuses in any way selling off a company for £60 million less than it was worth?
    The Prime Minister: If it was such a good bargain, why did not the TUC and the unions try to buy it first?
    Mr. Carttiss: Will my right hon. Friend acknowledge that, although I was listed as one of the Tory rebels by the Radio 4 programme and have the honour to represent he constituency once represented by the distinguished Member who was the father of my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer), I, my constituents and the British people demand that she remains—[Interruption.]
    Mr. Speaker: Order.
    The Prime Minister: I am grateful to my hon. Friend. I am sure that he and his constituents are both right.

    West Yorkshire
    Mr. Cryer: To ask the Prime Minister when she next expects to pay an official visit to west Yorkshire.
    The Prime Minister: At present I have no plans to do so.
    Mr. Cryer: Does the aspiring President for life and Prime Minister accept that if she visited west Yorkshire she would find extensive anger and resentment about water privatisation because, over the years, billions of people have bought and paid for a comprehensive system of water supply and disposal through the rates? When sites are sold off which people already own it is regarded as legalised theft. Is she aware that if the right hon. Member for Henley (Mr. Heseltine) had the guts to stand against her she would be swept from office and dumped with the garbage of her policies?
    The Prime Minister: As the hon. Gentleman is aware, 25 per cent. of the water supply industry is already privatised. Even Socialist France knows that privatised water is a better deal than nationalised water. I hope that water privatisation will proceed successfully. The hon. Gentleman had better wait and see in the light of the facts rather than pontificate.
    Mr. Gill: In view of the dramatic events unfolding in eastern Europe—[Interruption.]
    Mr. Speaker: Order. The hon. Member must ask a question about west Yorkshire.

    Engagements
    Mr. Wallace: To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Wallace: As the Prime Minister in her interview last night said that in matters of government we should retain for ourselves the things we do best ourselves, will she give the Scottish people greater opportunities to govern themselves?
    The Prime Minister: I believe that the Scottish people are best served by the present arrangements—the United Kingdom in the European Community and the continuance of the European Community as an organisation with maximum co-operation between sovereign nations.
    Sir Patrick McNair-Wilson: To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Sir Patrick McNair-Wilson: May I warmly congratulate my right hon. Friend on her successful meeting with President Bush at Camp David last Saturday? Will she tell the House that there is agreement between Britain, the United States and our European allies on the best approach to the historic changes taking place in eastern Europe?
    The Prime Minister: Yes, Mr. Speaker. For four and a half hours last week we had excellent discussions with President Bush at Camp David which showed a substantial identity of view on the way ahead for East-West relations. It is most important to secure democracy in all east European countries and throughout the Soviet Union, and not to raise the question of borders until that is complete. When it is complete there will be a different world and all sorts of things will be possible. Meantime NATO must be kept intact, our defence sure and negotiations between the Warsaw pact and NATO on the reductions of armaments must continue, giving us a basis of security for the enormous changes to take place to advantage.
    Mr. Anderson: Why are there now many more young people begging on the streets of London and other big cities?
    The Prime Minister: The hon. Gentleman is aware that if young people are in difficulty they can claim income support and housing benefit—[Interruption.]
    Mr. Speaker: Order.
    The Prime Minister: For those between the ages of 16 and 18 there are more youth training places available than young people to fill them. The Government believe that it is better for young people to take up training than to be idle. If young people are in difficulty or facing hardship, special grants are available.
    Mr. Jack: To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Jack: What advice would my right hon. Friend give to the Vauxhall car workers at their plant in Ellesmere Port in Cheshire who, because of the action of Labour's acolytes—the Transport and General Workers Union—face the prospect of losing a £200 million engine plant development as a result of a damaging, selfish inter-union dispute on working premises?
    The Prime Minister: Good jobs and good prospects come from working with and investing in equipment to its maximum extent. It is time for restrictive practices to go out of the window so that our labour costs become lower and our productivity higher, and so that we can compete with car manufacturers in Europe, Japan and the United States. Most ordinary trade unionists know that and I hope that they will pass that message on to their trade union leaders.
    Mr. Radice: Can the Prime Minister tell the House whether she thinks there is a positive advantage for Britain in joining the exchange rate mechanism?
    The Prime Minister: I refer the hon. Gentleman to my speech at Madrid which laid down specific conditions to be met before we join the ERM. The first is that inflation must be got down. The second is that stage 1 of Delors with the necessary directives, together with the freeing of financial services, the freedom of capital movements plus the abolition of foreign exchange controls, must be met by other member countries, as they are being met by us. Moreover, we must get fair competition between countries. Hon. Members in most parts of the House accept that that is the right and proper way to proceed.
    Mr. Stanbrook: To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Stanbrook: In response to some fancied labour shortage, the Government appear to want to encourage more mothers of young children to go out to work. Would it not be wiser—for the sake of the care, happiness and fostering of our children and of society—for mothers of young children to be encouraged to stay at home?
    The Prime Minister: My hon. Friend is aware that it is for mothers themselves to decide. We do, indeed, need many more women at work, but it is for mothers to decide whether they can make full and proper arrangements for their children or whether they should wait until later, when their children are off their hands, to return to work. My hon. Friend knows that from next April, the taxation of married women will change and that they will be taxed separately. That will be a great advantage to them and will enable them to make their own choices.
    Rev. Martin Smyth: Will the Prime Minister comment on recent developments in which the Secretary of State for Northern Ireland looked forward to entering discussions with Sinn Fein, whose aim is the British withdrawal from Northern Ireland, and on the weekend statement by Cardinal Ó Fiaich who asked for that intention to be declared?
    The Prime Minister: As the hon. Gentleman is aware, Northern Ireland is, and remains, part of the United
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    Kingdom. That is the wish of the majority of her people and could be changed only if the wish of the majority changed and they did not want to stay with the United Kingdom, in which case it would be a matter not only for them but for hon. Members of this House. I hope and believe that Northern Ireland will remain a part of the United Kingdom.

    Leeds
    Mr. Kirkhope: To ask the Prime Minister if she will make an official visit to Leeds.
    The Prime Minister: I have at present no plans to do so.
    Mr. Kirkhope: Does not the recent announcement that the National Health Service executive and the social security directorate are to move to Leeds—with 2,000 members of staff—show the Government's true commitment to the interests of the people of the north of England? Does not it also provide further proof that Leeds and West Yorkshire are drawing people to them like a magnet?
    The Prime Minister: I agree with my hon. Friend that the move of the Health Service executive and the social security directorate to Leeds is greatly to be welcomed. I believe that they will give a better service at less cost. They are fortunate to be able to move to that part of the world where they will have facilities which are much better than they are in London. I hope that the move will add much to the attraction of Leeds for others who may wish to move there.

Student Loans Company Building (Government Liability)
3.31 pm
Mr. Jack Straw: On a point of order, Mr. Speaker. I have given you notice that I wish to raise the question of parliamentary approval for the costs of the Student Loans Company building in Glasgow. Last Wednesday, the Secretary of State for Education and Science presented to Parliament a minute giving details of what was described as a contingent liability or guarantee on the rent of the building. The rent for one year is about £1 million and other costs, too, are guaranteed. There is no statutory authority for this expenditure. It has never been authorised by the House.
"Erskine May" makes it clear that the procedure for presenting a minute to Parliament concerning contingent liabilities arises only in respect of liabilities that are genuinely contingent. "Erksine May" makes it clear that, where an objection is laid, approval should be withheld for 14 days pending consideration of that objection. The Opposition have laid such an objection, which stands as motion No. 42 in the Remaining Orders of the Day.
Three important questions arise from the use of the procedure by the Secretary of State for Education and Science. First, the liability that he has identified is not contingent, as the procedure requires, but is an absolute liability. The procedure arose from the 1977 report of the Public Accounts Committee, which made it clear that there should be a procedure for registering liabilities that were genuinely contingent and unquantifiable. An example given was the previous Conservative Administration's nationalisation of Rolls-Royce.
At that stage, the Government's liabilities were genuinely conditional and unquantifiable, whereas the liability of the Exchequer for the costs of the Student Loans Company Ltd. building in Glasgow are absolute. The Government have said that they will pay all the costs of administration. No contingency arises. We are dealing not with a contingency but with expenditure. In those circumstances, how can the procedure conceivably be used to override proper parliamentary scrutiny of the substantial decision that lies behind it?
The second question is—
Mr. Speaker: Yes, but make it brief please, because there is an important debate before us.
Mr. Straw: There are two further questions, Mr. Speaker, and I have given you notice of both of them.
Is it right for the procedure to be used when there is a Bill on the same issue before Parliament—in other words, to be used to by-pass parliamentary scrutiny?
My third question is: now an objection has been made, in the terms of my right hon. Friend's motion, how can Parliament hold the Secretary of State to account for what would otherwise be an arbitrary exercise in power without statutory authority?
Mr. Speaker: I am grateful to the hon. Member for having given me notice of this point of order, as that has enabled me to give careful consideration to the matters that he has raised.
In answer to the hon. Gentleman's first point, I am satisfied that the proposed guarantee is properly described as a contingent liability. The direct obligation is being incurred by the Student Loans Company Ltd., but there is a guarantee and that is why the need for a specific departmental minute has arisen.
The hon. Member's second point was that the matter would best be dealt with by including it in the Education (Student Loans) Bill. I am sure that he will recognise that that is not a matter for me, but something he should argue during the proceedings of the Bill.
The hon. Member's third point was to ask what happens next. The procedure was introduced in 1977 in response to a recommendation from the Public Accounts Committee. Its purpose was to draw specific attention to new guarantees, and to provide a breathing space during which objections to what the Government propose can be made direct to Ministers. Thereafter, the Government bear responsibility for what they decide and are answerable to this House in all the usual ways. There is no automatic follow-up procedure, but what has been done is fully in conformity with the practice in force since 1977.
Mr. Straw: I am grateful to you for that answer, Mr. Speaker. Am I to understand from that that the "consideration" specified by "Erskine May" is a consideration made not by the House but by the Minister?—in other words, despite the motion from my right hon. Friend, that the Minister is to act as judge and jury in his own cause?
Mr. Speaker: The house will have to judge that in debate. I have carefully looked into the question the hon. Gentleman has raised. It is wholly in conformity with a long-standing practice, and resulted from a report by the PAC.

Points of Order
3.37 pm
Mr. Ron Brown: On a point of order Mr. Speaker. Will you explain why Mr. Paddy Meehan's book cannot he mentioned in this place? He has a point of view that should be heard, whether you or I agree with him, and he has expressed his view in print. He says that he was fitted up by the security forces. He has a lot to say, and one should bear in mind the fact that he received a free pardon some years ago—
Mr. Speaker: Order.
Mr. Brown: Mr. Speaker—
Mr. Speaker: Sit down, please. There is an important debate following this. Please let me deal with this matter.
When I call an hon. Gentleman to ask a question, I expect him to ask a question on his own account. The hon. Member was trying to draw attention to somebody else's comments in a book—[Interruption.] I gave the hon. Gentleman the opportunity to ask his own question. He must relate it to his own experience, even if he draws attention to something that he has read.
Mr. Brown: It is very important—
Mr. Speaker: I am sure that it is a very important book, and no doubt we should read it.
Mr. Edward Leigh: May I ask your advice, Mr. Speaker? I see from page 161 of the Order Paper that there has been an amendment to the Queen's Speech in the name of the right hon. Member for Chesterfield (Mr. Benn). As that amendment seems to differ from that placed on the Order Paper by the Leader of the Opposition, and as it takes precedence on the Order Paper, will we have the opportunity to vote on it, because it is an important issue?
Mr. Speaker: I have not announced my selection yet.

STATUTORY INSTRUMENTS, &c.
Ordered,
That the Food Protection (Emergency Prohibitions) (Contamination of Feeding Stuff) (Wales) (No.3) Amendment Order 1989 be referred to a Standing Committee on Statutory Instruments, &c.[Mr. Garel-Jones.]

Orders of the Day
  Debate on the Address

    SIXTH DAY
    Order read for resuming adjourned debate on Question [21 November].
    That an humble Address be presented to Her Majesty, as follows:
    Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Gow.].
    Question again proposed.

  The Economy
  Mr. Speaker: Before I call the right hon. and learned Member for Monklands, East (Mr. Smith), I must announce that I have selected the amendment in the name of the Leader of the Opposition. I have also selected, for a second Division, later in the evening, the amendment in the name of the right hon. Member for Yeovil (Mr. Ashdown).
  Mr. Anthony Nelson: On a point of order, Mr. Speaker.
  Mr. Speaker: Order. I am still on my feet.
  There is great demand to take part in this debate, which is the final day of the debate on the Queen's Speech, so I propose to put a 10 minute limit on speeches made between 6 pm and 8 pm but, as I have said on previous days, I hope that those called before and after that time will stick broadly to that limit.
  Mr. Nelson: On a point of order, Mr. Speaker. May I revert to the point of order made by my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh), as this is a matter of interest to the House? When an amendment calling for full-blooded Socialism, withdrawal from Northern Ireland and the repeal of all trade union legislation has been tabled, is it not right, as the eyes of the country are upon the splits in the Labour party, and as the amendment appears to have precedents, that the House should be given an opportunity to vote on it and the country should be given an opportunity to see the division in the Labour party?
  Several Hon. Members rose—
  Mr. Speaker: Order. Let me deal with one point of order at a time. The order in which amendments appear on the Order Paper is immaterial to my selection, which I have already announced.
  Mr. Eric S. Heifer: On a point of order, Mr. Speaker. While I understand the efforts being made by Conservative Members to suggest that there are splits in the Labour party, I must say that some of us would welcome the opportunity to vote on what we believe.
  Mr. Speaker: I have not selected that amendment.
  Several Hon. Members rose—
  Mr. Speaker: I hope that this is not a continuation of this spurious point of order, because—[HON. MEMBERS: "It is not spurious."] I have announced my selection, and I cannot go back on it.
  Mr. David Wilshire: On a point of order, Mr. Speaker. May I ask you to reconsider that selection, in view of the comments of the hon. Member for Liverpool, Walton (Mr. Heller)? Should not the public have the right to know how many other Opposition Members are full-blown Socialists?
  Mr. Speaker: Let us get on with the debate; then no doubt we shall all hear.
  Mr. Barry Field: On a point of order, Mr. Speaker. You are most jealous in guarding the rights of Back Benchers. It has come to the House's attention and that of the nation that the hon. Member for Liverpool, Walton (Mr. Heller) feels compelled not to stand at the next general election—
  Mr. Speaker: Order. I have already dealt with this matter and announced my selection. Arguments on this issue can be advanced when we get to the debate.
  3.43 pm
  Mr. John Smith: I beg to move, at the end of the Question, to add:
  But humbly regret that the Gracious Speech seeks to continue economic policies which have caused the largest balance of payments deficit in our history, the highest interest rates among the leading industrial nations, and the highest rate of inflation of the principal countries in the European Community; and call on the Government to adopt a strategy for the regeneration of British Industry, and in particular its manufacturing sector, based on a commitment to regional economic development, support for the introduction of new technology through the promotion of research and development, and a sustained investment in education and training to reverse the appalling skills deficit which continually undermines the prospects of economic recovery.
  I should like to begin with a word of apology to the Chancellor of the Exchequer. In all the flurry of events consequent upon the resignation of the former Chancellor and the ups and downs of recent weeks, I fear that I omitted formally to congratulate him on his accession to his new, and most recent, high office. It occurred to me today that I could and should put that omission right in the first economic debate in this Session of Parliament. So I extend my congratulations to him.
  There is another reason why I should take the opportunity now. Events on the Government Benches continue to move apace. The hon. Member for Clwyd, North-West (Sir A. Meyer) is clearly a force for glasnost and has caused an outbreak of what I can only describe as democratic fervour in the Conservative party, and it seems to be as heady a brew there as it is in eastern Europe.
  After glasnost, as we know, comes perestroika. That opening of the political Pandora's box can afflict even those who thought that they were previously unassailable. So I can understand the feeling of nervousness and uncertainty that is evident in the behaviour of Conservative Members.
  So concerned are they by the political as well as the economic events, that the Prime Minister has sought to reassure them that the election will not be held next year or even the year after that.
  Mr. David Winnick: Or at all.
  Mr. Smith: Even the Prime Minister, despite some confusion about her own ambitions—to which I heard a reference from my hon. Friend the Member for Walsall, North (Mr. Winnick)—and which has left most of us bewildered, will have to face the electorate, and however reluctantly, at the latest in 1992.
  These are all signs of a Government who have lost the confidence of the people and are running scared. They have lost the confidence of the people because of the economic situation which they have created. At the end of 10 years of Thatcherism, we have, at £20 billion, the highest balance of payments deficit in our economic history, we have a rate of inflation higher than any of our European competitors, and we have the highest interest rates among the leading industrial nations.
  Mr. Tim Devlin: In view of what the right hon. and learned Gentleman has been saying, may I ask how he explains recent polling evidence that, even when the Conservative party is in the doldrums, more people have confidence in it to solve the nation's economic problems than they have in the Labour party?
  Mr. Smith: The hon. Gentleman makes a highly selective interpretation of some parts of polling data. I hope that he will take fully on board the fact that the latest poll I saw showed the Labour party 13 points ahead of the Conservative party in the estimation of public opinion. That might just weigh with him in his consideration of events.
  The Government have lost the confidence of the people, and, what is worse, we seem set to enter the 1990s, as the Autumn Statement makes painfully clear, with the prospect of low growth, rising unemployment, falling investment and, even after all that, a balance of payments deficit at the end of the year predicted at £15 billion.
  Those who might have hoped for early relief from the burden of high interest rates, including the millions of people who are locked in mortgage misery, will note with concern from the Autumn Statement that it appears, as City and press commentators have noted, that the Government assume that interest rates will remain at about their present level for at least the year ahead.
  The Chancellor says that next year will not be easy. Does he think that 1989 was easy? Does he think that people found it easy to find £70, £80, £90, £100 extra each month to pay for the homes in which they live? Sadly, the millions in mortgage misery are paying the price of the Government's failed economic policies.
  There is little recognition in the Gracious Speech of the true nature of Britain's economic situation. Last year the Gracious Speech told us that the Government's policies would "bear down on inflation". The Government went on to assure us that the problem was only a "temporary blip" on the path to zero inflation. A year later, we see what credence we can attach to such glib denials of reality.
  But, then, complacency is the hallmark of this Government, and nowhere more so than in their persistent refusal to recognise the gravity of the balance of trade deficit, which has been deteriorating steadily throughout the decade. It may have been masked in the early years by the windfall benefits of North sea oil—a bounty of £78 billion, which the Government have never properly acknowledged—but relentlessly, as the Government's

  587
  neglect of manufacturing industry was perpetuated, the deficit has grown, until 1989 we find ourselves with a record level of £20 billion in the balance of payments.
  Each year, it has been under-estimated by a complacent Government heedless of the consequences of their policy. They were heedless, too, of the warnings given years ago about what would happen if they persisted. It has been a commonplace in the speeches from Opposition Members that the neglect of manufacturing industry would lead inexorably to balance of payments problems. I shall remind the Government that the same message was given to them from another source and from another place. Just over four years ago in 1985—significantly half way through the present decade—the House of Lords Select Committee on Overseas Trade in a special report warned the Government of the neglect of Britain's manufacturing industries.
  The report said:
  "Unless the climate is changed so that steps can be taken to enlarge the manufacturing base, combat import penetration, and stimulate the export of manufactured goods, as oil revenues diminish, the country will experience adverse effects".
  It went on to identify as among those adverse effects:
  "an adverse balance of payments deficit of such proportions that severely deflationary measures will be needed."
  It predicted the risk of
  "the economy stagnating and inflation rising, driven up by a falling exchange rate."
  Seldom has there been such a chillingly accurate prediction.
  Mr. Julian Brazier: Will the right hon. Gentleman give way?
  Mr. Smith: Let me finish this point.
  It unfolded in anticipation the reality of Britain's economy today. So let us have no excuse from the Government that they have been somehow blown off course by unexpected events or adventitious circumstance. They did not listen then, just as they do not listen now.
  The Government's reaction to the considered and careful reasoning of the Select Committee was given by the former Chancellor the right hon. Member for Blaby (Mr. Lawson) in his Mansion house speech of 1985. Not one to mince his words, the former Chancellor rounded on their Lordships and said:
  "The Government wholly rejects the mixture of special pleading dressed up as analysis and assertion masquerading as evidence which led the Committee to its doom-laden conclusion."
  The style and manner of that attack will be familiar to students of the Government. All criticism is gracelessly repelled and all critics immoderately abused. They are always ready to ignore the messages and shoot the messengers.
  The House is well able to judge who was right, in the light of the outturn of events. The Government ignored the threat to manufacturing industry and under-estimated and dismissed the balance of payments consequences. We now know that the House of Lords Select Committee was devastatingly accurate and the Government were completely wrong. We are experiencing an adverse balance of payments deficit of record proportions—the highest in our economic history. Are not interest rates at 15 per cent. a severely deflating measure? The economy is stagnating. Leaving oil aside, it was forecast to grow in the Autumn Statement by only three quarters of 1 per cent. next year. Inflation is rising—it has risen to a six-year peak—and the
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  exchange rate has fallen by 10 per cent. against the basket of currencies since the beginning of the year. Those are precisely the forecasts made by the House of Lords Select Committee in 1985.
  One might have thought that a Government would have been chastened by such an experience, but there is no sign that any lessons have been learnt.
  Mr. Brazier rose—
  Mr. Smith: I will give way to the hon. Gentleman in the hope that at least one Conservative Member might have picked up the point.
  Mr. Brazier: The right hon. Gentleman has mentioned the rate of inflation four times already in his speech. Will he tell the House whether at any time in the future he expects the rate of inflation to reach the average level that it was under the previous Labour Government?
  Mr. Smith: I thought that it might occur to Conservative Members to make such a point. It occurred to me also when I was reading the Prime Minister's contribution during the Gracious Speech debate. On 21 November the Prime Minister said:
  "When growth has been too fast, inflation re-emerges. It emerged in 1973 and it has re-emerged now."—[Official Report, 21 November 1989; Vol 162, c. 28.]
  The House should note the significance of that. Inflation emerged in 1973, before the 1974 Labour Government were elected. It was there with the Barber boom, just as it is here with the Lawson boom.
  It is not only that: Conservative Members conveniently ignored the oil price throughout the entire 1970s. They also conveniently ignore the fact that they have had almost the lowest commodity prices on record throughout the 1980s. Above all, since the Prime Minister, whom most of her colleagues follow slavishly, has given the clue that all this happened in 1973, her colleagues should amend their scripts accordingly.
  Mr. David Clelland: Will my right hon. and learned Friend help the hon. Member for Canterbury (Mr. Brazier) to further his education by telling him that, when the Conservative Government headed by the right hon. Member for Old Bexley and Sidcup (Mr. Heath) came to power in 1970, the rate of inflation was 5·9 per cent. and that, when they retired in 1974, it was 13·1 per cent. and rising fast?
  Mr. Smith: I am grateful to my hon. Friend. A great deal of education is required about the history of inflation in this country; if for no other reason, this debate is helpful in that respect.
  Mr. Tim Smith: Why does the right hon. and learned Gentleman continue to criticise the performance of British manufacturing industry when its profitability is higher than it has been for 25 years, its investment has risen by 40 per cent. and its productivity has risen by 20 per cent. over the past three years, when manufacturing exports are up by 11 per cent. on the figure a year ago and by 40 per cent. in comparison with 1985—the year to which the right hon. and learned Gentleman referred? Why does he continue to run down British manufacturing industry?
  Mr. Smith: I do not want to run down what is left of British manufacturing industry; I want to run down the Government who put such obstacles in its way. It might

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  have occurred to the hon. Gentleman that there is something regrettably wrong with the situation in this country—
  Mr. Philip Oppenheim: Will the right hon. and learned Gentleman give way?
  Mr. Smith: I cannot give way to the hon. Gentleman when I am answering another hon. Member. The hon. Gentleman should expect me to answer his colleague properly before he tries to intervene.
  The hon. Member for Beaconsfield (Mr. Smith) knows perfectly well that there must be something wrong with our manufacturing sector. Many of the leading figures point out constantly that the present size of our balance of trade deficit is a major factor in the highest balance of payments deficit in our history.
  Mr. Oppenheim rose—
  Mr. Bill Walker: As the right hon. and learned Gentleman is a Scottish Member like me, he will realise that one of the major exporting industries in the United Kingdom is the whisky industry, which today is doing better than it has ever done. He will be aware that the distilleries that closed under the Labour Government are now reopening. He will also realise that the £1,000 million-worth of exports by the Scottish whisky industry is a record. That is what is happening under this Government. Perhaps he can explain how it can do that if the Government are so wrong.
  Mr. Smith: The hon. Gentleman puts a fetching point to me. I am unlikely to disagree with anyone who seeks to find solace in whisky, especially as it is, as the hon. Gentleman stresses, such a genuinely important industry and an important contributor to our balance of payments and to employment in the United Kingdom. I wish it every success. However, I regret that, over the full scope of the manufacturing sector, in far too many areas, we are in a trade deficit which should not have been allowed to occur.
  Mr. Oppenheim rose—
  Mr. Gerald Howarth rose—
  Mr. Smith: I will give way once more, and then perhaps I might be allowed to proceed with my speech.
  Mr. Howarth: Does the right hon. and learned Gentleman agree that the trade deficit is accounted for in large measure by the individual spending decisions of our fellow citizens? Does the Labour party plan to introduce import controls across the board or is the right hon. and learned Gentleman content simply to tell his right hon. and hon. Friends that they should stop buying French cars and do as I do and drive a British car?
  Mr. Smith: I do not know whether the hon. Gentleman wants to be congratulated on his personal purchasing decision. However, it will not do for the Government to try to shuffle off the responsibility for the balance of payments deficit on to private individuals. In far too many areas, people who want to buy British cannot because there are no British goods available because our manufacturing sector has become so small that there is very little in the way of choice: there are no British goods in the shops to
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  combat imports. In the interests of choice, apart from economic success, the hon. Member for Cannock and Burntwood (Mr. Howarth) should be supporting the policies advocated by the Labour party.
  Of course, even after all that experience, Government economic policy is still characterised by complacency and confusion. Despite resignations and reshuffles, the Government's economic policy remains obscure and muddled. In ringing tones in the public expenditure debate on 9 February, the present Chancellor said:
  "the first economic duty of government is to safeguard the value of the currency".—[Official Report, 9 February 1989; Vol. 146, c. 1154.]
  [HON. MEMBERS: "Hear, hear."] "Hear, hear," I hear from Conservative Members sitting behind the Chancellor. On the day the Chancellor spoke, on 9 February, sterling was DM3·27; now, it is DM2·80. No wonder there is scepticism about the Government's commitment to the policy which the Chancellor has articulated on their behalf.
  The markets have known all along, and still believe, that the Prime Minister, schooled by Sir Alan Walters, does not want to manage the exchange rate at all, on the view that one cannot buck the market.
  Mr. Quentin Davies: Will the right hon. and learned Gentleman give way?
  Mr. Smith: I have repeatedly given way to Conservative Members. I must make some progress.
  Mr. Davies rose—
  Mr. Smith: I will not give way to the Member for Stamford and Spalding (Mr. Davies). I have made it crystal clear, and I make it clear again, that I do not intend to give way to the hon. Gentleman at present. Perhaps if he will remain in his seat I could make some progress in this debate. Many hon. Members want to speak and I should not take too much time.
  The same degree of confusion appears to extend to the other first duty of Government—the control of inflation. One wonders why the new Chancellor has been so coy about accepting that inflation should be his judge and jury. On at least two occasions he has reminded us that those were not his words—perhaps a case of "Read his lips, don't read mine." The Government's problem is their loss of credibility over the whole range of their economic policy. They once professed to have a medium-term strategy. Hon. Members remember the heady days when we were told that the MTFS would provide a stable financial climate for business and that stability was to be brought to the disordered world of our finances so that virtuous businesses could plan ahead with confidence.
  Earlier this year, the new Chancellor, the then Chief Secretary, sought to explain the policy to small business men. He said:
  "Government policy now operates in a medium-term framework, which gives individuals the confidence to plan ahead."
  He was speaking on 24 May, the very day when interest rates rose to 14 per cent. He omitted to warn them of that increase or the subsequent increase to 15 per cent. in October. So much for the confidence-inspiring medium-term financial strategy. It is no more than an addiction to rising interest rates.
  The Government still peddle the myth of an economic miracle and will resort to any device to attempt to wish away economic reality. When the balance of payments

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  monthly deficit first began to exceed £1 billion, at Prime Minister's Question Time the Prime Minister herself dismissed the figures as a "freak". But as, in month after month ever since, the average monthly deficit was significantly above £ 1 billion, a new explanation for the freaks had to be found. The device which the Government hit upon would have pleased Lewis Carroll—stand the problem on its head and declare it to be a success. The deficit was not a problem at all. Indeed, it was but a sign of success.
  Into the fray went the present Chancellor, again as Chief Secretary. On 27 April 1989, in a speech to the American Chamber of Commerce, rather than attribute the deficit to the consumer boom, an error into which many other commentators appear to have fallen, he declared:
  "the main reason for the balance of payments deficit is the dramatic surge in investment."
  We have often heard such arguments since. For example, British industry is merely pausing to re-equip itself for the next great leap forward.
  That argument cuts no ice with the Opposition. To refute it in detail, I quote the analysis prepared by the City firm, Greenwell Montagu Research, entitled "The UK and Its Love of Imports: How the Deficit Arose", which was published in May of this year. In a detailed study of the composition of the balance of trade, meticulously analysing imports in each category of goods under the standard international trade classification, it concluded:
  "The deterioration in the trade deficit is across virtually all categories of goods. It is certainly not true that the deterioration is due, as the Chancellor"—
  that is, the former Chancellor—
  "would have us believe, to an investment boom."
  Greenwell Montagu Research showed that true investment goods, which it defines as categories 71 to 74 in the standard trade industrial classification, which means power generating machinery, specialised industrial machinery, metal working machinery and general industrial machinery,
  "have accounted for a little over £3 billion of the £25 billion deterioration in the trade account since 1981."
  Just as the claim that the deficit has been caused by an investment boom is bogus, so is the claim that the rise in business investment has transformed the capacity of the British economy, and especially of its manufacturing sector. The truth about the Government's claim is that they constantly seek to obscure the facts about manufacturing investment with hype about business investment—we hear it every day of the week. The real increase in investment is overwhelmingly concentrated in the service sector. There has been greater investment in retail distribution, in banking, insurance, finance and related services. In contrast, manufacturing investment is only marginally higher than the level inherited by the Government 10 years ago, in 1979. Imagine that—manufacturing investment is hardly higher today than it was 10 years ago.
  The fundamental point that the House of Lords Select Committee on Overseas Trade begged the Government to appreciate but which they have constantly failed to appreciate, is that manufacturing is not only the basic wealth creator in this country, but also the crucially internationally tradeable sector of the economy. I remind the House that, at page 82 of its report, the House of Lords Select Committee stated:
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  "service industry cannot substitute for manufacturing because many services are dependent on manufacturing and only 20 per cent. of services are tradable overseas".
  The same point was made in an important article on the United Kingdom's investment record, which was published in the Financial Times on the 8th of this month by Mr. Andrew Glyn, an economist at Corpus Christi college, Oxford. He stated:
  "it would be fantasy to believe that finance and business services can take over from manufacturing and generate the foreign exchange necessary to pay the import bill".
  In this House, however, we are more accustomed to hearing of fantasies rather than facts when Government economic policy is being justified. What else but a sense of fantasy could have led the former Chancellor to claim in the Budget debate of 1988 that Britain was experiencing an economic miracle similar to that enjoyed by Japan and previously experienced by West Germany?
  The first thing that needs to be done is to abandon such illusions. We need a fresh start. Rather than seeking, to maintain the pretence of a busted medium-term financial strategy, we need to build a medium-term industrial strategy that will modernise and expand Britain's manufacturing capacity, so that by wealth creation we can secure the prosperity of the nation and provide the public services that are so vital to the community's quality of life.
  Such a strategy must encompass the whole nation. Britain cannot afford the north-south divide or, to put it another way, cannot operate properly by cramming so much of our economic activity in the overcrowded and congested south-east, to the prejudice and harm of the rest of the nation, as well as of the south-east itself. Therefore, a vigorous and determined regional policy is required, not only in the interests of fairness, but to deploy the under-used resources and the unemployed people who have potentially so much to contribute to the process of wealth creation—[Interruption.]
  Mr. Ian Bruce rose—
  Mr. Edward Leigh rose—
  Mr. Smith: Some of the Conservative Members making interventions from sedentary positions would be better employed listening to some of these obvious truths about the British economy. They do not like the truth, but in this free Parliament they are going to get it, whether they like it or not. I give way to the hon. Member for Gainsborough and Horncastle (Mr. Leigh).
  Mr. Leigh: The right hon. Gentleman has talked about making a fresh start, so may I help him by referring him to the four new taxes proposed in the Labour party's policy document? I refer to the two local taxes that already appear to have been dropped, and to the payroll tax, as well as to the tax on unearned income. As two of the taxes have already been dropped, may I take it that the battlecry of the Labour party is no longer "Meet the Challenge: Make the Change", but "Dodge the Issue: Ditch our Tax"?
  Mr. Smith: The hon. Gentleman has spent a long time rehearsing that intervention; perhaps the kindest thing I can say is that it needs a little more rehearsal.
  Mr. Quentin Davies rose—
  Mr. Smith: Perhaps the hon. Gentleman will allow me to answer the point raised by the hon. Member for

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  Gainsborough and Horncastle (Mr. Leigh). A lesson in courtesy would not go amiss among some Conservative Members—not so much to me as to their hon. Friends who have been so good as to ask me a question.
  The hon. Member for Gainsborough and Horncastle has a sauce to talk about new taxes. What is the new tax afflicting our people from one end of the country to the other? It is the poll tax. Those of us with constituencies in the northern part of the kingdom, in Scotland, know only too well what lies in store for the people of England and Wales. I am being kind in restricting my comments to the poll tax, as what amount to a water tax and an electricity tax will also come the people's way as a result of the privatisations.
  Mr. Ian Bruce rose—
  Mr. Smith: No, I shall not give way.
  We cannot be content with the range of our manufacturing activity. In too many areas, as is being increasingly recognised, Britain has either no presence or one that is too weak to make a real impact in the competition of export markets or in competition with imports at home. That is the very point to which the hon. Member for Cannock and Burntwood (Mr. Howarth) inadvertently drew attention in a previous intervention. Let us remember that we have a deficit of more than £2 billion in information technology industries alone.
  It is the unavoidable responsibility of Government, as recognised by so many of our competitors, to work in partnership with industry to see that Britain is properly placed to develop the new products and the new processes on which we may have to depend in the fiercely competitive markets of the 1990s.
  The neglect of research and development, and particularly the neglect of product development, must end. Above all, we need a wholly new commitment to education and training. For 10 years, our system of industrial training has been in relentless decline. Modern economies are talent-based, and success in the 1990s will go to the countries that can mobilise the skills of their people—all their people.
  That is why the French train three times more people to craft-level qualifications than is done in the United Kingdom. Each year, the Germans train 600,000 young people on three-year industrial courses offering vocational qualifications at the end. In Britain, employment training is under-subscribed by one third and, on average, offers a six-month training period only with, at best, just credits towards vocational qualifications. According to the British Chambers of Commerce, skills shortages now affect 46 per cent. of manufacturing businesses in the United Kingdom.
  In the face of those facts, how can anyone argue that training is satisfactory in Britain today? How can the Government justify the public expenditure programme that they recently brought to the House, which cuts the amounts available for training in industry?
  If we set ourselves the ambition, we could create the best educated and trained work force in western Europe. I believe that the nation would respond to a Government who drove forward to achieve such an ambition.
  Sir Peter Hordern rose—
  Mr. Smith: I hope that the hon. Gentleman will forgive me, but I shall not give way; I am about to conclude.
  Sadly, that ambition will not be achieved under an Administration whose vision is so limited and whose concept of the future is so hopelessly flawed by their restricting ideology and their policy failures.
  The Gracious Speech shows that little has been learnt either about the challenges of the 1990s or the failures of Thatcherism in the 1980s. Britain needs not just a change of Prime Minister: it needs a Labour Government.
  4.13 pm
  The Chancellor of the Exchequer (Mr. John Major): I am grateful to the right hon. and learned Member for Monklands, East (Mr. Smith) for his kind opening remarks. May I take this first opportunity to welcome warmly the hon. Members for Derby, South (Mrs. Beckett) and for Brent, South (Mr. Boateng) to the Opposition Treasury team? I am sure that the right hon. and learned Gentleman will miss his hon. Friend the Member for Monklands, East—
  Mr. John Smith: For Dunfermline, East (Mr. Brown).
  Mr. Major: I beg the hon. Gentleman's pardon. The right hon. and learned Gentleman and his hon. Friend are perhaps the two most famous men to come out of Scotland since Burke and Hare, and it is perhaps understandable that I mixed them up. I know that the right hon. and learned Gentleman will miss his hon. Friend. Above all he will miss him because his hon. Friend has gone to shadow the Department that the right hon. and learned Gentleman regards as the real heart of economic policy. Some time ago, when the right hon. and learned Gentleman was the Opposition spokesman on trade and industry, he said:
  "the Treasury has been too dominant in the whole area of economic and industrial policy. What has been lacking is an important economic department based on the Department of Trade and Industry."
  The right hon. and learned Gentleman has not yet retracted that. His hon. Friend the Member for Dunfermline, East is now the Opposition spokesman on trade and industry, and presumably the right hon. and learned Gentleman, who is the shadow Chancellor, is subordinate to him.
  Although the right hon. and learned Member for Monklands, East may wish to downgrade his role, the shadow team remains as interesting as ever. In that context, I shall turn to the hon. Member for Derby, South (Mrs. Beckett), who has recently joined that team. She has spent a considerable part of her career distancing herself with some clarity from precisely the policies that the right hon. and learned Gentleman so frequently advocates. Hon. Members will recall that, not long ago, the hon. Lady said:
  "None of the arguments for staying in the EEC can be sustained."
  As I understand it, that is not the position of the right hon. and learned Gentleman. The hon. Lady also said that the EEC was a prime obstacle to the policies that the Labour party wants. There is no doubt that the hon. Lady will bring variety to the Opposition Front Bench. While the right hon. and learned Gentleman tours European capitals, the hon. Lady will remain at home planning our exit from the Community.
  Ms. Hilary Armstrong: Perhaps the Chancellor has found himself in the wrong place. The Pre-School Playgroups Association is meeting in the Dining Room.
  Mr. Major: In that case, I am surprised to find the hon. Lady here.
  The right hon. and learned Member for Monklands, East had a great deal to say about the problems that we face. Much of his speech requires an answer and I shall deal specifically with that. He had little or nothing to say about a practical and worthwhile solution. He undervalued our industrial performance and said little to acknowledge the improvements that have been made in recent years. He does not help his party or anyone else by playing down the achievements of business and industry in recent years.
  The right hon. and learned Gentleman conveniently overlooks the fact that total investment is at an all-time high and that an additional 69,000 businesses have been created in the first 10 months of this year alone. He did not acknowledge at all the fact that 2,750,000 more people are in work than six years ago—the greatest creation of jobs by a considerable amount of any nation in the European Community. Perhaps the right hon. and learned Gentleman does not wish to give the Government credit for that. I understand that, but he might offer some credit to the business men and the people who have created that success in the last few years.
  Mr. Robert Sheldon: When the previous Chancellor of the Exchequer departed from office, we were informed that the policies would remain unchanged. Since then, the effective rate of the pound has declined by 4 per cent. Is that a continuation of policy?
  Mr. Major: The central core of our policy has been, and remains, our intention to hear down on inflation and to reduce it as speedily as possible. That is precisely the policy that I shall continue to follow, for I share the view of my right hon. Friend the Member for Blaby (Mr. Lawson) that inflation is now higher than we wish it to be. It is imperative that we use every mechanism at our disposal to bring inflation down: that was my right hon. Friend's policy, and it will remain my policy.
  Mr. Nelson: My right hon. Friend will know that, day on day, exchange rate variations—even those in the European currencies in relation to the pound—are becoming quite substantial. As many of those depreciations must inevitably feed into the rate of domestic inflation, I wonder whether my right hon. Friend feels that we would have been worse off or better off over the past two days had we been full members of the exchange rate. In my view, there can be no doubt of the answer: we would have been better off.
  Mr. Major: At present, that is, I think, unprovable. The fact is that we are not a member of the EMS, and we shall not become a member until the conditions set out at the Madrid summit by my right hon. Friend the Prime Minister are met. There is no doubt that we shall join then, but there is much to be done before that day arrives—not all of it by this Government.
  Mr. Tony Banks: I am grateful to the right hon. Gentleman for giving way. We ex-Lambeth councillors must stick together.
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  Opposition Members genuinely want to see the good side, but if it is so good, why—after 10 years—is our inflation rate higher than that of any of our major European competitors, and why have we the highest balance of payments deficit on manufactured goods? We merely want to know why that has come about.
  Mr. Major: I am surprised that the hon. Gentleman should think that that constitutes ex-Lambeth councillors sticking together. The differentials between the performance of this country and that of the rest of Europe have narrowed dramatically between 1979 and now. Over the past 10 years, we have experienced a higher compound year-on-year growth than any other nation in the European Community. That is a matter of undoubted fact, which the hon. Gentleman may care to bear in mind.
  Mr. Geoffrey Robinson: Is the Chancellor not aware that that growth has come from imports and service industries? Does he not realise that, far from being the enemy of manufacturing industry, the Opposition are its greatest supporter?
  Is the right hon. Gentleman not aware that the whole problem arises from the attitude of his predecessor, who said that he could see no difference between a job in service industry and one in manufacturing industry, and who could not perceive that service industry was largely dependent on manufacturing industry? That attitude has bred a culture of maximum short-term gain, in which the spivs of the City are against long-term investment in our manufacturing industry. That is what is wrong with the Government's outlook, and until they correct it, manufacturing industry will decline yet further.
  Mr. Major: I think that the hon. Gentleman has a cheek. He should remember that Jaguar is a good deal better off today than it was when he was running it some years ago. The figures that I quoted were for output growth, in which we have a better record than any of our partners in the European Community. The hon. Gentleman should not seek to downgrade that record.
  Mr. Ian Bruce: Does my right hon. Friend remember that, in the 1970s, when faced with the problem of high wage inflation in the economy and difficulties with the balance of trade, the Labour party—the friend of manufacturing—decided that the way out was to increase employers' national insurance, with the iniquitous employers' national insurance surcharge? Does he believe that that would be the right way in which to proceed today, or does he agree that it was responsible for sending our manufacturing competitiveness spiralling downwards?
  Mr. Major: I recall those historical sins of the Labour party. More relevantly, however, I also recall that—for all that Labour Members say about manufacturing industry—manufacturing output fell between 1974 and 1979. Against that background, the right hon. Gentleman should perhaps be a little less forceful in his criticism of the present Government for the changes that have taken place in the wider economy.
  Mr. Stuart Bell: Before he leaves the subject of the exchange rate and interest rates, let me remind the Chancellor that his right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) coined the phrase, "the sole golf club in the Chancellor's bag". The Chancellor said in reply to an earlier question that he

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  would use every possible mechanism in relation to the exchange rate. Is he saying that the "single club" policy has now been discarded? Are there now other mechanisms with which to control the exchange rate? Is the right hon. Gentleman prepared to allow it to continue to fall, and, if not, what preventive measures does he propose?
  Mr. Major: If the hon. Gentleman had listened carefully to what I said in the Autumn Statement, he would know that I made it absolutely clear that we shall maintain a firm monetary and fiscal policy to bear down on inflation. I believe, and there should be no doubt about it, that we need to bear down on and to reduce inflation, which I shall try to do. He may not understand the impact of a firm monetary and fiscal policy, but I shall deal with that and other matters later for him.
  Mr. A. E. P. Duffy rose—
  Mr. Keith Vaz rose—
  Mr. Major: If hon. Members will forgive me, I should like to make progress. I have given way generously.
  Insofar as the right hon. and learned Member for Monklands, East addressed what I believe to be the principal problem that we face—inflation—he simply attacked the methods that we are using to curb it, without suggesting any practical alternative. He attacked the medicine but, alas, neglected the disease. He did not overcome his chronic reluctance to reveal his policies in any detail, although I shall be able to help him with that later, as I have now had the opportunity to read with some care the Labour party's policy review.
  The burden of the right hon. and learned Gentleman's speech was that, over the past 10 years, little or nothing has been achieved, and that nothing has changed in our economic performance. If that genuinely is his view—I doubt that it is—he has a selective memory. Ten years ago, we had an economy in which the market was strangled by regulations and controls. There was a large, hopelessly inefficient and loss-making nationalised industry sector. There were controls on prices, dividends, and pay. There were controls on how much the average holidaymaker could take abroad, which had to be stamped in his passport before he could go abroad. All those controls have gone. At that time, they had control of just about everything, except inflation, borrowing and debt, which were uncontrolled by the Labour Government.
  We have moved from that, which is why I reiterate, without qualification, what I said in the Autumn Statement—that the British economy enters the 1990s incomparably stronger than it entered the 1980s, and nothing can hide that reality.
  Mr. Tony Benn: I am listening intently to what the Chancellor is saying. Will he say what the time scale would be for the reduction or disappearance of the balance of payments deficit if present policies, which he supports, are followed? In the end, that will be an important factor. Will he give his estimate of how long it will be before that deficit disappears?
  Mr. Major: I share the right hon. Gentleman's wish to see the trade gap diminish, and I made that clear some time ago. It has not been the fashion of the Government or their predecessors to forecast the trade gap beyond a year. I
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  made a clear forecast in the Autumn Statement of what I think will happen to the trade gap next year. I forecast that it would fall from this year's level of £20 billion to £15 billion. I shall make a further forecast in next year's Autumn Statement, but at present it would not be productive to go further than that.
  Over recent years, economic growth in this country has been good in historical terms and by international comparisons. Throughout the 1980s, it has been faster in the United Kingdom than in all the other European Community countries.
  I do not hide for a second the short-term difficulties that we face, but the policies to deal with them have been put in place and remain in place. The problem that confronts us is to get inflation down. At present, it is too high, and bringing it down will not be easy. Inflation tends to be stubborn, and that will take time. The path from one month to the next will not necessarily be smooth. It may be erratic, not least because of the effect of including mortgage interest payments in the retail price index. For example, next month the recent increase in mortgage interest rates may be reflected in an unnecessarily high retail price index figure.
  Mr. A. J. Beith: The Chancellor has turned to the very point that I wanted to ask him about. It is surely no use for him to complain about the statistical problems of including mortgage interest rates in the retail price index when cost-push inflation is led by pressure for wage increases from people whose mortgages have rocketed at such a rate, because of high interest rates, that they must plead for higher incomes. Given that position, how can the right hon. Gentleman hope to conquer inflation with a high interest rate policy? Why is he not looking for the sort of external disciplines, such as the exchange rate mechanism, that would enable him to get interest rates down?
  Mr. Major: The hon. Gentleman misstates what we have said previously about the RPI. We have said that it is an unreasonable comparator between this country's inflation rate and those of other countries which, with the exception of Canada and Eire, do not include anything remotely approximating to mortgage interest rates in their retail price indexes. That means that the comparative figure looks noticeably worse in this country simply because of the separate methods of calculation.
  Mr. Vaz rose— —
  Mr. Harry Ewing rose—
  Mr. Major: I have given way quite generously and a large number of hon. Members wish to cach your eye, Mr. Speaker, so I fear that I shall not give way.
  To bring inflation down, we are clear that a firm monetary and fiscal stance remains necessary. We have one in place, and we will keep it in place. I expect to do that for some time. That will be so, because the only way to bring inflation down is to keep policy tight, which means keeping interest rates high as long as we need to do so and taking account of a range of monetary indicators, including the exchange rate. That is not a popular message but, in my judgment, it is essential.
  Tight monetary policy should also contribute to a narrowing of the trade gap, by slowing the excessive growth of demand. Of course, to reduce the deficit, our exporters need to do well too, and the signs on this front

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  are far more encouraging than they have been for a considerable time. In 1989 so far, our manufacturing exports have been up 11 per cent. on the same period a year earlier. It now looks as though the United Kingdom's share of world trade will have risen in 1989, which is the clearest possible demonstration that British industry can compete and is competing successfully in world markets. I expect further strong growth in exports next year and a slowing in imports as home demand continues to respond to the tight policy which we now have in place.
  I must say bluntly that there is no known easy way to get inflation down. I have carefully considered the potential alternatives to high interest rates, but the more I have looked at them, the less convincing they have become. Nothing illustrated this more clearly than the difficulties that the Labour party had when it flirted with the fashionable idea of reintroducing credit controls. When Labour did so—
  Mr. Neil Kinnock: We are not flirting.
  Mr. Major: The Leader of the Opposition says that Labour is not flirting with that idea. The hon. Member for Derby, South (Mrs. Beckett) said on television that the Labour party had not made up its mind about the issue. I am pleased to hear that the Leader of the Opposition is in favour of credit controls. I am delighted to hear him confirm that.
  Mr. Kinnock: The Chancellor said a moment or two ago that there was no known alternative to his policy of trying to squash out demand by very high interest rates. There is a known alternative, which permits a country to control the amount of credit extended in order to bring down demand without hammering industry by pushing up costs, and belting every home buyer. Why does not the right hon. Gentleman try one of the known ways that will not harm the economy in the way that his policies will?
  Mr. Major: The right hon. Gentleman clearly does not understand that making credit scarce puts up the price of credit; it does not bring it down. He also does not understand that he has just described the classic way to create the mortgage queue so beloved of the Labour party.
  When the Labour party considered credit controls, it was far from clear what it meant by them. The hon. Member for Dunfermline, East, who, alas, is not with us at present, told us that we could not have credit cards—at precisely the moment that the Labour party introduced its own credit card. The Labour party clearly does not understand that little personal borrowing is done on credit cards, so that would not work.
  Scarcely was that interview over than the hon. Member for Dagenham (Mr. Gould) popped up to tell us that the Labour party did not intend to concentrate on credit cards, but wanted to restrict new mortgages. A little thought persuaded Labour Members that such a policy would be unpopular—as it would be—so the right hon. and learned Member for Monklands, East entered the fray to say that he did not mean to do anything about credit cards or mortgages—or anything else, as far as I can see. Instead, he would apply a little moral pressure by having a quiet drink with his friends in the City. So much for a brief flirtation with policy.
  The truth is that credit controls are not the right answer. Not only were they unfair, inefficient and damaging to industry when they were last used, but in
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  today's competitive and open markets—and especially in the absence of exchange controls—they simply could not work. Artificial controls on bank lending would not work. We tried them before and they failed.
  Mr. Kinnock rose—
  Mr. Major: The right hon. Gentleman might find it wise to wait a minute.
  Such controls would be even more ineffective in today's open and deregulated markets.
  We are not alone in drawing that conclusion. The United States and Germany have rarely, if ever, relied on credit controls such as we have had. Italy and France have moved to eliminate their controls recently, and even Denmark and Sweden, which traditionally have highly regulated economies, are ridding themselves of credit controls.
  Perhaps the most interesting case is that of Australia, which has a Labour Government. If they thought that credit controls could work, they would certainly have introduced them rather than face the present 20 per cent. interest rates. But as their Labour Finance Minister explained to me only last week, they have quite logically concluded that credit controls are a non-starter and they will have nothing to do with them. Only the British Labour party still lives in the 1960s and wants solutions that have been tried before, and have failed.
  Mr. Spencer Batiste: Does my right hon. Friend agree that the only net beneficiaries in an attempt to introduce credit controls would be the European banks, which would take a significant market share away from British banks?
  Mr. Major: My hon. Friend is entirely right. Perhaps that is part of the new-found Europeanism of the Leader of the Opposition.
  The simple fact is that we need to discourage borrowing and to encourage saving, and there is no ducking that. Nothing does that more effectively than interest rates. Our policies are right and, in my judgment, the only policies that we can pursue satisfactorily. There is no simple alternative. We need to be patient for a while, but there is no doubt that the policy is working. The evidence is mounting: retail sales have slowed considerably, the housing market has cooled down and the money supply, although just outside its target range, has slowed from earlier in the year. In short, there is comprehensive evidence that the policy is working, and I see no reason to change it.
  Mr. Duffy: If, as the Chancellor has said, the policy is working, how does he explain the gloomy forecast of the Confederation of British Industry yesterday that, with investment slumping, the economy hovers on the brink of two years of recession? How does such a forecast encourage any of us to believe that the narrow manufacturing base, which was the burden of the concern of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), will be expanded? Unless that happens, we cannot narrow the trade gap.
  Mr. Major: There are several points to make on that matter. First, I gave a perfectly clear-cut response in the Autumn Statement, and I advise the hon. Gentleman to read it. Secondly, the manufacturing base has flourished

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  and will continue to do so, providing that we are able to achieve and maintain firm control of inflation, as we are determined to do.
  Mr. Vaz: Will the Chancellor of the Exchequer give way?
  Mr. Major: No. If the hon. Gentleman will forgive me, I have been over-generous in giving way.
  I shall not set interest rates higher than necessary for longer than necessary, but nor do I intend to reduce them until that can be safely done without risk to inflation. To do so would simply lengthen the time before we can return to the steady and sustainable growth that we are determined to have in the 1990s.
  Nor will there be any backsliding whatever from the sound fiscal policies which have been the characteristic of this Government, throughout its 10 years in office. In case anyone misinterprets, I say that not as a Budget hint but simply to reinforce the fact that, like both my predecessors, I favour a tight fiscal position, both as an essential buttress against inflation, and because of the innate desirability of reducing Government debt rather than adding to it and leaving the next generation to repay it. Our policies mean that, by the end of the current financial year, we shall have made debt repayments of £30 billion in the space of just three years.
  The advantages of our strong fiscal position are self-evident and important for the future. The latest public expenditure plans, which I presented to the House just two weeks ago, show debt interest payments running at £18 billion a year. Had we continued borrowing at the rate that we inherited in 1979, that annual burden would have been, not £18 billion but more like £30 billion a year, a saving of £12 billion. That is a conservative estimate of the saving that we have made. It may have been a great deal larger.
  We have saved more than half the total amount that we spend on the Health Service every year—or, to put it another way, more than the combined budgets of the Department of Trade and Industry, the Department of Employment, the Ministry of Agriculture, and the Department of Transport. That is the scale of the improvement to our public finances of the policies that we have followed in the past 10 years.
  Mr. Vaz rose—
  Mr. Graham Allen rose—
  Mr. Dennis Skinner rose—
  Mr. Major: With the possible exception of Japan, no large nation in the world can match the current strength of our public finances.
  Mr. Allen: The Chancellor of the Exchequer talks as if he has just assumed his responsibilities, as indeed he has. Is he aware that there has been a Conservative Government for 10 years, at the end of which we have the highest inflation rate in industrialised Europe, rising interest rates, which will probably rise further in the near future, the largest trade deficit of any industrialised country and the highest inflation of any G7 country? Does he agree with the right hon. Member for Blaby (Mr. Lawson), who is no longer with us, that inflation should be the judge and jury of this Conservative Government?
  Mr. Major: The hon. Gentleman left out many items from his catalogue. We have had the highest growth of investment, the highest growth of debt repayment, the highest rate of growth in the European Community and much else besides. He should not join his right hon. and hon. Friends in playing down what industry and commerce have achieved.
  Mr. Vaz: Will the Chancellor give way?
  Mr. Major: No. I shall not give way.
  The fact that so much has been achieved and that we have such a strong fiscal position explains precisely why we could increase by £2·6 billion the resources of the National Health Service for the coming year, why we shall double spending on national roads by 1993, why we can afford an extra £250 million for a new initiative to tackle homelessness, and why we can spend a further £500 million on resources for higher education, not to mention the £1·5 billion extra for capital spending by central Government and public corporations—a remarkable increase in real terms of 10 per cent. on the current year.
  Mr. Winnick rose—
  Mr. Major: As a result, it is now clear for all to see that the services that people want and the investment that builds for the future are safe with this Government as they never were under Labour in the 1970s.
  Mr. D. N. Campbell-Savours rose—
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. The Chancellor of the Exchequer has said that he is not prepared to give way.
  Mr. Major: With his usual fairness, the hon. Gentleman will appreciate that I have given way generously in the past few minutes.
  Equally importantly, we have been able to increase spending on priority areas, while sticking absolutely to the ratio of public expenditure planned and determined over a year ago. Public expenditure control is firm and will remain so, now and in future.
  But impressive as our public-sector record is, it is not the whole story of the economy. Not only is the public sector preparing for the future, the private sector is doing so, too. In the past decade, total investment has grown much faster than previously. In the 1960s and 1970s, we were at the bottom of the growth league. In the 1980s we have been at the top of the European investment league. Business investment has also grown more than twice as fast in the 1980s as it did in the 1970s. Last year it stood at £58 billion—a record level of 14·75 per cent. of national income—and it has risen further this year.
  There is yet a further point. There is no point in investing in plant and machinery to produce goods that nobody wants to buy. We learned that in the past. In the 1970s, much of the investment that actually took place was driven not by genuine commercial considerations but by tax avoidance. But since the changes in corporation tax in 1984, that has ceased and investment has increased, not to exploit tax breaks but to reap genuine commercial opportunities and to earn real profits.
  If anyone doubts the importance of considering the quality of investment as well as the quantity they should reassure themselves by examining investment in eastern Europe. In countries such as Poland, Bulgaria, Romania and the Soviet Union, investment accounts for around a

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  quarter or more of national income, significantly more than in this country or other advanced industrial countries. But has it been successful? Has it made a real contribution to the welfare and success of these economies? The lesson is—the Labour party should learn it—that inefficient investment for its own sake gets one nowhere; that is why the quality of our investment is so important to our success.
  Business today is in far better shape than it was ten years ago. It is far better able to tackle—[Interruption.] Opposition Members do not like it, but they know that it is much better. After a decade of rising productivity and rising profitability, industry is far more able to handle a tougher year in 1990, and, beyond that, to face the next decade with confidence.
  In the 1990s, the economic environment will be very different from that of the 1960s, 1970s and 1980s. We should see the completion of a single market in Europe. Demand from eastern Europe—for so long suppressed—should increase dramatically. They will need modern machinery and consumer goods. All those developments represent genuine opportunities for British industry and commerce. I have no doubt whatever that the revival in British enterprise puts us in an ideal position to exploit future challenges, but our objectives will remain the same: sustainable growth, stable prices, lower taxes and better public services. I have no doubt that these are achievable and deliverable in the 1990s.
  I do not believe for a second that the enterprise that has been revived under this Government will evaporate just because interest rates are high for the time being. What would destroy enterprise would be a return to the policies that failed so dismally when the Labour party introduced them.
  Mr. Campbell-Savours rose—
  Madam Deputy Speaker: Order. The Chancellor has made his position clear, and it must be respected.
  Mr. Major: A return to the past is precisely what the Labour party is offering in its policy document, "Meet the Challenge, Make the Change". It is subtitled: "A New Agenda for Britain", although the introduction by the Leader of the Opposition rather spoils that. He admits that, far from a new agenda,
  "we have looked back to gain inspiration from the great accomplishments of the past."
  Mercifully, he does not tell us which accomplishments, but he is accurate to say that his party has looked back—straight back to the policies of the Wilson Government.
  The right hon. and learned Member for Monklands, East is shy about his policy document. He rarely mentions it—very wisely. I have read it and know why he rarely mentions it. It promises a "power house" designed to
  "develop a new proactive role providing continuity, consistency and commitment."
  Would the right hon. and learned Gentleman care to tell us what that gobbledegook means?
  Mr. Campbell-Savours rose—
  Mr. Allen rose—
  Mr. Major: No, I will not give way.
  Mr. Campbell-Savours rose—
  Madam Deputy Speaker: Order. The hon. Gentleman should not persist when the Chancellor has made his position known.
  Mr. Major rose—
  Mr. Campbell-Savours rose—
  Madam Deputy Speaker: Order. I am requiring hon. Gentlemen to resume their seats.
  Mr. Major: I am sorry that the hon. Gentleman is so upset, but if he listens he may learn something.
  All hon. Members will be reassured when they learn that this brand new policy document says that its—
  Mr. Andrew Faulds: Tell us about the pound.
  Mr. Major: Good gracious: fresh from his triumph as Carver Doone, the hon. Gentleman interrupts us again, having woken from his slumbers.
  The policy document says—
  Mr. Faulds: Tell us about the pound.
  Mr. Major: I think that the hon. Gentleman's mechanism has got stuck. Perhaps the hon. Member for Hackney, North and Stoke Newington (Ms. Abbott), who is sitting beside him, could rewind him and he would move on.
  The policy document states—
  Mr. Faulds: Tell us about the pound.
  Mr. Major: That was one of the worst auditions that I have ever heard.
  The document tells us that its
  "task will not be to pick winners."
  Losers, perhaps, as before. Instead of a Department of Economic Affairs, Labour now promises
  "A new Department of Trade and Industry, which will have an equal, if not superior, status to that of the Treasury."
  Instead of a national plan, Labour will now treat us to a "medium term industrial strategy". Instead of George Brown, we shall have Gordon Brown; otherwise, it is all the same.
  Mr. Bell: On a point of order, Madam Deputy Speaker. We are considering the Queen's Speech and this is the Government's defence of their record. Could you direct the Chancellor of the Exchequer to defend the Government's record?
  Madam Deputy Speaker: That has nothing to do with the Chair.
  Mr. Major: A few minutes ago, the right hon. and learned Gentleman told us—
  Mr. Harry Ewing: On a point of order, Madam Deputy Speaker. This is a serious matter. Millions of people are worrying how they can meet the expenditure of Christmas as well as their mortgage payments and every other item of expenditure in their household budget, yet the Chancellor is—
  Madam Deputy Speaker: Order. The hon. Gentleman is a considerable parliamentarian, and he knows that that is not a point of order for me.
  Mr. Major: A few minutes ago, as the House will recollect, the right hon. and learned Gentleman said that the country needed a Labour Government.
  Mr. Skinner: Hear, hear.
  Mr. Major: Perhaps I should say that again, to see if there is more support on the Labour Benches next time.
  It is entirely reasonable to examine the policies of this putative Opposition. If they will not tell us about those policies, we must tell people what their policies are, whether they like it or not. There are further nostalgic references to Wilsonian policies. There will be an investment bank.
  Mr. Faulds: What is the right hon. Gentleman's next job?
  Mr. Major: I promise I shall not understudy anything that the hon. Gentleman has in mind.
  Mr. Ted Rowlands: On a point of order, Madam Deputy Speaker. I wish to raise with you what is clearly emerging as a hat trick post-television. That is that Ministers endeavour to speak until live television finishes. In the light of that—
  Madam Deputy Speaker: Order.
  Mr. Rowlands: In the light of that—
  Madam Deputy Speaker: Order. I am on my feet. I am prepared to deal with the point of order, which I am sure I have understood. The length of the Chancellor's speech has nothing to do with the Chair. He should be allowed to make progress. If there were fewer interruptions, he could do so.
  Mr. Rowlands: Further to that point of order, Madam Deputy Speaker. This is a procedural point. In the light of that evidence, is it not time for the Procedure Select Committee to look at the length of ministerial speeches?
  Madam Deputy Speaker: If the hon. Gentleman feels that this matter should be raised with the Select Committee on Procedure, he has the answer in his own hands. I suggest that he raises the matter with that Committee.
  Mr. Major: Perhaps the Procedure Committee could look at organised disruption while it is about it. In the last film in which I saw the hon. Member for Warley, East (Mr. Faulds), he played the part of a mounted Boer, and he played it well.
  Mr. Campbell-Savours: Will the Chancellor give way?
  Mr. Major: I have given way frequently, and I shall not give way to the hon. Gentleman.
  We are offered "new investment products", but what will they be? If they are any good, why do they need an investment bank? Labour does not tell us. Anyway, I thought from the policy document that Labour was not going to pick winners. Apart from the policy being nonsense, it is nostalgia in a big way—nostalgia for the National Enterprise Board and the Industrial Reorganisation Corporation, both of which made a distinguished contribution to the near-fatal collapse of the British motor car industry. The whole policy echoes the past—the Meriden co-operative, Messrs. Solemn and Binding and the social contract. No wonder Labour
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  members are trying to disrupt these proceedings. They do not like this. It is no wonder that the Leader of the Opposition wrote:
  "We have looked back to gain inspiration from the great accomplishments of the past."
  Back is certainly true, inspiration I am not sure about, and accomplishments is surely wrong by any reasonable judgment.
  We have a decade of solid, clear-cut achievement behind us. By contrast, Labour holds the record of failure—whether it is failure to make British industry successful, failure to bring prosperity to the regions, failure to reduce unemployment or failure to control inflation. We on this side of the House have policies that will work for the future. Labour has policies that failed in the past. Between them, there is only one choice to be made, and I invite the House to make it.
  Madam Deputy Speaker: I call Mr. Beith.
  4.59 pm
  Mr. A. J. Beith rose—
  Mr. Harry Ewing: On a point of order, Madam Deputy Speaker. I apologise to the hon. Member for Berwick-upon-Tweed (Mr. Beith), but I must stress that this afternoon we have seen an absolute abuse of the House of Commons. I am telling you frankly, Madam Deputy Speaker, that there are enough of us in the House with sufficient experience to deal with such tactics should they be repeated. I am warning the occupants of the Chair, in the kindest possible way, that unless they take control, or the Select Committee on Procedure takes control, we will take control.
  Madam Deputy Speaker: I am sure that the hon. Gentleman means his remarks most kindly. As he knows, he has the solution in his hands and I am sure that hon. Members who feel strongly about this matter will raise it in the appropriate quarter. Mr. Alan Beith.
  Mr. Beith: It seems quite clear that if the Government cannot use up every moment until 5 pm, the baying hordes on the Labour Benches will succeed in doing so. Labour Members are trying to shout loud enough to ensure that the Liberal Democrats are not heard at all. No doubt they will continue to do so, just as I shall continue to try to ensure that all points of view can reasonably be heard in the House. I am sure that you, Madam Deputy Speaker, feel that it is your job to do likewise. [Interruption.]
  Madam Deputy Speaker: Order. I should be obliged if the House would now settle down so that the hon. Member for Berwick-upon-Tweed (Mr. Beith) may be heard.
  Mr. Beith: Thank you, Madam Deputy Speaker.
  We have experienced a great deal of political knockabout this afternoon but little about what either the Conservative or the Labour party intends to do about the economy. It was always a possibility that when the new Chancellor took up his responsibilities we might have a little more realism and honesty than hitherto about our economic prospects. There was at least some sign of that in the Chancellor's economic forecast. The right hon. Gentleman forecast a £20 billion trade deficit, which he hoped would fall to £15 billion, and more than 7 per cent. inflation. Today, however, he again allowed himself to give some very rosy forecasts. The real situation is a great deal more serious. The right hon. and learned Member for

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  Monklands, East (Mr. Smith) gave us another denunciation of Government policies but little suggestion of what the Opposition would do about the economy.
  The Gracious Speech tells us little about some of the most important aspects of the economy. It does not say whether the Government intend to make further tax cuts. The Chancellor had to appear on Channel 4 to say that they intended to do so, but probably only just in time for the general election. The Gracious Speech does not mention the Government's earlier objective of zero inflation. It refers to economic and monetary co-operation in Europe but abandons the Government's treaty commitment to European monetary union, which was the subject of the previous Chancellor's recent paper. There is confusion in the Gracious Speech about the Government's European objectives.
  The Prime Minister has said that "uncertainty about anything connected with the Government is not good". We all know what she was referring to, but the assertion extends beyond that matter. We now have uncertainty about the Government's policy on Europe and uncertainty about their exchange rate and monetary policies. Are the present high interest rates determined by pressure on sterling or by domestic monetary conditions? Will they increase if sterling falls? We still do not know, and there remains confusion at the heart of Government policy.
  The Government's anti-inflation strategy has been mistaken at crucial moments. When inflation was led by demand—by too much money chasing too few goods—the Government were boosting demand by tax cuts and the promise of tax cuts and by their changes in the mortgage tax relief system. Now that inflation is led by wage pressures, the Government are pushing up interest and mortgage rates, leaving wage negotiators fighting for a better deal and for cost-of-living increases because the people whom they represent have had to face large increases in their mortgage repayments. That is especially significant now that home ownership is so much more widespread because, quite rightly, many more people are now buying their own homes. High interest rates mean high inflation because wage bids are forced up by the severe pressure on people's finances.
  Clearly, we need action to make lower interest rates possible. That requires an external framework, and the European monetary system makes just such a framework available. The Government must also halt the privatisation price increases, which will feed through and have a massive affect on inflation. Water and electricity prices are to rise steeply as a direct result of the privatisation measures that the Government are implementing this very day. There ought also to be measures to boost saving. We save less than our competitors, and the Government have at their disposal the means of increasing tax incentives designed to attract more people into saving—not to give more tax relief to existing forms of saving, but to attract new savers.
  What prospect will industry have of tackling the balance of payment problem if the Government do not invest to help it? Industry's export record is good. In that respect, the Government's forecast, which I doubted, proved reasonably accurate. They forecast substantial increases in exports because of a switch in capacity from the home market. There has been an increase in exports in the past year, and industry is to be congratulated on it. But what is the other side of the coin? The Government expected imports to decrease and that has not happened.
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  Although demand has remained constant, import penetration has continued to be high and British industry has not been able to meet the needs of its home market. It will not be sufficient for us to increase our export success if we cannot supply our home market to a considerable extent.
  The Government should be investing in training a more skilled work force. Yet some of the most significant cuts outlined in this year's public expenditure statement were cuts in training—in the budget of the Department of Employment. The Government express pride that they have reduced expenditure in this vital area when they should be increasing expenditure on training.
  The Government claim that because fewer people are out of work, we do not need as much training. What nonsense. The main aim of training should be to provide those in employment with better skills. We need to train unemployed people so that they can get jobs, but that is not the end of the story. There is an urgent need for investment in training. Industry must play a part in that investment but it will not take place unless the Government make more effort to play their part in the process.
  We shall need much more transport investment than the Government are committed to, to enable industry to get to the market—especially the industries of the north of England, Scotland and Wales, which will be denied effective access to the Channel tunnel and east coast ports unless we invest more in transport. The measures are available. The Government have the means at their disposal. They have the means to turn round the balance of payments. If those measures can be combined with the lowering of interest rates we shall have some prospect of improving our economic situation. The Queen's Speech does not live up to that challenge.
  On Europe, the Gracious Speech speaks with the voice of a Prime Minister who cannot accept any external discipline on her policies. Was it not striking that, when the former Chancellor revealed in his resignation speech that he had proposed to the Prime Minister that there should be a more independent central hank, the Prime Minister moved swiftly to make it clear that the proposal had been consigned to the wastepaper basket? She is a Prime Minister who can brook no discipline over her conduct and control of power. She demands the freedom to devalue the currency and to print more money—the freedoms that would be restricted if we became full members of the European monetary system and had a more independent central bank, whether British or European. Why does the Prime Minister want the freedom to devalue the currency and to print money? It shows that she rates the retention of power more highly than the achievement of policy objectives that she is supposed to hold.
  The Liberal Democrats have tabled an amendment to the Loyal Address. I hope that many hon. Members will find it attractive, because it moves on from the vague phrases of the Gracious Speech and sets out clearly our aims—that we ought to have
  "a clear commitment to early entry into the exchange rate mechanism … to provide a firm framework for the exchange rate and the battle against inflation, to permit lower interest rates and to ensure that this nation is the leader rather than a spectator in the development of European unity."
  I expect the hon. Member for Clwyd, North-West (Sir A. Meyer)—the stalking horse—to be first through the

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  Lobby in support of the amendment. Perhaps he could conduct his campaign meeting in the Division Lobby if other hon. Members who support him go with him.
  I fear, however, that the pressure on some Conservative Members and the letters to their constituency chairmen, may mean that some of them dare not vote in favour, even though it is such an explicit commitment to something of which the Government were once in favour. Therefore, I am prepared to offer a certificate to any right hon. and hon. Member who comes through our Lobby tonight, to say that it will not be taken as a sign that they intend to vote for the Prime Minister in the subsequent secret ballot. The certificate can be sent to their constituency chairmen to protect Conservative hon. Members.
  I hope to see many Conservative Members in our Lobby. I expect to see the right hon. Member for Blaby (Mr. Lawson) and the right hon. Member for Old Bexley and Sidcup (Mr. Heath). The right hon. Member for Blaby has spoken recently in favour of the principles behind the amendment and the right hon. Member for Old Bexley and Sidcup has been in favour of them for many years.
  I do not see why the official Opposition should not vote for the amendment. I welcome their conversion, and particularly that of the Labour Front Bench to the European monetary system.
  The right hon. and learned Member for Monklands, East (Mr. Smith) did not say whether he was prepared to support the amendment. He did not say anything about the EMS in his speech. Perhaps the conversion process is not complete, and I am asking too much. It is not too much to ask the hon. Member for Durham, North (Mr. Radice), but it may be too much to ask the hon. Member for Dagenham (Mr. Gould) to vote in favour of the principle that we should get into the European monetary system quickly.
  I hope to see many of those right hon. and hon. Members in the Division Lobby tonight—or are they prepared to sit back and watch Britain miss the boat again, as it has done so many times on European issues?
  I think that discussions on this matter may be taking place on the Opposition Front Bench now—
  Mr. Ron Brown: Will the hon. Gentleman give way?
  Mr. Beith: I would rather save any intervention for the right hon. and learned Member for Monklands, East. Perhaps he is able to clarify the position, but I think that discussions may still be continuing as to whether they are allowed to vote for the amendments tonight—
  Mr. Ron Brown: Will the hon. Gentleman give way?
  Madam Deputy Speaker: Order. The hon. Gentleman who has the Floor has made it clear that he does not intend to give way at this stage.
  Mr. Beith: Since the debate on the Gracious Speech began a few days ago, and since the opening speeches, there have been further dramatic changes in eastern Europe. The Prime Minister welcomed those changes, as we all did. Indeed, she goes further—she claims credit for most of them, and that may seem strange to the people in eastern Europe who have fought so hard for many years. What a strange picture that conjures up. We all welcome the changes: multi-party politics; the prospect of coalition
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  Governments; decentralised power; protection for human rights and new constitutions; demonstrations in the streets; strikes; trade union activity in support of political causes; freedom of information, including press conferences given by the security forces; church leaders becoming involved in politics; challenges to the existing party leadership. The Prime Minister welcomes all of them, but only as long as they do not happen here. Those things should also be happening in Britain.
  In eastern Europe there is a move away from repression towards liberal democracy. There is a long way to go, but it is an important move. In Britain, under this Prime Minister, we are moving in the opposite direction.
  5.12 pm
  Mr. Edward Heath: I offer my warmest congratulations to my right hon. Friend the Chancellor of the Exchequer on his appointment. He holds one of the three great departmental offices in Britain, and that is an immense responsibility.
  I cannot help wondering what the millions of people who will see the Chamber tonight on television will think. People with mortgages, who find that the interest rate has almost doubled since they took out their mortgages—what will they think? All those people who have to give up their houses, or have them seized from them—
  Mr. Barry Field: Will my right hon. Friend give way?
  Mr. Heath: No, I shall not. I propose to carry on my own speech in my own way throughout.
  What do those individuals, whom we have encouraged to start their own enterprises, think as the bankruptcy rate goes ever higher? What did the business men from larger enterprises think, when they left the Confederation of British Industry conference, about their future and what the Government are doing about it?
  The public will watch a knockabout show once, but they do not usually go back to the same show again. They are not interested in what the Labour Government were doing from 1964 to 1979, or in what the Government were doing 10 years ago, as detailed by Opposition Members. They want to know in detail what their future will be, and how they should respond to it—that is natural. I suggest that it is our responsibility to deal with the problems in that way.
  When my right hon. Friend the Chancellor refers to the past, or when Opposition Members intervene on that basis, they should be accurate. It is not accurate to say that the regional development schemes put forward directly after the second world war and carried through until the present Government, were a failure. It is complete nonsense. I see my right hon. Friend the Chancellor shaking his head, but I must tell him that it is indeed nonsense.
  One of the most successful parts of British industry at the moment is the high technology industry in new towns in Scotland, and Scotland should have every credit for that. That industry would not be there without the incentives that were offered to business men to go there. The decisions as to which industries went to those places, how they set up firms and how they are run were taken by business men and not by Governments or Departments. We gave them the incentive that made it profitable to carry on a business and to provide jobs. I ask my right hon. Friend the Chancellor not to repeat accusations which can

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  so easily be disproved. I am sorry to see that he still shakes his head—he took no part in those operations and obviously did not see what happened.
  The hon. Member for Tyne Bridge (Mr. Clelland) mentioned inflation in 1973. It would have been more accurate to point out that we had to cope with a quadruple increase in oil prices which followed us through the 1970s, and the highest price for imported raw materials that we have ever known in Britain. It is ridiculous to try to learn lessons from that unless we take account of all the circumstances as they occurred.
  There are two things which disappoint me in my right hon. Friend the Chancellor. First, he has boxed himself in on two vital aspects of policy. One is interest rates, which are said to be the only way to deal with the economy, and the other is going for lower taxation than we have at present. Most observers analysing the situation agree that the sudden descent to a 25 per cent. tax rate by the previous Chancellor had a considerable amount to do with the position in which we now find ourselves. There is a lesson to be learned from that.
  Mr. Neil Hamilton: Will my right hon. Friend give way?
  Madam Deputy Speaker: Order. The right hon. Member made it clear at the beginning of his speech that he was not prepared to give way.
  Mr. Heath: Until my right hon. Friend's predecessor did so, no Chancellor has declared in the House that he would not increase taxation under any circumstance and that he was determined to reduce it. Other Finance Ministers recognise that circumstances may arise when it is necessary to increase taxation so as to influence the economy in the way that they wish. I am sorry that my right hon. Friend has boxed himself in on those two issues, which are important for the handling of the economy.
  The other methods of handling the economy which my right hon. Friend the Chancellor dismissed so bluntly are limitation of credit and influence on the amounts of credit available. It is untrue to say that that policy was a failure—at the time, it was immensely effective. My right hon. Friend says that he no longer has the means to do that, but I disagree with him. Perhaps the Governor of the Bank of England no longer exerts influence in the City. That may be why my right hon. Friend's predecessor put forward the argument that there should be an independent Bank of England, similar to the independent Bundesbank, but I do not accept the whole of that argument.
  I believe that it is still possible for the Governor of the Bank of England to use his influence in the City. People say that that is no longer possible because of the abolition of exchange control, but that is a simplification of the situation. There are many foreign banks in London now, but if the Governor wishes to exert his influence they have to accept it. They know perfectly well that they are licensed, and if they do not do as the Governor insists their licence will be in danger. [Hon. Members: "Rubbish!"] I ask my hon. Friends to stop their chattering. If they think it is possible to live here and get the credit they want anywhere in the world, let my right hon. Friend the Chancellor try doing it—it just does not work in the way that has been described. If he was determined to deal with the excess of credit through action by the Governor of the Bank of England and allied means, I believe that he could be effective. He has asked for proposals. He should
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  consider that one in detail and not dismiss it out of hand as having failed for the first 40 years, since the war. We should also consider other means of dealing with the problem.
  There are two aspects of the emphasis on the repayment of debt that I wish to mention. First, if there is repayment of debt, the money goes back into circulation. It is the repayment of gilts. Unless it is borrowed to the same extent, that puts pressure on the economy as a whole. It is bound to do so. Everyone with whom I have discussed the matter agrees. That is another issue that could be dealt with perfectly well by my right hon. Friend the Chancellor.
  The second thing that worries me is that those borrowings were made by our predecessors to insure for our future. The boast now is that we are not doing that. We are not insuring the future for other generations. Anyone who has travelled around Europe and North America knows that Britain has the worst infrastructure in the western world. I welcome my right hon. Friend's contribution through the expansion that he announced in his Autumn Statement, but when we compare that with the rate of inflation—and when we compare what that money can achieve with what is required—we see how much is lacking. I stress the comparison with how much is required. That is why the citizen says, "Yes, I get all these increases, and I am told that there are billions of pounds more, but my needs are not being met."
  Yesterday, the Secretary of State for Health mentioned my constituency and said that a consultant had complained. In fact, the management committee of the Bexleyheath health authority complained. For the next three months, until next year, only emergency cases are being taken for operations. My constituents say that that is not good enough. In the summer, my attention was drawn to the case of a lady who has lost the sight of one eye and whose sight in the other is failing. Her doctor told her that he would consult the hospital and get her an appointment. She duly got one—for 16 June 1990.
  Mr. Brian Sedgemore: That is unacceptable.
  Mr. Heath: I have to point out that that lady is 95 years old. Despite what we are doing, the genuine requirements of the citizen are not being met. We as a party must show that we are following a course which will ensure that they are met.
  There is another fundamental fallacy here—that everyone must become more efficient. The usual answer is to pluck someone who knows nothing about the job and put him in, saying that he is now a manager. In the hospital service, the more efficient one becomes—in my constituency, Queen Mary's hospital is immensely efficient and acknowledged to be so—the more money one requires, as more patients are seen and they spend a shorter time in hospital. The result is a need for more money— [Interruption.] I am sorry if my hon. Friends are not interested in Bexley—[HON. MEMBERS: "We are."] I nave described a fundamental misunderstanding concerning the NHS.
  Another thing that worries me immensely about the attitude towards money concerns privatisation. I imagine that most right hon. and hon. Members were horrified when, after the Deal tragedy when the Royal Marines band was bombed, we heard that the guards had been privatised. To me, that is utterly unacceptable. As a party,

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  we have always believed in effective defence. If someone is in the Army, his job is to defend himself and not to get private citizens to do it, even in peace. I do not believe that the change is justified, and I am even more horrified to learn the extent to which it is going on. This cannot possibly continue if we are to have an effective answer to the terrorism that we face.
  For my right hon. Friend the Prime Minister to say, "Don't blame us for not having a proper military guard—blame the IRA for attacking us" is not justified in a war of terrorism against the British people. We cannot say, "They will not go for the soft spots," because we know that they will go for any spot they can find. That is clear from recent experiences in Europe and especially in Germany.
  Italy and Germany have dealt with terrorism. We have had it for 20 years, but we have still not dealt with it, and the information that we have for dealing with it is inadequate, as proved by the number of occasions when we have been taken off guard and people have suffered. That is what is happening in Northern Ireland, in mainland Britain and in Europe.
  Mr. Ian Bruce: Will my right hon. Friend give way?
  Mr. Heath: No.
  For the past 10 years I have urged that this country should become a full member of the European monetary system. I still urge that course—[Interruption.]
  Mr. Giles Radice: On a point of order, Madam Deputy Speaker. Is it right for Conservative Members who do not like what the former Prime Minister is saying to barrack and heckle when they are sitting directly behind him?
  Madam Deputy Speaker: The hon. Member is quite right. I hope that the House will settle down. We need only one debate at a time in the Chamber.
  Mr. Heath: My right hon. Friend the Chancellor says that he wants to keep inflation down. He is absolutely right to want that but the policies being pursued at present are increasing inflation. Becoming a full member of the European monetary system even five years ago would have helped to decrease inflation. Looking back five years, on the criteria that have been laid down it would have been perfectly possible for us to join.
  Mr. William Cash: Will my right hon. Friend give way?
  Mr. Heath: I have already said that I shall not give way.
  Had we been in the European monetary system, the pressure on inflation would have been far greater. When the Prime Minister lists so many conditions that have to be met, she is saying that we are worse than the lowest of the 11 who have accepted the situation—[Interruption.] She is saying that we cannot go in, but that they can go in and be successful. She is saying that Germany can be immensely successful, that France can be successful, that the others can be successful but that we cannot and that we must wait until the last moment.
  Then we are told that joining the EMS affects our sovereignty. Christopher Johnson, one of the best commentators on economic affairs, said in an article:
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  "if sovereignty is nothing more than the right to make one's mistakes in ignominious isolation, then it is hardly a prize worth having."
  That is right.
  Mr. Ron Brown: Will the right hon. Gentleman give way?
  Mr. Heath: No.
  Mr. Brown rose—
  Madam Deputy Speaker: Order. The right hon. Member for Old Bexley and Sidcup (Mr. Heath) has made it absolutely clear many times that he will not give way.
  Mr. Brown rose—
  Madam Deputy Speaker: Order.
  Mr. Heath: I assure the hon. Member that I am not a stalking horse in any sense.
  Now we are told that to be isolated is to be leader. I can say in all modesty in those circumstances that I must be the greatest leader of all time—and it is not a position that appeals to me. It is obvious that the greater part of our organisations and the greater part of the Cabinet believe that we should already be in the EMS, that we are being held out for only one reason and that the quicker we get in, the better.
  I was glad to hear the Foreign Secretary say that we would not go back to an EFTA position. He had to say that only because the whole line of the Bruges speech was about going to EFTA. Chancellor Kohl and President Mitterrand saw that clearly, and that was the reason for President Mitterrand's statement. They are determined to go on their own, regardless of us, unless we are prepared to make our contribution to a full Community.
  For me, a full Community is a situation in which we do all that we can together for our own advantage. Why should we have turned down help for our old age pensioners merely so that we could say, "No, we are not forced to do it, so we shall insist on doing it or not doing it ourselves"? The result is that we do not do it, and we all suffer. I believe that the great majority of people in Britain want us to be in a Community in which we can share as far as we possibly can.
  As the hon. Member for Berwick-upon-Tweed (Mr. Beith) said, the developments in eastern Europe have been remarkable, and we cannot judge how it will all finish. Already the question of the unification of Germany has arisen. I use the word "unification" rather than "reunification" because reunification raises the question of going back to pre-1939 boundaries, and that strikes fear into the hearts of the Poles and Czechs. On unification, however, Chancellor Kohl has today set out the three stages on which he believes that it can be achieved. He obviously cannot set a timetable, but he has stated what West Germany will do.
  Mr. Skinner: Who follows Kohl?
  Mr. Heath: At present, a large part of the German public.
  Mr. Skinner: The right hon. Gentleman knows the meaning of my question.
  Mr. Heath: We shall see what happens after the next election. If anything, the SDP is more strongly in favour because it does not believe that eastern Germany will be

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  Christian Democrat. It believes that it will be non-Communist but Socialist, and that would greatly increase its influence. So it is a united country wanting to have Germany united.
  Mr. Skinner: Why?
  Mr. Heath: I shall explain why to the hon. Member for Bolsover (Mr. Skinner), who always listens to me with great patience. Many people in Europe and in the United States will be intensely worried about such developments and from the defence point of view some will ask whether it is a clever move by Mr. Gorbachev to get eastern Germany into a position from which it can tell western Germany, "Yes, we will join you, if we both become neutral." The impact of that on NATO and on the defence of Europe would be immense, but I do not believe that he is as clever as that. When we look at the other situation, in which western Germany is still in NATO and in the Community, people then worry lest Germany have a dominant economic position in the Community and in Europe.
  The only answer to the fears of those in Europe and elsewhere about a united Germany is to have a stronger, more tightly bound Community. That involves all aspect, of the Community. It also involves Britain taking a lead now and playing a constructive part in the formulation of the Community and its policies to ensure that a western Germany, even an enlarged united Germany, cannot be considered a danger to the rest of us. It concerns those of us who lived through the 1930s and who fought through six years of war as much as anybody else that that should not happen. Nor are we prepared to see a situation in which we again split up into a mass of little nation states. There are those who say, "Hold up Community progress, let eastern Europe get its own house sorted out individually, and then we shall be a nice lot of individual countries again." I am not prepared to accept that. Nor do I believe the British people are willing to accept it. The risks are far too great.
  I repeat that the answer is a stronger, more united Community, and we must play our part in achieving that. It has proved to be the attraction for eastern Europe and is one reason why they have thrown off Communism. They want to adopt a system closer to that of the Community and they want to get the benefits that they see. The people of East Berlin and East Germany saw that more clearly than anyone else because it was going on next door in West Berlin and West Germany.
  For those reasons, I urge the British Government and the Chancellor to play their part in going for full membership of the European monetary system. If we have a common currency, West Germany will be more tightly bound into our system. If we have a central bank—with, as I believe, democratic control—western Germany, or a united Germany, will be more tightly bound into the Community and into our continent. That is the next stage. We have no time to waste if we are to go on to help the people of eastern Europe when they become democractic. We can help them. The Americans will not like giving them a great deal of investment—they never have—but we can help.
  We must not, however, allow that to take our minds off the problems of the Third world, which is the other big danger because the problems of the Third world are emerging again. In Ethiopia there are again hundreds of
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  thousands of starving people. The Third world still needs the attention of the Community, but we must become more prosperous so that we can help eastern Europe in its development. Above all, we must have a Community which is tightly bound together so that later we can consider the future membership of what will then be free and democratic countries.
  5.36 pm
  Mr. Alan Williams: It is more of a pleasure to speak following the right hon. Member for Old Bexley and Sidcup (Mr. Heath) as a speaker than as a Minister. When I went to the Department of Prices and Consumer Protection in 1974, I had to pick up the results of the accelerating inflation that the right hon. Gentleman had left us, with his threshold agreements.
  Indeed, it amused me to hear the Chancellor trying today—as did the Secretary of State for Trade and Industry last week—to rewrite history, trying to pose horrors of the 1960s as being implicit in the programme that the Labour party is putting forward. The Chancellor referred to the Department of Economic Affairs and to the National Enterprise Board. We heard the same last week from the Secretary of State for Trade and Industry, who said:
  "Does the Labour party remember the Department of Economic Affairs?"
  I remember it. I was in it. He went on:
  "Does it remember the National Enterprise Board? They, too, were set up to 'develop strategies and identify priorities for industry'. Where did they leave British industry?"—[Official Report, 22 November 1989; Vol. 162, c. 122.]
  I am happy to tell the House where they left British industry. At today's prices, they left British industry with a balance of payments surplus of £5 billion a year, and the Conservatives were the beneficiaries of that. Not only did they leave the advantage of the equivalent at today's prices of a £5 billion a year balance of payments surplus, but they did it having inherited from the Conservatives a deficit of £5 billion. So if the Government want to go back to the days of the Department of Economic Affairs and the National Enterprise Board, we should not run from that but run to the record books and throw the figures back at the Government.
  I am today having a fascinating maiden speech experience, in that I am making my first Back-Bench speech after 22 years on the Front Bench, where I served mainly in economic areas. I therefore feel it appropriate to contribute on a narrow aspect of the issues that are dominating our worries today. I want to talk about what I see as the squandering of a unique and unrepeatable opportunity that Britain had during the 1980s.
  I want to fit the events about which we are now worried into a longer-term context, as I genuinely believe we are seeing the return to a problem that has beset the United Kingdom since the second world war—the stop-go syndrome. For the Chancellor and other Ministers to describe what is happening now as a blip either reveals that they have been grossly misled or is an attempt by them to grossly mislead.
  We are facing a balance of payments crisis of unprecedented proportion. We must remember that we emerged fom the second world war into an era of balance of payments crises for reasons that I do not need to go into, and which most of us understand. So intransigent were the problems that we faced, as far back as the mid-1940s, that for the next 35 years they beset successive

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  Governments. Every time there was a bid for growth, the drawing in of raw materials and semi-manufactures led to pressure first on the balance of trade, then on sterling, then on the Bank of England to inervene, next on the Government to raise interest rates and then on the Government to introduce credit squeezes. After the go, the stop would inexorably be applied, and we would be in a period of deflation.
  That was bad enough, but the consequences produced what we have all come to know as the British malaise—low investment, bad industrial relations and low growth. They produced low investment because manufacturers were determined that they would not be caught again. They were told by successive Chancellors and Prime Ministers that if they invested, this time the dash for growth would be the real one, and then subsequently, as the brakes were applied, they found that they had surplus capacity and high servicing charges. As a result, they became cautious and in turn created the second problem—poor industrial relations. They began to use labour as a capital substitute. As we went for growth, instead of investing, as our competitors were doing, we took on labour and started overtime. When there was a cut back and deflation, we cut labour and overtime.
  Consequently, the era of industrial confrontation was born. Out of that hire and fire economy emerged the British sickness—low investment, bad industrial relations, lack of skills and low growth. While we were trapped in that syndrome, our competitors—the United States, the EEC and Japan—were enjoying continuing growth. Every time we touched the accelerator and our gear slipped—as inevitably happened as the brake had to be applied—the gap between us and our competitors widened.
  Nowhere was that gap revealed more clearly than in the car industry. Over a period of 30 years, as was revealed in The Sunday Times this weekend, car production in western Europe increased by 375 per cent., whereas in Britain it increased by 15 per cent. Until the late 1970s, we were always bedevilled by the threat of a balance of payments crisis and of stop-go.
  Then came a unique fortuitous but finite opportunity for us. It came in the form of North sea oil which brought the double boom of resources, but more importantly—although this has tended to be ignored or not recognised—a shield for the first time against the very balance of payments pressures which had forced every Chancellor to apply the brake.
  For the first time, we had time—we had a decade. During those 10 years, which are just expiring, as a result of the overseas sale of North sea oil and gas and the import substitution that it represents, we have had a balance of payments windfall of £128 billion. It was our only chance to go for growth. In addition, it provided resources for the first time—which the Government could use if they wished—of an extra £70 billion in windfall revenue. That money could have been used to modernise industry and update technology, for innovation, growth and investment.
  The Government inherited that possibility in 1980, at a time when manufacturing investment in Britain was already at the highest level it had ever attained in the entire post-war period. They had the platform on which to build. Manufacturing investment was at an unprecedented high
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  and the resources were available to boost that investment further. What more could any British Government have asked for? What an opportunity was presented to them.
  How did they use that opportunity? The guilty man is sitting on the Treasury Bench. How did the present Leader of the House use it in what he described as his first "opportunity Budget"? This Government, like so many Governments, made their errors in the first six months and spent the rest of their term trying to undo them.
  In his first Budget, the present Leader of the House unleashed policies that cut manufacturing industry by 20 per cent. and manufacturing investment by 41 per cent. We had the resources to sustain output at that time, but he cut it. For the entire life of this Government, while they have had that finite resource, instead of manufacturing investment soaring it has only just got back to where it started. In the process, that manufacturing industry, which, as I said, had already been cut back by 20 per cent. in capacity, lost £18 billion in investment which it would have had if the Government had sustained the level of investment applying when they took office. No Government since the war have ever had such an opportunity.
  Now, 10 years on, the Thatcher miracle can be seen for what it is—the miracle that never was. Despite that £128 billion balance of payments windfall—it is important to emphasise that figure—at the end of this year the Government will have a net balance of payments deficit for the decade of £15 billion. The existing £15 billion deficit and the £128 billion balance of payments bonus that they had show that the Government have under-produced goods and services on a monumental scale—£143 billion. That is the cover that they have had from the North sea. It is the price which we have had to pay for the destruction of industry and the cutting of investment. The other day the Secretary of State for Trade and Industry had the cheek to say that there was no supply side problem—there is just a gap of £143 billion.
  Now oil is declining. Britain has never known failure on such a scale. Future historians will look with wonder and horror at the Government's failure and at the failure of the right hon. and learned Gentleman the present Leader of the House and the Prime Minister to seize the one and only opportunity we have had since the war to break out of the vicious stop-go cycle. It was not a decade of lost opportunity because "lost" implies that there might have been an element of chance in it. It was a decade of squandered opportunity.
  The Prime Minister and the Leader of the House are like a family who won the football pools and two years later were bankrupt. Britain won the pools when we found North sea oil and that £128 billion-worth of resources for the country. However, because of doctrinal bigotry, lack of understanding, refusal to consider alternatives and a neglect of the evidence, the Government in their blindness allowed the North sea oil—all the £128 billion—to run back into the sand from whence it came. Now, £128 billion later, we are back where we started: there is pressure on sterling, a brake on growth and firms are revising investment programmes downwards.
  The peak riches of the North sea are behind us. There is no rescue for the Government. I submit that we are seeing not an isolated blip, but a return to that inexorable cycle: thanks to the Government's ineptitude, we are back on to the old stop-go treadmill.
  5.50 pm
  Mr. Michael Grylls: The right hon. Member for Swansea, West (Mr. Williams) was a very distinguished and charming Labour Minister. He has made a very interesting speech, as we would have expected; he has been a friend of mine in the House for some time and I hope that he always will be. Although his historical analysis was right when he referred to the British disease of the 1970s, he was on dangerous ground when he carried his analysis through to the present day.
  Some Opposition Front-Bench spokesmen, including the right hon. and learned Member for Monklands, East (Mr. Smith) today and the hon. Member for Dunfermline, East (Mr. Brown) in the debate on industry last week, have tried to decry what some people, although not I, have described as the British miracle. It was foolish to do that, and inaccurate.
  It would be more accurate to refer to the changes that we can contrast today with the scene described by the right hon. Member for Swansea, West. Those changes have occurred not as a result of a miracle, but thanks to sensible and practical policies. Those policies have been followed in many other countries with great success over the years. However, somehow Britain failed to follow them in the decades before the 1980s.
  We owe a great debt of gratitude to my right hon. and learned Friend the Leader of the House. When he was Chancellor of the Exchequer, he laid the foundation for the first conquering of inflation and for the many tax changes that he introduced on the supply side. Those have been important factors in strengthening the British economy.
  I know that this is a partisan debate; that is normal, and probably right. However, it does not do the debate any good for the Opposition to decry any or all of the Government's achievements. Perhaps people do not want to give the Government credit, because that is not within the partisan mood, but they should at least give credit to British industry, which has changed itself beyond recognition within the past 10 years. That does not mean that everything has been done, because there is plenty more to do. Perhaps there should be almost a bipartisan view about what needs to be done in future.
  The right hon. Member for Swansea, West tried to accuse my right hon. and learned Friend the Leader of the House, a former Chancellor of the Exchequer, of squandering an inheritance. That is lunacy. The right hon. Gentleman is normally a very good debater, but such accusations do him no good.
  We must consider the fact that British industry has quadrupled its productivity. It has doubled its profits, and 1,500 new firms are starting up every week. Before, we were losing small firms. There was a net loss, but there is now a net gain. That is the sign of a very successful economy.
  No doubt Opposition Members would say that that is not enough, and I would agree. I want to see British industry double and treble those figures. However, if we continue the policies that we have pursued over the past 10 years, we are entitled to state that those figures will rise. Those figures have been achieved because the economy has been growing and we have made important supply side changes. There have been changes in taxation and unnecessary regulations have been removed to encourage entrepreneurs to get up and start new businesses.
  Ms. Diane Abbott: If the number of new firms is a sign of success, what is the record level of bankruptcies a sign of? Will the hon. Gentleman enlighten us?
  Mr. Grylls: The figure that I gave was a net figure. In three or four months, the figure may go up or down. It is a forecast. However, so far that net figure has been increasing.
  Interest rates are a great worry to many independent businesses. However, we should not simply decry the great success caused by the supply side changes which have been the basic foundation of growth which is the important success in our economy. It would be wise of us to recognise the huge turn-round.
  No doubt the right hon. Member for Swansea, West will remember as I do that, under the Labour Government and in the early years of the Conservative Government, we still faced huge losses in several nationalised industries. British Steel reported losses of £500 million. British Leyland was always in a disastrous state. There was always a crisis around the corner and BL representatives visited Ministers and Back Benchers to explain the latest disaster. Leyland has been successfully returned to the private sector, and we hope that it will thrive and become stronger and achieve the exports that it deserves. Similarly, I hope that British Aerospace is successful.
  The transformation of the nationalised industries has been very important. We are all aware of the success story of British Telecom. Mercury, a new telephone company, is gradually expanding and bringing much-needed competition into the telecommunications market. That competition has helped to create new firms in the telecommunications business. When we had one dominant nationalised industry, it was difficult for new firms to enter the marketplace. The market has been opened up and there is a strong regulator in the shape of Oftel to encourage competition. New gadgets are being invented daily in the telecommunications world and British Telecom is one of the world's leading companies in that area.
  I do not want to refer to Europe at length today, as other hon. Members have done that already. However, anyone who says that Britain is behind hand in being a good member of the Community must be aware that we were the first to open up our telecommunications to procurement Communitywide. We are entitled to ask other Community countries when they will open up their markets so that British firms can try to win orders to supply their telecommunications companies. In that respect—and I believe in many others—Britain has been a very good European and has been leading the way in deregulating.
  In surveying the general scene of industry and commerce. I want to refer to the smaller industrialists. Now that we have had such an improvement in British industry generally, it is time to see whether we can give more encouragement to the typically smaller industrial firm. I want to refer to a firm of a size that is typical in West Germany and which has been the backbone of the German industrial scene and largely responsible for West German industrial success. It is a small industrial firm with a turnover of about £1 million.
  Typically, such a firm would spend about 50 per cent. of its turnover on materials and associated costs. When interest rates go up, such a firm faces a double squeeze

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  —a squeeze by customers, who may take up to two extra weeks to pay, and a squeeze by materials suppliers, who will restrict credit by two weeks. That firm's overdraft could then go up from £100,000 to £160,000. The firm is squeezed by the higher borrowing and, sadly, by a lack of understanding on the part of too many of our high street bank managers who inadequately understand the needs of a smaller independent business. Some of them are trying to change, but matters are not as good as they should he. A firm which is faced with such a squeeze must cut back somehow and hope to ride out the substantial extra cost of borrowing or of working capital.
  We can look to Germany and Japan for a solution. Although we have rightly removed general subsidies in nationalised industries and our other great industries, which should be and are now standing on their own feet, there is an argument for helping and encouraging a small industrial firm with a turnover of £1 million. That argument has been accepted in Germany and Japan, where such firms are given a differential rate of interest.
  No doubt Opposition Members will say that the hon. Member for Surrey, North-West has taken leave of his senses and is asking for some form of subsidy. Of course subsidies have not yet been totally removed from the economic scene. They have not been removed from housing or from pensions—indeed, they are prevalent. There is an argument for seeing how we can help this sector of our industry, because it would be an investment for the future. I hope that hon. Members who do not like general subsidies will not be derisive.
  Unlike large firms, a small industrial company cannot borrow on the Eurodollar market, for example, or in some sophisticated way through the City of London. Generally, it can borrow only through its own bank in the way that I have described. When we try to defeat inflation with high interest rates, we must try to help such companies. Therefore, I hope that the Government will look at this matter. We should not rush into it, but we should study what is done in several other countries, such as Germany and Japan, and see how we can help such firms. They comprise part of our still weak industrial life. They were seriously weakened over the 1950s, 1960s and 1970s by too much taxation and regulation, and they are not yet strong enough. I want them to be helped to get on to their feet.
  Mr. Benn: I do not know whether the hon. Gentleman is aware that the exact scheme that he proposes was put up by myself as Secretary of State for Industry, but it was turned down as a breach of the treaty of Rome. The right hon. Member for Old Bexley and Sidcup (Mr. Heath) had an interest relief scheme which was 1 per cent. below the going rate to help industry in Scotland. The Commissioner in Brussels said that it was illegal, and it was abandoned. As a pro-European, the hon. Gentleman must take account of the fact that everything he has suggested would be deemed illegal.
  Mr. Grylls: I do not think that that is right. Any subsidy must be negotiated with the Commission—that is quite correct—but the scheme is in place in West Germany, and it is approved. I am not suggesting what the necessary mechanism is, but the issue must be looked at.
  Let the House be clear that independent business is immensely stronger than it was 10 years ago. It is a
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  thousand times better off, largely because of the supply side changes that have been brought about by the Government. My right hon. and learned Friend the Leader of the House has played his own distinguished part by means of reductions in personal and capital taxation. They have made it easier to pass a firm from one generation to the next, which is essential if a firm is to grow from one generation to the next. A firm should not need to be taken over when its proprietor retires or dies. The situation is much better than it was. The Government's initiatives have given great encouragement to independent firms.
  The additional venture capital that is around today was scarcely known about 10 years ago. The Government's loan guarantee scheme has helped firms to get on their feet. All that has at last given Britain an opportunity to have a strong, independent firm sector. That will be the central part of our future economy. There is no doubt that 99 per cent. of British industry is wholly behind the Government's efforts to put inflation at the top of the agenda and to conquer it. That must be correct.
  Hon. Members will agree that, when inflation goes up again, the Government will succeed in dealing with it. We dealt with it in the early 1980s and in 1985, and we will defeat it in 1989–90. It is not a disease that can be cured once and for all and never reappear. That would be too easy. Every business man knows that no business goes along in a straight line. Of course there are ups and downs. That is exactly what happened throughout most of the industrialised world in the past 10 years. Inflation has ebbed and flowed. Today's inflation could do much more damage than the damage that was done by interest rates. The damage is painful but it is not terminal. However, inflation is terminal for the independent business. There is no doubt that business will support the Government's efforts to bring inflation under control.
  I am delighted that my right hon. Friend the Chancellor has come back to hear my last words. [Interruption.] I am sure that he will hear them. Business men will support the Government's worthy aim of getting rid of inflation. They can then look forward to expansion and to continuing the growth that has been the hallmark of the decade of the Conservative Government.
  Several Hon. Members rose—
  Madam Deputy Speaker: Order. I need to remind the House that the Standing Orders now require speeches to be limited to 10 minutes.
  6.7 pm
  Mr. John Evans: The huge strike in Czechoslovakia yesterday and the strikes that have taken place in other eastern European countries over the past few weeks would be illegal in Great Britain. They would be illegal because they were political strikes against the Government. Such strikes were outlawed by the Employment Act 1982. They would be illegal also because they were called without ballots. For British trade unionists, such actions were made illegal by the Trade Union Act 1984. If the Government's new employment Bill is enacted, they will be illegal because they are unofficial.
  We welcome the developments in eastern Europe and the movement towards freedom and pluralistic democracies. But it is easier for workers in eastern European countries to take industrial action than it is for workers in

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  Thatcher's Britain to take industrial action. The Opposition do not believe that arguments about freedom stop at the Berlin wall. I will examine one or two issues which are basic to freedoms in this country, and which the Queen's Speech clearly ignored.
  The Gracious Speech does not recognise the level of poverty in Great Britain. It does not mention the poverty of millions of our fellow citizens, nor the contribution to that poverty which has been made by the appallingly low social security benefits which the Government have created. Nor is there any recognition of the disastrous under-funding of Britain's local authorities or of the demise of many of their services, which manifests itself in many of our towns and city centres being left unswept and frequently looking like pigsties. Nor is there any commitment to the major improvement in the National Health Service that a massive majority of the British people want to see and for which they are willing to pay.
  On a constituency note, I draw the attention of the House to a petition that I have received from the St. Helens and District Society for the Deaf, protesting that there is no provision in the forthcoming broadcasting Bill for improved facilities to enable the deaf to enjoy television programmes. I beg the Home Secretary to correct that omission before presenting the Bill for its Second Reading.
  Most significantly, nothing in the Queen's Speech recognises the economic problems that 10 years of Thatcherism have created for towns such as St. Helens. As I have only limited time, I shall concentrate on the one Bill that the Government claim will be beneficial to Britain's economic performance—the new employment or trade union Bill. When the former Chancellor of the Exchequer, the right hon. Member for Blaby (Mr. Lawson), downed ledgers a few weeks ago, the Prime Minister got a taste of had industrial relations. The Chancellor obviously found his working conditions intolerable and walked out.
  It is ironic that, just weeks later, the Government have announced a Bill to outlaw unofficial industrial action. They should be well aware that disruptive action, whether the resignation of a Chancellor or a lightning strike in a factory, happens when trust breaks down and when conventions or agreements are unilaterally broken.
  The Government's Green Paper "Unofficial Action and the Law" is symptomatic of the inability of the Secretary of State for Employment to grasp that basic fact. In many ways, the Green Paper is misleading, fundamentally misconceived and frequently economical with the truth. Paragraph 1·1 states:
  "The reform of industrial relations law since 1979 has made a vital contribution to the improvement in our country's economic performance."
  One wonders to which country it refers. Perhaps no one has told the author that interest rates are at their highest for eight years; that the balance of payments deficit is heading for £20 billion; that inflation is nearly 40 per cent. above the European average; that Britain's training and education programmes are among the worst in the Economic Community; that Britain is teetering on the brink of a recession; and that unemployment is set to rise again. But of course, the Secretary of State for Employment knows that very well. The so-called "economic miracle" is a mirage. So that, as things go from bad to worse, the Government can attack workers' rights as the scapegoat for their own economic mismanagement. The Government make the mistakes, but the workers get the blame.
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  The new trade union Bill marks a major change in emphasis from previous Employment Bills. Until now, we have always been told that the nation's real enemies were the trade union bosses. Trade union bosses, the Tories claimed, were power-mad barons who conscripted workers into closed shops against their will, bullied reluctant workers into strikes and used the workers as cannon fodder to satisfy their own lust for power.
  To rescue the workers from their clutches, the Government have banned the post-entry closed shop. They have given workers "rights" to elect union leaders in the expectation that the workers' well-known moderation would kick the militants from office. Unions have also been prevented from disciplining any worker who defies a lawfully called strike.
  However, the Tories have suddenly changed direction. There is now a new enemy within—ordinary trade union members. Despite the compulsory ballots, the alleged decline of the closed shop, and the election of responsible leaders, the workers are still not docile enough for the Tory party. The new bogeyman is unofficial industrial action. Paragraph 1·2 of the Green Paper states that the great majority of strikes in Great Britain have always been unofficial. Paragraph 1·3 states:
  "Most unofficial strikes arise over local issues which have not been taken through the agreed procedure for dealing with disputes".
  Of course, the Government are interested only in those bits of the truth that bolster their own arguments. They do not tell us what is behind 95 per cent. of those "local issues". In fact, the cause is almost always unilateral action by employers or managers who arbitrarily breach agreements by riding roughshod over the work force on such things as wages, conditions, safety or union recognition, or by sacking workers unfairly. In other words, it is invariably an employer who ignores the agreed procedures for the avoidance of disputes.
  So what do the Government propose to do about their concern for good industrial relations? Again, they attack trade unionists. They are certainly not proposing penalties for guilty employers who provoke industrial action. The Government condemn workers for not abiding by procedures. Employers, however, are not only free to do as they please, but will now be given even greater freedom to attack their employees.
  Under a heading "Extending Trade Union Responsibility", in chapter 2, page 4 of the Green Paper, of which the Nazi propaganda Minister Goebbels would have been proud, the Government will force trade unions to repudiate any unofficial action. Trade union bosses will have to coerce their members back to work no matter what their employers' provocation. Secondly, if workers do go on unofficial strike the Government will give the employer the legal right to sack the so-called ringleaders. Thirdly, if any striker is sacked, industrial action, even backed by a secret ballot, in support of his or her reinstatement will be unlawful.
  In paragraph 2·10, the Government say that action is unofficial where there has not been a ballot. If these proposals become law, trade unions will be accountable for the actions of every member. The only way to escape large fines would be for the union to repudiate any and every unofficial action. If a union does not repudiate its members in writing, employers and their customers could

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  get injunctions forcing the union to call off the action. If the union could not comply, it would face fines and sequestrations.
  The Government do not make it clear how a union can force workers to return when they are on unofficial strike. It could mean that, to escape legal action, unions would have to expel striking members or dismiss full-time officials deemed to be supporting strikers or withdraw credentials from shop stewards. Difficulties will arise if a walkout occurs over, for instance, the dismissal of a shop steward, which was later endorsed by a secret ballot.
  At paragraph 2·11, the Green Paper states that the union could
  "accept liability for industrial action, in which case the union would need to hold a proper secret ballot of all its relevant members."
  Although the Green Paper is silent on the matter, it implies that while the ballot is being held the union would be obliged to get its members back to work—
  Madam Deputy Speaker: Order. It really hurts me to have to call an hon. Member to order, but we are now within the 10-minute rule.
  Mr. Evans: Yes, I appreciate that, Madam Deputy Speaker.
  What is required is co-operation between Government, employers and workers. The Gracious Speech makes no mention of that, but that is what we require—
  Madam Deputy Speaker: Order. I call Mr. Terence Higgins.
  6.17 pm
  Mr. Terence L. Higgins: The debate on the Gracious Speech this year is inevitably taking place against the background of the dramatic events in eastern Europe. I was rather struck by a phrase—one might almost say a slogan—that was used in our earlier debates on the Gracious Speech. I refer to the expression, "Today we need borders, not barriers." That is a good way of summing up the present position. Clearly, it is vital that the barriers should come down between the various countries of eastern Europe and those of us in the West. That is particularly important, not least from an economic point of view.
  However, while I share the euphoria at recent events, I also share considerable concern about the potential dangers. The argument for maintaining borders at the moment—whatever may come at some time in the future—is important. That point is worth stressing because it is against that background that we need to look at both the European situation and the general economic position.
  It is true that this debate on the economy, at the end of the debate on the Queen's Speech, is never satisfactory, not least because the wind-up speech must cover the entire debate. Although my right hon. and learned Friend the Leader of the House can cope with the various economic arguments made, tonight he must cover a broad area.
  We have had two recent debates on the economy. An extremely good one on an Opposition Supply day and one when we discussed European harmonisation. We have also had the Chancellor's Autumn Statement. The Treasury and Civil Service Select Committee is still in the course of taking evidence—last week it took evidence from Treasury
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  officials, yesterday it took evidence from the Chief Secretary and next week it will take evidence from the Chancellor. My Committee has not yet reported nor has it had an opportunity to look in depth at the implications of the Autumn Statement, which no doubt will be debated in January. In that sense we are in limbo, so I shall confine my remarks to a couple of specific points.
  I believe that the action taken by the Chancellor on the economy has been right, not least with regard to the rate of interest and the fiscal policy. Those actions are having the desired effect. Although I understand the concern expressed about the balance of payments, the figures year on year, three months on three months or month on month are showing an improvement. The year-on-year and three-monthly comparisons, of course, show an improvement because exports have gone up faster than imports. The latest monthly figures show exports up and an actual reduction in imports, and that is a reflection of the success of Government policy. We must all hope that those policies continue to operate in that manner.
  From time to time my Committee has produced a crude analogy of the Chancellor—the present and the previous one—on a tightrope between inflation and unemployment. It is apparent that the danger of the Chancellor falling over on to the inflation side was greatly exacerbated by the failure of the official forecast to anticipate just how rapidly the economy was moving, not least when action was taken following the stock exchange crash of 1987. The danger is that, because that forecasting error was due largely to the huge expansion in consumer credit, when interest rates began to bite, the forecasts could be in error in the other direction. If that happens, my right hon. Friend the Chancellor will not realise the extent to which deflationary pressures are operating within the economy. That matter is of considerable concern.
  More particularly, however, I am concerned about a rather technical point with regard to the use of interest rates in relation to fiscal policy. We continue to run an enormous budget surplus with no clear precedent. We must ask to what extent that reflects the tightness or looseness of fiscal policy given the Government's approach which involves a policy of so-called fully unfunding that surplus. We must ask whether there is some scope for action on public expenditure and so on that has not yet been undertaken.
  One simply cannot get rid of the surplus. That would be grossly irresponsible, but we must take into account the relationship between that surplus and the policy of fully unfunding. I have come to the conclusion that the answer depends on whether one adopts a monetarist or a Keynesian approach. A monetarist may question, given the policy of fully unfunding, whether it makes any difference if one runs a budget surplus of £15 billion or £5 billion. That is a relevant question—whether the size of the public sector debt repayment makes any difference. A monetarist may say that the aim of policy, as defined by the Government, is to leave the size of bank deposits unchanged. Since bank deposits are effectively insulated from changes in the PSBR, a monetarist would say that there is no difference. He would argue that there would be no difference to aggregate demand because the money supply or interest rates do not change. The only change is in the composition of aggregate demand as the contraction of public expenditure is offset by the expansion of the

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  private sector as long-term interest rates fall. That happens because when the Government buy in gilts their price goes up and the rates go down.
  A non-monetarist—or, for want of a less pejorative expression, a Keynesian—would argue that the fall in long term rates is unlikely to offset fully the contraction in the public sector. They would argue for example, that the fall in long-term rates is likely to be small because if the public sector is operating a surplus some other sectors—the private or overseas sectors—must he operating a deficit. If those sectors in deficit borrow in the bond market the long-term interest rate will not he so low as expected by monetarists and private expansion will be stifled. Consequently, Keynesians would argue that the fiscal policy does have an overall effect, because pulling the purchasing power out of the economy has the overriding effect and they would argue that the monetary effects are relatively small.
  At the moment I do not believe that we are clear, nor is the Chancellor clear, what the true impact of the fiscal policy is when it is backed up by the policy of fully unfunding. We are faced with an unprecedented situation and we have not analysed the situation correctly. Does the size of a fully unfunded surplus matter? We must appraise carefully whether there is some scope for changes in public expenditure or in taxation that have not been recognised previously. The answer turns on which analysis one adopts. I do not expect the Leader of the House to give me that answer tonight, but we should know which of those policies have been adopted.
  Although I remain strongly of the view that control of public expenditure is of overriding importance, that raises the question of what the Government's spending priorities should he. My maiden speech was about whether pensions should he given, as of right, to the over-80s left out of the national insurance scheme. I subsequently introduced a private Member's Bill—I was lucky enough to come first in the ballot—but the Labour party, to its eternal disgrace, filibustered all through the Thursday night and stopped the Bill coming to a vote on the Friday. I am happy to say that the first thing that happened when we come to office in 1970 was that we gave pensions, as of right, to that group.
  I believe that there is a close analogy between that group and war widow pensioners. All war widow pensioners get the basic pension, but those who claimed after the deadline when the so-called occupational scheme was introduced also get a substantially larger sum on a separate scheme. Because it is an occupational scheme, we are told that it cannot be made retrospective. In many respects that is the same argument as that advanced regarding over-80s pensioners.
  The war widow pensioners who are excluded from the occupational scheme should at least be entitled to that part of the pension that is not covered by contributions. I advanced the same argument for over-80s pensioners and so last week I tabled a question to ask what part of the occupational pension scheme for war widows was covered by contributions. The reply stated:
  "The armed forces pension scheme is non-contributory" —[Official Report, 13 November 1989; Vol. 160, c. 32.]
  The whole lot comes out of the defence vote. The only argument for the other side was that the pay of those who claimed after the 1973 deadline was cut to represent notional contributions. It is ridiculous to suggest that their
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  pay was then lower than that received during the war. I went into the forces after the war and my pay was four shillings per day. That is an absurd argument.
  Despite all the restraints on public expenditure, I hope that my right hon. Friends at the Treasury will consider carefully the close analogy between the position of war widows and the over-80-year-olds, as the arguments are almost the same.
  6.28 pm
  Mr. Tony Benn: From listening to the debate and especially the right hon. Member for Worthing (Mr. Higgins) the implication is that economic policy is a subtle seminar about the management of an unchanged economy.
  I am sure that the right hon. Gentleman, in common with me, has had people come to see him at his surgery who have waited a long time for medical treatment or those who have become homeless. The other day, a young girl came to me who had been thrown out of her house by her father on her 16th birthday. He had broken her nose because she was pregnant. She was living on the streets and stealing to live. She was denied a place on the youth training scheme because she was before the probation service.
  In common with many hon. Members, I have had people come to me because they are suddenly in huge arrears with which they cannot cope as a result of the new housing benefits regulations. It is no good saying to them, "Are you basically a monetarist or a Keynesian?" Economic policy is about the aims and objectives of society; it is not just a discussion between financiers in the City about who can run the economy best. I acquit the right hon. Member for Worthing of that charge, but there are many people who speak as though we were only discussing whether industry was profitable.
  Other objectives in society should be the concern of the Chancellor. One is that everybody should have useful work at a living wage. People should have a home in which to live. The benchmarks by which to judge the success of economic policy should be: is there proper provision for education; are the schools provided with books; is there an adequate health service or do people have to try to jump the queue by opting for private medicine; will people be able to enjoy dignity when they are old? If the only criterion set is the profitability of companies that are still in business, we are missing the whole point of economic policy.
  We have been told to look at reality, and I think we should. Although many hon. Members have spoken about the new situation in eastern Europe, the Chancellor never mentioned defence expenditure. Next year, he will have to find £21 billion and his great new reality did not include the possibility that reducing defence expenditure and diverting the money to other matters might not only reduce inflationary pressure, but might pay for some of the needs that I have described.
  Another new reality is that, in a democracy, the Government's economic policy must be approved by the people. The shift in public anxiety or the change in feeling among the people about the Government is because they no longer accept the underlying assumptions of Government policy. They do not believe that monetary policy and profitability are the criteria by which our society should be governed.
  Mr. Cash rose—
  Mr. Benn: No, I shall not give way. We are restricted to 10-minute speeches, I think a bit unfairly.
  We must recognise that the debate is not just about the Prime Minister. I have never liked the word "Thatcherism", because it is the values peddled by the Government that people are rejecting. Hon. Members should not think that things are not changing. On Saturday week, I was at Trafalgar square supporting the ambulance drivers. The police buses were waiting in Whitehall, as they always do when there is a big demonstration. The policemen were huddled in the buses and inside there were stickers saying, "We support the ambulance workers". There was a Marine commando at Trafalgar square wearing a steward's armband.
  Hon. Members should not think that trade unions are unpopular, because as mortgage rates go up and people in this generation are driven into debt, they learn what others have learned before them—that they need trade unions to protect them. My hon. Friend the Member for St. Helens North (Mr. Evans), who made a powerful speech about the new proposals, gave an idea of what would happen.
  The poll tax, the widening gap between rich and poor, and the debt into which people are being driven are unfair. It must be the experience of every hon. Member that many people who had good jobs bought houses on mortgage. Then the interest rates knocked out their company, which meant that they could not keep up the mortgage payments and had to sell the house. However, house prices are falling and there are no council houses because the councils have had to sell them and cannot buy or build any more. That is the reality that must breathe some life into the debate.
  The gravity of the situation is far greater than has been admitted. I do not intend to go into debating points about statistics. I was an industrial Minister in 1964 when we came to office. George Brown was at the Department of Economic Affairs and Callaghan was the Chancellor. There was the "Maudling dash for growth" that led to a deficit. We had a national plan, but 18 months later it was dropped because of international financial pressure. In 1974, we inherited an even worse situation.
  The reality is that, during all the policies that have been followed—on the exchange rate, interest rates, credit controls, the old stop and go and incomes policy—there has been a steady decline in British manufacturing relative to what we need to survive. That is a continuing problem. Oil gave us a bonus. I was the Minister of Power in 1970 when the Forties field was discovered. My hon. Friend the Member for Copeland (Dr. Cunningham) was with me later in the Department of Energy. I think that I am right in saying that BP put £500 million into the Forties field and amortised it in 18 months, so rich was it. We have thrown the whole thing away. Look at the amount that has been paid out in unemployment benefit or at the imported goods that have destroyed or limited our manufacturing industries.
  There will soon be an election. I should like to see the people being given the right to make their choice sooner rather than later, because this House of Commons is in the time warp of 1987 and much has happened since then. I am bound to turn my mind to the questions that will face an incoming Labour Government, because that is the Government we shall have. Compared to 1964 and 1974, the problems that that Government will face will be monumental. I asked the Chancellor when he thought he
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  would get the deficit down, and he could not say. He would not pretend that it would be down to anything like a reasonable level by the time that there is a change of Government.
  What will my right hon. and hon. Friends do when they come to office? Will it be enough to deal with the problems in terms of exchange rate policy, the exchange rate mechanism or the European monetary system? The answer is no. We shall have to take a big national decision by deciding that industry is as essential to us as agriculture. We have never allowed agriculture to be destroyed by temporary movements in world food prices. We have sustained it—the Conservative party is best at doing that because it represents the shires. To allow our industry to be destroyed because of short-term changes in the exchange rate or stop-go policies is absurd. Nobody can accuse me or my hon. Friends of not being clear in our amendment about what will have to be done. We shall have to have exchange controls.
  We could not have a nation generating profit by its own wealth only to see it move to Korea or South Africa where people can make a bigger profit. We have a deficit of such magnitude that the Chancellor cannot anticipate its end. I cannot anticipate its end by using the old measures in which I was involved. That means that we will have to say to people that we cannot afford to buy from abroad what we now buy from abroad. We must tell them that they will have to wait a bit longer for a Mercedes but that they might get quicker treatment at the local Health Service hospital.
  We shall have to cut defence expenditure sharply. Even the Secretary of State for Defence in Washington talked about cutting it by half. At the Labour conference, there was a resolution to cut it to the same level as that of our European partners, and that is outdated by the ending of the Berlin wall. What will Trident and Polaris be used for? Will one be dropped on Walesa and one on Gorbachev? Where is the enemy that justifies enormous military expenditure?
  The real priorities are that people should be properly fed and housed, educated and cared for, because those things are in the national interest. Market forces cannot solve any of the problems that are of prime concern to our people. Nor can the Common Market. Who wants to transfer power to Mr. Delors, who is unelected and cannot be removed at an election? We have to do it ourselves.
  The British people must be told that the only answer to the problems that confront us lies in our own actions, efforts and policies. Such a suggestion may be a little ahead of its time. I found an article in the TV Times that I wrote in March 1957 calling for the televising of Parliament. Thirty-two years is about par for the course. Perhaps a little later, the House will heed what I am saying now. Without pursuing my Dubcek role any further, I commend our amendment.
  6.38 pm
  Sir Anthony Grant: Whether or not one agrees with the right hon. Member for Chesterfield (Mr. Benn), the one thing we can say about him is that we know where he stands. The right hon. Gentleman says what he believes in, and that is more than can be said for his colleagues on the Opposition Front Bench. I wish that we had more time to hear more of the policies that he proclaims in the amendment, about the

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  withdrawal of troops from Northern Ireland, the withdrawal from military blocs and, presumably, from NATO and the EEC. We appreciate the fact that the right hon. Gentleman has said quite honestly what he believes in. I hope that he will not share the disillusion of the hon. Member for Liverpool, Walton (Mr. Heifer), who has decided to disappear from the House at the next election, because we would miss the right hon. Gentleman very much.
  I and the right hon. Member for Chesterfield share one trait. He dislikes spending too much time on personalities and believes in talking about policies and principles. I entirely agree. On personalities, we are exceedingly fortunate to have my right hon. Friend the Member for Huntingdon (M r. Major) in the post of Chancellor. We in Cambridgeshire may have had more opportunity to observe his abilities, but I believe that, in what may well prove a tough economic year, his acumen, sensitivity and plain common sense should give us considerable confidence.
  It was, in my view, entirely right for the Gracious Speech to proclaim firm policies to reduce inflation and to foster the conditions necessary for sustained growth. No sane person would deny that that task should be a priority; but how has the present degree of inflation arisen? I do not believe that tax reductions were the main cause, although it might have been better to phase them over a period. I believe in the reduction of taxation, and hope that our Government will never lose sight of that principle. I have also supported the switch from direct to indirect taxation which has proved so necessary over the past decade.
  The prime cause of inflation was, I believe, the hysterical panic that spread throughout the world when the stock markets fell on black Monday in 1987. Governments of developed countries panicked and reduced interest rates, and the then Chancellor had to follow suit. There was no alternative; indeed, he was urged by the Opposition to take such action.
  No sensible person would deny that interest rates are the most powerful and effective weapon with which to deal with the cancer of inflation. The credit controls used by the Labour Government in the 1970s would be as ludicrous today as they were then. Rather like the Bourbons, however, the Opposition have forgotten nothing and learnt nothing. I understand that the alternative policy of the right hon. and learned Member for Monklands, East (Mr. Smith) is some kind of chit-chat with bankers in the City: an up-market version of beer and sandwiches—champagne and caviar, perhaps. I do not think that we can accept that as a serious alternative.
  Interest rates, however, are also the cruellest weapon, hitting the have-nots and benefiting the haves. Three groups in particular suffer in this regard. No hon. Member has yet pointed out that farmers depend on credit. I am not talking about rich farmers; there are many poor farmers in Cambridgeshire, and they will find the increase in interest rates very burdensome. Secondly, there are the small firms. I was pleased that my hon. Friend the Member for Surrey, North-West (Mr. Grylls) mentioned them, as they have always been a cause near to my heart. We need not worry about large firms, which, I am glad to say, have become very profitable under the present Government, and can sustain higher interest rates. Small firms working on tight margins, however, will find them crippling.
  When I was responsible for small firms, they were unfashionable, but they have now grown to a record
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  extent. That is one of the most encouraging developments brought about by the present Government. They are the large firms of the future. I was pleased to note that the Queen's Speech promised to promote enterprise, and small firms are the basis of free enterprise.
  I was interested in my hon. Friend's suggestion of differential interest rates. I do not think that the EEC or the treaty of Rome would be all that would stop that; attractive though that may seem, I do not believe that there is a practical way of administering such a system. The only answer is to get these wretched interest rates down as soon as possible, and I beg the Government to bear that in mind and not to kill the goose that lays the golden eggs.
  The third category of sufferers are home owners with mortgages. Some, of course, have raised money through their mortgages for cars, videos and foreign holidays, but we should spare a thought for those who, in my view, constitute the majority—those who were inspired by the philosophy of the home-owning democracy, and especially those who were urged to buy just before the clampdown a year ago which caused the rise in mortgage interest rates.
  Those three groups bear the greatest burden of anti-inflation policy, although it was not their fault that the markets and Governments of the world panicked in 1987. We should remember that they are the bedrock of support for the present Government: they know that Socialism is stupendous folly, and that it has never worked anywhere. They can see through the pretence by the official Opposition—not the hon. Member for Berwick-upon-Tweed (Mr. Beith) and his hon. Friends—that their policy is not really Socialist.
  I beg my right hon. Friend to give careful thought to the sections of society that I have mentioned. Let me make a suggestion. I do so somewhat hesitantly, as a Treasury Minister is on the Front Bench and I know that what I am going to say is anathema to the Treasury. I feel rather like the fat boy in "The Pickwick Papers" who said to an old lady, "I wants to make your flesh creep." I shall inspire horror in the Treasury mandarins.
  I ask the Treasury not to reject out of hand possible changes in mortgage interest relief—and I mean changes in an upward direction. The housing market has taken such a knock that it will be some time before prices spiral again. On many housing estates, properties cannot be sold, but with a degree of balance and common sense I believe that the problem could be solved. I am aware that the Chancellor has poured cold water on the idea in an article in the Sunday Express, but he made it clear in his Autumn Statement that he does not reject the possibility of resolving the matter by fiscal means. I have great faith in my right hon. Friend, and I merely ask him to keep an open mind. The pressure for wage increases to combat the high interest rates from which many large firms are now suffering could be eased by such a measure.
  The Government committed themselves in Madrid to the achievement of economic and monetary union as prescribed in the Single European Act, and decided that stage I should begin on I July, 1990. We shall obviously join the exchange rate mechanism; the only question is when. I hope that my right hon. Friend will study the paper in which his and my MEP, Sir Fred Catherwood, argues that the solution to inflationary problems lies within the exchange rate mechanism, and that we should join sooner rather than later. That conclusion was also reached by the July report of the Select Committee on Trade and Industry, of which I am a member. Whatever

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  we do, we should not miss the bus. If the Government take the view that Sir Fred and the Committee are wrong, and that we do not want to join the ERM, I feel that that will be disastrous for us. If we join, however, I believe that we shall experience considerable benefits, and that many of the problems that we have encountered since black Monday will be overcome.
  My right hon. Friend faces daunting tasks, but I have every faith in is ability to deal with them effectively and courageously. Certainly the least of those problems will be dealing with the Opposition.
  6.47 pm
  Mr. William Ross: Readers of Hansard will see that on 15 November I asked the Chancellor about the effect of increasing public expenditure from £168 billion to £203 billion between the current year and 1992–93. The Chancellor replied carefully that I must have misheard the figures, because the increase for next year was £5·5 billion. The question that I asked mentioned the correct figure of £35 billion—a huge, increase, even if the Chancellor's predictions of a fall in the percentage of gross domestic product is correct.
  I appreciate that the Chancellor now has a huge Budget surplus. I am surprised that only two Conservative Members—the right hon. Members for Worthing (Mr. Higgins) and for Old Bexley and Sidcup (Mr. Heath)—have mentioned that so far. If that surplus were allowed to continue until the next general election, it would be the most bountiful gift that any Opposition could ever expect to receive. Imagine the joy of a Labour Opposition and shadow Chancellor who were handed such a treasure house. They could make the most generous promises to the electors, and the Conservatives could not say—as they have been able to say at every election within living memory—"Where is the money to come from?", for the money would be there. It follows, therefore, that the Chancellor must spend the bounty that he has inherited before the next election.
  I am sure that that prospect does not make his task of reducing inflation any easier. If inflation is not reduced, the pressure on him to enter the exchange rate mechanism will be increased by those who are in favour of that course of action.
  The apparent attractions of taking such an easy way out by taking the first steps to full monetary union are outweighed by the long-term loss of control of our affairs that would flow from that step. I believe that the Prime Minister at least is well aware of the consequences of handing control of the nation's finances to other hands. I have no doubt that the sovereigns from whom the House wrested control knew the importance of control of the money supply; they certainly held on to it as long as they could. One does not hold on to something that is of no use.
  If the Government now understand the downstream consequences of the loss of control of our finances, do they understand the consequences of the diminution of sovereignty that has flowed from the Anglo-Irish Agreement? Willingly adulterating one's absolute right to take whatever course of action is necessary, especially with the involvement of others, is not a policy that I should commend, especially if those most affected are opposed to it.
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  An illustration of the defects of shared responsibility is the Anglo-Irish Agreement, which has created a rigid framework in which the Government must operate. They lost freedom of action, and as a result the Secretary of State for Northern Ireland foolishly said that he found it difficult to envisage the military defeat of the IRA. If that is so, the framework—the policy in which the Secretary of State must operate—is wrong and must be changed.
  Despite his later efforts to qualify his words, by his first remarks the right hon. Gentleman did himself fatal political damage. The IRA's perception of itself is that it cannot be defeated, and it will act on that perception. That perception must be changed before victory over that terrorist body can be won. For the good of everyone who wants to live in a western liberal democracy such as we enjoy, that victory must be won.
  My hon. Friend the Member for Antrim, East (Mr. Beggs) pointed out last Wednesday that the Unionist party wanted a good neighbour policy with the Irish Republic, and that we should like a lasting relationship based on mutual respect between Ulster and the Republic. I believe that that can follow only from stability in Ulster. My right hon. Friend from Lagan Valley (Mr. Molyneaux), who is the leader of my party, said last Tuesday that such stability could come about only if there were what he called a constitutional offensive—in essence, an end to constitutional ambiguity about Ulster.
  I know well that the constitutional measures that my right hon. Friend outlined—which are detailed to some extent in the amendment that we have tabled—were supported, and not for the first time, by a member of the Social Democratic and Labour party. I know that those measures are often referred to as "integrationist", but I do not agree with that description because they are far more accurately described as constitutionally neutral between integration and devolution, and they most certainly would not inhibit moves to a devolved parliamentary structure, when folk in Ulster learn to work together once again or to the creation of a constitutional and administrative position in Northern Ireland that is indistinguishable from the rest of the United Kingdom.
  If the measures taken included the return of simple majority elections, the IRA would be even more deeply wounded, and so much the better for us all. Let there be no doubt that moves such as those outlined in our amendment would wound the IRA because they would change its perception, which is of fundamental necessity before it can be defeated.
  Those steps would therefore send a clear signal to the IRA that its campaign of thuggery, murder and lies will not succeed in the short or long term. The foolish words of the Secretary of State will not be wiped out by more words. He has been wasting his time in trying to pull back from them since he first uttered them. No matter how wise or firm those words are, they will not suffice; only action will do the trick, and it must be taken as soon as possible.
  Democracy means far more to me than blind insistence on every jot and tittle of the desires of a 51 per cent. majority. The word "democracy", if one looks it up in a dictionary, demands sensitivity to all minorities and a willingness by the majority in any elected Chamber to take into account the minority point of view, especially when deciding on a course of action of which they may not wholly be in favour. I know that 51 per cent. majorities seem to work well and brutally in this House, but it is not

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  a wise policy in the long term. It is a pity that the Government so rarely follow the true meaning of democracy.
  If we are to have peace and stability in Ulster, we should go down the course outlined by my party. If the Government have any sense they will not surrender control of the nation's finances to any hands, but rather will retain sovereignty and freedom to act as the needs of the nation dictate and not as others would try to dictate to us.
  7 pm
  Mr. Spencer Batiste: The Gracious Speech states:
  "My Government will continue to pursue firm financial policies designed to reduce inflation and foster the conditions necessary for sustained economic growth … and … will continue to work with our European partners to complete the single market; to enhance economic and monetary co-operation."
  I should like to examine how we can best achieve those vital and interactive objectives, particularly in the context of our membership of the European Community.
  We in Britain have a vigorous and robust political system. Some who have been watching our debates over the past week may say that it is too robust, but it changes only slowly. It follows behind economic and social change, and then only along clearly defined paths that are well enforced. Our partners have quite a different approach. They are comfortable with bold constitutional statements of objectives, some of which can be achieved only in the long term, if at all, and in some cases they live with patchy enforcement provisions. That difference of approach is a cause of frequent conflict and misunderstanding and often leads to important and essential debates on our future being reduced to divisive slogans, when in reality many of the differences are bridgeable.
  The creation of the single market and stage 1 of the Delors report on economic and monetary union represent a response to existing needs. They have clearly defined objectives and procedures, and that responsive approach stimulates no symptoms of rejection from the British body politic. The single market and stage 1 of EMU are a "good thing." We press on with the detailed measures needed for implementation and are rightly critical of others who lag behind and impatient of their rhetoric, which we see as empty when it is not being delivered in the shape of firm measures and legislation.
  Stages 2 and 3 involve the notoriously hazardous occupation of crystal-ball gazing. They seek to anticipate changes that are a long way off and inherently unpredictable. Because the debate is anticipatory rather than responsive, and because at this stage there can be no timetable attached to it, all our national rejection symptoms are triggered. The debate becomes a "bad thing" and we are hesitant about becoming involved in it or even in the more immediate issue of the exchange rate mechanism. We cannot afford to reduce those important matters to the language of "1066 and All That" and miss the opportunities to advance vital British national interests by a more flexible approach.
  Of course the proposals for stages 2 and 3 are controversial; they could hardly be otherwise when we have yet to complete half the measures needed for 1992 or have even begun to address the implications of enlargement and events in eastern Europe. We should aim to separate the debate on economic union from that on
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  monetary union. They do not have to run side by side, and many of the difficult controversies that arise within them can be addressed if they are treated separately. The alternative evolutionary approach for monetary union put forward—albeit rather belatedly—by the Government is a significant first step in this direction.
  Good arguments demand good tactics as well. Sometimes we need to be firm even if we stand alone, but not so often that we are perceived as negative and isolated. Why say "no" to initiatives when saying "yes, hut" at any early stage can often lead to achieving our objectives more effectively? Better still, why not be the promoters of new initiatives rather than respondents to the initiatives of others?
  I and, I believe, many colleagues in the House are concerned that this Parliament is less effective than many others in its European role, but if we as parliamentarians feel that we are peripheral to European affairs, that is our fault and for us to put right. It is not the fault of the Community, and we should not vent our frustration upon it. If we are to be responsible as members of the Government, we must address ourselves to the question of how most effectively to exercise real power now and in the future and how to achieve democratic accountability throughout the system.
  I certainly would not wish to encourage corporatist interventionism. Ron Todd may well consider coffee and croissants in Brussels an acceptable alternative now that beer and sandwiches are off the menu at No. 10, but it would be a damaging alternative, not just for Britain but for Europe at large.
  All legislative decisions that can best be taken at national level should be. "Subsidiarity" is not just a convenient, if inelegant, label—it is the most effective route forward for many aspects of economic and employment policy, where market pressures will bring rapid convergence once the single market is complete.
  Equally, some issues require Community action, and high on the list are those needed in our interest to complete the single market, to make it effective and to ensure that everybody is playing by the same rules. If we want others to support the measures that we regard as important, such as more open financial services, we must be sensitive also to the matters that they regard as important, particularly in the context of developing stable trading relationships and containing inflation within the exchange rate mechanism.
  Against that background, we have to address as one of our highest priorities the potentially destabilising deterioration in our balance of trade over the past two years, especially with our Community partners. The statistics have looked very suspect for some time, and I hope that my right hon. Friend the Chancellor will tell us how his investigation of them is proceeding. Undoubtedly, whatever the validity of those statistics, they show a trend which must be reversed. The underlying causes of that trend are quite different from those in the 1970s, when vast chunks of United Kingdom industry were unprofitable and little was being done to put it right.
  The director general of the CBI, John Banham, made an impressive opening speech to his conference last week and listed the factors which between them account for the entire deterioration in our trading balance over the past two years. I should like briefly to examine them because they are fundamental to considering the need for flexible tactics in Europe.

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  The first was the inflationary upsurge in consumer spending. The Government have addressed that problem by their high interest rate policy. Painful though it is, it is the only solution available to us. I hope that no one will flirt with credit controls, which would be a disaster for this country. The imposition or attempt to impose ineffectual credit controls would fatally undermine our banks when they need all the support that they can to face world competition beyond 1992.
  In any event, it cannot make sense to seek to solve a trade deficit in manufactured goods by creating a deficit in our invisible trade. Many of our business men look at the Community and at the way in which every other country from one end of the political spectrum to the other has benefited from membership of the exchange rate mechanism and ask, "Could we not benefit also from belonging to that mechanism sooner rather than later?"
  The second item highlighted by John Banham was lower North sea oil earnings, as a result of the Piper Alpha disaster and other problems. That is being reversed and revenues will increase again next year, but nobody should take it for granted that oil exploration will continue indefinitely, whatever the tax climate. An Opposition committed to higher taxation would only drive away those who seek to explore the North sea for new oil resources.
  The third item was the long-term weakness in our motor car industry. That matter is being addressed by huge inward investment from the world's major motor companies and especially the far-sighted Japanese who, despite the Labour party, recognise that Britain is the best place in Europe to make their products. In the coming decade, it is possible that we shall once again become a net exporter of motor cars. That is of great strategic significance to us. However, it reflects not just our internal domestic industrial environment, important though that is, but the fact that our investors regard our role in Europe as critical to their plans and we must never lose sight of that.
  The fourth matter was the surge of imports of world-class machinery to re-equip our manufacturing industry. That is a good sign for the future, provided we can contain unit labour costs. It highlights other important matters as well. First, there is the unique vulnerability in Europe of United Kingdom industries to hostile takeovers as a consequence of the dominance of equity investment by our stock markets and the dominance in those markets of institutional investors obsessed by short-term pressures.
  It is easy to blame restrictive practices in markets overseas or competition policy at home. Both are important, particularly as takeover activity will increase, so progress on a coherent European mergers policy is vital to us. The real core of our unique problem lies in the unwillingness of our banks to invest in their customers and in our taxation system, which still discriminates against the continuity of family businesses.
  Many other comments could be made in the debate, but time runs out. We must learn from the experience of the past to be flexible in our tactics towards our partners and learn not to be bound by our traditional patterns but to look forward to opportunities in Europe and be willing to grasp them, whatever our philosophical difficulties may be.
  7.6 pm
  Mr. A. E. P. Duffy: I welcome the reference by the right hon. Member for Old Bexley and Sidcup (Mr. Heath) to regional policy. I share his fear that it was neglected by the Chancellor. I should like to describe that concern through the vehicle of my region and that of my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse), who is secretary of our Yorkshire group. I want to talk about the current programme of regeneration of our old industrial cities in Yorkshire, and to do so in the light of the Government's economic policy.
  I remind the House of the pledges in the Queen's Speech: that the Government will work for "sustained economic growth" and will form a partnership "to regenerate our cities". Those two commitments are of great importance to our region and to the cities of Bradford, Hull, Leeds and Sheffield. Since the recession, there has been a steady and consistent recovery across the broad spectrum of industries in the region. Yorkshire's base is now more high-tech, more diversified and more efficient. Business in the region is in better shape to meet the challenge of the 1990s and beyond than anyone would have dared forecast at the beginning of this decade.
  With its closeness to Europe and its excellent ports, Yorkshire is well placed to meet the opportunities from 1992 of the single European market. The Humber is growing more quickly as a trade route than any other United Kingdom estuary, and carries some 55 million tonnes of cargo annually. The Humber ports are backed up by an extensive motorway and road network system as well as rail links to the rest of Britain, and are thus strategically faced towards Europe, with its 320 million single market customers.
  Yorkshire's traditional industries of chemicals, wool textiles and coal and steel are also poised to make major contributions to exports. In recent years, significant investment by most of Yorkshire's chemical companies has ensured that Yorkshire chemicals will continue to play a significant role not only regionally but internationally. The United Kingdom's wool textile industry, with its roots firmly in West Yorkshire, is on course to achieve a remarkable £700 million export earnings record this year. This will easily maintain its place as one of our top five exporting industries and the country's largest exporter to Japan. Coal and steel are making all-out efforts to improve productivity and efficiency, in desperate attempts not only to preserve domestic markets but to win new ones overseas.
  That is not bad for a region which is still regarded as a struggling relic of our industrial past. That impression is as much a myth as the cloth cap and clogs image of centres such as Leeds and Sheffield. Along with the rest of the Yorkshire economy, those old industrial cities have geared themselves to restructuring in the 1980s, with a view to regeneration.
  Let me repeat that Yorkshire is poised to provide that incremental industrial capacity of which the British economy is clearly in such dire need. The last thing with which Yorkshire can afford to be saddled at this crucial stage is a regime of continuing high interest rates, a depleted industrial base and an investment downturn—in other words, current Government economic policy. No region is doing more to try to assist this Government, to pick itself up and to gear its economy to the challenge of

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  the single European market than Yorkshire and Humberside, and no region is doing more to regenerate its cities.
  The pace of urban development is being set by Government-created corporations in Leeds and Sheffield. They are charged with the task of breathing new life into districts blighted by years of industrial decline and dereliction. The Sheffield development corporation works closely with the Sheffield city council, which has also promoted regeneration with imaginative skill and vigour. Both have arrived at a unique concordat which amplifies the new partnership. All that has been achieved despite a cut in the regional aid budget of no less than 72 per cent. in real terms since this Government came to power in 1979. Partly as a consequence, economic growth in the south over the same period has been 35·6 per cent., compared with 16·6 per cent. in the north.
  The economy faces two years on the brink of recession with investment slumping and profits standing still, according to a gloomy set of forecasts published by the Confederation of British Industry yesterday. In separate forecasts, Lloyds bank said yesterday that the economy will hover on the brink of recession next year as high interest rates take their toll. That raises the question whether the slowdown will turn into outright recession with a sharp drop in output, as occurred in 1979–81. However, the inflation problem is not as severe as then, and the world economy is in better shape.
  The balance of payments position, as we have heard almost ad nauseam during this debate, is considerably worse and the British economy is vulnerable at any time to a collapse of confidence among overseas investors. There is a danger that Britain is facing a structural deficit problem such as has plagued the United States in the 1980s. It may take several years of low potential growth in Britain before the deficit disappears.
  There are some genuinely encouraging features about the latest trade figures. For the first time since the spring, as the Chancellor confirmed in his opening speech, the volume of exports has been growing faster than the volume of imports, but that more hopeful trend must lose some of its shine because of the continuing deterioration in the terms of trade. Exports, happily, have been rising faster than imports in value terms.
  The Chancellor has used the Autumn Statement to play for more time. He has said nothing about the mix of fiscal and monetary policy next year, but he is only too well aware that real interest rates are the highest in recorded western history. Moreover, demand is at its weakest since 1980–81. What is he going to do about that nightmare scenario? Many of us posed that question to him this afternoon, and it is only fair to say that he was most generous in giving way and in his responses. I hope that he will seek the earliest possible relaxation, bearing in mind the lags, which may mean that it will take time to get the economy going again.
  I hope that, in his first Budget next April, the Chancellor will further raise public investment, especially in areas that help to expand industrial capacity. Fiscal policy is crucial to the hopes of getting interest rates down. I also hope that the Chancellor will cut taxes, especially those that bear on costs and prices such as employers' national insurance contributions, thereby helping to bring about a fall in inflation.
  Recalling the earlier reference by the right hon. Member for Old Bexley and Sidcup to regional policy, I
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  appeal to the Chancellor above all to restore support for regional policy and thereby to restore confidence in regions such as Yorkshire and Humberside and in their cities, especially Sheffield and Leeds.
  7.14 pm
  Mr. Tim Smith: I was most impressed by the speech of the hon. Member for Sheffield, Attercliffe (Mr. Duffy), because he gave a fair picture of the current position and I was encouraged to learn of the progress that has been made in his region of Yorkshire and Humberside, of the restructuring of the past 10 years and of the determination of the people there to try to improve matters. I recognise that 1990 will be a difficult year and that high interest rates will cause problems.
  First, I welcome the Queen's Speech on behalf of my constituents, who will especially appreciate the Bill to control pollution and waste. My constituency is attractive and people want to preserve the character of the environment; the Bill will help that cause. Secondly, I welcome more generally the Bills to restructure the coal industry, to sell the Crown Suppliers and other parts of the Property Services Agency, to develop training and enterprise councils and to reform trade union law, because those four measures will contribute to the more efficient working of the economy.
  The media concentrate on the short term, but in a debate such as this, we need to recognise that the way in which the Government can help most is to make long-term structural changes to the economy which will improve its efficient running. That has been the whole objective of the Government's economic policy for the past 10 years. We have seen many improvements on the supply side. As a result, the sustainable rate of economic growth in the United Kingdom has increased considerably over the past 10 years and the performance of British industry has been transformed in the process.
  Today, British industry can manage without Government restrictions such as those that my right hon. Friend the Chancellor described earlier. The most important achievement is the huge increase in industrial profitability over the past 10 years—we have returned to the levels of the 1960s. That is important, because the principal source of investment is retained profits and most companies now have substantial retained profits with which they can invest. Productivity has also improved as a result of increased investment.
  The other day I noticed an article in CBI News in which the director-general of the CBI pointed out that, on CBI figures, productivity increased by 6·5 per cent. in 1987, by 6·2 per cent. in 1988 and by 6·9 per cent. in 1989, and was expected to increase by a further 7 per cent. in 1990. Those productivity gains have come about largely as a result of the huge increase in investment. My right hon. Friend the Chancellor was right to point out that it is the quality of investment that matters. The acid test is whether British industry is more profitable and the answer is yes, considerably more, because investment has been extremely effective. Exports have also increased: by 11 per cent. in the past year and by 40 per cent. since 1985 as a result of that increased investment.
  Today, the sustainable rate of economic growth in the economy has reached between 3 and 4 per cent. However, the difficulty is that, over the past couple of years, economic growth has been well in excess of that figure and,

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  as a result, we face the problem of inflation. The reduction of inflation, therefore, must continue to be the No. 1 economic priority. The most effective way to combat inflation is by the use of interest rates, painful though that may be, because they curb demand. Therefore, I hope that my right hon. Friend will keep interest rates at present levels for as long as is necessary to bring inflation down. However, he could emphasise less the aim of keeping interest rates at their present level to defend the value of sterling. It is noticeable that, over the past month, there has been a 4 per cent. fall in the value of sterling. We can afford to cope with that and on balance, it will be an advantage to British industry and to British exports. The inflationary consequences of that devaluation will then be minimal.
  In 1990, the British economy will start to come back on course. The rate of investment will slow down from recent high levels, but the position is different from that of 1980–81. As a result—I base my assumption on many discussions with manufacturers in my constituency and elsewhere—the slowdown will be temporary. Towards the end of 1990, confidence will be restored and in 1991 there will be a sharp recovery.
  In the meantime, what sort of Budget should the Chancellor of the Exchequer introduce in March next year? It should be a budget for business. Although I welcome his recent renewed commitment to reduce the rate of income tax to 20 per cent., perhaps next year is not the time to do that.
  I am sorry that my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant) is not present. Unlike him, I believe that it would be inappropriate to increase the mortgage tax relief ceiling above £30,000. That would be an inefficient way of helping first-time buyers. Many people have no need of such help, including myself. They have no need of additional relief. If we want to help first-time buyers with cost of buying a house—I understand my hon. Friend's objectives—it would be more effective to raise the ceiling for stamp duty. The Treasury should not increase the £30,000 tax relief limit.
  As I said, next year's Budget should be a Budget for business. There are three principal business taxes. The first is national insurance contributions. When the Government Actuary's report is published in a few days, much of the fiscal surplus will be contained within the national insurance fund. As unemployment has fallen substantially during the past two years, the fund must be in substantial surplus. The rate of contribution has not been reduced to the same extent as they were increased when unemployment was rising. Next year's Budget may be an opportunity to reduce the employer's national insurance contribution, and thereby the costs of the payroll.
  The second business tax is corporation tax. I would not wish to interfere with the changes which my right hon. Friend the Member for Blaby (Mr. Lawson) introduced in 1984. Although the reforms were much criticised at the time, there are now far fewer tax distortions in the system and investment decisions are taken for the right reasons, not for tax reasons. In the subsequent five years, we saw a huge increase in the yield from corporation tax, and today it stands at well above £20 billion.
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  The Treasury should perhaps consider a change in the arrangements for leasing. The leasing industry has been a great success. Today, about 30 per cent. of capital investment is financed on lease. However, there is a penalty for leasing exporters. People who export leasing finance receive only 10 per cent. writing-down allowance on the asset, compared with 25 per cent. available on all other assets. A change in the arrangements might encourage exports by making it easier to finance them by leasing.
  The third tax on business is the business rate. At present it is difficult to judge the impact of the uniform business rate, because the valuations list will not be published until January. Until then, it will be difficult for businesses to plan and budget, because they do not know what their position will be. Clearly, there will be large increases for some firms, probably in the commercial and retail sectors. I welcome the transitional protection for small firms. By the time the Chancellor drafts the Budget, the position should be clearer, and I hope that he will not renounce further help if it proves necessary.
  As I said, although 1990 will be a difficult year for the British economy, it is unrealistic to compare it with 1980–81. The economy is much stronger now, and its capacity for recovery is much greater. I believe that, towards the end of 1990, confidence in the economy will he restored and in 1991 there will be a sharp upturn In growth.
  7.24 pm
  Mr. Denzil Davies: This is the 11 th Gracious Speech that we have debated since the Prime Minister was elected in 1979. She and her Government were elected principally because they persuaded the British public that they could and would conquer inflation and claimed that they could arrest and reverse Britain's economic decline. Ten years later, after much strife, upheaval and damage, the Government's economic policies have failed and inflation has not been conquered: we have the highest rate of inflation of all our industrial competitors. The relative decline of Britain's industrial economy has accelerated. We have been overtaken by Italy in the European league of national wealth and another five years of Thatcherism could see us overtaken by Spain.
  In 1979 we had a surplus on our balance of trade in manufactured goods. This year we have a deficit of £17 billion. We have a surplus with few countries, either inside or outside the EEC. Recently, I read in the Financial Times that we now have a balance of trade deficit even in putty. So much for the Prime Minister's economic miracle. She likes to peddle the rhetoric of thrift, prudence and financial rectitude but she has achieved and created their very antithesis. We are a country of consumers and spenders, of borrowers and importers, a country using borrowed money to live off the fruits of production of the ingenuity and productivity of other nations.
  Some of us remember that in 1979 the Prime Minister and her colleagues were certain that they knew the causes of inflation and had all the answers. Inflation was caused by what I might call a triad of elements—high public expenditure, high public borrowing and a failure to control the money supply. In the simplistic jargon so favoured by the ideological Right, all that was compendiously described as printing too much money. So public expenditure was cut, causing great damage to public services. Public borrowing was limited, with devastating

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  consequences for public investment, the infrastructure, roads and railways. Yet, after all that misery, we still have the highest rate of inflation of all our industrial competitors. In many cases it is higher by far than that of countries in western Europe which have better public services, infrastructure, roads and railways and spend more on public investment.
  Control of the money supply has been a complete shambles. From 1979 to 1981, the money supply was too tightly controlled. Then, when the right hon. Member for Blaby took over, it became too loose. It has been a shambles because of a contradiction at the heart of Government policy. The Prime Minister believes in a free market, apparently in almost anything and everything, including money.
  In the pursuit of that belief and that policy, the Government abruptly abolished exchanged controls and allowed the banks, building societies and financial institutions to compete freely for money in the market place. Britain's financial system, which was one of the most open in the world in 1979, was made far more open by the changes and the free market in money which the Government instigated. A free market in money is often not compatible with tight control of the money supply. Because of that, the only way the Government can seek to control the money supply is by cripplingly high interest rates.
  The right hon. Member for Blaby (Mr. Lawson) eventually came to realise that. He realised that he did not have many instruments to control the money supply. He looked around for some other lodestar to control growth in the money supply and found it in the exchange rate. That is one reason why he wanted to join the exchange rate mechanism. He tried to shadow the deutschmark, but that ended in disaster. The Prime Minister would not even allow him that benchmark for monetary policy.
  The Prime Minister not only believes in a free market in pounds in the domestic market, but apparently in a free market in pounds in foreign exchange markets. With a balance of payments deficit of £20 billion, that means devaluation and nothing else. We have seen devaluation of 4 per cent. in the past few weeks and we shall see much more of it in the coming months. For all her rhetoric about fiscal rectitude, sound money and a strong pound, the Prime Minister is a devaluer. The markets have tumbled to it and the City knows it.
  The Government's economic policy is in tatters. All that they can do is to limp—dare I say it—like a lame duck towards the next election, hoping and praying that high interest rates will reduce inflation just a little, that the devaluation abroad and the recession at home will reduce the trade deficit just a little, and that as a consequence interest rates may come down just a little. They also hope that the inflationary consequences of devaluation will not appear in the figures until after the next election.
  Perhaps the Prime Minister still believes in her economic policies, but I do not think that most of the Cabinet do. I also do not believe that the City and the financial markets believe in them any more—certainly the British public do not. That is why the Prime Minister has already lost the next election.
  7.32 pm
  Mr. Matthew Carrington: I warmly welcome the commitment in the Gracious Speech to continuing and increasing the battle against inflation. For all the pain caused by high interest rates, inflation is by far the worst scourge that can attack the country, and it must be fought at every opportunity.
  Nobody pretends that high interest rates are painless. They do serious damage and hurt home owners, borrowers and, particularly, small businesses which rely on bank debt to finance their activities. Inflation does more damage to the economy and is more painful to old-age pensioners on fixed incomes, those with savings and those whose salaries cannot rise as rapidly as prices. Inflation destroys companies and hurts exports, particularly companies which export. Although inflation eventually affects the exchange rate and will eventually produce a devaluation of the currency, devaluation is erratic, slow and unpredictable. Devaluation rarely manages to ensure that the competitiveness of British manufacturing companies is sustained. In the end, everybody loses with inflation.
  There is no alternative to interest rates as a way of controlling inflation. The House has often debated whether there are alternatives and the only suggestion is that somehow we can persuade banks to control credit and stop lending. In practice there are few ways to stop banks lending money. It has been suggested that we should talk nicely to them or remind them that it is not in accordance with the Government's economic policy, so if they wish to remain friendly with the Government, they should stop lending. The vast majority of banks that can operate in our market are not susceptible to those pressures, largely because they make money from lending, so they are not easily persuaded to give up that lucrative method of increasing their profits.
  My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) suggested that we could control banks by threatening to remove their banking licence. Even if we could control them, many banks are outside the control of the Bank of England and the banking licence. We would have to rely on central banks being prepared to exercise similar controls on the banks within their jurisdiction, and it would not be possible to persuade them to do that. Nor would it be a sufficient way of producing the right effects.
  It has been suggested that we could stop banks lending money through special deposits. The practice of requiring banks to place special deposits increases interest rates still further. It forces up interest rates to limit the desire to borrow and the demand for lending. That would have little effect on the totality of lending, if demand continues. In other words, it is similar to the Government increasing interest rates in the first place.
  Without the reintroduction of exchange controls there can be no effective sanctions against the banks. Some right hon. and hon. Gentlemen suggest in their amendment to the Loyal Address that the reintroduction of exchange controls would cause us considerable problems with the European Community. The other effective sanction would be the imposition of tough withholding taxes on those who borrow. That, too, would cause us considerable problems with the EC and our international treaties.
  The only other way of reducing liquidity in the economy is by raising direct taxes. To produce a sharp enough effect, the basic rate of income tax would have to

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  be raised sharply. That would cause far more damage and be far more dangerous as a weapon than the increase in interest rates from which we have all suffered.
  All the signs are that the economic medicine is working in the domestic economy and that inflation is on the way down. All the lead indicators point to a pattern of sustained economic growth which will allow a return to sensible economic growth. Our interest rates of 15 per cent. are probably not sufficiently high for the external value of sterling. We are in the classic exchange rate trap. Interest rates are high enough for the domestic economy but arguably not sufficiently high for the external economy.
  Short-term attitudes and exchange rate management are misleading since foreign exchange markets tend to be volatile and swing on emotion as much as on the economic realities of the country of the currency being traded. It is misleading to look at the exchange rate at any given point as a measure of how markets are viewing the currency. The inflationary pressures arising from the recent devaluation will undoubtedly be bad, although some commentators have exaggerated the extent of the problem.
  Perhaps the present value of sterling against the deutschmark will give us a chance to re-examine the exchange rate mechanism of the European monetary system. Perhaps we should be considering whether the present ERM and EMS will be suitable, given the new conditions emerging in Europe. Events in eastern Europe have certainly changed the external position of the European Community and will dramatically change Germany's position within it.
  Through its intended ties with East Germany, West Germany will gain cheap labour and a large unexploited market with an almost insatiable demand for the goods that it can produce. Moreover, that market will be tied to West Germany's apron strings by strong emotional bonds.I believe that that will strengthen the deutschmark still further, and that will start to blow the exchange rate mechanism further apart if the necessary changes are not made sooner rather than later.
  The Italian Government are already making noises to the effect that they are unhappy with the control that the Bundesbank exercises on European monetary policy. The Italians' doubts can only get worse and should be echoed by the rest of Europe. The British Government should seek an opportunity to enter discussions with other members of the European Community to decide whether we cannot dump the Delors plan and substitute better proposals for monetary co-operation more adaptable to the new challenges that we face in Europe.
  7.41 pm
  Mr. Jim Sillars: On 16 November 1985, the Prime Minister made a revealing statement when a senior Conservative colleague went to plead the case on behalf of the then Tory devolutionists. She said:
  "I am an English nationalist, and never you forget it."
  We in Scotland have had cause not to forget it. There is no question but that the Queen's Speech is an English nationalist's speech, which fails to acknowledge in any sensible way the extent of the economic and social crisis that the people of Scotland face.
  Because time is limited, I shall take just one example to show the fault that lies with the English Tory Government
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  —the death blow that they have allowed Sir Robert Scholey, chairman of British Steel, to aim at the heart of the Scottish economy. I refer to three plants in particular —Ravenscraig, Dalzell and Clydesdale tubeworks, which employ between 4,000 and 4,500 people. British Steel has pursued a deliberate policy of under-investment in Scotland. Since 1983, it has invested £580 million in steel plants, of which Ravenscraig got £16 million. In the current investment programme, £83 million is earmarked for Lackenby, £40 million for Scunthorpe, £54 million for Llanwern and £106, million for Port Talbot. Scotland is scraping along at the bottom. Schemes currently being considered for approval would cost £350 million, but not one pound of it would be earmarked for Scotland.
  Clydesdale's output is mainly for offshore construction. I have listened with amusement to hon. Members lecturing us today about the importance of the cash that has flowed from the North sea and saying that the next decade will be very different from the last. In terms of development and development values, that is bunk. According to the Scottish Development Agency, a pretty reasonable organisation, in the next decade the development work in the North sea will be worth 10 times as much as the development work involved in the Channel tunnel in terms of construction and related engineering orders. In the next five years, £27 billion is earmarked for development. In the next three or four years, 46 platforms are to be built using 740,000 tonnes of steel—and that does not include the pipelines that will be required to service the development when it comes on stream.
  Scotland is the only nation ever to discover oil and actually become poorer, at the hands of an English Tory Government. One third of the Scottish people are living in poverty according to the official definition. The Government privatised British Steel and gave Scholey and his anti-Scottish mates open licence with their anti-Scottish bias, to pursue malicious policies against the men at Ravenscraig, Dalzell and Clydesdale. It is not because those men have not worked well—they have broken records in terms of production and freedom from strikes and have done an enormous amount of work at a plant which badly needs investment. It is the men's work that has overcome the technical problems associated with steel production in those areas, but the malicious bias of Scholey and company has been directed to undermining that work.
  If Ravenscraig, Dalzell and Clydesdale go, there will be a domino effect down the Clyde and across to the east of Scotland. Reputable economists have predicted that if we lose the Scottish steel industry we shall lose not just the 4,000 to 4,500 jobs in that industry but about 15,000 to 20,000 related jobs.
  That is the potentially devastating prospect for the Scottish economy—all because the Government privatised British Steel and gave Scholey a gun to point north to destroy the industry which lies at the heart of our economy. Ironically, if Scholey and his friends have their way, not only will a nation that discovered oil have become poorer but a nation in whose jurisdiction and waters sits one of the largest developments in terms of demand for steel will not have the capacity to meet that demand and its able and skilled steel workers will be on the dole. That is Scotland's indictment of the English Tory Government and why the Queen of England in Downing street is so detested north of the border.
  7.47 pm
  Mr. William Cash: As we move towards 8 December and the summit at which new developments towards a federal Europe will be discussed, we should reflect on the concerted attempts that have been made to undermine the position of this House over the past few months and years. The activities of President Mitterrand and Chancellor Kohl are quite understandable in terms of their countries' economies but they are wholly irrelevant to what is happening in the United Kingdom.
  I would not wish to push them too far, but there are some parallels to be drawn between what is happening in Europe in the run-up to 8 December and events in the mid to late 1930s. The context may be very different but in both cases there has been a threat to the future of the United Kingdom. A concerted attempt is being made to undermine the ability of the House to determine its own economic and social priorities, and effectively, that undermines the purpose, objective and efficacy of debates such as this.
  I have been given numerous notes and briefings on the state of the British economy. Chancellor Kohl and President Mitterrand seem determined that we should accept the binding rules proposed by Mr. Delors—who I believe is coming here on Friday. If that happens, we shall no longer be able to determine a basis on which our economy can function at all independently or even reasonably flexibly.
  Dr. Norman A. Godman: Surely the treaty of Rome and the Single European Act preclude the independent decision making that the hon. Gentleman is talking about?
  Mr. Cash: That is a perfect illustration of the need for greater understanding and information about the manner in which the treaty of Rome has operated. Up to and including the Single European Act, there has been adequate opportunity for co-operation. I believe that what we should be doing, and what we are doing on behalf of Britain is to ensure that there is some flexibility, so that we are not bound hand and foot to what a panel of central bankers determines. We should also ensure that we are not bound by the concerted attempts of other countries to make their economic policies prevail at the expense of ours.
  In the original treaty of Rome, in the articles that deal with economic and monetary co-operation, the word "co-operation" appears and it is carefully preserved in the Single European Act. However, now they are trying to move the goal posts. As President Mitterrand said on 17 October, they do not merely want economic and monetary union, as opposed to co-operation, but political union. That is the basis upon which the new federalism is being constructed.
  That is no joke. After 20 years of automatic progression by stealth, we find that we have blown their cover during the past year. In effect, we are now being threatened that, if we do not go along with something that is not in the treaty—contrary to what the hon. Member for Greenock and Port Glasgow (Dr. Godman) has just said—but a new set of rules, and we will be marginalised into one of the outer concentric circles of Europe. That is what is being devised by Delors and others. We will no longer have any control over Britain's economic policy.
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  Perhaps the Opposition are waiting to see what we do at the summit on 8 December. However, during the debate on economic and monetary union a few weeks ago, hon. Members on both sides of the House agreed that we would not pursue stages two and three of the Delors plan. I expect that we will resist the attempts to take us down the federal route, despite the political difficulties posed by the threat.
  However, we still have a major problem. Under the present Government's policy we have effectively reconstructed our economy since 1979. In the early 1970s we threw away a golden chance, when we had the opportunity, to make certain decisions. My right hon. Friend the Prime Minister has been prepared, during the last few years, to take those decisions which were ducked at the time. However, the challenge to us as a nation, and to our will power, is the need to increase productivity, quality and saving, as they are necessary to put us back into competition with our rivals in Europe. The management and work force of Britain, aided by a structure that can be provided by the Government, are the only people who are able to produce the goods for the benefit of the British people.
  Let us consider France and West Germany, where there is massive state aid. We have the recent example of Renault, which is a state-owned company that has had to withdraw from the position it had adopted—presumably with the full knowledge and connivance of the French Government who provided massive state aid.
  Italy is doing the same. We know about that from figures recently produced by the Commission. The percentage of state aid in Britain is rapidly declining. However, other countries in the European Community are engaged on a policy to get inside the rules before 1992 bites.
  West German companies have increased investment in Britain by as much as 200 per cent. in the past few months. For example, there has just been an agreed merger between Morgan Grenfell and the Deutsche Bank.
  There have been massive increases in the amount of money made available to the southern parts of Italy, through the structural fund. The system is being abused and that is combined with massive fraud, yet the system provides an opportunity for a strong, liberalised, deregulated economy.
  Britain will do well, but we have to take the opportunities open to us. We must be vigilant and ensure that other member states do not take us for a ride.
  7.57 pm
  Mr. Brian Sedgemore: I congratulate the right hon. Member for Huntingdon (Mr. Major)—who, alas, is not here at the moment—on his appointment as Chancellor of the Exchequer at the Treasury, and as juvenile lead to the Prime Minister in the Cabinet.
  As I listened to the right hon. Gentleman today, I was reminded of the assertion of George Jean Nathan;
  "politics is the diversion of trivial men who when they succeed at it become important in the eyes of even more trivial men behind them".
  That is a little unfair. I shall analyse, in a moment, the view of the Chancellor that he is unfit for the job—and there are others who agree with him.
  The recent Whitehall farce at the Treasury has its more serious side. It has forced us to re-examine our

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  understanding of the English language. When the previous Chancellor was driven from office, we had to redefine words such as "brilliant" and "unassailable". Now the closest friends of the new Chancellor and his most fervent admirers describe him as dull, boring, ignorant and grey. Therefore we will have to redefine such words as "loyalty" and "hagiography."
  Quite the most fulsome praise that I have heard about the Chancellor came from a neutral observer on "The Money Programme" last Sunday week. He said:
  "The Chancellor has a lot to learn in many policy areas".
  I suppose that the alternative view is that the Chancellor has a lot to learn in every policy area.
  One thing worries everyone: who is in charge at the Treasury? To judge from the 4 per cent. depreciation in the pound that has occurred in the few weeks since the Chancellor took office, the dealers on the foreign exchanges do not believe that anyone is in charge. Phillips and Drew, the city experts, take a rather different view. In their bulletin, describing the Chancellor's policies as grim and grisly, they argue that the right hon. Gentleman is in the pocket of his civil servants. Bill Martin, their leading economist, puts it rather delphically:
  "More than Mr. Lawson, the current Chancellor is likely to be sensitive to the natural fiscal conservatism of his Treasury officials."
  If there are Conservative Members present who hope for tax cuts, perhaps I should read them another sentence:
  "It is probably right then to think in terms of a mean Budget, incorporating perhaps an implicit tax increase of £ 1·2 bn".
  I do not agree with the foreign exchange dealers or with the City experts. I believe that the power in the Treasury still resides at No. 10. Why did the Chancellor spend last evening at No. 11, which I understand is not customary? I understand that he does not normally sleep there. I am told that he woke up last night in a cold sweat, turned towards No. 10 and, in a whispered cry, was heard to mutter:
  "Oh! Why does the wind blow upon me so wild?
  Is it because I am nobody's child—Margaret?"
  We know that the Chancellor is the son of a trapeze artist. As such, he will know that, when a child falls from dizzy heights, it has a hard landing. The Chancellor's non-oil forecast of three quarters of 1 per cent. for the economy next year means that all the rest of us are in for a hard landing. On television on Sunday, and here at the Dispatch Box today, the Chancellor told us that he is a monetarist with a one-eyed view of the economy. With his one eye, he sees only one problem—inflation. And he has only one weapon to deal with it—interest rates. His sadly misplaced approach reminds me of Mr. Kremlin in Disraeli's "Lothair":
  "Mr. Kremlin was distinguished for ignorance for he had only one idea—and that was wrong."
  The famous economist John Maynard Keynes was certainly not a monetarist. He has been dead for a long time, yet in his "Essays in Persuasion", written in the inter-war years, he had the prescience to anticipate the recent shambolic hysteria at the Treasury. He said:
  "The Economic Problem, as one may call it … is nothing but a frightful muddle, a transitory and unnecessary muddle".
  Did not the Chancellor's appointment to his new office arise out of a transitory and unnecessary muddle? It was unnecessary because the Prime Minister put her pride before her country; it was transitory because, even if the
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  Chancellor stays in office for two years until the next general election, my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) will take over from him.
  The Chancellor talks to us on television and in the House today about sound finance and threatens, as though it has some sort of macho symbolism, to raise interest rates to 16 per cent. The Keynesian retort—
  "'Sound' finance may be right psychologically—but it is a depressing influence"—
  is as apposite today as ever it was.
  The recession that is inherent in the Autumn Statement is depressing, as indeed are the Chancellor's words. Delving into deep and difficult psychoanalytic theory, not to mention sado-masochism, he tells us that, if the policy is not hurting, it is not working. But the people who will be hurt are not the Chancellor's own class but the working people of Britain.
  Behind this ludicrous language and the pain and despair of recession lies a profound and tragic ignorance of economic management on the part of the Chancellor. When he made his Autumn Statement on 15 November, I asked him why the warranted rate of growth in 1989 was less than it was in 1979. As his answer moved from guff to persiflage, it was clear that he did not have a clue what I was talking about. It is a bit like the neurosurgeon, taken before the medical disciplinary tribunal, saying, when asked why he operated on the patient's leg, "Nobody told me that the brain was in the head."
  We should have realised what was going on when the Treasury and Civil Service Select Committee heard the Chancellor's pathetic outburst on 3 February 1988. You know how it is, Mr. Deputy Speaker when, in this place, we hide our true selves, we bottle it up inside and we pull a mask over our face—until there is a cathartic event and we have to blurt out the truth and a little tear rolls down our cheek. That is what happened to the Chancellor on 3 February. I shall quote him extensively.
  I asked him what would happen to public expenditure if we had a disastrous balance of payments crisis. He flipped and refused to answer the question. He answered:
  "While undoubtedly you were at university learning to become an academic, I was outside digging roads learning how to earn my living".
  I yield to no one in my admiration for those versed in the theory and practice of digging roads. I would even be prepared to accept that, as an economist, the Chancellor makes a first-class navvy but, summoning up all my reserves of logic, I have to say that being good at digging roads is not being good at being Chancellor of the Exchequer.
  Mr. James Hill: Oh dear!
  Mr. Sedgemore: Yes, it will be "Oh dear" as I quote from the Chancellor again. He then made two statements which, on the Richter scale of economic imbecility, have never been exceeded. He said:
  "I also know that there is no imminent balance of payments crisis".
  To add insult to injury to that estimable Committee, he said:
  "I simply observe beyond that that if you think that any projections that anybody has produced of any possible payments deficits in the last few weeks represent remotely a crisis in terms of the percentage of GDP compared with what we saw year after year during the 1970s, then I am extraordinarily surprised that you should make that comment."

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  History has recorded that I was right and that the Chancellor was wrong.
  I have examined the figures in some detail. In the 1970s, there were balance of payments deficits in six years. But not even in 1974, when oil prices trebled, did the balance of payments deficit reach 4 per cent. of GDP, as it will this year. There were deficits in four other years in the 1970s when Labour was in power—in 1975, when the balance of payments deficit was 1·4 per cent. of GDP, in 1976 when it was 0·8 per cent. of GDP, in 1977 and in 1979. When it comes to a balance of payments deficit, this Chancellor, with deficits of 3·2 per cent. of GDP in 1988 and of 4 per cent. in 1989, is in a mega-league of his own.
  Every hon. Member knows what the warranted rate of economic growth is, but because the Chancellor does not, I shall define it for him. It is the sustainable rate of economic growth that Britain can have without moving into a balance of payments deficit. From 1950 to 1970, the warranted rate of economic growth varied between 2·5 per cent. and 3 per cent. of GDP. In the mid-1970s, because of the oil crisis, it fell to 1·5 per cent. In the 1980s, because we found North sea oil, it rose to 3 per cent. Recent simulations have shown that the warranted rate of growth is between 0·5 per cent. and 1 per cent. of GDP. That means that there has been a tragic decline in our manufacturing base. The proof of that lies in the Chancellor's forecast that, in 1990, with virtually no growth and a recession, there will be a £15 billion balance of payments deficit.
  That will not end in 1990 or in 1991. The Chancellor is hopeless, helpless and hapless. No wonder we shall be voting against him tonight.
  8.10 pm
  Mr. Phillip Oppenheim: I shall deal first with what I call the manufacturing myth—the myth that Labour Members are the true friends of manufacturing industry. Some commentators paint a picture in which all the recent economic growth that we have enjoyed has been in the retail and service sectors and that none has been in manufacturing. Some say that the supposedly great manufacturing industries of the 1960s and 1970s are all dead or dying. Opposition Members have consistently claimed that, under Conservative rule, manufacturing output has fallen.
  The stark fact is that manufacturing output fell under the last Labour Government. Under the Conservatives, manufacturing output has risen sharply, particularly in the past few years, and last year it rose by 4 per cent. Much of the industry in the 1970s was grossly uncompetitive and almost dead on its feet. Not only do we have more manufacturing industry now than we had under Labour, but it is more competitive and in better shape—[Interruption.] Labour Members laugh, but I will give examples to prove my point.
  Who would have given British Steel a chance in 1979? Who would have given a chance to our aerospace industry or even to ICI, which had the reputation of being a sleepy, inefficient giant depending largely on our old colonies for its markets? Yet last year, for the first time ever, Britain's pharmaceutical companies exported more than those of any other country.
  Our aerospace producing industry recently overtook France to become the world's largest, after the United States and the Soviet Union. Many people in my
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  constituency, including Labour supporters, tell me frankly that industry in the area in the 1970s depended largely on inefficient and uneconomic pits or on old industries which were on their last legs. My constituency has seen a huge growth in manufacturing industrial output and there is now a widespread competitive manufacturing sector ranging from engineering to carpets and from consumer products to electronics.
  Just outside my constituency, another of the industrial near basket cases of the 1970s, Rolls-Royce, now has a record order book for its aero engines. At almost every airport in the world one sees new planes with Rolls-Royce engines. My hon. Friends and I are extremely proud of a record such as that, even if Labour Members are grudging about it.
  There is no denying that there has been some mismanagement of the demand side of the economy. That mismanagement has been due not to tax cuts, as is often claimed—such cuts injected only £4 billion extra into the economy last year—but to low interest rates in 1987 and 1988, which injected 10 times as much demand into the economy—£40 billion in all.
  Those demand side problems should not blind us to the fact that the supply side of the economy has been producing record levels of wealth and output in recent years. Proof of that lies in the fact that, while the demand explosion has undoubtedly meant that imports and inflation have risen, our domestic output has risen sharply as well. The reasons for that enormous improvement in domestic output are better productivity and more competitive industry which has enjoyed an investment boom.
  Investment now going into British industry is far better than that which occurred in the 1970s. At that time, investment was often directed by Government into unviable projects such as the creation of ludicrous and unsustainable levels of capacity in the steel industry.
  There are other, more positive, though little noticed, signs which bode well for our prospects in the coming few years. For example, our share of world exports, which fell sharply in the 1970s, has stabilised in the last decade. Exports were up sharply in the last year and, in volume terms, they rose by 10 per cent. over the last quarter.
  Our exports are now growing far faster than are our imports—[Interruption.] That may not give Labour Members much pleasure, but I have stated the facts. Our export performance is good now. That shows that our economy is more competitive and is responding well to increased demand. Perhaps that does not amount to the economic miracle that some were unwisely claiming some years ago, but it shows that our industrial problems are not nearly so grim as Opposition Members suggest.
  Perhaps there never was a real chance of solving in a decade all our deep-seated and long-term industrial problems, many of which go back many years and are the responsibility of many Governments, as hon. Members in all parts of the House will accept. Even so, we now need, above all, a continuation of our successful supply side policies to consolidate the improvements of the last decade. An area where improvement is vital is the education system, which must supply the skilled, trained and educated people whom industry needs.
  Conservative policies have produced more wealth and more manufacturing output than ever before. We should not be blinded to that fact by short-term demand problems. To deny that our policies are working risks a

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  return to old-style, pre-Thatcherite policies. It would be ironic if, at the time when every other country, including many Communist states, are moving to more free market systems, we should return to a more controlled, centralised, regulated economy.
  We have recently been hearing more a term which, thankfully, we have not heard for a decade. It is "industrial strategy". If we can learn lessons for the future by looking at the past, we can learn much by looking at previous attempts at industrial strategies. Consider, for example, Jaguar, which is topical today. The Government have been accused by the Opposition of allowing Jaguar, supposedly the jewel of the British car industry, to be sold off to foreigners, preventing it from developing into a major independent force in world car markets.
  The battle for Jaguar to be a major independent force in world markets was lost not in the last decade but in the two decades before that. When we took office, Jaguar made a paltry 15,000 cars per year. Last year it made more than three times that number. It has been brought back from the brink by Conservative policies. Jaguar was taken to the brink by earlier Labour policies, for it was an industrial strategy of the Wilson Government which decreed that the British car industry should merge.
  Industrial strategy and regional policy ordained that the British car industry should build plants in unsuitable places which meant that bodies and engines had to be shunted around the country from the midlands to Bathgate, and to Speke and back again. An industrial policy in the 1970s determined that the volume car business should bleed Jaguar and Land Rover white, so that for years those companies did not have enough investment capital.
  That was why the good bits of the old British Leyland empire, such as Jaguar, were virtual industrial write-offs by 1979, making a few thousand cars in out-of-date factories with appalling labour relations and no pride in the job. Opposition Members need not take my word for that. George Simpson, currently the managing director of the Rover group, who worked in that group in the 1960s and 1970s, talking about the late 1960s, observed:
  "It was a radically different company years ago … riddled with archaic practices. My greatest initial experience when I joined the company was trying to find out which level of canteen I would be assigned to. There were 14 levels of canteen and eventually I was allocated to one where you could have beer or sherry with your lunch."
  That was under a Labour Government. That was when Jaguar's pass was sold. That was the legacy of Labour's industrial strategy. Industrial strategies and interventionist industrial policies do not work. Markets work because they represent the individual choices of millions of people. It is sheer arrogance to believe that politicians and bureaucrats can make those decisions for people and that they know better than business men where to invest money.
  The investment decisions of politicians are almost invariably clouded by political judgments which usually lead to commercial failure. Those who hold up Japan as an example of supposedly successful industrial planning have grossly misread the causes of Japan's industrial success. I accept that it is always easy for western politicians and business men to claim that Japan succeeded through something simple and easily understandable such as an
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  industrial policy, which supposedly we have not had in the West. However, virtually all western Governments have tried industrial policies, and almost always they have failed.
  To believe that industrial planning lies at the heart of Japanese industrial success is to miss the point. Japan has succeeded for many reasons, among which are its intensely competitive internal market, very low taxation, very low Government spending and a disciplined and vocationally oriented education system. Since the war, Japanese Governments have never pilloried profit or sneered at success in the way that Labour politicians habitually do. Japanese companies have taken care to make their employees feel part of their organisation, and they have been open-minded enough to buy in the best technology from overseas. Japan's Governments have provided a pool of low-cost investment for its industry by keeping taxes very low on savings—something which we would do well to emulate. None of those things has anything to do with industrial strategies.
  We should not kid ourselves that the Japanese have succeeded through industrial planning, however alluring an excuse that might be, or that all that Britain needs to solve its industrial problems is a little bit of intervention here and a little bit of administrative guidance there. We should not fool ourselves that the right hon. and learned Member for Monklands, East (Mr. Smith) and his friends will get together with industrialists, trade unionists and a few civil servants and solve all our industrial problems. Our economy is not like that.
  All those policies have been tried, and they have failed. Those policies gave us the economic planning boards of the 1960s, the National Enterprise Board of the 1970s, and British Leyland, British Shipbuilders, and British Steel, all of which were chronic loss-makers. Those policies will fail again if they are tried again. We should not return to the old pre-Thatcherite agenda which is being rejected all over the world. We should continue with the free market policies allied to improvements in our education system which will steadily rescue us from nearly a century of steady decline.
  8.23 pm
  Mr. Ted Rowlands: I believe that my remarks will more than answer the complacent speech of the hon. Member for Amber Valley (Mr. Oppenheim), who managed to describe a successful supply policy which has resulted in a £20 billion balance of trade deficit. Other hon. Members have mentioned—and I recall vividly—the first statement made by the new Chancellor when he said that, if it is not hurting, it is not working.
  People in the communities that I represent are asking who else has to be hurt or damaged and how many more have to lose their jobs before that policy apparently works. During the summer, in the weeks before the Chancellor took his new office, communities such as mine were already suffering serious blows as a result of the Budget and of the continuing structural changes imposed upon us. In one month during the summer, two pits in my constituency were closed. Six others have been closed within a 30-mile radius in the past 12 months. On the day of the announcement of the closure of Merthyr Vale pit at Aberfan, Hoover, our other major alternative source of

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  employment, also announced significant large redundancies. It directly attributed those redundancies to the Government's economic policy, particularly on interest rates.
  Hoover—the major alternative to the coal industry in my constituency—started the decade 1979–89 with 5,400 jobs and now, at the end of the decade, it probably has no more than 1,500 people at work. Many of the structural changes mentioned by the hon. Member for Amber Valley were accepted many times during the last decade by the trade union movement and management agreeing to change a variety of practices to become more efficient. It is a sad and tragic observation that, after a decade of difficulty, sacrifice and job losses in our communities, we now have the chilling feeling that in the next 12 months we shall have a repeat performance of the experiences of 1980 and 1981.
  It is in that context that one has to measure the famous valleys initiative launched by the Secretary of State for Wales, of which my constituency is supposed to be the major beneficiary. I welcomed the initiative from the start. Local authorities, myself and others have co-operated fully in endeavouring to make the initiative successful. The Secretary of State thought that it was so successful that he wanted to show it off to the Prime Minister a week ago. That was the first time that the two have been seen together in public. Nevertheless, he was willing, keen and eager to demonstrate the success story of the valleys initiative.
  I doubt whether the Prime Minister heard the whole truth. The truth is that the jobs we have gained from the valleys initiative have been more than matched by the jobs lost. In character and volume, those lost jobs cannot be compared with the jobs created. We have lost well-paid jobs in manufacturing and, with one or two exceptions, we have gained poorly paid part-time jobs in the service sector.
  The Queen's Speech offers no solution to the structural problems which led to the supply problem about which the hon. Member for Amber Valley boasted. How can one boast about a successful supply policy which ends up with a £20 billion balance of trade deficit? What has happened in the past two or three years—there was a semi-admission of it in what the hon. Gentleman said—is that consumption has risen totally out of line with production. The only answer that the Government have is to crush consumption to match the decline in production. To achieve that cut in consumption, they will damage the investment necessary to increase production.
  I can give a vivid illustration from my constituency. A new young enterprising company came to my constituency to make pistons for diesel engines. It is an amazing story. Do the hon. Member for Amber Valley and the Government know that now in Britain—once a great nation of manufacturing and engineering—there are only two companies which can make pistons for diesel engines? One is a small nascent company set up in Merthyr Tydfil. The company was set up because the gentleman who owns the export company had export orders which would no longer be met by any British company. He could not find the products to sell to the export markets that he has secured, so he was forced to set up a small manufacturing unit.
  Having set it up, he has been besieged by telexes from Rolls-Royce, Perkins and Listers asking him to deliver pistons for diesel engines within Britain, in addition to his
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  exports. He therefore needs to expand. However, a small company such as his needs to borrow. He has found that his interest rate bill alone has gone up by £2,000 per month in the past 18 months to two years. He will therefore not be able to expand to meet the supply-side problems that have arisen in the economy as a result of the Government's total and utter neglect of the manufacturing sector of the nation.
  Our internal manufacturing supply problems and the Government's interest rate policy will make it more difficult, not less, to produce things in Britain again in communities such as mine. Developments in Europe, particularly in eastern Europe, will also cast economic and industrial shadows over manufacturing in this country.
  I read with some interest that large-scale West German and American capital will be crossing into eastern Europe. Parts of eastern Europe are seen as a new south-east Asia or Taiwan within Europe because they offer an opportunity to launch products manufactured with cheaper labour and new investment into western European markets.
  Another major employer in my constituency is Thorne Lighting. I recently read a headline stating: "General Electric plans attack from the east." The United States group has moved to buy into Tungsram, a major Hungarian lighting company which a few years ago caused enormous damage by dumping light bulbs on to the British market. That is a sign of other developments that will occur. Such developments may be understandable, but they will add considerable pressure on the manufacturing sector in our economy.
  What does the Queen's Speech offer to help the manufacturing sector? We are not being governed by people who are interested in making things. Communities such as mine were founded on making things and there is nothing wrong with wanting to produce things rather than simply servicing things. In the end, the service economy depends on wages in the manufacturing sector.
  Much of the service sector is self-consuming—it consumes other people's wages. To stay open, our B and Q stores and Great Mills stores require other people to have incomes, so people must be earning good money in other companies in the manufacturing sector. Communities such as mine with our great ironworks began the British and world industrial revolution in the late 18th century. We want to produce things again, but the Government are more interested in paper money than in meaningful production.
  Recently I read the Chancellor of the Exchequer's, remarks about taking the Bank of England out of politics. The origins of the Bank of England date back to the 1960s. There were great debates in 1710 when the nascent Bank of England refused to support the Government of the day and almost created a credit strike. Daniel Defoe wrote an essay on credit in which he referred to "men of paper". The Government, too, are men of paper. They are not in the slightest bit interested in the manufacturing sector. If they were, they would not have allowed the decline in the past decade to become as bad as it has.
  I have one modest suggestion which can be applied within the existing terms of Government policy. The Government can assist the growth and redevelopment of manufacturing investment in communities such as mine in two ways. First, they can use selective financial assistance to its limits. That is the last bit of regional policy left which can serve communities such as mine. Companies such as

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  the one that I have decribed, which makes pistons, require that assistance to at least offset some of the costs of the high interest rates imposed by Government policy.
  Secondly, the Government must take a much more imaginative approach to the EC funds available for regional restructuring and redevelopment. There has been a large increase in the regional development budget. However, in my extended correspondence with the Secretary of State for Wales in the past few weeks, I have found no imaginative thinking about how some of those regional Community funds can be used and adapted to ensure that communities such as mine, which are proud of their tradition of manufacturing things, can be so again.
  8.34 pm
  Mr. Ian Bruce: I am pleased to follow the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). Like him, I believe passionately that manufacturing industry is extremely important for the United Kingdom. I have always believed that the United Kingdom has been able to show the world how to manufacture and I believe that it can do so again in future.
  I want to confine my remarks on the Queen's Speech to a very narrow subject. I want to help by offering some suggestions about our trade balance. Our trade balance can be financed and there is no need to panic. However, we can take measures against it.
  When my right hon. Friend the Chancellor of the Exchequer considers his options, he must be worried about how he can steer his way through the problems without raising interest rates even higher. He must be worried about keeping inflation down and move against constant tax increases. He must always keep his eye on the difficult problem of unemployment which we are beginning to control.
  The Government already use interest rates in their battle with the trade balance, but I believe that there are other measures available. We could reduce inflation through a tax reduction which would make United Kingdom goods and services more competitive, reverse the trade gap and bring greater employment. I can see the excitement on the faces of my colleagues on the Treasury Front Bench at the thought of that. I am referring to employers' national insurance.
  In the Autumn Statement, I was very unhappy to hear that we will continue to keep employers' national insurance at roughly 10·5 per cent. I was involved in costing as a work study engineer in industry. Whenever we carried out a costing, we first considered the labour costs in the particular goods or services. As soon as we had written down the labour rates, we added on what was usually a very high figure for the employers' national insurance.
  Earlier, I listened to my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), who tends to rewrite history. However, I want to praise his excellent efforts with regard to employers' national insurance. In 1970, when my right hon. Friend's Government took office, employers' national insurance, which is really a tax on jobs, was 13·5 per cent. Over four years my right hon. Friend reduced that to 6·5 per cent. However, when the Labour Government took office they did not like that level of the tax because they are so friendly with the workers.
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  They saw it as a tax on employers and one which they would not be hammered for by their supporters. However, we all know that a tax on an employer is passed on in the cost of the product.
  The Labour Government raised the employers' national insurance from 7·4 per cent. to 8·5 per cent., then 8·75 per cent., and to 10 per cent. The Labour Government said that they had to increase the employers' national insurance tax because of higher and higher unemployment and benefits. To add insult to injury, they added on the iniquitous national insurance surcharge, first at a rate of 2 per cent. and then at 3·5 per cent.
  When this Government came to power, my right hon. Friend the Prime Minister understood the difficulty that the surcharge was causing employers and she made a commitment to reduce it. She reduced it from 3·5 per cent., but that took a long time. I believe that it was finally removed on 6 April 1984. That was one of the engines which ensured that inflation was reduced, because it had an effect on the cost price of goods and services in the United Kingdom. Therefore, it helped to boost enterprise and company profitability. That tax has been 10·45 per cent. or 10·5 per cent. for many years, and the employees' national insurance charge, which started at about 5 per cent. or 6 per cent., is now 9 per cent. Both taxes are foolish. We presently appear to have a surplus of taxation receipts. If there is any money to be given back, the best place to put it would be the employers' national insurance charge. That would have the effects that I have outlined.
  If the Government wish to be adventurous, by transferring that tax—not a tax on employment but a tax on consumption—and putting it effectively on the VAT rate, at one fell swoop they would ensure that, when goods are imported, which effectively reduces employment in the United Kingdom, somebody buying those goods or services would pay for unemployment benefit, pensions and so on.
  A tax on employment is wrong. At the moment, we export goods at 15 per cent. and we remove a 15 per cent. tax, but, in France, we might get a tax rate of 25 per cent. or 33 per cent. We effectively pay a higher tax rate in France. In France, an employer gets 33 per cent. or 25 per cent. taken off his goods as he is going out the door, and only 15 per cent. when he comes in our door. The equalisation of VAT would work to our advantage against most of our competitors. There are some fine judgments to be taken, but we could improve our competitiveness.
  It is not de rigueur to do the opposite of what the Labour party suggests or what it has done in the past, but it is often good to do it. The Labour Government put up taxes, and their tax take into the Treasury went down. They looked for more Government involvement, but got less control over the economy. They opted for more nationalisation, supposedly to preserve companies and jobs, but we ended up with fewer companies and jobs. They put up national insurance rates, thereby putting up prices and destroying competition.
  By cutting tax rates, we have increased the tax take and created more enterprise. We have removed Government control and privatised many companies, which has created more enterprise and jobs. Let us now reduce the employers' national insurance rate. That would reduce prices, restore competition and start to cut the trade gap which undermines international confidence in our economy. That is the mechanism for getting our economy back on track in the next financial year.
  8.42pm
  Mr. Graham Allen: I should like to continue my series of great Tory economic myths—an in-service training course for the more gullible Conservative Back-Bench Members. The great Tory myth which I should like to discuss today is the "record levels of investment in the United Kingdom".
  This morning, the east midlands CBI announced a programme for the east midlands—it could have been endorsed or even written by myself or the Labour party —calling for transport investment, the availability of more land for new industry, and a serious retraining and reskilling programme. However, the common ground that now exists between the CBI, Opposition Members, trade unions and commerce is not shared by Conservative Members. The Conservative party once proudly boasted that it was the party of business, but it can no longer make that claim. The process has subtly changed.
  The Conservative party is now clearly identified not as the party of business but as the party of the City, the money-changer, the moneylender and the money markets. Those interests often run counter to the interests of business, and more and more people in the business community—the real economy—such as the producers and the wealth creators, are beginning to realise that. The Conservative party can no longer claim to be the party of industry. The free market obsession, which, incidentally, is exclusive to Thatcher's Britain, has been the death sentence for the many of our industrial companies.
  On investment, it should be enough to quote the Chancellor's own Autumn Statement in which he admitted that total fixed investment will plummet in 1990, increasing by only 1·75 per cent., including a fall in general Government investment of 3·75 per cent. We must look deeper, as Tory propagandists have yet to catch up with the magnitude of the economic crisis.
  In his Autumn Statement, the Chancellor stuck up two fingers at industry, and it is about time that the CBI at national level stopped primly believing that that is a gesture of victory and started to scream about alternatives before the recession starts to pick off its membership. The Autumn Statement gave no support to British industry, no new money for industrial research and development, no new money for industry in the regions, and less money for industrial training.
  Incarcerated in the prison of Thatcher's Britain, we often get a distorted perspective and need to look abroad to see what other nations do. What do they do in terms of investment and of assisting their industries? The new Chancellor today referred to what happens in the Soviet Union, Romania and other Eastern bloc countries which spend perhaps a quarter of their GDP on public investment—a brilliant intellectual sweep that was meant to indicate that virtually all investment was potentially bad. The Chancellor excluded our major industrial competitors in Japan, Germany, the United States and elsewhere.
  Our total public sector investment has fallen by 20 per cent. since 1979. In Germany, two brand-new north-south railway routes are being built. In Spain, every single yard of railway track is being ripped up and restored on a new gauge. In France, just about every last chicken shack along every rural route has been electrified to bring about the benefits of rail electrification. All that costs money.
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  However, the Government will not even allow British Rail to find £95 million to electrify the line from London to the east midlands.
  The Chief Secretary to the Treasury (Mr. Norman Lamont): I do not understand the hon. Gentleman's reference to £95 million. British Rail's investment in the next three years will increase by £3·7 billion.
  Mr. Allen: British Rail's investment is commendable, but much of it is obviously in matters such as environmental improvements. The Conservative Government are quite happy to see £500 million spent on environmental improvements in Kent, but they cannot find £95 million for the economic regeneration of the east midlands.
  I sometimes feel sorry for the Chancellor. He has perhaps been dropped into the mire, just as the Prime Minister is treading on the Meyer. He has been left an appalling legacy by his predecessor. He should insist on the resignation of the person who, in the debate on the 1988 Autumn Statement, predicted the levels of trade deficit, inflation and other matters. Sadly for him, the person who made that prediction was the Chief Secretary, and we all know who that was.
  The insanity of the Government's policies is that, at the very time when we should encourage investment in manufacturing, the Government are deliberately using high interest rates to choke the demand which would stimulate investment decisions on new plant and machinery. That is why the CBI's latest industrial trends survey shows the gloomiest outlook for investment since 1983.
  On top of that, industry now has to carry the burden of new taxes. No, not the heavier burden of personal taxation which, if one adds indirect and direct taxation together, has risen under this Government, and not the taxation of the uniform business rate, but a new tax. Indeed, we might even call it a "Major" new tax in honour of the new Chancellor. This "Major" new tax has been imposed upon the people of this country without the consent of Parliament. It is the rise in interest rates. This "Major" new tax adds £73 per month to a £30,000 mortgage. For a small business man with a 5,000 loan, the "Major" tax adds £75 per month. For industry generally, for every 1 per cent. increase in interest rates, the "Major" tax adds £250 million to costs.
  Why invest in such circumstances? Those who have funds to invest may well choose in such circumstances to put their money on deposit or into the money market rather than invest in Britain when returns are so high. That is why six major companies in the United Kingdom now have cash mountains of over £1 billion. They choose not to invest in Britain because they know that they can make larger returns by sticking their cash on the money market, contributing to the hot money economy that has been developed by the Conservative Government.
  But if in doubt, one should go back to the old standards and fiddle the figures. That is the way to make the economy look a little better. First, redefine the terms. The term "business investment" now actually includes the investment of public corporations, as well as that of private business. But even with such investment added, "business investment" has not grown since 1979. Within that business investment, the manufacturing element has shrunk from 26·3 per cent. to 19·7 per cent. It is no wonder

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  tht the Japanese put out the red carpet for the Prime Minister because she and her policies have done more for their economy than any other individual in the world.
  The second of the big fiddles is a new one. A new fashion has been developed today on the Conservative Benches—it is to talk, not of the level or the quantity of investment, but of the quality of investment. First search out one's investment and then talk about its quality. It is the truffle theory of investment.
  The third is a good old statistical manipulation from the Norman Fowler School of Actuarial Standards. Most Conservative investment statistics start with 1981 to avoid the year zero time for manufacturing, which was between 1979 and 1981 when, with Pol Pot dedication, the Government set about creating a pile of skulls out of one fifth of British industry. One fifth of Britain's manufacturing industry was piled into the economic mass graves dug by the Prime Minister and her Khmer Blues.
  From 1979 to 1988 business investment rose by 4 per cent. per year and high investment in services concealed the manufacturing investment element, which was still below 1979 levels. In the interim, an investment hole of some £18 billion had been created—a permanent irrecoverable handicap at a time when our competitors were investing like crazy, the Japanese having just announced £150 billion-worth of planned investment in the future.
  Today the Chancellor attacked Labour's policies with all the confidence of a man who is certain that he will soon be replying to a Labour Queen's Speech, and who needs the practice. He asked, "How do we increase investment?", but unfortunately he uncharitably and untypically refused to allow interventions to answer that question from myself and other hon. Members.
  However, the lines are clear and they will become ever clearer to Conservative Members. First, we need to work in partnership with industry. We need to work with business to develop our capabilities in training, education and research and development. We need to spread activity around the country and the regions. That makes sense in terms of fairness as well as in terms of economic efficiency. While the south-east overheats, the rest of us freeze. We need to look at instruments that can help industry and business, rather than hinder them. As well as tackling high inflation and high interest rates, we need to consider other specific economic instruments, including perhaps better depreciation allowances on capital investment, to examine the rates of corporation tax and, of course, to review the uniform business rate and the poll tax.
  The squalid unclean Thatcher era is now stumbling to an end and for the Opposition that end cannot come too soon.
  8.55 pm
  Mr. Timothy Kirkhope: For just a few minutes I had a feeling that we were in the Romanian Parliament, hearing the voice of Socialism spouting in its usual inappropriate and undemocratic way. However, I was quickly brought to my senses when I realised that a considerable number of other hon. Members disagreed fundamentally with the sort of nonsense that we have been hearing from Opposition Members.
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  It is all very well to refer to things that have happened in the past, but we should try to remember a little about the arrival in this country in the mid-1970s of the International Monetary Fund, not to seek our advice as happens now, but then to seek our proposals as to how the country might be bailed out of its bankruptcy under the Labour Administration.
  About half an hour ago, an Opposition Member referred to Britain being "great" in Labour's day. Apart from the name, nothing much was great, except perhaps the great debts, the great inflation, the great misery of the British people, and the great trouble that we were in, financially and in every other way, in international terms. That was the "greatness" that the Labour party provided for this country when it last had its opportunity, and that is the sort of greatness that it would like to thrust upon the British people if it were ever to get power again.
  Since the Conservative Government came into power in 1979, we have achieved immense results for the British people. Those listening to the debate this evening will realise when they look at their own families that their way of life, their quality of life and their standard of living have improved substantially under the Conservative Government. We are concerned with results. It is all right to have neat Socialist theories, but the people want results and that is what they have had ever since we came to power in 1979.
  Our economy has grown faster than any other European economy. It is true that, initially, it needed to do so, because we had fallen so far behind in the 1970s. We have lowered taxes in numerous Budgets, and I hope that we continue to do just that, because the result is an inevitable increase in the resources available to the Exchequer to enable the Government to do things for the benefit of the people. During the past 10 years, investment in our industries and businesses has increased substantially. Some Opposition Members might decry the interests of overseas investors, but it is fair to remind them that our investment overseas is also substantial. Any free trade between countries includes the movement of investment, which is one of the greatest creators of wealth and prosperity for such countries.
  Let us consider the alleged north-south divide. I am pleased to say that that historic boundary no longer exists. I am speaking directly from my experience of my constituency in Leeds and of the north-east, where I lived before I was elected. The achievements have been absolutely sensational, and they are a direct result of the Government's economic and other policies. The fortunes of the north-east, Yorkshire, Humberside, the north-west and the east and west midlands have been completely revived.
  Previously, those areas lay in a despondent state as a result of the constant Socialism thrust upon them when, unfortunately, local authorities were politicised at the end of the war. We were unlucky enough to have one or two Socialist administrations in power in those regions. One need only look at the resources of those areas to realise that the Conservative Government have been a great help. They have done an enormous amount to help the development of road programmes, regional airports—a great success story—and related infrastructure, as well as providing a concentration of investment in health, education and schools.
  Mr. Ted Garrett: Will the hon. Gentleman tell the House what the average rate of unemployment is in Tyne and Wear? Will he also tell the House how much private investment has gone into that area and how much private investment has been lost as a result of changes in work practices and massive redundancies thereafter?
  Mr. Kirkhope: The hon. Gentleman knows the figures better than anyone. I do not know whether he has contributed to this debate, but, if so, he had the opportunity to give those figures. From my experience, the north-east is totally transformed. The hon. Gentleman must be as aware of that as his constituents and other people who live in that region. From my experience, everyone knows that my constituency, within the Yorkshire and Humberside region, has grown faster than any other region outside of London. It has experienced that growth as a direct result of Government policy.
  Despite the Government's attempts, Socialist views still remain in those regions, and they are not consistent with greater prosperity. I deeply regret that. Earlier today I was fortunate enough to be able to remind my right hon. Friend the Prime Minister of the 2,000 jobs that have been moved by our Government, through the National Health Service executive and the social security directorate, to my city of Leeds. That move proves the commitment of the Conservative Government to the north of England and its people. Some of the local arrangements in my city, however, are not consistent with the enterprise and success which has been experienced in the city and the region. I regret that those local arrangements result from Socialist control of some of that area.
  Conservative policies have been responsible for success, but what are the Labour alternatives that, presumably, will be offered to the nation at the next election? I have no doubt that the hon. Member for Copeland (Dr. Cunningham) will remind us of them in a moment. Those alternatives include such interesting proposals as credit control, price controls, tight income controls—all proposals which are unworkable and would make the Labour party unelectable. Above all, there would be more and more bureaucracy to run all those controls, and that would make the Labour party unelectable for ever.
  Everything is changing in eastern Europe. Such policies have been overthrown in the eastern European countries. Only the British Labour party wishes to have such policies and to force them upon the British people. It will not succeed, because the people know the truth and will not be hoodwinked by such nonsense. The Government have a good economic policy, and we will win through.
  9.5 pm
  Mr. John Garrett: It is as well to start my speech in such a debate with an examination of the Government's central forecasts, because if they are good enough for the Government they should be good enough for us. The main indicators of the Government's forecast show that we are already well into a recession. They show 0·75 per cent. non-oil growth in 1990. The Treasury average error in such a forecast is usually about 1 per cent. The indicators show a 250,000 increase in unemployment and 5·75 per cent. inflation in the fourth quarter of 1990. That includes a rise in housing costs of about 11 per cent. That shows that there will not be a reduction in interest rates. That rate of inflation will be much higher than the rate in any other country in western Europe.
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  There will be a £15 billion deficit on the balance of payments. This year's deficit is no less than 4 per cent. of national income, a percentage that has never been exceeded in peacetime. I can never understand why the Conservatives always say that a balance of payments deficit is due to the import of capital goods for re-equipping our industry. First, that is not true, and secondly, I thought that this country was in the business of producing capital goods. The fact that we have to import them in order to invest strikes me as odd.
  Those are indicators of a major recession. They are not a blip any more but show the beginning of a long slide. It is the classic British problem of lack of international competitiveness and a higher rate of inflation than other countries.
  Even on their own figures, what the Government require to turn the economy around is a tall order. For example, they forecast a growth in the economy and a 1·25 per cent. decline in the balance of payments. They have not allowed for the substantial destocking by industry that has already started. The most alarming factor to someone who has spent his career in industry is the deficit of £2 billion on information technology equipment. That is especially alarming when one compares it with the position in France, where the French Government have invested heavily to rebuild the communications network based on domestic manufacture of such equipment.
  The Government forecast a decline in inflation in general, but there are many rates of inflation, depending on one's circumstances. For example, inflation in the National Health Service is greater than the general rate because of higher increases in the price of drugs and medical innovation. That means that extra Government spending on the Health Service is exaggerated.
  The poor suffer more than anybody from the effect of differential inflation. Because of their spending patterns, the low-paid and pensioners have a higher than average rate of inflation. The Low Pay Unit has recently shown that the rate of inflation for the poor is a full percentage point higher than the increase in the retail price index. Food and housing costs account for nearly half the budget of the low-paid, and those costs are rising by well over 10 per cent. a year, while prices of consumer durables bought by the well-off have hardly risen at all. In 1990. the low-paid will face price rises in electricity, water, gas, fares, mortgages and poll tax. Those people are the real victims of inflation and will continue to be.
  Pensions and benefits have not increased by anything like the amount required to compensate the low-paid and the poor for inflation. In our advice surgeries, all hon. Members meet people who are massively disadvantaged as a result of the level of inflation. The least well-off bear the cost of the Government's inflationary policies.
  According to the CBI, the investment outlook of companies is the worst since 1983. This year, manufacturing investment will still be two thirds of the 1979 level as a share of GDP, and growth investment has come to a halt., as one might expect from the increase in interest rates. That helps to explain why the Treasury's economic progress report shows that our productivity still lags far behind that of the United States, Germany and France. The increase in productivity of which the Government boast was a one-for-all step increase in the early 1980s, and we have lagged behind the rest of western Europe in productivity ever since.

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  We must invest in capital equipment for transport, communications, education and training: all our constituencies contain schools that have not enough textbooks, and we have all seen the crumbling fabric of school and hospital buildings. Transport systems are wholly inadequate. I sometimes think that my constituency must be cut off from British Rail, given the daily failures in transport equipment.
  We must invest in the long-term competitive structure of our economy, which the Government are busy running down. We have higher inflation, a worse balance of payments and more unemployment than other members of the EC, but there is no Government strategy to improve our industrial performance, apart from a hope that the position will correct itself by means of the action of market forces and the blind application of interest rates to choke off demand. Interest rates are due to remain high throughout 1990.
  The great Thatcherite experiment has taken our economic performance back to the 1950s and 1960s. In the meantime, however, we have lost one fifth of our manufacturing industry, unemployment has doubled and our share of world exports has fallen by 3 per cent. Yet our economy, suffering as it is from under-investment, is about to be exposed in the single European market to competitors with modern industries which train and educate their people by means of public investment in services and infrastructure. That is investment that private industry will never make, and it is the duty of Governments to make it for them.
  The Prime Minister has said that our problems are the problems of success. They are not: they are the problems of incompetent economic management, short-termism and a misguided ideology.
  9.10 pm
  Dr. John Cunningham: When I first read the Gracious Speech, I was convinced that it contained a printing error. I looked again, and still could see no reference to a local government Bill. I was sure then that there was an error—for this is the first Gracious Speech in the 10 years of our present Government that has not contained at least one Bill attacking or dismantling local democratic government. I suppose that that, at any rate, brought a sigh of relief from members of all political parties and from local councils.
  The first feature of the debate that I enjoyed was the humour of the hon. Member for Eastbourne (Mr. Gow), who is in his place—the humour, if not the politics. It has been instructive to listen to the debates of the past six days and to read the reports of those debates, for they represent the culmination of a decade of Conservative Government legislative programmes of this kind—a kind described so graphically and emphatically in the excellent speech of my right hon. Friend the Member for Swansea, West (Mr. Williams) earlier this evening.
  It has also been revealing to listen again this November to the Prime Minister's claims about the aims, objectives and achievements of her Governments, and to compare her speech of a few days ago with those of earlier years. As the 1980s draw to a close, the industrial and economic scene in Britain has an all-too-familiar appearance. The decade began with a huge recession, brought about
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  directly by the mistaken policies and mismanagement of the Tory Government; it ends with our economy again on the edge of a debilitating recession.
  According to the CBI,
  "the UK economy is destined for two years of crawling growth, rising unemployment, high interest rates—and an increase in the underlying rate of inflation."
  That was confirmed earlier today, when the Chancellor of the Exchequer had to admit that next month's inflation figure will rise—probably by as much as half a percentage point, which means that in December inflation will again be nudging 8 per cent.
  The CBI view and the reality of the Chancellor's admission are buttressed by the view of Lloyds bank, which also envisages two years of sluggish growth which will place the economy on the brink of recession. That is what the Chancellor described recently as a "necessary pause". With the Conservatives, we are back to a future that does not work. What a way in which to enter the new decade!
  Inevitably, economic and industrial issues have been at the forefront of the debate, although last Friday's debate on foreign affairs was of huge interest and importance, given the dramatic events now unfolding in eastern Europe. I especially enjoyed reading the record of that day and hope that we shall hear many more times from my right hon. Friend the Member for Leeds, East (Mr. Healey) before he finally and regrettably leaves the House.
  Last year, the Prime Minister made several important claims for Government policy in the debate on the Gracious Speech. I shall list her claims:
  "To hold to firm and successful economic policies … reflect the new vitality of our economy … to bear down on inflation … borrowing must be checked … the personal sector also needs to save … the two Bills"—
  water and electricity privatisation—
  "show our determination to secure the advantages of privatisation for each industry, their consumers and the taxpayer".—[Official Report, 22 November 1988: Vol. 142, c. 21–241.]
  That all sounds rather hollow now.
  Last week, in a speech of dreadful complacency and smugness, the right hon. Lady ignored the abject failures of her Government on those and other important aspects of policy. Inflation is up, is double that in France and Germany and is the highest of any major industrial nation. Personal borrowing is up, and is likely to remain so. The balance of payments is much worse than a year ago. Mortgage charges have increased by nearly 4 percentage points compared with last year's average and are crushing millions of families.
  The privatisation of the water and electricity industries has resulted in a disaster, wrecking the hopes of any sensible national industrial strategy for supply and wrecking any hope of any sensible strategy for the environment or for consumers, who have already experienced massive price increases. As for the taxpayer, £16 billion has simply been written off or presented to large private monopolies as a dowry. Insulting and expensive advertising campaigns have infuriated the British people. The taxpayer has made a huge loss on the water industry alone of almost £2 billion, not to mention the millions of pounds spent on advertising and underwriting fees that we do not yet know about.
  The Government have attempted to project the latest programme as one aimed at improving the quality of life in Britain. Let us examine that claim, which is transparently bogus. People know that, for all but the very

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  well-off, tax cuts have long since been swallowed up by rent increases and mortgage payments. To their credit, even some of the tiny minority who benefited recognise, as do more than 60 per cent. of the British people, that the quality of their lives has declined under this Government of debt and division.
  I searched in vain for any recognition of that in the speeches of Tory Members, hut with one or two notable exceptions, we have heard a litany of obsequious platitudes, showing little sense of concern or criticism.
  The next 12 months in the House will feature a programme of largely unwanted legislation, such as proposals on the Health Service, education and broadcasting, which are likely to damage the quality of life of our country. Further destruction of the basic principles of good health care, as embodied in the Health Service, will be met with our vehement opposition, outstripped only by the anger of the British people at the political manipulation of their Health Service, mainly by people who never use it.
  I retain a special anger for the continuing failure of the Government to provide our people with the fundamental basis for a decent quality of life—a safe, warm and secure home that they can afford. Earlier this year, the Royal Institute of British Architects said:
  "Britain is faced in 1989 with a dramatic housing crisis. There are signs of an acceleration in existing housing problems that are very far from solution. There is a great danger both that too little housing will be provided to meet genuine and often acute need and that the quality of much new housing will he poor."
  The problems that the RIBA describes are a direct result of Government policy, as the report from the National Audit Office of July 1989 makes clear. The Comptroller and Auditor General said:
  "Over the period 1979–80 and 1989–90 the annual Housing Investment Programme allocations have declined.… in actual terms and.….at constant prices"—
  by 78 per cent.
  "This decline has particularly affected those local authorities which have both severe housing problems and disproportionately low capital receipts, and which therefore depend heavily on Housing Investment Programme allocations."
  The huge fall in public sector housing starts and completions throughout the 1980s—a continuing feature and a deliberate policy—has not been made up by house building in the private sector. No wonder there has been an inexorable and predictable increase in homelessness—so much for improving the quality of life. In 1983, 78,240 households were accepted as homeless. By 1988, that had risen to 117,500. This year's figure is approaching 135,000—a scandal in any civilised society. In 1983, 2,700 homeless households were placed in bed-and-breakfast accommodation. By the end of 1988, that figure had reached the astonishing level of 10,970 families.
  The misery and consequent social and financial problems are a huge easily avoidable cost to us as taxpayers, if only the Government would permit local councils to reinvest more of their capital receipts or improve their housing investment programmes. Tory mismanagement of the economy has produced record mortgage rates, coupled with a near-doubling of house prices in the past five years, which are preventing a generation of young people from buying their first home. The average price of a house is now a record four and a quarter times average annual earnings—little wonder that young couples and people on lower incomes find it
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  impossible these days to become home owners. A bigger share of take-home pay now has to go on mortgage repayments than ever before.
  We believe that good housing will always be the key to the health and well-being of our society. There must be collective responsibility for such a precious national asset. Labour will help local councils and housing associations to build more homes at prices at which people can afford either to buy or to rent. Against that background of disaster in housing policy, there is not a single word in the Gracious Speech about any of these problems or about any aspect of housing policy. There is no mention of them in the Government's programme for the coming year.
  Education and training hold the key to Britain's future economic prosperity. However, during the past decade, the proportion of national income invested in education and science has dropped by £3…25 billion, at today's prices. What kind of commitment to the future of our economy does that demonstrate? None at all, either in the scale or in the quality that our young people and our industry so desperately need. Britain is now in the shameful position where fewer young people stay on in full-time education or high-quality training after 16 than in any of our major competitor countries. We are in the shameful position in which fewer children have nursery education than in most of our competitor countries, although that is not true. I am pleased to say, of some Labour-controlled local authority areas. Even South Korea has more students in higher education than we have, yet employers in industry and commerce are crying out for a better educated and better trained work force.
  My next point relates specifically to the duties and responsibilities of the Leader of the House, and I hope that he can give a positive response tonight. The Scottish Office is the only Department of State not to be monitored by a Select Committee. Given the lack of popular support for this Government's policies in Scotland, that is an especially glaring omission in the democratic process, which the Government must act to correct—and which the Leader of the House has a duty to correct.
  We accept that the lack of Scottish Conservative Members presents the Leader of the House with a genuine difficulty, but that very lack of Scottish Conservative Members heightens the need for parliamentary scrutiny of ministerial activity. We have been more than willing to be flexible and helpful about membership. Although we should wish to see the highest possible membership of Members with Scottish constituencies, we want to make it clear that we place no preconditions on membership as regards the constituencies of members of the Select Committee. Over the past two and a half years, the Government have claimed consistently that they would like a Select Committee on Scottish Affairs to be established, but they have also claimed that they have been unable to find enough Scottish Members to serve.
  If that is the case, it is difficult to explain the enthusiasm of Conservative Members outside Scotland to participate in other aspects of Scottish business. English Conservative Members have been more than happy to play an active role in Scottish Question Time and I am struck by their eagerness to serve on Scottish Standing Committees to get through the Government's business. Conservative Members from outside Scotland were only too keen to play a part in the proceedings on the Self-Governing Schools etc. (Scotland) Bill last Session.
  Mr. Bill Walker: The hon. Gentleman has been blaming the Government for the lack of a Select Committee on Scottish Affairs. Let me make it clear that I refused to serve on that Select Committee because I did not want to serve on a Select Committee that tried to rig reports. [HON. MEMBERS: "No."] Yes, it is true and it is all on the record for any to see.
  The Scottish National party refused to serve on the Select Committee on Scottish Affairs, describing it in the past two Parliaments as a piffling little Committee. We will not accept any of that humbug and nonsense—[Interruption.]
  Dr. Cunningham: I leave the House to judge the hon. Gentleman's statement about the rigging of Select Committee reports, but I must tell him that we are happy for him not to serve on the Select Committee.
  The Select Committee on Scottish Affairs has played an important role in the past. It has carried out respected investigations into areas of policy such as housing conditions and the steel industry. It is intolerable that the Government have let the matter drift. The Government's reluctance to act is a remarkable dereliction of duty to the democratic process and to the interests of the Scottish people. On behalf of my right hon. and hon. Friends from Scotland, I urge the Leader of the House to think again and to set up a Select Committee on Scottish Affairs, as required by Standing Order No. 130.
  The Government's failures in housing, in education and training, and in policies for the environment belie claims that the new Tory programme can lead to a better quality of life for the majority of the British people. Indeed, people feel increasingly that the Tory Government are taking Britain in the wrong direction and that, as a country, we are being left behind, unprepared for the new and exciting challenges of the 1990s and increasingly isolated. That is hardly surprising. In almost every area of policy there is a complete absence of strategy—no coherent guiding principles, but simply a series of short-term changes, often gimmicks, which fail to tackle the underlying problems of urban and rural areas alike.
  The Prime Minister's only strategy seems to be the Prime Minister. While others are sacked or resign, she seems determined to go on and on, unable to see anyone in the Cabinet suitable to be the next Prime Minister—at least she is right on that. When we observe the right hon. Lady's disordered will—one week saying that she will pass on the torch, the next that she will stay for the next election and beyond—is it any surprise that her Cabinet is so rent with divisions and disaffection? It is divided on the economy, on Europe and on the leadership.
  In a remarkable speech, the right hon. Member for Old Bexley and Sidcup (Mr. Heath), disgracefully barracked and harrassed by the Chief Whip's bully boys, spelled out exactly how isolated the Government and the Prime Minister are becoming—and, as he so disarmingly said, he should know all about isolation. It takes a particular lack of realism and touch to envisage "popular acclaim" at the very time when opinion in Britain shows that two thirds of the electorate believe that the Prime Minister should stand down before the next election.
  As the hon. Member for Clwyd, North-West (Sir A. Meyer) spreads panic in the Tory party with his disarming frankness, we learn that, while challenges to other political leaders are good news, welcome everywhere and good for all nations, they are not good for Britain. We are told that
  670
  the Prime Minister's interests are paramount, allegedly synonymous with the national interest. What cant. What a contrast with the Prime Minister's views on events elsewhere, for example in eastern Europe. What a contrast. as the Leader of the House must reflect, with her behaviour and view on the Tory party in 1975.
  Last week the Leader of the House, no doubt prodded by the Chancellor of the Duchy of Lancaster, issued his own clarion call for loyalty and unity. Imagine his surprise over breakfast the next morning, to read in The Times that he was not fit to follow the right hon. Lady but that a new generation was needed. He must reflect darkly on another recent quotation in The Times from the Prime Minister:
  "I do not like anyone who has ever worked with me to be unkindly treated."
  But, of course, she was speaking about Sir Alan Walters. One by one, those with ambition—the Leader of the House, the Chancellor of the Exchequer and the right hon. Member for Henley (Mr. Heseltine)—have backed off. Now we know the real significance of the speech of the chairman of the Tory party in Blackpool, when he said:
  "He which hath no stomach to this fight, let him depart."
  He was referring not to the general election but to the leadership election.
  It is rumoured that even now the so-far-silent right hon. Member for Cirencester and Tewkesbury (Mr. Ridley)—a political Don Quixote—is riding to the rescue of the Prime Minister bringing with him a copy—[Interruption.]—of the Housing Act 1988. In the leadership election his ingenious voting system will apply. Those who abstain will be deemed to have voted for the Prime Minister.
  As this largely irrelevant Government programme makes clear, it is time for a change. We need a Government who will get Britain back on the right track, moving in the right direction. The policies that we oppose tonight are those already shown to have failed Britain. They will do so again; that is why we reject them.
  9.34 pm
  The Lord President of the Council and Leader of the House of Commons (Sir Geoffrey Howe): It is appropriate to commence the concluding observations of this debate by paying tribute, as I gladly do, to my hon. Friends the Members for Eastbourne (Mr. Gow) and for Bury, South (Mr. Sumberg) who moved and seconded the Loyal Address.
  My hon. Friend the Member for Bury, South spoke up proudly for his constituency as the home of the Lancashire black pudding. I felt less at home with that than with his claim to have a Welsh grandmother. I can lay claim to a Welsh grandfather as well, so it is no surprise, that my father knew Lloyd George. It is a happy fact that my mother did not have the same experience.
  Despite the firm opposition of my hon. Friend the Member for Eastbourne to the televising of our proceedings I am certain that with his modest pride and his hair style—he is right to be modest about it—he undoubtedly provided the televisual highlight of the debate. He first became my hon. Friend when he was reckless enough to act as my campaign assistant at the 1959 general election—
  Mr. Skinner: The hon. Gentleman will not do it now.
  Sir Geoffrey Howe: I am happy to tell the hon. Gentlement that no campaign is in progress. I am still more than proud to count on the long-standing friendship of my hon. Friend.
  At that time we were unsuccessful in checking the arrival in this House of the right hon. and learned Member for Aberavon (Mr. Morris), who is still here. It was for me, as for my right hon. Friend the Prime Minister whom my hon. Friend the Member for Eastbourne served so faithfully as Parliamentary Private Secretary, an occasion of immense sadness when the Anglo-Irish Agreement was signed. It was an act that required my hon. Friend to resign his position as a member of the Government. Then as now the whole House respected the powerful integrity and sense of duty that prompted his decision.
  My hon. Friend will have been struck, as I have been, by the fact that no fewer than 10 hon. Members from Northern Ireland—more than half the total—have been heard in this debate. They have all spoken, more than understandably, of the special grief and suffering of their constituents in the face of what one of their number described as
  "a diabolical and vicious campaign of terror"—[Official Report, 21 November 1989; Vol. 162, c. 76.]
  which is still being waged against us all but most brutally of all against the people of Northern Ireland. They should have no doubt that the Government are unyielding in their resolve to resist and conquer those who wage this savage, empty campaign. I assure my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) that no function of Government is more generously and spontaneously provided for than the fight against terrorism. That is how it should be.
  Northern Ireland Members spoke of their wish for reconciliation and peace between the different communities and traditions that they represent. Those were the twin objectives of those of us, among whom I am proud to count myself, who helped to shape the Anglo-Irish Agreement, now just four years old. I know that it is still a cause of controversy, and I respect those who take that view. I am glad, too, to welcome the prospect, referred to by my hon. Friend the Member for Arundel (Mr. Marshall) of a British-Irish parliamentary body, through which there can be a fruitful coming together of representatives of the four nations that share the life of these islands.
  I think that the House will have been particularly moved, as I was, by the eloquence of my hon. Friend the Member for North Down (Mr. Kilfedder). I recall that he and I walked together up Ludgate hill and sat beside each other in St. Paul's cathedral for the funeral service of Sir Winston Churchill. My hon. Friend told us last week of his conclusion that his proper place in the House was on these Benches. All my right hon. and hon. Friends say, "Hear, hear" to that. My hon. Friend also urged the leaders of the constitutional parties in Northern Ireland to work together for the future of the Province. The whole House can say "Hear, hear" to that.
  Mr. John D. Taylor: I find the Minister's opinion on North Down of great interest. Does that mean that he will not support the Conservative candidate who is to oppose the present hon. Member for North Down?
  Sir Geoffrey Howe: It is right to point out that no candidate has yet been adopted for that constituency. The
  672
  right hon. Gentleman will recall the reasons that prompted his colleague, the hon. Member for North Down, to decide as he did.
  Together we now go into the television age. Perhaps it is right that the House should be taking a step into the television age after, and not before, the Supreme Soviet in Moscow and in many other less mature and confident Parliaments. I have little doubt that the televising of our proceedings represents the most important change in the presentation of politics since I first entered the House. The experiment has clearly started well. I am sure—at least I hope—that a touch of human fallibility, even on the Front Benches, is likely to elicit a good-natured response from the majority of viewers.
  Even at this early stage, I record sincere appreciation and thanks, on behalf of the whole House, first to all those in the House of Commons broadcasting unit and the organisations that convey us to the world outside for their skill and enthusiasm and, secondly, to the Select Committee on the Televising of Proceedings of the House —in particular my right hon. Friend the Secretary of State for Energy, the former Leader of the House, who so skilfully steered the Committee and the House to the present stage.
  The arrival of television is by no means the only recent change in our procedure, and rightly so. The Select Committee on Procedure is considering the work of departmental Select Committees, 10 years after they were instituted by my colourful predecessor Lord St. John of Fawsley. We look forward with great interest to the reports of their wide-ranging inquiry. In the meantime. I offer particular thanks to my right hon. Friend the Member for Worthing (Mr. Higgins) for his sterling work behind the scenes as Chairman of the Liaison Committee. The hon. Member for Copeland (Dr. Cunningham) reminded me of one of the two pieces of on-going business that I have had to consider during the first months of my work as Leader of the House.
  Mr. Campbell-Savours: Will the right hon. and learned Gentleman give way?
  Sir Geoffrey Howe: No, I must respond to the point made by the hon. Member for Copeland. On that matter, I have been able to reach a conclusion, albeit a negative one. Despite wide-ranging discussion with those involved, following a debate on the Floor of the House just 11 months ago, I have reluctantly concluded that none of the proposals that have been made will resolve the impasse that has persisted until now. As my hon. Friend the Member for Tayside, North (Mr. Walker) pointed out, no new solutions have emerged. I have therefore concluded that I can sensibly take no action in that respect during the life of the current Parliament.
  Mr. Donald Dewar: No doubt the right hon. and learned Gentleman will accept that Opposition Members hear his remarks with dismay and that his decision is totally unacceptable to us. Does he not understand that it will be seen in Scotland as an abdication of responsibility and a clear indication of the cavalier attitude that the Government take to the good government of that country? We shall continue to press the Leader of the House on this point and we do not accept or believe that it is beyond the ingenuity and power of the

  673
  Government business managers to set up the Select Committee, given the will to do so. I strongly advise him to reconsider his negative and irresponsible attitude.
  Sir Geoffrey Howe: The hon. Gentleman's intervention was far from spontaneous. I have considered the matter closely and, after wide consultation, I have reached a conclusion for the reasons that led my predecessor to reach the same conclusion. It seems right that I should put the matter on record before the House at this stage.
  Mrs. Margaret Ewing rose—
  Sir Geoffrey Howe: The second outstanding question—
  Mr. William McKelvey rose—
  Mr. Speaker: Order. The Leader of the House is not giving way.
  Sir Geoffrey Howe: I have to deal with the next matter—
  Mr. Sillars: On a point of order, Mr. Speaker. Given that Standing Orders govern this whole place, is it in order for the right hon. and learned Gentleman to say that he will do nothing further? Is it not the case that, if the official Opposition, on a Supply day, tabled the necessary motion to set up a Select Committee, it would have to be determined by the House? If a minority party such as ours was fortunate enough to get half a Supply day, and tabled the necessary motion, that debate would have to take place and a definitive conclusion would have to be reached.
  Mr. Speaker: That is a hypothetical question at the moment.
  Sir Geoffrey Howe: It is right for me to state my own view at this stage.
  The discussions about the work currently done by the Social Services Select Committee, under the chairmanship of the hon. Member for Birkenhead (Mr. Field), are proceeding and I shall endeavour to bring them to a conclusion as soon as possible.
  There is no need for me to stress the importance of European legislation, and the desire of Parliament in general and of this House in particular to play a full and proper part in the scrutiny and management of such matters. The present procedures were designed as long ago as 1973, shortly after enactment of the European Communities Act 1972, by a Committee under the chairmanship of the hon. Member for Northwich, Sir John Foster. Since then, they have been operated by the hon. Member for Newham, South (Mr. Spearing)—sometimes, it seems, almost single-handedly.
  However, with the subsequent adoption of the Single European Act and its enactment by Parliament, and the growing role of our legislative partners in the European Parliament, it is plainly time for procedures to be brought up to date. We are grateful to the Procedure Committee for the work that it is doing in that area. Its report will be published on Thursday. I cannot comment on it in advance, but I guarantee that its recommendations will receive careful and positive consideration by the Government.
  674
  I pay tribute to the Chairman of the Procedure Committee, my hon. Friend the Member for Honiton (Sir P. Emery), for his careful and considered approach to that and other questions.
  The Private Bill procedure is the last procedural matter I shall mention. The more closely I have studied it, the more I have come to realise the importance and complexity of the issues involved. I hope to bring forward, on a consultative basis, proposals that will command the support of the whole House. Meanwhile, I urge right hon. and hon. Members to be patient, and not to allow unjustified impatience to become an excuse to deny or block Bills for reasons other than genuine disagreement.
  The whole House understands the difficult job of the Chairman of the Ways and Means when it comes to private legislation. I am sure it joins me in praising the care and attention he brings to that time-consuming role, as well as to his other duties as First Deputy Speaker.
  Mr. Campbell-Savours: The right hon. and learned Gentleman has alluded to the inquiry that the Select Committee on Procedure is to hold into Select Committees. Can we have an assurance that the subject will be debated immediately its report is produced as, in the past, we have had to wait, sometimes for several years, for a report to be debated? Is he aware that my hon. Friend the Member for Rotherham (Mr. Crowther) felt that it was necessary to resign from that Committee, because the House never found time to debate the reports in the way that he felt they should be debated?
  Sir Geoffrey Howe: Many of those reports have already been debated, and many have been acted upon. I shall endeavour to ensure that that continues to be done.
  Mr. Beith: As some of the reports have been acted upon, which of the measures in the Gracious Speech will the right hon. and learned Gentleman submit to the procedure by which witnesses can be called before Committees that consider legislation? Will he, for example, submit the National Health Service and Community Care Bill to that procedure, so that people who work in the Health Service can give evidence to the Committee before it considers the Bill?
  Sir Geoffrey Howe: I do not at present have any intention of doing that for any Bills. I shall consider the measures in the Queen's Speech in a moment.
  The hon. Member for Copeland referred to the speech by my old sparring partner at the Dispatch Box—the right hon. Member for Leeds, East (Mr. Healey). Like the hon. Member for Copeland, I was sorry to miss his speech. The House may recall that the right hon. Gentleman said that he had read so many obituaries of himself in the past few weeks that even he thought that he was already dead. Rather disconcertingly, the right hon. Gentleman makes increasingly benevolent remarks about me. If I may respond in kind to one of his more memorable phrases, 1 feel rather as though I am being cherished by a dead savage. [Laughter.] I hope that the House will think that that was worth waiting for.
  The whole House will join me in wishing the right hon. Member a happy retirement in the lush pastures of his Sussex farm. We compliment him on his very good sense in having, while he was Chancellor, deferred indefinitely the introduction of a wealth tax.

  675
  The Gracious Speech set out the Government's proposals for balanced and effective legislation. It has four main objectives: first, to improve protection of the environment; secondly, to extend choice and to raise the quality of services to consumers in food safety, broadcasting, legal services and national health; thirdly, to combat international crime and to enhance security; fourthly, to increase employment opportunities and scope for enterprise in the economy.
  All of those things should come forward and take their place alongside the firm economic policy, designed above all to combat inflation, outlined by my right hon. Friend the Chancellor in his Autumn Statement and again today, and on which my right hon. Friend the Member for Worthing commented earlier in the evening. That programme provides clear scope for increased spending on key objectives from the Health Service to homelessness, on which the hon. member for Copeland dwelt—some £250 million is to be devoted to homelessness—and from transport infrastructure to the arts.
  Mr. Terry Dicks: Will my right hon. and learned Friend explain why the Autumn Statement says that inflation next year will be 5·75 per cent., yet the arts are to get an increase in funding of 12 per cent. next year and the year after? What is so special about the arts?
  Sir Geoffrey Howe: The Government's view is that those programmes are of sufficient importance to the quality of life as a whole that they deserve such support.
  The key objectives of our legislative programme are therefore to increase the influence and power of consumers over services to which they are entitled, and the environment in which those services are provided. As my hon. Friend the Member for Surrey, North-West (Mr. Grylls) said, that will serve to strengthen and increase the availability of resources. It will enable the required improvements to take place by encouraging increased private investment.
  Opposition Members, particularly the right hon. Member for Swansea, West (Mr. Williams), criticised industry's performance during the past decade. It is important to draw attention to one or two facts about that. I refer him, for example, to an industry that he may know well, to the steel industry in South Wales and to the Abbey works in my home town of Port Talbot. When we came to office it was employing 11,000 to 12,000 people, all of whose jobs were in jeopardy because the industry at that time was losing between £500,000 and £1 billion a year.
  About 18 months ago I took to that works in my home town the then Foreign Minister of the People's Republic of China, who was presented with a film showing the rebirth of British steel. Although there are now only half as many people employed in those works—[Interruption.] —the output is profitable and expanded, their jobs are secure, the industry is making a profit and other jobs are burgeoning throughout South Wales. That is the reality of the changes that have taken place as a result of Conservative policies.
  Mr. Merlyn Rees: The Leader of the House is referring back constantly to 1979. He will be aware of the crime figures for that year. In every year since then, the crime figures—under the stewardship of a party that believes in law and order—have escalated. It is said in the Gracious Speech:
  676
  "My Government will vigorously pursue their policies for reducing crime".
  What are they?
  Sir Geoffrey Howe: I hope that the right hon. Gentleman will join us in applauding the fact that i he recorded crime figures for the last 12 months are down, and that he will help us to sustain that downward trend.
  My personal conviction is that the policies that we have been following for the last 10 years have set a new direction for political debate in this country, have set a remarkable change of direction for Socialism, here and abroad—[Interruption.]taking as its fundamental starting point the rejection of everything that Socialism has previously stood for.
  All that goes a long way to explain the dismal, negative, wholly unconstructive performance of speakers from the Opposition Front Bench throughout the debate. There has been an absence of any kind of positive suggestions for reform—[Interruption.] It has been a dismal political approach from a party which has in the last 12 months purportedly junked more outworn ideas, rubbished more wrong thinking and dumped more dogma than all the Warsaw pact Governments put together. No wonder the right hon. Member for Liverpool, Walton (Mr. Hafer) complains.
  Yet Labour Members have still not come up with what any thinking man or woman would consider voting for. The Labour Front Bench, under the leadership of the right hon. Member for Islwyn (Mr. Kinnock), are living proof' of the maxim that only the mediocre are always at their best—[Interruption.]
  Mr. Speaker: Order.
  Sir Geoffrey Howe: The House has heard this week no fewer than 11 speeches from the Opposition Front Bench —[Interruption.]—but despite that, every question about Labour party policy remains unanswered. We come to see that Labour's much-vaunted policy review has a gaping black hole at its heart. In this era of designer Socialism —[Interruption.]—shiny new Labour spokesmen pop up on every front. The parliamentary Labour party now has in this House alone no fewer than 80 Front Bench spokespersons, of whom only 13 ever served in Government. Indeed, Labour has eight more departmental spokespersons in the Commons than we have Departmental Ministers in the Government as a whole. It is hardly surprising that Labour sounds less and less like a credible alternative Government— [Interruption.]—and more and more like a political tower of Babel.
  The Leader of the Opposition has added a new dimension to his concept of collective irresponsibility. The truth is— [Interruption.]
  Mr. Speaker: Order.
  Sir Geoffrey Howe: The truth is that meeting the cost of Socialism is the reason why any Labour Government should be, and indeed would be, unthinkable. Every Labour Government in British history has ended in economic disaster, and every one of those Governments were headed by so-called moderates. After every such failure— [Interruption.]—the Conservative party was called in to put things right. The record of the Labour party has been one of their fudging the challenge and of our counting the cost. That should be the title of Labour's much-vaunted policy review.

  677
  By contrast, the Conservative party and this Government stand for the political and economic revival of Britain. That is why we confidently present our programme to the House and to the people of Britain. That is why we are confident that we shall win.
  Question put, That the amendment be made:—
  The House divided: Ayes 229, Noes 328.

  Division No. 3]

  [10 pm

  AYES

  Abbott, Ms Diane

  Dunnachie, Jimmy

  Adams, Allen (Paisley N)

  Dunwoody, Hon Mrs Gwyneth

  Allen, Graham

  Eadie, Alexander

  Alton, David

  Eastham, Ken

  Anderson, Donald

  Evans, John (St Helens N)

  Archer, Rt Hon Peter

  Ewing, Harry (Falkirk E)

  Armstrong, Hilary

  Ewing, Mrs Margaret (Moray)

  Ashdown, Rt Hon Paddy

  Fatchett, Derek

  Ashley, Rt Hon Jack

  Faulds, Andrew

  Ashton, Joe

  Field, Frank (Birkenhead)

  Banks, Tony (Newham NW)

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

  Barnes, Harry (Derbyshire NE)

  Flannery, Martin

  Barnes, Mrs Rosie (Greenwich)

  Flynn, Paul

  Barron, Kevin

  Forsythe, Clifford (Antrim S)

  Battle, John

  Foster, Derek

  Beckett, Margaret

  Foulkes, George

  Beggs, Roy

  Fraser, John

  Beith, A. J.

  Fyfe, Maria

  Bell, Stuart

  Galloway, George

  Benn, Rt Hon Tony

  Garrett, John (Norwich South)

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

  Garrett, Ted (Wallsend)

  Bermingham, Gerald

  George, Bruce

  Bidwell, Sydney

  Gilbert, Rt Hon Dr John

  Blunkett, David

  Godman, Dr Norman A.

  Boateng, Paul

  Gordon, Mildred

  Bradley, Keith

  Gould, Bryan

  Bray, Dr Jeremy

  Grant, Bernie (Tottenham)

  Brown, Gordon (D'mline E)

  Griffiths, Nigel (Edinburgh S)

  Brown, Nicholas (Newcastle E)

  Griffiths, Win (Bridgend)

  Brown, Ron (Edinburgh Leith)

  Grocott, Bruce

  Bruce, Malcolm (Gordon)

  Harman, Ms Harriet

  Buchan, Norman

  Hattersley, Rt Hon Roy

  Buckley, George J.

  Healey, Rt Hon Denis

  Caborn, Richard

  Heffer, Eric S.

  Callaghan, Jim

  Henderson, Doug

  Campbell, Menzies (Fife NE)

  Hinchliffe, David

  Campbell, Ron (Blyth Valley)

  Hoey, Ms Kate (Vauxhall)

  Campbell-Savours, D. N.

  Hogg, N. (C'nauld & Kilsyth)

  Cartwright, John

  Home Robertson, John

  Clark, Dr David (S Shields)

  Hood, Jimmy

  Clarke, Tom (Monklands W)

  Howarth, George (Knowsley N)

  Clay, Bob

  Howell, Rt Hon D. (S'heath)

  Clelland, David

  Howells, Geraint

  Clwyd, Mrs Ann

  Howells, Dr. Kim (Pontypridd)

  Cohen, Harry

  Hoyle, Doug

  Coleman, Donald

  Hughes, John (Coventry NE)

  Cook, Robin (Livingston)

  Hughes, Robert (Aberdeen N)

  Corbett, Robin

  Hughes, Roy (Newport E)

  Corbyn, Jeremy

  Hughes, Simon (Southwark)

  Cousins, Jim

  Janner, Greville

  Cox, Tom

  Johnston, Sir Russell

  Crowther, Stan

  Jones, Barry (Alyn & Deeside)

  Cryer, Bob

  Jones, leuan (Ynys Môn)

  Cummings, John

  Jones, Martyn (Clwyd S W)

  Cunliffe, Lawrence

  Kennedy, Charles

  Cunningham, Dr John

  Kinnock, Rt Hon Neil

  Darling, Alistair

  Kirkwood, Archy

  Davies, Rt Hon Denzil (Llanelli)

  Lambie, David

  Davies, Ron (Caerphilly)

  Lamond, James

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

  Leighton, Ron

  Dewar, Donald

  Lestor, Joan (Eccles)

  Dixon, Don

  Lewis, Terry

  Dobson, Frank

  Litherland, Robert

  Doran, Frank

  Livingstone, Ken

  Douglas, Dick

  Livsey, Richard

  Duffy, A. E. P.

  Lloyd, Tony (Stretford)

  678

  Lofthouse, Geoffrey

  Robinson, Geoffrey

  Loyden, Eddie

  Rogers, Allan

  McAvoy, Thomas

  Rooker, Jeff

  McCartney, Ian

  Ross, Ernie (Dundee W)

  McFall, John

  Ross, William (Londonderry E)

  McGrady, Eddie

  Rowlands, Ted

  McKay, Allen (Barnsley West)

  Ruddock, Joan

  McKelvey, William

  Sedgemore, Brian

  McLeish, Henry

  Sheerman, Barry

  Maclennan, Robert

  Sheldon, Rt Hon Robert

  McWilliam, John

  Short, Clare

  Madden, Max

  Sillars, Jim

  Marek, Dr John

  Skinner, Dennis

  Marshall, David (Shettleston)

  Smith, Andrew (Oxford E)

  Marshall, Jim (Leicester S)

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

  Martlew, Eric

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

  Maxton, John

  Smith, J. P. (Vale of Glam)

  Meacher, Michael

  Smyth, Rev Martin (Belfast S)

  Meale, Alan

  Snape, Peter

  Michael, Alun

  Soley, Clive

  Michie, Bill (Sheffield Heeley)

  Spearing, Nigel

  Michie, Mrs Ray (Arg'l & Bute)

  Steel, Rt Hon David

  Mitchell, Austin (G't Grimsby)

  Steinberg, Gerry

  Molyneaux, Rt Hon James

  Strang, Gavin

  Moonie, Dr Lewis

  Straw, Jack

  Morgan, Rhodri

  Taylor, Mrs Ann (Dewsbury)

  Morley, Elliot

  Taylor, Rt Hon J. D. (S'ford)

  Morris, Rt Hon A. (W'shawe)

  Taylor, Matthew (Truro)

  Morris, Rt Hon J. (Aberavon)

  Thomas, Dr Dafydd Elis

  Mowlam, Marjorie

  Thompson, Jack (Wansbeck)

  Mullin, Chris

  Turner, Dennis

  Murphy, Paul

  Vaz, Keith

  Nellist, Dave

  Wall, Pat

  Oakes, Rt Hon Gordon

  Wallace, James

  O'Brien, William

  Walley, Joan

  O'Neill, Martin

  Warden, Gareth (Gower)

  Orme, Rt Hon Stanley

  Wareing, Robert N.

  Paisley, Rev Ian

  Watson, Mike (Glasgow, C)

  Parry, Robert

  Welsh, Andrew (Angus E)

  Patchett, Terry

  Wigley, Dafydd

  Pendry, Tom

  Williams, Rt Hon Alan

  Pike, Peter L.

  Williams, Alan W. (Carm'then)

  Powell, Ray (Ogmore)

  Winnick, David

  Prescott, John

  Wise, Mrs Audrey

  Quin, Ms Joyce

  Worthington, Tony

  Radice, Giles

  Wray, Jimmy

  Randall, Stuart

  Redmond, Martin

  Tellers for the Ayes:

  Rees, Rt Hon Merlyn

  Mr. Frank Haynes and

  Richardson, Jo

  Mrs. Llin Golding.

  Roberts, Allan (Bootle)

  NOES

  Adley, Robert

  Boswell, Tim

  Aitken, Jonathan

  Bottomley, Mrs Virginia

  Alexander, Richard

  Bowden, A (Brighton K'pto'n)

  Alison, Rt Hon Michael

  Bowden, Gerald (Dulwich)

  Allason, Rupert

  Bowis, John

  Amery, Rt Hon Julian

  Boyson, Rt Hon Dr Sir Rhodes

  Amess, David

  Braine, Rt Hon Sir Bernard

  Amos, Alan

  Brandon-Bravo, Martin

  Arbuthnot, James

  Brazier, Julian

  Arnold, Tom (Hazel Grove)

  Bright, Graham

  Ashby, David

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

  Aspinwall, Jack

  Browne, John (Winchester)

  Atkins, Robert

  Bruce, Ian (Dorset South)

  Atkinson, David

  Buck, Sir Antony

  Baker, Rt Hon K. (Mole Valley)

  Burns, Simon

  Baldry, Tony

  Burt, Alistair

  Banks, Robert (Harrogate)

  Butcher, John

  Batiste, Spencer

  Butler, Chris

  Beaumont-Dark, Anthony

  Butterfill, John

  Bellingham, Henry

  Carlisle, John, (Luton N)

  Bendall, Vivian

  Carlisle, Kenneth (Lincoln)

  Benyon, W.

  Carrington, Matthew

  Bevan, David Gilroy

  Carttiss, Michael

  Biffen, Rt Hon John

  Cash, William

  Body, Sir Richard

  Channon, Rt Hon Paul

  Bonsor, Sir Nicholas

  Chapman, Sydney

  Boscawen, Hon Robert

  Chope, Christopher

  679

  Churchill, Mr

  Higgins, Rt Hon Terence L.

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

  Hill, James

  Clark, Sir W. (Croydon S)

  Hind, Kenneth

  Colvin, Michael

  Hogg, Hon Douglas (Gr'th'm)

  Conway, Derek

  Holt, Richard

  Coombs, Anthony (Wyre F'rest)

  Howard, Michael

  Coombs, Simon (Swindon)

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

  Cormack, Patrick

  Howarth, G. (Cannock & B'wd)

  Couchman, James

  Howe, Rt Hon Sir Geoffrey

  Cran, James

  Howell, Ralph (North Norfolk)

  Critchley, Julian

  Hughes, Robert G. (Harrow W)

  Currie, Mrs Edwina

  Hunt, David (Wirral W)

  Curry, David

  Hunt, Sir John (Ravensbourne)

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

  Hunter, Andrew

  Davis, David (Boothferry)

  Hurd, Rt Hon Douglas

  Day, Stephen

  Irvine, Michael

  Devlin, Tim

  Irving, Charles

  Dicks, Terry

  Jack, Michael

  Dorrell, Stephen

  Jackson, Robert

  Douglas-Hamilton, Lord James

  Janman, Tim

  Dover, Den

  Jessel, Toby

  Dunn, Bob

  Johnson Smith, Sir Geoffrey

  Dykes, Hugh

  Jones, Gwilym (Cardiff N)

  Eggar, Tim

  Jones, Robert B (Herts W)

  Emery, Sir Peter

  Jopling, Rt Hon Michael

  Evans, David (Welwyn Hatf'd)

  Kellett-Bowman, Dame Elaine

  Evennett, David

  Key, Robert

  Fallon, Michael

  Kilfedder, James

  Favell, Tony

  King, Roger (B'ham N'thfield)

  Fenner, Dame Peggy

  Kirkhope, Timothy

  Field, Barry (Isle of Wight)

  Knapman, Roger

  Finsberg, Sir Geoffrey

  Knight, Greg (Derby North)

  Fishburn, John Dudley

  Knight, Dame Jill (Edgbaston)

  Fookes, Dame Janet

  Knowles, Michael

  Forman, Nigel

  Knox, David

  Forsyth, Michael (Stirling)

  Lamont, Rt Hon Norman

  Forth, Eric

  Lang, Ian

  Fowler, Rt Hon Norman

  Latham, Michael

  Fox, Sir Marcus

  Lawson, Rt Hon Nigel

  Franks, Cecil

  Lee, John (Pendle)

  Freeman, Roger

  Leigh, Edward (Gainsbor'gh)

  Gale, Roger

  Lennox-Boyd, Hon Mark

  Gardiner, George

  Lightbown, David

  Garel-Jones, Tristan

  Lilley, Peter

  Gill, Christopher

  Lloyd, Peter (Fareham)

  Gilmour, Rt Hon Sir Ian

  Lord, Michael

  Glyn, Dr Alan

  Luce, Rt Hon Richard

  Goodhart, Sir Philip

  Macfarlane, Sir Neil

  Goodson-Wickes, Dr Charles

  MacGregor, Rt Hon John

  Gorman, Mrs Teresa

  MacKay, Andrew (E Berkshire)

  Gow. Ian

  Maclean, David

  Grant, Sir Anthony (CambsSW)

  McLoughlin, Patrick

  Greenway, Harry (Ealing N)

  McNair-Wilson, Sir Michael

  Greenway, John (Ryedale)

  McNair-Wilson, Sir Patrick

  Gregory, Conal

  Madel, David

  Griffiths, Sir Eldon (Bury St E')

  Major, Rt Hon John

  Griffiths, Peter (Portsmouth N)

  Malins, Humfrey

  Grist, Ian

  Mans, Keith

  Ground, Patrick

  Maples, John

  Grylls, Michael

  Marland, Paul

  Gummer, Rt Hon John Selwyn

  Marshall, John (Hendon S)

  Hague, William

  Marshall, Michael (Arundel)

  Hamilton, Hon Archie (Epsom)

  Martin, David (Portsmouth S)

  Hamilton, Neil (Tatton)

  Mates, Michael

  Hampson, Dr Keith

  Maude, Hon Francis

  Hanley, Jeremy

  Mawhinney, Dr Brian

  Hannam, John

  Maxwell-Hyslop, Robin

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

  Mayhew, Rt Hon Sir Patrick

  Hargreaves, Ken (Hyndburn)

  Mellor, David

  Harris, David

  Meyer, Sir Anthony

  Haselhurst, Alan

  Miller, Sir Hal

  Hawkins, Christopher

  Mills, Iain

  Hayes, Jerry

  Mitchell, Andrew (Gedling)

  Hayhoe, Rt Hon Sir Barney

  Mitchell, Sir David

  Hayward, Robert

  Moate, Roger

  Heath, Rt Hon Edward

  Monro, Sir Hector

  Heathcoat-Amory, David

  Montgomery, Sir Fergus

  Heddle, John

  Morrison, Sir Charles

  Hicks, Mrs Maureen (Wolv' NE)

  Morrison, Rt Hon P (Chester)

  Hicks, Robert (Cornwall SE)

  Moynihan, Hon Colin

  680

  Mudd, David

  Steen, Anthony

  Neale, Gerrard

  Stevens, Lewis

  Neubert, Michael

  Stewart, Allan (Eastwood)

  Newton, Rt Hon Tony

  Stewart, Andy (Sherwood)

  Nicholls, Patrick

  Stewart, Rt Hon Ian (Herts N)

  Nicholson, David (Taunton)

  Stokes, Sir John

  Nicholson, Emma (Devon West)

  Stradling Thomas, Sir John

  Norris, Steve

  Sumberg, David

  Onslow, Rt Hon Cranley

  Summerson, Hugo

  Oppenheim, Phillip

  Tapsell, Sir Peter

  Page, Richard

  Taylor, Ian (Esher)

  Paice, James

  Taylor, John M (Solihull)

  Parkinson, Rt Hon Cecil

  Taylor, Teddy (S'end E)

  Patnick, Irvine

  Tebbit, Rt Hon Norman

  Patten, John (Oxford W)

  Temple-Morris, Peter

  Pawsey, James

  Thatcher, Rt Hon Margaret

  Peacock, Mrs Elizabeth

  Thompson, D. (Calder Valley)

  Porter, Barry (Wirral S)

  Thompson, Patrick (Norwich N)

  Porter, David (Waveney)

  Thorne, Neil

  Portillo, Michael

  Thornton, Malcolm

  Price, Sir David

  Thurnham, Peter

  Raison, Rt Hon Timothy

  Townend, John (Bridlington)

  Rathbone, Tim

  Townsend, Cyril D. (B'heath)

  Redwood, John

  Tracey, Richard

  Renton, Rt Hon Tim

  Tredinnick, David

  Rhodes James, Robert

  Trippier, David

  Ridley, Rt Hon Nicholas

  Trotter, Neville

  Ridsdale, Sir Julian

  Twinn, Dr Ian

  Rifkind, Rt Hon Malcolm

  Vaughan, Sir Gerard

  Roberts, Wyn (Conwy)

  Viggers, Peter

  Roe, Mrs Marion

  Waddington, Rt Hon David

  Rossi, Sir Hugh

  Wakeham, Rt Hon John

  Rowe, Andrew

  Waldegrave, Hon William

  Rumbold, Mrs Angela

  Walden, George

  Ryder, Richard

  Walker, Bill (T'side North)

  Sackville, Hon Tom

  Walker, Rt Hon P. (W'cester)

  Sainsbury, Hon Tim

  Waller, Gary

  Sayeed, Jonathan

  Walters, Sir Dennis

  Scott, Rt Hon Nicholas

  Ward, John

  Shaw, David (Dover)

  Wardle, Charles (Bexhill)

  Shaw, Sir Giles (Pudsey)

  Warren, Kenneth

  Shaw, Sir Michael (Scarb')

  Watts, John

  Shelton, Sir William

  Whitney, Ray

  Shephard, Mrs G. (Norfolk SW)

  Widdecombe, Ann

  Shepherd, Colin (Hereford)

  Wiggin, Jerry

  Shepherd, Richard (Aldridge)

  Wilkinson, John

  Shersby, Michael

  Wilshire, David

  Sims, Roger

  Winterton, Mrs Ann

  Skeet, Sir Trevor

  Winterton, Nicholas

  Smith, Sir Dudley (Warwick)

  Wolfson, Mark

  Smith, Tim (Beaconsfield)

  Wood, Timothy

  Soames, Hon Nicholas

  Woodcock, Dr. Mike

  Speed, Keith

  Yeo, Tim

  Speller, Tony

  Young, Sir George (Acton)

  Spicer, Sir Jim (Dorset W)

  Younger, Rt Hon George

  Spicer, Michael (S Worcs)

  Squire, Robin

  Tellers for the Noes:

  Stanbrook, Ivor

  Mr. Alastair Goodlad and

  Stanley, Rt Hon Sir John

  Mr. Tony Durant.

  Question accordingly negatived.
  Amendment proposed, pursuant to Standing Order No. 32 (Calling of amendments at end of debate), at the end of the Question to add:
  But humbly regret the absence from the Gracious Speech of any clear commitment to seek early entry to the exchange rate mechanism of the European Monetary System in order to provide a firm framework for the exchange rate and the battle against inflation, to permit lower interest rates and to ensure that this nation is a leader rather than a spectator in the development of European unity.—[Mr. Ashdown.]
  Question put, That the amendment be made:
  The House divided: Ayes 23, Noes 334.

  Division No. 4]

  [10.13 pm

  AYES

  Alton, David

  Beith, A. J.

  Ashdown, Rt Hon Paddy

  Bruce, Malcolm (Gordon)

  Barnes, Mrs Rosie (Greenwich)

  Campbell, Menzies (Fife NE)

  681

  Cartwright, John

  Sillars, Jim

  Ewing, Mrs Margaret (Moray)

  Steel, Rt Hon David

  Howells, Geraint

  Taylor, Matthew (Truro)

  Hughes, Simon (Southwark)

  Thomas, Dr Dafydd Elis

  Johnston, Sir Russell

  Welsh, Andrew (Angus E)

  Jones, leuan (Ynys Môn)

  Wigley, Dafydd

  Kennedy, Charles

  Livsey, Richard

  Tellers for the Ayes:

  McGrady, Eddie

  Mr. James Wallace and

  Maclennan, Robert

  Mr. Archy Kirkwood.

  Michie, Mrs Ray (Arg'l & Bute)

  NOES

  Adley, Robert

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

  Aitken, Jonathan

  Davis, David (Boothferry)

  Alexander, Richard

  Day, Stephen

  Alison, Rt Hon Michael

  Devlin, Tim

  Allason, Rupert

  Dicks, Terry

  Amery, Rt Hon Julian

  Dorrell, Stephen

  Amess, David

  Douglas-Hamilton, Lord James

  Amos, Alan

  Dover, Den

  Arbuthnot, James

  Dunn, Bob

  Arnold, Tom (Hazel Grove)

  Durant, Tony

  Ashby, David

  Dykes, Hugh

  Aspinwall, Jack

  Eggar, Tim

  Atkins, Robert

  Emery, Sir Peter

  Atkinson, David

  Evans, David (Welwyn Hatf'd)

  Baker, Rt Hon K. (Mole Valley)

  Evennett, David

  Baldry, Tony

  Fallon, Michael

  Banks, Robert (Harrogate)

  Favell, Tony

  Batiste, Spencer

  Fenner, Dame Peggy

  Beaumont-Dark, Anthony

  Finsberg, Sir Geoffrey

  Beggs, Roy

  Fishburn, John Dudley

  Bellingham, Henry

  Fookes, Dame Janet

  Bendall, Vivian

  Forman, Nigel

  Benyon, W.

  Forsyth, Michael (Stirling)

  Bevan, David Gilroy

  Forsythe, Clifford (Antrim S)

  Biffen, Rt Hon John

  Forth, Eric

  Body, Sir Richard

  Fowler, Rt Hon Norman

  Boscawen, Hon Robert

  Fox, Sir Marcus

  Boswell, Tim

  Franks, Cecil

  Bottomley, Mrs Virginia

  Freeman, Roger

  Bowden, A (Brighton K'pto'n)

  Gale, Roger

  Bowden, Gerald (Dulwich)

  Gardiner, George

  Bowis, John

  Garel-Jones, Tristan

  Boyson, Rt Hon Dr Sir Rhodes

  Gill, Christopher

  Braine, Rt Hon Sir Bernard

  Gilmour, Rt Hon Sir Ian

  Brandon-Bravo, Martin

  Glyn, Dr Alan

  Brazier, Julian

  Goodhart, Sir Philip

  Bright, Graham

  Goodson-Wickes, Dr Charles

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

  Gorman, Mrs Teresa

  Browne, John (Winchester)

  Gorst, John

  Bruce, Ian (Dorset South)

  Gow, Ian

  Buck, Sir Antony

  Grant, Sir Anthony (CambsSW)

  Burns, Simon

  Greenway, Harry (Ealing N)

  Burt, Alistair

  Greenway, John (Ryedale)

  Butcher, John

  Gregory, Conal

  Butler, Chris

  Griffiths, Sir Eldon (Bury St E')

  Butterfill, John

  Griffiths, Peter (Portsmouth N)

  Carlisle, John, (Luton N)

  Grist, Ian

  Carlisle, Kenneth (Lincoln)

  Ground, Patrick

  Carrington, Matthew

  Grylls, Michael

  Carttiss, Michael

  Gummer, Rt Hon John Selwyn

  Cash, William

  Hague, William

  Channon, Rt Hon Paul

  Hamilton, Hon Archie (Epsom)

  Chapman, Sydney

  Hamilton, Neil (Tatton)

  Chope, Christopher

  Hampson, Dr Keith

  Churchill, Mr

  Hanley, Jeremy

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

  Hannam, John

  Clark, Sir W. (Croydon S)

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

  Colvin, Michael

  Hargreaves, Ken (Hyndburn)

  Conway, Derek

  Harris, David

  Coombs, Anthony (Wyre F'rest)

  Haselhurst, Alan

  Coombs, Simon (Swindon)

  Hawkins, Christopher

  Cormack, Patrick

  Hayes, Jerry

  Couchman, James

  Hayhoe, Rt Hon Sir Barney

  Cran, James

  Hayward, Robert

  Critchley, Julian

  Heath, Rt Hon Edward

  Currie, Mrs Edwina

  Heathcoat-Amory, David

  Curry, David

  Heddle, John

  682

  Hicks, Mrs Maureen (Wolv' NE)

  Moynihan, Hon Colin

  Hicks, Robert (Cornwall SE)

  Mudd, David

  Higgins, Rt Hon Terence L.

  Neale, Gerrard

  Hill, James

  Nelson, Anthony

  Hind, Kenneth

  Neubert, Michael

  Hogg, Hon Douglas (Gr'th'm)

  Newton, Rt Hon Tony

  Holt, Richard

  Nicholls, Patrick

  Howard, Michael

  Nicholson, David (Taunton)

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

  Nicholson, Emma (Devon West)

  Howarth, G. (Cannock & B'wd)

  Norris, Steve

  Howe, Rt Hon Sir Geoffrey

  Onslow, Rt Hon Cranley

  Howell, Ralph (North Norfolk)

  Oppenheim, Phillip

  Hughes, Robert G. (Harrow W)

  Page, Richard

  Hunt, David (Wirral W)

  Paice, James

  Hunt, Sir John (Ravensbourne)

  Paisley, Rev Ian

  Hunter, Andrew

  Parkinson, Rt Hon Cecil

  Hurd, Rt Hon Douglas

  Patnick, Irvine

  Irvine, Michael

  Patten, John (Oxford W)

  Irving, Charles

  Pawsey, James

  Jack, Michael

  Peacock, Mrs Elizabeth

  Jackson, Robert

  Porter, Barry (Wirral S)

  Janman, Tim

  Porter, David (Waveney)

  Jessel, Toby

  Portillo, Michael

  Johnson Smith, Sir Geoffrey

  Price, Sir David

  Jones, Gwilym (Cardiff N)

  Raison, Rt Hon Timothy

  Jones, Robert B (Herts W)

  Rathbone, Tim

  Jopling, Rt Hon Michael

  Redwood, John

  Kellett-Bowman, Dame Elaine

  Renton, Rt Hon Tim

  Key, Robert

  Rhodes James, Robert

  Kilfedder, James

  Ridley, Rt Hon Nicholas

  King, Roger (B'ham N'thfield)

  Ridsdale, Sir Julian

  Kirkhope, Timothy

  Rifkind, Rt Hon Malcolm

  Knapman, Roger

  Roberts, Wyn (Conwy)

  Knight, Greg (Derby North)

  Roe, Mrs Marion

  Knight, Dame Jill (Edgbaston)

  Ross, William (Londonderry E)

  Knowles, Michael

  Rossi, Sir Hugh

  Knox, David

  Rowe, Andrew

  Lamont, Rt Hon Norman

  Rumbold, Mrs Angela

  Lang, Ian

  Ryder, Richard

  Latham, Michael

  Sackville, Hon Tom

  Lawson, Rt Hon Nigel

  Sainsbury, Hon Tim

  Lee, John (Pendle)

  Sayeed, Jonathan

  Leigh, Edward (Gainsbor'gh)

  Scott, Rt Hon Nicholas

  Lennox-Boyd, Hon Mark

  Shaw, David (Dover)

  Lilley, Peter

  Shaw, Sir Giles (Pudsey)

  Lloyd, Peter (Fareham)

  Shaw, Sir Michael (Scarb')

  Lord, Michael

  Shelton, Sir William

  Luce, Rt Hon Richard

  Shephard, Mrs G. (Norfolk SW)

  Macfarlane, Sir Neil

  Shepherd, Colin (Hereford)

  MacGregor, Rt Hon John

  Shepherd, Richard (Aldridge)

  MacKay, Andrew (E Berkshire)

  Shersby, Michael

  Maclean, David

  Sims, Roger

  McLoughlin, Patrick

  Skeet, Sir Trevor

  McNair-Wilson, Sir Michael

  Skinner, Dennis

  McNair-Wilson, Sir Patrick

  Smith, Sir Dudley (Warwick)

  Madel, David

  Smith, Tim (Beaconsfield)

  Major, Rt Hon John

  Smyth, Rev Martin (Belfast S)

  Malins, Humfrey

  Soames, Hon Nicholas

  Mans, Keith

  Speed, Keith

  Maples, John

  Speller, Tony

  Marland, Paul

  Spicer, Sir Jim (Dorset W)

  Marshall, John (Hendon S)

  Spicer, Michael (S Worcs)

  Marshall, Michael (Arundel)

  Squire, Robin

  Martin, David (Portsmouth S)

  Stanbrook, Ivor

  Mates, Michael

  Stanley, Rt Hon Sir John

  Maude, Hon Francis

  Steen, Anthony

  Mawhinney, Dr Brian

  Stevens, Lewis

  Maxwell-Hyslop, Robin

  Stewart, Allan (Eastwood)

  Mayhew, Rt Hon Sir Patrick

  Stewart, Andy (Sherwood)

  Mellor, David

  Stewart, Rt Hon Ian (Herts N)

  Meyer, Sir Anthony

  Stokes, Sir John

  Miller, Sir Hal

  Stradling Thomas, Sir John

  Mills, Iain

  Sumberg, David

  Mitchell, Sir David

  Summerson, Hugo

  Moate, Roger

  Tapsell, Sir Peter

  Molyneaux, Rt Hon James

  Taylor, Ian (Esher)

  Monro, Sir Hector

  Taylor, Rt Hon J. D. (S'ford)

  Montgomery, Sir Fergus

  Taylor, John M (Solihull)

  Morrison, Sir Charles

  Taylor, Teddy (S'end E)

  Morrison, Rt Hon P (Chester)

  Tebbit, Rt Hon Norman

  683

  Temple-Morris, Peter

  Walters, Sir Dennis

  Thatcher, Rt Hon Margaret

  Ward, John

  Thompson, D. (Calder Valley)

  Wardle, Charles (Bexhill)

  Thompson, Patrick (Norwich N)

  Warren, Kenneth

  Thorne, Neil

  Watts, John

  Thornton, Malcolm

  Whitney, Ray

  Thurnham, Peter

  Widdecombe, Ann

  Townend, John (Bridlington)

  Wiggin, Jerry

  Townsend, Cyril D. (B'heath)

  Wilkinson, John

  Tracey, Richard

  Wilshire, David

  Tredinnick, David

  Winterton, Mrs Ann

  Trippier, David

  Winterton, Nicholas

  Trotter, Neville

  Wolfson, Mark

  Twinn, Dr Ian

  Wood, Timothy

  Vaughan, Sir Gerard

  Woodcock, Dr. Mike

  Viggers, Peter

  Yeo, Tim

  Waddington, Rt Hon David

  Young, Sir George (Acton)

  Wakeham, Rt Hon John

  Younger, Rt Hon George

  Walden, George

  Walker, Bill (T'side North)

  Tellers for the Noes:

  Walker, Rt Hon P. (W'cester)

  Mr. Alistair Goodlad and

  Waller, Gary

  Mr. David Lightbown.

  Question accordingly negatived.
  Main Question put and agreed to.
  Resolved,
  That an humble Address be presented to Her Majesty, as follows:
  Most Gracious Sovereign,
  We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
  To be presented by Privy Councillors or Members oilier Majesty's Household.

PETITIONS

  Deaf People (Broadcasting)
  10.25 pm
  Mr. Roger Sims: I am pleased to present a petition signed by my constituents and those of my hon. Friends the Members for Ravensbourne (Sir J. Hunt), for Beckenham (Sir P. Goodhart) and for Orpington (Mr. Stanbrook), and others on behalf of the deaf and hard of hearing. It bears more than 1,200 signatures, and urges that the 4 million of our fellow citizens who have little or no hearing should be able to enjoy television programmes through a far greater provision of teletext subtitling and sign language accompanying the programmes.
  The advent of television in the House emphasises the need for such facilities, and the forthcoming broadcasting Bill will give an opportunity to oblige the BBC and television companies to provide it. I fully support the petitioners' pleas.
  To lie upon the Table.
  10.26 pm
  Mr. John Garrett: I am pleased to present a petition from the Norfolk and Norwich deaf sports and social club concerning facilities on television for the deaf. The material allegations are that broadcasters are not providing complete access to deaf television viewers —for example, subtitles or sign language. At least 4 million viewers are affected.
  Deaf viewers, as equal members of the general public, are entitled to equal access to television programmes. There are 741 signatories to the petition, and the prayer is as follows:
  that your Honourable House will ensure that legislation be passed placing an obligation on Television channel operators to make their programmes more accessible to deaf people by using teletext subtitles, sign language or other means, and to reach complete coverage by a fixed date. And your petitioners, as in duty bound will ever pray.
  To lie upon the Table.

Victoria Hospital, Accrington
Motion made, and Question proposed, That this House do now adjourn.—[Mr. John M. Taylor.]
10.27 pm
Mr. Ken Hargreaves: I am grateful for the opportunity to raise the subject of the future of Victoria hospital, Accrington.
Thousands of people have signed petitions and written to their Members of Parliament and to the Secretary of State. A public meeting has been held. The chief executive of Hyndburn borough council has agreed that the lead in the campaign for Victoria hospital must be taken by the local authority.
Thousands of people have signed petitions and written to their Member of Parliament and to the Secretary of State. A public meeting has been held. The chief executive of Hyndburn borough council has agreed that the lead in the campaign for Victoria hospital must be taken by the local authority.
I have not made a mistake and repeated the first paragraph of my speech. The first paragraph referred to the position described in the Accrington Observer and Times of Saturday 7 October 1978; the second described what has happened since the meeting of the district health authority on 6 September 1989, when it was agreed that the Victoria should be a community hospital.
It is clear from the two passages that we are fighting the same battle now that we fought 11 years ago. It is equally clear that the people of Hyndburn wish to unite and fight. It is not a party political issue. In 1978, when the Victoria hospital's problems first arose, we had a Labour Government, a Labour Member of Parliament and a Conservative council. In 1989, we have a Conservative Government, a Conservative Member of Parliament and a Labour council. Those who try to turn the campaign into a party political battle do no service to Accrington Victoria hospital or to the people of Hyndburn.
Accrington Victoria hospital was founded in 1894 as a cottage hospital. It was paid for by public subscription, not least by people who worked for low wages contributing so much each week from their wages. No doubt that is part of the reason why is it held in such affection and why attempts to reduce services are met with such strong hostility, but that is only part of the reason. Over the years, we have come to recognise the superb care that patients receive from its dedicated staff, its friendly, almost family atmosphere and the special, almost indefinable quality that it has, which I have not experienced in any other hospital in which I have been a patient. For that reason, four years ago when I had major surgery, I chose to go to Accrington Victoria hospital. It was a difficult time, but four years on I am a good advertisement for the skill and dedicated care of the hospital.
Experts now tell us that surgery should be withdrawn and that services should be centralised on one site. They say that that is better for us. Experts once told us that we should demolish terraced houses and build high-rise flats. Ordinary folk said that they were wrong, and ordinary folk have been proved right. The same applies to Accrington Victoria hospital. Ordinary folk do not need experts to tell us what is best for us—we know instinctively. We know that for our benefit we want to retain the widest possible range of services at Accrington Victoria.
686
Over the years, services have been withdrawn from Accrington Victoria, and often the withdrawal of one service has been the reason for the withdrawal of the next. In 1952, the eye wards were no longer used as such. In 1962, the department of pathology no longer matched blood for transfusions, and shortly afterwards the pathology laboratory was closed.
In the early 1970s, junior doctors from the surgical and medical departments no longer helped by doing evening and weekend sessions in the casualty department. In 1978, it would have been closed on the retirement of its long-serving and distinguished senior casualty officer, Mr. J. H. Armstrong, but for local GPs stepping in and agreeing to staff it.
In 1979, the unit was no longer allowed to accept 999 calls. In 1984, the children's ward was closed temporarily, without notice or consultation, and never reopened. In 1985, the district health authority announced that it was to press for the closure of the maternity unit, which had been opened only eight years earlier, to have a greater chance of succeeding in getting the new high-tech maternity unit at Queen's Park hospital, Blackburn, in the region's capital programme. Many local GPs spoke out against the proposal.
In 1985, it was announced that Accrington Victoria was to be the site of a new renal unit. Ward 4 was closed in preparation and two staff were sent on a training course. It transpired that there had been some misunderstanding and that there was no guarantee that it would get the renal unit. The ward remained padlocked. I had an angry meeting with Sir John Page, the regional chairman, and it was eventually agreed that the unit will open at Accrington next year, ward 4 having been closed for four years.
Last year, the district health authority proposed to reduce the hours of opening of the minor injuries unit and to close GP ward 6. I sent a message to the meeting to inform it that an extra allocation of resources for the Health Service had just been announced and urged that the decision be delayed until we knew by how much our area would benefit. We received £250,000 and the ward and the unit were kept open.
In December 1988, the deputy dean of postgraduate studies at Manchester university informed the authority that trainee surgeons would no longer be sent to Accrington Victoria to train. In September 1989, the district health authority voted to develop Accrington Victoria as a community hospital. Earlier this month, it proposed the closure of wards 5 and 7 and a possible reduction in the hours of the minor injuries unit.
Finally in this saga, I refer to the maternity unit at Accrington Victoria. The Minister will be aware of the situation regarding maternity facilities at Queen's Park hospital because he replied to an Adjournment debate in April in which I urged that the new unit at Queen's Park —promised since 1979—be found a place in the capital programme. I explained at the time that the district health authority felt that, because of the dramatic increase in the birth rate, it would shortly have to turn patients away. The authority had decided that it had no option but to build a temporary unit at a cost of £300,000.
Thanks to the debate and to the Minister's intervention, that much-needed 19-bed temporary unit is to be built at the region's expense. Unfortunately, the district health authority has decided that, to staff it, the maternity units at Accrington Victoria and at Bramley Meade will close. That was not made clear when I made the plea on their

687
behalf. As yet, I have been unable to work out how closing 35 beds to staff a 19-bed unit is necessary or an improvement on what was supposed to be a desperate problem. Given that the district administrator, Mr. Paul Whitfield, had said in 1982
"that the proposals do not mean either the closure or downgrading of Accrington Victoria hospital. Between now and 1995, there will be little change at Accrington Victoria hospital"
and bearing in mind the events since 1978, and earlier, which I have outlined, it is not hard to understand the state of morale at the hospital. The staff are to be congratulated on their excellent work in difficult and uncertain times.
The people of Hyndburn now find it difficult to accept the continuing reassurances that Accrington Victoria hospital will not close. Since 1978, they have been actively campaigning for the hospital. At a public meeting held in May 1979, 700 people packed the town hall, with more than 100 people being turned away. They were all objecting to the plan put forward by the Blackburn district hospital management committee to remove surgical facilities and the children's ward and downgrade Accrington Victoria to a geriatric and community hospital. The people of Hyndburn were supported in their opposition by the then Member of Parliament, Arthur Davidson, my right hon. and learned Friend the Member for Ribble Valley (Mr. Waddington) and my hon. Friend the Member for Rossendale and Darwen (Mr. Trippier). As mayor of Hyndburn at the time, I spoke against the plans on behalf of the council.
In 1982, when we were beginning to feel that our campaign was succeeding, we were faced with a consultative paper, issued by the district health authority and entitled "District Strategy". Option 2, which proposed an 1,100-bed district general hospital sited at Queen's Park hospital, Blackburn, with community support throughout the district, was just a restatement of the 1978 proposals. Accrington Victoria was to be developed as a community hospital and in that role would have acute beds, with a substantial long-stay element of geriatric beds and day places. It would have an ESMI—elderly severely mentally ill—unit and retain some beds for routine surgery and support the overall maternity provision at Queen's Park hospital.
Option 3, which had the support of the people of Accrington and many from the surrounding area, would have seen the retention of the three existing acute hospitals in that role, together providing a district general hospital service. Queen's park hospital would have been the major hospital with 630 beds, while Accrington Victoria hospital would have largely retained its present acute and maternity role plus the ESMI unit, with 185 beds and 75 day places. The major attraction of this option was that it apparently reflected governmental thinking since 1979 whereby the 600-bed size for the principal hospital in a district is considered advantageous, with a more flexible role retained for smaller hospitals.
To our regret, the district health authority chose option 2, but part two of the resolution adopted said:
"Accrington Victoria hospital should continue in its present role for at least 10 years, that is until after development at Queen's Park hospital as set out in the region's ten year capital programme."
It is clear that that part of the resolution has not been adhered to. When I met the chairman of the district health authority, Mr. Ian Woolley, on 20 November to discuss the latest proposals, he said:
688
"The district general manager presented a paper on the 28th July 1989 to members identifying many options. The Members recommended the community hospital option to a full meeting of the health authority which was held on the 6th September 1989. When Accrington Victoria hospital becomes a community hospital, it will have far more acute and rehabilitation beds for local people of all ages, run by the GP's, plus a variety of other services including physiotherapy, radiography, minor injuries, day hospital for the elderly. In addition, there will be clinic facilities e.g. dental facilities, out patient consultant clinics, ESMI unit and the renal unit."
In view of the earlier fears that a community hospital would be nothing more than a geriatric hospital, which would be unacceptable, the present proposals are an improvement, but the people of Hyndburn still believe, as I do, that the hospital has a more important role to play in the life of the community than the one envisaged, given that we have a population of 80,000. The new Zeri theme park that is being built at Hyndburn is likely to attract 40,000 visitors a day when it is opened early in the 1990s, and it will put further pressure on hospital services.
Our worries about the present decision are increased by the fact that the proposals for a community hospital depend on the co-operation of local general practitioners. They have expressed an interest, but they have not agreed to staff it. Mr. Woolley is setting up a working party of GPs and others to work out the details. It seems that, with the best will in the world, we are still a considerable way from having a community hospital in Accrington. In the meantime, existing services continue to be whittled away, and it is possible that worse is still to come.
On 22 December the Royal College of Surgeons makes its quinquennial visit to review all surgical posts at senior house officer and registrar level throughout the district. The temporary recognition of these posts at the Accrington Victoria hospital will be reviewed, and the recognition will be extended or cancelled. Mr. Woolley feels that temporary recognition may be withdrawn. He has assured me that if that happens he will go to the regional health authority to ask for permission to continue advertising posts without recognition. Withdrawal of recognition will make it even more difficult, if not impossible, to recruit junior doctors.
Despite all this, the possible proposals to close two wards and to reduce the hours of the minor injuries unit, with accreditation likely to be withdrawn on 22 December, when I asked Mr. Woolley whether the hospital was to be closed he said:
"We have absolutely no intention to close the hospital on the 22 December or on any other date."
The people of Hyndburn, to a man, want to believe that, but the experience of the past 11 to 20 years has made them sceptical. They will need a great deal of convincing that the intention is not to concentrate services at Queen's Park hospital. The knowledge that in 1982 the district health authority spent 12·4 per cent. of its budget on the AVH and now spends only 11·1 per cent.—a reduction of £400,000 per year—does little to reassure them.
The man in the street is bewildered. After years of campaigning for our maternity unit, we find that after only eight years of operation the DHA proposes to close it. Last year, tens of thousands of pounds were spent upgrading the former children's ward for use as an orthopaedic ward; now it is proposed for possible closure. The minor injuries unit last year dealt with 42,946 cases—27,778 new patients and 15,168 return patients. During the hours when it is

689
proposed in future to close the unit, 15,184 patients were treated. Where will they go? The majority will have to go to Blackburn Royal infirmary.
Can the Blackburn Royal infirmary cope, given that the community health council reported recently that patients were waiting up to five hours for treatment? I know that Mr. Woolley is concerned about waiting at the BRI, and the problem is the subject of a study. He assures me that waiting times have been reduced. Nevertheless, to add a further 10,000 patients to an existing problem does not seem to make sense.
It would be remiss of me if, on behalf of the people of Hyndburn, I did not pay tribute to the Accrington Observer & Times for the continued support and enormous coverage that it has given this issue since 1978. The material that I have brought with me is a sample of what it has produced over those years. The campaign could so easily have floundered without that support. I pay tribute to the many people who have been involved in the campaign for so many years. They have all worked extremely hard. I pay tribute especially to Councillor Bill Parkinson, whose hard work has earned him the respect of all sections of the community.
The people of Hyndburn have had enough. We want to be certain that the Accrington Victoria hospital will continue to play an important role in health provision in the district, we want to retain the widest possible range of services at the AVH, and we want a plan for the future of the hospital that is acceptable to the people of Hyndburn as well as to the district health authority. Most important of all, once a plan is accepted it should be strictly adhered to so that the staff at the hospital feel secure. Until we get that plan, we seek assurances that no further services will be withdrawn.
10.43 pm
The Parliamentary Under-Secretary of State for Health (Mr. Roger Freeman): I congratulate my hon. Friend the Member for Hyndburn (Mr. Hargreaves) on raising this important topic that deserves to be debated fully in the House and the local community. I have replied to many Adjournment debates this year and it gives me great pleasure to reply to my hon. Friend for a second time. I know that he holds dear the best interests of his constituents. He fights for them valiantly, is a great supporter of the health services in his constituency and pays close attention to their needs. The fact that he spoke from the heart about his constituents' needs clearly impressed other hon. Members. My hon Friends the Members for Basildon (Mr. Amess), for Maidstone (Miss Widdecombe) and for Great Yarmouth (Mr. Carttiss) are present to support him, not for a constituency interest but to pay tribute to his determination, personal courage and diligence in representing his constituents.
Acute services in the district are spread three ways: between Blackburn Royal infirmary, Queen's Park hospital and the Accrington Victoria hospital. My hon. Friend will agree that it would not be wise for central Government to attempt to do detailed planning of local acute services. Whitehall does not have the expertise or the local knowledge to match that available to local managers.
690
That is why the Government have made a priority of developing strong, local management in the Health Service.
Before turning to the important issues affecting the Accrington Victoria hospital, I should like to outline the Government's approach to strengthening Health Service management and increasing resources to the NHS, particularly in the North Western region and the Blackburn health authority.
For many years management in the hospital service was hampered by the concept of collegiate leadership. That appeared to mean that no decision was ever made unless the medical, nursing, administrative and other interests could be reconciled. The system did not encourage careful, deliberate preparation and implementation of realistic plans. Unfortunately, it was a recipe for procrastination. The results are still with us in the shape of unsuitable buildings, poor maintenance and duplicated services. The appointment of general managers to be responsible for the performance of each hospital unit, district and regional authority has done much to focus management effort.
The Government's plans for changes in the NHS, which were presented to Parliament last week, include the appointment of smaller district authorities that should be able to work better with general managers in controlling the use of Health Service resources. Therefore, my first point is that following the first Griffiths's report we shall set up a management structure in the Health Service designed for clear leadership and support for smaller district health authorities, if the Bill is enacted. We shall then delegate responsibility and let local general managers and health authorities make decisions.
In last week's debate, which was initiated by my hon. Friend the Member for Fylde (Mr. Jack), we had a helpful discussion of the Government's intentions on resources for hospital and community health services next year. I pointed to an increase next year of 8·5 per cent. in cash terms, which in real terms, after an assumed 5 per cent. rate of inflation, is an increase of about 3·4 per cent. I assure the House that I am happy to repeat that the North Western regional allocation in 1990–91 will be higher in real terms than this year's figures. There will be real growth in resources.
In a few weeks' time the actual cash allocation will be known and then the North Western regional health authority can calculate each district's specific allocation. We expect those allocations to be made in the early months of next year. In the meantime, the over-pessimistic planning assumption in the north-west has meant that the districts have expected a cut in resources of 0·3 per cent., which has led them to examine the current pattern of service provision in search of efficiency savings. I am happy to be able to reassure my hon. Friend that those pessimistic assumptions are no longer valid. There will be real growth for the north-west and for the districts, consequent upon the specific allocations by the region.
Let me deal with the preoccupations and plans of the Blackburn, Hyndburn and Ribble Valley health authority. A few weeks ago, it met to consider its short-term programme for 1990–91, which has since been passed to the regional health authority. This is a comprehensive document and contains an impressive record of achievements.
The district authority has pledged to at least maintain the level of general acute services in the district. I hope that it will be able to do very much better than that. The

691
authority is examining the way in which these acute services are provided in three hospitals—the Blackburn royal infirmary, Queen's Park hospital and Accrington Victoria. It should be noted that the district is currently achieving the highest ever levels of acute and other services. Since 1982, in-patient treatments have increased by 10 per cent., out-patient treatments by 15 per cent. and day cases by 20 per cent.
The question remaining is why the role of Accrington Victoria hospital should be reviewed. I am advised by the district general manager that the Accrington Victoria hospital lost its accreditation for the medical training of pre-registration junior doctors in November 1988, among other reasons, because there were not sufficient senior doctors with time available to give supervision to their junior colleagues. That arose in part because their duties were split between the three acute hospitals that I have mentioned.
I am further advised that representatives of the Royal College of Surgeons will be visiting the hospital in December—as my hon. Friend said—to consider whether the number and type of surgery cases dealt with there can any longer justify the hospital's accreditation for the training of senior house officers. The question arises whether the cases dealt with at the hospital include a sufficient number of major trauma cases to provide a broad range of experience for senior house officers. One of the criteria that the Royal College of Surgeons may well use is the existing size and scope of services at the hospital —doubtless a function of past decisions about what should be provided at the hospital. It is the proper job of the royal college to review the present range of services to see whether appropriate experience is being gained.
Against that background of changed requirements, developments elsewhere in the district and the consequences of the loss of accreditation, it was clearly the duty of the district health authority to consider what future services should be provided at the Accrington Victoria. The district health authority held a public meeting in Hyndburn on 16 May 1989 and further discussions on the provision of acute services followed in July and September. The district authority resolved that proposals to develop a community hospital at Accrington Victoria should be pursued.
That option, considered by the authority in September 1989, envisaged the transfer from Accrington Victoria of 25 surgical beds and an equal number of orthopaedic beds and the transfer in of a day hospital for the elderly and, possibly, an associated day centre for the elderly. The renal unit, out-patient clinic, minor injuries unit and existing beds for the elderly would be retained at Accrington Victoria. I have noted the possibility of Accrington
692
Victoria becoming a community hospital and the fact that the district health authority's proposal envisages the future long-term use of the hospital for community services. I think that that will greatly reassure local residents.
The first of two assurances that I want to give my hon. Friend is that in the event of any proposal to reorganise services at Accrington Victoria or to close the hospital completely, the proposal must come to Ministers for final decision if the community health council objects. The process of considering the future deployment of services has only just begun, but if the CHC objects to any proposal concerning the reorganisation of services—I am advised that there is no prospect of the closure of the hospital—that proposal must come to Ministers.
I do not want to go into the merits of the case for centralising the acute services at Blackburn Royal infirmary and maternity and gynaecology services at Queen's Park hospital. That decision is essentially a local matter. The services are for people in the Blackburn area, and their views must be heard. I do not think that the authority can be faulted for its openness in setting out the issues in papers considered by the authority and discussed in public.
I remind my hon. Friend of the three key issues that have emerged in this debate. First, it must be remembered that, since 1978–79, the Government have increased resources for the North Western region by 13 per cent., and the increase next year for the NHS as a whole will be 3·4 per cent. in real terms. The exact amount for the North Western region and the Blackburn authority has yet to be decided.
Secondly, major developments in the region and in Blackburn at the Queen's park hospital are at the highest ever level, and inevitably require the review of existing patterns of service elsewhere in the authority area. Thirdly, the district authority should, as far as possible, be left to arrive at local solutions that meet the financial targets that have been set, but match as closely as possible the needs of the local population.
I come now to my second assurance. Although I have no desire to interfere with the proper local management of the Health Service, I can assure my hon. Friend that I shall come to visit his constituency and the hospital service there before any final decisions are taken. I do that not in a spirit of wanting to interfere with the district or the region but to express, with my hon. Friend, my interest in and dedication to the improvement of services for his constituents, as for the entire population of the country, in an improved quantity and quality of services in the NHS.
Question put and agreed to.
Adjourned accordingly at four minutes to Eleven o'clock.

CIVIL SERVICE

  Malawi
  Mr. Mullin
  To ask the Minister for the Civil Service what aid his Department has given to the Government of Malawi either directly or through any other agency since 1979.

  Mr. Luce
  [holding answer 27 November 1989]: It is not within the ambit of my Department's vote to grant aid to foreign Governments and none has been made.

THE ARTS

  Libraries (European Information)
  Mr. Fisher
  To ask the Minister for the Arts (1) whether he will list the United Kingdom library authorities which(a) are European business co-operative network intermediaries, (b) have European business co-operative network contracts and (c) subscribe to tenders electronic daily service;

  (2) how many library authorities have European information centres.

  Mr. Luce
  [holding answer 27 November 1989]: No record of this information is maintained centrally.

ENVIRONMENT

  Unleaded Petrol
  Mr. Amos
  To ask the Secretary of State for the Environment (1) how many United Kingdom filling stations have offered unleaded petrol for sale for the first time over the last 12 months; and if he will make a statement;

  (2) what is the total number of filling stations currently selling unleaded petrol in the United Kingdom; and if he will make a statement.

  Mr. Heathcoat-Amory
  About 17,000 of the 20,000 petrol stations in the United Kingdom now stock unleaded petrol. In the last 12 months around 14,000 of these started selling the fuel for the first time. The United Kingdom has fully complied with the European directive that required member states to ensure the availability and balanced distribution of unleaded petrol from 1 October 1989. The dramatic increase in outlets has greatly assisted the

  £ million

  1982–83

  1983–84

  1984–85

  1985–86

  1986–87

  1987–88

  1988–89

  (1) Local authority borrowing

  42

  1,018

  2,246

  2,042

  1,703

  2,152

  2,588

  (2) Gross capital expenditure

  4,875

  5,569

  5,852

  5,298

  5,205

  5,919

  n/a

  (3) Total gross expenditure

  33,835

  36,533

  38,488

  40,242

  41,998

  45,479

  n/a

  156
  successful campaign efforts of the Government, the private sector and voluntary groups, which have encouraged many motorists to switch to unleaded petrol during the year.

  Nitrous Oxide
  Mr. Amos
  To ask the Secretary of State for the Environment what percentage of nitrous oxide emissions will be reduced when the programme to fit low nitrous oxide burners to main United Kingdom coal-fired stations has been completed; and if he will make a statement.

  Mr. Trippier
  The United Kingdom is committed under the EC large combustion plants directive, agreed in 1988, to reduce emissions of oxides of nitrogen (NOx) from existing large combustion plants by 15 per cent. by 1993 and 30 per cent. by 1998. The Central Electricity Generating Board's programme of retrofitting low-NOx burners to its 12 largest coal-fired power stations, representing 23,000 MW of generating capacity, will make a major contribution to meeting this commitment.

  Chlorofluorocarbons
  Mr. Amos
  To ask the Secretary of State for the Environment when he expects Britain to meet the levels of chlorofluorocarbon emissions agreed under the terms of the Montreal protocol; and if he will make a statement.

  Mr. Trippier
  The Montreal protocol requires consumption of chlorofluorocarbons to he cut to 50 per cent. of 1986 levels by 1999. We expect this to be achieved in the United Kingdom by the end of this year—10 years ahead of the protocol timetable. The United Kingdom is pressing for a strengthening of the protocol to cut CFC consumption and production elsewhere by 50 per cent. in 1991–92, by 85 per cent. in 1995–96 with a phaseout in 2000.

  English Heritage (Chairman)
  Mr. Butler
  To ask the Secretary of State for the Environment whether he intends to reappoint Lord Montagu as chairman of English Heritage; and if he will make a statement.

  Mr. Trippier
  Since Lord Montagu's current appointment as chairman has until 30 September 1991 to run, my right hon. Friend will naturally not be taking a decision on the future chairmanship until much nearer the time.

  Local Government Borrowing
  Mr. David Nicholson
  To ask the Secretary of State for the Environment if he will list in the Official Report his estimates for the amount of income from borrowing obtained by local government and the proportion these figures represent of total local government spending in England for each year since 1982.

  Mr. Chope
  The available information is as follows:
  157

  1982–83

  1983–84

  1984–85

  1985–86

  1986–87

  1987–88

  1988–89

  (1) as a percentage of (2)

  0·9

  18·3

  38·4

  38·5

  32·7

  36·4

  —

  (1) as a percentage of (3)

  0·1

  2·8

  5·8

  5·1

  4·1

  4·7

  —

  Notes:

  1. Local authority external borrowing net of repayments but gross of investments (such as deposits with the financial sector). Includes temporary and longer term borrowing. Excludes intra- and inter-authority loans.

  2. Gross of capital receipts.

  3. Gross of sales, fees and charges, capital receipts and Government grants. Excludes double counting of flows between service accounts and other local authorities. Excludes the notional value of capital assets acquired by leasing.

  n/a: not available.

  Source: Local Government Financial Statistics England. The 1989 issue, generally covering the period up to 1987–88, is due to be published towards the beginning of December.

  Page Street (Development)
  Mr. Campbell-Savours
  To ask the Secretary of State for the Environment (1) what access to Westminster hospital will be affected by proposals by the Property Services Agency to carry out development at Page street, London SW1;

  (2) what correspondence he has received from Lord St. John of Fawsley on behalf of the Royal Fine Art Commission in relation to the proposed Property Services Agency development at Page street, London SW1;

  (3) what objections he received from English Heritage in the case of the Property Services Agency's proposals for development at Page street, London SW1; and if he will make a statement;

  (4) what recommendations he received from English Heritage in the case of Berkely House's proposals for development at Thames house, Page street, London SW1;

  (5) what representations the Government have received as to its proposed development by the Property Services Agency at Page street, London SW1;

  (6) whether he has received objections to the proposed development by the Property Services Agency at Page street, London SW1 from the Westminster Society; and if he will make a statement;

  (7) whether the Property Services Agency intends to apply for planning permission for the proposed development at Thames house, Page street, London SW1;

  (8) which Government Departments will occupy Thames house following upon the proposed works by the Property Services Agency;

  (9) why he waived listed building requirements in the case of the proposed development by the Property Services Agency at Page street, SW1.

  Mr. Moynihan
  The proposals by the Property Services Agency to carry out works to refurbish Thames house were considered by Westminster city council under the procedure for development by the Crown set out in DOE circular 18/84—"Crow n Land and Crown Development". Listed building requirements were not waived.

  The views of English Heritage were given to the local planning authority and to the Property Services Agency during consideration of the proposals. Local residents' associations were consulted by the local planning authority and any representations made by them were taken into account. The agency is discussing the proposals with the secretary of the Royal Fine Art Commission and will take account of any comments to be made by the commission. The development will not affect access to Westminster hospital. The local planning authority raised no objections to the proposals. Arrangements have not been finalised as to which Departments should be
  158
  accommodated in the building. There were no recommendations from English Heritage in the case of Berkely House's proposals.

  Council Housing
  Mr. French
  To ask the Secretary of State for the Environment if he has received any representations requesting permission for an inner-city housing estate to opt out of local authority control.

  Mr. Chope
  The tenants' choice provisions of the Housing Act 1988 give public sector tenants the opportunity to choose a new landlord. The Housing Corporation has the responsibility under the Act to provide information, advice and assistance to such tenants and to consider applications for tenants' choice landlord approval. Applications are decided by a ballot of the tenants concerned.

  One tenants' choice application has been made so far. Many other tenant groups and potential new landlords are in discussion with the Housing Corporation.

  Mr. French
  To ask the Secretary of State for the Environment if his Department has any operational schemes to promote home ownership in the inner cities.

  Mr. Chope
  Yes. Sales to sitting tenants under the right to buy remain buoyant; the Housing Corporation has this year allocated 65 per cent. of its programme of new housing association low-cost home ownership projects to designated urban stress areas and local authorities have been given new powers to make grants to help tenants move out into homes of their own. A total of 39 authorities are now operating cash incentive schemes. Subject to proper safeguards, authorities in areas of particular housing pressure will be allowed to offer tenants more generous assistance than now. In 1990–91 the Housing Corporation will introduce a tenants' incentive scheme, enabling housing associations similarly to help their tenants buy homes of their own. Cash incentives are an important new tool by which local authorities and housing associations can secure vacancies for reletting to homeless people while helping existing tenants reach the goal of home ownership.

  Mr. French
  To ask the Secretary of State for the Environment what initiatives his Department has taken since June 1987 to encourage tenants to buy their council homes.

  Mr. Chope
  The right to buy has been improved, with higher maximum discount, a modified cost floor rule, and a procedure under which tenants can be compensated if the landlord holds up the sale. Houses let by one right-to-buy landlord to another have been brought within
  159
  the right to buy, and it has been extended to tenants of housing for disabled people outside sheltered schemes. New housing for elderly people, outside sheltered schemes, will shortly be brought within the right to buy. These changes help more tenants to buy their homes.

  Local Government Finance
  Mr. Riddick
  To ask the Secretary of State for the Environment if he will calculate the financial effects on commercial and industrial concerns in(a) Colne Valley constituency, (b) Kirklees metropolitan district council and (c) Yorkshire and Humberside region resulting from the introduction of the unified business rate, and what is his estimate of the likely effect in employment in these areas resulting from the introduction of the unified business rate.

  Mr. Chope
  The Inland Revenue sample survey of the effects of the uniform business rate and of the non-domestic revaluation, the results of which were published in July, suggested that the aggregate of non-domestic rate bills in the Yorkshire and Humberside region would fall by £80 million (10 per cent.) in real terms in 1990–91 and by £210 million (25 per cent.) a year in real terms once the new system was fully in place. No information is yet available at sub-regional level. I have made no estimate on the likely effect of these changes on employment.

  Mr. Rooker
  To ask the Secretary of State for the Environment if he will list in order of administrative cost the various options available under current legislation for payment of the community charge.

  Mr. Chope
  Under the Local Government Finance Act 1988, chargepayers with a full-year liability must be offered the facility of paying their charge by 10 monthly instalments. Authorities will have a discretion to offer smaller, more frequent, instalments if they wish and to offer appropriate discounts to those who choose to pay in a single lump sum.

  There are no statutory requirements on the method of payment chargepayers may offer. The Audit Commission's 1986 report "Improving Cash Flow Management in Local Government" listed the cost of different payment methods as follows:

  Pence per transaction

  Direct Debit

  12·9

  Standing Order/Bank Giro

  20·5

  Postal remittance

  28·5

  Cash collection

  50·5

  Mr. Rooker
  To ask the Secretary of State for the Environment to what extent pre-school nursery education provided by local education authorities is taken into account in his calculation of standard spending assessments in respect of the poll tax.

  Mr. Chope
  The standard spending assessment for education is a measure of the appropriate amount of revenue expenditure consistent with providing a standard level of service, taking account of each authority's social, demographic and geographical characteristics. It takes no account of the actual provision of services, such as pre-school nursery education, by each authority.
  160
  Mr. Rooker
  To ask the Secretary of State for the Environment why, in calculating the standard spending assessments for poll tax in respect of children at risk, he decided to take account only of children of lone parents and children of claimants of income support.

  Mr. Chope
  My right hon. Friend did not. The children-at-risk indicator also takes account of the number of resident children aged under 18 years of age, and the proportion of children aged under 16 living in private households in rented accommodation. The selection of these indicators is based on recent research conducted by the personal social services research unit at Kent university and was the subject of consultation with the local authority associations.

  Population Statistics
  Mr. Rooker
  To ask the Secretary of State for the Environment if he will set out the basis for each of his estimates of population in paragraph 4 of his population report laid under paragraph 2 of schedule 12A to the Local Government Finance Act 1988.

  Mr. Chope
  The estimates of population referred to in paragraph 4 of the draft population report would be used only in the calculation of the relevant population of a charging authority in certain limited circumstances.

  The estimates in paragraph 4 are based on the best information available to the registrar general, my right hon. Friend the Secretary of State for Education and Science, my right hon. and learned Friend the Secretary of State for Health, my right hon. and learned Friend the Secretary of State for the Home Department and my right hon. Friend the Secretary of State for Social Security as appropriate.

  Mr. Rooker
  To ask the Secretary of State for the Environment why he decided to use population figures at 30 June 1988 in respect of setting revenue support grant for April 1990 to March 1991; and what factors prevent a date nearer to the introduction of poll tax being used.

  Mr. Chope
  These figures are the latest annual estimates of the resident population compiled on a consistent basis for all local authorities by the registrar general. They are available for the age groups used to define the client groups for particular local authority services in the calculation of standard spending assessments.

  Pollution Control
  Mr. Malcolm Bruce
  To ask the Secretary of State for the Environment if he intends to introduce marketable permits to increase pollution control effectiveness.

  Mr. Trippier
  There are no plans to introduce marketable permits for the purposes of pollution control, but their use and effectiveness in other countries, notably the United States of America, is under study.

  Environmental Protection
  Mr. Malcolm Bruce
  To ask the Secretary of State for the Environment if he will make it his policy to incorporate the concept of inter-generational equity into decision-making within his Department in respect of policy towards environmental protection.

  Mr. Trippier
  The United Kingdom comments on the report of the world commission on environment and
  161
  development (known as the Bruntland report), published in July 1988, accepted the report's definition of sustainable development as development which meets the needs of the present without compromising the ability of future generations to meet their own needs (para 2.1). The comments also indicated that, whilst there could be no quarrel with this as a general definition, the key issues were now how to translate the concept into practice, how to measure it, and how to assess progress towards its achievement. It was concern over this point that led the Department of the Environment to commission the Pearce report which was published under the title "Blueprint for a Green Economy" in September this year. I believe that the Pearce report makes an important contribution to our understanding of the requirements for sustainable development, including the need to safeguard the well-being of future generations.

  Mr. Malcolm Bruce
  To ask the Secretary of State for the Environment what is the current complement of the environmental protection statistics and economics branch of his Department; whether he has plans to increase the complement; and if he will make a statement.

  Mr. Trippier
  The environmental protection statistics and economics division was split on 1 November 1989. There are now two divisions known as the environmental protection statistics division (EPS) and the environmental protection economics division (EPE) respectively. The professional complements of the two divisions are as follows:

  Environmental Protection Statistics division (EPS)

  1 Chief statistician

  3 Statisticians

  1 Senior assistant statisticians.

  Environmental Protection Economics division (EPE)

  1 Senior economic adviser

  3 Economic advisers.

  The support staff consists of one higher executive officer, one executive officer, one administrative assistant and two personal secretaries.

  The complement of the two divisions is under continual review in the light of new developments. However, the senior economic adviser's post was newly created with effect from 1 November and one of the economic adviser posts was transferred from another division on the same date.

  Mrs. Gorman
  To ask the Secretary of State for the Environment when he last received representations advocating a free market solution to environmental problems.

  Mr. Chris Patten
  I receive a wide range of representations. Recent engagements have included my address to the CBI's national conference on 20 November in which I stressed that private enterprise was essential to meeting the challenges of environmental protection.

  Pearce Report
  Mr. Malcolm Bruce
  To ask the Secretary of State for the Environment what is his policy on the statement in the Pearce report that unfettered free markets will not solve environmental problems.

  Mr. Trippier
  The Pearce report suggests that"unfettered markets will tend to over-use the services of natural environments".
  162
  The correction to this tendency is to be sought by proper and appropriate valuation and pricing of these services together with effective regulation and monitoring.

  Mr. Malcolm Bruce
  To ask the Secretary of State for the Environment when he will be in a position to review his detailed response to the recommendations within the Pearce report.

  Mr. Trippier
  The detailed response to the Pearce report will be an integral part of the work leading up to the publication of the White Paper on the environment in the autumn of next year.

  Benzene
  Mr. Malcolm Bruce
  To ask the Secretary of State for the Environment what research is presently being undertaken on behalf of the Government to examine the possible health implications of benzene in the atmosphere.

  Mr. Trippier
  The toxic effects of exposure to high concentrations of benzene in the air are well understood, but possible consequences to health of exposure to low levels of benzene are less well understood. A monitoring study funded by the Department has recently been completed and has increased our understanding of the levels of benzene to which the public may be exposed. The Government's health advisers will be asked to consider the evidence on exposure to benzene in the atmosphere and advise on its implications for public health.

  Defective Housing
  Mr. Parry
  To ask the Secretary of State for the Environment, following the recent decision by Liverpool city council to repurchase defective dwellings of the Boot and Boswell type, whether he will provide extra financial assistance to Liverpool to help resolve the problem.

  Mr. Chope
  Liverpool city council received an additional HIP allocation of £545,000 in 1989–90, specifically to help it meet its housing defects obligations. Housing investment programme allocations to individual local authorities for 1990–91 will be announced in early December. In taking decisions on the level of allocations to authorities, my right hon. Friend will have regard to the total needs of each authority for housing capital expenditure, including the need for expenditure on housing defects.

  Environmental Groups
  Mrs. Gorman
  To ask the Secretary of State for the Environment if he considers the political stance of the environmental groups with which he has discussions before meeting them.

  Mr. Chris Patten
  No; nor do they seem to consider mine.

  Mrs. Gorman
  To ask the Secretary of State for the Environment if he will list all the environmental groups with which he has had discussions since taking office.

  Mr. Chris Patten
  I have met the Council for the Protection of Rural England, the Countryside Commission, the European Environment Bureau, the Institute for European Environmental Policy, Friends of
  163
  the Earth, the Nature Conservancy Council, the royal commission on environmental pollution and the National Trust.

  Mrs. Gorman
  To ask the Secretary of State for the Environment what is his policy on meeting environmental groups whose philosophy is against the free market.

  Mr. Chris Patten
  The same as it would be with any other group which held such views: I argue with them.

  Oxfordshire
  Mr. Baldry
  To ask the Secretary of State for the Environment how the community charge paying population of Oxfordshire has been calculated.

  Mr. Chope
  Details of the proposed method of calculation were set out in the consultation paper issued by my right hon. Friend on 6 November.

  In general, the relevant population of a charging authority for 1990–91 will be based on the numbers of people shown on the community charges register on I December 1989, as subject to a personal community charge or a collective community charge of that authority.

  Mr. Baldry
  To ask the Secretary of State for the Environment if he will set out for each of the last five years that sum which his Department judged appropriate for Oxfordshire county council to spend to provide a reasonable level of service and the amount actually spent by Oxfordshire county council.

  Mr. Chope
  The amount my Department considered appropriate for Oxfordshire to spend and the actual total expenditure for Oxfordshire in the past five years are as follows.

  Grant related expenditure

  Latest reported total expenditure

  £ million

  £ million

  1985–86

  180·220

  175·373

  1986–87

  189·659

  192·623

  1987–88

  200·008

  203·556

  1988–89

  216·081

  227·906

  1989–90

  226·794

  242·075

  The total expenditure figures shown are outturn figures, with the exception of 1 98 9–90 which is based on Oxfordshire's budget returns.

  Mr. Baldry
  To ask the Secretary of State for the Environment what advice his Department gave to Oxfordshire county council last year concerning the use of its reserves.

  Mr. Chope
  I am not aware of any such advice having been given.

  Public Sector Pay
  Mr. Baldry
  To ask the Secretary of State for the Environment what proportion of any increase in teachers' pay for next year is included in the sums that he is making available to local authorities for next year.

  Mr. Chope
  In making proposals for the amount it would be appropriate for authorities to spend on education, my right hon. Friend made full allowance for an increase in teachers' pay in line with the remit given to the interim advisory committee by my right hon. Friend the Secretary of State for Education and Science.

  Steel-framed Houses
  Mr. Allen
  To ask the Secretary of State for the Environment if he will meet a delegation of hon. Members and Peers in connection with steel-framed houses.

  Mr. Chope
  No, but I hope that the hon. Member will take up my suggestion that he should visit the building research establishment and meet the experts who have been responsible for the BRE steel-framed house research programme.

  Fast Anglia
  Sir Eldon Griffiths
  To ask the Secretary of State for the Environment if he is now in a position to publish for consultation his draft regional guidance for the future strategic planning of East Anglia; and if he will make a statement on the representations he has received from local authorities including the standing conference of East Anglian local authorities.

  Mr. Moynihan
  We welcome the initiative of the standing conference of East Anglian local authorities in producing the regional strategy document, and expect to publish for consultation draft regional guidance for East Anglia early in 1990.

  We will of course take the representations that have been received from local authorities and other bodies into account when preparing the draft regional planning guidance note.

  Water and Sewerage Rates
  Mr. Atkinson
  To ask the Secreary of State for the Environment if he will make a statement on the calculation of the water and sewerage rate based on the new rateable value.

  Mr. Howard
  It is for each water and sewerage undertaker to determine the methods and principles on which its charges will be based subject to the conditions of its appointment and the prohibition, in section 80 of the Water Act 1989, on basing charges on rateable values after 31 March 2000. Those undertakers who decide for the time being to charge their unmetered customers on the basis of rateable values will be able to use the 1973 valuation list or, as an alternative for non-domestic customers only, any valuation list created under the Local Government Finance Act 1988. Those undertakers who use a valuation list under the 1988 Act will have to adjust their poundage charges to non-domestic customers to take into account the change in rateable values.

  A45, Cambridgeshire
  Sir Eldon Griffiths
  To ask the Secretary of State for the Environment if, before reaching any conclusions about the various proposals for new settlements along the A45, to the east or to the west of Cambridge, he will personally visit this corridor and discuss the strategic planning implications of the planning applications he has called in for his own decision with both honourable Members representing constituencies that may be affected in Suffolk and Cambridgeshire and with the standing conference of East Anglian local authorities.

  Mr. Moynihan
  In reaching a decision on the proposed new settlement on the A45 east or west of Cambridge, the
  165
  Secretary of State will have regard to all the evidence presented to the public inquiry due to commence on 6 February 1990. It is not possible for him to meet either the hon. Members representing constituencies that may be affected or the standing conference of East Anglian local authorities (SCEALA) since to do so would give the appearance that the Secretary of State was giving separate and special consideration to one particular viewpoint outside the statutory process. For that reason he will also be unable to visit the sites personally. He will rely on the report of his inspector who will conduct site visits at the appropriate time.

  I understand that SCEALA has recently decided that it wishes to give evidence at the inquiry. It is also open to hon. Members in the constituencies affected to give evidence to the inquiry if they so wish.

  Merchant Seafarers
  Mr. Macdonald
  To ask the Secretary of State for the Environment if he will place in the Library the guidance note issued to local authorities in October 1989 concerning merchant seafarers and liability for the poll tax.

  Mr. Chope
  Copies of the Department's guidance note on merchant seamen's liability for the community charge were placed in the Library on 26 October 1989.

  Poppy Farms
  Mr. Wigley
  To ask the Secretary of State for the Environment if he will introduce new regulations to ensure that local authorities have powers to intervene to inspect, and, if necessary, enforce action on poppy farms.

  Mr. Moynihan
  Planning permission is not needed for growing poppies. If the hon. Member is concerned about other aspects of poppy farms, perhaps he would write to me, or to my right hon. Friend the Secretary of State for Wales.

  Assisted Places Scheme
  Mr. Blunkett
  To ask the Secretary of State for the Environment what regard he had to the level of fees charged by private schools and paid for by the assisted places scheme, when calculating the SSA for education announced by him on 6 November.

  Mr. David Hunt
  None.

  Norman Shaw South (Chimney)
  Ms. Ruddock
  To ask the Secretary of State for the Environment what is the purpose of the chimney which has its outlet adjacent to a window of Room GO1, Norman Shaw South; what substances are emitted from that outlet; whether any health risks are associated with those substances; and if he will make a statement.

  Mr. Chope
  The flue provides the outlet from the gas central heating boiler serving 1 Canon Row. It discharges exhaust gases diluted with fresh air to reduce the carbon dioxide content to less than 1 per cent. This complies with British Gas recommendations for emissions from low-level outlets.

  Water Charges
  Mr. Madden
  To ask the Secretary of State for the Environment (1) if he has been notified of any plans by water companies in England and Wales to alter the basis on which water charges are calculated; and if he will make a statement;

  (2) who is responsible for authorising water companies introducing flat-rate water charges, not related to water consumption or rateable values of properties supplied with water; and if he will make a statement.

  Mr. Howard
  It is for each water and sewerage undertaker to determine the methods and principles on which its charges will be based, subject to a condition in its appointment, enforced by the Director General of Water Services, that in fixing charges it should not show undue preference to, or undue discrimination against, any class of customers. Several companies have notified my right hon. Friend of their intention to meter new properties and I understand some companies are considering introducing alternative unmeasured charges such as a flat rate licence fee.

  Mr. Madden
  To ask the Secretary of State for the Environment if he has been notified of any proposals by Yorkshire Water to introduce a flat-rate water charge, not related to the rateable values of properties supplied with water; and if he will make a statement.

  Mr. Howard
  No, I understand that the board of Yorkshire Water has yet to make a decision on how the company will charge in future; section 80 of the Water Act 1989 prohibits the use of rateable values as a basis of water and sewerage charges after 31 March 2000.

  Homelessness
  Mr. Corbyn
  To ask the Secretary of State for the Environment what is his estimate of the homeless in London; and what plans he has to alleviate it.

  Mr. Chope
  [holding answer 24 November 1989]: Latest estimates of households accepted as homeless in London appear in table 1(a) of "Local authorities' action under the homelessness provisions of the 1985 Housing Act: England. Results for the second quarter of 1989. Supplementary Tables", which is in the Library.

  The Government's plans were announced on 15 November. In particular, local authorities in London have been invited to submit bids for a share of the £177 million extra funds available to local authorities over the next two years for projects designed to move homeless families out of bed and breakfast accommodation. In addition, we have doubled the funds for Housing Corporation, in the next three years; and trebled the resources available for advice and other services for the homeless through the voluntary sector.

  Air Pollution
  Mr. Sedgemore
  To ask the Secretary of State for the Environment what is or was the average total daily weight of carbon monoxides and nitrogen oxides emitted into the air by road traffic in Greater London in 1987 and 1988; and what estimates are available for 1989, 1990 and 2000.

  Mr. Trippier
  [holding answer 24 November 1989]: Warren Spring laboratory has provided the following

  167
  estimates assuming the London annual total emission from road transport to he 7·55 per cent. of the United Kingdom total, and daily emissions to be 0·274 per cent. of the annual total (1/365).
  Average daily emissions 1987:

  CO = 925 tonnes

  NOx = 213 tonnes

  Corresponding data are not yet available for 1988 and 1989. The Department is currently revising its projections of future vehicle emissions in the light of the recent EC agreement on tighter emission standards and other developments, and I regret therefore that the information sought for 1990 and 2000 is also not presently available.

  Landlords and Tenants
  Mr. Blunkett
  To ask the Secretary of State for the Environment if he intends to bring forward proposals(a) requiring landlords to provide tenants with a written statement of their present rates contributions and (b) making it an offence to include that amount in rent payments after 1 April 1990; and if he will make a statement.

  Mr. David Hunt
  [holding answer 27 November 1989]: No, since such a provision would not be workable. Many tenants will have a legal basis for ensuring that their rents are not in effect increased as a result of the abolition of domestic rates. The Government will shortly be issuing a leaflet on rents and rates explaining the position for both tenants and landlords.

  Nature Conservancy Council
  Mr. Robert N. Wareing
  To ask the Secretary of State for the Environment what representations he has received in respect of Government policy towards the Nature Conservancy Council; what his response has been; which organisations he has consulted about this matter; and if he will make a statement.

  Mr. Trippier
  [holding answer 27 November 1989]: My right hon. Friend has received a variety of representations and advice about the Government's proposals to reorganise the conservation agencies, which were announced in July. Discussions have also taken place with a range of organisations and individuals, as well as with the Nature Conservancy Council and the Countryside Commissions. I would also refer the hon. Member to the reply given by my right hon. Friend on 23 November to my hon. Friend the Member for Wyre (Mr. Mans) at column 16.

TRADE AND INDUSTRY

  Computers (Imports)
  Dr. Godman
  To ask the Secretary of State for Trade and Industry if he will estimate the percentage of the home market of electronic computers supplied by imports.

  Mr. Forth
  Imports represented 90 per cent. of the United Kingdom's home market in 1988 for electronic data processing equipment.

  Cellular Telephone Networks
  Mr. Win Griffiths
  To ask the Secretary of State for Trade and Industry if he will direct the two cellular telephone operators to indicate within the detailed maps of the areas covered by their networks those parts of the network where reception is below an acceptable standard.

  Mr. Forth
  The coverage maps issued by the two cellular radio network operators clearly indicate areas where full coverage is available and those with fringe coverage. They also specify the circumstances in which reception may be limited, particularly for hand portable equipment.

  In these circumstances, I have no plans to direct the operators to publish more detailed coverage maps.

  Satellite Services
  Mr. Baldry
  To ask the Secretary of State for Trade and Industry if he has considered further the provision of services by the specialised satellite service operators.

  Mr. Forth
  I am pleased to announce that the United Kingdom's seven specialised satellite services operators will be permitted to provide satellite-based telecommunication services in Europe as well as the United Kingdom. I have also decided to issue licences under the Telecommunications Act allowing greater flexibility in the running of receive-only satellite dishes by the seven operators and by broadcasters.

  The seven operators will now be permitted to provide one-way point to multipoint satellite services of all kinds within Europe as well as the United Kingdom. This will allow them to provide, for example, a simultaneous data or video distribution service to all the European offices of a company.

  This reflects the growth of liberalisation in Europe, and puts the United Kingdom in a good position to take advantage of any further changes which take place. The United Kingdom remains in the vanguard of European telecoms liberalisation, and I hope that the operators will now go out and sell innovative and competitive services in the single market which will be with us in 1992.

  Two new licences are also to be issued allowing particular groups of people to pass on signals received from satellites beyond the premises on which the reception dish is sited.

  The first will allow the seven specialised satellite services operators to receive signals from satellites at their main uplink sites and then retransmit them. The second licence will allow both sound and vision broadcasters to receive material from satellites, whether uplinked in the United Kingdom or overseas, at their studio and retransmit it over their broadcast networks.

  These changes arise from particular limitations which the operators have found under the current arrangements. They will allow satellites to be used to provide a wider range of services, especially from locations where it is not easy to use ordinary telecommunications equipment. The new licences will ensure that satellite-based services can be of use to a larger number of companies, particularly the broadcasters, without moving away from the basis of the original terms on which they were liberalised in 1988.

  Mr. Baldry
  To ask the Secretary of State for Trade and Industry if he has received the Director General of
  169
  Telecommunications' report on British Telecom's arrangements for the provision of space segment capacity on behalf of the new specialised satellite service providers; and if he will make a statement.

  Mr. Forth
  In his report, published today, the director general has concluded that British Telecom's arrangements for dealing with the specialised satellite operators, through its signatory affairs office, will, if properly followed, be fair and impartial. I am pleased that the director general has been able to give this assurance which is essential to the specialised satellite service operators as they begin to develop their businesses. These arrangements are to be reviewed at the end of next year and in the meantime the director general has undertaken to investigate any complaints that they are not working fairly.

  The director general has also concluded that it would be more satisfactory if end-users were able to deal directly with the international satellite consortia. This would require changes in the Intelsat and Eutelsat operating agreements which may be achieved in the longer term. I have written to the director general to welcome his report and its conclusions. I have placed copies of the report in the Libraries of both Houses of Parliament.

  German Democratic Republic
  Mr. Wareing
  To ask the Secretary of State for Trade and Industry if he will give, for visibles and invisibles, the annual trade between the United Kingdom and the German Democratic Republic for each year since 1979, indicating the trade and payments balance in each case.

  Mr. Redwood
  [holding answer 27 November 1989]: Information on the value of invisible trade between the United Kingdom and the German Democratic Republic is not available. Figures for visible trade are as follows:

  £ million

  Imports

  Exports

  Crude Balance

  1979

  110

  57

  -53

  1980

  88

  93

  +5

  1981

  94

  83

  -11

  1982

  134

  64

  -70

  1983

  168

  61

  -107

  1984

  198

  92

  -106

  1985

  204

  64

  -140

  1986

  195

  82

  -113

  1987

  180

  81

  -99

  1988

  153

  113

  -40

  1989'

  125

  82

  -43

  1 January-September

  Source: Overseas Trade Statistics of the United Kingdom.

  Iraq
  Mr. Corbyn
  To ask the Secretary of State for Trade and Industry if he will list for each year since 1979 the number of agreements and total value of facilities under the export credit guarantee system between Britain and Iraq.

  Mr. Redwood
  [holding answer 24 November 1989]: Prior to 1983 United Kingdom export credit facilities for Iraq were limited to basic credit insurance on cash or short-term credit transactions. The value of such Iraq business insured by ECGD since 1979 is as follows:
  170

  Year

  £ million

  1979

  113

  1980

  170

  1981

  292

  1982

  589

  1983

  461

  1984

  140

  1985

  161

  1986

  208

  1987

  55

  1988

  121

  In addition, since 1983, under a series of intergovernmental financial protocols, the ECGD has supported the financing of United Kingdom contracts on medium-term credit involving the sale of capital goods, services, pharmaceuticals and humanitarian products as follows:

  1983: £250 million for Capital Goods and Projects.

  1984: £250 million for Capital Goods and Projects.

  1984: £25 million for Pharmaceuticals and Humanitarian Products.

  1985: £50 million for Pharmaceuticals and Humanitarian Products.

  1986: £50 million for Pharmaceuticals and Humanitarian Products.

  1987: £100 million for Capital Goods, Services and Projects.

  1987: £75 million for Pharmaceuticals and Humanitarian Products.

  1988: £60 million for Pharmaceuticals and Humanitarian Products.

  1988: £280 million for Capital Goods, Services and Projects.

  Iran
  Mr. Corbyn
  To ask the Secretary of State for Trade and Industry if he will state for visibles and invisibles the annual trade between the United Kingdom and Iran for each year since 1979; and what actions are being taken to increase this.

  Mr. Redwood
  [holding answer 24 November 1989]: Data on United Kingdom trade in services are not available by partner country. Visible United Kingdom imports from and exports to Iran were as follows:

  Year

  Imports1

  Exports

  £ million

  £ million

  1979

  380

  232

  1980

  142

  393

  1981

  198

  403

  1982

  307

  334

  1983

  102

  631

  1984

  476

  703

  1985

  147

  526

  1986

  94

  399

  1987

  237

  308

  1988

  172

  248

  19892

  215

  179

  1 Country of Origin.

  2 To 30 September 1989.

  Source: Overseas Trade Statistics.

  Despite the absence of diplomatic relations, the Department of Trade and Industry remains ready to assist British companies wishing to export to Iran as far as it can.

  Chile (Security Equipment)
  Mr. Steel
  To ask the Secretary of State for Trade and Industry if the Government will introduce a ban on United Kingdom companies selling equipment to the Chilean security police and armed forces.
  171
  Mr. Redwood
  [holding answer 27 November 1989]: The Government have no plans to change their present policy on the control of exports of equipment to Chile. Export licence applications are considered on a case-by-case basis, in accordance with stringent criteria. It is not our practice to grant a licence for the export of equipment which is likely to be used for internal repression.

OVERSEAS DEVELOPMENT

  Aid Budget
  Mr. Baldry
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the aid budget for the next three years.

  Mrs. Chalker
  The substantial increases in the aid budget over the next three years announced to the House on 15 November are clear evidence of the Government's determination to play their full part in helping to promote sustainable economic and social development and in alleviating poverty in developing countries.

  Compared with the original provision this year of £1,430 million, the aid budget is now planned to grow by 22 per cent. in cash terms over the next three years, or by 9 per cent. after allowing for forecast inflation. These increases will enable us not only to continue our widespread support for economic reform in developing countries, but to commit more resources to tackle the environmental issues that are fundamental to sustainable economic growth.

NATIONAL FINANCE

  Privatisation
  Mr. John Evans
  To ask the Chancellor of the Exchequer how many officials are employed at the Treasury to advise him on estimates of privatisation proceeds.

  Mr. Ryder
  The Treasury's public enterprises group, responsible for privatisation and nationalised industry policy, employs 30 people. However, estimates of proceeds from individual sales are the responsibility of the Departments concerned.

  Exchange Rate Mechanism
  Mr. McFall
  To ask the Chancellor of the Exchequer to what extent inflation will have to fall before the Government will consider entering the European exchange rate mechanism.

  Mr. Lilley
  As my right hon. Friend the Chancellor of the Exchequer has repeatedly made clear, sterling will join the exchange rate mechanism when, among other conditions, the level of United Kingdom inflation is significantly lower.

  Pensions increase (per cent.)

  Paid in

  Based on movement of prices between

  1989

  5·9

  April 1989

  September 1988–September 1989

  1988

  4·2

  April 1988

  September 1987–September 1988

  1987

  2·1

  April 1987

  January 1986–September 1987

  Gross National Product
  Dr. Marek
  To ask the Chancellor of the Exchequer what is the latest figure he has for the gross national product per capita; and what information he has on comparable figures for the German Democratic Republic.

  Mr. Ryder
  The 1989 edition of "United Kingdom National Accounts"—otherwise known as the CSO Blue Book gives annual estimates of gross national product (on United Kingdom definitions table 1.1; on international definitions page 130) and of population (table 17.1). A copy is available in the Library of the House. For 1988, the United Kingdom figures are:

  £

  Gross national product at market prices (United Kingdom definition) per head of home population

  8,200

  Gross national product at market prices (international definition) per head of home population

  8,100

  For the German Democratic Republic (GDR), fully comparable figures are not readily available in the publications of the international organisations.

  National Loans Fund
  Mr. Jack
  To ask the Chancellor of the Exchequer when he intends to use the power taken in the Finance Act 1989 to enable the Government to use the National Loans Fund money to acquire gilt-edged stock held in the issue department of the Bank of England for immediate cancellation.

  Mr. Major
  The first use of this power will be made on 6 December, when £4½ billion of stock will be acquired from the issue department for immediate cancellation. The Bank of England will today be issuing a separate notice giving precise details of the stock to be cancelled.

  Inflation
  Mr. Barry Field
  To ask the Chancellor of the Exchequer what were the projected rates of inflation for the indexation of Civil Service pensions for the last five years; and what were the yearly actual inflation figures.

  Mr. Ryder
  [holding answer 27 November 1989]: Under the Social Security Pensions Act 1975 Civil Service pensions, in common with other public service pensions, are uprated in line with movements in the retail prices index (RPI) in order to maintain their value. Until 1980 the uprating was on the basis of the forecast RPI but since then it has been on an historic basis, which is a simpler and more certain method. Accordingly no RPI forecasts are now made for the purpose of uprating these pensions.

  Over the years there have been some changes in both the timing of the uprating periods and the date from which the upratings are paid. These are shown in the table.
  173

  Pensions increase (per cent.)

  Paid in

  Based on movement of prices between

  1986

  1·1

  July 1986

  May 1985-

  January 1986

  1985

  7·0

  November 1985

  May 1984-

  May 1985

  Widows' Pensions
  Mrs. Margaret Ewing
  To ask the Chancellor of the Exchequer what is his most recent estimate of the loss to the Exchequer if widows' pensions were to be treated as non-taxable income.

  Mr. Lilley
  [holding answer 27 November 1989]: Of the 3½ million widows in the United Kingdom only about 850,000 are liable to income tax. If all their widows' state retirement pensions were treated as non-taxable, the direct revenue cost would be about £270 million.

  Forestry
  Sir John Farr
  To ask the Chancellor of the Exchequer (1) if he will introduce legislation to allow unitised vehicles for forestry investment to benefit from the same tax treatment currently enjoyed by individual owners of forests and woodlands;

  (2) whether he will take steps to see that commercial forestry and woodlands are removed from inheritance tax where such forestry and woodlands have been owned by a deceased person for seven years.

  Mr. Lilley
  [holding answer 27 November 1989]: I cannot anticipate my right hon. Friend's Budget statement.

HOME DEPARTMENT

  Broadcasting
  Dr. Marek
  To ask the Secretary of State for the Home Department whether the ban on the televising of speeches by members of Sinn Fein extends to the transmission of historical programmes containing recordings of speeches by deceased supporters of Sinn Fein.

  Mr. Mellor
  The directions prevent the broadcasting of direct statements by persons representing, or purporting to represent, the organisations named in the notices, or which support, or invite support for, those organisations. The directions do not distinguish between statements made by the living and recordings of statements by those who have died.

  Mr. Corbett
  To ask the Secretary of State for the Home Department how many members of the Independent Broadcasting Authority have been required to resign for being in breach of schedule 1(4) to the Broadcasting Act 1981.

  Mr. Mellor
  None.

  Mr. Corbett
  To ask the Secretary of State for the Home Department to how many former Independent Broadcasting Authority members by name compensation has been paid when they have ceased to be a member of the authority otherwise than on the expiry of their term of office.

  Mr. Mellor
  None.
  174
  Mr. Corbett
  To ask the Secretary of State for the Home Department when he last satisfied himself that no member of the Independent Broadcasting Authority has a financial or other interest in any advertising agency or in any business concerned with the manufacture or sale of apparatus for wireless telegraphy or other telegraphic equipment or in any business consisting or intended to consist in whole or in part of entering into or carrying out contracts with the Independent Broadcasting Authority for the provision of programmes or parts of programmes.

  Mr. Mellor
  Under schedule 1(4) to the Broadcasting Act 1981, my right hon. and learned Friend has to be satisfied on these matters before appointing a person to be a member of the Independent Broadcasting Authority. This procedure is carried out before each appointment is made, and repeated annually for existing members.

  Mr. Corbett
  To ask the Secretary of State for the Home Department whether he will list those public bodies concerned with aspects of broadcasting to which he has powers to appoint.

  Mr. Mellor
  My right hon. and learned Friend is responsible for appointments to the following bodies concerned with broadcasting:

  Broadcasting Complaints Commission

  Broadcasting Standards Council

  Cable Authority

  Independent Broadcasting Authority

  Welsh Fourth Channel Authority.

  Appointments to the British Broadcasting Corporation are made by Her Majesty the Queen by Order in Council.

  Official Secrets Act
  Mr. Corbett
  To ask the Secretary of State for the Home Department whether he will list those public bodies to which he appoints people where it is required that a declaration is made under the Official Secrets Act as a condition of membership.

  Mr. Waddington
  None of the people I appoint to public bodies are required to sign a declaration that they recognise that they are bound by the terms of the Official Secrets Act. Whether or not such a declaration is signed does not affect the application of the law in any specific case.

  Firearms
  Mr. William Ross
  To ask the Secretary of State for the Home Department if he will call for a report from the chief constables of police as to whether they require from the applicant for a shotgun certificate evidence by way of written permission to shoot over farmland before granting the certificate.

  Mr. Peter Lloyd
  Responsibility for the grant or renewal of a shotgun certificate is a matter for chief officers of police who must have regard to the statutory requirements of the Firearms Acts 1968 to 1988.
  175
  My right hon. and learned Friend has issued guidance to chief officers of police in the publication entitled "Firearms Law: Guidance to the Police", a copy of which is in the Library.

  Mr. William Ross
  To ask the Secretary of State for the Home Department if he will list those provisions of the Firearms Acts that refer to procedures governing applicants for shotgun licences.

  Mr. Peter Lloyd
  Section 26 of the Firearms Act 1968, as amended by sections 9 and 10 of the Firearms (Amendment) Act 1988, provides for applications for the grant and renewal of a shotgun certificate to be made in the prescribed form. Sections 26 and 53 of the 1968 Act empower the Secretary of State to make rules prescribing the form of application and certificates. These are set out in the Firearms Rules 1989, a copy of which is in the Library.

  Child Abuse
  Mr. Wigley
  To ask the Secretary of State for the Home Department if he will introduce a requirement whereby if a sexual abuse offender admits guilt the mother must be informed if the offender intends to return to the parental home.

  Mr. Peter Lloyd
  If a suspect admits that he has sexually abused a child, it will be for the police, and subsequently the courts, to decide whether he should be kept in custody or released on bail while criminal proceedings are pending. Under the arrangements recommended in "Working Together", social service departments should be fully informed of any decisions to release a suspect on bail, and able to take whatever steps are needed to protect the interests of the child. However, my right hon. and learned Friend the Secretary of State for Health and my right hon. and learned Friend will consider whether further guidance is needed on this aspect.

  Water Charges
  Mr. Madden
  To ask the Secretary of State for the Home Department how many people in Bradford have been issued with court summonses in the last year, to date, to appear in court for the non-payment of water charges; how many people have been fined; what level of fine was imposed; and what other sentence was imposed.

  Mr. Waddington
  This information is not held centrally.

  Prisoners (Complaints)
  Mr. Wheeler
  To ask the Secretary of State for the Home Department if he will publish the report of the working group established to examine the proposals in the report of Her Majesty's chief inspector of prisons on prisoners' complaints.

  Mr. Waddington
  I am issuing today the report of the working group on grievance procedures and placing a copy in the Library. I have not reached any firm views on the working group's proposals and would welcome comments on them. They should be sent to

  P3 Division

  Her Majesty's Prison Service

  Room 717

  Cleland House

  176

  Page Street

  LONDON

  SW1P 4LN

  by 22 January 1990.

ENERGY

  Independent Electricity Producers
  Mr. Wigley
  To ask the Secretary of State for Energy how many gas turbine, wind and landfill gas projects capable of producing up to 5,000 MW of electricity there are in Britain; and how many such companies have gone into receivership since the Government first announced their privatisation plans.

  Mr. Peter Morrison
  The information is as follows:

  Gas Turbines
  The CEGB currently has 11 gas turbine power stations having a declared net capacity of around 2,500 MW.

  Wind Energy
  There are nearly 30 known grid-connected or otherwise significant wind energy installations with a total installed capacity of around 8 MW.

  Landfill Gas
  There are 13 known existing projects totalling 16 MW installed capacity.

  None of the above is known to have gone into receivership.

  Mr. Wigley
  To ask the Secretary of State for Energy when he last met the Association of Independent Electricity Producers; what was discussed; and if he will commission a survey to discover how electricity privatisation will affect smaller generating companies.

  Mr. Michael Spicer
  My right hon. Friend last met the Association of Independent Electricity Producers on 19 October to discuss developments in our thinking on privatisation and my Department will continue to keep them in touch with progress. We are confident our proposals for the ESI will offer good prospects for independent generation. I do not see the need for a survey.

  Collieries
  Mr. Barron
  To ask the Secretary of State for Energy how many British Coal operating collieries there are in the current year and each previous year since 1979.

  Mr. Michael Spicer
  The number of operating collieries is published in British Coal's annual report and accounts, a copy of which is in the Library of the House. British Coal currently has 76 operating collieries.

  Mr. Barron
  To ask the Secretary of State for Energy what was the number of men on colliery books by British Coal area, for each year since 1979.

  Mr. Michael Spicer
  Average colliery manpower by British Coal area is shown in British Coal's annual report and accounts, a copy of which is in the Library of the House.

  Power Stations
  Mr. Barron
  To ask the Secretary of State for Energy if he will list the average production output and potential output of each Central Electricity Generating Board power station for each of the last three years.
  177
  Mr. Michael Spicer
  The information requested by the hon. Member with respect to 1986–87 and 1987–88 is contained in the statistical yearbook of the CEGB's annual reports, copies of which are in the Library of the House. The 1988–89 yearbook has yet to be published.

  Mr. Barron
  To ask the Secretary of State for Energy if he will list the oil-fired power stations and indicate which can be dual-fired.

  Mr. Michael Spicer
  The information requested by the hon. Member is contained in the statistical yearbook of the CEGB's 1987–88 annual report, a copy of which is in the Library of the House.

  Coal Exports
  Mr. Barron
  To ask the Secretary of State for Energy (1) what is the amount of British Coal output which will be exported in the current year; and what was the amount for each year since 1979;

  (2) what is the size of British Coal's domestic market in the current year and in each year since 1979;

  (3) what is the size of British Coal's industrial and commercial market for the current year; and what it was in each year since 1979.

  Mr. Michael Spicer
  These are commercial matters for the British Coal Corporation and I have, therefore, asked the chairman to write to the hon. Member.

  Early Retirement Payments (Electricity Boards)
  Dr. Marek
  To ask the Secretary of State for Energy what has been the cost to the individual area electricity boards of early retirement payments to their senior and middle management.

  Mr. Michael Spicer
  This is a matter for the industry. I am asking the chairman of the Electricity Council to write to the hon. Member.

ATTORNEY-GENERAL

  Legal Aid (Northern Ireland)
  Mr. William Ross
  To ask the Attorney-General what sums have been paid out in legal aid for fees to(a) solicitors and (b) barristers in Northern Ireland in each of the last three years.

  The Attorney-General
  The figures for payments out of the legal aid fund in each of the last three financial years to(a) solicitors and to (b) barristers are as follows:

  (a)

  Financial year

  Fees

  Disbursements

  Total

  1986–87

  5,043,872

  1,172,368

  6,216,240

  1987–88

  15,914,822

  1,275,835

  7,540,659

  1988–89

  8,125,482

  1,704,474

  9,829,956

  (b)

  Financial year

  Total

  1986–87

  1,841,119

  1987–88

  11,666,831

  1988–89

  2,499,817

  178

  1 This figure is an estimated apportionment of legal aid fees paid to solicitors and barristers. Difficulties encountered during the initial stages of computerisation of the Legal Aid Department prevented barristers' fees and solicitors' fees in respect of Civil Legal Aid being accounted for separately.

  Mr. William Ross
  To ask the Attorney-General what sums have been paid out in legal aid in Northern Ireland in each of the last three years.

  The Attorney-General
  The total expenditure from public funds for legal aid in Northern Ireland for the last three years is as follows:

  £

  1986–87

  9,009,849

  1987–88

  10,000,384

  1988–89

  13,080,815

  Mr. William Ross
  To ask the Attorney-General whether he has taken any steps to determine the perceived religion of those persons who have received legal aid in Northern Ireland in each of the last three years.

  The Attorney-General
  Persons who receive civil legal aid do so on the grounds of financial eligibility and where applicable, on grounds that their involvement in the proceedings is reasonable, as is their receipt of legal aid in the particular circumstances of the case. Persons who receive criminal legal aid do so at the discretion of the court, it being satisfied that granting a certificate is desirable in the interests of justice and is necessary to assist the defendant in meeting the costs of the case.

  A person's perceived religion does not have any bearing upon the decision-making process, and no steps have been taken to determine the perceived religion of recipients of legal aid in Northern Ireland.

EDUCATION AND SCIENCE

  Bulwell St. Mary's School
  Mr. Allen
  To ask the Secretary of State for Education and Science when he received a letter from the head teacher of Bulwell St. Mary's Church of England primary school; and what response he has made.

  Mrs. Rumbold
  My right hon. Friend received a letter from Mr. J. St. John, the head teacher at Bulwell St. Mary's Church of England primary school on 10 November 1989. A response will be sent as soon as possible.

  Education Act 1988
  Mr. Parry
  To ask the Secretary of State for Education and Science how he intends to respond to letters he has received from head teachers, parents and governors in Liverpool expressing concern regarding the implementation of the Education Act 1988.

  Mrs. Rumbold
  All letters to this Department will continue to receive appropriate replies which I hope the recipients find helpful.

  Mr. Parry
  To ask the Secretary of State for Education and Science how many letters of concern regarding the implementation of the Education Act 1988 he has received from head teachers, parents and governors throughout the United Kingdom.
  179
  Mrs. Rumbold
  The information is not readily available in the form requested. My right hon. Friend frequently receives correspondence about various aspects of the provisions of the Education Reform Act 1988 from head teachers, parents and governors.

  Child Abuse
  Mrs. Dunwoody
  To ask the Secretary of State for Education and Science if the circular "Working Together for the Protection of Children From Abuse: Procedures within the Education Service". is available to persons other than educational authorities.

  Mr. Alan Howarth
  The circular was sent to a wide range of educational bodies in addition to local education authorities, including maintained schools, non-maintained special schools and independent schools, and institutions providing courses of initial teacher training. The circular was also sent to local authority social services departments, health authorities and family practitioner committees.

  Mrs. Dunwoody
  To ask the Secretary of State for Education and Science when he expects to receive the report on the progress of the programme initiated by his Department to monitor the protection of children from child abuse; how many education authorities have taken action following his circular; and how many individual educational programmes have been established.

  Mr. Alan Howarth
  Local education authorities' reports to the Department on action they have taken to implement the recommendations in circular 4/88 are due by the end of this month. These will provide information about programmes which local education authorities are undertaking.

  School Examinations and Assessment Council
  Mr. Bowis
  To ask the Secretary of State for Education and Science whether he has yet replied to the advice of the School Examinations and Assessment Council on the issues which it raised in July, in the context of A-level and AS examinations, on education and training of 16 to 19-year-olds generally and on the vocational relevance of academic study; and if he will make a statement.

  Mr. MacGregor
  I am writing today to SEAC, with a parallel letter to the National Curriculum Council, and placing copies of both letters in the Library of the House.

  I am concerned to see that all young people aged 16 to 19, including those studying for advanced and advanced supplementary examinations, should be equipped with the general skills, knowledge and understanding needed for employment and adult life generally in the 21st century.

  I have therefore asked the SEAC and the NCC, working together and with other interested parties including the National Council for Vocational Qualifications, the further education unit and the Training Agency, to define the common skills and knowledge which are needed by advanced-level and advanced supplementary examination syllabuses. I have also asked the SEAC, in its future work in this area, to take account of widely expressed concerns about the apparent gap in the structure of qualifications between GCSE and A-levels.

  I believe that the work now set in hand will increase the breadth and relevance of study of advanced-level students,
  180
  and also ensure the development of links between A-AS qualifications and vocational qualifications, which will in the longer term improve opportunities for progression and credit transfer for all young people aged 16 to 19 in education and training.

TRANSPORT

  Waterloo Development
  Miss Hoey
  To ask the Secretary of State for Transport what is his latest estimate of the likely increase of road users and the effect on traffic congestion as a result of the construction of the Channel tunnel terminal at Waterloo.

  Mr. Portillo
  The effect of the additional traffic flow generated by the Channel tunnel terminal on the surrounding road network is not expected to be significant, provided that British Rail proceeds with its proposals to improve the internal road layout within the station. This issue was discussed at some length during parliamentary proceedings on the Channel Tunnel Bill.

  Miss Hoey
  To ask the Secretary of State for Transport what is his latest estimate of the effect on local residents, traffic circulation and local businesses as a result of development proposals for the Waterloo area; and whether, in view of these developments, he will agree to a public inquiry into the strategy and co-ordination of developments in the Waterloo area.

  Mr. Moynihan
  I have been asked to reply.

  The effects of development proposals are for the local authority to assess. I recognise that there are a number of proposals for development in the Waterloo area, one of which has recently been the subject of a public inquiry. There are others which may be the subject of future inquiries as part of the planning process. In view of this, and the recent adoption of alterations of the Waterloo district plan which would be a material consideration at public inquiries, I see no need for holding a public inquiry to co-ordinate several unrelated developments for the area.

  Swanley-London Rail Link
  Miss Hoey
  To ask the Secretary of State for Transport (1) if he will list the latest estimated figures on the amount of increased traffic, particularly freight traffic, that will use existing rail lines as a result of British Rail's decision not to build a tunnel for a high-speed rail link to Waterloo, London from Swanley, specifying the number and size of increased trains on existing routes, the frequency of these trains and the amount of night-time movement of freight;

  (2) what works will be required to upgrade sections of existing railway lines on the route from Swanley to central London to allow for the increased passenger and freight traffic; when these works will commence and how long they will take to complete; what is the latest estimate of the effect on local communities of these works; and what arrangements have been made for compensation to local residents on the effect of any upgrading works.

  Mr. Portillo
  These are matters now being studied by British Rail and its chosen private sector partner, Eurorail.

  Dalton-in-Furness Bypass
  Mr. Franks
  To ask the Secretary of State for Transport when he expects to make an announcement regarding the A590 Dalton-in-Furness bypass.

  Mr. Atkins
  The inspector's report on the public inquiry is expected shortly. An announcement will be made as soon as my right hon. Friends the Secretaries of State for Transport and for the Environment have considered it.

  Scarisbrick-Pinfold Bypass
  Mr. Hind
  To ask the Secretary of State for Transport if he will appoint consultants to advise him on the proposed route of the Scarisbrick-Pinfold bypass; and if he will make a statement.

  Mr. Atkins
  The Department is appointing consultants for new schemes included in the White Paper "Roads for Prosperity" in several tranches over a period of about 12 months. I expect to invite competitive bids for this scheme early next year. Our aim will be to consult the public on route options within two years of appointing a consultant.

  Channel Rail Link
  Mr. Thurnham
  To ask the Secretary of State for Transport whether he will raise the designation of the Channel rail link as a route qualifying for assistance under the proposed European Community transport infrastructure scheme when he next meets his fellow European Transport Ministers; and if he will make a statement on the proposals.

  Mr. Portillo
  The Council of Ministers has yet to decide whether any further grants should be made from budget line 580 beyond the end of this year. It would be premature to consider what specific projects might or might not benefit from a future programme.

  Green Roof Marker Lights
  Mr. Roger King
  To ask the Secretary of State for Transport if he will consider the safety aspects of forward-facing green-coloured roof marker lights displayed by trucks.

  Mr. Atkins
  I am not aware of any safety benefit, or harm, due to green roof-mounted lights on trucks.

  The rules on lighting require that if additional lamps are fitted which serve to indicate the width as well as the presence of the vehicle, they must emit white light. These do not, however, prohibit the fitting of green ornamental lights near the centre of truck roofs.

  Learner Motor Cyclists
  Mr. Fearn
  To ask the Secretary of State for Transport what information he has on the practice of companies employing L-plate motor cycle and moped riders for delivery of goods; and if he intends to bring in regulations to prohibit such practice.

  Mr. Atkins
  Motor cycle couriers provide a useful service. It requires skill and experience. We deplore the use of unqualified riders, and no responsible company should employ them for the delivery of goods.

  Roads (London)
  Mr. Cox
  To ask the Secretary of State for Transport if he will make a further statement on any recent decisions affecting the London assessment studies.

  Mr. Atkins
  No.

  Mr. Tony Banks
  To ask the Secretary of State for Transport whether he has anything to add to the answer given by the Minister for Roads and Traffic on I November on Roads (London),Official Report, column 192, in the light of the letters he sent to the hon. Members for Richmond and Barnes (Mr. Hanley) and for Hornsey and Wood Green (Sir H. Rossi), advising them that he had asked the consultants for the London assessment studies to study the possibility of building roads along the line of the Parkland walk and across Barnes common in tunnels.

  Mr. Atkins
  No. We expect the consultants' report to be published next month.

  Mr. Cox
  To ask the Secretary of State for Transport what has been the total cost to his Department of the London road assessment studies; and if he will make a statement.

  Mr. Atkins
  The cost to date of the London assessment studies is £8·5 million.

  Mr. Cox
  To ask the Secretary of State for Transport what will be the cost to purchase a copy of the London road assessment studies report when it is published; and if he will make a statement.

  Mr. Atkins
  The selling price of the consultants' reports has yet to be determined.

  Land Values
  Mr. Tony Banks
  To ask the Secretary of State for Transport why his Department does not retain information on the values ascribed to individual portions of land needed for trunk road construction.

  Mr. Atkins
  The extent of the information held by the Department on the value of individual plots of land needed for trunk road constuction varies according to the circumstances of each case and the stage the preparation of the scheme has reached. Information in respect of individual plots, when available, is not made public since this could prejudice negotiations and would breach confidentiality between the Department and individual land owners.

  Page Street (Development)
  Mr. Campbell-Savours
  To ask the Secretary of State for the Environment whether he will make it his policy to reject any application to divert the public right of way in the case of the Property Services Agency proposals to develop Page street, SW1.

  Mr. Atkins
  Such matters must be considered on their merits in accordance with the normal statutory procedures. A draft order under section 209 of the Town and Country Planning Act 1971 proposing the stopping up of the relevant length of Page street was published on 12 October. Objections received to that draft order are being considered. An announcement will be made shortly on the next step in the statutory procedures.

  Bradford Rail Link
  Mr. Cryer
  To ask the Secretary of State for Transport whether he will have discussions with the chairman of British Rail on the provision of financial assistance for the development of a cross-Bradford rail link; and if he will make a statement.

  Mr. Portillo
  It is for British Rail and the West Yorkshire passenger transport authority to decide whether there is a case for investment.

  British Rail (Meetings)
  Mr. Yeo
  To ask the Secretary of State for Transport when he last met the chairman of British Rail; and what subjects were discussed.

  Mr. Portillo
  My right hon. Friend last met the chairman of British Rail on 22 November, when a variety of railway matters was discussed.

  Road Maintenance
  Mr. Tredinnick
  To ask the Secretary of State for Transport what incentive schemes are in operation to encourage motorway and other major road maintenance contractors to complete repairs on or ahead of schedule; whether any new incentives are planned; and if he will make a statement.

  Mr. Atkins
  The main incentive to contractors to complete maintenance work as soon as possible is the use of lane rental contracts. Since these contracts were introduced in 1984, they are estimated to have saved over 2,000 days of lane closures worth around £40 million in avoided delays to road users.

  As well as encouraging contractors to complete work more quickly, we are acting to reduce the impact of works on the road user. A number of new traffic management arrangements are being tested to increase vehicle flows past contraflow sites. These include the use of narrower traffic lanes to enable more lanes to be provided, and tidal flow systems in which the number of lanes available in each direction changes to match traffic demand. The Department is also developing a computer system to assist in optimising the planning and scheduling of maintenance and improvement works on trunk roads, including motorways, to minimise disruption to road users.

  Motorways (Safety)
  Mr. Thurnham
  To ask the Secretary of State for Transport what steps he is taking to improve safety on motorways; and if he will make a statement.

  Mr. Atkins
  Responsible driving is the key to improving motorway safety. We announced a comprehensive package of measures last year to help drivers. These included advice leaflets, videos, extra driving tuition, roadworks safety, signing requirements and 70 mph repeater signs.

  A further development to which I attach particular importance is better information for drivers on what is ahead.

  Cost-Benefit Analysis
  Mr. Adley
  To ask the Secretary of State for Transport if he will make it his policy to instruct BR to undertake full cost-benefit analyses on their investment proposals: and if he will make a statement.

  Mr. Portillo
  The circumstances in which cost-benefit appraisal is appropriate for the evaluation of rail investments were set out in the Government's observations on the third report of the Transport Committee, Session 1987–88 (House of Commons paper 420). British Rail is aware of them.

  Motorways
  Mr. Janner
  To ask the Secretary of State for Transport what representations he has received concerning congestion at junction 21 of the M1 motorway.

  Mr. Atkins
  Since the beginning of 1987 the Department has received six letters and two parliamentary questions from hon. Members, including one letter and one question from the hon. and learned Member for Leicester, West. The Department has also received a total of 14 other representations from Leicestershire county council, Blaby district council, Leicestershire constabulary, local businesses and individuals.

  I am aware of the particular problems at junction 21. Plans were announced in the "Roads for Prosperity" White Paper in May for M1 widening and junction improvements, including a major scheme at junction 21. Construction of an interim improvement scheme will begin in the spring.

  Channel Tunnel
  Mr. Teddy Taylor
  To ask the Secretary of State for Transport what discussions he has had with Eurotunnel and British Rail about the proposed Channel tunnel; and if he will make a statement.

  Mr. Portillo
  My right hon. Friend and I have had discussions with Eurotunnel and with British Rail on a range of issues related to the Channel tunnel.

  Mr. Prescott
  To ask the Secretary of State for Transport what contact his Department has had with Eurotunnel or TML representatives to discuss the disposal of surplus spoil from the Shakespeare cliff site; and if he will make a statement.

  Mr. Parkinson
  My Department has discussed the disposal of spoil arising from the Channel tunnel with Eurotunnel and TML on a number of occasions.

  I understand that Eurotunnel originally planned to use 1 million cu m of spoil as part of the bulk fill required for the construction of the Cheriton terminal. At the start of the operation, it used sand brought in by pipeline. This was welcomed by local authorities, as it involved less environmental disturbance than would the use of spoil. Sand was therefore used for the whole operation. Eurotunnel identified a number of options for disposal of the now surplus spoil, on which it consulted the Department and other interested parties. It announced at the meeting of the Kent joint consultative committee on 18 October, chaired by my hon. Friend the Minister of State, that it was not its intention to bring forward a private Bill

  185
  on the matter. It is still considering, with TML, disposal options permitted within the Channel Tunnel Act, and has promised full consultation with those concerned.

  Public Transport
  Mr. Andrew Welsh
  To ask the Secretary of State for Transport whether the Government have undertaken a comparative cost analysis between increased investment in public transport and constructing new roads and improving old ones.

  Mr. Atkins
  [holding answer Monday 27th November 1989]: The Government's policy is to support worthwhile investment in both public transport and roads. Investment in public transport is supported in its own right and where it is a more cost-effective way of dealing with transport problems than road improvements or traffic management measures. The policy is explained more fully in the

  Year

  Amount (tonnes)

  Country of origin

  Destination (district council)

  Nature of waste

  1987

  15

  Holland

  Strathkelvin

  Sub-soil

  1988

  2

  Sweden

  Inverness

  Sodium metal

  451

  Eire

  Edinburgh

  Solvent and contaminated methylated spirits (for recycling)

  Information is not available for earlier years.

  Local Government Finance
  Mr. Macdonald
  To ask the Secretary of State for Scotland whether he intends to issue new guidance to bring the community charge liability of merchant seamen who are at sea for more than six months in the year into line with the guidance issued for England and Wales by the Department of the Environment on 26 October.

  Lord James Douglas-Hamilton
  My right hon. and learned Friend has no plans to do so at present. It is for community charges registration officers, whether in Scotland or in England and Wales, to decide in the light of all the facts and circumstances relating to individual cases whether a person is solely or mainly resident in their area and thus liable to pay the personal community charge. Decisions made by community charges registration officers are, of course, appealable.

  Further Education
  Mr. Allan Stewart
  To ask the Secretary of State for Scotland whether he will reconsider the timetable for appointing the new further education college councils under the Self-Governing Schools Etc. (Scotland) Act 1989.

  Mr. Ian Lang
  My right hon. and learned Friend has received representations that the proposed date of 1 April 1990 for appointing further education college councils will leave insufficient time for education authorities to carry out full consultations on the appointment of employer representatives. In the light of these representations, he intends to make a direction under the Act amending the date to 1 August 1990. College council regulations will be made early in 1990 once we have had time to consider comments on our proposals in the consultative paper the "College Control Principle". It is open to an authority to 186
  Government's response to the Transport Select Committee published in March 1988 (House of Commons Paper No. 420, Session 1987–88.)

SCOTLAND

  Toxic Waste
  Mr. Dewar
  To ask the Secretary of State for Scotland if he will list the ports currently registered for the import of toxic waste in Scotland, and the amount of such waste imported, the country of origin and the destination, and the nature of the waste, through each of those ports, for the last three years available.

  Mr. Rifkind
  There is no requirement under the legislation on waste disposal for specific ports to be registered for imports. Returns made by Scottish local authorities indicate that the total amounts of waste imported into Scotland in 1987 and 1988 were as follows:

  appoint college councils before 1 August 1990, and the date for college councils taking over their new functions will continue to be 1 October 1990.

  Conservation
  Sir Hector Monro
  To ask the Secretary of State for Scotland if he has considered the responses to the Scottish Development Department's consultation paper, "Scotland's Natural Heritage."

  Mr. Rifkind
  I have received 179 responses to the consultation paper seeking views on our proposal to merge the proposed Nature Conservancy Council for Scotland (NCCS) and the existing Countryside Commission for Scotland (CCS) and express my appreciation to all who submitted views. The responses have been wide ranging both in their sources and their comments. I am encouraged that our consultation paper stimulated a wide debate and provided scope for those responding to offer their own proposals for developing the potential of the new framework for a more co-ordinated approach to nature conservation and countryside matters in Scotland.

  Of the 159 respondents expressing a view, 98 (over 60 per cent.) are in favour of the merger of NCCS and CCS and 61 are opposed. Twenty did not express a view. I am pleased to report that our merger proposals are supported by a wide cross-section of respondents including voluntary conservation organisations. I was particularly pleased that CCS and the NCC (the Scottish advisory committee) are in favour of our proposals.

  A great many respondents paid tribute to the work of the NCC and CCS in Scotland and I would also add my own tribute to both bodies and especially their staff, to whom the Government have given assurances of job security.

  The responses have confirmed the Government's judgment that a new unified body will provide a sensitive,

  187
  coherent and co-ordinated approach to the protection and enjoyment of Scotland's unique and priceless landscape, wildlife and habitat.

  Many responses emphasised the need for a strong science base and co-ordination on standards, research and matters of GB or international significance. The Government recognise this need and the answer given by my right hon. Friend the Secretary of State for the Environment on 23 November at columns 16–17, set out the Government's proposals for a statutory co-ordinating committee of the three proposed nature conservation bodies.

  Many respondents, including some who supported the merger, also sought reassurances on a range of matters including the independence, funding, staffing and location of the new body. I intend to respond to their concerns and will consult further on the detailed aspects of my proposals before bringing forward the legislation needed to create a single natural heritage body in Scotland. I will invite comments early in 1990.

  Badgers
  Mr. Baldry
  To ask the Minister of Agriculture, Fisheries and Food what initiatives his Department is taking to develop vaccine to protect badgers from tuberculosis.

  Mr. Maclean
  Work on a vaccine for use on badgers has been carried out at the Middlesex hospital in collaboration with the central veterinary laboratory (CVL). Further work is planned, particularly in respect of safety, to enable field trials to be undertaken. This work will commence at the CVL shortly.

  Pesticide Unit
  Mr. Malcolm Bruce
  To ask the Minister of Agriculture, Fisheries and Food what steps he proposes to take to improve the efficiency of the pesticide unit at Harpenden.

  Mr. Maclean
  Procedural changes and closer contacts with other national regulatory bodies conducting reviews of old chemicals are being implemented aimed at speeding up the evaluation of pesticides and minimising duplication of effort. Scientific and administrative staff have received special pay awards designed to encourage recruitment and retention. In addition, outside consultants have been asked to study the benefits of installing a suitable new information technology system and the use of independent consultants to evaluate certain data is being explored.

  Fisheries Council
  Mr. Mans
  To ask the Minister of Agriculture, Fisheries and Food what was the outcome of the Brussels Fisheries Council held on 27 November.

  Mr. Curry
  I attended the Council of Fisheries Ministers in Brussels on 27 November 1989. The Council decided on guide prices for 1990 and we secured the maintenance of the seasonal price arrangement for herring which is important to our industry. The Council agreed on useful arrangements for assisting the improvement of member states' enforcement. Further, the Council agreed on an increase in the total allowable catch for Channel cod which gives the United Kingdom a further 66 tonnes this year.

  Slaughterhouses
  Mr. Matthew Taylor
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on cross-contamination within slaughterhouses.

  Mr. Maclean
  Statutory hygiene controls, enforced by local authorities, apply at all stages of meat production to reduce the risk of cross-contamination. My Department is continuously seeking ways of further reducing the incidence of cross-contamination. We will he advising local authorities and the industry shortly on additional measures further to reduce the incidence of contamination in poultry slaughterhouses.

  Food Irradiation
  Mr. Matthew Taylor
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the implications for Government policy of the recent European Parliament vote on food irradiation.

  Mr. Maclean
  The vote as such has no implications for Government policy. It is the means by which the Parliament has set out its opinion on the proposal from the Commission. The co-operation procedure provides for the Commission to take a view of the Parliament's opinion and for the Council to seek a common position among the member states.

  Mr. Matthew Taylor
  To ask the Minister of Agriculture, Fisheries and Food what studies have been carried out or are in progress to examine the effects of food irradiation on(a) listeria monocytogenes, (b) pesticide residues and (c) vitamin levels; and if he will make a statement.

  Mr. Maclean
  I refer the hon. Member to the bibliography at Appendix G of the report on the safety and wholesomeness of irradiated foods by the advisory committee on irradiated and novel foods, available in the Library of the House. This refers to a number of studies on vitamin levels in treated foods and to the use of the process to reduce or eliminate pathogenic micro-organisms. So Far as listeria monocytogenes is concerned a further study has been carried out by my Department which may be published in the near future. Further a recent study by Dr. M. Patterson, Queens university, Belfast has been published in "Letters on Applied Microbiology 8(5)" pages 181–184.

  The effects of irradiation on pesticide residues were considered by the advisory committee on irradiated and novel foods which concluded that the levels of any radiolytic products of such residues would be negligible. Further information on this sector will be found in the World Health Organisation publication "Consumer Concerns about the Safety of Irradiated Food" (ref WHO/EH E/FOS/89.1).

  Mr. Matthew Taylor
  To ask the Minister of Agriculture, Fisheries and Food if he will list the membership of the working party on food irradiation, and indicate which members represent consumer interests, which enforcement agencies, and which food industry interests.

  Mr. Maclean
  The membership of the advisory committee on irradiated and novel foods is as follows. The
  189
  members did not represent sectoral interests, but were chosen for their expertise in the various specialised branches of science relevant to consideration of the safety and wholesomeness of irradiated food.

  Chairman
  Sir Arnold Burgen MD, FRCP, FRS.
  Master of Darwin College, University of Cambridge.

  Members:
  Professor J. W. Bridges BSc, PhD. CChem, FRSC, FIBiol, MRCPath, MinstEnvSci.
  Director of the Robens Institute of Industrial and Environmental Health and Safety, University of Surrey.
  Professor J. D. Bu'Lock BA, PhD.
  Head of the Microbial Chemistry Laboratories, University of Manchester
  Dr. J. C. Gould BSc, MD, FRCPE, FRCPath, FFCM, FIBiol, FRSE.
  Former Director of the Central Microbiological Laboratories, Edinburgh.
  1Dr. H. Smith PhD, FIBiol.
  Former Head of the Biology Department, National Radiological Protection Board.
  Professor J. Hawthorn BSc, PhD, ARCST, CChem, FRSC, FIBiol, FIFST, FRSE.
  Emeritus Professor of Food Science, University of Strathclyde.
  Professor W. P. T. James MD, MA, DSc, FRCP, FRCP(Edin).
  Director of the Rowett Research Institute, Aberdeen.
  Professor B. E. B. Moseley BSc, PhD.
  Head of Reading Laboratory, Agriculture and Food Research Council Institute of Food Research, Reading.
  Dr. A. N. B. Stott MB, ChB, FFOM.
  Former Chief Medical Officer, United Kingdom Atomic Energy Authority.
  Dr. A. J. Swallow PhD, DSc, ScD, CChem, FRSC.
  Head of the Biophysical Chemistry Division, Paterson Institute, Christie Hospital and Holt Radium Institute Manchester.
  2Professor E. D. Wills MA, MSc, PhD, ScD.
  Late Head of the Department of Biochemistry, St. Bartholomew's Hospital Medical College, London.

  Ex Officio Members:
  Professor A. E. Bender PhD, DSc(Hon), FRSH, FIFST.
  Emeritus Professor of Nutrition and Dietetics, University of London.
  (Chairman of the Panel on Novel Foods).
  Professor P. Turner MD, BSc, FRCP, HonMPS, HonFIBiol.
  Professor of Clinical Pharmacology, St. Bartholomew's Hospital Medical College, London.
  (Chairman of the Committee of Toxicity of Chemicals in Food, Consumer Products and the Environment).
  Dr. J. E. M. Whitehead MA, MB, FRCPath, DipBact.
  Former Director of the Public Health Laboratory Service, London (Former Member of the Standing Panel on Hazards from Microbial Contamination of Food).

  1 Until December 1982.

  2 From August 1983 until April 1985.

  Mr. Matthew Taylor
  To ask the Minister of Agriculture, Fisheries and Food how many representations from members of the public he has received in favour of the relaxation of the ban on food irradiation; and how many against.

  Mr. Maclean
  Since the announcement of the Government's decision to take steps to enable consumers to choose the additional protection of irradiated food if they so wish, 34 letters have been received from members of the public either expressing support or seeking further information and 92 letters have expressed concern about aspects of the matter.

  Microwaves
  Mr. Matthew Taylor
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the use of microwaves for primary heating of food products.

  Mr. Maclean
  The question presumably refers to the use of microwave ovens to cook food from raw. Each microwave oven manufacturer provides instructions on how best to do this using his particular oven. The user should of course check that the food is thoroughly cooked in the same way as is necessary with any other cooking method.

  Food Industry
  Mr. Matthew Taylor
  To ask the Minister of Agriculture, Fisheries and Food how many meetings he has had within the last 12 months with representatives from(a) Sainsburys, (b) Safeways, (c) Tesco, (d) Marks and Spencer and (e) Trusthouse Forte; what matters were discussed; if he plans any future meetings; and if he will make a statement.

  Mr. Curry
  My right hon. Friend, like his predecessor, maintains regular contacts with the food industry, including on occasions meeting representatives from individual companies to discuss matters of mutual concern. During the past year at such meetings, particular emphasis has been put on all aspects of food safety and protection of the consumer.

  Hill Livestock Compensatory Allowances
  Mr. Amos
  To ask the Minister of Agriculture, Fisheries and Food when he expects to make an announcement about the new rates of hill livestock compensatory allowances; and if he will make a statement.

  Mr. Curry
  An announcement of the 1990 HLCA rates and scheme conditions will be made as soon as possible following completion of the annual autumn review of the economic conditions in the hill and upland areas.

  Mr. Amos
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the outcome of his meeting with the Agriculture Council of Ministers regarding the future arrangements for hill livestock compensatory allowances.

  Mr. Curry
  I refer my hon. Friend to the reply I gave to my hon. Friend the Member for Ludlow (Mr. Gill) on 22 November at column 8.

  Eli Lilley
  Mr. Matthew Taylor
  To ask the Minister of Agriculture, Fisheries and Food when he last met a representative from Eli Lilley; and what was discussed.

  Mr. Maclean
  My right hon. Friend has not met representatives of Eli Lilley since his appointment as Minister of Agriculture, Fisheries and Food.

PRIME MINISTER

  Wales
  Mr. Wigley
  To ask the Prime Minister if she will make a statement on her recent visit to Wales.

  The Prime Minister
  During my visit to the Rhondda valley and Cardiff bay, I was able to see the remarkable regeneration that is taking place; with new factories, shops, new housing and offices together with major improvements in the local environment.

  I visited Allied Steel and Wire where I was pleased to meet management and employees and to congratulate them on their impressive growth and achievements over recent years. I also saw a fine example of inward investment when I visited the Kyushu Matsushita Electric United Kingdom plant at Newport. This inward investment has high productivity and a fine export record. It is just one example of over 230 inward investment projects that have been attracted to Wales.

  I met the Health Promotion Authority for Wales and to learn about its campaign to reduce the incidence of heart disease and cancer. I visited Companies House which is one of many examples of the relocation of Government activities from London to the regions. These have brought benefits to the local economy and provided very good facilities for those carrying out these important Government operations.

  I was delighted to witness personally the remarkable transformation that is taking place in both the economy and the environment of Wales under this Government.

  Child Abuse
  Mrs. Dunwoody
  To ask the Prime Minister if she is satisfied with co-ordination between programmes in Whitehall to combat the problem of child abuse.

  The Prime Minister
  The interdepartmental group on child abuse provides a permanent and formal mechanism to facilitate interdepartmental co-ordination in the field of child protection.

  German Democratic Republic
  Mrs. Currie
  To ask the Prime Minister if she has any plans to visit the German Democratic Republic.

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

  Portsmouth
  Mr. David Martin
  To ask the Prime Minister whether she will make an official visit to Portsmouth.

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

  USA President
  Mr. Latham
  To ask the Prime Minister when she next expects to meet the President of the United States of America.

  The Prime Minister
  I shall meet President Bush at the NATO Summit in Brussels on 4 December following his meeting with President Gorbachev.

  Haemophiliacs (AIDS)
  Mr. Ashley
  To ask the Prime Minister when she intends to reply to the letter she received from an all-party group of hon. Members requesting an immediate out-of-court compensation payment for AIDS-infected haemophiliacs.

  Mr. Alfred Morris
  To ask the Prime Minister what representations she has received about the plight of people with haemophilia who, in the course of National Health Service treatment, have been infected with the AIDS virus; and what reply she has sent.

  The Prime Minister
  My right hon. and learned Friend the Secretary of State for Health announced on 23 November that we have offered an additional £19 million to the Macfarlane Trust to provide ex gratia payments to haemophiliacs who contracted the AIDS virus in the course of treatment. I refer the right hon. Members to the reply my right hon. and learned Friend gave to my hon. Friend the Member for Salisbury (Mr. Key) on 23 November at columns 11–12. Over 300 representations in support of people with haemophilia and HIV infection have been received. Replies will be sent shortly. As court proceedings have now begun, it would be inappropriate to comment on the question of an out-of-court settlement.

  Hereford
  Mr. Colin Shepherd
  To ask the Prime Minister if she will make an official visit to Hereford.

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

  Cyprus (President)
  Mr. Cox
  To ask the the Prime Minister if she will invite the President of Cyprus to make an official visit to the United Kingdom.

  The Prime Minister
  President Vassiliou paid an official visit to this country in March this year. He is a frequent visitor to the United Kingdom and had talks with my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs in London earlier today.

  Northern Ireland
  Sir Michael McNair-Wilson
  To ask the Prime Minister when she last met the leaders of the Northern Ireland political parties represented at Westminster.

  The Prime Minister
  I last met the leaders of the main Northern Ireland political parties represented at Westminster on 23 February, when we discussed the future of Harland and Wolff.

  English Language
  Mr. Boswell
  To ask the Prime Minister what recent representations she has received on the role of English as a world language.

  The Prime Minister
  I have received no such representations. I believe that it is essential that young people should have a full command of the English language and that they should be proficient in at least one modern foreign language. Both are included as foundation subjects in the national curriculum.

  Keighley
  Mr. Waller
  To ask the Prime Minister if she will make an official visit to Keighley.

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

  Ambulance Dispute
  Mr. Tim Smith
  To ask the Prime Minister if she will make a statement about the ambulance dispute.

  The Prime Minister
  It is a matter of great regret that ambulance staff are refusing to do non-emergency work and in many cases not maintaining an adequate accident and emergency service as the unions have promised. The National Health Service chief executive has put forward an excellent basis for a settlement. This includes an increase of 9 per cent. on basic rates, with 11·8 per cent. for qualified staff in the London ambulance service, and an additional annual payment of £500 for fully trained paramedical staff. The unions should return to the negotiating table.

  Edmonton
  Dr. Twinn
  To ask the Prime Minister if she will make an official visit to Edmonton.

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

  Clifton, Rugby
  Mr. Pawsey
  To ask the Prime Minister whether she has any plans to make an official visit to Clifton, near Rugby.

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

  Government Accountability
  Mr. Allen
  To ask the Prime Minister what steps she will take to improve Government accountability to Parliament.

  The Prime Minister
  I am satisfied that Ministers are already fully accountable to Parliament for the work of their Departments.

  Wales
  Mr. Gareth Wardell
  To ask the Prime Minister when she next intends to visit Wales.

  The Prime Minister
  I visited Wales on 17 November 1989. I have at present no further plans to do so.

  Exchange Rate Mechanism
  Mr. Dykes
  To ask the Prime Minister if she will give the list of conditions she has established for United Kingdom adherence to the European monetary system exchange rate mechanism of the European Community.

  The Prime Minister
  The decision on when to join the exchange rate mechanism will have to be judged against progress in a number of areas—in particular, when the level of United Kingdom inflation is significantly lower, there is capital liberalisation in the Community and real progress has been made towards the completion of the single market, freedom of financial services and strengthened competition policy.

  British Rail
  Mr. Adley
  To ask the Prime Minister when she last met the chairman of the British Rail board; and what was discussed.

  The Prime Minister
  My right hon. Friend the Secretary of State for Transport regularly meets the chairman to discuss a wide range of issues.

  India
  Mr. Vaz
  To ask the Prime Minister when she next intends to pay an official visit to India.

  The Prime Minister
  I look forward to visiting India again, but have no current plans to do so.

  European Community
  Mr. Teddy Taylor
  To ask the Prime Minister if she will raise at the next meeting of the European Council the cost of the common agricultural policy; and if she will make a statement.

  The Prime Minister
  The United Kingdom has taken the lead in EC budgetary reform. I have no plans to raise the cost of the common agricultural policy at the next European Council.

  Mr. Teddy Taylor
  To ask the Prime Minister what issues she intends to raise at the next meeting of the European Council.

  The Prime Minister
  I expect discussion of a range of issues, including eastern Europe, the single market, economic and monetary union and the social charter.

  Mr. Teddy Taylor
  To ask the Prime Minister if she will raise at the next meeting of the European Council the degree of progress made in the implementing of free trade within the European Economic Community; and if she will make a statement.

  The Prime Minister
  In the context of the single market programme, considerable progress has been made on breaking down the barriers to free trade within the European Community: 147 single market measures have now been agreed. This means the community is about halfway through the programme set out in the Commission's White Paper, "Completing the internal market". At the meeting of the European Council in Strasbourg I shall be urging that the momentum on the single market programme be kept up, and that the Community should not allow itself to be distracted from this important goal.

  Relocation
  Sir Eldon Griffiths
  To ask the Prime Minister if, in the process of implementing the Government's policy of dispersing departmental offices out of high-cost urban areas, she will co-ordinate the plans of the Chancellor of the Exchequer, the Secretary of State for Defence, and the Minister of Agricultue, Fisheries and Food to concentrate into Cambridge offices of the Inland Revenue, the Property Services Agency, the Ministry of Defence and the Ministry of Agriculture, Fisheries and Food that at present are located in East Anglia's smaller market towns.
  195
  The Prime Minister
  The guidelines already require relocating Departments to consult other relevant Departments, so that issues such as comparative costs, the benefits of property rationalisation and interdepartmental co-ordination can be fully considered in advance of Ministers announcing their decisions.

  Nicaragua
  Mrs. Clwyd
  To ask the Prime Minister what discussions she had with Senora Violeta Chamoro on 13 November concerning United Kingdom development aid to Nicaragua after the elections in February 1990.

  The Prime Minister
  I saw Senora Chamoro in order to demonstrate our support for the democratic process in Nicaragua. We did not discuss development aid.

  United Nations
  Mr. Tony Banks
  To ask the Prime Minister why representatives of the African National Congress were asked by officials of the United Kingdom mission to the United Nations not to offer her congratulations on the occasion of her recent speech to the United Nations General Assembly.

  The Prime Minister
  We look to the African National Congress to agree to the suspension of violence on the basis set out in the negotiating concept of the Commonwealth eminent persons group. It has not yet done so. The question of ministerial contact with the ANC is viewed in this context.

  Engagements
  Mr. David Martin
  To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.

  Mr. Gareth Wardell
  To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.

  Mr. McFall
  To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.

  Mr. Pike
  To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.

  Mr. Harry Greenway
  To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.

  Mr. Stern
  To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.

  Mr. David Porter
  To ask the Prime Minister if she will list her official engagements for Tuesday 28 November.

  The Prime Minister
  This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today, including one with President Roh of South Korea who is on an official visit.

NORTHERN IRELAND

  Kincora Boys' Home
  Mr. Dalyell
  To ask the Secretary of State for Northern Ireland if he will set up a public inquiry into the events at Kincora boys' home.
  196
  Mr. Cope
  No.

  Arts
  Rev. Martin Smyth
  To ask the Secretary of State for Northern Ireland whether he has any plans to encourage co-operation between the Belfast festival at Queen's and Glasgow, European city of culture as part of overall promotion of the arts; whether he will investigate the possibility of sponsorship by his Department; and if he will make a statement.

  Dr. Mawhinney
  Co-operation between the Belfast festival at Queen's and Glasgow, European city of culture is a matter for the organisers of the festival which is already supported by public funds through the Arts Council of Northern Ireland. Equally, the question of sponsorship of any co-operative ventures is a matter for the respective organisers. I understand that contact between the organisers has in fact already been established.

  Belfast Airport
  Mr. Clifford Forsythe
  To ask the Secretary of State for Northern Ireland what European Community and Government grants have been provided for Belfast international airport in the last 10 years; and what are the projected airport passenger traffic figures for the next 10 years.

  Mr. Peter Bottomley
  [holding answer 27 November 1989]: In the 10 years to 31 March 1989, Belfast international airport received grants of £11·98 million a nd £11·76 million from the Government and the European Community respectively. Northern Ireland Airports Ltd. projects airport passenger traffic figures for the next 10 years as follows:

  Million

  1989–90

  2·2

  1990–91

  2·4

  1991–92

  2·7

  1992–93

  2·8

  1993–94

  2·9

  1994–95

  3·0

  1995–96

  3·1

  1996–97

  3·2

  1997–98

  3·3

  1998–99

  3·4

  1999–2000

  3·5

FOREIGN AND COMMONWEALTH AFFAIRS

  Chemical Weapons
  Mr. Cyril D. Townsend
  To ask the Secretary of State for Foreign and Commonwealth Affairs what progress is being made with negotiations with the Soviet Union over the elimination of chemical weapons.

  Mr. Waldegrave
  Negotiations are taking place at the Geneva conference on disarmament, to which the Soviet Union is a party, for a comprehensive, global ban on chemical weapons. Useful progress has been made in the talks, which are due to resume on 28 November.

  Separately, the United States and the Soviet Union have agreed on a bilateral data exchange and series of

  197
  visits. In addition, the United States has proposed a substantial mutual destruction of chemical weapon stockpiles.

  Poland
  Mr. Tredinnick
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the current state of relations between the EEC and Poland.

  Mr. Maude
  Relations are excellent based on a trade, economic and commercial co-operation agreement signed in September 1989. The Community's aim is to support and encourage economic liberalisation and political reform; it has agreed in principle a substantial package of assistance for Poland which includes free food, trade concessions, European investment bank lending, and aid for agriculture reform, environment and training. The EC Commission is also co-ordinating broader western assistance to Poland.

  Amnesty International
  Mr. Butcher
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will meet British representatives of Amnesty International to discuss the Indian Government's refusal to grant entry visas to representatives of Amnesty in January, March and December 1985, November 1986, November 1987 and March 1989.

  Mr. Sainsbury
  We are always ready to consider requests from Amnesty for meetings, which take place regularly. On the substance of the issue of visas, I refer my hon. Friend to the reply my hon. Friend the Minister of State, Foreign and Commonwealth Office gave him on 8 November.

  North Atlantic Treaty Organisation
  Mr. Cartwright
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the implications of recent events in the German Democratic Republic for the future of the North Atlantic Treaty Organisation.

  Mr. Waldegrave
  NATO remains the cornerstone of our defence and has a vital role in providing the framework of stability within which further progress towards democracy and freedom in the German Democratic Republic can be made.

  Refuseniks
  Mr. John Marshall
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations have been made to the Russian authorities about the case of Vladimir and Irina Tsifkin of Leningrad and their daughter.

  Mr. Waldegrave
  We have not previously raised this particular case with the Soviet authorities but we will be happy to do so if my hon. Friend will provide the necessary details.

  British Embassies
  Mr. O'Neill
  To ask the Secretary of State for Foreign and Commonwealth Affairs what is the current number of naval and air attaches, defence and military attaches and attaches (defence) posted to British embassies.

  Mr. Waldegrave
  At present the total global deployment of service attachÉs and advisers at British embassies and high commissions overseas is 132. The current numbers of naval and air attachÉs, defence and military attachÉs and attachÉs (defence) posted to British embassies are eight, 16 and two respectively.

  Mr. O'Neill
  To ask the Secretary of State for Foreign and Commonwealth Affairs when the current tours of duty of the naval and air attachÉ, the defence and military attachÉ and the attachÉ (defence) presently attached to the British embassy in Thailand began; and when they are due to end.

  Mr. Sainsbury
  The current naval and air attachÉ in the British embassy in Bangkok began his tour in November 1989; the defence and military attachÉ arrived in October 1988, and the attachÉ (defence) arrived in December 1988. They will leave Bangkok on the completion of their postings; it is not our practice to release details of staff movements in advance.

  Vietnamese Boat People
  Mr. Norman Hogg
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will reconsider his decision forcibly to repatriate Vietnamese boat people from Hong Kong.

  Mr. Maude
  There is unanimous international agreement that those who are not refugees should return to Vietnam. It is universal practice for non-refugees to be repatriated to their country of origin. Involuntary repatriation to Vietnam will go ahead only if there are assurances from the Vietnamese Government that they will not be persecuted and there is independent monitoring of their condition.

  Tibet
  Mr. Fearn
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the present situation in Tibet.

  Mr. Maude
  Martial law remains in force in Lhasa, but there have been no recent reports of widespread unrest.

  Bilateral Aid
  Mr. Macdonald
  To ask the Secretary of State for Foreign and Commonwealth Affairs what levels and types of technical assistance and bilateral aid are given to(a) Costa Rica, (b) Panama, (c) Nicaragua, (d) Guatemala, (e) El Salvador, (f) Belize and (g) Mexico, according to the latest available figures; and when was the last time a project for such aid or assistance was approved for Nicaragua.

  Mr. Sainsbury
  The table shows the kinds and amounts of bilateral aid provided in 1988:
  199

  Technical co-operation

  Financial aid

  Relief aid

  Commonwealth Development Corporation

  Aid and trade provisional

  Costa Rica

  713

  —

  20

  817

  —

  Panama

  134

  —

  —

  —

  854

  Nicaragua

  —

  —

  180

  —

  —

  Guatemala

  4

  —

  —

  —

  —

  El Salvador

  14

  —

  140

  —

  —

  Belize

  1,242

  1,547

  —

  340

  47

  Mexico

  1,249

  —

  —

  —

  —

  The last project for Nicaragua was approved in 1973 and concluded in 1979. The last expenditure on non-projectised aid—training awards and wholly financed personnel—was in 1986.

  El Salvador
  Mr. Macdonald
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether he has any plans to increase direct humanitarian aid to El Salvador during the present emergency; and if he will make a statement.

  Mr. Sainsbury
  I refer the hon. Member to the answer my right hon. Friend the Minister for Overseas Development gave on 24 November to the hon. Member for Islington, North (Mr. Corbyn). Since then, Britain's share of emergency aid provided so far by the European Community has risen to £200,000.

  Nicaragua
  Mr. Macdonald
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether he has any plans to resume direct aid to Nicaragua following the conduct of free and fair national elections; and if he will make a statement.

  Mrs. Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs if United Kingdom development aid will he made available to meet the needs of the Nicaraguan people after the February 1990 elections are held, regardless of which party or parties form the next Government.

  Mr. Sainsbury
  As my right hon. Friend the Prime Minister told President Ortega in May, we will judge Nicaragua's performance on the facts. As regards aid, we have to set priorities and we focus mainly on Commonwealth countries, with which we have close ties, and on the poorest countries. We do, of course, take into account changes in circumstances.

  Mrs. Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs what criteria Nicaragua is required to meet before Her Majesty's Government will provide bilateral development aid to meet the needs of the Nicaraguan people.

  Mr. Sainsbury
  Our aid priorities concentrate on the developing Commonwealth countries and on the poorest countries. We recognise, nevertheless, the case for helping other developing countries also. The most recent figures published by the World Bank indicate that there are 60 countries with per capita incomes lower than Nicaragua's. Nevertheless, we are contributing, through the European Community aid programme, to Nicaragua. Our share of 200
  EC commitments in 1988 totalled £3·3 million. We also provided bilateral emergency aid of over £260,000 in 1988 to assist following Hurricane Joan. In addition, since 1985–86, we have supported from our aid programme 42 projects in Nicaragua jointly funded with Oxfam, CAFOD and Christian Aid at a total cost to the aid programme of £247,000.

  Mrs. Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs what meetings Violeta Chamoro had with Ministers or officials during her visit to the United Kingdom; and under what terms United Kingdom development aid was offered to Nicaragua.

  Mr. Sainsbury
  Senora Chamoro was received by my right hon. Friend the Prime Minister and by officials of the Foreign and Commonwealth Office. The subject of bilateral development aid was not raised from either side.

  Gibraltar
  Dr. Marek
  To ask the Secretary of State for Foreign and Commonwealth Affairs if any progress has been made in increasing scheduled air services to and from Gibraltar..

  Mr. Maude
  No. Progress is unlikely until the Gibraltar Government take steps to implement the 1987 airport agreement.

  Dr. Marek
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether the gardens adjoining the governor's residence, Gibraltar, are now being tended.

  Mr. Maude
  The Gibraltar Government assumed responsibility for the maintenance of the gardens from 1 April 1989.

  Southern Africa
  Mrs. Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) what is the amount of bilateral debt owed by each member of the Southern African development co-ordination conference; to which countries, including the United Kingdom, the debt is owed; and what provision for debt relief for Southern African development co-ordination conference countries has been agreed;

  (2) what is the amount of multilateral debt owed by each member of Southern African development coordination conference; to which institutions the debt is owed; and what provisions for debt relief for Southern African development co-ordination conference countries have been agreed;

  (3) what is the total debt for each member of the Southern African development co-ordination conference.

  Mr. Waldegrave
  The following table sets out the amounts of bilateral, multilateral and total external debt
  201
  owed by each member of the southern African development co-ordination conference at end December 1988 (the latest figures available). The table shows bilateral debt owed to all OECD countries. Details of the individual claims of bilateral creditors other than the United Kingdom are not available.

  The United Kingdom has outstanding aid loans to Swaziland and Zambia only, of £10·9 million and £56 million respectively.

  The details of the United Kingdom's trade credit claim to individual countries are matters of commercial confidence, but the combined total for all SADCC countries is £493,095,000.

  $ million

  Multilateral debt

  Country

  Official bilateral debt to OECD countries

  IMF

  World bank

  African development bank

  Total external debt

  Angola

  1,506

  —

  —

  135·15

  2,121

  Botswana

  513

  —

  161

  316·49

  707

  Lesotho

  65

  4

  096

  200·15

  298

  Malawi

  419

  95

  643

  —

  1,421

  Mozambique

  1,764

  42

  138

  271·04

  2,476

  Swaziland

  133

  —

  059

  119·52

  310

  Tanzania

  3,346

  133

  199

  78·09

  5,291

  Zambia

  3,496

  908

  703

  427·92

  6,232

  Zimbabwe

  1,317

  70

  374

  209·06

  2,617

  Source: OECD.

  OECD member countries are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.

WALES

  A487 (Porthmadog Bypass)
  Mr. Wigley
  To ask the Secretary of State for Wales whether officials in the highways section of his Department, or of the Gwynedd county council, have drawn up alternative outline routes for a bypass for Porthmadog for the A487; and if he will make a statement.

  Mr. Wyn Roberts
  As indicated in "Roads in Wales —Progress and Plans for the 1990s", the A487 between Maentwrog and Caernarfon is the subject of a study. The consultant's report on the Porthmadog section will identify possible routes for a bypass.

  Housing Associations
  Mr. Murphy
  To ask the Secretary of State for Wales what extra resources he proposes to give to Welsh housing associations.

  Mr. Grist
  We shall be making an announcement on this shortly.

  Schools
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if he will outline the role of his Department following proposals by a local authority to close a primary school in Wales.

  Mr. Wyn Roberts
  The statutory process to be followed by local authorities proposing a school closure is set out in section 12 of the Education Act 1980. Welsh Office circular 20/88, a copy of which is in the Library, stresses the importance of consultation with appropriate bodies well
  202
  One SADCC country (Tanzania) has already obtained concessional rescheduling of its official debts in the Paris Club on "Toronto Terms".

  Malawi and Tanzania are also benefiting from a World Bank initiative to offer supplementary concessional IDA credits to compensate borrowers whose per capita income is now below the IDA-only threshold, but who are still repaying old IBRD non-concessional loans, for part of the interest payments due.

  The United Kingdom has cancelled its old aid loans to all SADCC countries except for Swaziland (whose GNP per capita is too high for it to be eligible for this relief) and Zambia. The possibility of comparable treatment for Zambia will be kept under review.

  before the publication of a statutory notice. Once a section 12 notice has been published there is a period of two months to allow for objections. If there are statutory objections, that is, by any 10 or more local government electors for the area, the closure proposal is referred to my right hon. Friend for determination.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if his Department has identified those primary schools in Wales that do not satisfy the physical requirements necessary for their pupils and teachers to cope with the demands of the national curriculum.

  Mr. Wyn Roberts
  No. The suitability of school premises for delivery of the national curriculum is the responsibility of local education authorities.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales what information his Department holds on the percentage of secondary school children in Wales who take part in linking activities with companies.

  Mr. Wyn Roberts
  A survey of links between schools and industry will be undertaken early in the new year to cover the academic year 1989–90. The technical and vocational education initiative now available throughout the Principality places importance on work experience and shadowing for pupils. The enterprise and education initiative aims to provide two or more weeks of work experience for every young person in the final year of schooling. As part of my right hon. Friend's programme for the valleys, we are discussing with the five local education authorities concerned ways of further improving links between valley schools and industry. Our objective is to ensure that young people have the opportunity to learn about the wide range of career choices available and that business has a work force better
  203
  prepared and equipped to meet its needs. As a result of these and the many other link activities, the majority of pupils in their final year of schooling are involved with business.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales what is the pupil number capacity of the following primary schools in the county of West Glamorgan (i) Crwys, (ii) Dyfnant, (iii) Penclawdd, (iv) Llanforlais, (v) Garnswllt, (vi) Dunvant and (vii) Bishopston.

  Mr. Wyn Roberts
  Information on the capacity of primary schools is not collected centrally. However, the total number of full-time and part-time pupils on roll in January 1989 is shown in the table:

  Number on roll

  Crwys

  194

  Dyfnant

  177

  Penclawdd

  104

  Llanforlais

  109

  Garnswllt

  28

  Dunvant Infants

  266

  Dunvant Junior

  308

  Bishopston

  298

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales what is the number of Betios county primary school in the county of Dyfed.

  Mr. Wyn Roberts
  The total number of full-time and part-time pupils on roll in January 1989 at Betws county primary school was 105.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales what measures he has taken to ensure children with special educational needs receive a broad and balanced curriculum appropriate to their ability under the national curriculum.

  Mr. Wyn Roberts
  The Education Reform Act 1988 requires maintained schools to provide a balanced and broadly based curriculum for all pupils. Pupils with special educational needs are required to follow the national curriculum as far as practicable. The attainment targets so far defined enable pupils of different abilities to demonstrate progress in relation to the same curriculum. The Curriculum Council for Wales is preparing guidance on the national curriculum and pupils with special educational needs.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales whether he has any plans to allocate resources to assist the county of West Glamorgan to build a new school at(a) Penyrheol, Gorseinon, (b) Llangyfelach, Swansea and (c) Three Crosses, Swansea.

  Mr. Wyn Roberts
  It is for West Glamorgan county council to determine its own priorities for spending the capital resources available to it.

  Community Care
  Mr. Wigley
  To ask the Secretary of State for Wales which organisations he will be consulting regarding the issue of quality assurance in community care provision; and when he will announce the results of his deliberations.

  Mr. Grist
  The Government's approach to quality assurance in the provision of community care services in 204
  Wales is set out in paragraphs 11.42 to 11.44 inclusive. of the White Paper "Caring for People: Community Care in the Next Decade and Beyond" (Cm 849).

  A comprehensive range of interested bodies, including representatives of the independent sector and of users of services are being consulted about a proposed strategy for quality assurance throughout the National Health Service in Wales, and also on all aspects of the independent review of community care services in the light of the recently published report of the all-Wales advisory panel on services for people with mental handicaps. Consultation on the former has ended and we intend to issue the strategy for the NHS before the end of the year. Consultation on the all-Wales panel's report runs until 16 February, and we will announce our conclusions as soon as possible thereafter.

  M4
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales by how long expenditure on road schemes in north Wales has delayed the start of the missing gap on the M4 motorway between Baglan and Lonlas.

  Mr. Wyn Roberts
  Priorities for road improvement schemes are set out in successive editions of "Roads in Wales". Start dates for individual schemes are affected by a range of factors and it is not possible to say how they might have progressed given different priorities.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales how many journeys he has made in his official capacity along the missing link on the M4 motorway between Baglan and Lonlas since his appointment; what were the dates and times of those journeys; and what was the length of any delays he experienced.

  Mr. Peter Walker
  I have travelled regularly along this stretch of road since my appointment as Secretary of State for Wales.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if he will give for each of the last 10 years the number of serious and fatal accidents on the missing link of the M4 motorway between Baglan and Lonlas.

  Mr. Wyn Roberts
  Fatal and serious accidents on the A48 between Baglan and Lonlas, including roundabouts, junctions and slip roads, are shown in the table:

  Accidents

  Year

  Fatal

  Serious

  1979

  0

  1

  1980

  1

  6

  1981

  0

  5

  1982

  1

  6

  1983

  0

  5

  1984

  0

  4

  1985

  1

  10

  1986

  0

  6

  1987

  1

  5

  1988

  1

  6

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if his Department has financed any studies which have examined the time delays for road traffic using the M4 motorway between Baglan and Lonlas.

  Mr. Wyn Roberts
  The cost benefit analysis carried out for the scheme includes an assessment of delays to traffic using the existing road system.
  205
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales what information he has on inward investment projects that have not been proceeded with because of the road transport bottleneck on the missing link of the M4 motorway between Baglan and Lonlas.

  Mr. Wyn Roberts
  I am unaware of any projects that have not been proceeded with because of the missing link.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales what plans he has to allocate extra resources to speed up the start of the missing link on the M4 motorway.

  Mr. Wyn Roberts
  Work is expected to start in the current financial year as announced in the Welsh Office commentary on the 1988 public expenditure White Paper.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales what representations he has received on the problems associated with the missing link on the M4 motorway between Baglan and Lonlas.

  Mr. Wyn Roberts
  My right hon. Friend has received a number of representations about completion of the motorway between Baglan and Lonlas. Tenders for the first stage, between Earlswood and Lonlas, are due back shortly and it is intended that construction will begin in the spring. The whole scheme is expected to be completed by mid 1994.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales whether he has any plans to allocate resources to assist the West Glamorgan health authority and West Glamorgan county council to improve the road access to Morriston hospital from the Llangyfelach junction of the M4 motorway.

  Mr. Wyn Roberts
  Resources for expenditure on local authority capital projects are distributed on an annual basis to county and district councils. Allocation of funding for individual schemes, including local road improvements, is a matter for them.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales whether his department has financed any studies to examine the economic consequences of the road transport bottleneck on the missing link of the M4 motorway between Baglan and Lonlas.

  Mr. Wyn Roberts
  The cost benefit analysis carried out for the improvement scheme is an economic assessment of its benefits to the road user.

  Local Government Finance
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales how many people will be exempt from paying the poll tax in Wales, separately distinguishing the figures by category.

  Mr. Peter Walker
  This information is not yet available.

  Schools
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if he will place in the Library a copy of the formula his Department uses for the calculation of the pupil number capacity of primary schools in Wales.

  Mr. Wyn Roberts
  The method of assessing the capacity of existing primary schools was set out in an appendix to 206
  Welsh Office Circular 20/88 "Educational Quality in Wales: The Response to Falling School Rolls", copies of which were placed in the Library in June 1988.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if he will publish in the Official Report those local authorities in Wales that are not involved with the school curriculum industry partnership strategy.

  Mr. Wyn Roberts
  I understand that those local authorities in Wales that are not involved in the partnership are Gwynedd, Clwyd, Dyfed and West Glamorgan.

  Rechem
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if his Department has now completed the analysis of PCB incidents in the area surrounding the Rechem chemical incinerator.

  Mr. Grist
  The Department has received the results of the analyses of a number of samples of materials from the area surrounding the incinerator. The landowners and the local environmental health authority have been informed of the results, and I shall write to the hon. Gentleman.

  Teachers
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales what percentage of teachers in Wales were provided with a work experience placement in industry of not less than two weeks during the academic year 1988–89.

  Mr. Wyn Roberts
  The information is not available in the form requested. However, I understand that so far this calendar year there have been 286 teacher placements in business with a further 19 programmed for this year. It is a prime aim of the Government's enterprise and education initiative that every year 10 per cent. of teachers should have the opportunity to gain personal experience in business.

  CFCs
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales which local authorities in Wales are making arrangements for the recycling of CFC gases from freezers and refrigerators before being landfilled.

  Mr. Grist
  Two local authorities are known to the Department to make such arrangements—Preseli Pembrokeshire and Montgomery.

  Welsh Development Agency
  Mr. Geraint Howells
  To ask the Secretary of State for Wales when he next expects to meet the chairman of the Welsh Development Agency to discuss the north Pembroke economy; and if he will make a statement.

  Mr. Peter Walker
  I frequently discuss matters affecting all parts of the Welsh economy with the chairman of the WDA.

  British Coal
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales (1) if he will indicate on a county-by-county basis the land area in Wales acquired by British Coal in each of the last five years, separately distinguishing the land(a) bought and (b) leased;
  207
  (2) if he will indicate on a county-by-county basis the land area in Wales (i) owned and (ii) leased by British Coal.

  Mr. Peter Walker
  The information is not available in the form requested.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if he will list the sites in Wales where British Coal is currently engaged in drilling exploratory boreholes as part of its programme to assess the viability of opencast coal mining.

  Mr. Peter Walker
  British Coal Opencast Executive is currently drilling exploratory boreholes at the following three sites in Wales:—

  i. Land south of Glynneath, West Glamorgan

  ii. Helid Colliery (near Rhymney), Mid Glamorgan

  iii. East Merthyr Reclamation Scheme, Mid Glamorgan

  Aberystwyth Harbour
  Mr. Geraint Howells
  To ask the Secretary of State for Wales what is his policy towards the development of Aberystwyth harbour; and if he will make a statement.

  Mr. Peter Walker
  Ceredigion district council has submitted a scheme in respect of the development of Aberystwyth harbour as a project of regional or national importance. My decision on this scheme will be announced shortly.

EMPLOYMENT

  Small Firms Service
  Mr. David Martin
  To ask the Secretary of State for Employment how many requests for advice have been received by the small firms service in the last 12 months; and if he will make a statement.

  Mr. Eggar
  In 1988–89 the small firms service in England handled 281,459 inquiries and provided 43,029 counselling sessions.

  "Unofficial Action and the Law"
  Mr. John Evans
  To ask the Secretary of State for Employment if he has any plans to meet the chairman of the Trades Union Congress to discuss his Green Paper, "Unofficial Action and the Law".

  Mr. Nicholls
  My right hon. Friend regularly meets representatives of the Trades Union Congress to discuss a wide range of employment issues. He has no plans to meet the chairman of the TUC to discuss the Green Paper.

  Unemployment Benefit (Childbirth)
  Mr. Rooker
  To ask the Secretary of State for Employment how many women have been deprived of unemployment benefit due to a refusal to return to a former employer after childbirth at the latest convenient date.

  Mr. Eggar
  The information requested is not available and could be collected only at disproportionate cost.

  Warrington-Runcorn NTDC
  Mr. Butler
  To ask the Secretary of State for Employment whether he proposes to give any extra incentives to increase employment in Cheshire in the light of the demise of the Warrington-Runcorn new town development corporation.

  Mr. Eggar
  The Warrington and Runcorn development corporation was wound up by my right hon. Friend the Secretary of State for the Environment because he was satisfied that it had substantially completed the purposes for which it was established.

  The Widnes and Runcorn travel-to-work area has assisted area status. This Department operates a wide range of employment, enterprise and training measures, which are available in Cheshire as well as elsewhere. I do not believe that the winding up of the corporation is a reason to introduce further measures to create employment opportunities in this area. In the year to October 1989, unemployment in the county of Cheshire fell by 8,656 (26·6 per cent.) and the rate of unemployment is currently 5·3 per cent. of the total work force.

  Single European Market
  Mr. McFall
  To ask the Secretary of State for Employment how many jobs will be lost in the initial phase of the single European market; and which sectors will be most affected.

  Mr. Eggar
  Neither the Department of Employment nor the Department of Trade and Industry has produced any forecasts of the employment effects of 1992. However, the Cecchini report, published last year by the European Commission, contains estimates of the Communitywide effects of the completion of the single market. The Cecchini report estimates that 525,000 jobs will be lost over the Community as a whole in the first year after completion. However, in the second year employment is. forecast to grow strongly, reducing the net loss of jobs to only 35,000. In the medium term—about six years—completion of the single market is expected to result in a net gain of about 1·8 million jobs. However, the report does not describe the employment effects of 1992 on individual industries. All these estimates are subject to a large degree of uncertainty. The actual employment effects in the United Kingdom depend crucially on the reactions of British industry to the new opportunities offered by the single market.

  Health and Safety
  Mr. Andrew Smith
  To ask the Secretary of State for Employment what representations he has recently received on health and safety at work.

  Mr. Nicholls
  My right hon. Friend has not received any specific representations recently on this wide-ranging subject.

  Availability for Work
  Mr. Kirkwood
  To ask the Secretary of State for Employment what research has been commissioned to study the effect on claimants of the new availability for work tests.

  Mr. Eggar
  Unemployed claimants have always had to be available for work. Under the Social Security Act 1989
  209
  they also have to seek employment actively in each week for which they claim. We shall be monitoring the effects of this change. At this stage no research has been commissioned.

  Equal Pay
  Mr. Win Griffiths
  To ask the Secretary of State for Employment what is his policy on(a) maintaining and (b) strengthening the laws relating to equal pay for work of equal value.

  Mr. Nicholls
  The Government fully support and intend to uphold the principle of equal pay including the principle of equal pay for work of equal value.

  We monitor closely the working of the Equal Pay Act to ensure that it is operating fairly and effectively, and in accordance with European Community law. In addition, the Equal Opportunities Commission has a statutory duty to review the legislation. The commission is currently carrying out a review and any proposals for change which may emerge from this will be carefully considered, as will proposals received at any time from other interested parties.

  Domestic Service (Foreign Workers)
  Mrs. Dunwoody
  To ask the Secretary of State for Employment what information is available to non-British nationals arriving in the United Kingdom to work in domestic service; and if his Department will issue a pamphlet outlining the rights and protection available to foreign workers.

  Mr. Eggar
  Foreign workers coming to work as employees in the United Kingdom enjoy the same employment rights and protection as British workers. My Department publishes a comprehensive range of booklets covering these rights and they are available from jobcentres, unemployment benefit offices and citizen advice bureaux.

  Aquaculture
  Mr. Macdonald
  To ask the Secretary of State for Employment (1) if he will make it his policy to include aquaculture in the Government loans guarantee scheme until a new credit scheme to include agriculture and horticulture can be established to replace the scheme ended by the Ministry of Agriculture, Fisheries and Food in March;

  (2) when he expects to announce a replacement for the agriculture credit schemes which ended in March; and whether he will seek to include aquaculture in the Government loans guarantee scheme in the meantime.

  Mr. Eggar
  My Department is actively considering the feasibility of including agriculture and horticulture in the loan guarantee scheme and I expect to announce a decision shortly.

  Training
  Ms. Short
  To ask the Secretary of State for Employment by region and for Great Britain as a whole, how many employment training trainees are in continuation training with employers for each month since August; and if he will make a statement.
  210
  Mr. Nicholls
  Information about the number of people in employment training is not available broken down into continuation training and other categories of trainees. Continuation training is a valuable feature of employment training because it enables trainees to take up offers of jobs and still complete their training.

  Tourism
  Mr. Batiste
  To ask the Secretary of State for Employment whether he has any progress to report on the implementation of his review of tourism policy.

  Mr. Bevan
  To ask the Secretary of State for Employment if he will make a further statement on the review of tourism.

  Mr. Fowler
  I have now approved detailed proposals for implementing the results of the review on tourism that I announced on 6 July. The proposals have also been approved by the English tourist board (ETB) and the British Tourist Authority (BTA). The ETB and BTA will streamline their central operations releasing an additional £4 million to be spent directly by the regional tourist boards in England, under a form of contract to the ETB, and the the BTA's offices overseas.

  The changes will take effect from 1 April 1990. Both ETB and BTA in conjunction with my Department will be considering further steps to involve industry and regional tourist boards more closely in their work; to ensure maximum flexibility of response to market conditions; further to increase efficiency; and to focus Government funding more clearly and in a way which is consistent with general policy.

  I would wish to emphasise the importance of tourism to this country. The tourism industry makes a major contribution to the United Kingdom economy. Its total annual turnover is about £19 billion. About 1·5 million people are employed in the industry, and this number is growing rapidly. 1988 was a record year for overseas visitors to the United Kingdom, with nearly 16 million visits, and the performance in 1989 so far is even better.

  These new arrangements will provide positive opportunities for the ETB, the BTA and the regional tourist boards to increase the effectiveness of their work, in partnership with the private sector. The Government remain committed to the success and growth of the tourism industry.

  Film, Record and Publishing Industries
  Mr. Fisher
  To ask the Secretary of State for Employment what is the current level of employment in(a) the film industry, (b) the record industry and (c) the publishing industry.

  Mr. Nicholls
  [holding answer 27 November 1989]: The available information, taken from the 1987 census of employment, and relating to industry classifications particularly associated with filming, recording and publishing, is as follows:
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  Employees in employment in the United Kingdom, September 1987, by industry groups of the Standard Industrial Classification (SIC) 1980

  Groups of SIC 1980

  Numbers (thousands)

  971

  Film Production, Distribution and Exhibition

  29·8

  974

  Radio and Television, Services, Theatres, etc.

  77·1

  475

  Printing and Publishing

  341·4

  The full results of the 1987 census of employment for the United Kingdom were published in the October 1989 issue of the "Employment Gazette" (pp 540-558) a copy of

  Civilian workforce in employment in regions of the United Kingdom—Unadjusted

  Thousands

  Males

  Females

  of which

  Total

  Full-time

  Part-time

  June 1979

  South East

  4,839

  3,285

  2,006

  1,279

  8,124

  East Anglia

  481

  300

  178

  122

  781

  South West

  1,032

  712

  417

  295

  1,744

  West Midlands

  1,462

  920

  550

  370

  2,382

  East Midlands

  1,013

  658

  393

  265

  1,671

  Yorks and Humberside

  1,302

  842

  480

  362

  2,145

  North West

  1,700

  1,190

  719

  471

  2,890

  North

  802

  522

  314

  208

  1,325

  Wales

  716

  441

  276

  165

  1,157

  Scotland

  1,333

  929

  597

  332

  2,262

  Northern Ireland

  359

  239

  n/a

  n/a

  598

  June 1989

  South East

  4,972

  3,899

  2,490

  1,409

  8,871

  East Anglia

  520

  398

  232

  166

  918

  South West

  1,137

  915

  528

  386

  2,051

  West Midlands

  1,334

  1,003

  590

  412

  2,337

  East Midlands

  1,016

  778

  442

  336

  1,794

  Yorks and Humberside

  1,172

  928

  499

  429

  2,100

  North West

  1,540

  1,233

  718

  515

  2,773

  North

  706

  548

  302

  246

  1,255

  Wales

  649

  502

  294

  208

  1,151

  Scotland

  1,230

  976

  590

  386

  2,206

  Northern Ireland

  327

  257

  n/a

  n/a

  584

  n/a = Breakdown not available.

SOCIAL SECURITY

  War Widows (Pensions)
  Mr. Cran
  To ask the Secretary of State for Social Security what is the estimated number of widows of service men killed in action currently in receipt of war widows' pensions.

  Mrs. Gillian Shephard
  War widows' pensions are paid to all where the death of the husband was due to service in the armed forces. No distinction is made between deaths in action or from other causes. The information requested could be obtained only at disproportionate cost.

  Fraud Investigation
  Ms. Mowlam
  To ask the Secretary of State for Social Security how many officers were involved in social security fraud investigation work at the latest date for which figures are available; what the total estimated cost in respect of
  212
  which is in the Library. A copy of the standard industrial classification (SIC) (detailing the industries which make up groups of the SIC) can also be found in the Library.

  Labour Statistics
  Mr. Win Griffiths
  To ask the Secretary of State for Employment (1) how many men were in employment in each standard planning region of the United Kingdom in June 1979 and the latest date for which figures are available;

  (2) how many women were in full-time and part-time employment on the latest date for which figures are available in each standard planning region of the United Kingdom.

  Mr. Nicholls
  [holding answer 27 November 1989]: The information is as follows:

  such investigation amounts to, and what the total actual savings amounted to as a result of fraud investigation work.

  Mrs. Gillian Shephard
  Precise figures are not available, but it is possible to estimate the number of full-time equivalent posts on the basis of records of staff time expended by this Department on social security benefit fraud-related work. The number of full-time equivalent posts is 3,335. Estimated salary costs are now some £43 million in a full year. There are in addition some costs for travel and subsistence. The estimated savings achieved as a result of the Department's anti-fraud efforts in 1988–89 totalled £262 million.

  Disabled People
  Mr. Harris
  To ask the Secretary of State for Social Security what has been the change in the level of spending on the disabled over the past 10 years.
  213
  Mr. Scott
  Expenditure on benefits for long-term sick and disabled people has increased, in cash terms, from £1·8 billion in 1978–79 to £8·3 billion in 1989–90. In real terms, this is an increase of £4 billion in 1989–90 prices.

  Mr. Fearn
  To ask the Secretary of State for Social Security if he intends to introduce a specific benefit to cover the additional day-to-day costs incurred by people with disabilities.

  Mr. Scott
  There are already a number of social security benefits which provide help with the additional day-to-day costs incurred by people with disabilities. My right hon. Friend the Secretary of State for Social Security announced on 25 October a range of significant measures to extend the availability of such help. We shall announce within the next few months further proposals to improve the balance and structure of disability benefits.

  Local Government Finance
  Mr. Rooker
  To ask the Secretary of State for Social Security if he will place in the Library a copy of the form used by his Department's local offices to communicate names and addresses of certain claimants to the relevant local authority community charge registration officer.

  Mrs. Gillian Shephard
  I have placed a copy of form NHB10(CC) in the Library together with a copy of the instructions for the completion of the form that have been issued to DSS local offices.

  Benefits
  Mr. Meacher
  To ask the Secretary of State for Social Security how may low-paid workers he estimates would be better off if they were unemployed and claiming unemployment benefit; how many of these are full-time or part-time workers; and how these figures have changed over the last 10 years.

  Mrs. Gillian Shephard
  It is estimated that, out of approximately 14 million working heads of tax units, only about 15,000 who currently work full time would be better off out of work. Figures are not availble to show the number of part-time workers who would be better off unemployed or to show the change over the last 10 years.

  Income Support
  Mr. Meacher
  To ask the Secretary of State for Social Security what is his latest estimate of the number of(a) elderly people, (b) sick and disabled people, (c) unemployed people, (d) one-parent families, (e) others and (f) total in receipt of income support, giving the date to which his estimates apply.

  Mr. Scott
  The latest available information, which relates to May 1989, is as follows:

  Number of income support claimants (thousands)

  Elderly people1

  1,557

  Sick and disabled people2

  291

  Unemployed people

  1,254

  One-parent families

  741

  Others

  321

  Total in receipt of income support

  4,164

  214
  1Aged 60 or over.

  2 In receipt of a disability premium.

  Ms. Short
  To ask the Secretary of State for Social Security whether those under 18 years of age who are entitled to income support and required to be available for work are also required to meet the full demands of the actively seeking work test; and if he will make a statement.

  Mr. Scott
  Irrespective of age, anyone claiming income support because of unemployment, who is required to be available for work, has also to meet the "actively seeking employment" test.

  Social Fund
  Mr. Meacher
  To ask the Secretary of State for Social Security what were the percentage refusal rates in each of the last two years for social fund(a) grants and (b) budgeting loans in each local authority area.

  Mr. Scott
  Details of the number of applications processed and awards made for the period 11 April 1988 to 31 October 1989 listed by local office areas are available in the Library. The information that the hon. Member seeks may be derived from that source. Statistical information about the social fund is not collected by local authority area.

  Community Care
  Mr. Brian Wilson
  To ask the Secretary of State for Social Security if he will list, by social security office in Scotland, the number of applications for(a) community care grants and (b) emergency loans at each office since April 1989 and the number in each category which have been approved.

  Mr. Scott
  Details of the number of applications processed and awards made for community care grants, budget loans and crisis loans listed by region and local office are available in the Library.

  Pensioners
  Mr. Rooker
  To ask the Secretary of State for Social Security if he will bring forward changes to the rules by which pensioners cannot obtain arrears of payments of more than 12 months even though they can show good cause why payment orders had not been cashed.

  Mrs. Gillian Shephard
  Regulation 7 of the Social Security (Medical Evidence, Claims and Payments) Amendment Regulations 1989, which came into force on 9 October 1989, introduced a relaxation of the absolute 12-month time limit for the encashment of an instrument of payment of benefit. The amendment provides that the 12-month period can be extended by the independent statutory authorities where a continuous period of good cause is established for the non-encashment of the instrument of payment.

  Deserted Women (Financial Support)
  Mr. Nicholas Bennett
  To ask the Secretary of State for Social Security what percentage of women with children where partners have left them are receiving financial support from their former partners; and if he will make a statement.
  215
  Mrs. Gillian Shephard
  The only information that the Department collects about maintenance relates to lone parent families receiving income support. Ninety-five per cent. of these families are headed by lone mothers. The most recent figures available are for May 1988 and show that maintenance was paid for 23 per cent. of these families. The Government are naturally concerned that absent parents should meet their responsibilities for their children wherever they can afford to do so, and we are considering how to make our procedures as effective as possible.

  Source: Income Support Annual Statistical Enquiry May 1988.

  Disability Benefits
  Mr. Wigley
  To ask the Secretary of State for Social Security (1) how he intends to take account of the views of disability organisations in developing his proposals for changing social security provision for disabled people;

  (2) who will be invited to give evidence to assist him in reviewing social security benefits for disabled people.

  Mr. Scott
  I refer the hon. Member to my reply to the hon. Member for Don Valley (Mr. Redmond) and the right hon. Member for Manchester, Wythenshawe (Mr. Morris) on 23 October at columns 341–42.

  Mr. Wigley
  To ask the Secretary of State for Social Security if he will be establishing a working party to formulate proposals for the review of disability benefits; and if he will make a statement.

  Mr. Scott
  I refer the hon. Member to my reply to the hon. Member for Nottingham, North (Mr. Allen) on 13 November at columns 51–52.

  Mr. Wigley
  To ask the Secretary of State for Social Security if he will publish his proposals for social security benefits for disabled people as a Green Paper.

  Mr. Scott
  We will make a statement within the next few months announcing proposals to improve the balance and structure of benefits for disabled people. It is too early to say what form that statement will take.

  Ms. Short
  To ask the Secretary of State for Social Security what is the number of claimants in receipt of income support transitional protection who are getting child disability premium at the latest date for which figures are available.

  Mrs. Gillian Shephard
  Based on the May 1988 annual statistical inquiry, an estimated 2,000 claimants getting the disabled child premium were in receipt of transitional protection immediately after the April 1989 annual benefit uprating.

  Ms. Short
  To ask the Secretary of State for Social Security what is the number of claimants in receipt of income support transitional protection who are getting pensioner premium or higher pensioner premium at the latest date for which figures are available.

  Mrs. Gillian Shephard
  Based on the May 1988 annual statistical inquiry, an estimated 250,000 claimants getting the pensioner premium or the higher pensioner premium were in receipt of transitional protection immediately after the April 1989 annual benefit uprating.
  216
  Ms. Short
  To ask the Secretary of State for Social Security what is the number of claimants in receipt of income support transitional protection who are getting disability and/or severe disability premium at the latest date for which figures are available.

  Mrs. Gillian Shephard
  Based on the May 1988 annual statistical inquiry, an estimated 25,000 claimants getting the disability premium, or the disability premium and the severe disability premium were in receipt of transitional protection immediately after the April 1989 annual benefit uprating.

  Grants and Loans
  Ms. Short
  To ask the Secretary of State for Social Security how much for all social security offices individually in London north and London south for 1988–89, the budget was for(a) community care grants, and how much of it was paid out to claimants, (b) crisis loans, and how much of it was paid out to claimants, (c) budgeting loans, and how much of it was paid out to claimants and (d) for each of the three categories above, how many applications were made, how many were granted and how many refused.

  Mr. Scott
  Details by region and local office of the number of applications processed and awards made for community care grants, budget loans and crisis loans for each month, together with details of the budget allocations for 1988–89 are available in the Library. Details of the number of such applications that were refused may be obtained from that information.

  Welfare Milk Scheme
  Mr. Meacher
  To ask the Secretary of State for Social Security what plans his Department has to review the operation of the welfare milk scheme.

  Mr. Freeman
  I have been asked to reply.

  We have no plans to change the operation of the welfare milk token scheme as it affects beneficiaries. The Department is currently considering reimbursement prices for welfare milk tokens following negotiations with the liquid welfare milk suppliers.

HEALTH

  Abortion
  Mr. Alton
  To ask the Secretary of State for Health (1) if foreign mothers presenting for abortion in Britain are required to give the details of medical contact in their country of origin;

  (2) if he requires doctors to present documentation covering the medical details of abortion on foreign mothers undergoing abortion in Britain for presentation to their doctor on return to their country of origin.

  Mrs. Virginia Bottomley
  This kind of information is already obtained and given as part of good medical practice.

  Mr. Alton
  To ask the Secretary of State for Health if he collects any figures concerning the prevalence of abortion-induced sterility in women following abortions.

  Mrs. Virginia Bottomley
  No.
  217
  Mr. Alton
  To ask the Secretary of State for Health if he will list the information required of foreign mothers presenting for abortion prior to the abortion being performed.

  Mrs. Virginia Bottomley
  The information required is that normally collected from a patient seeking medical treatment.

  Mr. Alton
  To ask the Secretary of State for Health if he will make a statement detailing the evidence and reasons on which he based his Department's decision to require the availability of resuscitation equipment at abortions of unborn babies of 20 weeks' gestation.

  Mrs. Virginia Bottomley
  The decision was reached at a time when measurement of foetal size by ultra-sound was less well developed and not so widely available.

  Mr. Alton
  To ask the Secretary of State for Health if his Department has conducted any studies into the psychological effects on medical staff of performing late abortions; and if he will make a statement.

  Mrs. Virginia Bottomley
  No.

  Mr. Alton
  To ask the Secretary of State for Health what information he has as to the prevalence of the practice of severing the umbilical cord of an unborn baby several hours before conducting an abortion by dilation and evacuation.

  Mrs. Virginia Bottomley
  None. Severing of the umbilical cord is carried out during the first stage of one of the techniques which may be used for performing abortions. The choice of method is entirely a matter for the clinical judgment of the doctor concerned.

  Mr. Alton
  To ask the Secretary of State for Health what information he has as to the prevalence of the practice of anaesthetising unborn babies prior to dismemberment by dilation and evacuation in abortions after 18 weeks.

  Mrs. Virginia Bottomley
  None. The decision as to the anaesthetic technique to be employed in any particular case is a matter for the clinical judgment of the doctor responsible for the patient's care.

  Mr. Alton
  To ask the Secretary of State for Health what standards he specifies for counselling for mothers undergoing late abortions; and what checks he conducts to ensure that such standards are maintained.

  Mrs. Virginia Bottomley
  We require adequate counselling to be provided for all women seeking abortion. Checks on this are made in the course of the Department's inspection visits to approved places and registered pregnancy advice bureaux in the private sector.

  Counterfeit Medicines
  Mr. David Nicholson
  To ask the Secretary of State for Health whether National Health Service patients who receive counterfeit medicines will be entitled to a refund of any prescription charges involved.

  Mrs. Virginia Bottomley
  Yes. Should this situation arise and not be immediately corrected by the pharmacist it would be open to the family practitioner committee to recommend a refund as part of the complaints procedure.

  Disability
  Mr. Allen
  To ask the Secretary of State for Health what guidelines his Department has issued for the purposes of the Local Government Finance Act 1988 which cover the right of mentally handicapped people to demand services.

  Mr. Freeman
  The issuing of guidelines relating to the implementation of the Local Government Act 1988 is for my right hon. Friend the Secretary of State for the Environment. Severely mentally impaired people are exempt from liability to pay the personal community charge under the Act. Their right to local services is, however, no different from those who will be liable to pay the community charge, including those people with a less severe mental impairment.

  Mr. Pawsey
  To ask the Secretary of State for Health what percentage of the population suffers from any form of handicap, physical or mental.

  Mr. Freeman
  The information that my hon. Friend requires is available in the reports "The prevalence of disability among adults" and "The prevalence of disability among children" which were produced at the request of the Department by the Office of Population Censuses and Surveys. Copies have been placed in the Library.

  Grading
  Mr. Rooker
  To ask the Secretary of State for Health if the proposal to classify all nursing assistants to grades B and C in 1992 will involve payment of arrears of wages to those currently on grade A.

  Mrs. Virginia Bottomley
  There is no such proposal.

  Tampons
  Mr. Spearing
  To ask the Secretary of State for Health what study his Department has made concerning the risk to women's health arising from internal sanitary protection.

  Mrs. Virginia Bottomley
  For several years the staphylococcal reference laboratory of the public health laboratory service has gathered information about the occurrence of toxic shock syndrome, a condition which is associated, very rarely, with the use of internal sanitary protection.

  Haemoglobinopathy Services
  Mr. Boateng
  To ask the Secretary of State for Health when lie intends to write to the hon. Member for Brent, South about the survey of haemoglobinopathy services.

  Mr. Freeman
  I regret that pressure of other work has delayed completion of the analysis of the results of this survey, but it remains our intention to review present provision for counselling and genetic diagnosis and screening—including that for sickle cell disease and thalassaemia—and consider the need for further central guidance. I hope that this work can commence early in the new year.

  Health Advisory Service
  Mr. Alexander
  To ask the Secretary of State for Health what is the composition of the members of the Health Advisory Service who monitored health services in Central
  219
  Nottinghamshire health authority in 1989, stating their qualifications and the basis on and by whom they were appointed.

  Mrs. Virginia Bottomley
  The appointment of members of NHS Health Advisory Service visiting teams is a matter for the director, Professor Philip Seager. My hon. Friend may wish to write to him for the information.

  New Hospital, Kendal
  Mr. Jopling
  To ask the Secretary of State for Health (1) what he estimates will be the latest cost of constructing the new hospital in Kendal;

  (2) when he expects the new hospital in Kendal to receive its first patients.

  Mr. Freeman
  I understand that development of the new Westmorland General hospital, Kendal is proceeding to time and cost and the latest estimate of the works cost of the project (excluding fees and equipment) is £15·6 million. The first patient use is expected to be in April 1991.

  Hospital Site Sales
  Mr. Galbraith
  To ask the Secretary of State for Health if he will list by region the number of hospitals which have been considered for capital support against future site sale.

  Mr. Freeman
  Regional health authorities decide their own priorities for capital projects within overall limitations on their spending. Health authorities' plans for development of services in their area may involve the relocation of services from existing sites, with the eventual potential for sale of surplus sites, but it is not generally possible to link particular hospital developments with site sales. The Department does not provide capital support against specific future site sales.

  Child Abuse
  Mrs. Dunwoody
  To ask the Secretary of State for Health if he will instigate a national campaign against child abuse which is aimed specifically toward general education for citizens and all their children.

  Mrs. Virginia Bottomley
  The Department has long recognised the need to raise public awareness of child abuse. The Department has funded production of a training package by the Open University which was launched earlier this year. This aims to provide greater awareness and recognition skills to people who have had little or no knowledge of the subject, as well as professionals and voluntary workers. The Department also provides core funding for several child care organisations such as the NSPCC, Childline and the National Children's Bureau which, as part of their day-to-day activities, raise public awareness of child abuse.

  Huntington's Chorea
  Mr. Vaz
  To ask the Secretary of State for Health how many people in each of the last 10 years have(a) consulted a counsellor, (b) taken the test, (c) had a positive result and (d) had a negative result for the genetic tests to discover if they are carrying the hereditary disease Huntington's Chorea, by area health authority; and if he will make a statement.
  220
  Mr. Freeman
  This information is not held centrally, although we recognise the need to safeguard, by proper counselling, those at risk of developing or transmitting a hereditary disease such as Huntington's Chorea. Therefore, in the light of rapid advances in clinical genetics and the growth of interest in screening, we have initiated a review of the genetic services currently available in the NHS to see if central guidance on the scope and organisation of these services is required.

  NHS Reform
  Mr. Vaz
  To ask the Secretary of State for Health how many representations he has received from general practitioners regarding the new contracts; and if he will make a statement.

  Mrs. Virginia Bottomley
  Since the publication of "The 1990 Contract" on 3 August 1989, the Department has received over 800 letters on the subject, mostly from general practitioners. The regulations necessary to introduce the new contract were laid on 16 October arid have been approved by Parliament. All GPs will shortly be receiving their new terms of service and the revised statement of their NHS fees and allowances. The new arrangements will come into operation from 1 April 1990.

  Mr. Vaz
  To ask the Secretary of State for Health if he will make a statement regarding budgeting levels for regional health authorities and family practitioner committees in relation to the Government White Paper.

  Mrs. Virginia Bottomley
  We have announced that, following this year's public expenditure survey, an additional £257 million will be made available in the NHS as a whole in England in 1990–91 for initiatives arising from the White Paper "Working for Patients". This brings the total available for regional health authorities and family practitioner committees in England next year for implementing the White Paper to £300 million. This is part of the extra £2·6 billion resources that the NHS in the United Kingdom will have available next year, £2·2 billion of which will be for England.

  Mr. Latham
  To ask the Secretary of State for Health to what extent he intends that general practitioners who are not budget holders will be permitted to choose the hospital to which they send their patients for(a) non-emergency treatment on an inpatient basis and (b) maternity care, including delivery of the baby; and whether he will make a statement.

  Mrs. Virginia Bottomley
  For all services, including non-emergency and maternity services, GPs should usually be able to choose the hospital that they consider most appropriate, taking account of their patients' needs and wishes. GPs who are not fund-holders will normally refer patients to hospitals with which the district health authority (DHA) has placed contracts. In placing those contracts the DHA will be expected to secure the referral patterns which local GPs wish to see put in place, unless there are compelling reasons for not doing so. In addition, the DHA will maintain a financial reserve to cover those occasions when GPs need to refer patients to hospitals with which their DHA has not contracted.

  Mr. Latham
  To ask the Secretary of State for Health what arrangements will be made in relation to the
  221
  assessment of the unit costs of small local community hospitals in the event of budget-holding general practitioners seeking to place their patients in larger hospitals with lower unit costs; and whether he will make a statement.

  Mrs. Virginia Bottomley
  We will be issuing guidance next year on the costing of hospital services in respect of the operation of general practice fund holding.

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

  Mrs. Virginia Bottomley
  I refer the hon. Member to the reply that my right hon. and learned Friend gave to my hon. Friend the Member for Suffolk, South (Mr. Yeo) on 3 November 1989 at column 385.

  Maternity Statistics
  Mr. Latham
  To ask the Secretary of State for Health what is the average length of time spent by mothers who have given birth to their first babies in district general hospitals between the birth and their discharge; what is the average lying-in period in maternity units in small local community hospitals; and what advice he has given to regional health authorities about the provision of lying-in time, especially for those mothers having their first babies.

  Mrs. Virginia Bottomley
  Information is not held centrally on length of stay in maternity units which distinguishes between district general hospitals and smaller local hospitals, nor are we able to identify first babies. In 1985, the last year for which data are available, the average length of stay post-delivery for all births was 4·1 days.

  It is for health authorities to determine their own policies on post-natal care including the timing of hospital discharge which, in addition to a clinical assessment of the health of mothers and their babies, takes into account the family's social and economic circumstances, the location of the maternity unit in relation to the centres of population and the scope of the community health services.

  Child Protection Register
  Mr Wigley
  To ask the Secretary of State for Health at what age local authorities remove children from the child protection register; and if he will bring forward legislation to ensure that all children can be kept on such registers until the age of 18 years.

  Mrs. Virginia Bottomley
  Local authorities will normally remove children from the child protection register when it is decided in a case conference that formal inter-agency working is no longer necessary to protect the child. The age of the child may be one consideration in such a decision. Provided the criteria for continuing registration are met, there is nothing to prevent a young person remaining on the child protection register until the age of 18 years. The "Survey of Children and Young Persons on Child Protection Registers Year Ending 31 March 1988", copies of which are available in the Library, shows that there were an estimated 1,700 young persons aged 16 and over on child protection registers in England at 31 March 1988.

  Residential Homes
  Mr Wigley
  To ask the Secretary of State for Health how many local authorities in England and Wales currently insist that owners of small homes for residential care inform them of their presence; how many local authorities have a register for such information; if he will make it compulsory for all residential home owners serving the vulnerable in society to inform their respective local authorities; and if he will make it compulsory for all local authorities to keep a register of these homes.

  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Health if he will bring forward legislation making it compulsory for local authorities to assess all intending providers of residential care and, if approved, place them on a register.

  Mrs. Virginia Bottomley
  Under part 1 of the Registered Homes Act 1984 the owners of private and voluntary residential care homes catering for four or more residents are required to register with the local social services authority. There are no plans at present to extend this requirement to cover homes with fewer than four places. Information on any records held by local authorities of such homes is not held centrally.

  Sexual Abuse
  Mr. Wigley
  To ask the Secretary of State for Health if he will introduce safeguards to protect individual disabled people over the age of 17 years, who live at home with a family member convicted of a sexual abuse offence who is likely to re-offend.

  Mrs. Virginia Bottomley
  At present, there is a specific statutory provision reflecting the needs of people with a severe mental handicap who are the subject of sexual abuse. Under the Sexual Offences Act 1957 is is an offence for a man to have sexual intercourse with a woman whom he knows or suspects to be mentally handicapped. Under the Sexual Offences Act 1967 homosexual acts with a man whom is known to be suffering severe abnormality within the meaning of the Mental Health Act 1959 are also unlawful unless the offender can prove he was not aware of the fact. We have no plans for further additional statutory provisions.

  Carers
  Mr. Wigley
  To ask the Secretary of State for Health if he will introduce training requirements for those establishing themselves as carers of residential placements.

  Mrs. Virginia Bottomley
  Training is available from a variety of sources. We have asked local authorities, in using the training support grant for the elderly, to have regard to the training needs of independent agencies. As part of the follow-up by the Department to the Wagner report on residential care, the National Institute for Social Work has been commissioned to undertake a programme to promote the training of staff in homes of all types.

  The Registered Homes Act 1984 requires people running residential care homes to be fit persons and the Residential Care Homes Regulations 1984 require home owners to employ suitably qualified and competent staff. Guidance on the qualifications and experience the person running the home should normally have is contained in "Home Life", a code of practice for residential care.
  223
  Mr. Wigley
  To ask the Secretary of State for Health what legal sanctions are enforced if cases of malpractice among residential carers are found; and if he will make a statement.

  Mrs. Virginia Bottomley
  Local authorities have powers under the Registered Homes Act 1984 to cancel an existing registration where the person registered or any other person concerned with the running of a residential care home is found to be unfit to do so. They may also cancel a registration where the person registered fails to provide adequate services or facilities in the home or otherwise fails to comply with the provisions of the Act or regulations made under it. Where a criminal offence is alleged to have been committed, action is a matter for the police.

  Community Hospitals
  Mr. Latham
  To ask the Secretary of State for Health whether he will make a statement on the role and extent of services which he intends to be delivered in local community hospitals; and how he intends these services to be made available to non-budget holding partnerships of general practitioners.

  Mrs. Virginia Bottomley
  Under the proposals in the National Health Service and Community Care Bill, district health authorities (and those GPs with practice budgets) will take into account the services offered by community hospitals when they place contracts to ensure the provision of a comprehensive range of services for their patients. Where DHAs have placed contracts with community hospitals the services offered will be available as now to those general practitioners who do not hold a practice budget.

  Patients treated in National Health Service hospitals St. Helens and Knowsley district health authority

  1982

  1986

  1987–88

  11988–89

  In-patient cases treated

  32,965

  34,045

  35,140

  35,346

  Day cases

  6,271

  8,034

  7,875

  9,549

  New out-patients

  34,181

  38,433

  37,381

  40,533

  Total out-patients attendances

  166,574

  169,750

  163,726

  164,773

  1 Provisional

  Source: 1982, 1986: SH3 return.

  1987–88, 1988–89: SH3A, KH09, KP70 returns.

  In-patient waiting lists

  St. Helens and Knowsley district health authority at at 31 March

  Total

  1982

  3,405

  1986

  3,868

  1987–881

  3,775

  1988–891

  3,586

  1 Total less self-deferred.

  Mr. John Evans
  To ask the Secretary of State for Health if he will make a statement on ward closures in the St. Helens and Knowsley health authority.

  Mrs. Virginia Bottomley
  The management of health services locally is a matter for the health authority concerned. The hon. Member may wish to contact the chairman of the St. Helens and Knowsley health authority.

  Young Disabled People
  Mr. John Evans
  To ask the Secretary of State for Health how many consultants are employed by each Mersey health authority specifically to meet the needs of younger disabled people.

  Mrs. Virginia Bottomley
  We do not hold this information centrally. The hon. Member may wish to contact the chairman of Mersey regional health authority, specifying which age group he has in mind.

  St. Helens and Knowsley Health Authority
  Mr. John Evans
  To ask the Secretary of State for Health if he will make a statement on capital investment funding for St. Helens and Knowsley health authority in relation to capital investment funding in other health authorities in the Mersey region since 1974.

  Mr. Freeman
  We do not hold this information centrally. It is for regional health authorities to decide how they allocate funding, both capital and revenue, among the districts. The hon. Member may wish to contact the chairman of Mersey regional health authority.

  Mr. John Evans
  To ask the Secretary of State for Health if he will make a statement on trends in patient demand in the St. Helens and Knowsley health authority area.

  Mr. Freeman
  Information in the form requested is not available. However, recent trends in the number of patients treated and in inpatient waiting lists are shown in the following tables:

  Funding (Mersey Region)
  Mr. John Evans
  To ask the Secretary of State for Health what representation he has received from Mersey regional health authority with regard to levels of funding to maintain standards of patient care.

  Mr Freeman
  We have not received any such representation from the Mersey regional health authority.

  Anti-tetanus Injection
  Mr. William Ross
  To ask the Secretary of State for Health what is the cost to the National Health Service each year or financial year of anti-tetanus booster injections.

  Mr. Freeman
  The information requested is not held centrally.

  Mr. William Ross
  To ask the Secretary of State for Health if he will insert in the new general practitioner contracts guidelines on the frequency with which anti-tetanus booster injections should be offered.
  225
  Mr. Freeman
  Guidelines on anti-tetanus and other vaccinations are set out in the memorandum "Immunisation Against Infectious Disease" which is prepared for the health departments by the joint committee on vaccination and immunisation, and issued to all doctors, a copy of which has been placed in the Library. A new edition of the memorandum is due to be published early next year.

  Genetic Modification
  Mr. Sims
  To ask the Secretary of State for Health in the light of scientific developments indicating the possibility of medical treatment involving genetic modification, what guidance is available to doctors contemplating such treatment; and what steps he is taking to inform himself of progress in this area and of the implications of such developments.

  Mrs. Virginia Bottomley
  Developments are taking place in this field. Following primary research in animals there is within the next two to three years the prospect of treating adults and children with certain serious conditions of genetic origin by gene modification. Such modification would be confined to the individual patient and not transmissible to offspring. The Government consider that it is important that the introduction of such treatments should be carefully studied in advance. I have therefore decided to set up a committee on the ethics of gene therapy with the following terms of reference:"To draw up ethical guidance for the medical profession on treatment of genetic disorders in adults and children by genetic modification of human body cells; to invite and give ethical consideration to proposals from doctors wishing to use such treatment on individual patients and to provide advice to the United Kingdom health Ministers on scientific and medical developments which have a bearing on the safety and efficacy of human gene modifications."
  The committee will report to the Secretaries of State for Health, for Scotland, for Wales and for Northern Ireland. It will be chaired by Sir Cecil Clothier KCB, QC (formerly Parliamentary Commissioner for Administration and Health Service Commissioner for England, Scotland and Wales and Chairman of the Police Complaints Authority). Its members are:
  Miss Margaret Auld (formerly Chief Nursing Officer Scottish Home and Health Department), Professor Martin Bobrow (Prince Philip Professor of Paediatric Research, United Medical Schools of Guy's and St. Thomas'), Mrs. Jane Davies (Member, North West Thames RHA), Professor the Rev. Canon Gordon Dunstan, DD, LLD, FSA (Emeritus Professor of Moral and Social Theology, University of London), Dr. Alison Hill (general medical practitioner, Oxfordshire), Professor June Lloyd (President, British Paediatric Association, Nuffield Professor of Child Health, Institute of Child Health, London), Mr. Nick Ross (Broadcaster), Professor Sir David Weatherall FRS (Nuffield Professor of Clinical Medicine, Oxford University), Professor R. Weiss (Director, Chester-Beattie Laboratories).

  Although no such treatment is at present being carried out in the United Kingdom it seems likely that it will be available within a few years. The Government consider it important that the introduction of such treatments should be carefully studied in advance.

  Information Technology
  Mr. Warren
  To ask the Secretary of State for Health what plans he has to support information and information technology requirements arising out of "Working for Patients" and "Promoting Better Heath"; and if he will make a statement.

  Mr. Roger Freeman
  The reforms outlined in "Working for Patients" will assist in integrating the NHS. There will, for example, be better links between primary and secondary care. District health authorities will need to work closely with GPs to take account of GPs' views when agreeing patterns of provision. GPs holding their own funds for elective and diagnostic services will be involved in direct transactions with hospitals.

  These changes come into effect in April 1991, and health authorities, hospitals and GP practice fund holders will need to be ready for them. In the first instance, block contracts will predominate, but with experience contracts will become increasingly sophisticated. To reap all the considerable benefits of these changes, the NHS will need to make major progress in such matters as the letting and management of contracts, the definition and measurement of quality of care and costing and resource management. To do all this they will need improved information systems and investment in technology to support them.

  We can, however, build upon present information systems for the task ahead. Implementation of the Körner recommendations put in place a range of minimum data sets that provide an excellent foundation for the post-review NHS. Some changes in the data sets will be necessary, of course, and one of the review implementation projects is considering what these should be.

  Spending on computing in health authorities has risen from £36 million in 1983–84 to around £130 million in 1988–89. This very considerable resource indicates the priority which we—and health authorities themselves—have given to information and IT in managing the delivery of health care. Computerisation is not, of course, an end in itself. District health authorities and the family practitioner services need to base IT developments on careful assessment of their information needs and the best means, clerical or IT, of meeting them. That is why the information requirements of the proposals in "Working for Patients" are being considered by working groups involving both the NHS and the Department. We expect the development of IT to be an evolutionary process. The past developments in IT already complement the general direction of the proposals in "Working for Patients" and the IT systems now in use in the NHS provide a firm base on which to build. For example, the new arrangements for contracting for services in the NHS, which will be introduced in April 1991, will initially be able largely to operate on the basis of existing information systems. In the longer term, as more sophisticated forms of contracting develop, we would expect changes in the information which is needed and the way it is provided. We believe that IT will have an important role in supporting such developments.

  Starting with the hospital and community health services, we propose to make available the following resources for 1990–91:
  227

  £ million

  Capital

  Revenue

  Total

  Resource management

  39

  39

  78

  Hospital information and support systems

  21

  4

  25

  "Working for Patients" set out our plans to extend the introduction of resource management to 260 acute hospitals by April 1992. The £78 million now available for resource management in 1990–91 will enable progress to be made in many sites. I expect to announce very soon the names of the 20 sites which will move into full resource management this year, following a period of preparation and the commencement of training, and the details of the programme for the remaining sites will follow. The management executive have evaluated the progress made at the six pilot sites and are still discussing some details of the evaluation with the joint consultants committee.

  It is important to emphasise that resource management is important in its own right in involving clinicians in hospital management and in giving both clinicians and managers the information they need. A major part of the funds available will be directed at these aspects. The proposed system of contracts will be supported at the outset by existing information systems. In due course, resource management systems will provide much information which will allow contracts to become more precisely specified. But the pace of implementation of resource management set out in the White Paper and now matched by the funds which will achieve it will not be rushed for this reason.

  We believe strongly that IT systems can benefit patients, not only by making NHS administration more efficient and by helping healthcare professionals to manage their resources better, but in more direct ways, such as the Eurodiabeta project at St. Thomas' hospital, which is developing better management of care for diabetics.

  We have made funds available to enable the two HISS projects in Darlington and Greenwich to move ahead towards completion and for work to continue on the Nottingham HISS project—which is using new methods of specifying and designing hospital computer systems. We shall also fund other projects in this field in 1990–91 to broaden our experience both in achieving integrated systems and in obtaining the maximum benefit from them.

  District health authorities, too, will need information systems to help them carry out their new functions such as placing and monitoring contracts and, most importantly, assessing the health needs of the population they serve. A study is under way to assess how best to meet districts' information needs. We will make a further statement next year on support for such systems.

  Although we are intending to fund a number of different initiatives at sites throughout the country, we will take steps to ensure that the money is spent in a co-ordinated way, irrespective of the level at which the initiative takes place. We also believe that the NHS could make more use of its considerable purchasing power to get even better value for money in IT and we will be taking steps to encourage this, in concert with the NHS procurement directorate and the centre of responsibility for computer procurement based at South Western RHA.

  We are well aware that information systems require expertise—people to design, build and operate them, as
  228
  well as to use the information they produce. These people need training and we have established a number of centrally financed projects—some £41/2 million will be spent over the next two years—to build up a training infrastructure for information management and technology in the NHS. As the need for exchange of information between different parts of the service grows, there will be increasing need for an electronic network which facilitates this exchange. The Department has therefore recently entered into negotiation for a private network for the NHS under the umbrella agreement between the Central Computer and Telecommunications Agency and Racal Data Networks Ltd. for the Government data network. The first links to the network will be between family practitioner committees (FPCs) and the newly computerised NHS central register, starting in mid-1990. Thereafter, it is planned to link other FPS administrative bodies and those FPS practitioners with computer systems meeting the required communications standards. We expect this FPS network to evolve over time to be capable of handling most of the needs of the wider NHS.

  FPCs are already working to improve the quality of the data they hold—data which will assume an increasing importance in a contractual environment. The management information requirements for FPCs arising from "Promoting Better Health" have been examined and work has begun to develop some of the information systems required.

  As far as IT in GPs' practices is concerned, the Government have already made it clear that we are fully behind the movement towards more and better computerisation. Quite apart from the importance of IT to link family doctors to family practitioner committees and hospitals, we are keen to encourage them to use computers to secure clinical benefits for their patients, to provide a wider range of services and to manage their practices more effectively.

  To encourage that, we announced earlier this year that, from 1 April 1990, GPs will be able to claim 50 per cent. direct reimbursement of their computer maintenance costs, the balance to be reimbursed indirectly through the setting of general fees and allowances. I am now able to announce that in 1990–91 additional resources amounting to £24 million will be made available for computerization in general practice. From 1 April 1990, all GPs will be able to claim 50 per cent. direct reimbursement of the costs of purchasing, leasing, upgrading and maintenance of their computer systems, together with 70 per cent. of the initial staff costs of setting up the systems. The balance of these costs will be reimbursed indirectly. These allowances will be subject to upper limits based on a sliding scale according to practice list sizes and will take account of systems obtained in 1989–90. We shall be discussing the details with representatives of the medial profession and in due course will publish them in the statement of fees and allowances. These revised arrangements will be reviewed after three years. Additional assistance will be announced shortly for GPs who choose to be funded through practice budgets to reflect their special computer needs.

  We are also making available additional sums from 1991–92 to set up a central GP computer development and research fund to examine and evaluate developments in this field.

  We have also set aside funds to develop and pilot systems to provide GPs with information on waiting times for hospital treatment. This, together with other

  229
  information relating to availability, cost and quality of service, will enable them to refer their patients to hospitals which provide a good quality service in a reasonable time.

  As well as information about their patients and practices and the contracts held by their DHAs, GPs will also require information about their prescribing costs. This will help them to monitor expenditure against their indicative prescribing budgets. We are funding the changes necessary to provide them from the enhanced prescription analyses and cost (PACT) system being developed at the prescription pricing authority. All GPs will be able to monitor such information without computer assistance but, over time, information technology will be of growing assistance in this field.

  A more detailed document setting out our strategy for the information needs and use of information technology in the NHS will be launched for consultation on 17 January 1990.

DEFENCE

  Short-range Nuclear Forces
  Mr. Benn
  To ask the Secretary of State for Defence whether any reassessment has been made of the need to replace short-range nuclear forces in the light of the recent political changes in eastern Europe.

  Mr. Buchan
  To ask the Secretary of State for Defence whether any reassessment has been made of the need to replace short-range nuclear forces in the light of the recent political changes in eastern Europe.

  Mr. James Lamond
  To ask the Secretary of State for Defence whether any reassessment has been made of the need to replace short-range nuclear forces in the light of the recent political changes in eastern Europe.

  Dr. Reid
  To ask the Secretary of State for Defence whether any reassessment has been made of the need to replace short-range nuclear forces in the light of the recent political changes in eastern Europe.

  Mr. Archie Hamilton
  At its summit in May, NATO reaffirmed its position that for the foreseeable future there is no alternative to the Alliance's strategy of deterrence based on an appropriate mix of adequate and effective nuclear and conventional forces which will continue to be kept up to date where necessary.

  Gurkhas
  Mr. Atkinson
  To ask the Secretary of State for Defence if he has any plans to deploy a Gurkha regiment in Northern Ireland.

  Mr. Archie Hamilton
  There are no current plans to deploy Gurkha infantry regiments to Northern Ireland.

  Eastern Europe
  Mr. Wareing
  To ask the Secretary of State for Defence whether any reassessment has been made of the need to develop a new strategy to replace flexible response in the light of the recent political changes in eastern Europe.

  Mr. Tony Banks
  To ask the Secretary of State for Defence whether any reassessment has been made of the 230
  need to develop a new strategy to replace flexible response, in the light of the recent political changes in eastern Europe.

  Ms. Ruddock
  To ask the Secretary of State for Defence whether any reassessment has been made of the need to develop a new strategy to replace flexible response, in the light of the recent political changes in eastern Europe.

  Mr. Archie Hamilton
  We continue to believe that NATO's strategy on flexible response and forward defence provides the best means of maintaining deterrence and thereby preserving peace in Europe.

  Mr. Terry Fields
  To ask the Secretary of State for Defence if he will make a statement on his assessment of the implications of recent developments in eastern Europe on United Kingdom arms expenditure.

  Mr. Wigley
  To ask the Secretary of State for Defence in the light of the changes in the politics of eastern Europe in the current year, whether he intends to reduce levels of defence expenditure.

  Mr. Archie Hamilton
  Welcome though the positive developments in eastern Europe are, proper funding for defence must be maintained. It would be quite wrong to pre-empt the outcome of the current arms control talks by decreasing our defence expenditure when there is still such a large imbalance of forces in Europe.

  Mr. Grocott
  To ask the Secretary of State for Defence whether he is undertaking any reviews of Britain's defence strategy in the light of the breaching of the Berlin Wall.

  Mr. Archie Hamilton
  We remain committed to NATO, whose policies of seeking dialogue with the East while maintaining adequate defensive strength have contributed to the political changes taking place in the GDR and elsewhere in eastern Europe.

  Mr. Gill
  To ask the Secretary of State for Defence what is his assessment of the military threat from the Warsaw pact countries in the light of recent developments in central Europe.

  Mr. Archie Hamilton
  I refer my hon. Friend to the answer given by my right hon. Friend the Prime Minister to the hon. Member for Great Grimsby (Mr. Mitchell) on 15 November 1989 at column 269.

  Mr. Jessel
  To ask the Secretary of State for Defence what is the number of submarines, tanks, military aircraft and army divisions at the disposal of the Warsaw pact countries taken together; and what are the corresponding figures for the North Atlantic Treaty Organisation countries.

  Mr. Archie Hamilton
  I refer my hon. Friend to figures 8 and 10 of chapter 6 of volume I of the "Statement on the Defence Estimates 1989" (Cm 675), and to the NATO publication "Conventional Forces in Europe: The Facts", published in November 1988, a copy of which is in the Library of the House.

  Tanker Aircraft
  Mr. Haynes
  To ask the Secretary of State for Defence if he will make a statement about the replacement programme of tanker aircraft for mid-air refuelling.
  231
  Mr. McKelvey
  To ask the Secretary of State for Defence if he will make a statement about the replacement programme of tanker aircraft for mid-air refuelling.

  Mr. Lofthouse
  To ask the Secretary of State for Defence if he will make a statement about the replacement programme of tanker aircraft for mid-air refuelling.

  Mr. Alan Clark
  As the Victor aircraft reach the end of their useful life, current plans are to convert a number of in-service VCIO and Tristar aircraft to provide air-to-air refuelling for the RAF.

  Frigates
  Mr. Allen Adams
  To ask the Secretary of State for Defence when he will be announcing orders for the next hatch of type 23 frigates.

  Mr. Bradley
  To ask the Secretary of State for Defence when he will be announcing orders for the next batch of type 23 frigates.

  Mr. Neubert
  I hope to announce the outcome of the competition by the end of this year.

  Lance Missiles
  Mr. Pike
  To ask the Secretary of State for Defence what plans there are to reduce the number of Lance missiles in Europe.

  Mr. Morgan
  To ask the Secretary of State for Defence what plans there are to reduce the number of Lance missiles in Europe.

  Mr. Frank Cook
  To ask the Secretary of State for Defence what plans there are to reduce the number of Lance missiles in Europe.

  Mr. McAllion
  To ask the Secretary of State for Defence what plans there are to reduce the number of Lance missiles in Europe.

  Mr. Archie Hamilton
  There are no such plans.

  Free-fall Nuclear Bomb
  Mr. Cohen
  To ask the Secretary of State for Defence what expenditure has been incurred to date on the study of possible replacement options for the replacement of the WE177 free-fall nuclear bomb.

  Mr. Patchett
  To ask the Secretary of State for Defence what expenditure has been incurred to date on the study of possible replacement options for the replacement of the WEI 77 free-fall nuclear bomb.

  Mr. Alan Clark
  I refer the hon. Members to the answer I gave earlier today to the hon. Member for Caerphilly (Mr. Davies).

  Mr. Cartwright
  To ask the Secretary of State for Defence if he will make a statement about progress on the replacement of the WE177 free-fall nuclear bomb.

  Mr. Alan Clark
  I have nothing to add to the answer given to my hon. Friend the Member for Wyre (Mr. Mans) on 24 October 1989 at column 429 by my hon. Friend the Minister of State for the Armed Forces.
  232

  Soviet Union
  Mr. Ian Taylor
  To ask the Secretary of State for Defence whether he has any evidence that the Soviet Union has altered its military doctrine; and what changes there have been.

  Mr. David Shaw
  To ask the Secretary of State for Defence whether he has any evidence that the Soviet Union has altered its military doctrine; and what changes there have been.

  Mr. Summerson
  To ask the Secretary of State for Defence whether he has any evidence that the Soviet Union has altered its military doctrine to one that is solely defensive.

  Mr. Archie Hamilton
  The Soviet Union formally redefined the political aspect of its public military doctrine in 1987, to emphasise both the priority aim of the avoidance of war, and its defensive nature. The cuts in Soviet forces announced by President Gorbachev at the United Nations in December 1988 and the accompanying restructuring of its remaining forces along strictly defensive lines, are quoted as evidence of the practical implementation of this doctrine. These measures are very welcome, but even when they are fully implemented, the Warsaw pact will still possess a significant military superiority over NATO in Europe.

  RTM322 Helicopter Engine
  Mr. Page
  To ask the Secretary of State for Defence what progress has been made in selecting the RTM322 helicopter engine.

  Mr. Alan Clark
  A competition for the supply of more powerful engines for the EH101 helicopter was run by the Ministry of Defence last year. It was won by the Rolls-Royce Turbomeca RTM322 engine, which beat the rival General Electric CT7 series engine on both cost and technical grounds.

  Exceptionally, the competition was run in advance of an established requirement for a more powerful engine in the EH101, in recognition of Rolls-Royce Turbomeca's desire for an early decision. Work to define the production standard of the aircraft (including its power requirement) is well in hand and will be completed shortly. A decision in respect of the engine contract will be made as soon as possible thereafter.

  Pegasus 11–61 Engine
  Mr. Stern
  To ask the Secretary of State for Defence if he has yet identified a United Kingdom requirement for the Pegasus 11–61 aero engine.

  Mr. Alan Clark
  There is currently no United Kingdom requirement for a more powerful engine for the RAF's Harrier.

  Defence Budget
  Ms. Abbott
  To ask the Secretary of State for Defence what assessment he has made of the increased military threat to the United Kingdom; and what are the reasons for the increase in the defence budget as announced in the Autumn Statement.
  233
  Mr. Martlew
  To ask the Secretary of State for Defence what assessment he has made of the increased threat to the United Kingdom to justify the increase in the defence budget as announced in the Autumn Statement.

  Mr. McCartney
  To ask the Secretary of State for Defence what assessment he has made of the increased military threat to the United Kingdom; and what are the reasons for the increase in the defence budget as announced in the Autumn Statement.

  Mrs. Mahon
  To ask the Secretary of State for Defence what assessment he has made of the increased military threat to the United Kingdom; and what are the reasons for the increase in the defence budget, as announced in the Autumn Statement.

  Mr. Archie Hamilton
  The plans for the defence budget reflect the Government's resolve to maintain the necessary funding for a strong defence. Whilst we welcome the positive developments in Warsaw pact countries, we shall not undermine the prospects for sound arms control agreements by implementing force reductions in advance.

  Conventional Forces
  Mr. Nigel Griffiths
  To ask the Secretary of State for Defence what assessment he has made of the need for new strategies and doctrines for conventional forces over the next 10 years.

  Mr. David Young
  To ask the Secretary of State for Defence what assessment has been made of the need for new strategies and doctrines for conventional forces over the next 10 years.

  Mr. Fatchett
  To ask the Secretary of State for Defence what assessment has been made of the need for new strategies and doctrines for conventional forces over the next 10 years.

  Mr. Wall
  To ask the Secretary of State for Defence what assessment has been made of the need for new strategies and doctrines for conventional forces over the next 10 years.

  Mr. Archie Hamilton
  NATO's fundamental strategies of flexible response and forward defence, together with its commitment to seek dialogue with the Warsaw pact, have successfully contributed to progress on arms control, and remain valid. Alliance plans will continue to take account of current military realities.

  Ms. Walley
  To ask the Secretary of State for Defence what assessment has been made of the environmental impact of negotiated cuts in British conventional forces over the next 10 years.

  Mr. Battle
  To ask the Secretary of State for Defence what assessment has been made of the environmental impact of negotiated cuts in British conventional forces over the next 10 years.

  Mr. Archie Hamilton
  It is not possible at this stage to assess the impact on the environment of the negotiations on conventional forces in Vienna, which cover the forces of all NATO and Warsaw pact countries, not just those in the United Kingdom. Regardless of force levels, however, the essential training of British troops is always conducted with a view to causing minimum disruption to the environment and local population.
  234

  Helicopters
  Mr. Duffy
  To ask the Secretary of State for Defence if he is satisfied with the performance of helicopters assigned to the 24 Airmobile Brigade; and if he will make a statement.

  Mr. Archie Hamilton
  Yes.

  US Defence Secretary
  Mr. Barry Field
  To ask the Secretary of State for Defence when he next intends to meet his American counterpart to discuss United States defence levels in western Europe.

  Mr. Bill Michie
  To ask the Secretary of State for Defence what discussions he has had with his United States counterpart about the possibility of nuclear-tipped tactical short-range attack missiles being deployed on aircraft based in the United Kingdom.

  Mr. Wray
  To ask the Secretary of State for Defence what discussions he has had with his United States counterpart about the possibility of nuclear-tipped tactical short-range attack missiles being deployed on aircraft based in the United Kingdom.

  Ms. Primarolo
  To ask the Secretary of State for Defence what discussions he has had with his United States counterpart about the possibility of nuclear-tipped tactical short range attack missiles being deployed on aircraft based in the United Kingdom.

  Mr. Archie Hamilton
  My right hon. Friend the Secretary of State is today attending the meeting of NATO's defence planning committee in Brussels, where he will meet Mr. Cheney. They will discuss a range of matters of mutual interest.

  Mr. Wallace
  To ask the Secretary of State for Defence when he next plans to meet the United States Secretary of State for Defence; and what issues he plans to raise.

  Mr. Archie Hamilton
  My right hon. Friend will discuss a wide range of matters of mutual interest with Mr. Cheney at today's meeting of the defence planning committee in Brussels.

  Mr. Hind
  To ask the Secretary of State for Defence when he plans to meet the United States Secretary of State for Defence to discuss reductions in United States forces in Europe; and if he will make a statement.

  Mr. Archie Hamilton
  I refer my hon. Friend to the reply I gave earlier today to my hon. Friend the Member for Faversham (Mr. Moate).

  Troops (Medical Training)
  Dr. Moonie
  To ask the Secretary of State for Defence to what level of medical proficiency have troops involved in civilian ambulance and emergency work been trained.

  Mr. Skinner
  To ask the Secretary of State for Defence to what level of medical proficiency have troops involved in civilian ambulance and emergency work been trained.
  235
  Mr. Norman Hogg
  To ask the Secretary of State for Defence to what level of medical proficiency have troops involved in civilian ambulance and emergency work been trained.

  Mr. Nellist
  To ask the Secretary of State for Defence to what level of medical proficiency troops involved in civilian ambulance and emergency work have been trained.

  Mr. Archie Hamilton
  Medical orderlies currently deployed with military ambulances undertaking civilian accident and emergency work have all received special training in basic nursing and medical skills in order to deal at an appropriate level with all likely first aid and emergency incidents.

  Our service personnel should be congratulated on the professional and dedicated way in which they have undertaken this essential work under difficult circumstances.

  Ferranti
  Mr. Strang
  To ask the Secretary of State for Defence if he has met the chairman of Ferranti to discuss the company's future as an indigenous defence contractor; and if he will make a statement.

  Mr. Alan Clark
  My right hon. Friend and I, and Ministry of Defence officials, maintain contact with the senior management of all major defence contractors, including Ferranti. The details of our discussions are always confidential.

  Efficiency Savings
  Mr. Andrew Mitchell
  To ask the Secretary of State for Defence what efficiency savings his Department has achieved in the past six months.

  Mr. Archie Hamilton
  Detailed efficiency achievements in the last six months have not yet been assessed centrally. However, in the first year of the three-year efficiency programme, which covers almost two thirds of the defence budget and to which I referred in the answer I gave to my hon. Friend the Member for Gloucester (Mr. French) on 3 February 1989 at column 443, the Department exceeded its target of 2·5 per cent.

  NATO
  Mr. Viggers
  To ask the Secretary of State for Defence when he next expects to meet the secretary general of the North Atlantic Treaty Organisation to discuss maritime security in the eastern Atlantic.

  Mr. Bell
  To ask the Secretary of State for Defence what discussions he has had with the secretary general of the North Atlantic Treaty Organisation concerning the modernisation of short-range nuclear weapons; and if he will make a statement.

  Mr. Livsey
  To ask the Secretary of State for Defence when he last met the secretary general of the North Atlantic Treaty Organisation; and what subjects were discussed.

  Mr. Archie Hamilton
  My right hon. Friend the Secretary of State is today attending the meeting of 236
  NATO's defence planning committee in Brussels, where he will meet the secretary general. They will discuss a range of matters of mutual interest.

  Mr. John Evans
  To ask the Secretary of State for Defence, when he next expects to meet his North Atlantic Treaty Organisation colleagues to discuss defence expenditure.

  Mr. Yeo
  To ask the Secretary of State for Defence when he last met his North Atlantic Treaty Organisation counterparts; and what subjects were discussed.

  Mr. Archie Hamilton
  My right hon. Friend the Secretary of State is today attending the meeting of NATO's defence planning committee in Brussels, where he will meet his ministerial colleagues. They will discuss a range of matters of mutual interest.

  Trident
  Mr. Cryer
  To ask the Secretary of State for Defence what is the latest cost of the Trident nuclear weapons system.

  Mr. Alan Clark
  The current estimate for Trident is £9,089 million at 1988–89 prices and an exchange rate of £1 =$1·76. It is intended to announce a revised estimate early next year.

  Mr. Douglas
  To ask the Secretary of State for Defence if he will make a statement on the progress of discussions between Her Majesty's Government and the United States Administration in relation to the anticipated delivery dates for the D5 Trident missiles.

  Mr. Alan Clark
  There has been no change to the planned dates for delivery of Trident missiles to the United Kingdom.

  Mr. Barry Porter
  To ask the Secretary of State for Defence if he will make a statement on the progress of the Trident programme.

  Mr. Franks
  To ask the Secretary of State for Defence if he will make a statement on the progress of the Trident programme.

  Mr. Alan Clark
  The Trident programme continues to progress to time and budget towards its in-service date of the mid-1990s.

  Mr. Salmond
  To ask the Secretary of Defence if it is his intention to review the commitment to Trident, in the light of recent developments in Warsaw pact countries.

  Mrs. Margaret Ewing
  To ask the Secretary of Defence if it is his intention to review the commitment to Trident, in the light of recent developments in the Warsaw pact countries.

  Mr. Sillars
  To ask the Secretary of Defence if it is his intention to review the commitment to Trident, in the light of recent developments in the Warsaw pact countries.

  Mr. Andrew Welsh
  To ask the Secretary of State for Defence if it is his intention to review the commitment to Trident, in the light of recent developments in the Warsaw pact countries.

  Mr. Archie Hamilton
  No.

  Heritage Assets (Gibraltar)
  Mr. Robert B. Jones
  To ask the Secretary of State for Defence whether he will make a statement on the preservation of heritage assets held by his Department in Gibraltar.

  Mr. Archie Hamilton
  The Property Services Agency, on behalf of the Ministry of Defence, undertakes considerable preservation work on historic properties which are part of the defence estate in Gibraltar.

  Disaster Relief
  Mr. Boswell
  To ask the Secretary of State for Defence what disaster relief assistance the armed forces have undertaken in the last six months.

  Mrs. Maureen Hicks
  To ask the Secretary of State for Defence what disaster relief assistance the armed forces have undertaken in the last six months.

  Mr. Patrick Thompson
  To ask the Secretary of State for Defence what disaster relief assistance the armed forces have undertaken in the last six months.

  Mr. Archie Hamilton
  I refer my hon. Friends to my reply of 24 October to my hon. Friend the Member for Nuneaton (Mr. Stevens) at column 430.

  Challenger Tank
  Mr. David Evans
  To ask the Secretary of State for Defence if he will report on the progress being made in completion of the contract for Challenger II tanks.

  Mr. Alan Clark
  I refer my hon. Friend to the answer I gave earlier today to my hon. Friend the Member for Tynemouth (Mr. Trotter).

  Defence Exports
  Mr. Stevens
  To ask the Secretary of State for Defence if he will outline the amount of defence exports achieved since 1979.

  Mr. Burns
  To ask the Secretary of State for Defence if he will outline the amount of defence exports achieved since 1979.

  Mr. Alan Clark
  I refer my hon. Friends to the answer I gave earlier today to my hon. Friend the Member for Basildon (Mr. Amess).

  Confidential Information
  Mr. Livingstone
  To ask the Secretary of State for Defence what steps he has taken to ensure that confidential information held on individuals by all those for whom his Department is responsible is not passed on to other individuals or organisations who may do harm to the person concerned.

  Ms. Short
  To ask the Secretary of State for Defence what steps he has taken to ensure that confidential information held on individuals by all those for whom his Department is responsible is not passed on to other individuals or organisations who may do harm to the person concerned.

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

  Naval Forces
  Mr. Stott
  To ask the Secretary of State for Defence what discussions he has had in the North Atlantic Treaty Organisation about the possibility of reducing naval forces by negotiation.

  Mr. Cummings
  To ask the Secretary of State for Defence what discussions he has had in the North Atlantic Treaty Organisation about the possibility of reducing naval forces by negotiation.

  Mr. Galloway
  To ask the Secretary of State for Defence what discussions he has had in the North Atlantic Treaty Organisation about the possibility of reducing naval forces by negotiation.

  Mr. Loyden
  To ask the Secretary of State for Defence what discussions he has had in the North Atlantic Treaty Organisation about the possibility of reducing naval forces by negotiation.

  Mr. Archie Hamilton
  My right hon. Friend has regular meetings with his NATO counterparts, at which a wide range of arms control matters are discussed. The Alliance's priority in conventional arms control is to achieve stability in conventional forces in Europe, with particular emphasis on the Warsaw pact's land forces with a capability for surprise attack and large-scale offensive action. Maritime forces are explicitly excluded from the mandate for the CFE negotiations.

  United States Defence Spending
  Mr. Bernie Grant
  To ask the Secretary of State for Defence what are the implications for the United Kingdom's defence policies of possible United States defence cuts in Europe.

  Ms. Mowlam
  To ask the Secretary of State for Defence what are the implications for the United Kingdom's defence policies of possible United States defence cuts in Europe.

  Miss Lestor
  To ask the Secretary of State for Defence what are the implications for the United Kingdom's defence policies of possible United States defence cuts in Europe.

  Mr. Harry Barnes
  To ask the Secretary of State for Defence what are the implications for the United Kingdom's defence policies of possible United States defence cuts in Europe.

  Mr. Archie Hamilton
  We remain committed to maintaining adequate and effective nuclear and conventional forces in Europe to underpin NATO's strategy of flexible response and forward defence. The United States Government fully share this view.

  War Widows (Pensions)
  Ms. Armstrong
  To ask the Secretary of State for Defence what representations he has received about the level of pre-1973 war widows' pensions.

  Mr. Turner
  To ask the Secretary of State for Defence what representations he has received about the level of pre-1973 war widows' pensions.

  Mr. Steinberg
  To ask the Secretary of State for Defence what representations he has received about the level of pre-1973 war widows' pensions.
  239
  Mr. Neubert
  I have nothing to add to the answer I gave earlier today to the hon. Member for Brent, South (Mr. Boateng).

  Nuclear Test Veterans
  Mr. Vaz
  To ask the Secretary of State for Defence whether he will grant compensation to ex-service men who were involved in the atomic test on Christmas Island and who are now suffering from leukaemia as a result of their involvement.

  Mr. Clay
  To ask the Secretary of State for Defence whether he will provide compensation for those ex-British service personnel whose health suffered as a result of their participation in British nuclear tests.

  Mr. McAvoy
  To ask the Secretary of State for Defence whether he will provide compensation for those ex-British service personnel whose health has suffered as a result of their participation in British nuclear tests.

  Mr. Neubert
  I refer the hon. Member to the answer I gave earlier today to the hon. Member for Aberdeen, South (Mr. Doran).

  Recruitment and Retention
  Mr. Wilkinson
  To ask the Secretary of State for Defence whether he will make a statement on the current levels of recruitment and retention in the armed services.

  Mr. Archie Hamilton
  Overall, both recruitment and outflow are running at a slightly higher level than last year.

  European Fighter Aircraft
  Mr. John Hughes
  To ask the Secretary of State for Defence when he will announce the order for the radar for the European fighter aircraft.

  Mr. Ernie Ross
  To ask the Secretary of State for Defence when he will announce the order for the radar for the European fighter aircraft.

  Mr. Alan Clark
  The decision on the choice of radar for the EFA will be announced as soon as possible. Discussions are continuing between the four partner nations, the international management agency and the international industrial consortium responsible for the development of the EFA.

  Devonport Dockyard
  Mr. Robert Hicks
  To ask the Secretary of State for Defence what steps are taken to ensure that present arrangements ensure adequate work for Her Majesty's dockyard, Devonport; and if he will make a statement.

  Mr. Neubert
  Devonport royal dockyard is allocated a core programme of MOD work, negotiated on a single-tender basis, which is kept under review, to ensure that it provides a viable basis for maintaining strategic capacity in the longer term.

  Women Fliers
  Mr. David Martin
  To ask the Secretary of State for Defence whether there are plans to increase the opportunities to fly with the Royal Navy.
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  Mr. Archie Hamilton
  There are no current plans to do so, although various possibilities for widening the employment of the Women's Royal Navy Service, including in the field of aviation, are under review.

  Chemical Weapons
  Mrs. Clwyd
  To ask the Secretary of State for Defence what consultation he has had with his United States counterpart regarding the current(a) Soviet stockpile and (b) United States production of chemical weapons.

  Mr. Galbraith
  To ask the Secretary of State for Defence what consultation he has had with his United States counterpart regarding the current(a) Soviet stockpile and (b) United States production of chemical weapons.

  Ms. Quin
  To ask the Secretary of State for Defence what consultation he has had with his United States counterpart regarding the current(a) Soviet stockpile and (b) United States production of chemical weapons.

  Mr. Wood
  To ask the Secretary of State for Defence whether he has any evidence that the Soviet Union has begun to destroy its stockpile of chemical weapons.

  Mr. Knapman
  To ask the Secretary of State for Defence whether he has any evidence that the Soviet Union has begun to destroy its stockpile of chemical weapons.

  Mr. Archie Hamilton
  We continue to maintain close liaison with the United States on all aspects of chemical weapons; most recently during the meeting my right hon. Friend had with Mr. Cheney last month.

  Common European Home
  Mr. Eastham
  To ask the Secretary of State for Defence what consideration he has given to the implications for current defence policies of the concept of a common European home.

  Mr. Caborn
  To ask the Secretary of State for Defence what consideration he has given to the implications for current defence policies of the concept of a common European home.

  Mr. Heifer
  To ask the Secretary of State for Defence what consideration he has given to the implications for current defence policies of the concept of a common European home.

  Mr. Parry
  To ask the Secretary of State for Defence what consideration he has given to the implications for current defence policies of the concept of a common European home.

  Mr. Archie Hamilton
  It is NATO's policy to pursue opportunities for dialogue with the East, and we welcome the commitment to greater co-operation implicit in the, as yet, undefined concept of a common European home. Any specific proposals for reducing the potential for confrontation, made in the conference on security and co-operation in Europe or other fora, will be given due consideration.

  Drug Trafficking
  Mr. Rathbone
  To ask the Secretary of State for Defence what contribution Her Majesty's forces are making to control drug trafficking.

  Mr. Archie Hamilton
  In response to occasional requests for assistance from Her Majesty's Customs and Excise, the armed forces provide a variety of support to their operations in the United Kingdom and in home waters. The armed forces also provide anti-drugs assistance overseas. For example, at the request of the Foreign and Commonwealth Office, training is being given to Colombia in VIP protection, bomb disposal and basic river boat skills, and non-lethal equipment is being supplied. In addition, the West Indies guardship provides surveillance assistance in co-ordinated anti-drugs patrols with the United States Coastguard.

  Defence Spending
  Mr. Norris
  To ask the Secretary of State for Defence whether he will make a statement on the proportion of gross domestic product Britain spends on defence.

  Mr. Bowis
  To ask the Secretary of State for Defence whether he will make a statement on the proportion of gross domestic product Britain spends on defence.

  Mr. Amos
  To ask the Secretary of State for Defence whether he will make a statement on the proportion of gross domestic product Britain spends on defence.

  Mr. Paice
  To ask the Secretary of State for Defence whether he will make a statement on the proportion of gross domestic product Britain spends on defence.

  Mr. Archie Hamilton
  During the current financial year, it is estimated that defence expenditure will be about 3.9 per cent of GDP.

  Service Personnel (Radiation Exposure)
  Mr. Hinchliffe
  To ask the Secretary of State for Defence what information he has on the average level of radiation exposure suffered by(a) Her Majesty's armed forces personnel, (b) Australian service men and (c) American service men and women during involvement in nuclear testing in the 1950s.

  Mr. Neubert
  The committed effective doses equivalent, in millisieverts per person, sustained on average by participants in the whole programme of overseas atmospheric nuclear tests and experiments conducted by the United Kingdom Ministry of Supply within the period 1952 to 1967 inclusive has been professionally assessed to be approximately as follows:

  All participants:

  Zero point four (0·4)

  Participants who were citizens of the United Kingdom:

  Zero point five (0·5)

  Participants who were members of Her Majesty's forces of the United Kingdom:

  Zero point four (0·4)

  Of which the division of work led to respectively on average:

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  Commissioned Officers:

  Two (2)

  Warrant Officers and other ranks:

  Zero point one five (0·15)

  Participants who were civilian

  citizens of the United

  Kingdom and supporting roles:

  Two point five (2·5)

  For comparison, individuals in the United Kingdom on average sustain in every year a dose of approximately 2·5 millisieverts from background radiations and radioactivity throughout their adult lives, and depending on location this level can be up to four or more times higher.

  Details of the involvement of, and doses sustained by, citizens of other countries are matters for the Governments of the nations concerned.

  Royal Navy (Recruitment)
  Mr. Colin Shepherd
  To ask the Secretary of State for Defence if he will make a statement on the level of recruitment to the Royal Navy.

  Mr. Archie Hamilton
  In the last complete financial year, which ended in March, the achievement in relation to targets was 93 per cent. for officers and 91 per cent. for ratings. It is too soon to say what the achievement will be in 1989–90, but we are mindful of the fact that both economic and demographic conditions affect recruiting and we are accordingly increasing our efforts in this respect. The additional advertising in which we are engaging is producing an increase in applications, but we are by no means complacent.

  Compensation Payments
  Mr. Churchill
  To ask the Secretary of State for Defence what compensation has been paid by the Ministry of Defence(a) to farmer Mr. Paul Adorian of Kirklington, Carlisle, Cumbria, for the death of one of his llamas attributed to a low-flying incident involving an RAF jet and (b) to the parents of Private Jason Winter of the 1st Battalion Light Infantry for the murder by the Irish Republican Army of their 19-year-old son while serving with the Army in Ulster.

  Mr. Archie Hamilton
  The Ministry of Defence has paid £5,021 in compensation to Mr. Paul Adorian in respect of the loss of one of his llamas, as a result of low flying military aircraft activity. No claim has been received by the Ministry of Defence in respect of the tragic death of Private Jason Winter, although it is understood that a claim has been considered by the criminal injuries compensation division of the Northern Ireland Office.

  Coastal Patrol Boats
  Mr. Cousins
  To ask the Secretary of State for Defence how many fast coastal patrol boats are available to the Royal Navy.

  Mr. Archie Hamilton
  There are 25 patrol craft of various classes in service with the Royal Navy, as set out in annex A to the "Statement on the Defence Estimates 1989" (Cm. 675-I).

  Training (Casualties)
  Mr. Ashley
  To ask the Secretary of State for Defence how many incidents of collapse due to excessive heat during training or exercises occurred this summer; in
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  how many cases was (a) medical attention and (b) hospitalisation required; and how frequently the outcome was death or permanent disability.

  Mr. Archie Hamilton
  The information requested will not be available until the publication next summer of firm figures for the whole of 1989 in the "Service Annual Health Tables". These statistics will not, however, include casualties that required hospitalisation for a period of less than 48 hours. Figures will record deaths but not permanent disabilities which cannot generally be established until treatment is completed.

  Submarines
  Mr. Foulkes
  To ask the Secretary of State for Defence what information he has regarding recent incidents involving fishing vessels and submarines; and if he will make a statement.

  Mr. Archie Hamilton
  There have been six incidents this year involving submarines and fishing vessels, two of which involved United States Navy submarines. The Royal Navy regards the avoidance by submarines of fishing vessels and their nets as a matter of considerable importance and is establishing closer links with fishermen's associations in order to promote mutual understanding.

  Recruits
  Mr. Ashton
  To ask the Secretary of State for Defence what percentage of the new recruits to the armed forces last year were of Asian or Afro-Caribbean origin.

  Mr. Archie Hamilton
  Provisional results of the ethnic monitoring survey of new recruits to the armed forces in the year ended 31 March 1989 show that 0·7 per cent. were black and 0·2 per cent. were Asian.

  USAF Planes
  Mr. Bellingham
  To ask the Secretary of State for Defence what recent representations he has received about the possible deployment of further United States Air Force F111s to the United Kingdom.

  Mr. Archie Hamilton
  My right hon. Friend has received a number of representations from right hon. Members, hon. Members and the public.

  NATO Forces
  Mr. Squire
  To ask the Secretary of State for Defence whether he will make a statement on the current balance between nuclear and conventional forces in the North Atlantic Treaty Organisation.

  Mr. Anthony Coombs
  To ask the Secretary of State for Defence whether he will make a statement on the current balance between nuclear and conventional forces in the North Atlantic Treaty Organisation.

  Mr. Sumberg
  To ask the Secretary of State for Defence whether he will make a statement on the current balance between nuclear and conventional forces in the North Atlantic Treaty Organisation.

  Miss Widdecombe
  To ask the Secretary of State for Defence whether he will make a statement on the current balance between nuclear and conventional forces in the North Atlantic Treaty Organisation.
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  Mr. Archie Hamilton
  At the summit meeting in May, NATO reaffirmed its position that, for the foreseeable future, there is no alternative to the Alliance's strategy of deterrence for the prevention of war. That strategy is based upon an appropriate mix of adequate and effective nuclear and conventional forces, which will continue to he kept up to date where necessary.

  Military Security
  Sir Michael McNair-Wilson
  To ask the Secretary of State for Defence if he is satisfied with the level of security at military establishments.

  Mr. Archie Hamilton
  We are constantly looking for ways in which our security arrangements can be improved.

  Royal Army Veterinary Corps
  Mr. Latham
  To ask the Secretary of State for Defence whether he will make a statement on the visit by the Under-Secretary of State for the Armed Forces to the Royal Army Veterinary Corps, Melton Mowbray, on 24 November.

  Mr. Archie Hamilton
  My noble Friend's visits to the Royal Army Veterinary Corps Centre and to the dog training squadron of the RAF police school on 24 November had the aim of helping to inform his decision on the proposed service animal centre. I understand that he found the visit to be most useful.

  Chemical Weapons (USSR)
  Mr. Anthony Coombs
  To ask the Secretary of State for Defence whether he has any evidence that the Soviet Union has begun to destroy its stockpile of chemical weapons.

  Mr. Archie Hamilton
  We have no evidence that the Soviet Union has begun to destroy its chemical stockpile.

  Defence Contracts
  Mr. Cox
  To ask the Secretary of State for Defence if he will give details of his policy to offer small companies in the United Kingdom the opportunity to tender for defence contracts; and if he will make a statement.

  Mr. Alan Clark
  Smaller companies are especially encouraged to compete for defence work under the successful small firms initiative.

  Between November 1986 and October 1988, about 4,000 companies sought guidance and information on how to sell to the Ministry of Defence from the then MOD small firms advice division. A further 1,800 companies have sought advice since the division was relaunched in November 1988 as the new suppliers service, which contains a specialist small firms group. The group provides advice to new companies on how to sell to the MOD. Over the past three years, MOD has made direct payments to small firms totalling around £1 billion each year, and the number of small firms receiving direct payments has increased from about 4,000 in 1986–87 to over 5,500 in 1988–89. Registration of new companies on the defence contractors list remains high. In 1988, about 300 small firms were registered, the same as in 1987. To help companies gain visibility of our requirements, we publish

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  our contract opportunities in a fortnightly "Contracts Bulletin". Small firms are encouraged to bid for work direct, or as sub-contractors to our major suppliers.

  We shall continue actively to encourage the important contribution of small companies to obtain better value for money.

  Swansea Docks
  Mr. Gareth Wardell
  To ask the Secretary of State for Defence what the current position is on the Royal Navy's plans to use part of Swansea docks for berthing submarines.

  Mr. Archie Hamilton
  Since this subject was last discussed in the House on 19 July 1989 at columns 490–98, my officials have had further discussions with West Glamorgan county council, concentrating on the preparation of a special safety scheme.

  Low Flying
  Mr. Kennedy
  To ask the Secretary of State for Defence if he is yet in a position to announce whether he will consult hon. Members over the local detail in drawing up and revising the advisory maps used for the purposes of low-flying activity; and if he will make a statement.

  Mr. Neubert
  No.

  Quality Assurance Unit
  Mr. Devlin
  To ask the Secretary of State for Defence if he will make a statement on the progress of the intended move of his Department's quality assurance unit to Stockton on Tees.

  Mr. Neubert
  I refer my hon. Friend to the answer I gave on 2 November at column 328.

  West Germany
  Mr. Tony Banks
  To ask the Secretary of State for Defence if he will make it his policy to review the present numbers of British troops based in West Germany.

  Mr. Archie Hamilton
  The Government keep overall British force levels under continual review. At the same time, it is our policy to maintain our commitments to NATO, of which the British forces in Germany form an important part.

  Warsaw Pact
  Mr. Tredinnick
  To ask the Secretary of State for Defence if he will make a statement on Her Majesty's Government's policy towards the Warsaw pact in military terms; and how the North Atlantic Treaty Organisation is proposing to respond to recent changes.
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  Mr. Hamilton
  NATO remains committed to seeking improved security at a lower level of forces. This policy has contributed to the political changes now under way in almost all the Warsaw pact countries.

  National Employment liaison Committee
  Mr. Baldry
  To ask the Secretary of State for Defence if he will make a statement of the progress of the NELC campain.

  Mr. Archie Hamilton
  The response to the campaign launched in September 1988 has been most encouraging. Pledges of support for the volunteer Reserves have been received from over 600 major employers representing over half of the United Kingdom work force. We are confident that the campaign has widened public understanding of the importance of the volunteer Reserves.

  JMC Exercises
  Mr. Macdonald
  To ask the Secretary of State for Defence what changes have been made in the live weapon firing allowances for JMC exercises in the last two years.

  Mr. Archie Hamilton
  There are no fixed allowances for live weapon firing for JMC exercises. The firing levels are derived from the requirements of those vessels or aircraft taking part in the exercise, but do not vary appreciably from one exercise to another.

  Mr. Macdonald
  To ask the Secretary of State for Defence what use was made of(a) Stornoway airport, (b) Benbecula airport and (c) the Cape Wrath ship-to-shore gunnery range during exercise JMC 89/3.

  Mr. Archie Hamilton
  During Joint Maritime Course 89/3, no use was made of Stornoway airport. Benbecula airport was used as a command and control centre, and Cape Wrath ship-to-shore gunnery range was used on 17, 20 and 21 November by NATO ships participating in the exercise.

  Royal Artillery Range, Hebrides
  Mr. Macdonald
  To ask the Secretary of State for Defence what is the purpose of the special extension to the danger area of the Royal Artillery range, Hebrides, between 29 November and 8 December; what units are involved in the activity; and whether live firing has been authorised.

  Mr. Archie Hamilton
  The danger area of the Royal Artillery range, Hebrides is being extended between 29 November and 8 December while missile testing takes place, to ensure that spent missiles fall within the designated area. Aircraft of No. 5 Squadron of the Royal Air Force will fire the missiles, with their warheads removed.

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

Nuclear Fusion: JET Project
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
What progress is being made at the European Community JET laboratory in Oxfordshire towards utilising nuclear fusion as a source of energy.
Viscount Ullswater: My Lords, during the past year the Joint European Torus project has made very good progress. A further lengthy period of development will, however, be needed to achieve an actual sustained net output of power as well as all the engineering development needed for a viable commercial fusion power reactor.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for that encouraging Answer. Although it is still many years away from practical use, may not fusion be the source of energy needed by the world in future when other sources are depleted or have become too dangerous to the atmosphere, in particular by adding to the greenhouse effect?
Viscount Ullswater: My Lords, my noble friend is correct that work on fusion around the world is still only at the stage of establishing whether the process is scientifically feasible. Studies suggest that a successful fusion reactor could have environmental and safety advantages, but fusion cannot be available before the middle of the next century. If anything is to be done over the next 10 or 20 years we shall need to use the technologies that are now available.
The Earl of Lauderdale: My Lords, will my noble friend say whether the Government are now prepared to review their disastrous decision to cut back on funding for fusion research in view of their commitment to retaining the nuclear option as a strategic option for the future?
Viscount Ullswater: My Lords, the Government judge that there is not a need to accelerate the pace of fusion research. They need to assess very carefully all the results from the JET programme and other experiments and the likely timescale for which fusion power may be needed.
Lord Williams of Elvel: My Lords, is it the case that the JET ruling body, the council, has approved an extension of the project for another four years and that the proposal is now being submitted by the Commission to the Council of Ministers for discussion in mid-December? Will the British Government support that proposal? Will they also
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undertake to continue the 10 per cent. of the JET funding that they carry as the host organisation?
Viscount Ullswater: My Lords, I understand that the JET council has agreed to seek a further extension of the life of the joint undertaking from 1992 to 1996. It is too early to say how the proposal is likely to be viewed by this Government or by other member states. The Commission must first complete a review of the Community fusion programme. Part of the work of this review will be undertaken by a senior external panel of experts and the United Kingdom will play a full part in the subsequent discussions.
Lord Williams of Elvel: My Lords, I wonder whether I may press the noble Viscount a little further. Am I wrong in thinking that this will be submitted to the Council of Ministers in mid-December? That is not very far away. Will the Minister very kindly answer my question as to whether the United Kingdom Government will continue their 10 per cent. share of the funding of the organisation?
Viscount Ullswater: My Lords, I shall find out about the mid-December date and write to the noble Lord. In the meantime I can say that the Government are committed to their £8.6 million funding this year and their participation as a host nation. They are also committed to their contribution towards the European funding of the JET programme and see no reason to cut down on it.
Lord Campbell of Croy: My Lords, when the Government consider an extension beyond the original 12 years will they bear in mind the long-term nature of the project and also the importance of building on the scientific knowledge that has already been gained?
Viscount Ullswater: Yes, my Lords, I think that my noble friend is entirely correct. It is such a long-term project that it needs careful assessment at each stage. We should certainly not be prepared to go to the next stage without fully assessing the results of JET so far.
Lord Callaghan of Cardiff: My Lords, I thank the Minister for his last reply. However, will he look into the history of the subject and recognise that we fought very hard for Britain to secure this project? We did so on the basis that it was a long-term project and we were willing to provide certain facilities because of the advantages that it would bring. Without putting too fine a point on it, it would be rather a breach of faith if, having fought hard for it and having secured it, we were in any way—and the Minister has not suggested this—to back away from the undertakings that we gave.
Viscount Ullswater: My Lords, the noble Lord is quite right. The original programme was designed to run for 12 years. During the course of that it was discovered that the achievements that were known to be possible were not coming through within that period. Therefore, the extensions to which the noble

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Lord refers and to which the noble Lord, Lord Williams of Elvel, also referred will be considered and will come before the Council of Ministers for that purpose.
The Earl of Lauderdale: My Lords, will my noble friend assure us that Britain intends to continue to play a full part in this project, at least until its feasibility has been proved or disproved?
Viscount Ullswater: My Lords, I am happy to confirm that the Government will play a full part in any negotiations.

Industry and Primary Schools
2.43 p.m.
Baroness Platt of Writtle Baroness Platt of Writtle asked Her Majesty's Government:
How far links have developed in the last three years between industry and primary schools.
Viscount Davidson: My Lords, links between industry and primary schools have developed very well over the past three years. Many more primary schools than ever before have such links.
Baroness Platt of Writtle: My Lords, I thank my noble friend for that encouraging reply. I believe that foundations laid at primary school level lead to attitudes which can be lifelong. Are the Government aware of the immense contributions made by voluntary organisations such as the Royal Society for the Encouragement of Arts, Manufacturers and Commerce through Industry Year, leading on to Industry Matters, which have led to this very satisfactory increase in links? Will the Government continue to support such links, particularly the Foundation for Education and Business Partnerships, in the future so that boys and girls will see careers in industry as attractive and will therefore help fill the areas in which there are skill shortages and improve our country's prosperity?
Viscount Davidson: My Lords, I can assure my noble friend that the Government are well aware of the valuable contributions made by the organisations to which she referred. We provide active support for their work and many such organisations receive funding from government departments. I am also well aware that my noble friend has been closely involved with Industry Matters. I understand that the excellent work in encouraging local partnerships between industry and education will be carried on by the new Foundation for Education and Business Partnerships which itself will receive government support.
Lord Dormand of Easington: My Lords, is the Minister aware that one of the most effective ways of developing links between primary schools, or indeed any schools, and industry is to have teachers spending either a long or a short time in industry itself? How can this be done when there is such a desperate shortage of teachers in primary schools?
Viscount Davidson: My Lords, I agree with the noble Lord, but the proposals for the technology curriculum aim to ensure that primary school children learn about the buying and selling of goods and services. Government departments, in addition to the DES, also contribute to work in this area. The DTI, for example, supports 130 teacher placement officers across the country to help arrange for teachers to spend some time in industry.
Lord Gisborough: My Lords, is my noble friend aware of the Compact scheme which operates between industry and certain schools in Cleveland? Is that scheme proving a success and is it spreading to other areas?
Viscount Davidson: My Lords, I am aware of that scheme, and it is proving to be a success. I shall look into it and write to my noble friend as regards whether it is spreading to other areas.
Baroness David: My Lords, is industry contributing to primary schools by giving them computers and other items of equipment which would help with information technology? Firms very often have spare items of equipment which are perhaps not quite modern enough for them but which would certainly be useful for primary schools.
Viscount Davidson: My Lords, I am not certain about that, but I shall make inquiries and write to the noble Baroness.
Baroness Phillips: My Lords, will industry assist those crumbling schools which governors are now having to maintain although they find that they do not have the money to do so?
Viscount Davidson: My Lords, it is certainly in the interests of industry to assist as much as it can. It is probably the schools which have been more prominent in coming forward with proposals than industry. It is in the interests of industry that we should have a properly educated population which is aware of the industrial and economic dimensions of life in the modern world.
Baroness Seear: My Lords, it is all very well for the noble Viscount to say that it is in the interests of industry to have a good education system—that is of course true—but is he really saying that this is the financial responsibility of industry? Surely it is the financial responsibility of government and local authorities and not of industry.
Viscount Davidson: My Lords, I did not say it was the responsibility of industry to find the money. It is the responsibility of the Government. I have already said that we are funding the money for this purpose.
Lord Boardman: My Lords, does my noble friend agree that these links are not confined to industry but extend to commerce and particularly to organisations such as banks, which have made considerable provision by way of equipment and other items to try to educate the young in economics and the business world?
Viscount Davidson: Yes, my Lords. I agree entirely with my noble friend.
Lord Peston: My Lords, I believe that it was my noble friend Lord Callaghan of Cardiff who emphasised some years ago the importance of links between industry and all schools. I believe he had it in mind that the links should be two-way. Does the Minister have any information on industry, notably management in industry, taking an interest particularly in our primary schools? The biggest interest firms could take in our state schools would be for senior management to send their own children to them.
Viscount Davidson: My Lords, I cannot comment on the last point. The noble Lord has obviously read the report entitled Evaluation of Primary School/Industry Links, 1986 to 1989 in which the noble Lord, Lord Callaghan of Cardiff, was mentioned. The recent evaluation of primary schools' links with industry indicated that the number of schools with links had doubled in the past three years. The Government are continuing to encourage links between education and business at every level because we believe that industrial and economic awareness is a vital cross-curriculum theme in the national curriculum.

European Parliament: Scrutiny Powers
2.50 p.m.
The Earl of Kinnoull The Earl of Kinnoull asked Her Majesty's Government:
Whether they are satisfied that the European Parliament has sufficient powers to scrutinise the European Commission effectively.
Lord Reay: My Lords, we believe that the Single European Act provided a satisfactory allocation of responsibilities for the European Parliament. National parliaments and the European Parliament have complementary roles in ensuring the essential scrutiny of proposals for European Community legislation.
The Earl of Kinnoull: My Lords, I thank my noble friend for that reply. Can he say whether under the new powers a European parliamentary committee can summon an individual member of the Commission to attend to explain some action, as it could previously? Secondly, can he advise whether the system of scrutiny at Westminster is being re-examined?
Lord Reay: My Lords, the European Commission may be dismissed as a whole by the European Parliament. That has never happened but the power serves as a constant reminder to all commissioners of their collective accountability to that body. My recollection is of commissioners being very assiduous in their attendance at sessions of the European Parliament. I should have thought that if there were any deficiencies in the working relationship between the European Parliament and
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the Commission—and I must add that I am not aware of any—that is a matter which in the first instance should be taken up between those two institutions.
Lord Cledwyn of Penrhos: My Lords, will the noble Lord be good enough to confirm that the European Commission has substantially amended the social charter and that that is opposed in the European Parliament by a very large number of members? Furthermore, will he not agree that if that is the case it could possibly lead to a grave constitutional crisis in the Community? Will he further confirm that the watering down of the social charter was the result of an agreement in Paris last month between Mrs. Thatcher and President Mitterrand?
Lord Reay: My Lords, I think that the subject of a social charter is rather wide of the Question on the Order Paper. I am not aware of the state of the relationship between the Commission and the European Parliament on the question of the social charter. The European Parliament was given substantial new responsibilities under the Single European Act. Those have been developing satisfactorily and we see no case for extending the European Parliament's powers once again at the present time.
Lord Cledwyn of Penrhos: My Lords, is the noble Lord aware that he is completely wrong in suggesting that my supplementary question was wide of the original Question? It is absolutely on the nail. Will he be good enough to answer my supplementary questions?
Lord Reay: My Lords, I tried to suggest that the substantive issue of the social charter was not part of my noble friend's original Question. I do not at present have information about the relationship between the Commission and the European Parliament on this point, but I shall let the noble Lord know the answer.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that both the Question and his Answer contain a misnomer? There is not a European Parliament; there is a European Assembly. To attribute to that Assembly parliamentary powers as we understand them in this country can be dangerous. Is not the Council of Ministers the proper force to ensure that the Commission is scrutinised and kept in order?
Lord Reay: My Lords, I believe that I am correct in saying that, whereas the term "European Assembly" was used until the introduction of the Single European Act, since that date the term "European Parliament" has had legislative validity.
Lord Taylor of Gryfe: My Lords, can the Minister say whether the excellent reports which are provided by the committees of this House which scrutinise European legislation are available to Members of the European Parliament? Are they read? Have they any impact?—because they should have.
Lord Reay: My Lords, the reports of the Select Committee on European affairs of your Lordships' House are considered by many throughout the Community to be exemplary models of the form which constructive scrutiny of proposed European Community legislation should take.
Lord Bonham-Carter: My Lords, does the Minister not agree that the criticisms which are often levelled at the Commission for being unduly bureaucratic are best dealt with by giving the European Parliament greater powers and by seeing that the procedures by which it is elected are based on a common threshold?
Lord Reay: My Lords, the European Parliament was given substantial new powers under the Single European Act which came into force on 1st July 1987. We believe that the best course now is for the European Parliament to make effective use of those powers rather than to consider new powers for it at the present time.
Baroness Serota: My Lords, following the previous supplementary question, is the noble Lord aware that not only are the reports of the House of Lords Select Committee on the European Communities available to the European Parliament but their contents pages are regularly translated into Italian for the benefit of the Italian Senate? Is he also aware that the committee's major report on fraud against the Community was reprinted in full for the Italian Senate?
Lord Reay: My Lords, I am very grateful to the noble Baroness for that additional information.
Lord Campbell of Alloway: My Lords, further to the question that was put by the noble Baroness, Lady Serota, is my noble friend aware that it is generally accepted throughout the whole of the Community that the scrutiny work of your Lordships' House is the most effective and objective scrutiny conducted anywhere? Is he also aware that those reports are read throughout the Community? If anyone doubts that, he can inquire about sales of Hansard.
Lord Reay: My Lords, I am grateful for what my noble friend has said, which corroborates the answer that I gave earlier.
Lord Monson: My Lords, does the Minister agree that Luxembourg has six seats in the European Parliament whereas on a per capita basis it would have only one, that the Republic of Ireland has 15 seats whereas on a per capita basis it would have only six, and so on, and that in contrast the United Kingdom, France and West Germany are under-represented on a per capita basis? Does the noble Lord agree that it is quite unthinkable that the European Parliament should be given more powers over our lives until such time as the normal democratic principle of one man one vote of equal value applies in the elections to that parliament?
Noble Lords: Hear, hear!
Lord Reay: My Lords, the noble Lord has raised issues which go deeper and wider than the Question on the Order Paper. I can only repeat that at the present time we do not see a case for extending the powers of the European Parliament.
Lord Stoddart of Swindon: My Lords, would the problem not be solved if initiating powers were taken away from the Commission and given to the Council of Ministers? In that case the Council of Ministers would be answerable to national parliaments in a proper way.
Lord Reay: My Lords, the noble Lord has taken the matter wider still. I do not think that those are questions which are on the agenda at present.
Lord Mackie of Benshie: My Lords, in view of the good work which it is acknowledged is done by the Select Committee, is the Minister satisfied that enough time is allowed for those committees to study the Commission's proposals?
Lord Reay: My Lords, we believe that the current arrangements enable Parliament to give effective consideration to proposals for European Community legislation. However, perhaps I should add that the Lord President of the Council has been holding discussions with the Select Committees on Procedure and on European Legislation in another place to examine whether procedures may be improved. The Select Committee on Procedure is expected to report soon and the Government will give careful consideration to its conclusions.

Company Directors: Earnings
2.59 p.m.
Lord Dormand of Easington Lord Dormand of Easington asked Her Majesty's Government:
What was the average pay rise for company directors in each of the last two years.
The Parliamentary Under-Secretary of State, Department of Employment (Lord Strathclyde): My Lords, no reliable information on directors' earnings is readily available.
Lord Dormand of Easington: My Lords, is the Minister aware that that is a pathetic reply? Having regard to the stark contrast between some awards which have been made to directors—some as high as between 50 per cent. and 110 per cent., for which they receive a gentle admonition from the Government—and those to the lower paid workers who are presently struggling against a 7·5 per cent. inflation rate caused by the economic incompetence of this Government, have the Government any morality at all? What will the Government do about such a state of affairs?
Lord Strathclyde: My Lords, I object to the tone of the noble Lord's supplementary question. To say that my Answer was pathetic is totally untrue. It is not the Government's role to interfere in individual pay settlements between companies and their employees, whether they are directors or not.
Baroness Turner of Camden: My Lords, is it not absurd to expect workers to settle for 7·5 per cent. or 6·5 per cent., as has been the situation in the National Health Service, in the light of the large increases which are acknowledged to be paid to directors of substantial enterprises? Will the Government look at the issue more from a social justice point of view than appears to be the case at the moment?
Lord Strathclyde: My Lords, the Government have repeatedly said that they do not support unjustified pay increases at any level. Where they are justified, they should be paid; and so be it.
Lord Mackie of Benshie: My Lords, will the noble Lord explain how the top pay award committee operates if it does not have any information regarding salaries in industry as against those in the public service?
Lord Strathclyde: My Lords, no central tables on directors' earnings are kept. As to how the top pay award committee operates, that is a matter for it, but pay should generally reflect what is needed to recruit, retain and motivate the right staff for the job within what businesses can sensibly afford.
Lord Diamond: My Lords, returning to the matter of social justice, surely the Government will do something for that poor director who found his salary slashed last year to a little over £850,000!
Lord Strathclyde: My Lords, I am not sure what the noble Lord's definition of social justice is. However, perhaps I may make the point that within this House there are many directors and chairmen of boards whom I am sure will testify to their own restraint.
Lord Bottomley: My Lords, have the Government ever given consideration to what Bernard Shaw said; namely, that everybody should receive the same income?
Lord Strathclyde: My Lords, that is not current government policy.
Lord Jenkins of Putney: My Lords, the noble Lord used the word "justified" more than once. Who decides what is and what is not justified in this context?
Lord Strathclyde: My Lords, that is decided between companies and their shareholders.
Lord Dean of Beswick: My Lords, is the Minister aware that, as a result of water privatisation, it is expected that the salaries of the top people running the privatised companies will double immediately? Does he consider the doubling of those people's salaries to over £100,000 conducive to helping the Government in the fight against inflation?
Lord Strathclyde: My Lords, again, that must be decided between the water companies and their new shareholders. However, perhaps I may point out
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generally that among the nationalised industries British Coal, for instance, had no increase, the Post Office had a 9 per cent. increase, and British Rail had a 7 per cent. increase. Those figures relate to the salaries of the chairmen of those boards and indicate a certain amount of restraint.
Baroness Turner of Camden: My Lords, when dealing with the question of justification, do the Government consider that there is a role for arbitration in these matters? Why cannot that be used in the current dispute?
Lord Strathclyde: My Lords, if we are talking about the ambulancemen, we are going slightly off the original Question. In any case, it is illogical to make comparisons between pay increases for different groups or individuals.
Lord Gisborough: My Lords, increases may well be justified in many cases. However, does my noble friend agree that some of the salaries which have been reported have, to say the least, been insensitive in times of inflation and therefore that the people concerned would probably have been wiser to take less?
Lord Strathclyde: My Lords, the issue of sensitivity may well be valid, but ultimately the Government cannot be an arbitrator in what individual companies decide is right for individual chairmen, and shareholders ultimately have the right to object.
Lord Cledwyn of Penrhos: My Lords, further to the noble Lord's supplementary question, does the Minister believe that salaries of over £1 million a year paid to some directors are justified? Is he able to tell the House whether he and his noble friends believe that such people should be paid more than the Prime Minister?
Lord Strathclyde: My Lords, as I have said, it is up to individual companies to decide. The Government do not have a role to play in forcing companies to pay certain salaries or even deciding what companies should pay their chairmen and directors. As to the noble Lord's point about the Prime Minister, I understand that my right honourable friend still takes less than her proper pay.
Lord Mayhew: My Lords, will the Minister explain more fully the reasons those statistics are not compiled, and, if they are, why he has not announced them? What is there to stop their publication apart from the risk of embarrassing the Government?
Lord Strathclyde: My Lords, there is simply no requirement to compile those kinds of statistics, but the noble Lord is entitled to ask the question. I am sure that there are individual reports and accounts in the Library of the House where he can find that information himself.
Lord Hatch of Lusby: My Lords, perhaps I may help the noble Lord in his difficulties. Is he not aware that the figures have indeed been published

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from within industry and that the average figure last year for the rise in directors' salaries was 21 per cent.? Does that not embarrass the Government in their present efforts to limit the ambulancemen and other workers to figures below the inflation rate? The 21 per cent. figure has been established as a national average increase last year.
Lord Strathclyde: My Lords, the 21 per cent. figure conies from a single survey. It is not necessarily all that scientific and the results should therefore be treated with a certain amount of doubt. In any case, the question of directors' and chairmen's pay awards has nothing to do with the case of the ambulancemen. That is an interesting question, but one to which we should come another day.
Lord Harmar-Nicholls: My Lords, in view of the picture that can be painted from the questions that my noble friend has answered, should it not be made clear that, alongside the situation in America, Germany, France and our main competitor countries, our directors' salaries are very low indeed?
Lord Strathclyde: My Lords, my noble friend makes an extremely good point. If the figure for the United States is taken at about 100, it appears that on a comparable basis the UK is paid about 60.
Lord Stallard: My Lords, how did the Minister make that comparison without knowing what British directors earn?
Lord Strathclyde: My Lords, I am sorry; I should have pointed out that those figures relate to senior executive pay and not to pay for company directors.
Lord Dormand of Easington: My Lords, does the Minister believe that the high increases to which I referred in my earlier question—I have a list of them—are damaging the Government's policy on wage restraint, particularly in relation to inflation?
Lord Strathclyde: My Lords, not if they are justified.
Lord Mackie of Benshie: My Lords, is the Minister aware that instead of disclosing his figures later when forced to do so, it would have been much more respectful to the House and better for his reputation if he had produced them at the start?
Lord Strathclyde: My Lords, I did not refer to any figures concerning directors' pay. The figures to which I referred came from a CBI pay survey concerning senior executive pay and had nothing to do with the Question. I do not feel that I have been in the least disrespectful to the House.

Contracts (Applicable Law) Bill [H.L.]
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I beg to introduce a Bill to make provision as to the law applicable to contractual obligations in the case of conflict of laws.
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I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor.)
On Question, Bill read a first time, and to be printed.

Address in Reply to Her Majesty's Most Gracious Speech
3.8 p.m.
Debate resumed on the Motion moved on Tuesday last by Lord Holderness—namely, That a humble Address be presented to Her Majesty as follows:
"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament".
The Paymaster General (The Earl of Caithness): My Lords, on this fourth and final day of the debate on the Address we shall debate economic affairs. It is entirely appropriate that we should do so. Without a strong and sound economic base we cannot implement many of the policies which the Government have proposed, which your Lordships have discussed in the previous three days' debate and which will improve the quality of life for our citizens. There is no end to the list of good causes and schemes on which more money could be spent, but unless the head rules the heart when it comes to the economy, disaster is inevitable.
One only has to compare two events. The Labour Party in the 1970s promised a time of plenty for all and spent money as though it was going out of fashion; but it soon ended in tears, with the country bankrupt. With inflation out of control and the infrastructure of the country neglected, everyone from the pensioner to the new-born infant suffered. Contrast that with the sound economic policies of this Government where investment has increased massively in real terms in priority areas, living standards are at record levels and the quality of life has substantially improved.
Only two weeks ago I had the pleasure of repeating the Autunmn Statement to your Lordships. We announced extra expenditure in some of the areas in which your Lordships have special interest, knowledge and concern. There is more for the health service, more for road and rail services, more for education, more for housing, more for the disabled, more for the arts, more for the environment and more for law and order.
But the key to these welcome increases and the difference from those in the early years of the Labour Government is that this time they are affordable. They are not financed by printing money or a lax fiscal policy. They are within the figures set last year for public spending as a percentage of GDP, and encouragingly that percentage continues to decline.
The overall objective of this Government's economic policy is to reduce inflation and so create the conditions necessary for sustained economic

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growth. To this end the Government have maintained firm financial policies which have established a sound financial framework. At the same time we have followed micro-economic policies aimed at improving economic performance through creating an environment which encourages and rewards enterprise and initiative. We have freed industry from unnecessary regulation and removed large areas of the economy from public control. The tax system has been reformed so that it no longer smothers enterprise but encourages it.
The results have been as dramatic as they have been welcome. We have heard nothing but gloom and doom about Britain and the British economy from the Opposition, who, alas, seem keen to run their country down. So it is worth repeating some facts about our economic performance in the 1980s.
Putting the performance of the British economy into a world context makes it easy to fully appreciate the turnaround in the past 10 years. The UK grew more slowly than all of the other major European countries all through the 1960s and 1970s. In the 1980s we have grown faster than any of them. In the 1960s and 1970s we were at or near the bottom of the European investment league. In the 1980s we are top. Productivity in the whole economy has grown faster than in any other major industrialised country except Japan since 1980; and in manufacturing we have beaten even the Japanese. Again, during the 1960s and 1970s we were languishing near the bottom of those leagues.
Putting the performance of the British economy into a world context makes one thing abundantly clear: the remorseless decline in the fortunes of the British economy has been reversed. The British people are now wealthier than they have ever been before and British business has been investing more in the future than it has ever done before. It is the policies pursued by Conservative Governments under my right honourable friend the Prime Minister, Mrs. Thatcher, which have brought this about.
However, your Lordships will recall that during the Autumn Statement I said that it was right that the economy should pause for breath for a short period and warned of the difficulties ahead before it resumed its steady, upward, non-inflationary growth. There are two reasons for that. The UK economy has enjoyed an average growth rate over the seven years to 1988 of 3·3 per cent., which is over half as high again as the average under the last Labour Government. But the last two years of this period, 1987 and 1988, saw a rate of expansion which was unsustainable. GDP increased by around 4½ per cent. in both 1987 and 1988—the first time output has risen by more than 4 per cent. in two successive years since 1960. But domestic demand over those two years was rising at a rate of over 7 per cent. per annum. The result was an increase in inflationary pressures and the emergence of a substantial current account deficit.
The rapid expansion of demand was entirely due to private sector spending. Public spending has been growing only very slowly. But the growth in demand was not a consumer spending binge. While consumer
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spending increased by around 12 per cent. between 1986 and 1988, business investment increased by around 30 per cent.
Once the re-emergence of inflationary pressures became apparent in the summer of 1988 the Government acted to tighten monetary policy by raising interest rates. As a consequence, demand growth has slowed in 1989. But the momentum of the economy had turned out to be considerable. This is a reflection of the increased confidence which sound economic policies have fostered, and a credit to British industry which had been stifled for years.
This continual growth was remarkable given the stock market crash of October 1987. A world recession was thought to be imminent and as a consequence money supply was eased. It is no good pretending that Labour would have done anything different, for at the time the honourable Member for Monklands, East, Mr. Smith, said that a cut in interest rates was necessary. Indeed, we were criticised for not going far enough. We were not alone; all major countries did the same. But it has compounded the problem by increasing inflationary pressures throughout the industrialised world. For the reasons that I have given there was greater strength in the economy than anyone could judge at the time and so it proved necessary to tighten monetary policy further during the course of this year. Nevertheless, despite the forecast slow-down of GDP to 1¼ per cent. next year we are still forecasting an average growth in the four years to 1990 of over 3 per cent. —higher than we predicted in 1987 and, remember, half as high again as under the last Labour Government.
Let me stress that we consider that inflation is currently too high. Inflation is an economic and social evil. Many saw their life-long savings eroded rapidly by the high inflation rates of the 1970s. We cannot let that happen again. That means that the immediate priority of policy is to reduce it. We are using all practical levers to this end. The key lever is monetary policy, and the essential instrument of monetary policy is interest rates. We shall keep interest rates as high as is necessary for as long as is necessary in order to reduce inflation. Of course high interest rates are painful. We all know just how difficult times are for those with a mortgage and a young family. But none of your Lordships will forget how high inflation eroded salaries, pensions and savings. Interest rates will come down but savings eroded by inflation cannot be replaced easily. Of the two choices, it is easy to see why we on this side of the House take the view that we do. We shall not sell out to higher inflation as a political expedient.
The RPI inflation rate reached a peak of 8·3 per cent. in May, and in October—the most recent month for which figures are available—it stood at 7·3 per cent. That is lower than the lowest rate ever achieved by Labour between 1974 and 1979. A rate that was a cause for celebration for the Labour Government because it was low by their standards is a cause for concern to us because it is far too high for our standards.
The noble Lord, Lord Williams of Elvel, would have been thrilled to have the rate at the figure

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that it is now when he was chairman of the Price Commission. During his tenure of that office the average rate was 10·3 per cent. and varied from 7·4 per cent. to 16·5 per cent. The current rate is likely to stay about 7 per cent. for some months to come, given the way in which retail prices are measured in the United Kingdom. But during the course of 1990 we expect to see inflation starting to come down to an annual rate of 5¾ per cent. in the fourth quarter of next year.
We should also see a turn-around in the current account deficit as domestic demand slows. With the home market so buoyant, and capacity utilisation at high levels, 1988 was a disappointing year for exports growth. The UK's volume share of world trade in manufactures fell, after a run of years in which we had held our own. But export performance in 1989 has been much better. In the first 10 months of 1989 exports of manufactures were 11 per cent. up on the same period a year earlier and it seems likely that we will see an increase in our share of world trade this year. There is every prospect of a further year of strong export growth in 1990. With little or no growth in domestic demand next year imports growth is likely to fall off quite sharply. The invisible balance is also likely to improve as a result of an improvement in the services balance. Thus from a projected deficit of some £20 billion this year on the current account we forecast a deficit next year of £15 billion. That is still too high but the trend is very much in the right direction.
It is worth while reminding your Lordships that this deficit is not a government deficit. Indeed the Government are in surplus due to a tight fiscal policy. That has brought and is bringing enormous benefits to this country. While Labour were in power propped up by the Liberals total public sector borrowing amounted to £120 billion. We expect to have paid off £30 billion in the three most recent years. That implies savings of nearly £3 billion a year in debt interest costs. That is of enormous benefit not only to ourselves but to our children and grandchildren who will reap the rewards.
But the Labour Party policy review would put all this at risk. Despite a lot of words very few definite policies have emerged. Nowhere does the policy review explain why corporatism failed so disastrously every time Labour practised it. Nowhere does it explain why it will work in the future. The reason is simple. The plain truth is that corporatism was and is a delusion doomed to fail and disappoint the best of good intentions. However we have been able to glean some idea of what Labour proposes. We shall move from a relatively low tax rate country to a high tax rate country with an investment income surcharge for many including pensioners. It looks like the minimum the top rate of tax will be is 60 per cent. as opposed to 40 per cent. now. However, everyone will pay more including the basic rate taxpayers—just as they did before.
And what would Labour do in the present circumstances? We know that the Leader of the Opposition said he did not know. However, others have been making contradictory remarks about
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public expenditure, applying the ineffective and discredited palliative of credit controls and altering the present arrangements for mortgages. When it comes to the key matter of inflation it is clear that Labour does not give it the priority we do, for the leader of the party, Mr. Kinnock, has said that his policies will lead to higher inflation. How much more will it increase for those policies that have not yet been announced?
It is no wonder therefore that the noble Lord, Lord Williams of Elvel, has had to word the Motion in his name in the terms that he has. But what it says is old hat. We have heard it all before. My generation was promised better opportunities. Some, alas, believed the promises of a strengthened manufacturing base utilising the new opportunities of modern technology. We were all misled and those who believed found that the promises were not fulfilled. What good did the Industrial Reorganisation Corporation and National Enterprise Board do for British industry? Let us take the motor industry as an example. What was the benefit of the subsidising of out-of-date, smokestack, environmentally polluting industries? It did not work then, and it will not work now.
Lord Taylor of Gryfe: My Lords, at least one of the contributions that they made was to save Rolls-Royce and Ferranti.
The Earl of Caithness: My Lords, the Industrial Reorganisation Corporation did much to support industries that should not in our view have been supported.
Noble Lords: Oh!
The Earl of Caithness: My Lords, to prove the point that I have just made, under this Government manufacturing output is up 12½ per cent. since 1979. Yet under the white heat of technology of the last Labour Government it was lower at the end than at the beginning. I trust that your Lordships will bear these facts in mind when it comes to a vote later this evening.
Before turning to Europe, I must inform your Lordships that among other measures to be laid before you this Session will be a Bill to extend the powers which enable governments to finance some of their activities through trading funds. I look forward to presenting it to your Lordships in due course.
I turn now to Europe. The Motion of the noble Lord, Lord Jenkins of Hillhead, requires us to consider the Community and in particular the fiscal side. What the Motion is really saying is that we should not argue as robustly and openly to protect our interests and beliefs as we have been doing and that we should agree more with the Commission's proposals. We have done what we have because we have a vision of Europe; one that is forward looking and prosperous; one that is able to offer high standards of living, freedom of choice and freedom of action; and one that is fit to compete with the rest of the world. But this Europe must develop according to principles we have stood out for in the Community

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and which are now widely shared. These principles include subsidiarity—the idea that only those things which cannot effectively be done at national level should be done at Community level —mutual recognition of each other's standards and practices with the minimum of harmonisation, which is the approach behind the 1992 programme, and promotion of a Community which in its outward relation with the rest of the world is liberal and open, not centralised and protectionist.
Let me give your Lordships just two examples of what we have achieved, first, on the removal of fiscal frontiers, in other words the cumbersome and inefficient process of levying excise duties and VAT on goods at the point at which they pass from one country to another. The Commission's original approach to this problem was to propose a country of origin system with a complicated and bureaucratic clearing house. We have pressed strongly for a more flexible approach and I am pleased to tell your Lordships that finance Ministers have now agreed to retain the principle of the existing destination system.
Secondly, I am glad that the UK has been able positively to influence the second banking directive and its supporting solvency ratios directive. These measures are now based on the principle of mutual recognition of basic prudential standards between member states.
Without the long hours that many of us have spent in the last two years in Brussels and elsewhere in Europe, there would be even more bureaucracy, more government and Commission interference and greater costs to industry. The Community would have become even more isolated and more of a fortress Europe. We shall take forward our guiding principles in our discussions on economic and monetary union, to prevent undue centralisation of bureaucracy, to promote greater accountability, and to agree a system which produces convergences on the best inflation performance in the Community, not merely the average.
The Motion of the noble Lord, Lord Jenkins, also calls on us to give our wholehearted participation in the European Community. That is just what we have done. The single market programme set out about 300 measures designed to bring down barriers and to ensure that the Common Market is a genuinely free market. These are supposed to be implemented by the end of 1992. Again the UK has taken the lead. Of the 68 single market directives which should have been implemented by now the UK has the best record with only three unimplemented. That is a record of which we all can be proud.
Those of your Lordships who might have forgotten 1979 would do well to read the valedictory letter of Sir Nicholas Henderson to Dr. David Owen, the then Foreign Secretary, which was published in the Economist in 1979 and which described the sad state of the country then. Over the past decade this Government have liberated the economy from socialist controls, controls on pay and prices, controls on foreign exchange and controls on dividends. We have freed the taxpayer from the dead weight of subsidising loss-making nationalised
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industries and have returned many to profit and to the private sector where they belong. If we had continued to subsidise those industries at the rate that Labour was subsidising in 1979 the cost to the taxpayer this year would have been £5 billion.
Most importantly, this Government have also refused to be deluded into believing that one can spend one's way out of economic problems. The country and its industry are in better shape to face the difficulties, challenges and opportunities in the years ahead. It is because of our economic policies that we shall provide greater wealth to our citizens. We shall minimise the central bureaucracy that stifles initiatives and we shall achieve for all of us a better quality of life.
3.29 p.m.
Lord Williams of Elvel Lord Williams of Elvel rose to move at the end of the Address to insert "but regret the failure of Your Majesty's Government to propose measures to strengthen the manufacturing base of British industry so as to reduce the current deficit in the balance of trade and to generate the resources required to secure lasting improvement in the quality of life."
The noble Lord said: My Lords, I beg to move the amendment standing in my name on the Order Paper.
I shall endeavour this afternoon to do three things. First, I shall reiterate, and, I hope, demonstrate, my continued view that the Government's economic performance since they took office in 1979 has been, contrary to their own assertions, a disaster. Secondly, I shall argue that the current strategy is badly flawed. I shall show how and in what particular it is flawed and say in what corrective measures we should be engaging. Thirdly, I shall seek to draw to your Lordships' attention some of the consequential effects in the general area of what we would call the "quality of life" of the serious economic position into which the Government have led us.
I hope that noble Lords will forgive me if I do not spend too much time on the speech of the noble Earl, Lord Caithness. I did not think that he believed what he was saying. I mean no disrespect as the noble Earl knows. However, I am afraid that I have listened to too many speeches on these matters justifying first one policy and then another. They were dutifully read out by various Treasury spokesmen in our House not least and latterly by the noble Lord, Lord Young of Graffham. Having suffered those speeches, all I shall say to the House about the noble Earl's effort—and I emphasise the fact that I say it in the friendliest possible spirit—is that the voice is that of Jacob but the hands are the hands of Esau.
Over the years we have listened to these rather wearying speeches from Government Ministers claiming economic miracles. We have been treated to many lectures. For instance, we were taught that the service sector would take up the running in keeping our balance of payments in equilibrium as manufacturing ceased to be a major factor in the post-industrial economy. When that failed to happen we were told how the yield from our enormous

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overseas assets would provide dividends to cover the gap. Unfortunately, due to the liabilities which we have incurred in financing our current deficit, the net annual yield is neither here nor there in terms of our current account. We were then told—and the noble Earl has told us again today—that the balance of payments deficit lies in the private sector and not in the public sector—in other words, it is all our fault; it is not the Government's fault but it is ours.
In its time each new theme was acclaimed as being the ultimate wisdom, and each one had its day; but such is the way of things each in turn has been shown to be without substance. There is only one theme whose passing I really mourn. That was the heroic assertion made two or three years ago that the balance of payments deficit was the sign of a strong economy. I used to enjoy that because, in all innocence, I used to ask noble Lords on the Government Front Bench whether, if the balance of payments deficit was a sign of a strong economy, the balance of payments surplus that we were running during the early 1980s was a sign of weak economy. It used then to be fun to watch their faces. We in Opposition in this House do not often have much fun but those occasions were splendid.
Let us look for a moment at the Great Economic Miracle. The noble Earl has proclaimed it again today. We must ask exactly where the miracle is. Is it a miracle of overall economic growth? I take issue with the noble Earl's figures. During the period from mid-1960 to the end of 1969 the economy grew at an average 3·1 per cent. per annum. That was not too bad. During the 1970s—taking a period of identical length from end-1969 to mid-1979—the economy grew at an average of 2·4 per cent. per annum. That was not so good but still tolerable. However, during the 1980s —again a period of identical length from mid-1979 to end-1988, and, having risen to all the self-congratulatory speeches from the Government Front Bench, your Lordships may think one of maximum growth—the figure comes out at 1·9 per cent. per annum. That is the worst performance of the three periods.
Then is the miracle one of productivity? Yes, because manufacturing productivity has done very well. After a good period during the 1960s and, we must accept, a bad period during the 1970s, it is now back on the long run trend growth line observable over almost 40 years of an improvement of 3·1 per cent. per annum. However, total economy productivity, which rose some 27 per cent. in the 1960s and some 20 per cent. in the 1970s, rose by only about 12·5 per cent. in the 1980s. There is nothing particularly miraculous about that.
What about inflation? The noble Earl spoke of inflation and referred to my chairmanship of the Price Commission. Again the figures are nothing to write home about. If we put our inflation rate in the international context—and the noble Earl was most keen to do so—we find that since 1985 we have been running at about 30 per cent. above the average OECD inflation rate. That figure is slightly higher than the rate by which we exceeded the average OECD inflation rate during the three years 1978 to
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1980. The gap between us and the OECD average is now beginning to widen.
But if the record on those counts is not too good, the record on the balance of payments is absolutely disastrous. Who in their right mind would have forecast that a balance of payments surplus of nearly £1 billion in 1978 (which accommodated a deficit on oil accounts of £2 billion) could possibly have been turned into a deficit of £14·5 billion 10 years later, and that when the oil account was £2·8 billion in surplus? That is a turn-around of £20 billion in 10 years. That really is a miracle—one of almost unbelievable incompetence.
Almost worse than the fact itself is the Government's attitude. At least in respect of inflation they admit that something has gone badly wrong. The same is true of economic growth; at least they recognise that it has practically come to a standstill. We now have official confirmation of the fact that we now enjoy—if that is the correct word—the slowest growth rate among the top 10 industrial countries and the second highest inflation rate behind Australia.
But the real conundrum is that the Government do not appear to admit that there is a balance of payments problem at all. The deficit projected for this year is £20 billion. Apparently next year's figure will still be around £15 billion, in spite of the continuing and accelerating sterling devaluation and a projected nearly nil growth rate.
The Government do not admit that that is a problem as long as the deficit is financeable. But it is only financeable through short-term borrowing. No one is lending to us long term because of the low yield available on long-term instruments. Why is there a low yield available on long-term instruments? Precisely because the Government insist in redeeming long-term debt. It is that which brings down the yield on long-term instruments. That policy serves only to produce a yield curve of maximum returns at the short end and minimum returns at the long end. The result is the accumulation of very short-term debt. It is precisely this Government's policy which is putting us at the mercy of the hot money merchants.
Any banker or businessman knows that it makes sense to cover a loss, particularly a short-term loss, only if there is a clear and sensible strategy for stemming and reversing that loss. Anything else is merely a step in the Rake's Progress. Merely to say that the deficit is financeable and leave it at that is the worst form of irresponsibility. Incidentally, it is a clear recipe for ensuring that it ceases to become financeable rather quickly.
For reasons that I shall give I shall now assert that any strategy for turning around our balance of payments deficit must—and I repeat the word "must"—be based on the resurgence of the manufacturing sector of our economy. It is the failure of the Government to comprehend that simple proposition that makes their whole economic strategy unworkable. That is plain to anyone who pays even passing attention to the figures.
Let us take the year 1988. Then our balance of payments on current account, before the balancing

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item, showed inflows at £168 billion and outflows at £182 billion. Of those totals, visible trade accounted for approximately £81 billion in exports and some £101 billion in imports; and of those totals £65 billion on the export side and £80 billion on the imports side were in manufactured or semi-manufactured goods. In other words, exports of manufactures account for nearly 40 per cent. of balance of payment inflows and imports of manufactures for some 44 per cent. of outflows. There is quite simply no way whatever that any remotely conceivable surplus on services, dividends, interest or tourism can make up the deficit. The magnitudes are just too great.
It is well known that since the early 1960s apart from a slight improvement in the 1970s, exports in manufactures have been increasing their share of the gross domestic product by something of the order of 2 per cent. per annum. Imports have been increasing their share of the gross domestic product roughly in the order of 6 per cent. per annum. Nothing we have heard in the past few days either in the Autumn Statement or the gracious Speech gives us any encouragement whatever that those two vital long-term trends will be reversed. However, reversed they must be if the economy is to be brought back into equilibrium at anything other than a truly horrendous rate of unemployed resources, and that includes unemployed people.
Therein lies the whole problem of the British economy. Not only do the Government fail to attack or recognise the problem, the fact is that they have exacerbated it. The ravages of 1980 and 1981 have left us with a manufacturing base which simply no longer has the capability to produce many of the goods which we demand. When could we last buy a camera or a hi-fi which was not imported? Where are the equivalent British exports which are conquering the world? They do not exist. They do not exist.
There is an alternative. In the short term, we must abandon the policy of using high interest rates as the sole counter-inflationary mechanism, since that is the quickest way to reduce manufacturing investment which we should be building up. It really should not need the chairman of Lloyds Bank to remind the Government that the use of credit controls will supplement and complement that policy by making it more effective and hence reducing the level of interest rates at which the policy will bite. Special deposits with the Bank of England, hire purchase controls, checks to ensure that mortgage lending is strictly for housing only and not for buying new wall-to-wall television sets are all measures which are possible and which should be on our agenda.
Secondly, and also in the short term, we should be eager—and not just reluctant but eager—to negotiate early entry into the exchange rate mechanism of the European monetary system so as to give our manufacturing exporters the exchange rate and price stability they need. To be sure, there will be a negotiation on the conditions of entry. No government would just jump in blind. We wish to see a consensus on a growth strategy throughout the Community; we need to enlarge central bank swap
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facilities to accommodate the entry of sterling, which, after all, is the second most highly traded currency in the Community after the deutschemark; and we must enter at a sensible rate. Above all—and this is the important policy change which we need and need even outside the context of our entry into the exchange rate mechanism—we must promote greater resources for regional development. It is vital to ensure that the single market spreads prosperity throughout Europe and avoids creating overheated and congested growth zones surrounded by underdeveloped and under-invested areas of neglect.
Those three policy changes—greater flexibility in monetary policy, early negotiated entry into the exchange rate mechanism and enhanced regional policy—are immediate requirements if we are to start on the long haul back to manufacturing based prosperity. In the longer term, equally significant policy changes are required. For goodness' sake, we must move up the league in investment in civil research and development instead of moving steadily down it. We must give assistance to companies of whatever nationality which have operations here to carry out their research and development here. We must achieve that not only by direct encouragement but by changing the technological climate. We must be excited about space, nuclear fusion, the high speed train and instant information transmission instead of treating them as risky ventures in which the private sector may or may not wish to involve itself but which are not for the public sector—that is not our scene. We must train and retrain our management and workforce, men and women, and learn to adapt to new methods of working as the new technologies take hold. We must inspire them with enthusiasm for those new technologies.
All those things can and must be done if we are not to continue the descent into the status of a banana republic. None of them can or will be done by a government whose all-consuming god is the god of market forces. They all require a degree of co-operation between government and governed which is quite foreign to current Conservative ideology. For that reason and that reason alone, I feal that those measures cannot be implemented with any credibility or conviction until either the party opposite reverts to its old, and I believe stronger, philosophy or until it is removed from office.
However, there is one further requirement for what is no more and no less than the necessary re-industrialisation of Britain. Since 1986 and the ratification of the Single European Act our fortunes have been and are inextricably bound up with those of our European partners. Therefore, we must define our attitude towards the EC in a manner which best serves that objective of re-industrialisation. We must ensure that the single market and social Europe also succeeds and flourishes. Today more depends on the economic and democratic vitality of Europe than even before. If we are to assist the growth of democracy in the East or the alleviation of poverty in the South, then Europe must prosper and succeed.
The policy which I am advancing rests on the premise, which I believe to be properly founded, that it will not be possible to redress our balance

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of payments problem, which is where our national economy is at its most precarious, without a government-inspired renaissance of industry's manufacturing base. However, I also argue that without such a redressment and renaissance, we shall not be able—and here I join with the noble Earl—to afford the improvements in the quality of life which your Lordships have debated over the past few days.
Apart from the privileged minority, we shall not be able properly to educate our children. We shall not be able to look after our old people. We shall not be able to care for the sick and disabled. We shall not be able to afford decent transport systems. We shall not be able to house the homeless. We shall not even be able to keep the rats off the streets of London. If your Lordships think that I am simply harping on old issues, you should know that these old issues are very much alive. If your Lordships doubt that, perhaps I may give an example of an issue which I thought had been buried forever by the post-war welfare state but which has now re-emerged. I refer—and I am ashamed to do so—to the number of our fellow citizens who are now reduced to begging.
Some 40 years ago the Attlee Government set the basis for the modern welfare state. They believed—and I will say that this personally inspired me as a young man—that hardship and deprivation should be banished from the land and that nobody, whatever his or her class or race, should be forced into the humiliation of begging for a living. If we succeeded then, we have failed now since we have allowed this Conservative Government to destroy that vision.
In May of this year a poll was conducted by MORI on that very question. The question was asked;
"in the last six months have you been approached by someone begging in a public place?"
We should not be too naive about that. There are people who actively choose such a life, for whatever reason. However, it comes as something of a shock to read that no less than one quarter of the national sample of 2,000 said that they had been approached by a beggar in the past six months. In London no less than 41 per cent.—that is two out of five —said that they had been so approached. A quarter of our population is 15 million people; 41 per cent. of the population of London is about two million people. That is what I mean about our quality of life. It is not just the ozone layer, hospital waiting lists or testing our children at seven. It is the basic provision of the necessities of life for all our people.
We thought that battle had been won. But we now find that we have to fight it all over again. This time we will fight not just for a temporary improvement, which can be reversed again without difficulty by the party opposite, but for a lasting improvement. I should hate to think that I had not made our intentions perfectly clear. The battle is joined; it will be hard, but we intend to win it and win it we shall.
Moved, as an amendment to the Motion, at the end of the Address to insert "but regret the failure of Your Majesty's Government to propose measures to strengthen the manufacturing base of British
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industry so as to reduce the current deficit in the balance of trade and to generate the resources required to secure lasting improvement in the quality of life".—(Lord Williams of Elvel.)
3.50 p.m.
Lord Jenkins of Hillhead: My Lords, I rise to speak to and indeed support the Motion in the name of the noble Lord, Lord Williams of Elvel, which he moved in a most powerful speech. Your Lordships will notice that I also have an amendment on the Order Paper which I propose to move after his amendment has been decided this evening but to which, for the convenience of the House, I shall devote part of my speech, as did the noble Earl, Lord Caithness, in opening.
In my view a most welcome development would be the growth of a little humility on the part of government spokesmen about the management of the economy. There was little sign of that in the speech of the noble Earl this afternoon. It is part of the presumptuous Manichaean doctrine of this Government that, just as we heard last night on "Panorama" about the appalling democratic turpitudes of almost every European government from Spain to Germany and France to Italy, so in this country we are presented with a picture of dark ages, whether under the Macmillan or Heath governments, or the Wilson or Callaghan governments, until a new enlightenment seized the nation in 1979 since when everything has been brilliantly managed.
In some mysterious fashion, however, this brilliant management has now succeeded in producing the following combination of circumstances: an inflation rate so high that it prevents us, according to the Government, alone among our Western neighbours, from joining the exchange rate mechanism; the prospect of nearly flat growth, verging on a technical recession, which will probably mean some slight growth in unemployment again; a balance of payments deficit which, even with this flat growth, will be at the massive and previously unimaginable level of £14 billion a year; interest rates which are cripplingly and isolatingly high; and a distinctly shaky pound on the foreign exchange market.
Mr. Lawson's method of departure earned respect, but there is no doubt that he left a mess behind. It will require some very tight navigation by Mr. Major to get the economy back on to a tolerable track in time for even a 1992 election. In these circumstances there would be nothing to be ashamed of in a little humility. Steering the complicated economy of any advanced country is a fairly thankless task. No Chancellor of the Exchequer or finance Minister should expect to score more than about 50 per cent of favourable marks. Indeed, if he earns plaudits too quickly he will probably find that they turn to ashes in his mouth.
In addition, the British economy has, under successive governments, acquired some in-built sluggishness of performance. There is no significant statistical evidence to suggest that this has been diminshed in the past decade, which makes the task of being British Chancellor a peculiarly intractable

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one. There would be nothing discreditable about admitting that, after a fairly good but improvident run for a few years, the economy now faces a distinctly rocky prospect. We hear nothing except Panglossian accounts of how perfectly everything has been done. I fear that the prospects for setting in hand the necessary cures are not reassuring while this complacent approach persists. One problem is that the Prime Minister is incapable of admitting error and this makes other perfectly sensible Ministers afraid to do so either lest they be accused of cracking the glossy shell of self-righteous complacency.
I have ventured to put down an amendment on a slightly different aspect of our affairs, which in no way censures the Government but urges them to recognise how inevitably in the modern world our economy is influenced by what happens outside these islands and to play a more effective hand in Europe. This is certainly not a plea for surrendering British influence, as the noble Earl chose to assume. On the contrary, it is framed in the almost desperate hope that at this crucial moment, when there is so much to play for in every part of Europe, we might still avoid making (for the fourth time since the war) the same mistake and cut ourselves off from the shaping of institutions which all previous experience tells us we will eventually have to join.
The Conservative Party is now being wrenched away from the European faith which it has embraced at least since 1961. It is choosing the worst possible moment in at least 40 years—there is so much flux and opportunity in both parts of Europe—to allow this to happen.
I remember that at the 1979 election, when I was in Brussels and president of the European Commission, I was enormously torn in my own mind as to what I wanted to happen. There were old affiliations but at the same time I believed that probably a change of government would be better for Britain's relations with Europe. That thought, in my position, was bound to be central to my thinking. Indeed, for a short time under the noble Lord, Lord Carrington, that did happen. But I could not begin to feel that way today.
I am not alone in being disillusioned about the Government's European performance. I was amazed at the noble Earl quoting Sir Nicholas Henderson's farewell dispatch which got into the Economist. Has he read Sir Nicholas's recent articles? Would he care to ask him to provide a fresh memorandum, and when it is done publish it under the imprint of the Government? That would be a very interesting experiment indeed.
Mrs. Thatcher sees herself as fighting a lone battle against a flattening federalism which wants to put us all into a melting pot and produce the analogue of a United States of America in Europe. In my view that is a tragically misplaced fear, because it is tilting at imaginary windmills in a way that does a great deal of harm to our fundamental national interests.
The Prime Minister is quite right, in my view, in thinking that Europe will always be different from America; Europeans in Europe, unlike those who made America, have not turned their backs on their
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countries of origin. They always will, and in my view should, retain a large part of their national identity. This is just as much a French or a Spanish view as it is a British view.
Mrs. Thatcher withheld one important part of the truth last night when she said—I am not sure whether or not this was a complaint—that there was a lot of nationalism in France. Yes, there is, and like much nationalism it can sometimes be selfish and obstructive; but the French have been skilful enough never to let it separate them from the main axis of European advance. As a result they have defended French interests and advanced French influence within the Community much better than successive British governments have done for British interests.
The French have made inconceivable the idea of a Europe without France. We have certainly not made inconceivable the idea of a Europe without Britain. Indeed, let us be in no doubt that more and more people in Europe are beginning to speak about precisely that, and deeply inimical to our interests that would be. That is because we have no other effective direction in which to go. If we had, we would have taken it long ago during the 40 years of semi-detachment and occasional rebuff. All that we could do is stand glowering at the edge, resentful, apprehensive and lonely.
I am increasingly struck by one other paradox in the Prime Minister's attitude. She lays great stress on a Europe of loosely co-operating sovereign states as opposed to a somewhat tighter institutional framework. Curiously, her proclaimed ideal is one peculiarly unsuited to her style and methods of operation. Co-operating sovereign states, if they are to achieve anything, manifestly can only operate on a basis of give and take, of compromise and of consensus—all of which are anathema to Mrs. Thatcher. There would be much more room for conviction politics and the belief that you are always right if more matters were settled by majority vote and greater power given to a parliament more partisanly organised. Nonetheless, we will no doubt resist any attempt to correct the democratic deficit in Europe with the same negativism that we are currently displaying on most other issues.
No one expects us or anyone else to rush headlong into a full federalism. The number of issues which need to be dealt with at a European level are quite limited. I am as committed to the doctrine of subsidiarity as the noble Earl said he was, but there are important, vital issues and money is most certainly one of them. The Community subjects itself to a vast internal handicap compared with its main competitors, Japan and the United States, by having 11 separate currencies instead of one. I believe that there is now a settled desire within the Community to advance along this axis. If we allow it to happen without us we will pay a heavy national price in the City of London and elsewhere. If ever there was an example of defending the shadow of sovereignty while allowing its substance to fly out the window it is to try to preserve the sacred independence of sterling. Sterling today is not a symbol of sovereignty; it is much more a cork on a deutschmark-dollar eddy.

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I do not necessarily say that all the Delors proposals should be inscribed on tablets of stone. Apart from anything else, only saints are in general prepared to accord that status to the actions and pronouncements of their successors. However, I believe that if we are to put forward competing or alternative solutions we must find something which is a great deal more serious and constructive than the competitive currency scheme which Mr. Lawson put forward with a rather throw-away gesture at the beginning of September and which Mr. Major dusted down more painstakingly in early November.
That is not serious because it does not engage with either of the two main problems raised by having 11 different currencies. First, if you do a deal in another member state for delivery in two or three years' time you do not know what you will be paid in your own currency at the end of the day. That considerably reduces the meaning of a single market. Secondly—this applies particularly to individuals and small businesses—if you operate in a number of different currencies you pay substantial, unacceptable foreign exchange margins.
Competitive currencies simply do not engage either of those two problems and therefore appear to many in Europe as a proposal which is either uncomprehending or deliberately diversionary. In my view, incomprehension is the main part of the problem. To establish our position as a leading state, in a leadership position with a few others, within the Community we would have to give up very little of substance. It is more a question of style and language, and understanding that combination of self-interest and genuine idealism which, as in most fields of human endeavour, makes up other people's nations. Above all, we must give up that constant air of semi-detachment which guarantees semi-impotence.
If there is one lesson which stands out a mile from the history of post-war Europe it is that a country can only exercise full influence if it participates in all the activities in Europe. That has long been the case, but there are many signs that the moment for more acute choice may now be very near. In my view, we did not go through the long struggles of the 1960s and 1970s, pick ourselves up after two General de Gaulle rebuffs and fight through the referendum campaign to obtain a massive majority just to end up as a second-rank member of Europe, almost as though we had stayed in EFTA. We did that in order to play our full part, to exercise a contributory leadership role in Europe, to advance our legitimate interests, but also to strengthen and enhance Europe's position in the world. If we continue to stand on the sidelines we shall throw away a large part of that political investment of the past 30 years.
Lord Monson: My Lords, before the noble Lord sits down, will he kindly clarify one point? It is this. However valid the arguments for economic and monetary union may be, how does he justify the constant interference by Brussels in the purely domestic affairs of the nation states of the Community? Such purely domestic affairs have no international or cross-border implications and,
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above all, have nothing whatever to do with the achievement of a single European market in 1992.
Lord Jenkins of Hillhead: My Lords, I do not know exactly to what the noble Lord is referring. There may be cases in which there is excessive attention to detail by Brussels, though that can only have an impact if it is carried by the Council of Ministers. The Commission can do nothing on its own. I am concerned with our attitude to the main few issues: Europe's trading position in the world, its place in dealing with money, its place in political co-operation and, increasingly, its position in dealing with questions of ecology and the environment.
4.10 p.m.
Lord Hankey: My Lords, the noble Earl, Lord Caithness, has given us a very interesting and encouraging report on the British economy and I agree with a great deal of what he said. I was enormously impressed also by the interview which the Prime Minister gave to "Panorama" last night. It was an extremely able and effective performance. I congratulate the Government on what they have done. They have been quite right to lay emphasis on the importance of combating inflation. But there is no mistake about it; we still have a very long way to go. There is no reason why this country should still be poor compared with other industrial countries in Europe and outside.
I believe that there was much force in the points made by the noble Lord, Lord Williams of Elvel, when speaking to his Motion concerning the importance of manufacturing industry. I also listened with great interest to the points made by the noble Lord, Lord Jenkins of Hillhead. I now wish to go forward and offer some encouragement to the Government for them to proceed further. By now it should be obvious that this country cannot stand and prosper alone. It is no good standing outside and sniping at Europe. I believe that much more quiet and able diplomacy needs to be done in Brussels before we send the Prime Minister over to shoot at everybody. I do not think that that approach convinces many people. Much more quiet diplomacy might relieve many of the difficulties. The Prime Minister and her colleagues could then perhaps find the final solutions.
All this confrontation irritates our European colleagues and, worse still, it causes a lack of confidence in us and in the pound. We must have a stable currency and much the best way is now to anchor the pound to the European bloc by joining the exchange rate mechanism of the European monetary system. We would still have to take measures to maintain our rate but our participation would obviously inspire more confidence. I am sure that we would rarely have to impose such drastic interest rates as we now have which are harmful both socially to people who have mortgages and even more to business, which should be investing more.
Our position in a powerful bloc of countries like the EMS would inspire much more confidence both at home and abroad. There would have to be an agreement about the conditions of our joining the scheme. If there were some quiet diplomacy in this

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regard I believe we could make a very satisfactory arrangement. We need to avoid carrying existing interest rate policies too far if we are not to discourage industry too much. I would regard any further rise in the rate of interest with total and absolute sorrow and gloom.
This brings me to the supply side of the economy. I believe that the Government should be in just as close touch with the CBI as they are with the Bank of England and the City. The Government have done a fine job in setting enterprise free. We should have done it years ago. But I do not think it is quite enough. Perhaps I may be slightly indiscreet for a moment. I went to see Mr. Maudling, the President of the Board of Trade and a very good friend of mine, when I was Official Chairman of the OEEC. I told him that I was extremely interested in the efforts he was making to encourage British industry to export. I said "You must know by now which industries are going to make the grade. Perhaps I may be able to help you over in the OEEC". Reggie Maudling's jaw dropped a bit. He said "I should like you to ask that question again in front of my Private Secretary". He pressed a button and in came his Private Secretary. I asked the question again. The Private Secretary said "Oh, Sir, we leave all that to private industry".
It is of interest to recall what happened then. British industry declined in the next years in spite of all the encouragement which it received in general terms. When the Labour Government took over in 1964 they were horrified at the appalling deficit in our balance of payments. That was partly due to very disorderly behaviour by the trade unions, and it is of enormous credit to Mrs. Thatcher's Governments, in the plural, that at last these scandals have been corrected, most recently in the dock labour scheme ports. Our industries cannot compete unless they can work regularly and reliably and get their imports and exports flowing regularly and reliably. That is a precondition of industrial success. I believe it to be the duty of the Government to make sure that happens.
The Government have to face the need for doing things on the floor as well as on the top storey of the British economy. They have to come down to the nitty-gritty. They have to reconcile themselves to helping particular products and functions like the Channel rail-link, which should have government support if it is going to succeed. It should be pushed through without so much unreasonable delay.
The Prime Minister did an excellent job some years ago in helping to get contracts for British industry in the construction of a new university in the Arab world. The Labour Party made a colossal mistake in blaming her for this. Having been mixed up for years in trying to promote British exports, I can assure noble Lords that all our main competitors actively help their industries. Some of them are quite ruthless. We do not want to be ruthless or improper, but I honestly believe that we could and should do more both at home and abroad and be a lot less fussy about it.
If a firm needs more land or there are housing difficulties, the Government should be ready to hasten planning decisions, which are often
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intolerably slow. The problem is that if a company decides to set up a new factory, it takes two years or so to get the necessary permissions and get the factory going. Then the markets change and the project is not a success. It is tremendously discouraging to business. It wants help to move forward, and it should receive help. The Government have to reconcile themselves to taking a hand in these matters.
If there is a particular shortage of some skills which is holding back progress in an industry, the Government and local authorities should actively promote local training. The Government have done a great deal in this respect. It is a recognised function of the education system to produce what the economy needs at every level including in the field of research and science, which should not be allowed to fall behind.
I did not realise until I retired what colossal gaps there still are between government, university and schools and private enterprise. If the Government could do even more to step in and help to bridge these gaps, and risk getting their feet wet in the process, it would make a huge difference to our productive industry and to our education system which should feed it. The Government have done a great deal to meet our needs on the last point and I warmly applaud their education reform. However, I wish to see the administration at all levels get its feet wet and get them even more on the floor.
We have now entered a new age when the environmental consequences of what we do both at home and in industry are seen to be very important. But we must beware of industry being held up for foolish and ridiculous reasons. The Government will have to be firm about this, important and vital as the environment is to our wellbeing. But God preserve us from idiotic and unscientific environmental enthusiasts.
4.20 p.m.
Lord Boyd-Carpenter: My Lords, many noble Lords will echo the concluding words of the noble Lord, Lord Hankey, who, if he will allow me to say so, seemed to speak a great deal of good sense on a number of problems. But we shall be called upon tonight to decide on two amendments; that in the name of the noble Lord, Lord Williams, and that in the name of the noble Lord, Lord Jenkins of Hillhead. I should therefore like to comment a little on both amendments.
It seemed to me that the noble Lord, Lord Jenkins of Hillhead, either was not the author of the Liberal amendment or had not read it. His speech, characterised by the agreeable moderation with which his speeches are normally characterised, did not go anything like as far as the amendment on which he proposes to ask your Lordships to vote later tonight. Therefore noble Lords should have in mind what the Liberal amendment says. It calls on Her Majesty's Government,
"to recognise how illusory are the benefits of economic sovereignty in an integrated world".
That is a tremendous proposition to ask noble Lords to pronounce upon because economic

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sovereignty covers practically all the major activities of a modern state. It covers not only currency but taxation, public expenditure and such related matters. To say that economic sovereignty in that sense has only "illusory" benefits and to suggest therefore that it would be right for the Government to hand over control of these matters to a European body is a very remarkable proposition indeed. Even if it had anything to justify it, it is not an action which could possibly be justified without a prior reference to the British people either at a general election or by way of referendum or both. It would be an immense and dramatic change in our position.
I am not very concerned with the complications of the doctrine of sovereignty but I am very much concerned with the question of whether a British Government would be able to look after, for better or worse, for richer or poorer, the British economy. If we forfeited our economic sovereignty to anybody else, noble Lords on the Government Front Bench would have to say, "This matter has nothing to do with us. You must refer it to Brussels". That would be an impossible position. Not only would it be impossible in principle but it would also be disturbing when one considers the record of the European Commission.
Noble Lords have only to consider the disaster the common agricultural policy has been and the failure there has been on the part of the European Commission to control it. It has been an enormous waste of money and has produced an enormous excess in agricultural production. It has produced surpluses which have literally had to be given away, in many cases to the Soviet bloc. At the same time it has seriously damaged the trade of other countries, particularly in the British Commonwealth, with which we used to deal and whose exports used to come here.
Even if one did not worry and regarded as academic the question of sovereignty, given the record on the common agricultural policy which has been a major matter of the European Commission, a matter which has absorbed, if that is the right word, a large part of the Commission's revenue, and bearing in mind the Commission's utter failure to get it under control and to check it, surely there is an overwhelming argument against submitting any more of our affairs to a body of such proved and demonstrable incompetence. Therefore, with great respect to the noble Lord, Lord Jenkins of Hillhead, that is the point of the amendment, as distinct from his speech, that the noble Lord is proposing apparently to ask your Lordships to accept later tonight.
I now turn to the amendment of and the speech by the noble Lord, Lord Williams of Elvel. As one would expect of him, it was far more reasonable in tone and in parts so much more persuasive. I noticed, as may have other noble Lords, one singular omission. For years speeches from the Opposition Front Bench and from the comparable Bench in another place have held forth at great length about the miseries and terrors of unemployment. But I think I detected in the noble Lord's speech only one rather passing reference to unemployment. Noble
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Lords may think that to be significant. It is an implicit admission that on that problem, about which many noble Lords opposite and many noble Lords on this side of the House were very much concerned, the Government are making steady and continuous progress. It is very much to the credit of the Government that this is so.
With regard to the issues raised by the noble Lord, Lord Williams, there are curious factors on both sides of the argument. There is—I give it to him at once—the enormous deficit on the balance of payments. If we had had anything like that figure of deficit on the balance of payments when I was at the Treasury we would have been horrified. There is also the level of inflation which, while a good deal lower than it was in many years of the Labour Government, is still—I know that my noble friend on the Front Bench will agree with me—far too high and is still higher than the level of inflation of most of our European friends. Therefore there are obviously, as always in these economic and financial debates, certain factors to be urged on behalf of the Opposition; and, as always, the noble Lord, Lord Williams, urged them with extreme skill, dexterity and adroitness.
I found it difficult to recognise the country which the noble Lord appeared to be describing. He said that the Government's policy for 10 years had been "disastrous". That was his phrase. It is difficult to go around the country and reconcile what one sees with a statement of that kind. One sees everywhere—or all but everywhere—a steady improvement in the standards of life. It is almost so big that it is difficult to recall what standards were 10 or so years ago.
Lord Diamond: My Lords, does that include the vast increase in the number of people sleeping rough?
Lord Boyd-Carpenter: My Lords, I shall come to that point in due course. Otherwise I shall only detain your Lordships unnecessarily long by breaking the flow of my argument. The fact remains that the great majority of people in this country enjoy a higher standard of life than they have ever enjoyed. Curiously enough some of our problems—for example, the problems of traffic congestion—are a reflection of this. The problems of traffic congestion are simply a reflection of the fact that enormous numbers of people who never dreamt of owning a car even 10 years ago now own one. There are indeed few families who do not have a car or a share in one. One sees it too in the enormous increase in holidays in the Mediterranean; the fact that people of quite moderate standing in life and in their jobs have holidays now at Marbella or at places in the sunshine of the Mediterranean. There has been an enormous increase in the standard of life. That has not been achieved by accident. It did not grow in the years before this Government came in. Surely it must be accepted that that is a considerable achievement.
I promised the noble Lord, Lord Diamond, that I would reply to his interjection. It is true that there are a certain number of people who, for one reason or another—perhaps one can analyse the

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reasons—decide to, as he put it, sleep rough. Indeed, the noble Lord, Lord Williams, referred to the number of beggers. I have had some experience of social security administration. I can assure your Lordships that our present social security system is a very elaborate, very expensive and very comprehensive one, but no system of social security can ensure that all those who are eligible to benefit from it in fact do so.
It is perfectly true that there are a number of people who would quite plainly be eligible for help in one way or another from the social security system who do not elect to seek it and who appear to prefer to sleep rough or to indulge in begging. I may say in the context of begging that it has the considerable advantage that all the receipts of a beggar are tax free, which is a benefit not otherwise easily to be obtained, There are a number of people who, for reasons of temperament and their own decision, apparently decide not to take advantage of our social security system. I give way to the noble Lord.
Lord Dormand of Easington: My Lords, I am most grateful to the noble Lord for giving way again. He says that the social security system is comprehensive and thereby by implication takes care of everything. Would he like to comment on the new regulations for the Social Fund? Your Lordships will know that the Social Fund contains a finite amount. When all cases of the social security department appear to have been dealt with there is no more money available, regardless of how bad a case is and notwithstanding that it would have been justified under the old regulations. Would the noble Lord care to comment on that?
Lord Boyd-Carpenter: My Lords, I recall the discussion that we had in your Lordships' House on this point. I am happy to comment on it. We were told by the Minister concerned—I have no reason to doubt his accuracy—that the amount provided was calculated to be sufficient, and as I understand it there was no suggestion that if that assumption proved to be wrong there would not be an improvement. Nor is there the slightest evidence, let me say to the noble Lord, that any of those who are sleeping rough, or otherwise not availing themselves of social security, are doing so because the money had run out under that fund. There is not a scrap of evidence for that.
It is a social phenomenon resulting from certain types of people who wish to go off on their own, often to get away from their families. I think this is so particularly in the case of young people. It is unfortunate. Social workers of some experience are always trying to deal with it. I was myself dealing with a case the other day when I managed to interest the social workers of a London borough in the case of a young man who was sleeping in Sloane Square Underground station—undisturbed, I may say, by any movement of the excalator. It is perfectly true that there are some people there, but let me say to the noble Lord that that is not a result of any deficiency in the social security system as administered by the Government.
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While I am on the subject of social security I should like to come back—and come back again to the Liberal Benches—to the speech of the noble Earl, Lord Russell, last Thursday when he kindly and courteously referred to a speech that I had made on an earlier occasion. He referred to the fact that I had pointed out that our social security expenditure now is in excess of £50 billion a year. I have a reference—col. 216 of last Thursday's Hansard. He said, "Oh, but then you see some £30 billion of that comes from the contributory benefits and therefore of course no burden on the economy or the Exchequer".
Your Lordships will only have to think for a moment. From where do those contributory benefits get paid? They get paid from two sources—by deduction from the pay of workers, in other words, from the exactly the same sources as the great amount of taxation is derived. Indeed so far is this now the case that the national insurance contribution from a worker is deducted from his pay at exactly the same time and on the same basis as the income tax by the Inland Revenue and deducted before his employer hands it over.
If I may say so in parenthesis, I regret this. I think that the system as it operated in the days when I had some responsibility, when there was a card that had to be stamped, made people realise that they were getting a benefit—a good, subsidised benefit at that—for age, sickness, unemployment and so on, which now frankly they do not. But of course it is a complete illusion to believe that, because some £30 billion of social expenditure is the result of payments under the contributory scheme, that somehow is separate from the general burden of taxation. It is simply another form of taxation or, if your Lordships prefer so to put it, a question of an allocated tax.
This is relevant to the interjection just made. Social security expenditure is now at its highest level ever in real terms. This again—coming back to the noble Lord, Lord Williams—is the result and the product of an economy which for all its difficulties has succeeded in raising ever-increasing revenues. Those ever-increasing revenues, among other things, enabled the repayment to be made of quite substantial parts of the National Debt, thereby for the future reducing the interest charge on those sections upon the taxpayer.
When one is trying as the noble Lord, Lord Williams, was undoubtedly trying, to paint a gloomy picture of what has happened to the economy over these years, it is perhaps relevant to look on the other side of the account—at the fact that year after year the system has produced a large Budget surplus. It has included not only being able to pay for ever-increasing social security benefits but equally to redeem some part of the National Debt.
While I am referring to that I hope that I may be allowed to add one further plea in respect of expenditure. The noble Lord on the Front Bench knows very well how strongly some of us feel about the treatment of war widows and the discrimination at present exercised against the older war widows—those widowed before 1973—as compared with those widowed since. To many of us this seems

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a quite intolerable distinction, because if anything it is the older war widow whose need is greater.
When one is speaking, as I am, of the considerable financial advantages that have been secured under and by this Government one is entitled to ask that priority be given to wiping out this blot on our whole social security system. It is utterly wrong. It is indefensible. I have never yet heard a Minister or anyone else prepared to defend it. I beg of my noble friend to give some sympathetic reply.
The other problem that we undoubtedly have to face—and it is the major problem—is inflation. Here I have two comments to make. Inflation is undoubtedly being supported and stimulated by excessive wage demands. There is no doubt about that. It is a fact that in the public sector the Government have control. I quite accept that, rightly, now the Government have none in the private sector. Very wisely they do not seek to interefere with it. But in the public sector the Government have a duty to be very strict indeed in rejecting claims for unjustifiable wage increases. In our present economic situation, unjustifiable wage increases seem to me to amount to wage increases which are above the level of inflation. I hope that my noble friend will be able to give us some encouragement on this.
There are those who talk about dealing with inflation by increasing taxation. I am sure that that is a very great mistake. In a dictatorship no doubt it would work. But if we simply increase income tax the net result is that, because people's wage packets after deductions are reduced, they simply make an increased demand for higher wages. Therefore we get higher costs for industry.
There is a very strong case in dealing with inflation for reductions in income tax. If we reduce the rate of income tax, people's take-home pay is increased without increasing the charge which they make of their employers and thus the cost of the product. Therefore, from the point of view of dealing with inflation as well as from many other points, there is a great deal to be said for carrying out the good intentions which the right honourable gentleman the Chancellor of the Exchequer announced the other day of seeking to get down the rate of income tax.
The same goes for VAT. VAT is a bad tax, far worse than the old purchase tax which discriminated between luxuries and necessities. I was horrified to see that the EC is now urging that we should extend the scope of VAT and apply it to transport costs. Any better method of stimulating inflation than that I find difficult to envisage. I hope that Her Majesty's Government will very firmly reject it.
The handling of the economy is the major issue at home. Although there are problems and always will be, I suggest to your Lordships that Her Majesty's Government have handled, are handling and will handle this with skill and determination. I hope therefore that your Lordships, with the greatest possible courtesy but with equal firmness, will reject the amendment.
4.43 p.m.
Lord Donoughue: My Lords, this House has perhaps too few debates on the economy but I sense that this one promises to be different and I hope a little more memorable. Hitherto, certainly in my brief time here, our debates have followed a certain ritualistic form. The Government have always claimed that we were witnessing an unprecedented economic miracle—with a wave of the magic wand the failures of the 1960s and 1970s would disappear. I think that on this side the Opposition have been sceptical, suspecting that this was being done by mirrors and some massaging of the statistics. But we were accused of being Jeremiahs and of selling Britain short. I must say that we resented that suggestion from the Government Front Bench this afternoon. I am sure that as the noble Earl grows older—and he is certain to age rapidly with the events of the next two years—he will learn to do better than that.
The Government have today played the same tune but the Opposition are more confident. The realities are now clear and the differences from Conservative rhetoric are well established. The Treasury magician has retired, I suppose technically being constructively dismissed. His mirrors are cracked, his wand—and I hope he will not feel that I am reflecting on his manhood—certainly drooped long before he left the stage.
Today we can contemplate the economic realities without hype, examine the balance sheet of 10 years of Thatcherism and see the ruins of the economic miracle. What we see today and will see in the months ahead is a government completely boxed in. If interest rates are kept high to restrain inflation, to reduce imports, to support sterling—all areas of weakness—then they will bash the economy into recession. If interest rates are cut then sterling will surely collapse and is already in the process of doing so. Interest rates, we know, are the only instrument of economic management that the Government apparently recognise.
The depressing range of economic numbers facing us was well set out by my noble friend Lord Williams in his excellent speech. I shall just focus on a few points central to the dilemma in which the Government find themselves. Let me take inflation first, because it is the first priority by which the Prime Minister says that she will be judged. Well, she has reason to be nervous. The underlying rate of inflation, the rate that the Government or the Treasury would like to use because it excludes mortgage costs, is at its highest for seven years.
Britain's inflation, after 10 years of the Thatcherite revolution, is 50 per cent. above the EC average, 30 per cent. above the OECD average and double that of our main competitors, Germany, France and Japan. Nor could any monetarist opposite—assuming there are any that remain—believe that inflation will improve quickly. I do not believe the Treasury forecasts. After all, the broad monetary aggregates are still expanding at nearly 20 per cent.
Where is the economic miracle on inflation, or indeed on our currency? Sterling was the symbol of Britain's strength and pride, as Mrs. Thatcher

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boasted when it rose so high during the great depression of 1980 to 1982. Since this Government took office in 1979 sterling has fallen against the US dollar by 27 per cent.; it has fallen against the German mark by over 30 per cent.; and it has fallen against the Japanese yen by 53 per cent. That is no miracle; that is a massive devaluation.
I wonder what Mr. Lawson meant when addressing the Conservative Party conference this October he said:
"The Conservatives are not a Devaluation Party".
They are. Governments of all parties are and have to be when they mismanage the economy.
The balance of payments deficit is of course the most staggering of all the numbers in the Government's balance sheet. The non-oil deficit as a percentage of the GDP at 4 per cent. is now and has been in recent years greater than at any previous stage in peacetime history. It is greater than in the notorious year of 1976 and the IMF.
The Government say that the deficit does not matter provided it can be financed. We have heard that again and again. I must say that my experience and observations are that it does not matter if it is a Conservative deficit but Labour deficits are denounced as evidence of betrayal and national decline.
As for financing it, of course it can be financed. It is being financed, as my noble friend Lord Williams explained so convincingly, by a flood of short-term hot money. The real question is, at what price is it being financed? The present price is astronomically high interest rates which cause desperate anxiety to young home owners and put British industry at a crippling disadvantage compared with its overseas competitors.
That trade deficit arises from two main causes. It arises partly from the excessive credit boom—this is nothing to do with wage pressure, nor is the inflationary problem basically one of wage pressure—generated to help win the last election. But at its heart is the destruction of British industrial capacity in the 1980s. As we all know, at its simplest the deficit represents the excess of demand for goods and services over supply. The Government have reduced supply to the point where UK manufacturing has the lowest share in GDP of any industrial country in the world. The noble Earl quoted the figure for the output of UK manufacturing correctly at 12 per cent. since 1979. That is a rise of barely 1 per cent. per annum. That pathetic average will worsen next year. It is not a case for pride but a demonstration of failure.
When in the past noble Lords in this House have pressed the Government to remedy the situation, the first response was that manufacturing does not matter. Now we notice that the trade deficit apparently does not matter. But it does matter. The destruction of British manufacturing capacity meant that in the recent boom the British economy ran out of plant capacity to meet demand, and did so long before it ran out of labour capacity. The consequence of this economic mismanagement is that we now face a recession. That recession is deeper than the present Treasury forecasts admit. Indeed the
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Government's electoral ambitions cannot be successful without such a recession. The recession will bring all the immediate miseries of high unemployment. I say to the noble Lord, Lord Boyd-Carpenter, that the figure of 2 million unemployed, which we shall have by the end of next year, is nothing to be proud of. The figure would be higher if the statistics were representative. Many people on this side of the House care about that.
The recession will bring the immediate miseries of higher unemployment, bankruptcy and, perhaps as important, the longer term costs of the inevitable collapse of manufacturing investment. That is the prospect ahead, but it need not be so. The economy could be decelerated slowly to allow a steady readjustment over several years. That course is open to us and to the Government. We could have modest but adequate growth with a readjustment based on less personal consumption of imports compensated by more investment in the national infrastructure, education, transport and housing for the homeless. We could follow that steady policy until inflation stabilises and the trade balance improves. Such a policy would be made much easier by full membership of the European exchange rate mechanism which would bring the stability which industry requires. That was forcefully and convincingly argued by my noble friend Lord Williams of Elvel and the noble Lord, Lord Jenkins of Hillhead, in his remarkable speech. That policy could also be assisted by taking a most positive role in the construction of the single market after 1992 to keep Britain in the centre of European economic developments.
However, we know that the Government will not pursue that steady strategy because it does not fit in with the Government's electoral timetable. The late Chancellor got the economic cycle and the electoral cycle out of phase. The Government must have pre-election reflation by 1991. Therefore, the Government must have a sharp squeeze before then. They must have a recession in 1990 to create the spare capacity for that pre-election boom. Therefore, interest rates, the only instrument, must be very high and for a very long time. That is the price that we all have to pay. We cannot fully join the European exchange rate mechanism because of the Prime Minister's prejudices. We see the proclaimed economic miracle as a bubble, inflated by public relations hype, which is now pricked. Inflation is not conquered. It has been traded off for unemployment. At any given level of unemployment, inflation is no better than it was in the 1970s while the underlying rate of unemployment is worse. That is not progress.
The trade deficit is not conquered. As my noble friend Lord Williams pointed out, import penetration is now higher than in the 1970s. We note that in those bad old days when demand was too strong we ran out of labour and imports increased. Now, after the revolution, we run out of manufacturing capacity and imports increase. There is little difference except that both the deficit and unemployment are higher. I should say to the noble Lord, Lord Boyd-Carpenter, that people are better off, especially noble Lords in this House. But that was true in 1979 after the 1970s, in 1969 after the

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1960s and in 1959 after the 1950s. That is true in every country of Western Europe and in every country of the OECD. That tells us nothing. However, if one looks at the relative figures and at the league table of national living standards relative to those of other industrialised nations, one sees that there is no relative improvement for Britain. Within Britain many of our poor are relatively worse off.
Lord Boyd-Carpenter: My Lords, in his interesting argument has not the noble Lord omitted the fact that between 1974 and 1979 there was no perceptible increase in the standard of living; indeed there was a measure of deterioration?
Lord Donoughue: My Lords, those figures are not acceptable to me. Their effect depends on how one presents them. One also has to look at the particular circumstances of that time. Next year, 1990, will expose these underlying economic realities. Industry, home owners and the unemployed will pay the price for past mismanagement. I believe it is possibly even shabby cynicism to create a recession in order to be able to create another artificial pre-election boom. Only a radical change in policies could produce a fundamental improvement in the true economic position of Britain. Perhaps only a change of Government will achieve that.
4.57 p.m.
Lord Diamond: My Lords, I count myself both fortunate and privileged to have heard the two opening speeches of the noble Lords, Lord Williams of Elvel and Lord Jenkins of Hillhead, which dealt so persuasively and, in my view, completely satisfactorily with the two major issues facing the country at the present time. Those two speeches together with the well informed speech to which we have just listened leave little more to be said. Nevertheless, having prepared a comment or two, I propose to burden your Lordships with them.
I wish to say a few words about the comments made by the noble Lord, Lord Boyd-Carpenter, during the course of his speech. I wish to support what the noble Lord, Lord Donoughue, said about the ridiculous suggestion that some credit is due to any government for the improvement in the overall living standards of the nation year by year. That is just as ridiculous as if the Prime Minister were to claim credit for the fact that all secondary students of age 16 are taller than all secondary students of age 12. Of course they are. By nature they grow each year. By nature the economy grows each year. It is very, very difficult, and has only been achieved twice during the course of the past 50 years, for the economy not to grow. Sometimes it grows very little; that is the point that we are concerned with.
So when the noble Lord, Lord Boyd-Carpenter, points to increases in living standards generally he is missing the point. He is missing the moral point. The important point is that under this Government the trend which has continued from the beginning of this century of a reduction in the inequalities between those who have and those who have not has stopped and has started to go the other way.
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Proportionately the rich are now richer and the poor are poorer. I accept what the noble Lord said by virtue of his great experience at his ministry, and he will similarly pay some regard to my having spent an equivalent time as chairman of the Royal Commission on the Distribution of Income and Wealth from which I draw these conclusions.
The other point in the noble Lord's speech to which I wanted to refer cannot be as important as I originally thought because it now escapes me. If your Lordships will forgive me I shall turn to the two simple points that I wanted to make. They are, first, what is wrong with the economy and, secondly, what is needed to help to put it right.
What is wrong with the economy is that it is out of control. When I said that over a year ago and gave many instances, including in particular the record rate of bankruptcies which had been achieved in the early years of this Government and the record rise in unemployment, as well as many other instances, the noble Lord, Lord Young, who was Secretary of State at the time, did not accept ray view that the economy was out of control. Therefore I am compelled to survey what has happened over the 10 years that this Government have been in office and to see whether my view is correct. I suggest to your Lordships that the evidence is now incontrovertible.
Let us look first at the balance of payments deficit. The figures are well known. I simply ask the Government, did they plan this? Was it their intention that during the last four years the deficit on visible trade should rise by £3 billion, £9 billion, £11 billion and £21 billion? Is that what the Government intended? Was it their plan? Was the Chancellor of the Exchequer determined to achieve the highest interest rates in living memory with the hardship that that brings for home buyers and the hard going it creates for industry? Was that planned?
Clearly in all those respects the economy has been completely out of control, as is underlined by the fact that the Government have been compelled continually at short notice to alter their forecasts. As the months went by they kept altering what they had said even a short time ago. They could not control the situation, even in the short term.
There are two more examples which I must give which relate to the two top priorities in the Government's policies. There is no need for any doubts as to what they were. They were repeated again in the gracious Speech:
"My Government will continue to pursue firm financial policies designed to reduce inflation and foster the conditions necessary for sustained economic growth".
Reducing inflation has been the top priority and sustained economic growth the next priority throughout this Government's 10 years in office. Let us see what has happened to those two priorities.
First, the Government have described inflation as being at an unacceptably high level. It is now at 7 per cent. I ask the Government, was that planned? Not so long ago—two years or so—inflation stood at half of today's figure. Was it the Government's firm determination to double it to the present figure? As we understand it the policy was to reduce inflation and to keep it down. That was the intention; the

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achievement was to double it. I repeat that I am talking about the one priority to which all other policies were subservient.
The second priority was sustained economic growth. We have all heard what is happening there. After some four years of approximately 4 per cent. growth overall, next year we face prospective growth of 1·25 per cent. The Chancellor has warned that it will not be an easy year. I ask the Government, is that how you plan sustained economic growth?
As to the reply which the Government may wish to give, inviting us to look at past years, I am delighted that that has been done today by the noble Lord, Lord Williams. It is quite absurd for the Government to claim some kind of economic miracle for their 10 years in office. Figures in the Monthly Digest of Statistics published by the Government show that, as has already been said, in their 10 years of office there has been average economic growth of less than 2 per cent. That is below the natural basic rate of growth for this country of some 2·4 per cent. which has persisted for more than 50 years. So they have achieved less than the normal rate of growth. Economic growth has been less than it would have been if it had been left to nature.
That has been achieved at the cost of an unacceptably high level of inflation, record interest rates, record balance of payments deficits, record numbers of bankruptcies and record unemployment. I invite the Government to show me the gracious Speech which promises all those record disasters and then I shall withdraw my allegation that the economy has been bumping along out of control.
There is one further record. Here I turn to my second main point, which is to suggest what could be done to improve the economic situation. I refer to personal savings—not for the first time. I invite your Lordships, first, to look at the facts. When this Government came to office individuals were saving 15 per cent. of their disposable income. They spent 85 per cent. of what they had to spend and the other 15 per cent. they put by. Last year that figure had dropped to 4·4 per cent.—a drop of 70 per cent. in the ratio of saving by ordinary people during the lifetime of this Government.
In the last five years the ratio of personal savings, in round figures, has been: 10 per cent., 9 per cent., 8 per cent., 6 per cent. and 4 per cent. It could hardly have been worse. Doubtless that has been due to vastly increased borrowing facilities offered by banks, building societies and financial institutions of all kinds and to the bombardment of individuals with easy spending schemes. In my view the Government have contributed to the creation of that ethos of the spendthrift by their negative attitude to the onslaught and by the manner of their tax reductions.
What is needed is a huge, long-term determined government campaign to encourage the perfectly natural habit of saving. It is in everybody's interest. An individual can put his savings to good purpose; companies can successfully seek more capital for expansion and innovation; governments can see the
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reduction in inflationary pressures which have been responsible for sucking in excessive imports and causing the balance of payments difficulties of which we are aware.
Perhaps I may now put the figures in context. If the savings ratio had not fallen and if people this last year had continued to save in the same way as they saved when the Government first came to office, the additional saving would have amounted to £32 billion. It is not possible to say with certainty what the final impact of that additional saving would have been, but clearly the majority of it would have had the effect of reducing the balance of payments deficit that we are discussing. The majority effect or impact would have been, directly or indirectly, on imports.
As we know, the visable trade balance amounts to £21 billion. The additional saving to which I have just referred would have been £32 billion—one and a half times as much. There can therefore be no doubt that that overall record deficit might possibly have been turned into a surplus, had the Government taken steps to encourage the maintenance of personal savings.
In every way, a return to more normal saving habits could do nothing but good, whether in terms of pressure on the economy, pressure on the pound or pressure on prices. I say to the Government: rather than raise the interest rate, raise interest in saving.
5.12 p.m.
Lord Rees: My Lords, it is a great pleasure for me to follow the noble Lord, Lord Diamond, since both he and I have in our times had some responsibility for public expenditure, which nearly always has a bearing on our debates on the economy. However, he advanced three propositions, with two of which I most violently disagree.
The first proposition was that the trend towards equality and greater diffusion of wealth has been halted. Of course, I defer to his knowledge as chairman of the Royal Commission on the distribution of wealth, but I wonder whether he has taken account of the considerable diffusion of wealth among our fellow countrymen that has resulted from, for example, the sale of council houses at very reduced prices. That has probably done more to build up a class of property-owning fellow countrymen than anything done by any Administration of which he was a part.
The noble Lord then said that no government should be given any credit for an increase in the standard of living of a country. I find that a most extraordinary proposition. In one sense, I wish that it was true because the corollary would then be that a government could disclaim any responsibility for the management of the economy of this country. I feel that at times too much of our debates at both ends of the Palace of Westminster are devoted to a sometimes sterile analysis of our economic position. Some politicians and commentators have persuaded themselves that economic well-being is the basis of electoral success. That has not always been so, not even in post-war years.
The noble Lord then came to a point on which I find myself in some agreement with him. He referred

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to the savings ratio of this country. I certainly agree with him that more measures should perhaps be taken to encourage saving among our compatriots. The question that I should like to ask should perhaps be directed to the noble Lord, Lord Williams of Elvel, who will wind up the debate for the Labour Party. However, I should like to know whether the noble Lord believes that the high rates of personal taxation which have always prevailed when we have had a Labour Government in this country, and particularly when there has been a special discriminatory tax against investment income, have encouraged saving among our compatriots?
The noble Lord concluded his powerful contribution by saying that the economy is quite out of control. Let us accept that inflation is still uncomfortably high, certainly uncomfortably high for a government who have made—and, I believe, rightly made—sound money as the basis of economic advance and who were, until last year, remarkably successful in achieving that. Let us accept that the trade deficit is also uncomfortably large. Since I do not want to be drawn into arcane analysis of statistics, I shall simply say that there is a certain doubt about how valid and accurate the trade figures are. I shall also make no point about last month's trade figures because I recognise that that question, like other economic questions, must be judged over a span of months, if not years, rather than weeks.
However, let us also recognise that the sharp decline of stock markets across the world in the autumn of 1987 might reasonably have been thought to presage an economic recession. It was therefore legitimate against that background—and that view was shared at the time by the spokesman for the Labour Party, at least in the other place—for the then Chancellor to ease the monetary constraints. Since then—this is not confined to this country alone—confidence in stock markets has not completely revived, but it was more debatable whether the then Chancellor should have introduced such a robust Budget in 1988. With the advantage of hindsight, which is always the privilege of Opposition parties, the Chancellor might have introduced a more modest Budget, but it must be recalled that the tax reliefs in that Budget bore no relationship to subsequent expansion of credit.
However, the monetary measures subsequently taken and the austere tone of this Chancellor's Autumn Statement, which I applaud, suggest, at any rate to me, that the necessary correction will take effect in 1990 without tipping the country into recession. I do not regard a reduction of the increase in our GDP from slightly over 4 per cent. to slightly over 1 per cent. as something to applaud, but that certainly does not amount to recession by any test that I recognise as valid. The measures taken will enable growth to resume at a healthy rate after 1990.
It should also be pointed out that analysis of the recent increase in the trade deficit tends to show that a great part represents the import of components to be used in the manufacture of exports and in an increase of capital equipment for industry, and that only a small part relates to personal consumption.
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For those who talk about the destruction of British industry—and there has been a little bit too much glib talk on those lines even in this debate—I should draw attention to the Autumn Statement to which the noble Lord, Lord Williams of Elvel, for example, did not refer at all. There are two charts which bear close scrutiny and study by noble Lords. One is the share of business investment in the gross domestic product. That is chart 2.8 on page 48. It shows that, as a proportion of the gross domestic product, business investment between 1987–88 and 1989 was at a higher level than at any point since 1965.
Again, if one looks at the chart about profitability it shows that the net real rate of return on non-North Sea industrial and commercial companies rose further in 1988 to the highest level for 20 years. That does not suggest to me that British industry or the industrial base has been destroyed.
In the long timescale of history, if not by the more fevered standards of electoral politics, the events of this year and next year will, I believe, be seen to have been a mere hiccup in a period of liberalisation and sustained growth in the British economy. Such a hiccup must be set in its true context. I shall not weary your Lordships with reminiscences of the state of the economy in 1979 but I hope to be forgiven if, like the noble Earl, Lord Caithness, I emphasise the underlying strengths of the economy as I see them at this moment in time.
There have been eight years of sustained growth of 3 per cent. or more. I admired the adroit way in which the noble Lord, Lord Williams of Elvel, handled the statistics which were the basis of his speech, but it was noticeable how selective he was in the periods from which he drew his conclusions. Of course the decade since 1979 may not have shown quite the economic miracle to which we could pardonably lay claim.
I see that the noble Lord, Lord Bruce, wishes to intervene. Perhaps he will first allow me to conclude this passage. Of course the first three years were devoted, as I remember very vividly because I was in the Treasury at the time, to trying to redress the balance and put the economy into some kind of order after the extravagances of the previous Administration. I give way to the noble Lord.
Lord Bruce of Donington: My Lords, I am most grateful to the noble Lord for having given way. He accused my noble friend Lord Williams of Elvel of being selective in his quotation of statistics. Surely in view of the fact that the Government have been in office for 10 years—not eight—it is quite legitimate for him to draw to the attention of the House the record over the 10 years.
While we are on selective quotation of statistics, does the noble Lord agree that the figures quoted in chart 2.8 on page 48 of the Autumn Statement refer not to manufacturing investment specifically but to business investment, which is slightly different?
Lord Rees: My Lords, the noble Lord is quite entitled to make both points. I spoke about the selective choice of periods and it was to correct the decade, of which, as I said, the first three years were rendered a little rough or tough at the Treasury by

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the need to redress the gross errors that had taken place in the previous seven or so years.
As regards the second point, the noble Lord is absolutely right. Indeed, the chart is headed: "Share of business investment". But I do not share the romantic attachment to industry as such of some of the spokesmen on the Opposition Front Benches. It is right and proper that we should hope and strive for a powerful industrial base, but if we are to judge the economy as a whole, we are quite entitled to take into account, for example, the service industries, which I am bound to say Labour governments did not favour very much; indeed, at times they introduced discriminatory taxes against them.
Perhaps I may proceed somewhat to emphasise the other points of strength. We now have a portfolio of foreign investments which is, I think, surpassed by only two other developed countries. Such have been the benefits of the abolition of exchange control, which was so bitterly resisted by the socialist Opposition. There has been a considerable reduction in public debt, which is a unique phenomenon in post-war Britain. Even the noble Lord, Lord Jenkins of Hillhead, to whose speech I listened as always with great attention and interest, only achieved a balanced budget in 1969. That was an achievement which I always applauded in public and continue to applaud, and an achievement which was not sufficiently recognised by his then socialist colleagues.
For those concerned with British industry, on which noble Lords opposite have concentrated very much, I point out that we now have one of the lowest rates of corporation tax in the developed world. That is a remarkable change from the position which obtained under any socialist government that I can recall in post-war Britain. We have a more rational personal tax structure which I believe the people of this country appreciate. In the Autumn Statement there has been forecast a modest increase in public expenditure which will do precisely what the Opposition amendment suggests; namely, increase the quality of life in this country, whether it be in the field of arts or the National Health Service. With profound respect I commend the noble Lord, Lord Williams of Elvel, before he comes to wind up, to apply himself for just a moment to the Autunm Statement from which he will glean much evidence which no doubt will encourage him and may even lead him to withdraw his amendment. As a former Chief Secretary I must admit that I envy my successors the resources which are at their disposal and I admire the dexterity with which they will surely apply them.
Finally, as my noble friend Lord Boyd-Carpenter said—and there has been considerable silence on this subject from the Opposition Benches—there has been a notable and steady reduction in unemployment. Indeed, another chart to which I respectfully draw the attention of noble Lords on the Opposition Benches shows that there are more people in employment now than there have been for a few decades.
If I may venture one criticism, which I am afraid is not novel, I hope that within months and not
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years we shall participate fully in the exchange rate mechanism of the EMS. It will be no panacea but it will provide a buttress for the pound and an external discipline which most governments need, as Mr. Delors found, for example, when he was Minister of Finance in Paris. I hope that the conditions stated in Madrid will not be used as a delaying tactic. I believe that we shall benefit from joining and that we shall do no particular favour to the other members of the Community if we do.
I conclude by turning to the position of the socialist Opposition which asks to be accepted as a credible alternative government. On that basis I believe that we are entitled to probe more closely their economic policies. How, for example, would they deal with an increase in inflationary pressures and any extravagant increases in credit? Apparently they are sceptical of monetary remedies. If that is so, we may ask what fiscal or other measures they would propose.
The noble Lord, Lord Williams, referred to certain measures of credit control which he culled from a statement of the chairman of Lloyds Bank. I have a profound respect for the chairman of Lloyds Bank, who has a far greater experience of banking than I am ever likely to command. But it seems to me that if we were to do so we should be going back over ground covered not once but several times under several Administrations since the war of both Labour and Conservative complexions and I doubt whether those measures of credit control would be any more successful now, when we have a more sophisticated and open economy, than they were in earlier years.
I may say that fiscal measures, too, would not seem entirely appropriate since we have such a considerable fiscal surplus. But what fiscal measures would the noble Lord, Lord Williams, in fact propose or will be disclaim any reliance on fiscal measures? Again there has been a deafening silence about the tax policies of any future Labour Government if, against my hope and expectation, there were to be one. We know that they propose a top rate of 50 per cent. together with a national insurance charge of 9½per cent. But what basic rate, which affects so many more of our fellow countrymen, would they propose? I believe that they are proposing to reintroduce an investment income surcharge. What measures of capital taxation would they suggest? For example, would they introduce a wealth tax?
Such measures only draw capital away from the private sector. If the noble Lord is serious about the regeneration of British industry, other than British industry in the public sector, then he must think very long and hard about measures of capital taxation to which I know the more foolhardy members of his party might wish him to commit them. What about VAT? Would they retain a single rate? If so, at what level?
Finally, in defiance of the country's obligations to the other countries of the European Community, would they reintroduce exchange controls? The noble Lord is looking a little puzzled. In totality, we wish such measures as they advocate—to use the phrase of the noble Lord, Lord Diamond —to bring the British economy into control, to rebuild the

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industrial base, and to continue the move to a more equal distribution of wealth.
As I recall, the noble Lord, Lord Williams, moved away from a recondite statistical analysis to a portentous conclusion based on a rather impressionistic view of the number of beggars in Great Britain. Of course there will always be pockets of hardship to which we must be sensitive. However, I invite him to take a look outside the metropolitan areas at the country as a whole and to state honestly whether he believes that the wellbeing of our fellow countrymen has declined over the past 10 years. Let us get down to the facts of life. Let us move away from an over-sophisticated debate based on analysis.
I hope that I may be allowed to conclude by lapsing into Latin. I hope that I may be forgiven if my pronunciation does not accord with that of most noble Lords. Si monumentum requiris circumspice. If you want evidence of the successful economic policies of this Government, just look around and judge the economic wellbeing of the vast majority of our fellow countrymen.
5.31 p.m.
Lord Stoddart of Swindon: My Lords, I should like first to congratulate my noble friend Lord Williams on his maiden speech from the Front Bench as the Deputy Leader of the Labour Party in the House of Lords. I am sure that we should all like to congratulate him on what was an excellent speech which dealt in detail with the failures of the present Government. I am not sure that I can agree entirely with him as regards his remarks on the EMS but I shall read what he said very carefully indeed.
The noble Earl sought to show that the record of this Government, on matters of inflation, of economic growth and so on, was very much superior to that of the Labour Party when it was in government between 1974 and 1979. But he is not comparing like with like. During the period of the past 10 years this Government have had the benefit of £80 billion worth—that is, £80,000 million—of North Sea oil. Frankly, any government that could not have done better than the present Government under those circumstances needs the utmost censure.
It is quite true that the standard of living in this country has improved over the past 10 years. By God, my Lords, it would have been strange if it had not improved with £80 billion of additional revenues going into the economy and into the Government's coffers. But we have now reached the situation where things do not look so rosy. We are faced, as we have been told, with a massive deficit on our overseas trade. Interest rates are almost, although not quite, at a record level. Inflation is now running at 7·3 per cent. The Government disclaim all responsibility for this. Indeed, throughout their term of office, they disclaim responsibility for anything bad that comes along. They blame somebody else: the European Community; the Americans; the wage earners; the salary earners—anybody but themselves and the policies that they have been pursuing.
I was a member of the Select Committee on Overseas Trade. The Government were warned, not by Labour Members alone, but by the noble Lords,
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Lord Aldington and Lord Ezra, that the economy would be in trouble at about this time. We warned the Government that unless they put more resources into rebuilding our manufacturing potential, into education and training, we would reach a balance of payments problem of massive proportions; and so we have. It is a great pity that Mr. Lawson did not listen to what the Select Committee said instead of sneering at it at that time. Had he done so, the economy might be in very much better shape. Unfortunately, Mr. Lawson—who has now left us, having created such a mess—never listens to anyone. Indeed the problem that we now have of inflation is largely of his own creation.
I must remind the House that it was Mr. Lawson who very foolishly in his 1988 Budget removed double mortgage interest tax relief. I agreed with that, but he gave people six months to adjust. And what did that do? It created the most massive property boom that we have ever had which pulled up credit and largely brought about our present problems. Let us make no mistake about it. It is not high wages that are causing the problems. As the CBI has already noted, higher wages in the private sector are covered by additional productivity. It is the enormous release of credit into the economy that has caused our problems of inflation and the balance of payments deficit.
We need to deal with the problem of credit expansion other than by interest rates. There are methods that can be used which do not require great bureaucracy. For example, there is no reason why the banks should not be required to place special deposits with the Bank of England for a given time. There is absolutely no reason why the Government should not put pressure on money lenders to stop them bombarding the population week after week and day after day with invitations to borrow more and more. Indeed, there is no reason why the Government should not insist that the credit card companies should require more than 5 per cent. to be paid off the bill every month. Those are some reasonable suggestions the administration of which would not involve a great bureaucratic machine. But at least they would help to bring down the rate of inflation. That is hurting not only home owners—who at this time are perhaps the least important—but also industry, which must have lower rates of interest.
I now wish to turn to the amendment standing on the Order Paper in the name of the noble Lord, Lord Jenkins. To a large extent I find myself in agreement with the noble Lord, Lord Boyd-Carpenter—or perhaps he is in agreement with me! I read the amendment most carefully and wondered at it. It states:
"To move at the end of the Address to insert: but call on Your Majesty's Government to recognise how illusory are the benefits of economic sovereignty in an integrated world"'.
First, I did not know that we had an integrated world. During the 60-odd years that I have been around I never noticed that. But would the noble Lord, Lord Jenkins, or any of us tell that to the United States of America, Japan, Switzerland, Sweden and other countries which appear to manage very well and retain their economic sovereignty? I

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do not believe that they would agree that the benefits of economic sovereignty are illusory.
Secondly, the EC is a closed society which erects barriers against third world countries with baleful effects on world trade and on those countries. It is the so-called benefits of British membership of the EC which have proved to be illusory rather than economic sovereignty. What are they? In 1988 there was a trade gap of £ 16·3 billion; that is £13·9 billion on visible trade and £3 billion on invisibles made up largely of taxes to the EC. Food costs to the average family are £13 per week more than they would need to be if we were buying food at world prices. Our fishing industry is ruined and the fish stocks of the North Sea are depleted. Our farming community has been decimated and the environment has been injured as a result of an excess of nitrates on the land. Those benefits—I say that in inverted commas—are not illusory; they are actual.
Undoubtedly, all that is bound up with the demand from certain quarters, some of which should know better, that we join the ERM immediately. That demand is absurd and stems from the fact that some sections of industry, the City and others see it as an easy option and a panacea for all our economic ills. That is not so, and it never will be so. If we are to succeed and deal with our economic problems we must pull ourselves up by our own boot straps. That has always been the case, and it remains so.
The present problems—in particular high interest rates—stem from the fact that the previous Chancellor of the Exchequer adopted a policy of shadowing the deutschmark, thus keeping the exchange rate artificially high instead of allowing it to float in accordance with good, free market Tory policies. It would have reached a proper level with the deutschmark so that we could export more goods to them and they could export fewer goods to us.
That argument is not new. At the time of the referendum the then Labour Government set out their proposals in their document entitled Britain's New Deal for Europe. At page 9 appears the following paragraph which is worth reading and remembering:
"There was a threat to employment in Britain from the movement in the Common Market towards an Economic and Monetary Union. This could have forced us to accept fixed exchange rates for the pound, restricting industrial growth and so putting jobs at risk. This threat has been removed".
But we are still talking about it. The same conditions apply now as applied then. The same results will now flow from entering the ERM unprepared and at the wrong time as those predicted in the document.
Has the EMS been as beneficial to the countries which are a part of it as has been claimed? We ought to examine that question. Have France and Italy done better in the EMS than we have done outside it? One of the reasons this Government have been able to claim that they are doing so much better than those in Europe is that those in Europe have been doing so badly in the EMS. I should like to quote some figures to your Lordships. For example, taking 1980 as 100 per cent., wages in the United Kingdom have risen by 32 per cent.; in France by 9 per cent.; in Germany by 15 per cent.; and in Italy by 14 per cent. France, Germany and Italy are inside the EMS
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and part of the exchange rate mechanism. Britain is outside and appears to be doing much better than those other countries inside.
Let us look at another indicator. Unemployment has also been spectacular compared with that of any other EC country. The figures show that in Italy at present unemployment is 11 per cent.; in France 9 per cent.; and in the United Kingdom 6 per cent. Therefore, again, we find that in terms of unemployment those countries inside the EMS are doing worse than is Britain outside. As I tried to explain earlier, we could do a great deal better, but being a member of the EMS is not a panacea for all our ills. We should understand that and not force the pace.
It is important to remember that within the exchange rate mechanism we should be required to keep the rate of exchange of the pound in relation to other countries within a margin of perhaps 6 per cent. That would merely give the Germans greater economic domination. The way to redress the problems of world trade is not to make Germany and Japan richer but to ensure that our goods are competitive in relation to theirs. The more we keep our exchange rate up against the deutschmark the more German goods will be sold in this country and the fewer will be sold in Germany. That is a fact and I believe it would be wrong to try to disprove it.
I sincerely hope that the conditions laid down not only by the Prime Minister but also by my noble friend, who laid down some conditions about our entry to the ERM, will be strictly adhered to—particularly, as regards my noble friend, the condition about regional aid, though I rather fear that even that condition might not benefit this country as much as it would benefit Greece, Portugal and Spain.
For all those reasons, though I shall naturally support with great alacrity the amendment moved by my noble friend Lord Williams of Elvel, I must say to the noble Lord, Lord Jenkins of Hillhead, that I shall not merely abstain but on grounds of sheer common sense I must vote against his amendment, which I believe is inimical to the best interests of this country.
5.50 p.m.
The Earl of Bessborough: My Lords, I found it difficult to make up my mind when to speak in this four day debate because nearly every aspect of government can be included in foreign affairs, or, perhaps international affairs. That applies especially to the global environment and the saving of the planet on which my right honourable friend the Prime Minister spoke so effectively at the United Nations in New York on 8th November and to which my noble friend Lady Trumpington and the noble Lord, Lord Shackleton, referred yesterday.
Economic affairs, the principal topic today, are closely related to foreign policy. I have chosen to speak today because what I have to say is concerned principally with the EEC —the European Economic Community. I was glad to hear in the gracious Speech that the Government will continue to work with the European Community partners to complete the

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single market, to enhance economic and monetary co-operation, to reinforce budgetary discipline—that is very important—and to play a full part in multilateral negotiations designed to liberalise international trade. I greatly welcome what my noble friend Lord Caithness said on those subjects at the outset of the debate. I interpolate here that I certainly do not want a change in the leadership of this country.
I also very much agree with what my right honourable friend Mr. Douglas Hurd, our new Foreign Secretary, said in the debate in another place last Friday about pushing forward the single market. I welcome also what my noble friend Lord Brabazon said in our debate on foreign affairs.
At the same time, although I cannot possibly vote for either of the amendments with their implication of no confidence in the Government, I must admit to having some sympathy with that proposed by the noble Lord, Lord Jenkins of Hillhead, on economic sovereignty. I do not doubt the sincerity of my right honourable friend the Prime Minister in her general attitude to the sovereignty of our national Parliament. However, I feel that unlike her other highly successful policies in the past 10 years—reducing inflation, sustaining economic growth, promoting enterprise and facilitating the growth of employment—in some respects she has been unduly concerned about the loss of national sovereignty.
I have to agree, despite what my noble friend Lord Boyd-Carpenter said so cogently, that economic sovereignty can perhaps be thought of as being no longer so realistic. That is so not only because of our membership of the EC but also because of our membership of the United Nations, of the International Monetary Fund and, indeed, of NATO and of the WEU, the economics of defence being also highly relevant.
If one considers Japan's manufacture of motor cars which we purchase—even if they are built to a considerable extent in this country—and also the very large percentage of electronic products, especially chips, 78 per cent. of which come from Japan, South Korea or elsewhere in the Far East, one cannot help being rather concerned. We must accept that we are now rapidly becoming an integrated world—a global village—although necessarily and desirably retaining many of the cultural and traditional features of our kingdom as, indeed, do other EC member states. I believe, as I think, does my noble friend Lord Thomas of Swynnerton, in a Europe of diversity, which he stated so well in his very able paper which he produced for our studies group.
As regards the European Community, I have always been, to some extent, in agreement with the views of the noble Lord, Lord Jenkins, with whom I served in Brussels, Luxembourg and Strasbourg. Every year for the past 10 or 11 years, I have made speeches on the importance of our full participation in all the activities of the Community including joining the exchange rate mechanism of the European monetary system. I was most interested in what the noble Lords, Lord Williams and Lord
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Donoughue, said in that respect. I know that entry into the exchange rate mechanism may cause problems and that the timing of our entry is all important. However, we must join the ERM if we are not, as many have said, to miss the bus a second time.
Coming near to 1992 and the single European market, I was particularly struck by a Channel 4 television programme on that subject screened, I believe, two Saturdays ago. I do not know how well that programme was researched, but those of your Lordships who saw it will, I believe, have been left, like myself, feeling slightly uneasy, especially about the fact—in contrast to what the noble Lord has just said—that other member states all seem to be greatly benefiting through being full members of the EMS. They boast about it. I was fascinated to learn, assuming the programme was properly researched, that business has boomed in Spain since it joined the Community and that in Italy, an enthusiastic member, the Fiat conglomerate is also booming. I hope that my noble friend Lord Belstead whom I warned that I should raise this issue may be able to comment. We know that the Federal Republic of Germany—one witnesses the strength of the deutschmark today—and the French are enthusiastic members and endorse the whole concept of economic monetary union.
In that connection, I agree very much with my honourable friend the Member for Chichester when he spoke on 2nd November in the debate in another place on European monetary union. As my honourable friend said, we are paying significantly more than we need to in interest rates because we are not members of the exchange rate mechanism. I also agree with my noble friend Lord Rees in regard to the ERM, as I do with the comments of the noble Lord, Lord Rees-Mogg, in his recent article on this subject in the Independent.
In view of what is happening in Eastern Europe it is even more important that the present 12 states of the Community integrate even further before we consider admitting certain Eastern European states who may apply for membership, much as we shall eventually welcome them when they have become democratised.
The Channel 4 television programme asked whether we in Britian were not at the bottom of the pile. Were we being too slow and reluctant to be fully co-operative and competitive with Continental member states? I was very surprised to hear this. It seemed to contradict all my briefs on the subject. I wonder whether my noble friend will have any comments to make on the programme. It seems that exports from the other member states I have mentioned are surging. Even in high technology, the French, who used to admire us in this respect, seem to be drawing ahead of us, whether it be in atomic energy—which generates 80 per cent. of their electricity—or with their high speed train, the TGV. to give only two examples. There are others which have already been mentioned this afternoon.
There seems no doubt that we appear to some to be falling behind in these areas. Even the Dutch seem in some respects more advanced than ourselves. Germany, I believe, spends more in applied scientific

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research and development, while we appear to be cutting back on funding. Again, perhaps my noble friend will have a comment on this. Some of our industries seem to be disappearing and apparently many more small firms are going into liquidation this year than last. I should like to hear the answer to that.
In that context I am glad that the Government are taking action in regard to training and the youth training scheme, but, according to my information, more people go to business school in Germany than here. I hate to say all this because I recognise that the present Government, having been in power for 10 years, have greatly improved our productivity, our standard of living and the prosperity of many people. For this we must congratulate my right honourable friend the Prime Minister as well as her right honourable colleagues.
However, I feel that in regard to the EC we should go a little further than the gracious Speech, which, although it refers to economic and monetary co-operation, does not yet seem to accept the stabilisation of exchange rates through the ERM or a wider use of the European currency unit, which we do already recognise in our Treasury bonds.
I personally see no reason why we should not ultimately agree to the establishment of a European central bank. If we do not accept it we are bound to become isolated. Frankfurt will take over; the deutschmark will become even stronger than it is now in relation to sterling and we in Britain will be left out on a limb.
I am greatly encouraged by the fact that I share some of these thoughts not only with the noble Lord, Lord Jenkins, but also with some of my noble and right honourable friends who may no longer be in the Government. I think particularly of my noble friend Lord Carrington, who believes that the European Community is the linchpin of the new Europe, and, of course, my noble friend Lord Cockfield; also, I guess, the former Chancellor of the Exchequer, my right honourable friend Mr. Nigel Lawson. I refer also to my right honourable friend Commissioner Sir Leon Brittan, who has spoken powerfully in the same sort of sense, as did my right honourable friends Mr. David Howell and Mr. Michael Heseltine, whose book entitled The Challenge of Europe recently won the Bentinck Prize as the best of some 30 volumes on Europe and 1992 published this year submitted to the jury of which I am the UK member.
I think I have said enough to make my views absolutely clear. I know it is not only my distinguished noble friends and my right honourable friends whom I have mentioned who must agree with a good deal or at least a certain amount of what I have said, but some others in your Lordships' House and in another place as well: the Confederation of British Industry and even—as we now know particularly this afternoon—certain leading members of the Labour Party, including the Deputy Leader in this House and even, I think, the TUC. I am sorry the noble Lord, Lord Murray, is not here to endorse this. He was a great supporter
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of Europe when the noble Lord sitting opposite me and I used to go to Brussels.
I only hope, reflecting on Hamlet's most famous soliloquy, which we all know by heart, that,
"the native hue of resolution",
in our relation to Europe will not be,
"sicklied o'er with the pale cast of thought",
or that
"enterprises of great pith and moment
With this regard their currents turn awry,
And lose the name of action".
We must be resolute. I agree with a very great deal—indeed with most—of what our Government have done in the past 10 years, but I am still a little unhappy about our economic stance as members of the EC. I shall be most interested to hear what my noble friend Lord Belstead, our Leader, has to say on some of these points in addition to what my noble friend Lord Caithness has already said in his very effective opening speech.
6.8 p.m.
Lord Blease: My Lords, before I speak to the main subject in this debate, perhaps I may first warmly welcome and support the words in the gracious Speech concerning Northern Ireland:
"In Northern Ireland, my Government will maintain its support for the enforcement of the law and the defeat of terrorism. They will continue to encourage the greater involvement of locally elected representatives in the affairs of Northern Ireland, to improve the economic and social wellbeing of the Province, and to work within the framework of the Anglo-Irish Agreement".
Perhaps I may add that I was also pleased to note the recent reply of the Minister, the noble Baroness, Lady Hooper, who spoke for the Government in the debate on Thursday last.
I have listened and read with interest the speeches delivered in this House on the Address in reply to the gracious Speech. I am in a dilemma, like many other Lords who have risen to speak, in that there have now been 92 speakers who have, in my opinion, collectively argued with positive and thoughtful reasoning about the political problems and the parliamentary challenges that currently confront the Government and the people of this United Kingdom. From all sides of the House speeches have been direct and of a high calibre in parliamentary terms. I compliment my noble friend Lord Williams of Elvel on a powerful and indeed moving speech. Equally, we heard a succinctly delivered speech from the noble Lord, Lord Jenkins of Hillhead.
If the Government are listening they will surely find some points in the various arguments that have been presented. There have been arguments that should influence major changes in the direction in which the Government are pursuing their policies. Those changes are in the best interests of the manufacturing industries in this country and the people working in them.
However, I should like to make four specific points which are absent from the gracious Speech. First, there is no reference to the provision of important regional and economic social development measures throughout the United Kingdom. Secondly, there is no reference to the urgent need for suitable

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educational and training programmes for 16 to 18 year-olds. Thirdly, there is no reference to the enhancement of management skills at regional level. Fourthly, there is no reference to the necessary input of adequate facilities for research and development. It is at these regional levels that the Government's changing agenda has had dire consequences for local manufacturing and working people.
Yes, I think we can say that there has been widespread chopping, changing and confusion, with serious crippling results for local communities. It appears to me that the Government have a great amount of unfinished business which is crying out for action in the regions. I should add in this context that I speak of the regions in accordance with the 12 defined areas stipulated in most government official indices: that is, Wales, Scotland, Northern Ireland and the nine English regions.
I do not wish to oversimplify the complex economic realities of the peripheral areas of the United Kingdom, or for that matter the peripheral areas of the European Community, of which the United Kingdom is one. It is obvious that positive forms of legislative, fiscal and economic intervention are needed to prevent the rapid spread of the economic-cultural malaise of the North-South divide.
Measures are also required to counter the cumulative causation whereby the rich areas become progressively richer and the poor areas progressively poorer. Surely it is not necessary for me to remind the House that such trends in the regions of any country are politically dangerous, even in a parliamentary democracy. In that connection, it gives me no pleasure to point out that figures published last month indicate that there are two regions in the United Kingdom which have a lower average weekly household income than that for Northern Ireland. In the North region the average weekly household income is £197.61. In Wales the figure is £207.20. In Northern Ireland it is £207.81. Those are the three lowest of the 12 regions of the United Kingdom.
Those figures compare with the figure for the Greater London area of £311.29 and for the South-East of £302.74. Indeed, that shows that in the North of England there is a disparity of one-third in the average weekly household income compared with London. I could give other figures but I want to refer to another aspect in regard to regional development. I refer to the unemployment figures, capital investment and commodity prices, all of which provide difficulties in regard to the outer regions of the United Kingdom.
I accept that within any national economy which is subject to centralised control of taxation, which is progressive in nature, and with a common system of social services, welfare benefits and educational provision, it is expected that there will be net transfers of revenue from taxation to the different regions of the economy. The scale of such transfers is greatly influenced by the relative prosperity of the different regions and hence their ability to contribute to tax revenue. In this respect, Northern Ireland is
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like any other region of the United Kingdom, and clearly if data were available for the other regions in the same way as for Northern Ireland that would be straightforward to demonstrate.
However, while there is a cash input to the regions there is an outflow which is not always easily measured; that is, of skilled personnel and the flow of capital through central services of banking and other agencies. Therefore, there is not a one-way traffic at all times to the regions. My view is that if the totality of the community of this United Kingdom is to prosper the regions equally must prosper. There must be no such thing as the North-South divide. Notwithstanding the importance of these net transfers, it is clearly of great concern if they create forms of dependence or have the consequence of undermining the capacity to produce goods and services competitively. I shall deal briefly with that aspect as I continue my speech.
There seems to be widespread agreement that perhaps one of the key considerations in attempting to improve the economic capacity both of individuals and of the regions—indeed, of the whole United Kingdom economy—is the great gaps in the provision of appropriate education and training for 16 to 18 year-olds, so many of whom leave the education and training system at the age of 16 without any qualifications or knowledge of industry. That is particularly true of Northern Ireland. It is a matter of urgency that needs to be pressed hard with the Department of Education in Northern Ireland and with the Northern Ireland Office.
There is a further point that could be true in relation to some of the other regions of the United Kingdom. It is a matter which arose from a report of a special conference dealing with Northern Ireland which looked at centres for literacy and numeracy in the area and the important contribution they make to enabling young people to improve their skills and abilities. In a school in one area, out of 297 children only 13 obtained a suitable grade on leaving. That school is in a depressed area. Because it is depressed, one cannot get the teachers and the necessary expertise. Facilities are not made available. The area therefore becomes further depressed and slips further down the ladder.
The report stated:
"What the children need is confidence in their own ability for the future and a sound basic education. These kids are not stupid. What we do we do to improve motivation and education for these children and also to help them educate themselves and give them hope and a wider vision to prepare them for a life of work. There is a lot of talk in Northern Ireland about the best 27 per cent. of our school population".
We welcome the fact that they reach those heights and are able to move into other areas of the United Kingdom, and elsewhere, to obtain employment. In the school population of Northern Ireland 27 per cent. of the pupils at the bottom of the ladder leave without any recognised qualification.
What I am saying about the Northern Ireland situation is equally true of many areas in the North of England and elsewhere. When dealing with economic matters such a situation should be remedied because we depend on young people for the future of our country. It is certainly argued—and

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there is substantial evidence to support it— that throughout the United Kingdom economy, including Northern Ireland, management skills are relatively under-developed and that far smaller numbers of managers than in many other developed countries have had exposure to systematic training and education.
In particular we have far fewer managers who are graduates than is the case in many of our major competitor countries in Western Europe, the United States and Japan. I wish to quote from the Economic Report issued in October and published by the Employment Institute. I shall quote it in full:
"In the 1960s and 1970s the British economy suffered from a series of 'stop-go' cycles, as every expansionary phase ran into problems of trade deficits and inflation. In the 1980s, following a severe depression, the economy enjoyed a longer than usual upswing.
"But inflation has reappeared as a major cause for concern and the balance of payments has never looked worse. So, have we cured the 'British disease', or merely enjoyed a temporary remission? How vulnerable are the jobs now being created to the scissors of technical change and import penetration?
"This Economic Report, by Christine Greenhalgh and Mary Gregory of Oxford University, investigates these issues. Based on the findings of a research project commissioned by the Employment Institute, the Report shows that:
'The British disease stems from a combination of poor workforce skills and slow application of design and technology. Upgrading the quality of British products remains an urgent priority; cost reductions alone will not suffice. Manufacturing matters, because this sector is the source of the vast majority of innovative products. Manufacturing matters also for jobs; despite providing a falling share of total employment, manufacturing's demand for services and intermediate products generates jobs in other sectors'.
"The authors conclude that extra spending in the fields of vocational training, research and development and greater support for innovative producers is urgently needed if Britain is not be relegated to Europe's second division of low wage, low quality producers after 1992."
Finally, I wish to quote from a statement dealing with the economic situation in general but particularly as regards Northern Ireland. It is a statement made by Mr. John Freeman, an official of the Transport and General Workers' Union. The principle that he refers to concerning Northern Ireland can be related to all other regions of the United Kingdom. He states:
"If the manufacturing base of Northern Ireland is so demonstrably weak, there is a clear imperative to seek ways to improve its competitiveness and to restructure ailing industries. In this region there is a great probability for successfully bringing together Government, industry and trade unions to diagnose the difficulties and plan solutions. While this form of corporatism is regarded as outmoded in Britain, it is worth remembering that nearly every single European economy is managed in this way. The Irish Republic, currently experiencing an annual growth rate of around 5 per cent. sees both trade unions and employers as important social partners of government".
Other countries within the EC also have a similar arrangement.
This debate has heightened my feelings that it is difficult to understand the values and principles of an Administration which so strictly limits action and finance for proven community needs and yet is so wasteful of human resources. For those reasons and with the view that our manufacturing base in the regions should be greatly assisted, I support the amendment put forward by the noble Lord, Lord Williams of Elvel.
6.25 p.m.
Viscount Caldecote: My Lords, the gracious Speech contains many valuable proposals for legislation which are much concerned with the quality of life. I welcome them all. But, as my noble friend Lord Caithness emphasised in his opening speech, that concentration on the quality of life has to be paid for and can only be paid for by the resources generated by wealth creation, the principal source of which is manufacturing industry.
Although I agree with the emphasis that the noble Lord, Lord Williams of Elvel, places on manufacturing industry, I will not support his amendment for two reasons. First, because strengthening the manufacturing base is not achievable simply by passing new laws. It is largely a matter of changing attitudes in government, in financial institutions and in manufacturing industry itself. Secondly, and more important, I will not support the amendment because if, by any mischance, the party of the noble Lords opposite came to power, it would inevitably put paid to enterprise and risk investment by its devotion to high taxation, regulation and interference with industry.
However, that is not to say at all that all is well with industry. I rather regret the impression that my noble friend Lord Caithness sought to give in his opening speech that all is well. For instance he referred—as did my noble friend Lord Rees—to 13 per cent. growth in investment in industry. But unfortunately past investment has not led to a corresponding higher output, which is what really matters. Nevertheless, by contrast to the record of the Labour Government, the Government have a splendid record of achievement in rekindling the spirit of enterprise in industry and commerce; in the reform of the trade unions and the sweeping away of damaging restrictive practices; in privatisation and in many other ways, all contributing to greater competitiveness in industry. Equally meritorious is the determination of Her Majesty's Government to control inflation although it has not yet been fully achieved.
All those are necessary conditions for enduring prosperity with the objective of providing the means whereby every citizen has the opportunity to lead a full and satisfying life. But they are not sufficient conditions. There is one glaring problem that remains which is holding back the progress we want to make towards sustainable —I emphasise "sustainable"—economic growth in which all can share. I am referring to the continuing huge deficit on overseas trade in manufactured products which is now running at an annual rate of £25 billion based on the figures for the past six months.
Of equal concern is the reluctance of Her Majesty's Government to state clearly that they recognise that this deficit is a major contributory factor to our present economic problems—not least in the relation to the long-term control of inflation—and therefore that the highest priority shall be accorded to increasing the output of competitive products by industry.
Surely the logic is clear enough; it is crystal clear. As some people say, inflation is not solely a monetary

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phenomenon: it occurs when the total spending power in the economy exceeds what the economy can produce. The monetary aggregate M4, which includes deposits in building societies and the like, is now regarded as useful and as probably the best indicator of purchasing power in the economy. Over the past 10 years it has been growing at an average rate of about 15 per cent. per annum. At the same time, over the same period, as the noble Lord, Lord Diamond, pointed out, the savings ratio has fallen dramatically.
Over the same period the volume of output of manufacturing industry has grown by 12 per cent., as the Secretary of State for Trade and Industry mentioned in another place recently and as my noble friend Lord Caithness mentioned today. But 12 per cent. over 10 years is equivalent to less thn 1·25 per cent. growth per annum in contrast to a 15 per cent. growth per annum in the M4 monetary aggregate, which measures purchasing power. Is it any surprise that there has been intense inflationary pressure and that inflation is now so unacceptably high? Can it be denied that, if we had produced a higher volume of competitive products more in line with increased purchasing power over that period, inflationary pressure would have been far less?
What is the Government's response to that point? In essence the response is, first, that manufacturing output is at record high levels and that over the past two years has grown at more than 5 per cent. per annum. That is true but it compares with a growth of 17 per cent. per annum in M4. Our competitors have done better. Our share of the exports of manufactured products produced by the principal manufacturing countries has fallen since 1980. We still have a long way to go.
Secondly, the Government also fairly emphasise that in the 1980s the productivity of United Kingdom industry has increased faster than any other major industrial country and profitability of manufacturing industry has also risen to the highest level for some 20 years. They are all fair and good points and encouraging ones. But the fact is that both productivity and profitability rose from unacceptably low levels—they were way down the scale of our competitors—and performance in competitor countries has forged ahead also in these respects. Overall, United Kingdom manufacturing industry is doing better, and so it needed to. But it is making little progress relative to our competitors. This, combined with the rapid increase in purchasing power, has resulted in a huge deficit in overseas trade in manufactured products.
The substantial evidence is that this huge deficit is the cumulative effect of a long-term trend. For the past 20 years, exports expressed as a percentage share of GDP have been rising at an average rate of 1.1 per cent. per annum compared with imports at the rate of 3.5 per cent. of GDP per annum. It is impossible to reverse such a long-term trend quickly. It is not just the short-term effect of importing capital goods for investment, as some Ministers have suggested, for capital goods account for only some 6 per cent. of the current account deficit. Radical change is needed in priorities and in the attitudes to
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manufacturing industry. There is no quick, easy solution to these complex problems, so the sooner we set about finding a solution the better.
The fact is that over many many years we have spent too much on consumption of wealth and on raising the standard of living, which is quite different from the quality of life, and we have invested far too little in the creation of wealth. The reasons go far back into our history. They are rooted in the democratic process also, for, with an election every four to five years, it is the natural wish of politicians to please the electorate by consumer-led booms with high growth in demand. That is relatively quickly achievable by expanding credit—the go phase—but it is a rather slower process, as we are now finding, to control when excessive demand appears. Then the stop phase comes in.
On the other hand, investment in manufacturing industry, in design, development and marketing of new competitive products and creating efficient capacity to make them, takes much longer to become effective than changes in monetary affairs. Closing down capacity can be done relatively quickly even though it is painful and expensive. So the stop-go aspect of the United Kingdom economy produces a huge disincentive to long-term sustained investment and it has a damaging downward spiral effect on our manufacturing industry base. It is the failure of successive governments of all parties to solve this problem which is at the root of our present difficulties.
Sustainable economic growth with due regard to maintaining the quality of life is certainly a laudable objective but we shall never achieve it if growth in the creation of wealth by manufacturing industry falls behind. It is interesting to note the different Japanese attitude to these problems. Mr. Morita, the chairman of that great electronics company Sony, said in an interview recently:
"Our job is to make our products obsolete before our competitors do so".
The chairman of Toshiba, an electronics company with a turnover of £16 billion, found that the rising yen halved his profits in one year. What was his reaction? It was not to cut costs, as would happen all too often in this country, but to note that he must raise expenditure on new product development in the ensuing year in order to recover his compeitive position and increase his output again.
It surely cannot be denied that growth of output of competitive products by manufacturing industry is wholly beneficial. Although, because of the need for greatly increased productivity, that will not of itself create many jobs, it will create real wealth as a base for expansion of all other activities—of the service and leisure industries, of environmental protection, of education, health and care for the aged.
In achieving such growth, efficiency and rising profitability are necessary both to attract essential investment and as a resource to pay for it. But profits are a means to an end of sustainable growth, not an end objective in themselves. Again, if through an increase in output of competitive products the huge deficit on current account was drastically reduced,

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can it be denied that there would be no worry about the falling value of the pound increasing inflationary pressure, as we see today?
To increase the output of manufacturing industry to the extent that is needed will be a long haul. The sooner we get started on that road the better. In the meantime, inflation will have to be reduced by short-term action to control the money supply. But we should recognise that whatever method is chosen, it is dealing with symptoms of the malaise and not the basic cause, which is our failure adequately to sustain the creation of wealth in the long term through first halting the decline and then increasing our manufacturing base. We must recognise too that high interest rates, however necessary they are—this method or some other means of controlling credit is necessary—are damaging to manufacturing industry for they deter investment for the longer term. The first step is to accept that the strengthening of our manufacturing base is an essential condition for sustainable, non-inflationary economic growth. The second step is to harness the knowledge and experience of people in industry, in finance and in government to determine the best way to achieve the objective of increasing the strength of our manufacturing base and its output. It is an elusive objective to us, it has been elusive for years, but it is not elusive to the Germans, who operate in just the same marketing conditions as we do.
There is no time today to go into any detail about the way forward. It is primarily a task for industry itself. The best companies need no encouragement, but many more must raise their performance to that of the best. Government can, and must, help too. I just give one or two examples of how that can be done in addition to the obvious needs in the fields of training and civil research to which other noble Lords have referred.
I understand that discussions on the future of the Export Credits Guarantee Department are proceeding. To expand exports often involves substantial risk with marginally acceptable potential reward, paticularly in the large, long-term projects with which ECGD helps. The ECGD provides a means of spreading over the whole economy the risk which cannot be carried by a single firm. Any proposal to reduce the scope and value of the service provided by the ECGD on the grounds of saving money must be fiercely rejected. We should look only at increasing its effectiveness to help our industry to export more and grow in its output.
We should look too at our merger and take-over policy. Competition is good, but again it is not an end in itself. Its purpose is to speed the creation of wealth. Should not we also look, when we are examining the disirability or otherwise of mergers and take-overs, at the effect that the merger will have on the output of goods in a manufacturing company? Again, the CBI has asked for reductions in corporation tax. In response I hope that the Government will point out to them that the best way of reducing the tax they pay is to invest more in product design, development and marketing. But the Government could give still greater incentive by
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granting a bigger tax refief in return for such higher investment.
These are just a few examples—I could give many others—where the Government could help, but much more can, and must, be done with determination to achieve our clear objectives of strengthening our manufacturing base.
My noble friend the Leader of the House, who is to reply, will have to deal with many questions that your Lordships have raised today. However, I implore him to answer two questions in the light of the Secretary of State's expectations that there will be only a small increase in manufacturing output in 1990. The first question that I hope my noble friend will answer is this: do Her Majesty's Government agree that more rapid growth in output of competitive products in manufacturing industry is essential to the long-term prosperity of this country?
Secondly, will Her Majesty's Government do everything possible to help in strengthening the manufacturing base, and in stimulating an increased output of competitive products consistent with bringing down inflation? With the assurance that positive answers to those questions would give us, we could go forward united in the determination to solve our long-term economic problems.
6.43 p.m.
Lord Ezra: My Lords, I am very pleased in this important debate on our economic affairs to be following the noble Viscount, Lord Caldecote. He is a person of great eminence in the manufacturing sector, his particular experience having been in engineering. We should take serious note of his analysis of our situation. I intend to follow in some of the directions to which he has pointed.
It is instructive before suggesting some of the steps that we might take—which other noble Lords have done, and I intend to follow suit—to consider how it is that we have got into the present difficulties. Difficulties they undoubtedly are because the Chancellor of the Exchequer himself has said that we are facing a difficult year. I have tried to contrast the circumstances surrounding the economic recession of 1980–81 with the difficulties that we are facing—perhaps not a recession, but a near recession— in 1989–90 and possibly 1991.
As your Lordships will recall, in 1980–81 the whole world was suffering. The cause of that suffering was the enormous oil price increase—the second within a few years—that took place in 1979. We all suffered and went through the worst recession since the war. But there is a major distinction between the reasons and the circumstances surrounding the recession of 1980–81 so far as this country is concerned and the difficulties we are going through now.
The difficulties we are going through now in Western European terms are in fact unique. I spend a lot of my time in Western Europe. I have been attending meetings in recent days in Brussels, Paris, Vienna and other places. I have had the opportunity of talking about the economic prospects of individual Western European countries. The

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consensus of the estimates is that they are looking forward in 1990 to a further year of growth.
The figures that are mentioned are something like 3 per cent. to 4 per cent. growth. Recession is not talked about at all. In the case of inflation, again figures of 3 per cent. to 4 per cent. are mentioned, with interest rates broadly of the order of 8 per cent. So far as the balance of trade and current accounts are concerned most countries are more or less in balance, with the one exception of West Germany, which has a massive surplus.
That is the broad European picture. It is unfortunate that all these figures are different—regrettably, in a negative sense —for Britain. We have a much bigger deficit on balance of payments, as we know; a higher inflation rate; higher interest rates, and so on. One must therefore ask the question, how has this come about? Why are we going in a different direction from our European trading partners? It is quite starkly different, in my opinion, based on the evidence that I have had in the last few weeks.
Here I come back to what the noble Viscount, Lord Caldecote, was just telling us. We are in the difficulties we are in at the moment because of the juxtaposition of two major factors. On the one hand there is the inadequacy of our manufacturing base and on the other there is the surplus of credit that has been created in the system over recent years. We have, in other words, had a situation of too much credit chasing too few goods. That to my mind is the fundamental reason for the difficulty we have got into.
The noble Viscount was absolutely right in drawing attention to M4. Many has been the occasion in recent years when we have asked the Government Bench what they were doing about the monetary aggregates to which so much attention was devoted in the early years of this Government but which progressively one after another were discarded as their trend seemed to come out differently from what the Government had expected.
The M4 indicator which is the broad indicator of purchasing power otherwise known as "broad money" raises a very serious problem indeed for this country. The latest figure I have seen indicates that in the year up to October last the rate of increase in M4, in broad money or purchasing power, was 17.2 per cent., way in excess of any other West European country. It is rivalled only by Australia—and perhaps this will give us some sort of comfort—whose rate of increase in the same period was 29 per cent. But Australia is the only other major OECD country with such a high rate of growth in purchasing power. Regrettably, in comparison with our major competitors, our manufacturing base has not increased at the same time by anything like the rate of that of other countries. The noble Viscount indicated the slow rate of growth in our manufacturing base. Of course we have had productivity increases and everybody concerned with those is to be congratulated. Unfortunately, the productivity increase is related to an inadequate base.
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Obviously, the way to overcome the problem of the inadequacy of the manufacturing base is to invest more in industry. We have talked about that ad infinitum. No one would disagree, and there has been a fair amount of investment in manufacturing industry. However, I do not know whether your Lordships are familiar with the latest CBI forecast published in the newspapers yesterday. In relation to fixed investment in manufacturing, the following figures emerge. As regards 1989, there was a good increase over the previous year of 9.6 per cent. But the stark fact is that the forecast for 1990 is minus 0.1 per cent. The level of investment in manufacturing industry, as forecast by the CBI, will go down next year. That is a terrible thing to happen to us, a country which needs to expand its manufacturing base. The forecast for 1991 is almost as bad—0.2 per cent., virtually no increase. The CBI does not go into the following year.
This is something we must put right. If the argument advanced by the noble Viscount, which I fully support—that one fundamental part of our difficulties is the inadequacy of our manufacturing base—is accepted, then we must at all costs increase that base at present and not allow it to dwindle. It is dwindling because the market has contracted as a result of the measures taken by the Government and because the cost of money has gone up. Those two factors have led to the contraction in investment.
I fully support what the noble Viscount said about fiscal incentives. The time has come for the new Chancellor of the Exchequer to look at the various fiscal instruments he can use to correct the regression in industrial investment. The obvious ones to take out of the cupboard and examine are investment allowances. But others could be used. I am glad to note that in recent speeches in another place the Chancellor has made it clear that his policy is likely to be more flexible than hitherto. He has mentioned fiscal instruments as one way in which remedies could be introduced into the present economic situation.
I very strongly commend to your Lordships the need to correct this stark, sudden and dramatic reduction in the level of vital investment in industry. We know that it will happen unless something is done about it. I think this must be one of the most urgent aspects to be addressed. It is for that reason—and here I part company with the noble Viscount—that I shall certainly support the amendment put forward and so cogently argued by the noble Lord, Lord Williams of Elvel.
There are other aspects to be considered. I shall deal only with short-term measures because longer term measures have already been mentioned. I wish to support entirely what the noble Lord, Lord Diamond, said in his compelling speech about savings. Just as the rate of broad money has increased dramatically over the years, so has the level of personal savings declined. The noble Lord gave the figures. It is of great importance that the Government should encourage personal savings.
I was somewhat disturbed recently when I asked a Question about the Government's policy towards National Savings certificates. The noble Earl

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opposite answered the Question. I had always supported National Savings. I thought they were sensible; perhaps there was a tinge of patriotism about them. After all, they arose during the first world war. I found quite by chance—I was not advised by the National Savings organisation—that if I kept money in for more than five years I would receive a rate of interest which was about half what I could get anywhere else. Naturally I quickly removed the money and put it elsewhere.
Yet the Government apparently say that they support long-term savings by the private individual. Why, in their own savings movement, do they not encourage people who have kept their money in the account for five years? I should certainly have kept money there for another five years if I had been so encouraged. I should have expected some slight reduction, but not a halving. Therefore, I feel—and this is the second short-term measure I recommend—that the whole question of personal savings should be looked at by the Government. They should try to see whether some of the excess credit in the community could be siphoned off.
Then there is the exchange rate mechanism. I hope that so far the noble Lord, Lord Stoddart agrees with what I have said. I was entirely with the noble Lord in all he said about manufacturing. Along with the noble Viscount, Lord Falkland, we participated in the committee of the noble Lord, Lord Aldington, some years ago, to which reference has been made. However, I know in advance that the noble Lord will not agree with what I shall say next. First, I am glad that the Government have committed themselves to joining the exchange rate mechanism, so going beyond what they have been saying over many years. It became terribly boring hearing them say that they would join when the time was right. They have now indicated the conditions. I suggest that they take a further step and say that in principle we should be committed to joining the exchange rate mechanism on 1st July 1990.
Why do I say that? There are three reasons. First, that is the time when the first stage of the Delors proposals comes into force. That first stage is fully supported by the Government. The recent paper produced by the Treasury indicating its alternative to the second and third stages starts from the first stage. The first stage starts on the 1st July 1990; so we should get in then.
Secondly, it is one of the Government's major conditions for joining that our inflation rate should come down. The Government tell us that it will come down next year. All right, let us say that in principle, subject to untoward external factors, we shall go in for that reason.
Thirdly, the Government say, "We don't want to go in until other countries in the European Community withdraw their exchange control restrictions and allow the free movement of capital". There has been great progress already. I was talking to French, Italian and Spanish industrialists yesterday. Very little more has to be done to allow the free movement of capital from those countries. What little more there is to do will be accomplished
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by 1st July next year. So my third short-term proposal to the Government is, "You have said that you support stage one of Delors. You have said that you support entering the ERM, subject to certain conditions. On the assumption that those conditions are met by 1st July 1990, please say that that is the date when we are going to join". That is a specific, constructive proposal. Once the announcement was made (despite what the noble Lord, Lord Stoddart, tries so persuasively to indicate to us from time to time) it would strengthen the currency straightaway in advance of our going in. It would remove one real problem and enable us to concentrate on the others.
I was surprised by what the noble Lord, Lord Boyd-Carpenter had to say about the amendment to be moved by my noble friend Lord Jenkins of Hillhead. We all admire the great powers of advocacy of the noble Lord, Lord Boyd-Carpenter. He displayed them to the full on that occasion. But the fact is, as the noble Earl, Lord Bessborough, pointed out in his important statement, in the world in which we live today there is no such thing as economic sovereignty. Even the great United States of America has to accept that there is the rest of the world with which it trades, that it is in serious imbalance and that this is one of the factors which influences its fiscal and other financial policies.
No one can act totally independently of the rest of the world. As the world becomes closer knit, as we trade more and more together, as funds are transferred more and more easily and as all the restrictions on the movement of money disappear, so it is that in formulating monetary policies and fiscal policies in any individual country account must be taken of what happens elsewhere. The object of bringing us closer together in the European Community is to try to strengthen everyone's position by joining together as far as is desirable. I am not necessarily in favour of stages two and three of the Delors proposals but I believe that we should be arguing and negotiating about them from a position of strength from within, and that we should recognise the reality of the life in which we live, which is that our individual freedom of action among democratic, free trading Western countries becomes more and more limited almost by the hour. I believe that the Motion put forward by my noble friend and so cogently argued by him is one that is virtually self-evident. I hope that it will be correspondingly supported.
Let me end on what I hope will be regarded as a positive note. I have been in industry of one kind or another all my life since the end of the war. Without any question at all there is an enormous potential in Britain as regards manufacturing, innovation and development of enterprise. I have seen that time and again in the companies with which I have been associated, both in the public and the private sectors, not only in what they have achieved in this country but in what they have achieved abroad. I have been on the board of a company in a certain sector which has set up in America, in Germany, on the Pacific rim, in Australia and elsewhere. It has been very successful in those markets.
That success emanates from British enterprise, British skills and other qualities. The potential is

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undoubtedly there. What we need in this period of difficulty which all admit is there is for the Government now to take a flexible view as to the corrective measures to be taken. A number of us have suggested some of those measures. I have tried to add to them in one way or another. I believe that the great merit of this debate is seriously and objectively to look at the problems we face and try to identify and come to agreement on the measures which need to be taken to deal with them.
7.3 p.m.
The Viscount of Oxfuird: My Lords, in following my noble friend Lord Caldecote, whose speech was one of great authority, one feels somewhat like an apprentice. However, perhaps I may use a little time in this debate to re-focus your Lordships' attention back to some of the matters affecting trade and industry in the United Kingdom, and within the wider European Community.
It is popular in these times of mild economic recession to concentrate on the negatives and to ignore the enormous benefits that have already been accrued from a sustained and consistent policy of tight monetary control and a firm control of public expenditure.
I know that all of us on this side of the House bitterly regret the recent rise in inflation to what we all recognise are unacceptably high levels and are heartened by the determination so strongly stressed in the gracious Speech that all necessary measures will be taken to reduce inflation. This must be regarded as one of the principal tasks of the coming year.
The gracious Speech to Parliament last week emphasised our Government's commitment to work with our European Community partners to complete the single market in 1992. This is a commitment that I believe is warmly endorsed by most sectors of industry. This commitment, however, imposes upon our industrialists a prime responsibility, one from which I know from my own daily experience working with the engineering sector of British industry they will not shirk. To survive and prosper within Europe those of us working within industry must redouble our determination to improve all aspects of our productivity and to invest positively in those technologies and new processes which will set us apart from the competition.
The noble Lord, Lord Williams, lays stress in his amendment on the need to strengthen our manufacturing base. This is acknowledged, but we must not forget that a manufacturing industry that is fundamentally overmanned, as ours was, must go through a period of shrinkage in order to establish a firm foundation on which to build. That process is now over, but for us to move forward with greater speed all aspects of our productivity must be strengthened, partly, as I have said, by investment in new technologies but partly also by all of us working that bit harder.
A headline in today's edition of The Times states:
"Car unions given deadline for £200m engine plant".
The article concerns General Motors and its new plant which will be established either in Cheshire
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or somewhere in West Germany. For six months negotiations have taken place to decide whether or not an agreement can be reached to end the threat of wildcat strikes. Perhaps we should work a little harder.
In addition to this, I wish to highlight two other areas where I feel that we within industry must concentrate our efforts if we are to move forward significantly. First, I wish to highlight the increasing need to deploy a significant resource into all areas of industrial training and retraining. When I spoke in the debate of my noble friend Lord Joseph on productivity I quoted from some of the published international comparisons. From these it is clear that many of our competitors overseas have succeeded in drawing away from us because they have been more committed to providing their industries with properly trained manpower in the right quantities and at the right time.
A second and probably even more important area is the need for us to concentrate even more rigorously than in the past on all areas of quality within British industry. We have heard much about the quality approach to management in the industrial sector. I certainly believe that this is one single factor that is very important. If we are to grow and prosper within the single European Community we must focus on quality. Total quality means concentrating on not just product quality but on the quality of every aspect of our performance within the industrial sector.
If the amendment of the noble Lord, Lord Williams, had been couched in terms suggesting the importance of total quality, there are many on this side of the House who might have followed him. If we are to prosper in Europe, as I believe we shall, it is that tradition of quality, stretching back to our industrial roots in the 19th century, that will be the key to our continued success.
We should recognise that that is an area in which we are already some way down the road. Having visited many leading British industries, I should like to acknowledge from my own experience the great progress that is being made and has already been made in that important area.
The gracious Speech also laid emphasis on our Government's willingness to play a full part in multinational negotiations designed to liberalise international trade. Those negotiations are to be welcomed as they can only be to the benefit of a strengthened and revitalised industry in Britain. Within that general framework there are many opportunities for sweeping away the featherbedding provided by a variety of national mechanisms prevalent in many countries of the European Community, and indeed the world, which allow weak and uncompetitive industry to cower behind tariff barriers and kindred distortions to free and unrestrained trade. Hence negotiation should be the order of the day and not recourse to anti-dumping actions under GATT, which in the end may only increase tariffs and subsequently costs.
In that regard, like my noble friend Lord Caldecote, I should like particularly to single out the efforts of our European Commissioner, Sir Leon

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Brittan, who has already done so much to sweep away the various techniques used by member nations of the European Community to shield unfairly some of their national enterprises from the beneficial effects of industrial merger.
We in the United Kingdom should be proud that it was our Government that stood in the vanguard supporting those important and reforming changes. It is indeed refreshing to note that when we are challenged, as we so often are, it is the United Kingdom which so often takes a lead in sweeping away the distortions to liberal international trade that have been so jealously fostered by many of the European nations which claim to be better Europeans than ourselves.
I have made it clear from my remarks that I am much encouraged by the gracious Speech and that despite our recent recessionary difficulties I believe that we are poised to take advantage of the significant progress that has already been made by a newly revitalised British industry. Our Government have committed themselves to fostering the conditions necessary to achieving sustained economic growth. We have heard a firm commitment to reducing the cancer of inflation. I am convinced that we as a nation, and more particularly we within the British industrial sector, have the will and determination to move forward and prosper no matter what the prognostications.
7.13 p.m.
Lord Taylor of Gryfe: My Lords, before I discuss the general theme I should like to deal with two particular points on which I seek an assurance from the Government. Both have a substantial impact on our balance of payments, which is a matter which has concerned us this afternoon. The first was referred to by the noble Viscount, Lord Caldecote, and is the present position of the Government in relation to their review of the facilities of the Export Credits Guarantee Department. I should like an assurance from the Government that as a result of that review British industry—and in particular heavy industry and the plant manufacturing industry which makes a remarkable contribution to our export activities—will not be disadvantaged against its competitors by any damaging change in the provisions of the ECGD.
The second matter is one which is close to my heart and also has some relevance to our balance of payments. Noble Lords may or may not be aware that this country spends £6·8 billion per annum on the import of timber and timber products. Correction of the balance of payments is not only a matter of boosting exports; it is also a matter of saving imports. The Government have changed the fiscal arrangements for forestry over the past two years. As a result the planting of trees in this country has fallen from 25,000 hectares before the fiscal changes to 13,500 hectares this year. That has a very serious impact on our future balance of payments. The effects will not be felt immediately because trees take a long time to grow. Nevertheless, I draw that point to the Government's attention in the hope that
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they will look once more at the fiscal arrangements which might encourage tree planting in this country.
I want now to talk about the general subject which concerns me. If the SDP in this House had the time and capacity to produce another amendment to the gracious Speech it would have read something like this:
"That the Social Democratic Party deplores the absence of any reference to a positive regional policy in the United Kingdom".
There is no serious reference in the Speech to regional development. It is high time the Government realised that the North-South divide persists. It is a threat to Britain's national unity and is unhealthy and anti-social. I speak from the experience of Scotland and I can say that there is a threat to the unity of the United Kingdom when people in one part of the country feel seriously disadvantaged.
I shall quote one or two statistics to justify that claim. Real investment in the period from 1982 to 1985 fell by 5·4 per cent. in Scotland; in the United Kingdom as a whole it increased by 7·7 per cent. Personal disposable income in the South-East was £5,137 per head; in Scotland it was £4,292. Projections of the National Institute of Economic Research for the period from 1986 to the year 2000 expect growth in the South-East of 8·1 per cent. and in Scotland of 2·6 per cent.
Last year, 15,000 young people left Scotland and emigrated, most of them South of the Border. In 1975–76 the figure was 5,800. That is a very serious matter because, of the people who emigrated, 89 per cent. were between the ages of 15 and 44. Young people who are trained and learn skills in Scotland, benefiting from the excellent education facilities which we have, cannot find work in their native country. Although many of them would like to live in a country where the quality of life is so much superior to that in the South-East of England, there are no prospects for them and so they make their way South.
The cost of all that in social and economic terms is quite sizeable. Perhaps I may quote some figures which show the cost to the taxpayer of the congestion in the South-East. British Rail's subsidy to the South-East network is £205 million per annum. That subsidy to the network in the South-East, even with its inadequate services, is 28 per cent. of the entire national subsidy to British Rail. London Regional Transport receives another £295 million. The London weighting allowance for civil servants accounts for another £150 million. The Autumn Statement, which we heard recently, will put another subsidy of between £400 million and £500 million into transport, most of it in the South-East. There are 2,900,000 mortgagors in the South-East. That is 36 per cent. of the United Kingdom total, but they receive 42 per cent. of tax relief. The concentration in the South-East, with all its social consequences and its cost to the taxpayer, is something we cannot afford.
The recent Autumn Statement announced that a further £830 million should be given to London Docklands in the next three years. Noble Lords will not be surprised to see the headline in the Glasgow

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Herald which states that the amount of money that is put into this little corner of the South-East dwarfs the total amount given in aid to the whole of Scotland. Is it any wonder that there is a deep sense of resentment on the part of the people who live in that economically disadvantaged area? So the bill comprises British Rail and London Regional Transport subsidies, London weighting for civil servants and mortgage tax relief. With the high cost of housing in the South-East, the amount taken in mortgage tax relief (the figures that I gave were for 1985–86) will certainly increase.
There is therefore a strong economic case, apart from a social case, for taking positive action which will redress that balance. There is something wrong with society when local authorities in London must send children home because there are no teachers and then decide to subsidise housing in the South-East in order to encourage teachers to come down here when schools in Scotland are now being closed because of lack of numbers. There is something unhealthy when there are trained people in Scotland who want to work and live there, but who find that they must come and offer their services in a heavily congested South-East.
What is to be done? The Government changed their policy two years ago. They decided that they would target regional aid rather than have regional development grants. I regret to have to say that that has resulted in a dramatic fall in claims for regional assistance. It is time for the Government to examine whether their new strategy in regional development grants is working. The number of claims is falling substantially under the new regional assistance scheme as compared with the old regional development grants scheme.
The trouble with the Government is that they have begun to believe their own propaganda. So much has been spent by the department of the former Secretary of State for Trade and Industry, the noble Lord, Lord Young of Graffham, on creating enterprise groups and enterprise initiatives and on targeting enterprise; yet, when one looks at the figures, there is a substantial lack of enterprise achievement as a result of the cutting of regional aid.
At this hour in the debate, I simply draw the Government's attention to the fact that this serious social evil and totally uneconomic underutilisation of resources in the North is related to overheating in the South-East. I look forward to the Government revising their regional policy so that it may have a greater impact in redressing that balance.
7.25 p.m.
Lord Coleraine: My Lords, in his interesting television interview with Mary Goldring on Sunday, my right honourable friend the Chancellor of the Exchequer affirmed that his first priority was the control of inflation—to bear down on and to bring down the rate of inflation. I can well understand that noble Lords on the Front Benches opposite may perfer to target their amendment today on the manufacturing base and the trade gap. Were they to be in power again, we should surely be right to fear controls and high spending policies, bringing high and growing inflation followed by stop measures
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leading to the threat of recession and unemployment, avoided by intervention to secure the expansion of the manufacturing base to be measured as much in terms of the number employed as of volume of manufacturing production or productivity.
On these Benches, we must continue with the Government to be concerned with inflation. Having said that, I press the Government to take the view that the best attitude to inflation is not that it should be brought down or borne down on, but that it should be squeezed out of the system—a phrase of which we have not heard much recently. It is not enough to intend that inflation should be contained or brought down to an acceptable rate if that rate will ultimately debauch savings and the currency as effectively as an unacceptable rate. What is more, such a policy of limited measures will certainly not lead to the rate of inflation coming down enough to become broadly proximate to that of our European partners, which, I am told, is a necessary precondition of our adhering to the exchange rate mechanism of the European monetary system.
My right honourable friend's immediate predecessor, Mr. Lawson, was interviewed a few weeks ago by Brian Walden. I was particularly interested by what he said at the very end of the interview. Mr. Walden chided him with having boosted demand, to which the former Chancellor replied by pointing to the biggest Budget surplus ever. Mr. Walden pointed out that the money to boost the demand had entered the economy somehow. In answer to that, my right honourable friend said:
"Yes, it did—as a result of financial freedom and the great upsurge in confidence there was in the country, we got people borrowing on an enormous and unprecedented scale".
My right honourable friend then contrasted the £4 billion of tax cuts in the Budget for which he had been responsible with the £40 billion of increased personal borrowing. It was the latter which fuelled the demand. Clearly, my right honourable friend took the view that that was to be compared with the natural disaster of October 1987.
Surely credit did not expand like a balloon because of a great upsurge in confidence so much as because there was availability of credit to finance a Gadarene rush into housing—a rush that had to take place before house prices went through the roof. It was not so much confidence as dreams of everlasting Christmas.
At some time after the stock market crash of 1987, in the easier monetary conditions then introduced, with the relaxed Budget following and with the realisation—or at least the hope—that world markets might after all have the ability to control sudden panics, there was that rush into house purchase. In my opinion that inflation of capital values got out of hand because of expectations that house prices would keep going up for ever. Those expectations arose in large measure because of the tax and other incentives to home ownership which constitute the undesirable and unstable framework in which the housing market operates and has operated for many years and under all governments.
That kind of capital inflation is a dangerous drug. In the past two years we have been shown that it

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carries with it the wholly undesirable consequence that in London, the South-East and other parts of the country those who buy their first homes are obliged to take on mortgages with colossal annual interest commitments because they must have homes or get on the home ownership rocket before it takes off. That was brought home only too clearly by Miss Goldring in her interview with the Chancellor when she said:
"There used to be a very steady relationship between house prices and incomes. It was something like three and half times earnings. The last few years, this jumped up by two-thirds. Now, it seems to me that you will need to have house prices falling, or at least static, for something like three years before you get back to what we could call normal".
In reply my right honourable friend the Chancellor drew attention to what he called "changes in the equation". He said:
"I think there has been an increasing demand, an increasing expectation of home ownership, particularly amongst younger people; an increasing tendency to make greater sacrifices for home ownership, particularly amongst young people. It is now a national expectation to own one's own home in the way it wasn't 20 years or so ago. People are prepared to devote a larger proportion of their income, particularly since they now have larger net disposable incomes than before, to home ownership".
I find that analysis and way of describing the sacrifices and gambles which young people have to take in order to get a foot on the housing ladder, however true it may be, both distressing and deeply disturbing. It describes the parlous situation of those who took the plunge and bought houses in the past two years. I shall not dwell on that matter in this debate. However, I find even more disturbing the fear on my part that the kind of situation that we have now will only persuade the Government, if they need persuading, that inflation in house prices is a desirable end on its own account. I have seen that case argued. I thought that I caught a whiff of it in the conversation between Miss Goldring and the Chancellor.
My right honourable friend seemed to be saying that the rise in house prices had got out of control but that prices were now stabilising; the present flat state of the market, though painful and distressing, was a sign that the anti-inflationary policy—the interest rate policy—was working and that for the first time buyer this was not wholly a bad thing. However, I had the feeling that the natural order of things, to which ultimately a return would be made, was one of increasing house prices and that only increasing house prices would once again float the new, more deeply financially committed generation of home owners off the rocks and launch the next generation.
What is more—I come back again to the specific reference of Mr. Lawson to the £40 billion of increased personal borrowing—the distortion of financial resources through artificial inducements to home ownership helped to trigger the expansion of credit and call down the present monetary policies and high interest rates. Those policies themselves tend to encourage excessive wage demands and then excessive pay awards on the path to recession and unemployment. Alternatively, they lead to profound and painful social dissatisfaction.
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It is my firm belief that incentives to house purchase not only fuel capital inflation but also fall quite outside proper Conservative policies of fiscal neutrality and giving to everyone the right not to be subjected to social engineering in the exercise of free choice. They inhibit capital formation in other socially desirable directions than bricks and mortar. They provide a framework in which house renting cannot thrive and so they damage mobility. They also severely limit the tax base.
It is with a reference to the tax base that I end my remarks. There is no objective justification for the exemption of personal residences from the capital gains tax net. At the same time it would surely be inconceivable to tax homes as other capital gains are taxed now. I should like to think that a moment's reflection would lead to the conclusion that there is something wrong with capital gains tax. In my view the problem is that the tax ought to be an amalgam of nine parts a sumptuary tax imposed on capital spent as income with one part perhaps a tax on capital. However, it quite clearly fails to be anything other than a completely random tax on capital, incurred as often as not when investments are merely switched.
In my view the minimum that is needed is to replace the tax exemption on personal residences with a new regime involving the taxation of gains on homes, but allowing roll-over relief where the sale of one home is only a prelude to the purchase of another. Better and fairer would be a regime under which a person's capital assets, his home and his stocks and shares, were ring-fenced. Those investments would then only be subject to capital gains tax when they were effectively taken out of the ring-fence and available to be spent as income.
The chairman of the Stock Exchange recently made a strong case to the Chancellor for some such scheme to be introduced in relation to stocks and shares. I do not wish to comment now on that scheme except to say that I accept the argument that a capital gains tax on switching investments must be wrong. I add that a capital gains tax which is unfair as between taxpayers, which unreasonably distorts the housing market and personal choice and which contributes to inflation, needs a radical rethinking.
7.36 p.m.
Lord Dormand of Easington: My Lords, hardly a week goes by without one hears a boast from the Government, both in this Chamber and outside it, that they have enjoyed the confidence of the electorate for more than a decade. Even allowing for their poor showing in the opinion polls in recent months, the Government are entitled to claim some credit for having won three consecutive general elections.
However, it seems to many people that there is now another side to the argument. When the Government say, as they do constantly, that things were very bad in 1979, we have to ask: How long must it take to put matters right? If it has not been done in 10 years, then how long will it take? That is the question that many people are asking. I ask noble Lords to consider how old they were 10 years ago

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and what they were doing then. In my own case I must say that it feels like another age.
Nor is it only a matter of any decade. It has been a decade in which this Government had the blessing of literally billions of pounds from North Sea oil. That is a bonus which no other British government have enjoyed—certainly not in this century. This debate could be about the sheer waste of that money over the past 10 years. Indeed, many of the problems raised in the debate arise in part at least from the profligate spending of that heaven sent fortune. It is almost unbelievable that, with 10 years of absolute power and North Sea oil thrown in, this country, as has been said many times in this debate and no doubt will be said again before half past ten tonight, should now have a record balance of payments deficit, the highest interest rates in Europe and the highest inflation rate in Europe. Moreover, let us not forget, because I think they are in danger of being forgotten, the unemployed men and women of this country. Even with the fiddled figures—and they have been fiddled something in the order of 15 or 16 times—unemployment is higher now than it was in 1979.
There are a number of reasons for the present position but I believe that the most important of them was the policy of the last Chancellor of the Exchequer. Nigel Lawson—for whom I have a very warm personal regard—has been a disaster. I find it deeply puzzling why such an intelligent and experienced person should make such a fundamental error in expanding the economy when the country's industrial base has been so seriously eroded. That fact has been repeated several times already in the debate. I have come to the conclusion that the last Chancellor was so determined to reduce the tax rate—something he had advocated for many years—that he was prepared to take a risk which has produced so dire an effect on the country.
When the problem began to hit us, we were told that most imports consisted of capital goods necessary to rebuild our industrial base. The last two sets of figures show that that is not correct. Imports are largely consumer goods. Indeed, when I looked at the figures recently, the proportion of investment and production goods in the trade deficit was exactly the same as it has been for the past 20 years.
In the parlous state of the country's economy there are many deficiencies requiring attention. I wish to speak on two aspects which cause me concern. They are matters on which I believe the Government are making serious misjudgments. My contribution to the debate will not be a broad sweep concerning the economy of the country, on which we have had some excellent contributions. My contribution relates to two aspects of the nuts and bolts of the economy. Your Lordships may decide later that such comment is an under-rating.
I refer to training. I need hardly remind noble Lords that the lack of a suitably trained workforce is presently the biggest bottleneck in the industrial scene. But—I say this as an aside, but it is of considerable importance—it is a contributory factor to wage inflation. We know that businessmen will go to great lengths to obtain and retain suitably qualified personnel. My main criticism of the
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Government's plans is simply that they will not work. They are to rely on voluntary schemes under a privatised system. The employment training programme and the training and enterprise councils will probably succeed in some instances. But it is far too important a matter to leave to chance. Even at this early stage there is considerable evidence to show that such schemes will not work.
Two weeks ago British Oxygen refused to sign a further contract, claiming lack of government support. Computer companies representing 200 firms are to meet soon to decide whether to wind up the Computer Services Industry Council through lack of support. I have a number of further examples. However, perhaps a report commissioned by the training agency says it all:
"The scheme was launched in haste and uncertainty. There was no adequate information on why people left the scheme and the reasons given by those in charge of ET showed a poor understanding of the seemingly legitimate concerns of the client group whom they serve".
I repeat and emphasise that that was a report from the training agency.
On 16th October the Guardian stated:
"A review of the Government's £1·45 billion Employment Training Programme has been launched by Ministers after its poor record in its first year".
If time permitted I could comment on the considerable criticism being made of the quality of some schemes and of some trainers. It cannot be emphasised too much how important good quality trainers are. Yet the Government pay virtually no attention whatever to this aspect of the programme. It need hardly be said that adequate premises and facilities are of fundamental importance. I visit such places, as I am sure do other noble Lords. Apart from accounts which one reads, I know that there is a wide variation in what is provided. Surely, if we are to attain the standards about which we all speak, such provision is absolutely basic. That aspect too smacks of the haste which we see in all the Government's training proposals.
I fear that my remarks also apply to the training and enterprise councils. I shall therefore not repeat them except to say that the Government's obsessive belief in the ability of the private sector to provide what is required is even more misplaced when applied to TECs.
Whatever the criticism made of government's training schemes in the past, there was at least a degree of what I might call acceptable compulsion in getting industry to provide effective training. I say "acceptable compulsion". The Minister, or at least some of his colleagues, will recall that there was also a genuine desire on the part of many business people to "go the second mile" (if I may use a biblical quotation) in accepting that compulsion. I find it of considerable interest that the Government have in the past month agreed to the setting up of two' statutory training bodies. It smacks of the former system that the Government have been so much at pains to criticise. Those training bodies are for engineering and construction, perhaps the two biggest industries in the country. Is that not an admission that statutory bodies have a role to play?

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However, we are now dealing with a voluntary scheme. We are entitled to ask the crucial question: how will the active co-operation of business and industry be achieved? We have not heard anything about how that is to be done.
By the very nature of things, there will be successes and failures under such an arrangement. With the challenges facing our economy, not least that of 1992, this country simply cannot afford failure in such a vital field. George Bernard Shaw once said, "You can get used to anything. Therefore you have to be very careful what you get used to". Truer words were never spoken. I become scared that we shall get used to second and third-rate training which does not even begin to match standards already being achieved by our competitors.
My second concern relates to research and development. Noble Lords will know that, like training, this is of fundamental importance to the progress and prosperity of our country. We wish to know in the clearest possible terms what the budget for research and development is to be for the next few years. I ask because it is an item which, although important, seems to be lost in the various sets of figures. According to the official review of government-funded R&D published on 25th October, there was a reduction overall from £4·8 billion in 1986–87 to £4·6 billion in 1987–88. For those who, like me, are very poor at quick arithmetic, that is a reduction of £200 million. The Government's policy seems to be to hold current funding as a proportion of national income. That seems a reasonable proposition, but it ignores a very important fact. I am sure that some noble Lords will be aware of it. I refer to the very considerable cuts made in research and development during the earlier years of this decade.
I have just referred to government-funded R&D; but of course R&D is also carried out within, and by, industry. Full surveys on expenditure on research and development in UK industry are carried out every fourth year by the Government. The last was carried out in 1985. I ask specifically whether the Government are carrying out a full survey this year, which is a fourth year. I hope so and I strongly request that a detailed analysis be made and published as soon as possible. My hope is that the shortfall in Government funding is at least being made up within industry, although I am pessimistic about that.
In a recent statement the Secretary of State for Trade and Industry gave the impression that he intends to cut the amount of money available. Having regard to the importance of the department, that means that we shall face the 1990s with fewer government resources for future technology than any other advanced industrial nation in Europe.
I am concerned also about the content of the Autumn Statement, referred to by another noble Lord. There was no specific reference to R&D. However, the implication appeared to be that it will take a back seat for some time. One also hears whispers that the amount will be reduced. I hope that the Minister will provide information about
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that. When I read that the Government have ended support for the fibre-optics R&D scheme, closed down the opto-electronics support scheme and the micro-electronics support scheme and are now trying to prevent a European collaborative programme in the most advanced technologies, I shudder for the future of those 21st century essentials. We face the 1990s with fewer government resources for future technology and new research and development than any other advanced industrial nation in Europe and most in the world.
According to the official figures given by the Chancellor in his Autumn Statement last week, the gross domestic product of the British economy grew by 5 per cent. in 1988. It is expected to grow by 3 per cent. this year. As a result of the Autumn Statement, the official forecast is that it will reduce to 0·75 per cent. in 1990. It is now obvious that it will take a long time for our GDP to match the level of our European competitors. I submit that, if we do not get right both the training of our workforce and the application of research and development, it will take even longer.
7.52 p.m.
Baroness Carnegy of Lour: My Lords, the noble Lord, Lord Dormand, criticised many aspects of the economy. As regards training, he said that what the Government have been doing appeared to be worthy of commendation but that he was not happy about the future. I remind him that the Government's previous politics on training were drawn at a time when many people were unemployed. Employers could not be expected to be involved in paying for that training. Now most of those people are in employment or are potential employees. It appears to be nothing but sensible that employers should be involved in putting their money where their mouths are, as they have been in Germany for so long and with great success. I hope that the noble Lord will persuade his party not to try to frustrate the training schemes that are being designed for Scotland, towards which it is showing some allergy.
I turn to Scotland. Sadly, the noble Lord, Lord Taylor, is not now in his place. He spoke of the North-South divide and drew the conclusion that "regional policy", as he called it, was the answer. I hope that he did not mean the old style over-encouragement of firms to go where they do not want to go. That has been tried extensively in Scotland and there are plenty of examples which demonstrate that it usually does not work. The Fort William pulp mill, with which the noble Lord was doubtless familiar, was an example: it is no longer there. It is important for the whole country, not least for Scotland, that location in the South-East should be made less attractive to business. However, I hope that it will be left to the market to decide how to respond. Firms, not governments are best equipped to decide what to do.
Scotland is not doing so badly. During the past two or three years, improvement has occurred at an accelerating pace. It is interesting to note that in 1987 Scotland's gross domestic product per head, excluding oil-related activities, was exceeded in the UK only by the South-East, East Anglia and the East

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Midlands. During 1988 manufacturing productivity in Scotland rose by 6.4 per cent. against a UK figure of 5.4 per cent. In 1988 Scotland's manufacturing exports rose by 7 per cent. in real terms as against 2 per cent. in the UK as a whole.
Enormous changes have taken place in the nature of our industries. That is extremely important because Scotland had a heavy dependence on the old heavy industries where productivity was low. In Scotland electronics now dominates manufacturing. It represents 16 per cent. of Scotland's GDP, its output being four times that in 1979. The industry employs 43,000 people—that is, 12 per cent. of the Scottish workforce. Interestingly, that is only 6,000 more than 10 years ago.
After several leaner years, whisky production, which is most important to Scotland, is again growing fast. In 1988 exports were up 13 per cent. and the improvement continued in 1988–89. The financial and business sector in Scotland is a great success story. Approximately £100 billion of investment funds are now managed in Scotland, including 10 per cent. of the UK unit trust market and 20 per cent. of the life assurance market. The noble Lord, Lord Williams, poured scorn on the contribution of service industries to the economy. I do not believe that the 183,000 people who work in the financial and business sector in Scotland will agree. Tourism, hotels and catering have also grown enormously. Ravenscraig's performance in producing liquid steel now compares well with the best in Europe.
Great changes in our industry and productivity have been made in Scotland. I do not know what the future will hold if the higher rate of tax is increased to 50 or 60 per cent; if the basic rate of tax is increased (I do not know whether that will happen under a Labour government); of if, as the Labour Party promises in its policy review, there is an addition to income tax to pay for an assembly tax. That assembly tax is now a commitment in the Labour Party's policy review.
The overriding priority for Scotland, as in the rest of the UK, must be that the speed and nature of growth in the country as a whole is such that inflation is contained. The noble Lord, Lord Dormand, accused the previous Chancellor of the Exchequer of expanding the economy when he should not have done so. He appeared to attribute that to the reduction in income tax. In a year during which there was £54 billion-worth of growth there was only £4 billion worth of reduction in tax. That does not appear to account for very much of the expansion.
Nevertheless, since the Stock Market collapse in 1987 it has become clear that there are now new inflationary forces at work in the economy. They are forces which keep spending going when traditionally it would have been expected to slow down. I believe that those forces must be recognised and understood by business, the unions, people at large and the political parties. To give an example, a number of noble Lords have talked about the costs of congestion. Travelling every week, as do I and many other noble Lords, between one of the least congested
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parts of the United Kingdom and the South-East, which is one of the most congested, one cannot but notice the growing contrast not just in the quality of life but also in the cost of living between an area which is congested and one which is not.
That congestion costs a lot of money is fairly obvious. Limited space and scarce land mean expensive housing or expensive commuting to where housing is cheaper. Traffic congestion is expensive in terms of time and petrol and adds to business costs. Widening roads to relieve congestion costs money and creates more congestion still.
What is less obvious is the effect of that expensive congestion in some parts of the country when it is combined with our continuing habit in the private and public sectors of national wage agreements. Such wage agreements allow for the higher costs in congested areas but they are paid to everybody, whether or not they live in congested areas. The noble Lord, Lord Stoddart of Swindon, said that fair wages do not matter as regards inflation because they are covered by productivity. However, when wages are increased for some people because of the congested area in which they live but are paid to other people in uncongested areas, they are not covered by productivity. It seems to me that that must be an increasingly inflationary trend.
We certainly must do something about congestion, especially in London. However, in the short term—and it can happen now—we must get away from national wage and salary agreements which are higher than they need be in some places because of the high cost of congestion in others. That creates unjustly high wages and salaries which are inflationary.
It is incumbent upon all our political parties to do better than they are doing at present on this matter. It is surely important to help people understand the trends and problems of inflation. I hope that this evening, instead of moving two reasoned amendments which have given rise to very interesting discussion, noble Lords opposite will support the Government and the gracious Speech because of the overriding importance of the issue of inflation.
8.3 p.m.
Lord Mountevans: My Lords, perhaps I may bring the debate down to a lower level because I propose to defend duty free. To defend duty free in the context of the single market is potentially to defend the indefensible.
The gracious Speech makes reference to Her Majesty's Government's commitment to the single market. The noble Earl the Paymaster General touched upon the single market in his speech. I am sad not to see him in his place at present because it would have been fun to recall the time three or four years ago, when he and I did some work on Sunday trading and duty free. Quite unlooked for, the noble Lord, Lord Boyd-Carpenter, rightly touched on the taking of package holidays—something in which we indulge in this country—as a yardstick of the nation's affluence.

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I believe that I have several reasonable grounds on which to raise this matter; for example, the proposed abolition within the single market of duty free and its replacement by ever increasing tax paid allowances. The abolition of duty free in airports and on ships has been the subject of two major surveys, one by the Netherlands Economic Institute and the other by Coopers & Lybrand. I have dug up many pages of figures. I do not propose to use them this evening but I should like to point out that if duty free is abolished within the EC a modest estimate is that UK airport landing fees will increase by some 16 per cent. The worst estimate is that they will increase by 42 per cent. Air fares within the EC will increase by perhaps 1·5 per cent. A charter ticket or charter package—and I come back to the comments of the noble Lord, Lord Boyd-Carpenter—might increase by 5 or 10 per cent. Taking all those matters into consideration a package holiday price might increase by 3 per cent.
On their own, those are no great sacrifices and do not create any particular problems. I expect that the price of toothpaste has increased by 3 per cent. in the past year. However, we are not only looking at the abolition of duty free or at one factor in isolation, because within the concept of the single market there is also the proposal to impose VAT on transport. That would put 5 or 10 per cent. on the cost of air fares. Of course, there is the EC package holiday directive which would put 5 to 10 per cent. on the cost of a package holiday which already includes the air fare, airport landing charges and all the other matters that have been mentioned.
Outside the single market, there is the CAA's very laudable £600 million investment programme in air traffic control facilities. In all fairness, that sum must be passed straight on to the customer. We cannot expect the nation as a whole to subsidise our wish to travel by air transport. There is also the as yet unknown cost of the aviation and maritime security Bill which I believe will receive its First Reading in your Lordships' House early next month.
Suddenly the cost of travel, be it for business or leisure, will go through the roof if those figures are compounded or even if the lowest figure is taken in each case. That does not seem to be a totally happy thought as we approach European tourism year which starts on 1st January 1990.
I could continue in that vein but I am trying to push on because I believe that the debate has gone on rather longer than we had all hoped this evening. Thanks to the Government's policies over the past 10 years, we have a very good airport development programme both for privatised and municipal airports. One of the reasons for that is that British airports lead the world in maximising the income they can receive from a passenger through duty free sales. Funnily enough, that means that duty free sales—and defending the indefensible which I mentioned at the outset of my remarks—are a quite enchanting source of private investment in our transport infrastructure.
As noble Lords will know, private investment in our transport infrastructure is a subject fairly close
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to my heart, as it is to Lord Ezra's, who I am sad to see is no longer in his seat. I would hate to see the progress we have made in developing our airports sacrificed on the altar of the single market.
So far I have spoken about aeroplanes, but my comments also apply to shipping. I could give distinctive examples in the shipping industry which illustrate my point. At five o'clock this evening a ferry sailed from Harwich to Esbjerg in Denmark. Probably 50 per cent. of its passengers were Swedes, Norwegians or Danes transiting under the single market concept which I am discussing into EC countries and thus still being entitled to duty free. At certain periods of the year, that ferry runs on the freight load and the car deck. At other times of the year—especially the tourist season—it runs on the fact that it is full of passengers. We travel abroad and others come to visit us. We have a very successful tourist industry. So, at that time of the year it runs on fares and—if I can mix a metaphor—on diesel. However, in the winter that ferry really runs on duty free; that is, the ability for people to shop cheaply abroad.
I now refer to Geneva Airport which some of your Lordships may know. One alights from the aeroplane and is faced with a choice: one can either go to France or to Switzerland. Again, if we take the single market route, I can see enormous problems. As regards shipping, arguments are being advanced by some of our British ferry operators that because of the way in which the industry is financed and its dependence on duty free particularly in the off season, we may no longer be able to liberate the Falklands if we abolish duty free.
I could go on to speak of the international trains, which British Rail must announce under the Channel Tunnel Act next month, and the Eurotunnel shuttles. They are all, to a certain extent, dependent on duty free. Duty free becomes a vehicle for investment.
I think I should draw my remarks quickly to a conclusion. I am running foul of my lady convenor's golden rule that if you cannot say it in seven minutes you should not say it at all. Duty free is a pleasure. I carried out a straw poll in the guest room this afternoon. No one was failing to use duty free. People look on it as a pleasure. It is something that starts the holiday or the business trip. It smooths the hassle of going through immigration.
In theory, under the single market we shall have no immigration or customs controls. However, in a Written Answer in another place last month Her Majesty's Government reminded us of their belief that the Schengen proposal will not stand up in the timescale involved. Our German, Benelux and French friends will not be able to abolish the physical frontiers by the end of next year, which is the target they have set themselves. One has to ask how long it is going to take to sort out all the single markets.
I look to the Government for three things, one of which—again defending the indefensible—is perhaps impossible. My ultimate choice will be to defend duty free lest it be sacrificed in some smoke filled room a couple of years hence in return for an agreement on the support price of beetroot produced in France or something similar. Duty free is an

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industry to us. I am told that 20 per cent. of duty free sales are up-market Scotch. The Scottish whisky industry—as those noble Lords who enjoy the product will know—is very fragmented; it is a rural industry. If we lost that 20 per cent. of sales one might suddenly be talking about 5,000 people unemployed in a fragmented way all over Scotland. Distilleries only employ 30 or 40 people. As long as Her Majesty's Government continue celebrating—I agree we should celebrate—a 10,000 fall in unemployment in a given month, I can see terrible problems in a fragmented 5,000 unemployed suddenly being thrust upon Scotland.
If Her Majesty's Government cannot defend duty free, may I seek an equal field? I have deliberately stayed away from the proposed substitute for duty free—increased quotas of tax paid trade across borders. However, we know that although ideally there should be an equal field—there should be a harmonisation of duty and everything else—Denmark is seeking a derogation. We know that Ireland is seeking a derogation. We know that Her Majesty's Government or the Northern Irish have already put the Irish Republic in the courts because of the limits imposed upon the Irish Republic citizen going north to buy tax paid goods, not duty free. Will we get an equal playing field in the fullness of time? I have sincere doubts.
Finally—and I come back to airports' policy, the Government's achievements and deregulation—I would hope that whether they defend duty free or seek the equal field that I seek, Her Majesty's Government will remember their achievement in liberalising air traffic. Again we will lose out because we are so far down the liberalisation tunnel that there is not much scope for increasing it. If all these costs—the ones which relate to the single market and the ones which relate to domestic development—are suddenly put upon travel, I think we shall be in difficulties. Who will end up paying? I should take my hand out of my pocket, but it is your Lordships' pocket, it is my pocket and it is the customers' pockets.
At the end of the day both the people's elected representatives in the European Parliament and the civil service in Brussels should be reminded that duty-free is a little pleasure, a modest pleasure; it will not change the world. However, strike it out and I suspect that many voters will suddenly remember or begin to feel, that the Common Market is not all that they wished it to be.
8.14 p.m.
Viscount Massereene and Ferrard: My Lords, I shall be very brief. I have not spoken in the House on this subject for the past two years. However, I have decided to chip in for a moment tonight.
The most amazing man to me is the former Chancellor, Mr. Lawson. At one moment he was talking about growth, which he appeared to favour; the next moment he was putting interest rates up and up. I understand that that helps to keep inflation down. On the other hand, it has some rather unsatisfactory results. If interest rates are put up too high, you cannot have growth. If you borrow from
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a bank to have growth, the present bank rate has gone up so much as to make it quite hopeless. It takes us back to the late 1970s when interest rates were very high. The number of companies that went broke and the consequent unemployment were very serious.
The Prime Minister spoke about having a "property owning democracy". That is an excellent phrase. The more people who have property the better; I am all for it. However, the former Chancellor put up the interest rates so high that thousands of people who have been encouraged by the Government to buy houses—I understand you can now buy your council house for a third of the cost—are in great difficulty in paying the mortgage.
The new Chancellor, Mr. Major—now he has got a boost of£6 billion—should give a little of that to help these people, especially the young; perhaps a couple who have just married and find they cannot afford the mortgage interest. These people ought to be helped. I hope my noble friend the Leader of the House will dwell on that for two or three seconds.
The past three or four months have been an extraordinary time in politics in this country, completely without parallel. The majority of the £6 billion will of course go to hospitals and to health, which must come first. Some will go, I hope, to roads. Congestion on the roads of this country is becoming more and more serious and it will continue to do so if money is not ploughed into a solution.
There is a further point. Bearing in mind that we are indeed in economic difficulties, people would like to know where the new Chancellor obtained the £6 billion boost. In fact, for the past 10 years the Conservative Government have done extremely well by paying off a substantial part of the national debt. One never sees any thanks given for that. It has hardly been mentioned in the press. The Government deserve a pat on the back for that. However, presumably the Chancellor is using some of the accrued interest slightly to ease the brakes on the economy at the moment to help deserving causes, as I have pointed out.
Those were the two main points that I wanted to make, but I also wish to refer to the two amendments. The first amendment, tabled by the noble Lord, Lord Williams of Elvel, suggests that manufacturing industry in this country has been neglected, to put it mildly. I do not agree. I am joint treasurer for an organisation which is part of the National Association of Boys' Clubs. It is the Kent Association of Boys' Clubs. We gave a lunch to raise funds. It was successful and we made £6,000. Our guest of honour was Mr. Eric Hammond, chairman of the ETU. I had a long talk with him during which I mentioned the noble Lord's amendment. He said that he did not think it entirely fair. I did not want to get embroiled in a discussion on the unions because I had been talking on that subject for some years, but he said that there are—I am not using his exact words—some naughty boys. He said that in many cases the unions could improve in regard to helping industry. However, I do not wish to go further into that as it is a touchy subject.
The amendment tabled by the noble Lord, Lord Williams, also refers to the quality of life. I assume

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that by that phrase he means the standard of living. On the other hand, the phrase could easily be interpreted in other ways. It is a wide phrase. After all, one man's meat is another man's poison. To a certain extent industry is responsible for the environment. In fact, industry is being made to be far more careful in regard to pollution. The noble Lord covered both points in the amendment.
I cannot agree with the noble Lord, Lord Jenkins of Hillhead. I rather admired the speech of the noble Lord, Lord Stoddart. He was fairly hard on the EC. To a great extent I agree with him. While that is so, I am all for the right honourable lady the Prime Minister, who has made some very good points. It would be crazy in our present economic position to go dashing in, but if we go into the EMS we must do so from a position of great strength.
I have spoken for long enough. I am sure the Government will take the wisest course—one always hopes so—and that everything will end up satisfactorily.
8.26 p.m.
Lord Cobbold: My Lords, I am happy at the end of this debate to have the opportunity of supporting the amendment proposed by my noble friend Lord Jenkins of Hillhead. I agree with him that the role this country and this Government play in the building of the single market in Europe is crucial to the economic welfare of the country in the 'nineties. I also agree with him that there are relatively few major European issues and that one of them is most definitely the monetary system. It is on that subject that I wish to speak this evening.
I welcome the Government's commitment to stage 1 of the Delors Report. While recognising the timing difficulties of taking sterling into the exchange rate mechanism, I support the suggestion of a target date of 1st July 1990, as put forward by my noble friend Lord Ezra. However, I think we must look beyond stage 1. We must start to think seriously about the next stages in progress towards monetary union, for I do not believe that the full benefits of the single market in Europe can be realised with 11 countries. There is of course an existing currency union between Belgium and Luxembourg. I repeat: I do not believe that the full benefits can be realised with 11 currencies, 11 interest rates and 11 balances of payments.
The stage 1 EMS is a stepping-stone—a necessary stepping-stone but I am afraid perhaps also a slippery one. I do not disagree with the Government's view that stages 2 and 3 of the Delors Report are flawed. I see no reason why monetary union should necessitate binding Community rules on national budgetary policies imposed by Brussels. However, I believe that the Government's response embodied in the Treasury's recent paper An Evolutionary Approach to Economic and Monetary Union is less than adequate. It appears from the opening paragraphs that the Treasury has a very limited view of what it described as the objectives of monetary union. It lists only three; price and currency stability; lower transaction costs; and equal access to financial markets. It clearly does not share the view that a
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genuine home market for Europe's manufacturers and 320 million consumers can be realised only with monetary union.
There are other important objectives that are ignored by the paper. Monetary union, in fixing exchange rates, eliminates the need for a balance of payments between member countries, as in the case of trade between England and Scotland or Texas and California. Our present trade deficit with Germany would not have forced us to raise interest rates to current levels. Comparative advantage can be allowed to flourish as it never can fully in a multi-currency system. Reducing the proportion of external trade in a national economy reduces the extent to which the domestic economy can be buffeted by changes in the external balance; something with which we are very familiar in this country.
Another beneficial consequence of monetary union in Europe is that the proportion of trade with the rest of the world in the gross Community product is much less than the average in individual member countries. It is about 14 per cent.; a good deal closer to 12 per cent. for the USA and 9 per cent. for Japan. The lower percentage should permit more stable growth within the European "domestic" economy and an end to stop-go policies for this country that were so deplored by the noble Viscount, Lord Caldecote.
These benefits cannot be achieved under Delors stage 1 but only follow from monetary union and a single currency. The Treasury recommends an evolutionary approach. I have no problem with that. It rightly looks for a mechanism that will focus on the best performer in monetary management rather than on the Community average. It claims that freely competing currencies within an EMS free of all restrictions on capital movements will lead to,
"greater use of low inflation currencies at the expense of high inflation ones in both transactions and deposits".
It may do so for transactions but is less likely to do so for deposits.
The reason is that within a managed exchange rate system like the EMS, there is a tendency for liquid resources to flow to the high interest rate, high inflation currencies which can undermine the domestic monetary policy of the recipient country. That is the problem identified by Professors Walters and Goodhart and the one that Mr. Lawson came up against when he was tracking the deutschmark in early 1988.
The stage 1 EMS, with unrestricted capital movements and with two major trading currencies—the deutschmark and sterling—will be a different animal and potentially less stable than the present deutschmark-dominated EMS buttressed by capital controls. It can work, but it will only work if everyone plays the game. A breakdown would be very damaging to the European economies and to progress towards the single market.
Let us suppose, as we all must hope, that it does work and that the Treasury's thesis that national authorities will pursue non-inflationary policies in line with the best in the Community is proved correct. Can noble Lords imagine that the "best in

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the Community" might be other than those of the Bundesbank? On present form the Bundesbank will inevitably be the de facto maker of monetary policy in Europe. Some would argue that it is already.
That brings me to the question of sovereignty and to the amendment moved by my noble friend Lord Jenkins of Hillhead. If the Government are prepared to see de facto dominance of monetary policy making by the Bundesbank, how can they argue at the same time that monetary policy making is a sovereign right of Parliament? There can be no doubt that Parliament has the sovereign right to raise taxes and to borrow money to finance public expenditure. But I am not sure that Parliament has, or should have, the sovereign right to lend itself money; to be both banker and borrower, or, in other words, to print as much money as it likes. Democratic governments do not have a good track record in money management. The temptation to print money for electoral purposes is hard to resist.
Therefore it is a matter of legitimate public debate whether the management of the money supply is better vested in an independent institution. I therefore welcomed the former Chancellor's recent statement in another place that he had put forward a fully worked out scheme for the independence of the Bank of England. That document should be published so that the subject can be freely debated.
I believe that an independent Bank of England would have a better chance of matching the discipline of the Bundesbank and therefore of giving this country greater credibility and a greater say in policy making and in day-to-day market operations in the evolving EMS of the nineties. What about democratic accountability? Is it possible for an independent central bank to be democratically accountable? The Treasury paper argues that at the European level this could only be achieved,
"by centralising the power of the Finance Ministers, requiring a European Finance Ministry and thus a European Government".
That is the back-door federalism of which the Prime Minister complains. But there is a fault in the Treasury logic. A requirement for a European Finance Ministry and Government might perhaps be necessary with non-independent central banks, but is certainly not necessary if central banks are independent. The Federal Reserve system in the United States admittedly exists in a federal environment, but its forms of democratic accountability—regular reports to Congress and publication of minutes of open market committee meetings—could be transposed to Europe and to existing national and European parliaments. The mandate and objectives could be set by the Council of Ministers and an ultimate right of veto retained similar to the right of veto retained by the Secretary to the Treasury under Section 10.6 of the Federal Reserve Act. The subject needs to be properly debated. It is too important to be stifled by dogma.
A final word on how we might achieve a single currency for Europe. Here again the debate tends to be ritualistic. It needs some fresh air; it needs to be moved out of research and development and given to the marketing department. Can we not find a way of retaining our pounds, francs and marks? Given
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the political will I believe that this could be achieved by fixing exchange rates within the EMS at the appropriate moment at convenient whole number parities rather than at meaningless figures to six places of decimals.
The three key currencies in the stage 1 EMS will be the deutschmark, sterling and the French franc. The weightings of sterling and the French franc combined about equal that of the deutschmark. If France and Britain in the first instance could agree on bilateral monetary union within the EMS similar to that between Belgium and Luxembourg, they could fix the sterling-franc parity at 10 francs to the pound around which level the two currencies have fluctuated over the past 15 years, with the pound dropping through 10 francs only a few weeks ago. A common note and coin issue would then be possible with the franc equal to 10 pence.
To come into line with the deutschmark at a convenient level—which need not necessarily happen at the same time—would require a revaluation or a realignment of the deutschmark. A realignment is almost certainly going to be required anyway within the next two or three years, if not before. The next convenient rate for the deutschmark is 2.50 to the pound. That would fix the mark at 40 pence and four French francs, permitting a three-way common note and coin issue. For example, a £10 note would be interchangeable with a 100 france note or a 25 mark note.
These rates are not unrealistic and locking the three key currencies together within the EMS in this way would create a de facto European currency and would preserve three key monetary units. In my opinion, this would be far more attractive to the public than, for example, the rather anonymous ecu. That is only one suggestion among many possible ideas. My call is for the debate to be opened up and for this country and this Government to play a constructive part in it. To call for progress towards a single currency in Europe it is not necessary to be a federalist—back door or front door. It is only necessary to believe in the vital importance of the single market for the economic welfare of this country in the 1990s.
8.39 p.m.
The Earl of Onslow: My Lords, the noble Lord, Lord Cobbold, has touched on the whole basis of the difficulties of the exchange rate mechanism. On these rather scruffy bits of paper which I call my notes I have something to say to which I shall return later. The noble Lord also spoke about inflation, the Bundesbank, the Japanese Bank and the Federal Reserve.
I have a list of what all these have in common: Diocletian, Henry VIII, Pizarro, Barras, General Galtieri, the noble Lord, Lord Barber, Mr. Denis Healey and Mr. Nigel Lawson all increased the money supply. Diocletian did so with disastrous effects. Constantine then brought it back under control and there was no further inflation in the Byzantine empire for about 1,000 years. Henry VIII debased the coinage. Pizarro discovered silver in Peru and flooded the European market with it, with consequent inflation. Barras produced the assignats

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in the French revolution, with consequential inflation. We all know what General Galtieri did with his money supply and how it led to inflation in Argentina.
The noble Lord, Lord Barber, has been accused by my right honourable friend the Prime Minister of increasing the money supply. There was a slight increase in inflation in the early 1970s. Mr. Healey did the same and Mr. Lawson, I suggest, did the same as well. He tried to shadow the deutschmark in 1987. He was worried that the exchange rate would rise above three deutchmarks to the pound. Money was printed, inflation followed and house prices increased. People thought that because house prices had increased—they increased to an enormous extent in the South of England, where I live—they could then go out and buy things. Credit expanded and inflation followed.
It must follow that if one wants to keep inflation under control the money supply must be kept under control. I do not think it is possible to trust any politician, be it my right honourable friend, the noble Lord, Lord Callaghan of Cardiff, or anybody else. They all want to get back to Number 10 Downing Street.
Lord Callaghan of Cardiff: No, no!
The Earl of Onslow: My Lords, they like being in Number 10 Downing Street. They like being in office. They like the red boxes. So the temptation to bribe the electorate is totally, completely and utterly irresistible. I make no party political point. They have all done it. I can see my noble friend Lord Boyd-Carpenter grinning in happy reminiscence of it. The corollary of this is that we should have an independent, privatised Bank of England with a mandate or a royal charter requiring it to control the money supply. In that way the noble Lords, Lord Boyd-Carpenter and Lord Callaghan, or the future Countess of Finchley will not be entitled to fiddle with the money supply to try to get themselves back into office.
Lord Callaghan of Cardiff: My Lords, I must make it clear to the noble Earl, if he has not already realised it, that the advantage of being a former Prime Minister is that one is treated with the same respect as one had when one was Prime Minister but that one does not have the red boxes. One has all the advantages without any of the disadvantages. On the noble Earl's major point, will he take it from me that, having thought a great deal about this, I find a great deal of truth in it. I do not think that either the United States or the Federal Republic of Germany is any less democratic than the United Kingdom because it has an independent central bank.
The Earl of Onslow: My Lords, that is exactly the point I was coming to. To encourage an independent central bank with a duty to control the money supply would be extremely useful.
It is interesting to note that Australia, Spain and the United Kingdom have had the laxest monetary policies and have consequently the highest interest rates. Those interest rates produce high mortgage
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rates and high inflation. If they had a strict money supply, perhaps the value of their currencies would have gone down and the value of imported Japanese televisions and so on would have gone up. I cannot see people writing to their local Members of Parliament to complain about the increase in the price of video recorders. I know perfectly well that they write to their local MPs to complain about the increase in the cost of mortgages. I am arguing for a serious attempt to control the money supply.
At home I have an extremely pretty 18th century tithe barn. That tithe barn will hold a certain number of bales of hay. If I fill it to the roof with bales of hay the cost of storing bales of hay is enclosed in the tithe barn. If I put in one bale of hay the cost of storing it goes through the roof. The money supply should be treated like a tithe barn. It should be used to fill the tithe barn to the top. It should not be used for one bale of hay just to get somebody back to that smart address not a million miles away from here.
I have completed one part of my speech but noble Lords will now have to listen to another part. It is interesting to note that when Mr. Attlee was First Lord of the Treasury 7·5 per cent. of people's income was collected in income tax. Under my right honourable friend Mrs. Thatcher, 20 per cent. of people's income is collected in income tax. In 1950 income tax started at 99.8 per cent. of average income. It now starts at 37·5 per cent. of average income. At the same time people are entitled to supplementary welfare payments. This produces a rather unattractive poverty trap.
Our present tax system is highly regressive. A married man with an income of £14,000 a year, £1,000 of mortgage interest relief and no perks pays 23·3 per cent. in tax and national insurance contributions. A man on £50,000 a year who receives an additional £20,000 of pension fund payments and other perks, £10,000 worth of shelter and £3,000 mortgage interest relief will pay 15·7 per cent. A man with an income of £150,000 who receives £50,000 of perks and £80,000 of shelter will pay 12·1 per cent., including national insurance contributions. Those are not your average Ken Livingstone, Karl Marx, Bernie Grant imagination figures from the funfair somewhere down the Walworth Road. The figures are produced by the Institute of Economic Affairs, which is not unknown for being slightly on the side of my right honourable friend the present First Lord of the Treasury.
It is perfectly possible to abolish all perks and have a flat rate of 20 per cent. income tax for everybody. This would include national insurance contributions. It would increase Treasury income and be a much fairer form of taxation. My noble friend Lord Coleraine touched on this point in greater detail than I have because I have tried to ration myself to 10 minutes. The same applies to capital gains tax. At the moment capital gains tax is applied to approximately 30 per cent. of all taxable capital gains. Of that, 70 per cent. is on houses. If everything were taxed fairly across the board, all of these taxes could come down to 20 per cent. I do not think that anybody would object to a 20 per cent. rate of tax. The Treasury would earn more income. A good many accountants would have to

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become gardeners and gamekeepers because there would be less for them to do in the accountancy world, which charges vast fees. We would have a much fairer system of taxation.
My contribution to this evening's debate is this: please may we have a fair system of taxation and complete control of the money supply by an independent Bank of England?
8.50 p.m.
Lord Annan: My Lords, I apologise for not being in my place when the noble Earl, Lord Caithness, opened the debate. I had to attend a statutory meeting at Cambridge, and I could not get out of it.
It is now nearly 25 years since I first took my seat in this House, and the spectacle of the country's economy for an historian such as myself is bound to look somewhat sombre. What a short time ago it was that the Prime Minister told us that she wanted to turn the country round. And yet here are all the old signs of the fundamental weakness in our economy appearing again—the interest rate at 15 per cent. in an attempt to control inflation, and growth beginning to fade away as a result, and the balance of payments in a catastrophic state: this after a decade of North Sea oil at its peak.
What is the root of our troubles? The Leader of the House, perfectly understandably, asks us, in responding to the gracious Speech, to concentrate each day on a different topic. But every topic affects the economy, and none more so than our foreign policy. Ever since the war we have been obsessed by our status as a great power. We enter into commitments all over the world, and perfectly reasonably the chiefs of staff demand that they be given the resources to meet those commitments.
No one should blame Mr. Attlee and Mr. Bevin for insisting immediately after the war that Britain should have its own independent nuclear deterrent. They did so at a time when the American Secretary of State, Jimmy Byrnes, was bitterly hostile to this country and was hoping and trying to make a deal with the USSR so that the two great powers could rule the world together. But that did not last long, and in 1948 we were united with America in resisting the communist powers' attempt to destabilise regimes throughout Europe and the world which were favourable to the West. From that time on there was never any need, in my judgment, for Britain to have its own independent nuclear deterrent. So long as America provided a nuclear shield the USSR was deterred from any military adventures in the West. But we have spent enormous sums on our own nuclear defence.
I was reading recently the memoirs of the noble Lord, Lord Barnett, in which he recalled that in 1975 Mr. Wilson slipped through the Cabinet what he called a little bit of modernisation of our nuclear weapons. It was not cash limited. The noble Lord, Lord Barnett, was then Chief Secretary to the Treasury and yet he had no inkling of what the cost was. Six years later, when he was chairman of the Public Accounts Committee, he found that the cost—that little bit of modernisation—had exceeded £1 billion.
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Our insistence on having our own nuclear deterrent is one of the causes of our economic troubles. I sighed when the noble Earl, Lord Arran, said that the speech of the noble Lord, Lord Zuckerman, had failed to move him. The advice of the noble Lord, Lord Zuckerman, as a scientist is not to be neglected or despised. Neither is the advice of the noble and gallant Lord, Lord Carver, as a soldier. The noble and gallant Lord, our most brilliant soldier since the Second World War, has said time and again that it is our nuclear weapons that distort our defence spending. Is the mind of the Cabinet impenetrable on this point?
The story of expenditure on nuclear weapons is only a part of the cost of foreign policy decisions. If we go back in time we can see Mr. Gaitskell's decision to rearm and send troops to Korea; the Conservative commitments in the Middle and Far East which led to the Suez debacle; the commitment of Mr. Wilson when he became Prime Minister to an East of Suez policy. All these are examples of our inability to recognise that our power is limited.
It is limited because our production and our economy are inadequate to sustain them, and that was the message of Sir Nicholas Henderson's valedictory dispatch from Paris. No item of public expenditure has risen so gravely under the present Government as defence. We appear to spend less on defence than France or Germany, but that is an illusion. That is because our GDP is so much smaller. In fact, we spend a higher proportion of our GDP on defence than France and Germany.
The great achievement of this Government in the first five years was to bring home to us that our stature in the world, and the level of the welfare state, depend on the productivity and marketability of our business. But in the last few years the Government have taken their eye off the ball. The gracious Speech contains very little to encourage one to believe that the Government are still giving these objectives top priority. There was one sentence to the effect that the Government will continue to develop training and enterprise councils. I was glad to see that. But should not industry be compelled through a levy to train its workforce, as is the case in both France and Germany? Why not lighten corporation tax to enable it to do that?
I sometimes wonder whether the Government are really in earnest about helping the revival of British industry. Only a short time ago the noble Lord, Lord Young, used to come to the Dispatch Box week in and week out and tell us that the level of manufacturing capacity was irrelevant. What mattered, he said, was the production of wealth, and service industries could take the place of manufactures.
My mind went back to the days when my old colleague at King's, Cambridge, Lord Kaldor, invented his selective employment tax, which your Lordships will remember was designed to drive hairdressers out of business and induce heavy industry to employ them. I am bound to say that I was as sceptical then of hairdressers working in steel mills as I am today of the belief of the noble Lord,

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Lord Young, that American blue-rinse matrons visiting our country will spend as much money in hairdressing salons as would have been earned by selling our manufactured goods in America.
In improving the standard of training, higher education has of course an enormous role to play. Is it yet playing it adequately? At last some universities are following the lead that the noble Lord, Lord Butterworth, set at Warwick University and are introducing courses in management at undergraduate level in subjects such as engineering and economics. Are the Government satisfied that the polytechnics are concentrating totally on vocational training? But conversely are the Government spending enough money on promoting the kind of research that industry needs? It is widely believed that the Government are at present reducing the funds for research. If the Government cannot trust the research councils to spend public money profitably, then let them set up some other agency to do it, but do not put us at a disadvantage to all our competitors.
Then again have the Government considered that one of the disadvantages that British industry faces is its inadequate capacity? It is lack of capacity that so often makes us unable to compete with those on the Continent, and of course with Japan. Industry cannot increase its capacity with interest rates at 15 per cent.
Are the Government really sure that the market alone is the best incentive to force business to become more competitive and to reduce inflation? It is not only the old guard, Left-wing Keynesians who think that some control of credit is needed to reduce our propensity to import more than we export. That powerful speech by the noble Lord, Lord Ezra, this evening dealt with this. Indeed, many of the speeches that were made tonight drove home this point. I hope that the Government will have some new thoughts on the control of credit.
I dare say that the noble Lord the Leader of the House will say that such intervention is against the policy of the Government. I think myself that what the last 50 years have shown is that doctrinaire theory, of whatever political persuasion, always ends in tears. The best Chancellors of the Exchequer are those who juggle with the balls, catching now one, and now the next, as they show signs of coming down, and if one gets out of balance then he reaches forward to throw it up again. The management of the economy of this country is an art and one needs the arcane devices of the necromancer to succeed. There have been some very successful Chancellors of the Exchequer: Lord Butler was one. The noble Lord, Lord Jenkins of Hillhead, was a notably successful juggler and it looked for a time as though Mr. Lawson had the art at his fingertips, but I do not think that he foresaw the credit explosion.
There is one last essential recipe for greater economic success. Let me echo everything that the noble Lord, Lord Bessborough, said earlier this evening. Britain must become a wholehearted partner in the European Community. I cannot tell noble Lords how depressed I was on the second day
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of the debate to hear the noble Viscount, Lord Eccles—I am sorry that he is not in his place at the moment—finding excuses for us to delay and going back again to the idea of an EFTA, a loose body of free trading partners. The noble Viscount is a particular hero of mine. I believe that he was the best Minister of Education since the war. I say that because it was he who—against the advice of his civil servants—insisted on promoting technical education on day release for school-leavers.
However, the noble Viscount belonged to that administration which turned down the proposals of the Messina Conference, the conference which led to the Treaty of Rome. We stood on the sidelines then. We sent an official from the Board of Trade to observe. We are standing on the sidelines now. If we do not join the EMS and act as a willing partner, the City will find that the centre of finance will move irrevocably to Frankfurt. One of our greatest assets, our financial services, which account for so much of our invisible exports, will wither and decay. The price of our remaining on the sidelines will be a body blow to the economy.
The Prime Minister has astonishing virtues. Whatever her opponents say, she is bound to go down in history as one of the three most remarkable prime ministers of this century. She is entirely right in telling us that we have to earn our way in the world. But she could also go down in history as responsible for the second catastrophic refusal of Britain to join the leadership in Europe. We cannot change the Community from the outside. We must work with it and in it. If we remain insular and isolated, the economy of our country will be dealt a blow so severe that it will take a generation for it to recover, if indeed it ever does.
9.3 p.m.
Baroness Seear: My Lords, as I have read and reread the gracious Speech and have listened through four days of debate—not, let me say, to every single speech but to a considerable number—it has come over with increasing force that there is the sharpest contrast between the admirable objectives laid down in the gracious Speech and the means to carry out those objectives described in it.
Again and again one sees that what is desired to be done is highly admirable. Then we look for the way in which it is to be achieved and we wonder however the Government can think that this is an adequate programme. I am sure that through our minds have run those familiar lines from an old hymn, "What I say and what I do in my poor world are always two". That seems to be the motto of this gracious Speech.
Let us look at some of these objectives. I could take many of them but I have picked three major ones. I have asked how, in terms of the Speech, it is intended to achieve them. The gracious Speech states:
"My Government will continue to promote improved relations between East and West—"
no one is likely to disagree with them about that—
"and to work for further progress on human rights".

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When we are attempting to influence other people, example is a fine thing. It would surely have helped if we had found examples in the gracious Speech of attempts to deal with some of the defects in our own system of human rights. What an opportunity it would have been to incorporate the European Convention on Human Rights into the laws of this country as we from these Benches have attempted again and again to do.
Then, how about the human rights of the people of Hong Kong? I see no mention of what is to be done about them in the gracious Speech. Promoting human rights at home in our own policy would surely be a fine way of influencing human rights elsewhere.
However, it is not only to those kinds of human rights that we have to pay attention. As we rejoice in changes that are taking place with dazzling speed in Eastern Europe, and as we see people from the Eastern European countries coming over into the West and gazing with admiration and envy at what they see, are we certain, unless we do more to put our own house in order, that we have so much to offer them that that admiration will hold?
Let us remember how disillusioned that great writer Solzhenitsyn became when he came to know us better and corrected some of the illusions that he had about us in the past. Will people from the Eastern European countries be so greatly impressed when they see men and women, boys and girls sleeping in the cardboard boxes in what is still one of the wealthiest cities in the Western world? Would it not have been most appropriate to incorporate into the gracious Speech some programme for dealing with the great gap that has been growing between the rich and the poor in this country, if only because we want to show that Western capitalism has something to offer other than the goodies in the shops in Berlin and other than the opportunities to take home better drink and better chocolate?
I see nothing in the gracious Speech which is likely to improve those standards and to convince those people of that. After all, they have had a security of a kind and an acceptance of responsibility of a kind, however much one totally deplores the doctrines involved. I and my party have never flirted with those doctrines. But, at the same time, if we want them wholly to collaborate with us, wholly to reject their past and to accept our way of life this is an opportunity to improve that way of life and to give a greater element of conviction to them when they come to see us.
The gracious Speech states that the Government will give:
"encouragement and support to the remarkable changes taking place in Poland, Hungary and now in East Germany".
No one could disagree with that. The gracious Speech further states that the Government:
"will work to ensure that these take place within a stable Europe".
If we really want to ensure that these changes take place within a stable Europe, how are we most likely to be able to ensure that that happens? Will it be by standing outside and hectoring the people in that stable Europe, or will it be by going inside and
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arguing with them when we do not agree with them? It is most unlikely that we should agree about everything. But we should argue from the inside, as a leading member of the Community, and not from the outside. We should not criticise and argue from the outside. The attitude taken by the leadership in the Government reminds me so much of a phrase from a little known minor poet: "Lead kindly light, thank God I am always right. How long, oh Lord, will all the rest be wrong?" I suggest that that is no way to ensure that we incorporate and encourage the developments inside a stable Europe.
This is the greatest opportunity that we have had or are likely to have to take our part inside the Community to shape the world that is coming upon us with such alarming speed with the changes that are taking place in Eastern Europe. It gives us an opportunity that we have been seeking for a long time. In view of the changes that are taking place in the East, the French are far more likely to welcome collaboration with us and to look for it than they have been in the past. We have a political and an economic opportunity. We say that we want a stable Europe. We are one of the great European powers, but are we behaving in a way which will enable us to develop that power and to bring about that stable Europe that we say we wish to see?
I shall now turn to a further objective, and one which we have discussed most today. However, as the noble Lord, Lord Annan, said, all the subjects that have been discussed interrelate. Although the debate is spread over four days it is in fact one debate. The gracious Speech states:
"My Government will continue to pursue firm financial policies designed to reduce inflation and foster the conditions necessary for sustained economic growth".
What do we find in the gracious Speech to encourage us to believe that the Government will bring about what they say? Will they bring about the:
"financial policies designed to reduce inflation and foster the conditions necessary for sustained economic growth"?
Again and again in the debate today and on previous days the point has been made that one of the speediest ways in which not, of course, to cure inflation but to take a real step towards curing it would be to enter the exchange rate mechanism. So many noble Lords have spoken about that matter, that I do not wish to elaborate on it now. However, I support very strongly the point made by my noble friend Lord Ezra when he asked the Government to give a date and to show the people of Europe that they are committed. That, in itself, because of the certainty it would bring, would probably have an immediate effect on the level of inflation. However, one cannot say that it certainly would have such an immediate effect.
I am sure we all agree that reducing the level of inflation is one of the most important things we can do. But how about the sure foundation for economic development? What is there in the gracious Speech which encourages us to think that the Government have policies that will achieve that objective?
I forget whether it was the noble Lord, Lord Coleraine, who talked about the importance of encouraging personal saving. He was not alone in

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doing so. One of the absurdities of our present arrangements is that we have grossly distorted the incentives for saving and directed them into particular areas, areas which are not necessarily those to which they should be directed. We give great encouragement to people to put their money into houses and into pensions. We do not give anything like comparable encouragement to other forms of saving. Yet surely that is not too difficult. The Institute for Fiscal Studies has suggested ways in which it could be done—ways of achieving what it is now so fashionable to call a level playing field for different types of saving.
There cannot be a very strong economic argument for favouring one or two types of saving against all others. If we want to revive and to develop the habit of saving which we once had, surely we should look at every aspect of the way in which we encourage people to use such surplus money as they have and direct it into one kind of saving or another. That should be examined very carefully. Yet there is nothing in the gracious Speech which suggests that we shall look at different ways of encouraging saving and making sure that saving becomes a habit in this country.
If we want a really good economic future we need to develop a system of industrial relations which will work effectively under conditions of full employment. That will be far more important if we return to full employment, and we are seeing the need for it already. The Government have relied on unemployment for peace in industry. In areas of the country to which full employment has returned we are already seeing the old problems of pressure on wages and possible strike action returning. What is there in the gracious Speech to lead us to suppose that the Government have any plans for creating a system of industrial relations which will work on a sustainable basis?
The only mention of industrial relations in the gracious Speech is the suggestion that there will be further trade union legislation of a hostile kind. The only speaker who raised the issue was the noble Lord, Lord Irvine of Lairg. But it is of the greatest importance. We on these Benches encouraged and continue to support some of the earlier reforms of trade union law which the Government introduced. They were overdue and necessary; they have been valuable. Now we want to move in the direction of encouraging responsible trade unionism with which we can work and continue to work, as in Germany they have encouraged trade unionism which has helped to develop, not hinder the economy. Further legislation would put that back. We had a great opportunity to take a step in the right direction. There is nothing here.
As other noble Lords have said, another big gap in the Speech concerns training and education. We still do not realise how far behind our competitors we are. I have made speeches about training with boring frequency in your Lordships' House. Yet, knowing that we are short of labour, knowing that we are under-trained in relation to our competitors, what do we have in the gracious Speech? Nothing, except reliance on the new training and enterprise
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councils, the very people who in the past have failed to train.
In legislation which has just passed through your Lordships' House we have made it more difficult, not easier, to give training to the 16 to 18 year-olds. That is the age group which it is vital should be of primary concern to people training and developing skills and knowledge. Yet, although our competitors do so much in the form of training for that age group, we in our employment legislation have said that those youngsters will now be free to work any hours, any shifts, including night shift. Does that reflect an appreciation of the importance of training for that group? There is nothing in the gracious Speech to suggest that we shall take any action whatsoever beyond leaving it entirely to the training enterprise councils to develop the kind of skilled labour force that we so urgently need.
As if that was not enough, we need a major expansion of the number of people with higher education. That is not necessarily higher education of the academic kind. The Government have been told that by people who have the greatest knowledge of that area. The Council for Higher Education in Industry, which includes some of the best known industrial names in the country, has recommended that there should be such an expansion.
What do the Government do? They introduce in the gracious Speech the idea of loans for people going into higher education. I accept that there is a case for saying that people who move into extremely well paid jobs and earn far more than the taxpayer who has supported them through their university training should make some return for what they have received. But to introduce loans before people go into higher education is to discourage the very people whom we need if we are to achieve the required expansion.
If one asks any sixth form master or anyone close to youngsters, he or she will say that it is already well known that the under-represented groups in higher education are women and children from the working classes. The position of women has improved, but it is still not as good as it should be. There is no doubt that loans will discourage both those groups. Quite apart from the opportunities for youngsters—the human side of the issue—it is a gross waste of the ability that we need to tap. Yet loans for youngsters going into higher education are the only contribution to the badly needed expansion of that sector that we find in the gracious Speech.
This year, 1989, will go down in history with 1848, 1789 and 1688 as one of the great years of European history. It presents us with challenges and opportunities such as we have not faced since 1939: what an inadequate response to those challenges and opportunities!
9.22 p.m.
Lord Bruce of Donington: My Lords, this has been a long and interesting debate. The House will be relieved to know that I do not intend to go over the ground that has already been covered so very admirably by my noble friend Lord Williams of Elvel. After he had spoken on the question of the

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adverse balance of trade and the position of manufacturing industry, there was little more to be said. I admired the way in which my noble friend let down the Government so lightly. They hardly wilted at all.
However, I detected in the course of the debate a degree of consensus in the House which I had not sensed in this last 10 years. There were the usual ritual obeisances to the party line by the noble Lords behind the Government Front Bench, but hardly one of them had a substantially good word to say for the way in which government policies have developed. They praised the Government for their political perspicacity and then searched their own brains for some detail in order to support their general sentiment. Alas, they could not find anything. I noted particularly that in the latter constructive part of his speech the noble Lord, Lord Coleraine, put forward substantial portions of my own party's policy towards manufacturing industry. It is a little early at this stage to ask him to send an application form for membership down to Walworth Road, but he might at least have a word with his noble friend Lord Rees.
In the earlier part of the debate, I was sorry to hear the noble Earl, Lord Caithness, begin his remarks with the accusation that his Government had been left a bankrupt country by the Labour Government which left office in 1979. I should not have minded that so much except that in his speech winding up the debate on the Finance Bill I thought that the noble Earl referred rather sneeringly—I do not use too derogatory a term because the noble Earl has a very considerable amount of personal charm which we all appreciate—to the fact that the last Labour Government went cap in hand to the International Monetary Fund. That was something that he deplored and thought entirely reprehensible.
I do not want to tread on too many corns but a certain myth must be exposed and I should like it done once and for all. The fact of the matter is that in the years 1976 and 1977 officials in the Treasury overestimated the public sector borrowing requirement by £4 billion in 1976 and £3 billion in 1977. Those figures were communicated officially I suppose to the IMF. In point of fact it was not at all necessary to go to the IMF.
In fact what happened was that the then Labour Government took only one half of the facility to which they were entitled and the whole of it was repaid before that government went out of office in 1979. I put that matter quite plainly and shall tell the House to what it is preferable. I use very measured terms which are meant very seriously. I suggest that that course of action was more honourable and more proper than running to the Sultan of Brunei in January and February 1985, as a result of which 5 billion dollars passed across the exchanges in support of the pound, followed in some mysterious circumstances by unusual permission to acquire Harrods being given to the person holding the power of attorney for the Sultan of Brunei. I say that going to the IMF was possibly a little preferable to that.
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If the noble Lord objects to what I have said I suggest that when he comes to reply he tells the whole House when he proposes to publish the DTI report into the whole matter. That demand comes from not only our side of the House but many quarters, including from behind the noble Lord. Should he deny the truth of what I have said or the inference that I have derived from it, perhaps he will tell the House when the DTI will be permitted to publish the inspector's report into the whole affair. I warn the noble Lord that we shall return to this matter.
Having said that, I come to the debate proper.
Lord Hailsham of Saint Marylebone: Hear, hear!
Lord Bruce of Donington: I am glad, my Lords, that my intention has the approval of the noble and learned Lord. I trust that I shall not disappoint him. The fact of the matter is that there is already a wide consensus in the House as to what is wrong with the economy. That has been a thread running through practically all the speeches.
It is a fact that the operation of free market forces has not worked for the benefit of the United Kingdom. It simply has not done so. It has led to short-termism and to a flurry of financial activity purely to make money out of money across the exchanges. Noble Lords know perfectly well that 40 times the amount that is necessary for the purposes of normal commercial or trading transactions crosses the exchange daily. Money is being made out of money. That has produced a situation in which it is more profitable to indulge in short-termism by the buying and selling of whole companies at a profit or loss than to invest in manufacturing industry.
I shall inflict only the following figures on noble Lords. Compared with 3.3 per cent. of the GDP being devoted to manufacturing investment in 1979, the figure is now down to below 2.5 per cent. and has gone far lower in the intervening years. There has to be an organised policy of investment in British industry. I do not say anything that is particularly revolutionary. It was stated in the coalition White Paper of 1944 that where private industry or the banks do not invest in manufacturing industry it is a proper function of the state to enter into that enterprise. That is exactly what we propose to do through the various agencies that we have proposed. There is nothing revolutionary about it; it was in the Government's White Paper on full employment in 1944.
Combined with a more far-reaching endeavour to promote research and development, education, science and the various adjuncts that are so desperately required by industry, these are some of the immediate steps that should be taken. Unfortunately they will take a long time because matters have gone too far.
However, this country can prepare itself for such action by British society adopting a new attitude on the British economy. It must be clear to most people by now that the days of confrontation are over and that the only way in which we shall promote a truly British enterprise is by the most urgent co-operation

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between those who have the capital facilties and those who provide the labour and managerial skills. It is no coincidence—as the report of the Select Committee published over a fortnight ago indicated—that the Japanese, who run their affairs on the basis of achieving a consensus between government, capital, the trade unions and people generally, can achieve three times the rate of growth achieved in the United Kingdom. That is not, as it was stigmatized in the debate, a return to obsolete corporatism. It is the beginnings of democracy, because democracy is the collective control of power. We have to struggle towards it in exactly the same way as the Eastern states are struggling at the present time. The Eastern states are struggling and succeeding in throwing off the dictatorship of the apparatchiks.
The rest of the world sooner or later has to emancipate itself from the virtually uninterrupted control of capital. There must be a compromise. I regret that this Government have not shown much ability or inclination to proceed even vaguely in that direction. Indeed, their philosophy as a whole was adequately summed up by the new Chancellor of the Exchequer shortly after his appointment. It should be adopted by the Conservative Party as a perfect and brief description of what it believes in. The new Chancellor said, "If it isn't hurting it isn't working". That is exactly what Toryism means: if it is not hurting it is not working.
However, Toryism is selective in who it hurts. It does not hurt the very rich or the very powerful. Perhaps sometimes unconsciously, but sometimes deliberately and wickedly, it hurts the underprivileged; the poor; the homeless; those on low incomes; the disadvantaged; and the sick and disabled. Always it is those in the lower income groups who are hurt during the conduct of its policy. Nor is there any reason to suppose that, in or out of the European Community and in closer or less close co-operation, we should be any better.
Like other noble Lords, I sometimes become a little weary when this country is accused of standing on the fringes of Europe; or of looking from an offside position; or of being out of the mainstream of Europe. What nonsense! Of course, there is already a two-tier group: those countries which pay and those which receive. Britain and Germany are those which pay; the remaining countries are those which receive. Those who were supercritical—including, regretfully, some of our Members—should tell those who criticise us from the international quango in
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Brussels for lagging behind that other countries would be well advised to put their money where their mouths are. I am thinking not only of France—the balance is even—but particularly of Spain and Italy, which are net recipients. How dare those people accuse Britain of not fulfilling the obligation that it made under the treaty? It has fulfilled them, and in fact overfulfilled them.
I was a little surprised to hear that those who believe in greater integration beyond joining the exchange rate mechanism did not lay down the fact that certain conditions must be fulfilled if Britain is to continue to finance the Community on this scale; also if it is to continue to endure the disadvantages of a common agricultural policy which over the past 15 years has been the biggest public scandal and even now involves a loss in fraud of at least £2 billion per year about which at one time the Commission did not appear to be interested.
We on this side of the House represent a party whose government originally participated in the European monetary system. That was in March 1949 when my noble friend was Prime Minister.
Noble Lords: In 1979.
Lord Bruce of Donington: My Lords, it was open at any time for successive Tory Governments to take the next step to join the exchange rate mechanism. I believe that we were wise in laying down certain conditions. I must apologise because occasionally I make mistakes, and I trust that I am not entirely alone in doing so.
Noble Lords: Hear, hear!
Lord Bruce of Donington: My Lords, this has been a very long and interesting debate and I have no desire to detain your Lordships any longer. This much I hope: that we may learn from it eventually. There is something to be learnt and something to be understood thoroughly from that growing degree of consensus which I have detected here this afternoon that something is vitally wrong and needs to be changed. After all, we are living in a time of change in which values are being upset all over Europe and new and unexpected events are taking place—and I hope to the world's advantage.
It will be a poor thing if we in this House, on whatever side we sit, cannot really begin to think again and perhaps question whether the values which have attracted us instinctively and to which we have stuck so zealously are necessarily the right values for the future of our country.
9.41 p.m.
The Lord Privy Seal (Lord Belstead): My Lords, I have listened, as I always do, with interest to the speech of the noble Lord, Lord Bruce of Donington. However, I confess that I did not detect much reference in his speech to what I believe is the main thrust of the gracious Speech; namely, the proposals for legislation which I truly believe will be important for the quality of life of individual people. Thus it is that during this Session the Government are introducing Bills to control pollution, to strengthen food safety, to combat drug trafficking, to improve the National Health Service and to give a wider choice of broadcast services.
Whenever government or opposition put forward policies it always seems that the reaction of most people is the practical but rather inelegant demand that a politician should put his money where his mouth is. So I certainly attach importance, although I am not entirely sure that noble Lords on the Front Bench opposite did, to the fact that my right honourable friend the Chancellor of the Exchequer, in his Autumn Statement on 15th November, announced plans for more, indeed, much more, spending on important priority areas. Nonetheless, I emphasise that the Government are committed to firm control of public expenditure. This year's Autumn Statement shows exactly the same ratio of public spending to national income for next year and the year after as the 1988 Autumn Statement showed for those years when that Statement was published a year ago.
The present plans imply a continuing decline in the ratio of spending to national income to a level in 1992–93 which will be lower than in any year since 1965–66, a period of 27 years. However, within the totals there will be room for substantial growth in priority areas. The National Health Service for next year will have over £2·5 billion more in total resources, an increase of 5·5 per cent. in real terms, which will provide funds for the National Health Service review and continuing growth in patient services.
The plans also include over £500 million for the substantial measures introduced last month which will help nearly 3 million pensioners. A wide range of further improvements are being made next year to help less well off families and disabled people and £3 billion more will be spent on social security next year compared to this.
The Government's plans imply an increase in capital investment between this year and next of around 10 per cent., giving substantial increases for investment on roads, my noble friend Lord Massereene and Ferrard will be glad to hear, on railways, hospitals and housing. A new initiative costing £250 million over the next two years has been introduced to assist local authorities and housing associations to tackle homelessness. The capital programme of the Housing Corporation will more than double from £800 million to over £1,700 million in the next three years.
Five hundred million pounds more is to go to higher education next year which will continue the
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growth in student numbers which are now, I am glad to be able to say, at a record level, having risen by 30 per cent. in the past 10 years. There is a wide range of measures for environmental research and protection. We are doubling our contribution to the United Nations environment programmes. There is money for a new climate change centre and £100 million for aid to tropical forestry initiatives.
Those are just some examples from a formidable programme of spending. I was therefore surprised, to put it mildly, that the Opposition's amendment moved by the noble Lord, Lord Williams of Elvel, at the beginning of our debate, regrets the Government's failure to propose measures to generate resources to secure lasting improvement in the quality of life.
It is fair to say that the burden of most of the speeches from noble Lords on the Benches opposite has been that, whatever the Government are doing, more and more public expenditure is needed. However, I did not hear very much hint from the Opposition about how the Labour Party intends to pay for its promises. In view of the wording of the amendment I assume that the Labour Party's industrial strategy is the key. A strategy spelled out in another place was referred to in much the same terms by the noble Lord, Lord Williams, and again referred to by the noble Lord, Lord Bruce, in winding up. This strategy, it seems to me, would, in its turn, rely on more and more public expenditure.
The last Labour Government had an industrial strategy; yet manufacturing investment was no higher in real terms when the Labour Government of the 1970s left office than when they entered office. Manufacturing output actually fell. By contrast, this year manufacturing industry in the United Kingdom is more profitable than it has been for 20 years. Since 1980 manufacturing productivity has grown by more than 50 per cent.; a higher rate than any other main manufacturing country. Output has also reached new record levels this year. But, yes, I agree with my noble friend Lord Caldecote that we need continued growth in output by manufacturing industry. My noble friend made a powerful, though brief, case on that point.
In that context I take comfort from the fact that investment, at a difficult time, is now at an all time high and on the latest figures is continuing to increase. Those are some facts about the manufacturing base to which the Opposition amendment specifically refers.
My noble friend Lord Caldecote also asked if the Government would do everything possible to strengthen manufacturing industry consistent with bringing down inflation. I give an assurance to my noble friend that we will continue with those policies which have provided a framework for the very considerable recovery of British manufacturing during the 1980s. Most of the credit for this, of course, belongs to industry itself. But it can be claimed—and I do claim—that it has been made possible by government policies. After all, industry needed incentives to be restored, controls to be lifted and industrial relations reforms to be made, a point

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which the noble Lord, Lord Hankey, brought out in his speech. In addition, today we find rates of tax in industry and commerce among the lowest in the industrialised world. And, of course, we have removed the burden of widespread nationalisation.
I put it to the Opposition that if their concern for the manufacturing base mentioned in their amendment is more than rhetoric, then their amendment should endorse those policies.
A great deal was said about Ministers not facing the fact that the deficit is not as it ought to be. I stand here at the Box and say quite clearly to the noble Lord, Lord Diamond, to my noble friend Lord Caldecote, and to other noble Lords that the trade deficit is too high. However, before noble Lords become too happy about that let me briefly remind them how that has occurred. While it has been occurring manufacturing output and the volume of manufactured exports has continued to grow. Our share in the volume of world trade in manufactured goods is increasing this year. That is not the performance of an inadequate manufacturing base, which is the basis of the Opposition's amendment now before the House.
I maintain that the causes of the deficit lie elsewhere. The rise in the manufacturing trade deficit reflects very strong growth in domestic demand, which has sucked in imports, but only one-quarter of manufactured imports are consumer goods; the rest are either for production or investment. My noble friend Lord Rees was absolutely right in saying that the rapid increase in investment over the past two years will help to reduce the deficit in the future as new capacity comes on stream.
Therefore, the Government's main concern—and I think it is right that it should be—is the inflationary pressures which give rise to the deficit. That is why our main priority is to get inflation down. At 7·3 per cent. inflation is in fact lower than the best that the Labour Government managed to achieve during the 1970s; but it is much too high and we must stick to a tight monetary policy in order to expect to see a reduction in the inflation rate next year.
I therefore oppose the amendment tabled by the noble Lord, Lord Williams, because I believe that it does not—and I am not being complacent in saying this—in any way give due credit to the performance of British industry. Incidentally, it makes no mention at all of one of the benefits of what has been going on in this country, which my noble friend Lord Boyd-Carpenter brought out in his speech; namely, the great recovery in employment that we have seen throughout this decade. I believe that the amendment is unjust in the reference that it makes to resources needed for the quality of life in view of the Autumn Statement which, with great respect to the noble Lord, he hardly mentioned. Perhaps most of all I cannot support the amendment because I am yet to be convinced that the Opposition are determined about defeating inflation.
I regret that I cannot this evening answer all the questions put by noble Lords because there is not
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time; not least the interesting speech by my noble friend Lord Coleraine on housing matters and the very interesting speech which my noble friend Lord Mountevans made about duty free shopping with the Community, or indeed the plans of my noble friend Lord Onslow about further restructuring the tax system.
However, I shall try to answer one or two questions as quickly as I can. My noble friend Lord Bessborough made a point about his concern, gleaned particularly from a television programme, about United Kingdom performance compared with that of other European Community countries. I am happy to be able to say to my noble friend that I have to hand information on growth in gross domestic product and output per worker in manufacturing which shows that the United Kingdom's performance was better during the 1980s than that of other European Community countries. Of course, in regard to employment, the increased 2·75 million jobs during the past six years has been by far the best performance of any Community country.
My noble friend Lord Caldecote and the noble Lord, Lord Dormand of Easington, asked about civil research and development budgets. I should like to say that the United Kingdom government-funded civil R&D, as a proportion of national output, is in fact higher than it is in the United States. My information is that an additional £60 million was allocated to the science budget this year, which is up 8 per cent. on last year, and the science budget is now at its highest ever level—up 27 per cent. in real terms on 1979.
My noble friend Lord Caldecote and the noble Lord, Lord Taylor of Gryfe, asked about the ECGD review. The noble Lord, Lord Taylor, in particular asked for an assurance that industry would not be disadvantaged thereby. The Kemp Report on the future of the ECGD was published in June and, as I am sure the noble Lord knows, it recommended that the project group should retain its separate departmental status. We are now considering the report and no decisions have yet been taken. All I can do this evening is give an assurance to the noble Lord opposite and to my noble friend that I shall most certainly draw to the attention of my noble friend the points made by most noble Lords in this debate.
The noble Lord, Lord Blease, has done so much in the past for the economy in Northern Ireland. Nonetheless, he was critical about arrangements which were made for the training of 16 to 18 year-olds in the depressed regions. Both the noble Lord, Lord Dormand, and the noble Baroness, Lady Seear, also mentioned that age group. My right honourable friend the Secretary of State for Employment announced at the CBI conference on 21st November a new youth training programme from April 1990 which will have two very important main objectives. Every young person up to and including the age of 18 in future should either be in full-time education or in a job with training and by 1995 every young person by the age of 18 should have an opportunity to obtain vocational qualifications equivalent to five of the old-fashioned O-levels.

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The noble Lord, Lord Taylor, complained about the treatment which the regions of the United Kingdom receive. That was also implicit in some of what the noble Lord, Lord Blease, said. I thought that my noble friend Lady Carnegy of Lour was absolutely right to point out that public spending in Scotland is really quite good. Spending is higher in Scotland, Wales and Northern Ireland than in England. Examples of the high level of public services provided in Scotland, Wales and Northern Ireland include such things as more roads, more hospitals per head of population and more educational spending per pupil.
I know that we now wish to reach a conclusion and I want briefly to refer to one or two other matters. We have a very important second amendment on the Order Paper in the name of the noble Lord, Lord Jenkins of Hillhead. At the start of today's debate the noble Lord, Lord Jenkins, the noble Lord, Lord Williams, and my noble friend Lord Rees expressed their interest in joining the exchange rate mechanism. However, my noble friend Lord Rees expressed the hope that we would not look on joining as a panacea.
I believe that my noble friend Lord Bessborough was absolutely right in saying that the timing is very important. I repeat that the Government have made clear that the United Kingdom will join the exchange rate mechanism when our level of inflation is significantly lower; when the objectives of stage 1 of the Delors Report have been achieved; namely, capital liberalisation, the freedom of financial services and the strengthening of competition policy besides real progress towards the completion of the single market.
Nowhere is our full participation in the EC demonstrated more clearly than in the single market programme. We have played an active and positive role in negotiating and implementing single market measures—over half of which are now happily in place—for completing the process and successfully building a single internal market in Europe which is, I absolutely agree, crucial. I also agree with my noble friend Lord Oxfuird that we should be proud that we have played our part in helping to frame Community directives on financial services; in negotiations as regards merger controls, and achieving key provisions in the second banking directive. In addition, the United Kingdom is at the forefront in implementing single market measures.
We have striven to ensure that as barriers have come down in Europe new ones do not go up. I say to the noble Baroness, Lady Seear, that we have done that from inside by negotiating with our partners in the Community. Meanwhile we are fully committed across a whole range of the Community's activities. On environmental matters the Prime Minister has given a clear lead in promoting global awareness and co-operation. We have been instrumental in bringing the Community's finances under control and in securing essential reforms in the common agricultural policy. Spurred on by your Lordships' Select Committee we have played an important part in ensuring that the problem of fraud against the budget is faced up to in the Community.
410
However, there is more to participating in the Community than that. At a time of the most dramatic changes in Eastern Europe, the political dimension of the EC is important as never before. In Britain we have always strongly supported the development of political co-operation in the Community, in order to give Europe the authority of having a united voice on a wide range of issues. But that authority requires a firm foundation; and for Europe, that foundation is the economic advantage of a single market.
Meanwhile, the gracious Speech reaffirms Britain's commitment to progressive realisation of economic and monetary union. In the United Kingdom's paper An Evolutionary Approach we set out our belief about the best way to achieve a practical monetary union without stripping away the parliamentary powers of member states. How right was my noble friend Lord Boyd-Carpenter to say that the amendment of the noble Lord, Lord Jenkins, strikes at the very heart of the running of a modern state, which would also inevitably be the effect of stages two and three of the Delors Report, with its permanently fixed exchange rates, a single Community currency, binding central rules on national budget policies and a system of central banks with sole responsibility for monetary and exchange rate policy throughout the Community. Yet it is that approach which is favoured by the amendment in the name of the noble Lord, Lord Jenkins of Hillhead.
On the afternoon of the State Opening my noble friend Lord Holderness, in moving the humble Address, recalled his enthusiasm when we joined the European Community and expressed his pride in the contribution that our country has subsequently made. My noble friend continued:
"If, as I suspect, most of us prefer to look forward to a closer partnership of nations rather than a federal Europe, if many of us look with apprehension on the later stages of the Delors proposals, and if we see great flaws in the social charter, then we have not only the right but the compelling duty to say so. There is more than one way forward in Europe, and I am anxious that my country should help to lead our European partners along the right one".—[Official Report, 21/11/89; col. 6.]
Those were wise words, but they are words which are not reflected in the amendment of the noble Lord, Lord Jenkins, which clearly aligns itself with the approach of stages two and three of the Delors Report, an approach which was emphatically rejected in another place in the debate on 2nd November. Accordingly this evening I ask your Lordships to disagree with the amendment in the name of the noble Lord, Lord Jenkins of Hillhead, as well as with the amendment in the name of the noble Lord, Lord Williams of Elvel, and so approve the humble Address in response to tier Majesty's gracious Speech.
10.3 p.m.
Lord Williams of Elvel: My Lords, I shall, as is customary, be very brief. I have only two points to make. The noble Lord the Leader of the House accused me of not paying attention to the Autumn Statement. I did not realise that we were debating

411
the Autumn Statement. I thought that we were debating the gracious Speech. If the noble Lord wants me to debate the Autumn Statement, I shall simply make one point. In the Autumn Statement real spending is not allowed to increase significantly; the increase in cash spending will be eaten up by inflation.
With regard to the manufacturing base, I mentioned in my opening speech that there was a stronger Conservative philosophy. I shall quote from yesterday's Independent an article entitled Hidden "Manifestos" of Contenders for the Conservative Succession. I shall quote from the report of a speech made by Sir Geoffrey Howe, the Deputy Prime Minister, on the fringes of this year's Conservative Party Conference:
"His friends were not surprised when he used the Blackpool conference fringe to cite the example of the Welsh and Scottish development agencies as models of the way in which inward manufacturing investment could be generated. What surprised many, however, was his statement that 'a strong manufacturing base' was required to overcome the current trade deficit: 'Manufacturing must be seen to matter'".
I shall press my amendment to a Division. I ask noble Lords opposite to vote for their own Deputy Prime Minister, who was, after all, saying exactly what we on these Benches are saying. That is the strong philosophy of a Conservative Government. That is where it should be.
10.5 p.m.
On Question, Whether the amendment (moved by Lord Williams of Elvel) shall be agreed to?
Their Lordships divided: Contents, 83; Not-Contents 135.

DIVISION NO. 1

CONTENTS

Airedale, L.

Graham of Edmonton, L. [Teller.]

Avebury, L.

Blease, L.

Grey, E.

Bonham-Carter, L.

Grimond, L.

Boston of Faversham, L.

Hampton, L.

Bruce of Donington, L.

Harris of Greenwich, L.

Buckmaster, V.

Hatch of Lusby, L.

Callaghan of Cardiff, L.

Houghton of Sowerby, L.

Carmichael of Kelvingrove, L.

Hunt, L.

Carter, L.

Irvine of Lairg, L.

Cledwyn of Penrhos, L.

Irving of Dartford, L.

Cobbold, L.

Jenkins of Hillhead, L.

Cocks of Hartcliffe, L.

Jenkins of Putney, L.

David, B.

John-Mackie, L.

Dean of Beswick, L.

Kennet, L.

Diamond, L.

Kirkhill, L.

Donaldson of Kingsbridge, L.

Llewelyn-Davies of Hastoe, B.

Donoughue, L.

Lockwood, B.

Dormand of Easington, L.

Longford, E.

Ennals, L.

Lovell-Davies, L.

Ewart-Biggs, B.

McIntosh of Haringey, L.

Ezra, L.

Mackie of Benshie, L.

Falkender, B.

Meston, L.

Falkland, V.

Millner of Leeds, L.

Foot, L.

Mulley, L.

Gallacher, L.

Nicol, B.

Galpern, L.

Northfield, L.

412

Ogmore, L.

Simon, V.

Oram, L.

Stedman, B.

Perry of Walton, L.

Stoddart of Swindon, L.

Pitt of Hampstead, L.

Taylor of Blackburn, L.

Ponsonby of Shulbrede, L. [Teller.]

Taylor of Gryfe, L.

Thomson of Monifieth, L.

Prys-Davies, L.

Tordoff, L.

Raglan, L.

Turner of Camden, B.

Robson of Kiddington, B.

Underhill, L.

Rochester, L.

Walston, L.

Ross of Newport, L.

Whaddon, L.

Russell, E.

White, B.

Seear, B.

Williams of Elvel, L.

Sefton of Garston, L.

Winchilsea and Nottingham, E.

Serota, B.

Shackleton, L.

Winstanley, L.

NOT-CONTENTS

Aberconway, L.

Hailsham of Saint Marylebone, L.

Abinger, L.

Allenby of Megiddo, V.

Hankey, L.

Arran, E.

Harmar-Nicholls, L.

Astor of Hever, L.

Harvington, L.

Barber, L.

Havers, L.

Beaverbrook, L.

Hemphill, L.

Belhaven and Stenton, L.

Henley, L.

Beloff, L.

Hesketh, L.

Belstead, L.

Hives, L.

Bessborough, E.

Holderness, L.

Birdwood, L.

Hooper, B.

Blake, L.

Jenkin of Roding, L.

Blatch, B.

Johnston of Rockport, L.

Boardman, L.

Joseph, L.

Borthwick, L.

Lauderdale, E.

Boyd-Carpenter, L.

Lindsey and Abingdon, E.

Brabazon of Tara, L.

Long, V.

Braye, B.

Lothian, M.

Brentford, V.

Lucas of Chilworth, L.

Brookeborough, V.

McColl of Dulwich, L.

Brougham and Vaux, L.

Mackay of Clashfern, L.

Butterworth, L.

Malmesbury, E.

Caithness, E.

Margadale, L.

Caldecote, V.

Marley, L.

Campbell of Croy, L.

Marshall of Leeds, L.

Carnegy of Lour, B.

Massereene and Ferrard, V.

Carnock, L.

Merrivale, L.

Carr of Hadley, L.

Mersey, V.

Clanwilliam, E.

Monk Bretton, L.

Coleraine, L.

Mottistone, L.

Colnbrook, L.

Mountevans, L.

Colwyn, L.

Norfolk, D.

Cork and Orrery, E.

Nugent of Guildford, L.

Cowley, E.

Onslow, E.

Craigmyle, L.

Oppenheim-Barnes, B.

Cullen of Ashbourne, L.

Orkney, E.

Davidson, V. [Teller.]

Oxfuird, V.

Denham, L. [Teller.]

Pender, L.

Dilhorne, V.

Penrhyn, L.

Dormer, L.

Pym, L.

Downshire, M.

Quinton, L.

Eccles, V.

Rankeillour, L.

Eden of Winton, L.

Reay, L.

Ellenborough, L.

Rees, L.

Elles, B.

Reigate, L.

Elliot of Harwood, B.

Renton, L.

Elliott of Morpeth, L.

Renwick, L.

Elton, L.

Rochdale, V.

Faithfull, B.

Rodney, L.

Ferrers, E.

St. John of Fawsley, L.

Forbes, L.

Saltoun of Abernethy, Ly.

Fraser of Carmyllie, L.

Savile, L.

Gibson-Watt, L.

Seebohm, L.

Glenarthur, L.

Selborne, E.

Goold, L.

Selkirk, E.

Gray of Contin, L.

Sharples, B.

Greenway, L.

Sidmouth, V.

Gridley, L.

Skelmersdale, L.

Grimston of Westbury, L.

Stodart of Leaston, L.

413

Strange, B.

Trumpington, B.

Strathcarron, L.

Ullswater, V.

Strathclyde, L.

Vaux of Harrowden, L.

Strathmore and Kinghorne, E.

Vinson, L.

Teviot, L.

Wedgwood, L.

Thomas of Gwydir, L.

Whitelaw, V.

Tranmire, L.

Wise, L.

Trefgarne, L.

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
10.14 p.m.
Lord Jenkins of Hillhead: My Lords, I beg to move at the end of the Address to insert: "but call on Your Majesty's Government to recognise how illusory are the benefits of economic sovereignty in an integrated world, and urge that at this moment of flux and opportunity they should maximise British influence through full participation in all the activities of the European Community".
Although the rejection by the noble Lord, Lord Belstead, of economic and monetary union on any terms which might enable us to move forward with others tempts me to comment, I nonetheless judge that expedition would be more appreciated than argument at this time. I therefore propose that we proceed immediately to a Division.
On Question, Whether the amendment (moved by the Lord Jenkins of Hillhead) shall be agreed to?
Their Lordships divided: Contents, 71; Not-Contents, 132.

DIVISION NO.2

CONTENTS

Airedale, L.

Lovell-Davis, L.

Annan, L.

McIntosh of Haringey, L.

Avebury, L.

Mackie of Benshie, L.

Blease, L.

Meston, L.

Bonham-Carter, L.

Milner of Leeds, L.

Buckmaster, V.

Mulley, L.

Callaghan of Cardiff, L.

Nicol, B.

Carmichael of Kelvingrove, L.

Ogmore, L.

Carter, L.

Oram, L.

Cledwyn of Penrhos, L.

Perry of Walton, L.

Cobbold, L.

Pitt of Hampstead, L.

David, B.

Ponsonby of Shulbrede, L.

Dean of Bewick, L.

Prys-Davies, L.

Diamond, L.

Raglan, L.

Donaldson of Kingsbridge, L.

Rea, L.

Donoughue, L.

Robson of Kiddington, B.

Ennals, L.

Rochester, L.

Ewart-Biggs, B.

Ross of Newport, L.

Ezra, L.

Russell, E.

Falkender, B.

Seear, B.

Falkland, V. [Teller.]

Sefton of Garston, L.

Foot, L.

Shackleton, L.

Gallacher, L.

Simon, V.

Galpern, L.

Stedman, B.

Graham of Edmonton, L.

Taylor of Blackburn, L.

Gray, E.

Thomson of Monifieth, L.

Grimond, L.

Tordoff, L. [Teller.]

Hampton, L.

Turner of Camden, B.

Harris of Greenwich, L.

Underhill, L.

Hunt, L.

Walston, L.

Irvine of Lairg, L.

Whaddon, L.

Irving of Dartford, L.

White, B.

Jenkins of Hillhead, L.

Williams of Elvel, L.

Kennet, L.

Winchilsea and Nottingham, E.

Lockwood, B.

Winstanley, L.

Longford, E.

414

NOT CONTENTS

Aberconway, L.

Hesketh, L.

Abinger, L.

Hives, L.

Allenby of Megiddo, V.

Holderness, L.

Arran, E.

Hooper, B.

Astor of Hever, L.

Jenkin of Roding, L.

Barber, L.

Johnston of Rockport, L.

Beaverbrook, L.

Joseph, L.

Belhaven and Stenton, L.

Lauderdale, E.

Beloff, L.

Lindsey and Abingdon, E.

Belstead, L.

Long, V.

Bessborough, E.

Lothian, M.

Birdwood, L.

Lucas of Chilworth, L.

Blake, L.

McColl of Dulwich, L.

Blatch, B.

Mackay of Clashfern, L.

Boardman, L.

Malmesbury, E.

Borthwick, L.

Margadale, L.

Boyd-Carpenter, L.

Marley, L.

Brabazon of Tara, L.

Marshall of Leeds, L.

Braye, B.

Massereene and Ferrard, V.

Brentford, V.

Merrivale, L.

Brookeborough, V.

Mersey, V.

Brougham and Vaux, L.

Monson, L.

Butterworth, L.

Mottistone, L.

Caithness, E.

Mountevans, L.

Caldecote, V.

Nugent of Guildford, L.

Campbell of Croy, L.

Onslow, E.

Carnegy of Lour, B.

Oppenheim-Barnes, B.

Carnock, L.

Oxfuird, V.

Carr of Hadley, L.

Pender, L.

Clanwilliam, E.

Penrhyn, L.

Cocks of Hartcliffe, L.

Pym, L.

Coleraine, L.

Quinton, L.

Colnbrook, L.

Rankeillour, L.

Colwyn, L.

Reay, L.

Cork and Orrery, E.

Rees, L.

Cowley, E.

Reigate, L.

Craigmyle, L.

Renton, L.

Cullen of Ashbourne, L.

Renwick, L.

Davidson, V. [Teller.]

Rochdale, V.

Denham, L. [Teller.]

Rodney, L.

Dilhorne, V.

Saltoun of Abernethy, Ly.

Dormer, L.

Savile, L.

Downshire, M.

Seebohm, L.

Eccles, V.

Selborne, E.

Eden of Winton, L.

Selkirk, E.

Ellenborough, L.

Sharples, B.

Elles, B.

Sidmouth, V.

Elliot of Harwood, B.

Skelmersdale, L.

Elliott of Morpeth, L.

Stodart of Leaston, L.

Elton, L.

Stoddart of Swindon, L.

Faithfull, B.

Strange, B.

Ferrers, E.

Strathcarron, L.

Forbes, L.

Strathclyde, L.

Fraser of Carmyllie, L.

Strathmore and Kinghorne, E.

Gibson-Watt, L.

Teviot, L.

Glenarthur, L.

Thomas of Gwydir, L.

Goold, L.

Tranmire, L.

Greenway, L.

Trefgarne, L.

Gridley, L.

Trumpington, B.

Grimston of Westbury, L.

Ullswater, V.

Hailsham of Saint Marylebone, L.

Vaux of Harrowden, L.

Vinson, L.

Harmar-Nicholls, L.

Wedgwood, L.

Harvington, L.

Whitelaw, V.

Havers, L.

Wise, L.

Hemphill, L.

Wynford, L.

Henley, L.

Resolved in the negative, and amendment disagreed to accordingly.
On Question, Motion agreed to: the said Address to be presented to Her Majesty by the Lords with White Staves.
House adjourned at twenty-five minutes past ten o'clock.

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