Sitting of 14 November 1990

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

  PRIVATE BUSINESS
  CLYDE PORT AUTHORITY BILL
  LONDON UNDERGROUND (VICTORIA) BILL
  TEES AND HARTLEPOOL PORT AUTHORITY BILL
  SHARD BRIDGE BILL
  Motion made,
  That so much of the Lords Message [12th November] as relates to the Clyde Port Authority Bill, the London Underground (Victoria) Bill, the Tees and Hartlepool Port Authority Bill and the Shard Bridge Bill be now considered;
  That the Promoters of the Clyde Port Authority Bill, the London Underground (Victoria) Bill, the Tees and Hartlepool Port Authority Bill and the Shard Bridge Bill may, notwithstanding anything in the Standing Orders or practice of this House, proceed with the Bills in the present Session; and the Petitions for the Bills shall be deemed to have been deposited and all Standing Orders applicable thereto shall be deemed to have been complied with;
  That the Bills shall be presented to the House not later than the seventh day after this day.
  That there shall be deposited with each Bill a declaration signed by the Agents for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the last Session;
  That each Bill shall be laid upon the Table of the House by one of the Clerks in the Private Bill Office on the next meeting of the House after the day on which the Bill has been presented and, when so laid, shall be read the first, second and third time and shall be recorded in the Journal of this House as having been so read;
  That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the last Session.—[The Chairman of Ways and Means.]
  Hon. Members: Object.
  To be considered tomorrow.

KING'S CROSS RAILWAYS BILL
Motion made,
That the Promoters of the King's Cross Railways Bill may, notwithstanding anything in the Standing Orders or practice of this House, proceed with the Bill in the present Session; and the Petition for the Bill shall be deemed to have been deposited and all Standing Orders applicable thereto shall be deemed to have been complied with;
That the Bill shall be presented to the House not later than the seventh day after this day;
That there shall be deposited with the Bill a declaration signed by the Agents for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the last Session;
That there shall be deposited with the Bill a declaration signed by the Agents for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the last Session;
That the Bill shall be laid upon the Table of the House by one of the Clerks in the Private Bill Office on the next meeting of the House after the day on which the Bill has been
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presented and, when so laid, shall be read the first and second time and committed (and shall be recorded in the Journal of this House as having been so read and committed);
That all Petitions relating to the Bill presented in the Session 1988–89 which stand referred to the Committee on the Bill, together with any minutes of evidence taken before the Committee on the Bill, shall stand referred to the Committee on the Bill in the present Session;
That no Petitioners shall be heard before the Committee on the Bill, unless their Petition has been presented within the time limited within Session 1988–89 or deposited pursuant to paragraph (b) of Standing Order 126 relating to Private Business;
That in relation to the Bill, Standing Order 127 relating to Private Business shall have effect as if the words 'under Standing Order 126 (Reference to committee of petitions against Bill)' were omitted;
That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the last Session;—[The Chairman of Ways and Means.]
Hon. Members: Object.
To be considered tomorrow.

SOUTHAMPTON RAPID TRANSIT BILL [Lords]
Motion made,
That the Promoters of the Southampton Rapid Transit Bill [Lords] may, notwithstanding anything in the Standing Orders or practice of this House, proceed with the Bill in the present Session; and the Petition for the Bill shall be deemed to have been deposited and all Standing Orders applicable thereto shall be deemed to have been complied with;
That if the Bill is brought from the Lords in the present Session, the Agents for the Bill shall deposit in the Private Bill Office a declaration signed by them stating that the Bill is the same, in every respect, as the Bill which was brought from the Lords in the last Session:
That as soon as a certificate by one of the Clerks in the Private Bill Office, that such a declaration has been so deposited, has been laid upon the Table of the House, the Bill shall be deemed to have been read the first time and shall be ordered to be read a second time;
That the Petitions against the Bill presented in the last Session which stand referred to the Committee on the Bill shall stand referred to the Committee on the Bill in the present Session;
That no Petitioners shall be heard before the Committee on the Bill, unless their Petition has been presented within the time limited within the last Session or deposited pursuant to paragraph (b) of Standing Order 126 relating to Private Business;
That, in relation to the Bill, Standing Order 127 relating to Private Business shall have effect as if the words 'under Standing Order 126 (Reference to committee of petitions against Bill)' were omitted;
That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the last Session.—[The Chairman of Ways and Means.]
Hon. Members: Object.
To be considered tomorrow.

KILLINGHOLME GENERATING STATIONS (ANCILLARY POWERS) BILL [Lords]
Motion made,
That the Promoters of the Killingholme Generating Stations (Ancillary Powers) Bill [Lords] may, notwithstanding anything in the Standing Orders or practice of this House, proceed with the Bill in the present Session; and the Petition for the Bill shall be deemed to have been deposited and all Standing Orders applicable thereto shall be deemed to have been complied with;
That if the Bill is brought from the Lords in the present Session, the Agents for the Bill shall deposit in the Private Bill Office a declaration signed by them stating that the Bill is the same, in every respect, as the Bill which was brought from the Lords in the last Session;

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That as soon as a certificate by one of the Clerks in the Private Bill Office, that such a declaration has been so deposited, has been laid upon the Table of the House, the Bill shall be deemed to have been read the first time and shall be ordered to be read a second time;
That, since no Petitions remain against the Bill, no Petitioners shall be heard before any committee on the Bill save those who complain of any amendment as proposed in the filled up Bill or of any matter which arises during the progress of the Bill before the committee;
That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the last Session.—[The Chairman of Ways and Means.]
Hon. Members: Object.
To be considered tomorrow.

Oral Answers to Questions
  ENVIRONMENT

    Local Authorities (Spending)
    Mr. Sheerman: To ask the Secretary of State for the Environment what level of inflation he assumed in fixing his total standard spending for local authorities for 1991–92; and if he will make a statement.
    The Secretary of State for the Environment (Mr. Chris Patten): Our proposals for the local authority finance settlement take account of what the country as a whole can afford. They do not assume any particular level of inflation. Our proposal for total standard spending is the level needed in cash terms in 1991–92 to provide the standard level of service taking into account all relevant factors.
    Mr. Sheerman: Is the Secretary of State aware that most of us know that the level at which the assessment has been pitched is 7·8 per cent? With the current rate of inflation at about 10·9 per cent., even my poor school mathematics suggests that there will be a 3·7 per cent. gap between the assessment and what local authorities will be forced realistically to plan for in their budgets. Is the Secretary of State aware that good local authorities, such as mine, Kirklees in West Yorkshire, will be forced to make drastic cuts in expenditure on essential services, to lay off staff and to push up the poll tax to a rate at which they will be capped? Does he realise what he is doing to good local authorities with his plans?
    Mr. Patten: As I recall, the standard standing assessment of the hon. Gentleman's constituency will increase by 18·4 per cent. next year. The level of local authority spending this year represents a 25 per cent. increase in two years. We are proposing an increase of nearly 13 per cent. in the external financing going into local authorities for next year. If the hon. Gentleman thinks that we should give more taxpayers' money to local government, I should be interested to hear how much more, who will pay for it and whether the shadow Chancellor of the Exchequer has accepted his figure.
    Mr. Thurnham: When my right hon. Friend talks to local authorities, will he remind them of the enormous savings that they can make by cutting waste and inefficiency? The Audit Commission has identified savings of £1·3 billion, of which only half have been achieved, with no help from the Labour party.
    Mr. Patten: My hon. Friend is entirely correct. Recently, the Audit Commission suggested that there was scope for savings of about £100 million in energy efficiency. In a study of sickness absence in some London local authorities it pointed out that the six worst could save £27 a year per community charge by reducing sickness absence to Confederation of British Industry average levels. There are substantial savings for local authorities if they listen to the Audit Commission and implement its proposals.
    Mr. Gould: Nevertheless, is not it ridiculous for the same Secretary of State in the Department on the

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    same subject, that is, local government finance, to use two widely differing inflation rates—an artificially low rate for local government spending commitments and the full, true rate of 10·9 per cent. for setting the business rate? Is not it one of the nonsenses that we understand the right hon. Member for Henley (Mr. Heseltine) will sweep away? Will the Secretary of State support him in that or would he rather resign than do so? Or, will he be back here next week under new leadership to say that the poll tax was, after all, a terrible mistake?
    Mr. Patten: I am delighted to discover that, despite a recent outbreak of democracy in the Labour party, the hon. Gentleman is still in his present slot—I think more or less. Let me say something about the comparisons that he made. Thanks to the uniform business rate, businesses will not be clobbered by high-spending Labour authorities, as they used to be. Over the past decade, businesses have regularly been fleeced by Labour local authorities, which is why their rates bills have gone up by more than the rate of inflation year after year. The hon. Gentleman is still remarkably coy about telling the House by how much he thinks the external financing of local authorities should have been increased next year and he should tell us where that money would come from.

    River Thames
    Dr. Goodson-Wickes: To ask the Secretary of State for the Environment what consultations he has had with the chairman of the National Rivers Authority about the condition of the River Thames and its tributaries in London.
    The Minister for the Environment and Countryside (Mr. David Trippier): It is for the National Rivers Authority to decide how best to use its statutory powers in order to secure acceptable river quality standards.
    Dr. Goodson-Wickes: I congratulate the Government on setting up the NRA and thereby tackling problems long neglected. I draw my hon. Friend's attention to the sorry state of the River Wandle, which flows through my constituency. That river will not be familiar to many hon. Members, but it is a tributary of the Thames once described as the busiest industrial river in the country. Will my hon. Friend give material encouragement to those of us who are striving locally to upgrade and improve the river?
    Mr. Trippier: I compliment my hon. Friend on taking the personal initiative of bringing together the local authority, voluntary groups and the NRA in a group that I feel should be affectionately known as the "Wandles of Wimbledon". I am extremely keen to encourage the NRA to help my hon. Friend in whatever way it can. I recommend that he makes contact with the regional manager of the NRA. Whatever help it renders will be made easier as a result of the substantial increase in funding that we announced last week.
    Mr. Tony Banks: Will the Minister pay tribute to the London county council and the Greater London council for all the work that they did to ensure that the Thames is probably the cleanest urban river in Europe? The efforts by people in Newham to clean up the River Lea were spoilt by the dumping of a large amount of industrial oil into the
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    river. How many prosecutions have been taken out in the past 12 months against the irresponsible people who still pollute our rivers in London?
    Mr. Trippier: I cannot give the specific number that the hon. Member seeks now, but I shall write to him on that matter. He will know that the NRA, which the Government were responsible for setting up, took action only the day after it was formed against the Shell oil company for polluting the River Mersey with oil from a fractured oil pipe and the company was subsequently fined £1 million. That made everybody sit up. There have been several similar examples throughout the year and they will continue.
    I am most reluctant to single out the GLC for praise, but several initiatives have been taken, not least by the water companies and the NRA, which have played a significant part in cleaning up the Thames.
    Mr. Jessel: Is my hon. Friend aware that thousands of my constituents who care deeply about the environment of the historic and beautiful stretch of the River Thames at Twickenham will be most grateful to my right hon. Friend the Secretary of State for the Environment for calling in a planning application to construct a large food shop beside the Thames, a plan that the autocratic Richmond upon Thames council had intended to push through against the wishes of a large majority of my constituents?
    Mr. Trippier: My right hon. Friend is happy to accept my hon. Friend's congratulations and is most grateful.

    Community Charge and Housing Benefits
    Mr. Illsley: To ask the Secretary of State for the Environment how the increase in rates support grant for 1991–92 will be identified to cover the cuts in the direct subsidy payable to local authorities to cover community charge and housing benefits; and if he will make a statement.
    The Minister for Local Government and Inner Cities (Mr. Michael Portillo): The estimated cost of the change to local authorities in England is £68 million. The Government propose to increase the moneys that they provide by about £3 billion, or nearly 13 per cent. The change is more than adequately provided for.
    Mr. Illsley: Is the Minister aware that in Barnsley the amount of direct subsidy has been reduced by about 3 per cent? Is he further aware that at the same time its revenue support grant has decreased from £28 million to £25 million, at a time when the authority has to deal with the effects of the Environmental Protection Act and other legislation that comes on stream next year as well as with pay rises, some of which have already been agreed, of 9 per cent? How can the Minister identify in that settlement where Barnsley has received adequate resources to fund community charge benefit? How does he expect the authority to set a poll tax in the face of all the reductions in grant?
    Mr. Portillo: The hon. Gentleman makes partial use of his statistics and I shall give him some others. The standard spending assessment for Barnsley—that is the amount that we consider it appropriate for Barnsley to spend—has been increased by 19 per cent. The total amount of external finance from the Government has been

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    increased by 8 per cent. I explained to the hon. Gentleman in my main answer that an extra £3 billion will be provided to local authorities next year and that that is nearly 13 per cent. extra. It is clear that the rate of inflation between April next year and the following April will be in single figures. All the matters that the hon. Gentleman mentioned have been well and truly catered for.
    Mr. Nicholas Winterton: Will not my hon. Friend be a little more honest with the House?
    Hon. Members: Oh!
    Mr. Speaker: Order.
    Mr. Winterton: I said, "a little more honest", Mr. Speaker, over my hon. Friend's use of the term "external finance". Is not my hon. Friend confusing the uniform business rate contribution with what in the past have been moneys given under rate support grant, and basically supporting the view of the hon. Member for Barnsley, Central (Mr. Illsley)? Is not it true that many areas have suffered a substantial reduction of the sum that they received from central Government under the RSG and that that is being masked by the increase in the business rate contribution, which, instead of coming from local government to local government, is coming from central Government?
    Mr. Portillo: I should have thought that the important feature is the total moneys that local authorities will receive from central Government sources, which now include the national non-domestic rate. In Macclesfield, the increase is 19 per cent. That is because the people of Macclesfield will not be expected to put £50 each into the safety net next year. That gives Macclesfield a magnificent opportunity to set a low community charge next year.
    Mr. Soley: Did the Minister discuss with his hon. Friend the Minister for Housing and Planning the housing benefit implications of that policy? Given the announcement made by his hon. Friend only the other week, it will have a catastrophic effect on the leaseback scheme of private houses to both housing associations and local authorities. Does not the Minister realise that many more families will be pushed into bed-and-breakfast accommodation and that the bill for that will be passed on to the poll tax payer? We have the absurdity of the Government ending a scheme that they wanted to encourage while at the same time increasing housing benefit and poll tax bills. Is not it time that the Department began to talk to individual Ministers within it and came out with a coherent policy instead of a contradictory one?
    Mr. Portillo: I see nothing catastrophic or harmful to local authorities, local authority tenants or community charge benefit claimants in what we propose. The amount of direct subsidy is being reduced from 97 to 95 per cent., and the balance is being made good within the SSAs, which have risen by an enormous amount, as even the Opposition must admit.
    Mr. John D. Taylor: Will the Minister take the opportunity of clarifying the confusion in my constituency about the community charge?
    Mr. Tony Banks: Poll tax.
    Mr. Taylor: The poll tax. The Conservative party in Northern Ireland has said that the poll tax is good for us
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    in Northern Ireland and that it wants to extend it to Northern Ireland. On the other hand the aspirant leader of the Conservative party said today that he wanted to abolish it in Great Britain. What is the future of the poll tax?
    Mr. Portillo: The Government's policy is that the community charge applies in Great Britain but not in Northern Ireland.

    Community Charge
    Mr. David Nicholson: To ask the Secretary of State for the Environment if he will make a statement on progress in collecting the community charge in Coventry.
    The Parliamentary Under-Secretary of State for the Environment (Mr. Robert Key): At the end of September, 82 per cent. of charge payers in Coventry had begun paying. No doubt that figure will move towards 100 per cent. during the next five months.
    Mr. Nicholson: May I, on behalf of, I hope, the whole House, congratulate my hon. Friend on his welcome appearance at the Dispatch Box?
    Whatever legitimate arguments there may be among some of us about the financial arrangements for the new system this year, we are all agreed that taxation should be collected and that it should be paid. Does not my hon. Friend agree that Coventry has done rather well, despite the opposition of some Coventry Members? Of course, it has not done quite as well as Taunton Deane in my constituency.
    Is my hon. Friend aware that the majority of law-abiding people deeply resent the prospect of having to pay more next year because of those who default? Should not the capping mechanism take that into account?
    Mr. Key: Of course, it is true that both Taunton Deane and Salisbury have done rather better than Coventry. Some 94 per cent. of people have started paying and some 50 per cent. of the projected yield has been collected. It is also true that the poorest will suffer if people such as Members of Parliament do not pay their community charge.
    I pay tribute to the great city of Coventry, especially on a very special day for that city, for achieving payment of its community charge very close to the national average.
    Mr. Speaker: Mr. Nellist—[HON. MEMBERS: "Hear, hear."] Order.
    Mr. Nellist: I join the Minister in marking the fact that, 50 years ago tonight, some 600 people died in Coventry and several thousand houses were either damaged or destroyed. Of all the remarks made about Coventry that the Tories could have made today, of all days, the remarks about defaulters by the hon. Member for Taunton (Mr. Nicholson) were the last that we expected.
    Is the Minister really so confident that Coventry is the only city where, since 11 July, defaulters have appeared in large numbers in the magistrates courts—100 people a day in July, 200 a day in August, 500 a day in September and 1,000 a day in October and November? They were dragged before the courts because the Tory poll tax in Coventry and everywhere else is the most unpopular tax in the

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    country. Is the Minister also confident that in two weeks' time his new leader will have him at the Dispatch Box defending the poll tax?
    Mr. Key: My city of Plymouth suffered similarly during the last war, so I do not need any lessons from the hon. Gentleman. Coventry began issuing statutory reminders in June and held its first magistrates court hearing in July. It has not encountered any problems with court hearings. After an initially slow start, it increased the number of summonses to 1,000 a week. That figure has now reduced to 500 a week because Coventry has obtained most of the liability orders that it needs.
    Mr. Brandon-Bravo: Does not the impact of non-payers, especially those who can and should pay but simply will not, concern people not only in Coventry but throughout Britain? This year, sensible limits have been imposed on what local authorities can spend. Will my hon. Friend assure the House that next year, it will not be possible for local authorities simply to add on a large sum to make up for those who will not pay?
    Mr. Key: It is interesting that under the previous discredited rating system, some 30 per cent. of people needed reminders. It remains true today that those who do not pay increase the burden of local taxation on those who do.
    Mr. Blunkett: I, too, congratulate the Minister on his appointment. I feel almost diffident about asking my question as it will put his new job on the line. Will he ask the Secretary of State whether he thinks that the people of Coventry agree with the new Secretary of State for Education and Science, who on the radio earlier today suggested that we did not need a leadership election to understand that the Conservative party has a problem with the poll tax? He went on to say that it was a problem that the Conservative party needed properly to address before the general election. Does the Minister agree that the issue needs addressing properly, and if so, how will he do that?
    Mr. Key: The problem has been addressed for the past 20 years. I gather that my right hon. Friend the Member for Henley (Mr. Heseltine) is promising jam tomorrow in much the same way as the Labour party has. It has done nothing but promise jam tomorrow. It is about time that we heard a little more about its plans. It is important to remember that about £3 billion extra external financing has been made available this year, as I am sure the hon. Member for Coventry, North-East (Mr. Hughes) will recognise.
    Mr. John Hughes rose—
    Mr. Speaker: Order. If the hon. Gentleman looks down the Order Paper he will see that, with luck, I shall be able to call him later.

    Temperature
    Mr. Corbyn: To ask the Secretary of State for the Environment what predictions his Department is making concerning the rise in average temperature over the next 10 years.
    Mr. Chris Patten: The intergovernmental panel on climate change estimates that, as a result of human
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    activities, average global temperatures will increase by 0·2 deg Celsius during the next 10 years. The uncertainty range of that estimate, which does not take account of any natural climate variability, is 0·15 deg and 0·3 deg Celsius.
    Mr. Corbyn: Does the Secretary of State agree that, as far as measurement is possible, that is the highest increase in the past 10,000 years? [Interruption.] This is a serious matter and I hope that the Secretary of State and other Conservative Members will treat it seriously.
    Is the Minister aware that that is the highest increase in the past 10,000 years measured from air samples in the Antarctic and that in order merely to contain current levels of concentration we would require a 60 per cent. drop in emissions of greenhouse gases, primarily carbon dioxide? In those circumstances, does the Secretary of State agree that it is necessary to take much stronger and more urgent action to cut the emissions of greenhouse gases and to promote afforestation schemes and the protection of the southern ocean and the savannah grasslands, which are the major areas where the change from carbon dioxide to oxygen takes place?
    Mr. Patten: As the hon. Gentleman will doubtless know, there was an extremely successful conference last week in Geneva at which we reached an outline agreement on climate change and global warming, which should lead to the start of negotiations on a climate change convention next February. The science is not quite as the hon. Gentleman described it, but one of the encouraging features of last week's conference was not only the commitment to action by all states, but the fact that, I think for the first time, nobody disagreed fundamentally with the scientific conclusions that were advanced.
    Mr. Squire: Does my right hon. Friend recall that recently on this important subject the Labour party committed itself to phasing out nuclear power and to a greater use of coal as against gas, at the same time bringing forward a still earlier timetable for stabilising carbon dioxide? Will my right hon. Friend confirm that those do not add up and that that is simply a sign of scientific ignorance among Labour Members?
    Mr. Patten: They certainly do not add up. The Labour party is the only organisation outside the executive committee of the National Union of Mineworkers that thinks that coal is cleaner than gas. It has also said that we can secure the environmental objectives and the goals that we want at virtually no cost. That is frankly dishonest and I hope that the Labour party will face up to some of those problems rather more honestly.
    Mrs. Ann Taylor: In view of what the Secretary of State has just said, will he confirm that he wanted to accept the European target on the stabilisation of carbon dioxide emissions by 2000 and that it was the Prime Minister who intervened to insist that the target date should be 2005? Perhaps while the Secretary of State is answering that question, he will also tell the House whether he agrees with the right hon. Member for Henley (Mr. Heseltine) that the Government could do better in their action on global warming and that Britain should play a more positive role in the development of EC environmental policy.
    Mr. Patten: I know of no one at the Geneva conference last week who did not think that we played an extremely prominent and helpful role in securing agreement. If the

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    hon. Lady had spoken to some of the European Free Trade Association, European Community, and other Organisation for Economic Co-operation and Development members, she would have found that that was the case. As to agreement within the Community, despite the astonishing intervention of hon. Member for Dagenham (Mr. Gould), the shadow spokesman on the environment, in writing to every other European environment Minister, very few of whom had heard of him, to urge them to try to isolate us at that meeting, we secured a wholly satisfactory outcome which recognised the different problems and programmes of a number of European countries. The agreement enabled Britain and EFTA to give a strong lead at the Geneva conference, which ensured that it was as successful as I hope that the hon. Member for Dagenham would wish.
    Mr. Patrick Thompson: Bearing in mind the Government's positive lead, will my right hon. Friend pay tribute to the climatic research unit at East Anglia university, which has done excellent work on global warming? Does he agree that a sober and scientific appraisal of the facts is needed, rather than party political posturing?
    Mr. Patten: The unit to which my hon. Friend draws attention has done outstanding work. That is recognised not only in Europe but beyond. I am delighted that, as a result of the public expenditure settlement announced last week in the autumn statement, we are substantially increasing the funding of environmental research on climate change and other matters.
    Mr. Simon Hughes: Is the Secretary of State not aware of the despair felt by many environmentalists because the Government are content merely to stabilise emissions over the next 15 years while other members of the European Community—such as Germany—are clear that they can reduce emissions by 15 or 20 per cent. by 2005? If Germany can do that, why cannot we do so? Is not that another example of short-term national political considerations being placed at the forefront of international environmental considerations? Where is the principle?
    Mr. Patten: The hon. Gentleman may not know that, according to returns made to the International Energy Agency, six European countries have not declared any stabilisation or reduction targets for carbon dioxide. Different countries have different sets of problems and some of those with a high input from nuclear energy find certain issues rather easier to resolve than we do. The hon. Gentleman should also be aware that the Germans are talking about an orientation, rather than the pledged target that we have set.

    Nuclear Waste
    Mr. Martyn Jones: To ask the Secretary of State for the Environment what is the Government's latest prediction of the levels of nuclear waste to be disposed of in the United Kingdom in the years 1990–95.
    The Parliamentary Under-Secretary of State for the Environment (Mr. David Heathcoat-Amory): About 125,000 cu m of low level radioactive waste will be disposed of to Drigg during the next five years.
    Mr. Jones: Is the Minister aware that the Chernobyl incident released about 50 million curies of radioactivity, and that we already have 5,000 million curies of high-level radioactive waste stored at Sellafield? Is not it foolhardy to continue importing such waste from other countries in even greater amounts over the next five years when we do not know how to dispose of that which we already have?
    Mr. Heathcoat-Amory: We do not import radioactive waste. We import spent nuclear fuel for reprocessing and since 1976 all contracts provide for the eventual return of the waste arising to the countries concerned.
    Mr. Ian Bruce: Will my right hon. Friend confirm that reducing our nuclear energy production and burning more coal would create more waste products such as carbon dioxide, which causes global warming, and that far more radiation comes from spent ash than from the sort of manageable waste produced by the nuclear power industry?
    Mr. Heathcoat-Amory: That is a fair point. Every industry and every form of power generation should take responsibility for its emissions.

    Coastal Waters (Discharges)
    Mr. Kennedy: To ask the Secretary of State for the Environment if he has any plans to revise the criteria by which to gauge the appropriate standards required for discharges to coastal waters; and if he will make a statement.
    Mr. Trippier: On 5 March, my right hon. Friend the Secretary of State announced that in future all significant discharges of sewage to coastal waters would receive at least primary treatment. It is now for the relevant regulatory bodies to apply this policy to individual discharges.
    Mr. Kennedy: Further to that announcement, the Minister may be aware that there has been a controversial proposal for a main drainage treatment works at Inverness. Following the environmental assessment, the original proposals have been shelved, as they would clearly have been in breach of the guidelines, and the costs involved to bring a treatment works up to a suitable standard will probably be more than twice those originally envisaged—well in excess of £10 million. Will the Minister and his right hon. Friend the Secretary of State therefore lend a sympathetic ear to local authorities such as Highland region, which will have to incur such huge costs for future generations, and will he encourage the Scottish Office to do likewise?
    Mr. Trippier: Experience has taught me that planning applications for sewage treatment works are invariably controversial, as are those for landfill or incineration sites. I shall, of course, bring the hon. Gentleman's remarks to the attention of my right hon. and learned Friend the Secretary of State for Scotland.
    Mr. Paice: Does my hon. Friend agree that one of the principal causes of pollution in coastal waters are rivers into which waste is discharged? Will he ensure that there are adequate controls not just in this country but throughout Europe and that they are especially applied to countries that border the Rhine, which contributes more to pollution in the North sea than any river in this country?
    Mr. Trippier: In so far as my hon. Friend's question referred to the United Kingdom, I accept entirely that he is right. As a result of measures introduced in the Water Act 1989, regulations are tougher than they have ever been. Secondly, the Environmental Protection Act 1990 will ensure a far tougher regime, especially part I of the Act which will tighten standards for those who pollute air, land or water. That will be effective. It may also please my hon. Friend to know that several proposals that will emanate from Europe will be based on our experience and the legislation in the Environmental Protection Act. Not only is our example replicated throughout Europe, but the same standards will apply in what might be described as a level playing field.
    Mr. Campbell-Savours: Will the Minister confirm that the level of nuclear discharges from Sellafield today is one hundredth of what it was in the 1970s?
    Mr. Trippier: I am not in a position to confirm or to deny that figure, but so that we do not fall into the trap of scaremongering—I know that it would never cross the hon. Gentleman's mind to indulge in that—I can tell the hon. Gentleman that any accident which may occur, or any releases into the atmosphere from Sellafield., are minuscule compared with the nuclear releases from natural sources such as rocks. We ought to get this whole thing in proportion.

    Community Charge
    Mr. Irvine: To ask the Secretary of State for the Environment if he has any plans to introduce a standard disaggregation formula which will identify separately the amounts being raised by county and district councils as regards the community charge.
    Mr. Portillo: The proposed community charge bill for 1991–92 will be simpler and easier to understand. It will show more clearly than this year which are the overspending councils and which are the prudent ones.
    Mr. Irvine: Is my hon. Friend aware that in Ipswich the Labour-controlled borough council and the Conservative-controlled county council are unable to agree for what share of the community charge they are respectively responsible? Does he appreciate that without a standard disaggregation formula there will continue to be such disputes and it will be that much more difficult to establish more accountability?
    Mr. Portillo: The Bill that we propose to introduce next year will, I hope, meet my hon. Friend's concern. Had that Bill been enacted this year, it would have shown clearly that Suffolk council was responsible for 77 per cent. of the total spending by the authorities in my hon. Friend's area and that Ipswich borough council was responsible for an overspend of £97 on its standard spending assessment. That is nearly 100 per cent. more than it should be. If overspending of that kind continues next year—I hope that it will not—it will appear on next year's bills.
    Mr. John Hughes: It is appropriate that the Minister referred earlier to the Coventry war experience. I draw attention to another aspect of the 1939–45 war. I wonder whether the Minister has read about the Nuremberg trails. If he has, he will have learnt that war criminals said that they tortured people to obey the law and that they
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    murdered people to obey the law. Does the Minister agree that they were not obligated to obey an immoral law and that similarly no hon. Member is obligated to obey an immoral law and thus absolve himself or herself from responsibility to constituents suffering untold hardship as a result of the imposition of the poll tax?
    Mr. Portillo: I am not sure what the hon. Gentleman's question has to do with the disaggregation formula. However, like other hon. Members, the hon. Gentleman is paid a salary by the taxpayers of this country in order to make laws. He is not paid a salary by the taxpayers of this country in order to break laws, or to urge others to break them.
    Mr. Cormack: Do the very refreshing and enlightened remarks by the Secretary of State for Education and Science this morning suggest a new and realistic approach to the poll tax?
    Mr. Portillo: My hon. Friend the Member for Staffordshire, South (Mr. Cormack) was one of those who were kind enough during the summer of this year to contribute to the Government's review of the community charge. That review is now complete. I thank my hon. Friend again for the very important contribution that he made to it.
    Mr. O'Brien: Has not the hon. Member for Ipswich (Mr. Irvine) highlighted yet again the problems and disadvantages of the poll tax? Is not it time for the Minister and his ministerial colleagues to line up behind the right hon. Member for Henley (Mr. Heseltine) and say, "Let's scrap it altogether?" When will they learn the lesson?
    Mr. Portillo: First, my right hon. Friend the Member for Henley (Mr. Heseltine) has said no such thing. Secondly, my hon. Friend the Member for Ipswich (Mr. Irvine) raised a serious point and got a serious answer. So far as I could judge from my hon. Friend's expression, he was satisfied with the changes made by the Government in the Bill as they were precisely the kind of things that he was looking for.

    Bathing Waters
    Mr. Andrew Welsh: To ask the Secretary of State for the Environment if he will provide the most recent figures which are available on the compliance of bathing beaches with the European Community bathing water standards.
    Sir Anthony Meyer: To ask the Secretary of State for the Environment what percentage of designated United Kingdom bathing waters currently complies with the European Community bathing waters directive; and what was the comparable position in 1979.
    Mr. Sahnond: To ask the Secretary of State for the Environment if he will provide the latest figures which are available on the compliance of bathing beaches with the European Community bathing water standards.
    Mr. Trippier: The 1990 results show that 77 per cent. of the 446 identified bathing waters in the United Kingdom met the directive's coliform bacteria standards this year. This compares with 76 per cent. of 440 waters in 1989 and 66 per cent. of 27 waters in 1979.
    Mr. Welsh: In view of the long time scale involved, what guarantees can the Minister give that measures to bring beaches up to current EC standards will be sufficient to cope with the improvement in those standards, as they will not be static? What consultations has the Minister had with local authorities and what additional resources is he giving to improve beaches? Furthermore, what steps is he taking to lower the discharge levels of nitrates and phosphates into the marine environment?
    Mr. Trippier: My right hon. Friend the Secretary of State and I announced previously the United Kingdom's national target would be 100 per cent. compliance by the year 2000. I am pleased to say that that target has now changed and I am able to announce from the Dispatch Box that we believe that we shall achieve 100 per cent. compliance by 1997. I know that the hon. Gentleman will welcome that. It will involve a capital spend to ensure that the treatment of the waters is brought up to standard. Our record in the United Kingdom is extremely good. I would find it extremely difficult to believe that any other member state would have 100 per cent. compliance by 1997.
    Sir Anthony Meyer: I was pleased to hear of the improvements announced by my hon. Friend the Minister. Can he say whether the improvements extend also to the beaches of north Wales because it does not look like it or smell like it? Is he aware that we in north Wales do not think much of the idea of long sea outfalls as a long-term way of curing the problem of pollution of our beaches?
    Mr. Trippier: The target date that I gave earlier applies to all bathing waters designated in the United Kingdom. Therefore, it applies to Wales. I have further good news for my hon. Friend and the House. Later this afternoon my right hon. Friend the Secretary of State will be announcing details of an accelerated programme which will ensure that we meet our target by 1997. That will apply to Wales as well.
    Mr. Salmond: The Minister has announced a 1997 deadline for bacterial standards on beaches. On what time scale will the Department consider discharges to rivers? Will there be serious consideration of the impact of the growth of algae in the North sea on the marine environment and fish life?
    Mr. Trippier: It is the same target. The point raised earlier by my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice) has an effect on coastal waters. We are talking about two directives—the bathing water directive and the municipal waste water directive, which is not yet in its final form but which we hope to agree in December. The target date for the municipal waste water directive I would guess—I think that it will be confirmed next month—will be the year 2000. As I have said, the date for 100 per cent. compliance with the bathing water directive is 1997.
    Mr. Brazier: Does my hon. Friend agree that a crucial element in meeting both the standards is investment in sewage treatment? Does he agree that one of the effects of the privatisation of water and sewerage has been the liberalisation of such investment from the Treasury? Does he agree that that preserves us from the danger of a sudden swingeing cut in investment such as occurred under the previous Labour Government?
    Mr. Trippier: My hon. Friend is absolutely right. I would go further and say that it is only as a result of privatisation that we have a massive £28 billion investment programme which will be invested over the next 10 years by the newly privatised water companies. I have to assure my hon. Friend that neither I nor any Minister in any Government could find that sort of money from Her Majesty's Treasury. It is interesting to hear the carping from Labour Members with regard to the privatisation of water, as when they were last in office they cut the amount of assistance given to the water authorities.
    Mr. Win Griffiths: Does the Minister recall that Britain's wholehearted adoption of the bathing water quality directive came about only after the European Commission threatened the Government with legal action in the European Court of Justice? That is on record. Further, does not the new accelerated programme to meet standards by 1997 result from the action that is currently pending in the European Court? As the Government have the legal responsibility for water standards, what contingency plans do they have to effect an even quicker implementation of the standards and at what cost to the water consumer?
    Mr. Trippier: I am sorry to say that I have never heard so much rubbish in all my life. If we are talking about facts, let us look at the facts. When talking about compliance with the bathing water directive, the House should be reminded that when the previous Labour Government were in office between 1974 and 1979 they did nothing—absolutely nothing. They never designated one single bathing water. Not one beach was covered by them. It is a bit rich for the hon. Member for Bridgend (Mr. Griffiths) to try to lecture me or anyone on this side of the House about what this Government are doing. The accelerated programme is the finest in Europe. The trouble with Opposition Members is that they delight in pulling the nation down and selling it short. That was the view expressed by the hon. Member for Dagenham (Mr. Gould) in the letter that he sent to European Community Ministers. It is an absolute disgrace.

    Cathedrals
    Mr. Gerald Bowden: To ask the Secretary of State for the Environment whether he has any plans to meet the chairman of English Heritage to discuss his cathedrals initiative.
    Mr. Chris Patten: Lord Montagu has told me that the provision of £11·5 million over the next three years for grants towards repair to cathedrals will enable us to establish the scheme on a really sound footing. My officials are discussing the basis of the new grant scheme with his officials and with the church authorities.
    Mr. Bowden rose——
    Mr. Skinner: On a point of order, Mr. Speaker. Is it in order for two Tory Members to be running a book?
    Mr. Speaker: Order. We are dealing with an important issues of English heritage.
    Mr. Bowden: I refer to cathedrals, Mr. Speaker. I am grateful to my right hon. Friend for acknowledging that the repair and maintenance of cathedrals is beyond the resources of cathedral authorities. As those great

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    institutions enjoy affection and respect far beyond merely churchgoers and are monuments to our national heritage, is not there a case for increased public support to ensure that they are maintained properly?
    Mr. Patten: I agree with my hon. Friend. I am sure that it is right that public appeals and private donations will remain the major source of funds for the repair of cathedrals, but it is right also that the state should play a role by using grant to lever in private finance. That is the objective of our new scheme. As I said, we shall be spending £11·5 million on the scheme in the next three years. The scheme has been widely welcomed by churchmen and by others who visit our great church buildings, though I recognise that the repair of cathedrals is not uppermost in everybody's minds this afternoon.
    Mr. Cryer: I endorse the view that public money should be spent on those great works of art and great assets for the country at large. Does the Secretary of State agree that, as he has undertaken to endorse the principle that public money should be spent on those great buildings, it would be better to do that and leave market forces to obtain money for Trident, for example? Instead of leaving cathedrals to raise money by flag days, we could use flag days for spending on nuclear weapons. The £9,000 million saved could then be spent on pensions, the national health service and a little bit on cathedrals.
    Mr. Patten: The hon. Gentleman must have heard the Leader of the Opposition say on a number of occasions that the Labour party now believes in market forces. That is what we are told again and again. The hon. Gentleman must therefore be a continuing embarrassment to those responsible for trying to burnish the image of the Labour party.

    Countryside Commission
    Mr. David Shaw: To ask the Secretary of State for the Environment by how much the Government have increased funding to the Countryside Commission since 1979; and how funding will be increased in the next three years.
    Mr. Heathcoat-Amory: Since 1979, grant in aid to the Countryside Commission has more than doubled in real terms to £25 million this year. The commission will lose its responsibilities in Wales from April 1991, but its grant for England is planned to rise to more than £30 million next year and £41 million over the following two years.
    Mr. Shaw: Does my hon. Friend agree that the Countryside Commission has done particularly well from a financial viewpoint under the Government of my right hon. Friend the Prime Minister? Does he further agree that the additional funds provided by the Government have enabled the Countryside Commission to plant more trees, which is particularly important to the people of Kent and my constituents who suffered considerably from the loss of trees as a result of the 1987 storms?
    Mr. Heathcoat-Amory: My hon. Friend is quite right. The chairman of the Countryside Commission has warmly welcomed the sharply increased funding that we plan for the years ahead. It will enable the Countryside Commission to undertake several new initiatives and to
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    continue the Task Force Trees programme, which will help to replace trees lost in the storms earlier this year, including in Kent.
    Mr. Denis Howell: Is the Minister aware that we join in welcoming the increased subvention for the Countryside Commission, but are still concerned about whether the money made available will enable us to make sufficient progress on access to the countryside and rights of way, an issue which was very properly identified in the White Paper but does not seem to be making much progress? We are also concerned about the continuing problems of common land. Will those two problems, which are of much concern to many people who use the countryside and who want access and rights of way, receive greater priority as a result of this and future settlements?
    Mr. Heathcoat-Amory: I am glad that the right hon. Gentleman acknowledges that the Countryside Commission has done well under this Government. He mentioned the right of way network. I confirm that it is an announced aim of the Countryside Commission to bring into good order our entire network of rights of way—all 140,000 miles of it—by the end of the century. As regards common land, I refer the right hon. Gentleman to the statement that my hon. Friend the Minister made in recent weeks.
    Mr. Bill Walker: My hon. Friend will be aware that the Scottish headquarters of the Countryside Commission is in my constituency, not far from his Scottish home. He will realise that under the Prime Minister and this Government the Countryside Commission has been responsible for vast improvements in access to many of Scotland's more beautiful parts, with the introduction of car parking and other facilities such as camping and caravanning. That has been the result of the generous attitude adopted by the Prime Minister and the Government.
    Mr. Heathcoat-Amory: I am delighted that Scotland is to get its own Nature Conservancy Council. I was sad, but not wholly surprised, that that was resisted every step of the way by the Labour party. Doubtless that attitude will have been noted in Scotland.

    Council Homes
    Mr. Flannery: To ask the Secretary of State for the Environment how many council homes have been started by local councils in the current year.
    The Minister for Housing and Planning (Mr. Michael Spicer): Local authority housebuilding is currently running at a rate of 7,000 starts a year. Housing associations are the major providers of new subsidised housing for rent. We announced last week that funding of housing associations will increase to more than £2 billion by 1993–94.
    Mr. Flannery: Is not the stark reality that since the Government took office the building of council houses has dropped catastrophically, that homelessness is rising steadily, that the number of people on council waiting lists in big cities is growing all the time, whereas it was falling in 1979, and that many building workers are being laid off as the slump deepens?
    Mr. Spicer: The stark reality is that about 40,000 households are in temporary accommodation. At the same

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    time, there are about 100,000 empty council houses, mainly in Labour-controlled authorities. That is the real scandal of the housing problem, which we intend to put right by attaching conditions to the vast housing subsidies that we give to councils.
    Mr. Dickens: Is it right to condemn people to live in council houses for the rest of their lives, paying rent until the grave and having nothing to leave their children? Is not it preferable to pursue our present home ownership policy and to help housing associations?
    Mr. Spicer: My hon. Friend is right. That is why our policy of right to buy has been such an enormous success, with more than a million households that would not otherwise have done so now owning their own houses. It is also why we shall be experimenting in Basildon with the rent-to-mortgage scheme.
    Mr. George Howarth: Does the Minister recognise that there is a strong connection between the decline in the supply of all sorts of rented housing over the past 11 years and the inexorable rise in homelessness? Has he had an
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    opportunity to read the report prepared recently by the Tory-controlled London Boroughs Association, entitled, "A Crying Shame—The Child Victims of Homelessness"? That report calls for a supplement to the inadequate £250 million allocation for homelessness and the relaxation of controls on capital receipts and it calls for local authorities to be allowed to bring into use long-term vacancies in the private sector. What does the hon. Gentleman intend to do about that?
    Mr. Spicer: What I want to do about the 600,000 empty houses in the private sector is to reinvigorate the whole private sector by totally changing the attitude to landlords. My problem is that if the Labour party ever returned to power, it would introduce new controls which would completely kill off the rented sector. The number of houses per head of population has risen considerably in the past few years. Because of the break-up of marriages and various other social forces, there are pressures on housing. That is why we have vastly increased the money that we are spending on the homeless, both single people and families. This Government have done more than any other Government to focus money on the homeless.

Point of Order
3.31 pm
Mr. Bill Midge: On a point of order, Mr. Speaker. In view of the ending of the cold war, the growing concern about the spread of nuclear weapons and nuclear technology to other nations, especially given the background of the Gulf crisis, and the impending meeting to stop or limit nuclear tests, should not the House have an opportunity to discuss the nuclear test that is likely to take place in the Nevada desert? Surely the House has the right to debate that issue. Will you use your good office-s, Mr. Speaker, to bring that about?
Mr. Speaker: That is not a point of order for me. The hon. Member might raise it tomorrow with the Leader of the House in business questions.

Point of Order

  BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 30 NOVEMBER
  Members successful in the ballot were:

  Mr. Michael Neubert

  Mr. Martyn Jones

  Mr. Graham Bright

  STATUTORY INSTRUMENTS, &c.
  Ordered,
  That the draft Education Support Grants Regulations 1990 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Boswell.]

Orders of the Day
  Debate on the Address

    FIFTH DAY
    Order read for resuming adjourned debate on Question [7 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. Younger.].
    Question again proposed.

    The Economy
    Mr. Speaker: I must announce to the House that I have selected two amendments—that in the name of the Leader of the Opposition and the amendment, for Division only, in the name of the leader of the Liberal Democrats.
    Mrs. Margaret Ewing: On a point of order, Mr. Speaker, about the selection of amendments. I wish to stress that I speak on behalf not only of the Scottish National party but of the nationalist parties and the party led by the right hon. Member for Lagan Valley (Mr. Molyneaux). As you know, we fully understand and appreciate the procedures which preclude you from selecting amendments today, other than those that you have specifically chosen. But you are aware also that this is a pluralist House and that it is necessary to debate all the different aspects and attitudes in the House. I therefore wonder whether it is possible for you to support the other minority parties in asking the Procedure Committee to look at the possibility of from time to time selecting amendments in the name of the members of those parties.
    Mr. Speaker: I am grateful to the hon. Lady, but only the Scottish National party has an amendment on the Order Paper today; the Ulster Unionist party and Plaid Cymru do not. The hon. Lady should take up herself with the Procedure Committee the question of giving authority to the Chair to call a third amendment for Division. Today I shall be as helpful as I can be in calling members of the minority parties to put their point of view in the debate.
    I must also announce to the House that, in view of the large number of right hon. and hon. Members—mostly right hon. Members—who want to participate today, I shall put a 10-minute limit on speeches between 7 and 9 o'clock. But I ask those who are called before then to try to ensure that their speeches are not much longer than that.
    3.35 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 recession, falling output and investment, rising unemployment, high interest rates and a massive deficit in the balance of payments; deplore the continuing confusion and disarray in domestic economic policies and towards the future economic and social development of the European Community; and call upon the

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    Government to prepare for the competitive challenges of the Single Market after 1992 by adopting an industrial strategy which promotes sustained investment in the manufacturing sector and encourages industrial innovation through the application of science and technology, to exploit fully the potential of the neglected regions through a vigorous regional economic policy and a modern transport system, and to provide the new opportunities in education and training which are crucial to Britain's economic recovery and future prosperity.
    When debating the Gracious Speech as we do in this House each year, we do not confine ourselves to a textual analysis of the often anodyne language contained in it. We look to other material, to additional evidence, to establish what Government policies are and are intended to be over the forthcoming Session. What Members find persuasive by way of additional evidence is very much a matter of individual choice, but for my part I turn for guidance to the Chancellor of the Duchy of Lancaster in his capacity as chairman of the Conservative party. Each year he sets—dare I say it—the style, if not the substance, of the Conservative party conference, with the carefully calculated slogan that hangs over the conference during the whole of its proceedings.
    In 1989 the slogan was:
    "The right team for Britain's future".
    The right hon. Gentleman buttressed the message by quoting Henry's exhortation to the troops at Agincourt:
    "He which hath no stomach to this fight,
    Let him depart".
    There was a consequence which Henry had not foreseen, which was that most of them did depart. There has been the biggest change in ministerial offices in the post-war political history of this country.
    Looking back on it now, admittedly with the luxurious benefit of hindsight, we see that the right hon. Gentleman clearly had a talent for irony which we had not properly recognised heretofore. I doubt whether there has been a time in post-war politics when there have been so many ministerial changes. It would be repetitive to read out a long list of the senior ministerial changes, occasioned by the confusion and disarray within the Government, which have occurred since the right hon. Gentleman's stirring slogan was first revealed. But this does remind us how important it is to attach proper significance to the slogan that he gives us each year.
    This year, the right hon. Gentleman tackled new ground. The slogan was: "The strength to succeed". Again with the benefit of hindsight, I believe that he should be credited with prescience as well as irony. How did he know that this very day a struggle for the succession would be announced? The very question that will agitate Conservative Members over the next weekend is: who will have the strength to succeed to the leadership of the Conservative party? How did the right hon. Gentleman know all this? How did he know that this matter would be of such concern to his party?
    I have been giving consideration to whether we might offer the right hon. Gentleman a slogan for next year's Conservative party conference. Perhaps he should hold a competition among his hon. Friends to see who could come up with a slogan as prescient and ironic as its predecessors. One or two come to mind. "The challenge of leadership" might be one. Perhaps "Combating unforeseen circumstances" might have a certain charm in certain quarters; but the one that I feel most attracted to
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    is "Catching the train to Europe". I offer the right hon. Gentleman the option of putting either a question mark or an exclamation mark after that slogan.
    The trouble is that the confusion and disarray which has surfaced in the turmoil of ministerial changes has finally burst through into a direct challenge to the Prime Minister by the right hon. Member for Henley (Mr. Heseltine)—and by who knows who else, in the weeks to come. There will be a fierce struggle in the Conservative party over style, substance, personalities and policies and it will be so serious that it will divide the Conservative party not just for the next week or so, but for a very long time ahead.
    However, today we are considering the Government's economic policies, a subject which is the cause of almost as much distress as the Conservative party's internal division. We begin our consideration with the current state of the economy, which is in a recession. What is more, that recession results directly, as we have frequently argued, from the Government's errors in economic policy, some of which, I will argue later, bear a striking similarity to previous errors by previous Conservative Governments.
    In the exchanges following the Chancellor's autumn statement, I was taken to task for insisting that the Government should admit the truth about our present economic situation and for pointing out the truth—that we are in a recession. I was glad to note that, a few days after that, in "The Money Programme" the following Sunday, the Chancellor appeared to accept—in a qualified way—that we are in a recession.
    People who watch the Chancellor answering questions in this House and who saw him on "The Money Programme" will be aware that the right hon. Gentleman's tactic has been to query the definition of recession. He says that there are so many definitions of recession: how do we assess whether we are in one? He slips from one definition to another rather like a bird flying around a cage looking for a statistical perch to alight upon temporarily, or for some convenient resting place. The Chancellor says that some people say one thing while others say another.
    The Chancellor was not always so coy. When he gave evidence to the Treasury and Civil Service Select Committee on 4 December last year, my hon. Friend the Member for Hackney, North and Stoke Newington (Ms. Abbott) asked the Chancellor directly:
    "What is your definition of a recession?"
    The Chancellor replied:
    "I think I would take as a definition of a recession the one that we have traditionally accepted and that is a reduction in gross domestic product over a measurable period of time, probably two or more quarters, although there is no formal and wholly agreed definition of recession. That is the sense in which I would use the term: a reduction in GDP over perhaps two quarters, a six-month period … If we have a reduction in GDP over a measurable period of time then I think it is reasonable to begin thinking in terms of a recession, but that is expressly not what we are forecasting at the moment."
    We have a definition of a recession and a forecast that a recession would not happen.
    An important table in the autumn statement, table 2/2–11, predicts the economic prospects for 1991. That table is entitled
    "Gross domestic product and its components".
    It states that, for the first half of 1990, for the GDP at factor cost, the average measure is 180·3. It drops in the second half of the year to 178·2. In the first half of 1991, it is 178·3 and it then rises rather mysteriously in the second half of 1991 by two full points. The consequence of

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    that is clear. The autumn statement forecasts, according to the Chancellor's predictions, a drop in the level of output not only for two quarters, but for four quarters in succession.
    By the Chancellor's own definition and prediction, are we not in an extremely serious recession? We should have a lot less nonsense from the Chancellor, who queries and quibbles over whether we are in a recession. We know we are in one. All the companies and businesses in our constituencies are aware of that, and the Chancellor's statistics prove that we are in one. Why cannot the Government come clean about that?
    We are also aware that we are in a recession as a result of other things that the Government are predicting. Only a few months ago, the Budget predicted that manufacturing output would increase by 0·75 per cent. in the first half of next year. The Chancellor now predicts that it will fall by 0·5 per cent. over the whole of next year. In the Budget, investment is forecast to decline by 0·75 per cent. in the first half of next year. However, the autumn statement predicts that it will fall by 1·75 per cent. in the whole of 1991. In the budget, exports were forecast to rise by 5·5 per cent., but that has been revised downwards to rise by 2·5 per cent. The figures for manufacturing production released yesterday confirm the downward trend and the pattern of negative growth.
    The Government's record on prediction is just as bad as their record on economic management. However, prediction is important because the only message in the Conservative party's shop window—if we could get the Government to admit it—is that, while things may be bad now, it will not be long before they will get better because we shall see everything improve in the years ahead.
    We remember the hype of the so-called economic miracle when the then Chancellor of the Exchequer, speaking from the Dispatch Box in the 1988 Budget debate, told us that we had overhauled what was then West Germany and were on track for catching up with Japan. It has been the persistent standard trick of the Conservative party grossly to exaggerate achievements and unrealistically to minimise the potential downturn when their policies run into it.
    Let us consider the Government's forecasting on inflation—that "temporary blip" which occurred in 1988. We remember that same Chancellor telling us not to worry because it was just a monthly phenomenon, a blip which would soon blip away like one of the little dots that appear for a passing second on a television screen, a minor irritant, no more—just a passing detail. We know what happened. We have had inflation at distressing levels ever since.
    We know that the forecast for 1988 turned out to be 62 per cent. wrong and that the forcast for 1989 turned out to be 30 per cent. wrong. We know that the autumn statements last year and this year are 100 per cent. wrong. Last year at the time of the autumn statement, the Chancellor of the Exchequer stood at the Dispatch Box and told us not to worry because inflation would be 5·75 per cent. now. What is it? Nudging 11 per cent. That is the Government's record on forecasting. People are asked to rely on those predictions and assurances that things will be better next year. We have been told exactly the same story in previous years.
    The Chancellor of the Exchequer relies on the retail prices index coming down. I should hope it will come down next year. I hope that inflation will not be at these
    582
    record levels next year. Indeed, the Government would have to do all the silly things that they have done in the past year all over again in order to maintain it at an RPI level of 11 per cent.
    There was a time when the Chancellor found the RPI an awkward statistic. That was when, to quote the right hon. and learned Member for Surrey, East (Sir G. Howe), the Chancellor was using his "considerable talents" to explain away the Madrid conditions. He felt that there was a problem with the RPI. He had all sorts of other definitions of inflation. There was the rather ingenious "proximate rate" which made a fleeting appearance during what one might call the Madrid season, which appears to have come to an end. We also had the "underlying rate". As I understand it, there are two versions of the underlying rate. One involves stripping out the mortgage rate; the other is a bit bolder, and involves stripping out the mortgage rate and the poll tax, which gives an even better underlying rate. Obviously, the British people cannot strip out either when it comes to paying bills.
    What criteria are we to apply next year to this year of recovery? The Chancellor was asked that very point by my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) during the exchanges on the autumn statement. My right hon. Friend asked:
    "When the underlying rate was less than the RPI, the Government made a great deal of it. Now that it is likely to be more than the RPI"—
    as has been predicted for next year—
    "may we have his forecast of the underlying rate of inflation, excluding mortgage interest, at the end of next year, the fourth quarter?"
    The bland reply from the Chancellor of the Exchequer was:
    "As the right hon. Gentleman knows"—
    here is sugar to the pill—
    "—he is a very distinguished former Treasury Minister"—
    that is undoubtedly true—
    "—the underlying rate of inflation has never been published, for perfectly understandable reasons."—[Official Report, 8 November 1990; Vol. 180, c. 127.]
    Another of the Chancellor's endearing tricks is to invent new conventions and rules whenever it suits him. He should tell the Central Statistical Office that the underlying rate—the RPI minus the mortgage rate—has never been published for understandable reasons. I have in my hand a copy of the document which it issues every month on inflation figures. One column states, "RPI—all items" and another states, "RPI—except mortgage interest payments". The answer to my right hon. Friend's question is set out precisely month by month.
    The Chief Secretary to the Treasury (Mr. Norman Lamont): No.
    Mr. Smith: There can be no dispute about it. The figures for the RPI minus mortgage interest rate payments are in the Central Statistical Office handout. It looks as if we may have to wait for an explanation until the right hon. Gentleman makes his speech.
    Why on earth is it difficult to forecast the underlying rate of inflation? I suggest that it is not impossible, that it is just a matter of discretion and that the Chancellor wants to keep vague the criteria that apply. He used to find the RPI uncomfortable and he thinks that it might he in his favour next year; so he wants to go by that and abandon his previous preferred alternatives. [Interruption.] As he is explaining it to the Prime Minister—and there is no doubt

    583
    that that is necessary—perhaps he should give us the benefit of that advice. We might take it, unlike the right hon. Lady. The Chancellor is treading on stony ground, as is shown by the record of his predecessors in trying to explain matters to the Prime Minister.
    If I had any doubt that the underlying rate is an important issue. I would rely on the evidence of the Chief Secretary to the Treasury, who did not bound to his feet recently, who said on the radio programme "PM" on 11 May that the
    "underlying rate was the real thing that matters."
    If he is right, let us know what the underlying rate will be next year.
    The Chancellor of the Exchequer has said various things about this. For example, in June he said that the
    "rate of inflation appears misleadingly unreasonable".—[Official Report, 7 June 1990; Vol. 173, c. 772.]
    If it is, he can put it right by giving us the proper criteria. If he does not tell us what criteria we should adopt, we shall not know whether we are back on track, as he says we shall be.
    One of the real problems affecting the Government in their handling of economic policy and one of the reasons why there is a leadership contest in the Conservative party is the Government's lack of credibility. That is felt not only by the electorate—something we all know from the responses of our constituents and can see in the movement of the opinion polls—but in the financial markets, which do not believe the Government or their economic purposes. We have seen that in the way that the Government entered the exchange rate mechanism.
    Substantial additional evidence of the lack of credibility of the Government and their economic policy was provided by the right hon. and learned Member for Surrey, East in his remarkable statement to the House yesterday. We know now that the Prime Minister agreed in principle to join the exchange rate mechanism only when she was cornered by the Chancellor of the Exchequer and the Foreign Secretary and threatened with their resignations unless we joined the ERM. We did not know that before the remarkable speech made by the right hon. and learned Member yesterday. Now, we know that the Prime Minister was taken at pistol point to sign up to join.
    The Prime Minister (Mrs. Margaret Thatcher): Nonsense.
    Mr. Smith: If the right hon. Lady thinks that it is nonsense, then she is casting doubt on the credibility of the right hon. and learned Member for Surrey, East. I should prefer him as a witness.
    We also know, from that dismissive phrase used by the right hon. and learned Gentleman about the Chancellor of the Exchequer using his "considerable talents" to explain away the Madrid conditions, how seriously they were taken by senior Ministers. They knew that it was hocus-pocus from the start. They were there to allow the Prime Minister to look as if she were getting gently off some hook. They had no intention of tempering the Madrid conditions, which is why they were slung away when the decision to enter the ERM was taken.
    People know perfectly well, because they have memories, that in that famous Walden interview, the Prime Minister said that the ERM was a higgledy-piggledy system.
    Mr. Nicholas Budgen: Quite right.
    Mr. Smith: That sedentary intervention came from one of the Prime Minister's more noted supporters. The No Turning Back group has temporarily found its voice.
    The next stage in the credibility problem will come with the hard ecu. I have been listening to various apologists on various sides of the argument appearing on radio and television with great frequency, last night, this morning, over lunchtime. One can hardly turn on a radio or a television without a Cabinet Minister or some other senior figure from the Conservative party offering his views on who should be Prime Minister. Some of us think that that might be something in which the electorate might be interested. For the moment, however, we are denied the test and we have to listen to a parade of views.
    Ministers all say one thing, however, and that is this: "There is no real problem about the way forward into Europe because we have the hard ecu, and the hard ecu solves all problems." Does it? There is a fundamental question which we have raised in a previous debate and we shall raise it again today: is the hard ecu an alternative to the single currency or an alternative means of achieving it?
    The right hon. and learned Member for Surrey, East reminded us yesterday of the Prime Minister's dismissive view of the hard ecu when she reported after the Rome summit. I believe that he said that there was a casual comment and an impulsive answer. I do not know how he would classify it—probably he would say that it was both a casual comment and an impulsive answer—when the Prime Minister said that the hard ecu was not likely to be widely used.
    After a little research, I discovered that, when the Prime Minister returned from the Dublin summit in June, when I think the hard ecu proposals were first presented to the other colleagues, she was asked about these matters. She said:
    "Our proposals"—
    that is, for the hard ecu—
    "would lead to a common currency which people could choose to use more or less as they wished, or they could continue to use their own currency. I do not believe that that formula could develop into a single currency." —[Official Report, 28 June 1990; Vol. 175, c. 493.]
    That is fine. So far, so good. The right hon. Lady said that the formula could not develop into a single currency.
    We have had various evasions on the subject by the Chancellor of the Exchequer, but I shall not bore the right hon. Gentleman by going through them. I turn instead to the evidence given to the House of Lords Select Committee on European Communities by the Financial Secretary to the Treasury, whom I am glad to see in his place. He was asked about the Government's proposals for the hard ecu. We have him speaking on behalf of the Government while giving evidence to a Select Committee:
    "One goes down the path which our proposals map out and can go on from that to a single currency. I think that is the important point to get across, and perhaps this has not yet been fully understood."
    I do not think that it has been fully understood by the Prime Minister. The Financial Secretary to the Treasury added:
    "I would go on to argue personally that the next stage of having a single currency"—
    notice "the next stage of having"—
    "could actually happen more quickly by going down this path than by going down any prescribed institutional path, setting up institutions at rigid dates, and trying to make it all happen

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    that way. That is a personal view and I could well be wrong about it. You could certainly mount a powerful argument that it would be a quicker path."
    What is it? Is it a path to a single currency or is it not? If it is, is it a quicker path or a slower path? Well, it could be. Some say one thing and some say another. It is no wonder that the right hon. Member for Henley (Mr. Heseltine) said at lunchtime today, apparently, that the Prime Minister's difficulty is that she cannot unite the Cabinet behind her European policy. I tell the right hon. Lady that she will not find unity in ambiguity in the way in which she is seeking to approach these matters, by saying that some say one thing and some say another.
    Mr. Philip Oppenheim: The right hon. and learned Gentleman is on dodgy ground.
    Mr. Smith: There can be no more dodgy position than the Government's position on Europe. Fundamental ambiguity lies at the heart of the hard ecu proposal. It is a simple point—
    Mr. Geoffrey Dickens: Will the right hon. and learned Gentleman give way?
    Mr. Smith: No.
    Does it or does it not lead to a single currency? Is the hard ecu intended to be a failure as a policy, or a success? We want an answer to that question during the debate. Unless the question is answered, there will remain a lack of credibility on the part of the Government.
    Mr. John Townend: Will the right hon. and learned Gentleman tell us whether the Opposition are in favour of a single currency and a central European bank?
    Mr. Smith: I set out my views on those matters earlier, in the debate on the exchange rate mechanism. [Interruption.] The Chief Secretary knows that I can speak for myself. As I said during the debate on the exchange rate mechanism on 23 October—
    Mr. Norman Lamont: What was that?
    Mr. Smith: The right hon. Gentleman was present for the debate, so he heard what I said.
    Mr. Lamont: I did not understand.
    Mr. Smith: That is a different matter. Comprehension is entirely a matter for the right hon. Gentleman, and I cannot assist him on that. I can only explain and hope that he comprehends.
    Mr. Lamont: Tell me again.
    Mr. Smith: We have told the Government time and again, as I did on 23 October, that at a time
    "when the gap between Britain's performance and that of other members of the Community is so wide, it would not be prudent to commit ourselves to an irrevocable exchange rate or to a single currency."—[Official Report, 23 October 1990; Vol. 178, c. 273.]
    We have made our views clear. The economic position into which this country has been led by the Government's economic policies is such that there would be a grave risk at this stage if we were linked to an irrevocable exchange rate—[Interruption.] Conservative Members may not like the policy that I articulate, but they should not claim that it has not been articulated, because I have clearly done so.
    Mr. Dickens: I am grateful to the right hon. and learned Gentleman for giving way in the middle of his entertaining speech. If he ever became Prime Minister—and he has more chance of that than the Leader of the Opposition—would he go to Europe to negotiate, and perhaps move forward to stage 2, when no one could explain exactly what was meant by stage 2? Our Prime Minister is not that sort of person; she wants to know the detail. That is the difference between the two parties.
    Mr. Smith: The hon. Gentleman should not worry about the leadership of the Labour party. He will have a major problem over the weekend trying to decide who to vote for as the future leader of the Opposition—
    Mr. David Shaw: She is sitting on the Front Bench.
    Mr. Smith: That is absolutely right. The hon. Gentleman, not for the first time, accidentally points to the truth. The Prime Minister is sitting on the Front Bench and she may win the leadership struggle, but not the next election, and will then take up office as Leader of the Opposition. I know that it is a chilling thought. At least 100 Tory Members—although the figure may have risen since lunchtime—will find that a fearful thought.
    The hon. Member for Littleborough and Saddleworth (Mr. Dickens) says that he cannot understand stage 2 and, what is more, that the Prime Minister does not understand it. In that case, they should ask for the proposals to be clarified. They should not simply walk out of meetings and denounce other people: they should ask intelligently for the proposals to be clarified. They should put questions with persistence, intelligence and perspicacity—but, as the right hon. and learned Member for Surrey, East advised and admonished them to do, they should continue, within the structure of the European Community, to make Britain's case understood. They should employ constructive diplomacy on behalf of our country.
    The real problem in the context of the European Community and the real problem in the context of our domestic economy are virtually one and the same—it is the weakness of our economy after 11 years of Conservative government. I have already mentioned the illusion—
    Mr. David Howell: The right hon. and learned Gentleman says that we should not worry about the Opposition, but some of us are worried because 180 members of his party—which is practically the whole of his party—believe in the Labour Common Market safeguards committee, which is in total opposition to monetary union and membership of the exchange rate mechanism. Is that the right hon. and learned Gentleman's position?
    Mr. Smith: If the right hon. Gentleman is reduced to that sort of remark, which is both pathetic and inaccurate, we can well understand why he had such a short ministerial career, even in a Government headed by the Prime Minister. We are accustomed—[Interruption.]
    Mr. Speaker: Order. Hon. Members should settle down.
    Mr. Smith: As I was pointing out before I was irrelevantly interrupted by the right hon. Gentleman, the big difficulty we face, as he must know—
    Mr. Norman Lamont: The right hon. and learned Gentleman explained that it was his view that we should

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    not have a single currency in Europe for the moment. He did not think the time was right. Is there a difference in principle between his policy and the Government's policy on whether we ought to have a single currency?
    Mr. Smith: I am not clear what the Government's policy is. Is it the Government's policy to have a single currency? [Laughter.] The right hon. Gentleman should stop laughing and address himself to that question. Given our economic conditions, it is premature to decide whether we could be involved in an irrevocably fixed exchange rate. That is the crucial river that has to be crossed. Once that river is crossed, it is difficult to see how one could cross back.
    I am told by some Conservative Members that the hard ecu is an alternative to moving to a single currency, and by others I am told that it is a quicker way of getting to a transitional mechanism for moving towards a single currency. I deduce that some members of the Government want a single currency and others do not. We have made it absolutely clear that we would like to see established a number of matters on economic and monetary union which we think are essential components of the type of economic unity within the EC that we want to see. One is a strong regional policy which helps to preserve economic and social cohesion—[Interruption.] Perhaps we could rise above the level of schoolboy remarks from the Financial Secretary.
    I do not understand how Conservative Members can think that the social cohesion of the EC is such a light matter. In the EC, 11 members think that it is sufficiently important to be regarded as one of the major objectives. It is one of the objectives of the Single European Act, for which Conservative Members voted in the House.
    We want to give substance to the ambitions that were enshrined in those proposals for the EC. Of course we want to see a strong regional policy. We also want to see a strong social dimension to the EC, which is why we want to see the social charter, and the social action programme coming on its heels, which the Government seek to block against the wishes of the other 11 members of the Community. That is why we want to see changes in the way in which we decide environmental and social policies.
    That policy cannot be encapsulated in one sentence: it is an extremely complex and difficult matter which Labour Members take seriously because it is important for Britain's future. It is a matter on which, according to the right hon. Member for Henley, the Cabinet cannot unite and on which the Government will never be able to unite the country.
    Mr. Norman Tebbit: Let me put to the right hon. and learned Gentleman the proposition that the hard ecu is, in essence, a swift path to the river that one would have to bridge to reach the single currency on the other side. It is a swifter way to arrive at that point of decision. Is the right hon. and learned Gentleman saying that there are circumstances in which he would say that he was satisfied on the conditions for a single currency, or is he saying no to that? In other words, are there circumstances in which he would be willing to give up Britain's unilateral control of its own economic policy?
    Mr. Oppenheim: Yes, answer.
    Mr. Smith: The hon. Gentleman, who is a member of the No Turning Back group, might allow me to reply.
    We do not support the proposal for the hard ecu, which is a fundamental issue of ambiguity in the Conservative party. The right hon. Member for Chingford (Mr. Tebbit) takes the view that he does only because he does not fully comprehend the trick that has been played on Conservative Members by the Foreign Office and others in producing a hard ecu with the purpose of leading to a single currency. When I last spoke on that issue in the debate about the exchange rate mechanism, the right hon. Member for Chingford was sufficiently concerned to ask questions of the Minister then addressing the House, and he was right to be so concerned. However, I cannot answer hypothetical questions about the future.
    We will judge progress by the way in which we can achieve a proper regional structure for the European Community and for the social dimension. More important than all of that is the capacity of this country's economy to converge to the European standard. It is one thing to contemplate monetary arrangements of that kind if one has a strong economy, but quite a different thing if one has a weak economy, such as that being run by the present Chancellor of the Exchequer.
    One would think from the tenor of the questioning that there is no ambiguity or conflict of policy in the Conservative party. If that is so, why is it having a leadership election? If Conservative Members are all agreed on European Community policies, it is passing strange that the right hon. Member for Henley has chosen to plunge his party into the most divisive leadership contest seen since the end of the war—and perhaps even in the history of the Conservative party. They cannot get away with it as easily as that. It is a question that fundamentally divides the Conservative party, and unless Tory Members can reconcile their differences, it will lead them into continuing difficulty.
    The Minister of State, Home Office (Mr. John Patten): The right hon. and learned Gentleman should look behind him. Labour Members do not understand him, and neither does the Leader of the Opposition.
    Mr. Smith: Conservative Members seated behind the right hon. Gentleman certainly do not understand him.
    We should address the fundamental problem affecting Britain here and now—apart from what may happen in developing the economic European Community in four, five, six or seven years' time. Stage 2 is only projected to start in 1994, and further proposals will not come forward before 1997. Anyone would be hard pressed to put a date on some of the decisions that must be made. Nevertheless, they are important decisions, and will have to be taken by the Government of this country at the appropriate time. Meanwhile, here and now—in 1990—there is much that we can do to prepare for our future in the Community, by sorting out the basic problems in the British economy.
    Thank goodness that the illusion of 1988—the notion that we had overtaken West Germany and were pressing hard on Japan—has, for reasons of embarrassment, ceased to be advanced by Conservative Members. The truth is that Germany is well ahead of us, France is significantly ahead of us, Italy is overtaking us, and Spain is coming up behind. That is the fruit of 11 years of Conservative stewardship of our economy.

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    The economy will not be put right by the policies in the Gracious Speech, whose most alarming aspect is that it promises no change in Government policy. Now, at the end of a decade, we have a massive balance of payments deficit, the highest interest and inflation rates of any industrialised country, and rising unemployment.
    It is not the first time that Britain has faced economic problems under a Conservative Government. I occasionally read publications produced by the City—some from institutes that are sympathetic to the Conservative party, but others that are more objective. The Greenwell Montagu gilt-edged research paper, "UK inflation in the 1990s", highlights the tendency of British Governments
    "to over-expand demand and to preside over periods of over-rapid expansion, mistaking them for the beginning of the catching up of British economic performance with those of our competitors and the beginning of a virtuous circle."
    We have not heard those phrases from the Conservative party.
    The report continues:
    "There have been three phases of this sort, all of which had serious consequences.

    (a) Maudling's dash for growth 1963–64;

    (b) Barber's boom, 1972–73;

    (c) The Lawson boom, 1986–88."

    We are back in the stop phase of stop-go economics for the third time under Conservative guidance of the British economy. The Government tell us, as we are stuck in the stop of yet another stop-go following the depressing and worrying cycle of economic mismanagement, that we will soon be back on track.
    How can we be back on track when, even in the midst of a recession in 1990–91, the Treasury predicted a balance of payments deficit of £11 billion? Under the previous Chancellor, it was argued that the terrible balance of payments figures were the result of excessive demand and a so-called investment boom. Those are not occurring in 1990–91, yet we still have massive balance of payments deficits.
    Does it never occur to the Government that we need a change of policy, not merely because it has not worked under this Government but because it has not worked under previous Conservative Governments? We end up in difficult economic situations, and the Labour party has to be elected to deal with them. It has happened before. The cycle mentioned by the learned authors of the Greenwell Montagu report is not complete. Usually it has to be completed by the British electorate. We are facing such a problem now and we shall have to tackle the underlying problems of the British economy. No one seriously believes that this is some minor matter of a mismatch of demand and supply. There are serious structural defects in the British economy, which require a supply-side policy to deal with them.
    As, regrettably, unemployment rises in the regions and nations of Britain, the need for a regional policy will become more manifest, and its neglect even more apparent. Just before I came into the debate today, I met representatives of 500 workers of James Howden, a company in Renfrew in Scotland. Five hundred people are facing redundancy there in a modern factory, which was opened by the Prime Minister in 1981 and which is widely regarded as having the best of technological excellence. Five hundred people will lose their jobs. That is what is happening in Britain today.
    Let not the Government tell us that there is no recession and that this is some temporary problem—let them look
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    into the faces of the people who are facing redundancy and tell us. Let the Government understand the consequences of their economic policies. This is not really an academic matter, as it affects the living standards and life opportunities of all the citizens of this country. The longer we continue to neglect the fragile technological base of British industry, the longer it will take us to match our competitors and to get up speed for Europe. The longer we neglect education and training the more difficult our problems will be.
    In another report that I came across, Mr. David Lomax, the group economic adviser for National 'Westminster bank, described the Government's training record as "execrable". I do not think that any Opposition Member has thought of such a dismissive and abusive term, and that quarter is not entirely unsympathetic to the Government.
    In powerful speeches yesterday, my hon. Friends the Shadow Education and Employment Secretaries outlined the major defects in Government policy and the Labour party's proposals for proper education and training. As we prepare for 1992, it is crucial that we get those things right, that we pay attention to building up the technological base of British industry, that we have a strong and vigorous regional policy and a new commitment to education and training, and that we give the manufacturing sector of the British economy the place it should have had during the neglected decade of the 1980s.
    The Opposition intend to build for success in Britain and in Europe. We have a vision of a fair society in which world class public services provide the best of facilities for all our citizens—a society in which care and compassion are active ingredients in social policies and where those least able to help themselves are given a helping hand by the rest of the community. We shall fight for that vision within Britain and within the European Community, but we also know that Britain cannot achieve these ambitions, which we hold on behalf of all our people, without a strong economy. That is why we shall tackle the problem of rebuilding the British economy patiently, purposefully, determinedly, year in and year out. [Interruption.]
    Mr. Speaker: Order.
    Mr. Smith: I shall explain to Conservative Members how we shall do so, and set out our targets for the supply-side regeneration of the economy. I shall set out what we have in mind. I fear that the Conservative party's problem is not merely one of comprehension, but one of understanding what the people of this country want. They want a strong economy and a fair society. Other European Community countries seem to be able to achieve those aims. The British people want that deeply, passionately and urgently. That is why they are turning in such large numbers to the Labour party, in order to make sure that a Labour Government are elected at the first available opportunity.
    4.19 pm
    The Chancellor of the Exchequer (Mr. John Major): Fond though I am of the right hon. and learned Member for Monklands, East (Mr. Smith), we have just heard the shallowest speech from the Opposition Front Bench for years. Stale jokes and cheap gibes are no policy for any Opposition who ever hope to form a Government. The right hon. and learned Gentleman spelt out his usual long

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    litany of criticisms of the Government, but he did not set out in any detail, or in any sense at all, clear policies on what needs to be done.
    In "Meet the Challenge: Make the Change" and in "Looking to the Future", the Labour party claims to have a selection of policies of which it is proud. So proud is the Labour party of those policies that Opposition Front-Bench spokesmen hardly ever mention them. What we get from them is absolutely nothing at all about the success of British industry over the past decade. They do not congratulate British industry on its record investment over the past decade. They never mention the dramatic improvements that British management and the British work force have brought about in terms of increased productivity. The trouble with the Labour party is that what is good for the country is bad for it, and it recognises that all the time.
    Mr. Dennis Skinner: Will the right hon. Gentleman give way?
    Mr. Major: I shall with great pleasure give way to the hon. Gentleman a little later.
    The right hon. and learned Gentleman referred to the quotation by my right hon. Friend the Member for Mole Valley (Mr. Baker) from Shakespeare's "Henry V". As I listened to the right hon. and learned Gentleman it was another, lesser-known poet, rejoicing in the name of John Gay, who sprang to my mind. John Gay was a master of burlesque. The right hon. and learned Gentleman may recall that he wrote:
    "I know you lawyers can, with ease,
    Twist words and meanings as you please;".
    [Interruption.] Opposition Front-Bench spokesmen seem to be remarkably boisterous when their policies have no credibility whatever.
    The right hon.and learned Gentleman mentioned the underlying rate of inflation. Of course we published in our document both the retail prices index and the underlying rate of inflation after the event. That is the information that he had. What I said to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), which he will understand as a former Treasury Minister, was that we never forecast the underlying rate of inflation for a sound economic reason. As we forecast the retail prices index, if we were also to forecast the underlying rate of inflation it would be possible to calculate interest rate assumptions, with very severe market effects. The right hon. Member for Ashton-under-Lyne understands that. It is a pity that the shadow Chancellor of the Exchequer does not understand it, too.
    Mr. John Smith: Will the right hon. Gentleman answer a simple question? How should we judge whether or not he is successful next year—by the retail prices index or by the underlying rate of inflation?
    Mr. Major: In due course the right hon. and learned Gentleman will see by both measures, and by the producer price index, how successful we are. The way to judge the success of policies is to see what the outturn of those policies is. I am content to be judged in that way.
    The right hon. and learned Gentleman also referred, with a total lack of self-knowledge, to what he rather
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    crudely called "Lawson's boom". I seem to recall that in 1987 and 1988 the right hon. and learned Gentleman was asking for ever lower interest rates to increase demand.
    Mr. Robert Sheldon: I understand why the right hon. Gentleman did not wish to give the underlying rate. It is the same argument as was used against giving the retail prices index and unemployment figures many months in advance. Of course, we have the autumn statement, which gives much more information and I could not understand why he was so coy about giving this further information to the House.
    Mr. Major: It was precisely for the reason that I have just given. If I gave the underlying rate of inflation forecast and the retail prices index forecast, it would be easy for anybody to calculate interest rate assumptions. The right hon. Member for Ashton-under-Lyne will know that that is not an attractive proposition.
    The right hon. and learned Member for Monklands, East made a great deal of the short-term problems that he perceives we have. He ignored the growth that we have had over the past eight years, the growth this year and the growth that we shall have again next year. Alas, he neglected to mention that. Of course, he wants to portray prospects as black as he can because he knows that, when inflation is heading down, we shall return to sustainable growth and a stronger economy.
    That is what concerns the right hon. and learned Gentleman. He knows that economic success for his country will mean political failure for his party. He knows very well that recovery is not just possible but probable because the underlying economy is incomparably stronger than it was a decade ago. Industry knows that, too. Last week John Banham addressed the Confederation of British Industry conference and said:
    "We must believe in ourselves and build on what has been achieved … We must not let our present difficulties obliterate the memory of the past 10 years. And this is precisely what is in danger of happening."
    Indeed it is. It is partly because Opposition Members see party advantage in denying the changes and improvements of the past decade.
    We should not be blind to the improvements that have taken place. Business investment has risen dramatically.
    Mr. Neil Kinnock: Manufacturing investment?
    Mr. Major: Over the three years to 1989, business investment rose by 45 per cent., which is an unprecedented increase. It is hardly surprising that that is not sustainable at this stage of the economic cycle. However, even assuming the modest downturn that we forecast this year and next, business investment will still be over 50 per cent. higher than when the Government took office in 1979. Over the past decade, the economy has grown faster than France or Germany. That is the first post-war decade in which that has happened. Also, living standards have risen enormously, with the real take-home pay of a married man with two children up by a third since 1979.
    Mr. Kinnock: This is a fraud.
    Mr. Major: I ask the Leader of the Opposition, who is muttering: which of those improvements are inaccurate and why do he and his right hon. and learned Friend never acknowledge them? Why do not they offer some real hope for our prospects in the 1990s? My statements are accurate and the Leader of the Opposition knows it.
    Mr. Giles Radice rose—
    Mr. Major: I shall give way a little later.
    I do not believe for a second that those achievements will vanish. They are fundamental and they will last. With other supply side improvements, they will improve Britain's economic fortunes throughout the 1990s. Do not be deceived. Our prospects in the medium and longer term remain excellent. In the 1990s we shall see the huge investment of the past few years bearing fruit as new capacity comes on stream; provided that firms remain competitive by containing their costs, it will continually help to close the current account deficit.
    I am wholly determined that the British economy will be ready for the challenges that lie ahead of us in the 1990s. I am wholly determined that we shall take the difficult decisions necessary now to ensure that it is. That is why we joined the exchange rate mechanism. That is why we shall stick with the tough policies that we have pursued and why I have no intention of reducing interest rates until I am satisfied that it is safe to do so.
    Mr. D. N. Campbell-Savours rose—
    Mr. Major: I shall give way in a moment.
    High interest rates, although painful, are bringing the slowdown in demand that is necessary to reduce inflationary pressures. As for our forecasts, as the right hon. and learned Member for Monklands, East who now clearly reads so much that is published in the City, will know, the overwhelming majority of analysts now agree with our forecast that inflation will come down next year to around 5·5 per cent. by the fourth quarter, and we intend then to keep it there.
    Mr. Campbell-Savours: Does the Chancellor agree with the former deputy Prime Minister who said yesterday that failure to enter the ERM in 1986 had been inflationary and had led to inflation?
    Mr. Major: No, Sir, and for the reason, which should appeal to the hon. Gentleman, that if we had entered the exchange rate mechanism at that time, we should have done so at a rate against the deutschmark of about 3·30 and 3·85. I am not convinced that it would have been the right time to enter. The right time to enter was when we entered. The moment the opportunity was there, we took the opportunity on the first available occasion when I judged that it was safe to do so.
    Mr. Skinner: On entering, will the Chancellor tell us whether he is prepared to take out his bat first wicket down?
    Mr. Major: So far as I am aware, the opening batsman is well played in and will stay there, I hope, for a long time to come.
    The current account deficit, to which the right hon. and learned Gentleman referred and in which he has apparently lost interest, so narrow is his span of interest, is now narrowing as a result of the low growth of import volumes combined with a substantially stronger growth of exports.
    Mr. Gordon Brown: It was £16 billion.
    Mr. Major: The hon. Gentleman says that it was £16 billion. He is the hon. Gentleman who, at one stage, was forecasting that it would be more than £20 billion this year. So much for accurate forecasts.
    Mr. Ken Livingstone: Will the right hon. Gentleman give way?
    Mr. Major: I shall give way to a former Lambethan.
    Mr. Livingstone: On the record of changes over the past decade, will the Chancellor comment on the fact that over that decade the proportion of our GDP going in exports has dropped by 3·5 per cent. of total GDP? Is that not the problem we face? What does the right hon. Gentleman propose to do to change that?
    Mr. Major: As the hon. Gentleman will know, the trend has been reversing itself, and exports have been growing substantially faster than imports over the past year or so and are projected to continue to do so. The expansion of growth of demand, actually sucked in more imports that domestic supply could not produce, but with the collapse and reduction of demand, it is moving back into equilibrium at a rapid rate.
    The slowdown in the economy points again to the trade deficit narrowing still further next year to around 1·75 per cent. of GDP.
    Mr. Radice: Will the right hon. Gentleman give way?
    Mr. Major: If the hon. Gentleman will forgive me, I have already given way more often than the right hon. and learned Member for Monklands, East. If he behaves himself, I may give way to him later.
    That trade deficit compares, for example, with Spain's current account deficit of 3·5 per cent. of GDP, which perhaps puts ours in a better perspective.
    As I made clear to the House last week, we intend to continue to maintain a tight fiscal stance both to support monetary policy and to squeeze inflation. By the end of 1990–91 we expect to have repaid £29 billion-worth of public sector debt over four years. That will save £2·75 billion in interest payments every year, the equivalent of a penny-ha'penny off the standard rate of income tax. We now expect a lower debt repayment this year than I had forecast in March at the time of the Budget, and lower than we enjoyed last year. But it is perhaps not only unusual but remarkable and encouraging that, at this stage of the economic cycle, with activity weakening, our central forecast for debt repayment amounts to £3 billion. Germany, for example, so often quoted against us as a virtuous economy, is likely to have a deficit this year in excess of 3 per cent. of GNP, while France's deficit this year is likely to be about 1·25 of GNP.
    As the autumn statement showed, we have not loosened our grip on public expenditure. We have made the difficult choices that were necessary and are not accommodating fully the higher than expected inflation either this year or in the planning totals that my right hon. Friend the Chief Secretary negotiated for the next three years. Instead of seeing a surge in the ratio of public expenditure to national income, as we have in past economic downturns, our plans maintain a stable ratio until 1993–94, when we expect it to resume its downward movement.
    Despite that restraint, within the overall settlement we have been able to keep our word and have not reneged on the spending commitments that we made. There has been

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    room for more resources to be allocated to key areas, especially to protect the more vulnerable groups in society. We have been able to maintain the real value of benefits that are paid to 10 million pensioners and 11 million people on income-related benefits; we have been able to increase spending on health between this year and next by £3 billion, which is a real increase of 5 per cent.; we have enabled British Rail and London Regional Transport to spend nearly £750,000,000 on safety measures in the next three years; and there has been an increase in provision for capital expenditure of £1·5 billion.
    Nor, in addition to those increases, have we overlooked the self-evident uncertainties in the world economy or at home. In view of those, we have set aside higher reserves in the next three years—up to £10·5 billion in the third year.
    Mr. Tam Dalyell rose——
    Mr. Major: Will the hon. Gentleman forgive me? I want to make a little progress.
    While Opposition Members speak at length about the problems that we face, as we saw from the right hon. and learned Member for Monklands, East, they are a little less clear, to put it kindly, about how to solve them. Their industrial strategy would not do so.
    Mr. Radice: Will the right hon. Gentleman give way?
    Mr. Major: If the hon. Gentleman behaves himself, later.
    Labour's industrial strategy amounts to a familiar programme of detailed intervention.
    Mr. John Smith: This is the House of Commons.
    Mr. Major: The right hon. and learned Gentleman says that this is the House of Commons. As he is sitting on the Front Bench, perhaps he should behave as though it were the House of Commons. Is it not interesting that every time we get to Labour's policies, Labour Members seek to disrupt whomsoever is at the Dispatch Box? Is that not because they know precisely what is in their policy documents, and what political poison it is? I am perfectly prepared to stay here until they keep silent so that we can discuss the policies that they will not talk about. In their document——
    Mr. Radice rose——
    Mr. Major: As the hon. Gentleman is unable to contain himself, I shall give way.
    Mr. Radice: I thank the Chancellor for at last giving way. Will he answer the question put by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith): Is the economy now in recession, or is it not?
    Mr. Major: If the hon. Gentleman is aware of the classic definition of recession—two quarters of falling output—he will know that it is impossible to know until we have the output figures for those two quarters, and we do not yet have those figures. If he wishes to know whether I think that it is probable that there will have been a downturn in output over two quarters, I have said several times that I think that it is probable. But I shall not know until the output figures are produced, and neither does the right hon. and learned Member for Monklands, East.
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    Let us return to Labour's industrial strategy. In its document, "Meet the Challenge, Make the Change", there is the quite extraordinary admission—this is from the new model Labour party—that the market can be tolerated only
    "providing the Government regulates it."
    So much for supply side socialism and for the new model Labour party. I dare say so much, too, for the right hon. and learned Gentleman's agreeable lunches in the City, if it reads his document.
    Dame Elaine Kellett-Bowman: He is chewing now.
    Mr. Major: The right hon. and learned Member for Monklands, East spoke for a long time—he is probably very hungry.
    What of the policies that would bring about this industrial renaissance from Labour? Let me tell my right hon. and hon. Friends what they are: a new national investment bank, a series of tax incentives to encourage investment, an enhanced regional policy, a British technology enterprise fund and, of course, and not to be missed, an increased role for regional enterprise boards and development agencies, all peopled with Labour's placemen.
    Some hon Members with long memories may think that that list has a familiar ring to it, and so it should. For medium-term industrial strategy, read Harold Wilson's national plan. The new terminology, brushed up and dusted down, may better fit the 1990s, but the policy would not. It failed in the 1960s and 1970s and would be equally disastrous if it were ever tried again in the 1990s.
    The right hon. and learned Member for Monklands, East mentioned unemployment. As for the labour market, this is a time when domestic conditions, reinforced by membership of the ERM, demand both wage flexibility and wage restraint. The whole of Europe seeks such flexibility—except, of course, the Labour party. I quote from "Looking to the Future". The Labour party argues that
    "there are … dangers in flexibility"
    for the labour market. Perhaps Labour thinks that there are merits in inflexibility. The whole of Europe is wrong and the Labour party is right. The Labour party has proposed its old friend, a minimum wage, at two thirds of national male average earnings, which would cause the loss of thousands of jobs for people on modest incomes—so much for Labour's plans for the vulnerable.
    Mr. Ian Bruce: Can my right hon. Friend estimate to what level manufacturers' costs would rise because of that policy and the effect on inflation if we were to have a Labour Government?
    Mr. MajorI cannot do that. Although I carefully read the Labour party's document, alas I found no such costing in it to show that.
    Of course, the right hon. and learned Member for Monklands, East is right to say that he wants more investment and more saving. I wholly agree. That is certainly the right objective. The question is, how shall we get it? We shall certainly not get it with his policies—not with plans to increase capital gains taxes, to introduce a new form of capital transfer tax and to reintroduce an investment income surcharge. I offer this thought to the right hon. and learned Gentleman—one cannot encourage savings by penalising the saver. One does not encourage

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    investment by damaging saving. All Labour's tax incentives would achieve is a distortion of investment decisions, damaging the quality and quantum of investment and reducing the return that it yields. 'That is what happened under the Labour Government in the 1960s and 1970s, yet Labour wants to try it again—no doubt, a crypto-policy.
    Labour's medium-term industrial strategy amounts to three things: savings—Labour will tax them; investment—Labour will distort it; the labour market—Labour will cripple it. All that is quite apart—[Interruption.] It is much more in the Queen's Speech than anything that the right hon. and learned Member for Monklands, East said. All that is quite apart from the fact that the Labour party has no credible policies to tackle inflation. Labour would not use a tight fiscal policy or high interest rates—that much is clear. For Labour, interest rates at any level are always too high and public expenditure at any level is always too low.
    For a while, the Labour party tried to shore up its credentials by saying that it would join the ERM, although only—let it be noted—on conditions that would transform the whole system. Now that option has gone. Labour now has only one distinctive policy left—the imposition of credit controls—and even that is withering away. The right hon. and learned Member for Monklands, East admitted that controls would not be "hermetically sealed". I think that saying that they would not be "hermetically sealed" is his way of admitting that they would not work. They would not. That is why they have been ditched all over Europe—by the French, the Italians, the Dutch and the rest of Europe.
    In recent months, policy on Europe and the debate on economic and monetary union have occupied centre stage. That is not surprising, for there is a great deal at stake in economic and monetary union. But the rapid push towards the Delors version of economic and monetary union owes almost everything to pressures for closer political integration in the Community and very little to the fundamental need for deeper economic and monetary integration. That was the message from the Rome Council, but it is the wrong way to approach such important and far-reaching decisions. What is needed is a constructive, practical and pragmatic approach. That is the approach that the Community has been following over the past five years or so. It has built on the undoubted discipline of the exchange rate mechanism, with the deutschmark providing the anchor. The result has been an impressive degree of convergence on low inflation in much of Europe.
    Our proposals are—agreed by the whole Government—to continue that successful evolutionary approach in the further moves now under discussion towards economic and monetary integration.
    Mr. Bob Cryer: Will the right hon. Gentleman be a runner in the second ballot for the Tory leadership? Will he make that clear?
    Mr. Major: The hon. Gentleman is in no position to yell from a sedentary position. There is not even agreement on the Bench upon which he sits on this issue. [Interruption.] Labour Members might as well agree with our policy, for it is clear that their party has none. That is why we have put forward our proposals for a European monetary fund and a parallel currency. They are practical and realistic and they will promote convergence and economic
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    integration beyond stage 1. Most important, they will enable the 12 member states of the Community to move forward together. That is an important development.
    The fact that some European figures attack our proposals should not worry us. They do so because our proposals are gaining ground—[Interruption.] The Opposition may not like it, but there is no point in people attacking policies that are not gathering ground. It is because our policies are gathering ground that some people attack them. I believe that they will win more adherents as the intergovernmental conference gets down to details. One of the points upon which we and our partners agreed at the Rome Council was that there needs to be a substantial next stage, which should involve the further development of the ecu. At present, the only worked-up proposals for stage 2 are ours and the Spanish proposals, which are built upon ours and are similar to ours.
    The IGC, which starts next month, will determine the future direction of the Community. It is therefore of enormous importance not just for this country but for the Community as a whole and for the wider Europe. We face some difficult negotiations—that is undeniable—but the House should remember that we are in the middle of the process. The IGC has not yet started. There is a long way to go. We should not underestimate for a second the strong desire both here and among our partners that we should not be sidelined in any way. Our European partners want the United Kingdom in the centre of the Community. We have played a leading role in recent years in the creation of an open Community based on free trade and the abolition of barriers.
    Our partners know that, and they know, too, that that would not have been achieved but for the leadership of my right hon. Friend the Prime Minister. I am convinced that we can and should continue to play that constructive and central role and that we shall be able to agree on a way forward on economic and monetary union that is acceptable to all 12 member states and, crucially, equally acceptable to right hon. and hon. Members who have a direct interest in what is determined.
    We must not trivialise the debate. The Leader of the Opposition, when asked about a single currency—perhaps one of the most important issues before the country for years—said:
    "We can certainly have the Queen's head on our currency. I would be very much in favour of doing that."
    That is nice to know. It is good to see a precise appreciation of these complex points, but when pressed on that and asked whether he thought that as long as the Queen's head was on the coin it would not matter if there were a common currency or a single currency, the right hon. Gentleman said:
    "That is the whole point that Leon Brittan and Jacques Delors and everybody else has made."
    Actually, it was not: their points were altogether deeper, but let that pass.
    Do not the Opposition comprehend the seriousness of this issue? The Delors report advocates a single monetary policy controlled by a non-resident bank that might be independent and not answerable to national Parliaments. That would be imposed by politicians, not decided by choice. Do not the Opposition realise that, whatever is stamped on either side of a coin, that coin must have a single unvarying value in terms of all other Community currencies? Those are issues of vital importance to

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    Parliament and our future, and they deserve much more than the right hon. Gentleman's glib answers to questions that he does not understand. He clearly does not understand what he would commit us to were he in government. He would simply follow the lead of others and join the end of the queue without having the faintest idea what he was queueing for: "The other 11 people seem to know, so it must be right—we will join the queue." That is the limit of the right hon. Gentleman's understanding.
    We know what is at stake, however: the whole future direction, composition and nature of the European Community. I believe that we must be a part of it, building, developing and shaping it. Our partners believe that too, which is why I am confident that we shall be able to negotiate a way to success in the intergovernmental conference that starts shortly.
    The current slowdown in the economy is in no sense comfortable but it is absolutely necessary, and once it is over, once inflation is heading downwards again and growth is picking up, as will happen, we shall put our problems behind us and begin to build on the formidable array of our achievements of the past decade. For when people get the chance to choose once again between a party that has principles and a party that has abandoned them, between a party that delivers freedom and a party that inhibits it, between a party that builds prosperity and one that merely seeks to redistribute it, I believe that they will vote for the consistency, courage and conviction with which my right hon. Friend the Prime Minister has led this country so successfully for so long.
    Mr. Nicholas Bennett: On a point of order, Madam Deputy Speaker. I seek your advice about remarks made by the Leader of the Opposition during my right hon. Friend's speech.
    When my right hon. Friend was giving the House some statistics about the increase in business investment in the past few years and the relative success of the British economy compared with France and Germany—[Interruption.]
    Madam Deputy Speaker (Miss Betty Boothroyd): Order. I must hear the point of order, and the hon. Gentleman must come to a point of order with which the Chair can deal.
    Mr. Bennett: Once my right hon. Friend had given those good news statistics, the Leader of the Opposition was distinctly heard to say that they are a fake. That was clearly a reflection on my right hon. Friend and his officials. Would the right hon. Gentleman care to withdraw the remark?
    Madam Deputy Speaker: That is not a point of order for the Chair. It may be a debating point, but the Chair has no responsibility for that.
    4.53 pm
    Mr. A. J. Beith: That point of order further illustrated the fact that proceedings in the House have had a slightly unreal air about them ever since the right hon. and learned Member for Surrey, East (Sir G. Howe) changed the course of events by his personal statement yesterday afternoon. The result of that statement was to throw wide open the chasm in the
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    Conservative party on Europe, an issue which should be central to the Gracious Speech and which is central to the future of this country. Yet the same issue divides the Labour party as firmly as it divides the Conservative party. The remarks that the right hon. and learned Gentleman made about stretching language to accommodate different points of view, true as they are of the Government, were shown to be equally true as the right hon. and learned Member for Monklands, East (Mr. Smith) sought to explain his position on certain fundamental European questions this afternoon.
    I cannot believe that the Chancellor—who, fortunately for him, was not interrupted by any background noise from those immediately around him this afternoon—has no view as to what the nature of a future European monetary system should be. I cannot believe that he imagines a European monetary system with divided responsibility for monetary policy in which the politicians of any one country, or indeed the Council of Ministers, could undermine sound money by continually interfering in the running of monetary policy by a central bank. If the Chancellor has such a view, I wish that he would expound it and explain how his hard ecu system would work.
    The issue may be academic, but it is interesting to examine what the Chancellor's real views are. I say that it is academic because it does not have a hope, but if the Chancellor believes that it is a serious contender perhaps he will explain what would happen if a member country with substantial public sector deficits decided to go on printing more and more money and exchange it into hard ecus at whatever value the bank cared to name. Sooner or later the central banking institution—the Eurofed—would say to that country, "Sorry, the game is up—you cannot run public sector deficits like that and take part in our scheme, so we shall interfere with your supposedly sovereign power and stop this continuing."
    Inherent in the right hon. Gentleman's scheme is the very denial of sovereignty which worries the Prime Minister so much. I find this one of the necessary and acceptable parts of the scheme. It is not possible to run such a system without getting away from the possibility that any one country could print money, but the Prime Minister clings tenaciously to the desire to be able to print money on whatever terms she or her successors choose.
    This is why no form of words and no structure can paper over the differences. Perhaps the Chancellor would not be in a position to insist that his scheme was seriously workable unless he put his hat into the ring and won, but unless he does so there is no hope of his scheme being taken seriously.
    I wish to concentrate on a few key points in what I hope will be a brief contribution. The first is growth, and what the Chancellor said about it. He spoke today about the prospects for improved growth in the latter part of next year. I do not understand how he deduces that from what he forecasts about current events. He talks of an average growth of 0·5 per cent., yet from that he concludes that he can achieve 2 per cent. growth at some time in the year. I do not know what he means by that figure, unless it be that there will be a substantial spurt of growth in the economy in the latter part of next year. Is that to be achieved by a careless policy on interest rates? It certainly does not flow logically from what the right hon. Gentleman has described as happening in the economy so far.
    For that growth to happen at all, there would have to be, as the right hon. Gentleman himself concluded a high

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    level of investment. He assumes that investment will remain on a plateau, but how will it do that if, as he already forecasts, the margins for business are effectively halved in the course of the year? How will a high level of investment be achieved from lower profitability? Put together, the Chancellor's forecasts do not appear to add up.
    I am worried that the Chancellor does not show any real anxiety about the likely level of underlying inflation next year. It is not true that he has failed to forecast the underlying rate. His denials are unnecessary, because, when answering me during exchanges on the autumn statement on 8 November, he said:
    "I expect underlying inflation also to fall next year … to broadly the level of the headline rate."—[Official Report, 8 November 1990; Vol. 180, c. 126.]
    If that is not a forecast, I do not know what is, but it is a forecast that our underlying inflation will be roughly double that of our main competitors. The Chancellor may want to bask in the glow of lower headline inflation. but he must recognise that what he knows to be continuing high underlying inflation is a serious problem for the British economy and one to which he has not yet forecast a solution.
    Part of the solution to that problem lies in the very disciplines that his right hon. Friend the Prime Minister finds so irksome—the disciplines involved in the kind of system being run by our European partners. Thus we get into the area opened up by the right hon. and learned Member for Surrey, East. In passing, I wish to pay tribute to something that has not been mentioned so far—the right hon. and learned Gentleman's work as Leader of the House. I worked closely with him in the House of Commons Commission and his work will stand the House in very good stead and will prove, to be of real and lasting benefit.
    Having worked closely with the right hon. and learned Gentleman, I always found him to be a reliable and sound witness. When matters are in dispute, I am inclined to accept his view, particularly when it comes to describing what happened in the Government five years ago. At that stage, the right hon. and learned Gentleman decided that we should be part of the exchange rate mechanism. I am not quite sure from what he said whether the right hon. Member for Blaby (Mr. Lawson) had reached that decision then, but we need not worry too much about that, as he arrived at the conclusion shortly afterwards.
    Five years ago, the right hon. and learned Member for Surrey, East decided that we should be part of the European monetary system's exchange rate mechanism. My right hon. and hon. Friends and I sensed that that was right, and on 29 January 1986 we tabled a motion to the effect that this country should enter the exchange rate mechanism. The Government strongly resisted the idea that we should join, and a vote was taken on the matter. I am pleased to tell the House that the hon. Member for Clwyd, North-West (Sir A. Meyer) voted with us on that occasion. The right hon. Member for Henley (Mr. Heseltine) voted against the motion. The right hon. and learned Member for Surrey, East was mysteriously absent and did not vote but abstained—like the entire Labour party, which at that time was a long way from having anything like a policy on the exchange rate mechanism.
    The Prime Minister might like to borrow the words used by the hon. Member for Sedgefield (Mr. Blair) when we debated that motion in 1986. The hon. Member for
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    Sedgefield is generally regarded as one of the more European enthusiasts in the Labour shadow Cabinet. He said:
    "The first consequence is that the EMS is essentially a deutschmark bloc. It could be said that we would be putting Herr Pohl of the Bundesbank in 11 Downing street. He might be preferable to the present incumbent, but we should yield our freedom of action."—[Official Report, 29 January 1986; Vol. 90, c. 990.]
    The views of the shadow Cabinet bear an extraordinary similarity to those of the Prime Minister. We should have joined the exchange rate mechanism much earlier. Had we done so, we would not now be paying such a high price. We would not have had high interest rates or high inflation for so long. Following our recent decision to join, we would not now be unable to reduce interest rates further because, were we to do so, we would hit the bottom margin of our wide band in the exchange rate mechanism.
    The Government must face up to the issues about a single currency and a central bank. As the Chancellor said with reference to the Leader of the Opposition, those are not issues about whose head appears on bank notes. The Chancellor cannot simply accuse the Leader of the Opposition of basing his arguments on that point because the Prime Minister is also worried about the head on bank notes. She is worried about the title of the pound sterling. She sounds more and more like Harold Wilson in his latter years.
    The issue at stake is whether we are to have sound money. Are we to have a currency in which people will want to be paid because it is sound? If many of my constituents were offered the choice of being paid in deutschmarks or in sterling, and were given even the briefest sign of what the relative values of the currencies were likely to be, they would probably opt to be paid in deutschmarks. They might prefer to have the money printed in a more familiar form, just as many of them now use Scottish pound notes which, rightly, do not have the Queen's head on them. They are interested in the value of the currency.
    Will their savings decrease in value? Will they be able to buy next year what they could buy this year with the little that they have pout away for retirement? That is the kind of guarantee that the Government's present policies cannot give my constituents.
    Mr. Tebbit: Do the hon. Gentleman's constituents have any interest in whether they should have the right, as citizens of this kingdom, to fire the Chancellor of the Exchequer of the day, whether he is a British Chancellor or, under the idealised system promoted by the hon. Gentleman, a Euro fed Chancellor?
    Mr. Beith: My constituents have watched in fascination as the Prime Minister has parted with Chancellors and senior Ministers of all kinds. They do not feel closely involved in those decisions as to who is to hold senior office in the Government, which have clearly depended more on disagreements within the Government.
    The right hon. Member for Chingford (Mr. Tebbit) persists in using that argument without facing the central issue. Germany is no less a democracy because its Parliament has entrusted to its central bank the responsibility for maintaining sound money. The German Finance Minister is no less subject to dismissal because his Parliament has entrusted to its central bank a duty and responsibility to promote price stability and sound money. We should be in a better position in this country if our

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    central bank had that responsibility. We should be in a better position in future if European monetary policy were determined on that basis rather than on a basis which allows the politicians of the day to manipulate the soundness of money to meet the timetable for an election or other short-term considerations.
    It is not possible to sustain the argument about sovereignty without recognising how much Britain will lose if it continues to assume that the best interests of its citizens lie in the ability to pretend that we can ignore what is going on in the rest of the world economy when setting out interest rates or determining what happens to our currency.
    Sir William Clark: With regard to the independence of the banks and particularly the Bundesbank, why did Helmut Kohl, when East and West Germany were reunified, allow the ostmark and the deutschmark to be interchangeable—one for one up to a limit of 5,000 and one for two thereafter? That was a political decision taken by Helmut Kohl. Where is the independence of the Bundesbank in that? The president of the Bundesbank did not care for that arrangement.
    Mr. Beith: That clearly shows how circumscribed and precise is the independence enjoyed by the Bundesbank. It has autonomous responsibility for price stability, but it is not responsible for deciding the terms upon which West Germany unites with East Germany. The head of the Bundesbank is not the Chancellor of the Exchequer, still less the Chancellor of the Federal Republic. His responsibility is clearly defined—to ensure that, at the end of the day, he presides over a sound currency, which is something that successive British Chancellors of the Exchequer have failed to do.
    I do not know how much longer, under the current leadership or under any foreseen leadership, the Government will remain impaled on the view that British sovereignty and the distinctive British character depend on preserving the Chancellor's ability to distort and debase our currency. I do not believe that the Government can sustain any serious anti-inflation policy unless they change that view.
    Mr. Skinner: The hon. Member for Berwick-upon-Tweed (Mr. Beith), like many of his hon. Friends, has for years been trying to explain that his party wants to hand over powers to the Common Market and to Germany, in particular with regard to currency. How does he square that with the fact that one of the first Liberal motions this Session is to sustain a Welsh Parliament?
    Mr. Beith: I am more and more amazed. Admittedly, the hon. Member for Bolsover (Mr. Skinner) is at odds with some members of his own party on this issue. However, he cannot understand that it is possible to have decisions taken within Europe at the lowest possible level and for decisions to be taken in Wales by a Welsh Parliament and in Scotland by a Scottish Parliament. Such decisions are being taken in Europe all the time.
    If the hon. Member for Bolsover believes that the British Government currently have maximum control over the pursuit of our interests in Europe, he is very much mistaken. The Bundesbank takes decisions which have a very powerful impact on our economy. I would much
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    rather be part of a central bank and monetary system which was much more influenced by our own traditions and ways because we were part of it, but I would nevertheless like it to enjoy the kind of independence that has enabled Germany to have a much lower rate of inflation for so long. Those who deride and disagree with that view should consider what has happened in other countries. Germany is no less a democracy for having pursued that kind of system, but it is a very much more successful economy for having pursued it.
    Many Tory Members are profoundly unhappy with the Prime Minister's approach on Europe, although not many of them are intervening this afternoon. I wish to make them an offer. We in the Liberal Democratic party have tabled an amendment to the Loyal Address which is the ideal vehicle for those who wish to show that they believe that Britain should play a positive role in Europe. It may be that the right hon. Member for Henley (Mr. Heseltine) is not the man for them, but they do not wish at this stage to be identified with any particular candidate.
    As I go round the House, I find that that seems to be a widespread view. There are many who want a change but do not want their name attached to any particular candidate. I invite them to join us in the Division Lobby to
    "regret the absence from the Gracious Speech of any coherent policy to secure for the people of the United Kingdom the benefits of the economic, monetary and political union of the European Community."
    At least some Members of Parliament, and many more people outside the House, realise that that is where our future lies.
    5.10 pm
    Mr. Nicholas Ridley: Yesterday my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) included in his speech the fact that matters of substance were partially the reason for his resignation, else, he said, he would be
    "the first Minister in history who has resigned because he was in full agreement with Government policy."
    I must lay claim to that title myself. [Laughter.] I hope that the House will let me explain my views on this matter, although I do not expect to be heard in silence and without interruption, as my right hon. and learned Friend was yesterday.
    This morning I again searched my right hon. and learned Friend's speech for the difference of substance between what he feels and Government policy. I cannot quite see what it is that prevents him from being the second Minister to resign because he was in full agreement with Government policy. He said:
    "none of us wants the imposition of a single currency."—[Official Report, 13 November 1990; Vol. 180, c. 461–3.]
    That is true of the Government, the official Opposition and the majority of the country, but not of the Liberals. There are some fundamental reasons why that should be so and we should analyse them before we see this matter in terms of the fervour of one's Europeanism or the refusal to face up to the realities of the economic world.
    As Mr. Pohl, an eminent witness, has said, this will lead to a federal system in due course. Another economic expert, who is not embroiled in the present dispute, John Maynard Keynes, said:
    "Whoever controls the currency, controls the Government."

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    To take control of the monetary, fiscal and budgetary weapons is to control the entire economic management of an economy. These are grave issues. The spectre of a country whose Government lose control of such vital matters is one that we should not toss aside lightheartedly, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) did as proof of his European virility.
    I do not rest my argument on the point about sovereignty. I have no objection to pooling sovereignty. However, when we are asked to pool a bit of sovereignty, we should ensure that we can afford to do without it. We should not contemplate losing the piece of sovereignty which concerns the management of our currency.
    Why is that so? The Community has weak and strong states and nations. Within large states, there are weak and strong regions and areas. The weaker peripheral parts of a community with a single currency will always find it hard to match the rate of productivity increase in the rich areas. That is multiplied, because high wages cause high investment to get rid of high wage costs. Low wages do not cause such high investment, because wage costs are low and the machinery is not worth it. Therefore, that built-in multiplier explains why rich areas continue to prosper while poor ones find it hard to keep up. Hon. Members from Scotland, Northern Ireland, Wales and the north of England know what I mean about the difficulty of keeping economies which cannot progress at the same speed within a single currency. [Interruption.] If there is divergence within a single currency, economic and political strain is inevitable.
    In a recent interview in a British paper, Mr. Pohl said:
    "By abolishing the Exchange rate between them, the mechanism that would otherwise have taken the strain has disappeared."
    What remains for disadvantaged regions? First, they must lower their wages, but it is impossible to say, "We are taking you into a single currency which means decreasing wages by 20 per cent." That is to ask the impossible. There is no such possibility as devaluation, because the Government do not fix interest rates: Eurofed does. Therefore, we cannot put pressure on wages in that way. There is no alternative to grants from the richer to the poorer areas.
    I call in aid, and agree with, the words of the Leader of the Opposition in the exchange rate mechanism debate:
    "If the Community seeks to achieve currency union between member states, then whatever the implications for Britain, it will have to make arrangements for joint growth strategies, fiscal co-ordination and regional policies on an unprecedented scale."—[Official Report, 23 October 1990; Vol. 178, c. 213]
    Mind you, Madam Deputy Speaker, he said that more in joy than sorrow. Nevertheless, it is true.
    The latest estimates of the cost of a single currency for East and West Germany is £40 billion to £50 billion a year for five years. That is the scale of expenditure that we are talking about. Moreover, as hon. Members from the north-east, Scotland and Wales constantly remind us, such grants are not successful. Although they are put into those areas, they do not solve the problem, which is a lack of competitiveness. We will never solve a lack of competitiveness with capital grants.
    A single currency leads to discontent, political divisions, and in the end, nationalist parties and break-up. Why else is the Soviet empire disintegrating? It is for one reason, that it has had a single currency for longer than the strains within that empire can accept. Who gains? The
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    poor areas are disadvantaged and the rich areas are bled heavily for the cost of the grants. We are already a net contributor to the Community of £2·2 billion annually. That would increase dramatically.
    I conclude that it is not in the interests of any member of the Community to go in for such an idea, certainly not at this time, when the convergence of both the regions within countries and of the nations within the Community is far from any meeting. It is not just that there should be convergence at one point: it is that the convergence should remain as a permanency in the economic relations between states. It is impossible to contemplate that happening for a long time.
    Mr. Ian Bruce: Will my right hon. Friend confirm that our regional policy is often under pressure from the European Community because, where we describe certain regions as being in economic need, compared with deprived areas in some European countries they are quite prosperous, so a flow of grants would not necessarily come from a central European regional policy?
    Mr. Ridley: I have heard regional policy argued over. I have taken part in debates about it in the House over 30 years. There can be no resolution of these problems. Nobody will ever accept that such a policy is right, and it never does the trick, either. It is very much the worst solution to the problem that I have outlined.
    All this has nothing to do with inflation. At this point, I pay a warm tribute to my right hon. and learned Friend the Member for Surrey, East for his period as Chancellor of the Exchequer. He was one of the best Chancellors of the century. As he said, he not only laid the foundations of our industrial recovery but brought inflation down from 22 to 4 per cent. He made that remarkable achievement with a floating pound. That achievement had nothing to do with the ERM or with being a member of the EMU or a single currency or the gold standard or Bretton Woods or anything else. The only time that we had a dramatic success with inflation was when we were not trying to interfere with the exchange rate.
    My right hon. and learned Friend said that he and my right hon. Friend the Member for Blaby (Mr. Lawson) wanted to join the ERM much earlier, but my right hon. Friend the Member for Blaby had pre-empted him. He made the pound shadow the deutschmark, thereby creating inflation. I must conclude that inflation is directly related to the control of money supply and is not in any sense connected with exchange rate policy.
    In the Community, when one talks to key Europeans, one is told that the question is not whether we should have a single currency but when and how quickly. They tell us that it is inevitable that we will join because Britain always gives way in the end, and that we all have to get quickly on that famous train mentioned by my right hon. and learned Friend.
    These people owe us an explanation of what they wish to achieve with a single currency and of how these fundamental defects are to be overcome. My right hon. Friend the Prime Minister is right to be firm about the single currency. She should, as she does, seek to persuade the other eleven of the mistake that they are making, of the dangers to Europe and to Britain. She is right to offer the hard ecu as a feasible alternative that will test whether the

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    nations of Europe want to go to a single currency, and it leaves the choice to them, rather than pushing an option at them.
    There is no middle way. If we do not leave things roughly as they are, there is only the hard ecu or the imposition of a single currency. My right hon. and learned Friend did not tell us what middle way he saw. Therefore, I have to conclude that he does not have a point of difference of substance with the Government. If the House agrees that there will be damaging consequences of joining the economic and monetary union as proposed, it follows that those who proceed will do less well than those who do not. Therefore there is a strong case for persuading them not to proceed with it, but if they insist, there is a much stronger case for us opting out.
    Therefore, my right hon. Friend the Prime Minister is right to pursue the positive priority goals in Europe of widening the Community, succeeding in the GATT Uruguay round, curbing the CAP and opening that protective industry to the world, and completing the single market as soon as possible. I do not think that there is a great difference between my right hon. Friend and my right hon. and learned Friend. I wonder even whether the use of this word "style" which was the other part of the argument, is not some sort of Alan Walters of my right hon. and learned Friend's imagination.
    After my resignation, I received an enormous number of letters of support from older people, but curiously also from young people. There was a feeling that we were being pushed along into a single currency, that we were being bullied and that, in the end, we would be forced to join, faute de mieux, because nobody was taking the trouble to stop it.
    The country is apprehensive. People want to know more about the matter first, but what they do know, they do not like. They want a firm stand to be taken. My right hon. Friend the Prime Minister has two audiences for what she says. One is that in the Council of Ministers, the Commission and Brussels, and the other is back in Britain. I think that, as between my right hon. Friend and my right hon. and learned Friend the Member for Surrey, East, the country prefers her style.
    5.27 pm
    Mr. Robert Sheldon: The right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) is the last remnant of the unreconstructed monetarists. His speech was a defence of policies enunciated in 1980. I remind him that the level of inflation of 21·9 per cent. was the level reached after one year of the Tory Government, who had inherited a level of 10·1 per cent. That is the measure of their achievement in those years, which led to a third of the industries in my constituency closing because of the high level of the pound and of interest rates. That was the achievement that the right hon. Gentleman seems to be the only person capable of applauding.
    I was particularly interested in, and I welcome, the Chancellor of the Exchequer's comments that he was not going to be sidelined in Europe. That was most fundamental and, whether or not he cleared that with the Prime Minister, it will be important in bringing about the reconciliation with Europe that I hope will now follow as
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    a result of his comments and the comments that we are hearing elsewhere. He said that the hard ecu is gaining ground. I do not see that when I look around. Who will use the hard ecu? The mystery is how it came to be part of the Government's policy and why it is still in play. A further question is what we are trying to achieve with it. Tim Congdon, in today's edition of the Financial Times, rubbished it as effectively as any new economic suggestion has ever been rubbished.
    I think that the new hard ecu was brought in to confuse the issue. Perhaps it was introduced to receive the plaudits of the Prime Minister in presenting another factor which it was thought might delay matters within the Community. For a time it was successful. For a time there was no reaction from the rest of the Community. Perhaps the other members of the Community were trying to work out all the complications, or perhaps they just dismissed it. Whatever happened at the beginning, it is clear now that it is not a runner. I think that we should cut our losses, forget it and start again.
    We have heard that the level of inflation will be the judge and jury of the Government. What is to be the level of inflation? Do we take the retail price index or the underlying rate? My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) explored this issue in a most penetrating way. In effect, the Chancellor of the Exchequer said "That is all finished with now. The underlying rate is not a matter of importance any more. It is the retail price index that matters." Looking at these matters year upon year, we know that, when inflation is rising it is better to choose the underlying rate, and that when it is falling it is best to choose the RPI. It is only sensible of us, the Opposition, to ask why the Chancellor of the Exchequer is not giving the underlying rate. He said that that would involve secrets which he cannot reveal.
    That is what used to be said about the RPI. Forecasts were never made of what the RPI would be. Governments never used to give forecasts of unemployment levels. When it comes to such forecasts, of course, they are described as assumptions that are built in. The same could be done with the levels of interest rates. Similarly, an assumption could be made of the underlying rate of RPI. That could be compared in the same way that we can compare the RPI as it is expected to be with what it turns out to be.
    The right hon. Member for Cirencester and Tewkesbury dealt at length with European monetary union and the problems that go with conceding some of our sovereignty and some of our rights. If we could secure a convergence of the various economies, we could have one trading area with the same taxes. We would have to have the same welfare treatment and comparable living standards, employment opportunities and so forth. That, however, is a long way off. We need to consider now whether we should be a part of the discussion. That is the real question before us. When the Chancellor of the Exchequer says that we are not to be sidelined, he is saying precisely what my right hon. and learned Friend the Member for Monklands, East and my right hon. Friend the Leader of the Opposition are saying.
    The right hon. Member for Cirencester and Tewkesbury was right to say that, in past years, there have been transfer payments of billions of pounds to the regions. However, even when the sums transferred were much larger than they are now, they were never enough to meet the need for evening out the great disparities within the country. Scotland and the north, among other regions,

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    received large payments, but within the United Kingdom there have always been two safety valves. They may not be very good ones, but they have helped to eliminate the damage of real and perceived regional differences.
    The first safety valve has been the willingness of our people to see part of their living standards used to help others in different parts of the country. The second safety valve has been the ability of some people to move to more prosperous parts of the country. Getting on one's bike can seriously damage the area that is exporting its best talents and there is serious condemnation of it, but it provides some opportunities in the absence of proper resources being made available to rebuild the economy.
    The operation of the two safety valves is much more limited across national frontiers within the Community. The Germans cannot be expected to subsidise those in the south of Italy to anything like the extent that is required. Likewise, Belgium will not transfer resources to our north-east to anything like the extent that a United Kingdom Government would. Nor can people cross language frontiers and expect to be treated much better than guest workers, who have fewer real rights and expectations than the people of the host country.
    Regional disparities will not be reduced to anything like the extent that is required because of an inability to alter the exchange rate or to undertake national policies to enable damaged communities to recover. People do not have much sympathy for other people's economic problems. We always think that our neighbour's economy would be easy to run if only all the sensible things available to be implemented were put into effect.
    Nicky Kaldor—he was shamefully denied a Nobel prize for economics, a matter which I brought to the attention of the shamefaced head of that organisation on one occasion—advised several new countries on their economies. Tales were told of the implementation of his policies, which were invariably followed by riots. These stories were grossly exaggerated. But in the end, economics is always subject to political judgment. Nicky was right on economics but he did not always understand the politics of the situation.
    Mr. Terence Higgins: The problem with Nicky Kaldor's prescriptions was not that they were wrong but that Governments did not realise that they were supposed to put his taxes into effect instead of the existing ones and not in addition to them.
    Mr. Sheldon: That may have been the case in one instance. More generally, the problem was Nicky's failure to consider the political situation and to understand it. He was always proud of his political expertise, but we know that it was his mastery of economics that was the clue to that giant of a man.
    If we do not examine the politics of a country, we shall not succeed with economics. For example, the United States says that the Soviet Union needs to do the obvious thing and increase bread prices threefold. That is its prescription. Meanwhile, the United States cannot bring itself to double its tax on petrol, which would solve its problems at a stroke. The Germans say that we, the British, need more discipline in respect of wages, while they threaten to disrupt the world's trade arrangements by entrenching their grossly indulged farmers within their
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    highly prosperous economy. We like to discipline others in accordance with our own prejudices. Those who have the strongest economies are foremost in their disciplinary zeal.
    The Bank of England has a certain amount of autonomy even within the structure of a nationalised industry. Mr. Pohl knows that he would have difficulty in controlling the area of his interest and involvement if he were to have other people in charge. We must ask whether the interest of bankers is the same as the national interest, or even the interest of the Community. Bankers want solid and safe loans and a strong currency, as that gives them scope for financial dealings. It is easier to operate successfully in international markets if there is a strong currency.
    Sometimes that may coincide with the national or even the international interest. Everything is seen by bankers, however, in financial terms. In the inter-war years, the role of the Bank of England was considered deplorable, and it was even opposed by Conservative Members. Some Conservative Members even voted for the nationalisation of the bank. Let us not assume that bankers can be operated and even controlled by political forces.
    Financial terms are not everything. We want jobs and prosperity for all. Those are not bankers' terms. We want industrial progress. Bankers want that, but only up to a point. As the hon. Member for Berwick-upon-Tweed (Mr. Beith) said, the task of the Bundesbank is to secure a stable rate of inflation, but that is not its only job. Its main job is to look after its own interests. Ours is not to make the world safe for international bankers. Of course, no one doubts that, on crucial issues, Governments will play a part and actually win. They do not do so, however, when it comes to day-to-day operations. The Chancellor of the Exchequer does not see the thousands of banking transactions that are made each day. There is great scope for clearing banks, which have a great deal of power when it comes to important decisions.
    I have outlined the problems. We must do what the Chancellor and my right hon. and learned Friend have suggested, and be a part of the discussions and the negotiations. We must not adopt the tone of being superior to the remainder of the Community. A1 my arguments and all the arguments of the right hon. Member for Cirencester and Tewkesbury are known. We are not the only people in Europe who understand the problems. Other people understand them and are concerned about them.
    We are talking about a period years hence, so we do not have to decide every detail now. I am reminded of the story about a couple, one of whom said, "I think that we should get married." The other replied, "Yes, what a good idea." The first one said, "We will have a lovely home." "Yes we will," the other replied. "We will have a couple of children," said the first. "Yes," the other replied. "We will have a boy and a girl, and the girl's name will be Valerie." "No, no, no," said the first, "her name will be Joan." The couple split up.
    It is nonsense. Our task is to say, "We are talking about a period long hence; we are not the clever ones and you the foolish ones; we do not have such experience that we can say that we know how to run our economy much better than you know how to run yours. We are all trying to find solutions."
    Mr. David Howell: The right hon. Gentleman is speaking with great wisdom, as he often does in economic

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    debates, but is he not unnecessarily complicating the issue of the authority of central banks and their independence of elected Governments? Surely a central bank should look after monetary policy and monetary affairs, as the Bundesbank does, while the elected politicians have the last say on higher matters of state—for example, the unification of Germany. The process must be open and understood. It must be made clear when the interests of monetary stability are put second to other matters. There is no difficulty with that, so I do not understand the right hon. Gentleman's problem.
    Mr. Sheldon: The right hon. Gentleman is aware that a number of decisions are made each day in discussions between the Governor of the Bank of England and the Chancellor. He is also aware that the Chancellor is not always successful in those discussions. The Governor has a great deal more detailed day-to-day information at hand. We must not assume objectivity in some of the actions taken by some people. That is the major problem.
    Another issue I now wish to raise is the fact that capital allowances are only 25 per cent. With the downturn in investment, especially in manufacturing, it is essential that investment is maintained at as high a level as is reasonably possible. I have said again and again that 25 per cent. is nonsense. If a company buys a piece of machinery for £1,000, at the end of the year it is written down to £750. Very often, that 25 per cent. reduction is less than the commission earned by the person selling that machine. The machine is not worth £750. Far from being an investment incentive, the level of capital allowance is frequently an investment disincentive. I hope that the Government will consider short-term improvements in the capital allowance, as has happened in the past.
    With the change in the perceived roles of the Chancellor and the Prime Minister, I hope that the right hon. Gentleman will firmly nail on the head any question of mortgage interest relief being raised above the current level of £30,000. We all know that it is the Prime Minister's dearest wish to have higher and higher levels of mortgage interest relief. We all know that all that does is feed through into the price of houses and so increase the difficulties for those who want to start on the house ownership ladder. The relief is costing £8,000 million a year. It is a waste of money. Instead, we should find some way of putting that £8,000 million into industry, especially manufacturing industry. That is one task that the Chancellor must undertake.
    We are approaching the end of our debates on the Gracious Speech. It is not a happy tale. It appears that the balance of payments deficit will continue indefinitely. Despite the many years of benefit from the vast sums of money from North sea oil, despite the many years of the benefit of £5,000 million a year from privatisation, what has been achieved with that enormous amount of income? It has all been a vast disappointment to the country.
    5.44 pm
    Mr. Michael Grylls: The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) made an interesting and amusing reference to a couple considering their family planning and their dreams about how many children they would have. Of course, I understand his analogy with Europe, but if we spent all
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    our time dreaming about having a family, we would never get around to having one. That is relevant to this debate because people on the continent appear to spend a great deal of time dreaming about what might happen at some time in the future, while forgetting to deal with the problems of today.
    British business—the wealth-creating sector of our economy—wants the final, proper and complete establishment of a single market in Europe. That is what is needed and that is what will create greater wealth, but it will not happen if we just dream about the possibility of a common currency. My right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) dealt with that point extremely well.
    My right hon. Friend the Chancellor rightly spoke about the prospects for a reduction in inflation under present policies and under the medicine that he is administering to remedy the problems that have hit this country. He is right to suggest that the medicine has bitten hard and that the effects will soon be evident. After all, we have been through this before. At the beginning of the 1980s, the Government had to deal with inflation and there were high interest rates. There was a resurgence of the problem in 1985, and again financial constraints were imposed and inflation brought down. I believe that the same will happen now.
    The right hon. and learned Member for Monklands, East (Mr. Smith) tried to have some fun with the question whether or not Britain is in a recession. I do not think that it is a matter for fun and he was being silly. He knows—or at least he should know—the correct definition, because my right hon. Friend the Chancellor had to remind him, in answer to his intervention. If the right hon. and learned Gentleman really wanted to be helpful, which he does not, he would admit that the medicine is working and that the economy is slowing down. Everybody knows that that is true. The sooner that that process is completed, the sooner we shall be out of any difficulties.
    After 10 years of record growth in the economy, people expect that to continue. They think that there is some sort of magic about it and that, because we have done so well for 10 years, we shall continue to do so and that there will be no decline. I am not making a political point but merely stating what I believe business men and individuals perceive to be the position. They are concerned about what is happening. People have forgotten that life goes in cycles, and that there are economic cycles which do not last for ever. The history books show that. In a way, 10 years of growth is a great record, but sooner or later there had to be a dip. That is exactly what has happened now.
    I wish to quote from a report which states:
    "Employment is in steady decline and industrial output is in steady decline. Housing stocks are down by one third. Companies are battening down the hatches. Recession is a fact. People who have lost their jobs have given up hope of finding any new ones."
    That is a description not of the British economy, but of the United States economy. Although Britain has been hit by high inflation, the economic cycle does not apply uniquely to Britain. It is happening in all industrialised countries.
    The other day I met an old friend with whom I went to school but had not seen for many years. We were reminiscing, as one does on such occasions, and he told me that when he was at school his family was poor because all their money had been lost in the depression of the 1930s. I had not realised that. How easy it would have been after

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    the stock exchange crash in 1987 for the world to go into a spin similar to the great depression of the 1930s. The reason why it did not was that the economies worked together to ensure that interest rates were cut. With the benefit of hindsight, it is easy to be critical of those interest rate cuts—there is no point arguing about whether they were right or wrong, because they happened—but it is easy to forget that without them the world economies might have gone into a spin which might have had the tragic consequence of wiping out people's money and jobs on a mass scale, as happened in the 1930s.
    Despite the problems that America and Britain are experiencing, Britain, happily, is fortunate in having a basically sound economy. In support of that, I cite the creation of new small businesses—an area in which many people, including myself, have taken an interest over the years. Despite the high interest rate policies since the middle of 1988 to deal with inflation, the net number of new businesses being created has been running at 1,700 per week, which surely proves that, even with high interest rates, the economy is basically strong. It is important to remember that. The economy is strong because it has been growing for most of this year, despite high interest rates.
    The economy is fit. It is rather like a horse that is fit and strong but needs to be reined back, and that is what is happening. As we learned from the autumn statement last week, our finances are still in a prudent shape compared with some of our neighbour countries, including the United States with its huge budget deficit. That is a wonderful thing. It is helpful that our public finances are strong. People's disposable income is still rising, unemployment is lower than that of our European competitors and youth employment is half the EC average. Those are all signs of a fundamentally strong economy. Whatever the shadow Chancellor may say, he cannot get away from that. He knows that the British economy is fundamentally strong, finances are strong and the problem of inflation will be resolved.
    In addition to the 1,700 new smaller businesses per week being created, there are 70,000 more medium-sized firms than there were a year ago, so I do not take it seriously when business men say that it is difficult to sell or that there is not much of a market today. Not only are there 2 million more people in work, which is a market for goods and services, but there are also all those new firms which did not exist a year ago.
    It is said in criticism of my right hon. Friend the Prime Minister that she has been abrasive, that she will not go along with the majority in the Community, that if she were a bit more polite she would have more influence in Europe—not that I have ever known her to be impolite—but is it not more sensible to judge by results? When Britain's large budget contributions were being discussed in 1981 and 1984, people said that it was improper to discuss such a measly matter as a budget rebate. But my right. hon. Friend succeeded beyond most of our wildest dreams and obtained a rebate of £10 billion. It is extraordinarily churlish of anyone inside or outside the House to criticise someone who has so successfully delivered the goods.
    We saw another example of firm negotiation—call it abrasive if you will—in the fact that, 10 days after my right hon. Friend the Prime Minister raised the matter in Rome, the farm subsidy issue was resolved. It is absurd to accuse her of wrecking the Rome summit. The fact that she raised
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    the GATT talks at the Rome summit must have had an effect because the matter was resolved and we now have the chance to save those all-important talks.
    Mr. Roy Beggs: Does the hon. Gentleman agree that in signing the Anglo-Irish Agreement the Prime Minister showed that she was capable of extreme compromise and also capable of taking bad advice?
    Mr. Grylls: You would be critical of me, Madam Deputy Speaker, if I transgressed on to Irish matters in a debate on the economy. I hope that many of the things that I have said about the economy will apply to the important and much-loved Province of Northern Ireland, for which I have a great affection.
    My right hon. Friend the Prime Minister has been criticised for fighting for British interests. I have just described two matters on which she fought successfully. I would rather put my faith in someone who has fought battles and proved that she can succeed. In the tricky negotiations at the intergovernmental conference next month, so well outlined by my right hon. Friend the Member for Cirencester and Tewkesbury earlier, and in the future negotiations on monetary union, I would rather put my money on the Prime Minister leading us in the right direction than on anyone else.
    5.57 pm
    Miss Joan Lestor: I have tried to translate some of the phrases used by the Chancellor of the Exchequer and one or two Conservative Members into what is happening in my constituency and others like it. I have listened to phrases such as the strength of the economy, how wages have risen and how the economy has grown, but I have heard little about the effects of what has happened in the past 10 years, about low pay and long-term unemployment, in constituencies such as mine in the north-west where there has been no investment and where traditional industries have declined. I have tried to consider what has been taking place and what that has meant to people, because it is people and how matters affect them that Government policy should be about.
    There is one section of society whose interests are not being adequately represented and who are rarely discussed in the House. They do not organise, they do not lobby and they do not have a voice or a vote. They are the children and the young people below voting age. For them, the Chancellor's autumn statement and the Gracious Speech brought no cheer. There were no proposals to tackle child poverty. There was no commitment either to ending the misery of long-term unemployment, which has been a characteristic of my constituency for many years, long before I was returned to the House as its Member of Parliament, when it was represented by Lewis Carter-Jones. There was no promise of the industrial regeneration that it so badly needs to provide jobs now for parents, and the prospect of employment tomorrow for their youngsters.
    The Gracious Speech contained no coherent strategy aimed at strengthening the family, whose importance we have heard so much about, to offer employment, and proper child care so that women could be free to work and provide their families with a better quality of life. Instead, we have heard only of proposals to penalise errant fathers in such a way that the main beneficiary will be not their

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    children but the Treasury. There are proposals to withhold benefits from mothers who are, for many reasons, unable or unwilling to name the fathers of their children. That is to visit the sins of the fathers upon the children in true Victorian fashion.
    Characteristic of many Conservative Members and Government statements is their attitude to one-parent families, because that term is becoming the swear word that "bastard" and "illegitimate" were in my youth. One-parent families are perceived as the cause of so many problems, so they must be punished.
    Last week, the Chancellor had the ideal opportunity to put right some of the damage inflicted by the Government on children over the past decade, yet he turned his back on them, and on the poverty in which so many of them are forced to live. The freezing of child benefit for four years and the meagre new £1 payment for the first child reveals the Government's attitude to child poverty.
    The Child Poverty Action Group suggests as a definition for poverty, those living on and below the level of supplementary benefit, and those living below 50 per cent. of average income. I commend also the definition in the Church of England's 1985 report, "Faith in the City", which drew widespread comment:
    "Poverty is not only about shortage of money. It is about rights and relationships; about how people are treated and how they regard themselves; about powerlessness, exclusion and loss of dignity. Yet the lack of an adequate income is at its heart."
    The Government's refusal to define an official poverty line makes it difficult to arrive at a yardstick. It is yet another manifestation of the Government's reluctance to produce official figures for homeless children, for example—whose numbers are lost in the statistics for homeless households.
    I can tell the House what poverty is, because I see it in my own constituency and the surrounding areas. I see it in the people who come to my surgery week after week. Poverty is kids sleeping rough in our cities and begging for money. Poverty is pensioners counting out their last few pence at the supermarket checkout, and having to return something to the shelf because they cannot afford to buy it.
    Poverty is a mother with two or three children crowded into one room in a sleazy bed-and-breakfast hotel, or having to use her child benefit to pay the poll tax instead of buying clothes for her kids—because otherwise the bailiffs are likely to arrive. Poverty is children in Conservative Britain having to be kept away from school because they have no shoes. All that after a decade of a so-called economic miracle.
    Conservative Members may argue that none of that is true. It may not be true of the children in their constituencies. It is not true of many children. But one must judge the success of any economy and society by conditions at the lowest end of the scale. That is the true test—not how wages have increased for the majority. If Conservative Members are honest with themselves, they will admit that the claims that I make are true in respect of an increasing minority of our children. Not a single agency dealing with children in this country would fail to support my remarks. Those agencies are the source of the statistics that I shall give shortly, not the Labour party.
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    Since 1979, and the so-called economic miracle, the number of families receiving supplementary benefit has increased by two thirds, despite there being only a small rise in its real value—far behind the increase in real earnings that we heard about today. There is a shocking stagnation in the incomes of the poor. How much longer must they wait for the benefits of the "economic miracle" to trickle down to them? The theory was that if the economy came right, the benefits would trickle down to the poor. That did not happen in America, from which the Government borrowed that theory. The substantial increase in the numbers dependent upon supplementary benefit is a direct consequence of rising unemployment during the 1980s.
    It is a shameful indictment of the Government that they are still prepared to countenance one child in 10 living in households in which the head of the family is unemployed. Half a million children have lived with their parents' unemployment for more than two years. I see that in my constituency day in, day out. It is in areas such as mine that one can see poverty, in which people must choose between paying the poll tax and buying their kids a pair of shoes.
    What are we to make of the self-styled party of the family, who suggested that fathers should get on their bikes in search of a job, and placed family relationships under intolerable stress as a result of unemployment that was cold-bloodedly engineered by the Government? When I hear people deploring the divorce figures, I think of the constituency that I represented for 17 years until 1983. Unemployment had not at that time hit Slough as it had the north-west. People moving there and elsewhere in the south-east could not afford to buy property even if they had owned a house before, and families were torn apart. Among the most important factors in divorce are poverty and the intolerable strains imposed by separation and the attempt to keep a family together on a meagre income.
    In 1987, more than 10 million people—one fifth of the population—lived in poverty. The number of families with income below supplementary benefit level increased by 18 per cent. between 1979 and 1987, to 1·9 million. The bottom line is that more people are on low incomes and making use of the minimum safety net benefit. Among the poorest of the poor are the children of such families.
    According to the Institute of Fiscal Studies, in 1987 nearly 2 million families comprising 3 million individuals had incomes below supplementary benefit level. That is an intolerable record of economic mismanagement and moral insensitivity. I never hear debated in the House what unemployment and poverty really mean for families.
    There was nothing in the autumn statement for the children of Salford, Eccles and other areas that the so-called economic miracle has passed by. The hon. Member for Surrey, North-West (Mr. Grylls) spoke of the number of new businesses that have been started, but I should like to know how many folded over the past few years. There has been no new investment in industry, to offer a future for our children. Children and young people are among the worst casualties of the past decade. Many in my own constituency and in others who are now young adults have never worked since leaving school seven or eight years ago. If the Government continue as they have, and given the content of the Gracious Speech and the autumn statement, the brothers and sisters of those youngsters will face exactly the same fate.
    6.9 pm
    Mr. Norman Tebbit: It is always a privilege to follow the hon. Member for Eccles (Miss Lestor), because she always speaks with great sincerity on these matters. However, she should not think, because Conservative Members may take a different view of the way in which those problems are best resolved, that we are less conscious of them. I did not have to wait to become a Member of Parliament for a seat in the north to know about unemployment and poverty.
    I especially enjoyed the traditional turn from our resident cheeky chappie, the right hon. and learned Member for Monklands, East (Mr. Smith), who was on his usual cheeky form.[Interruption.] He entertained us with selective economic memoirs. He made a long speech, and if he will contain himself for a moment, and stop talking to his right hon. Friends, I shall continue my speech. The right hon. and learned Gentleman seemed to be completely unable to recollect the name of the only British Chancellor who had to apply for an International Monetary Fund loan. Since he sat down, perhaps he has been able to remember which Chancellor had to go to the IMF. He shakes his head, so I see that he still cannot remember. The name "Healey" clearly escapes him. I think that that is a fair example of selective amnesia.
    I should like to deal with other issues, but I think that the phrase which the right hon. and learned Gentleman used today—
    "there can be no unity in ambiguity"—
    will be today's bon mot and will be hung round his neck for ever more. It may be quoted back at him on many occasions.
    There is no doubt that the economy is slowing down quite rapidly. That was my right hon. Friend the Chancellor's intention and he was quite right. The economy had expanded over a long period at a high rate of growth and had finished up by expanding too fast. That was the consequence of excessive monetary growth. [Interruption.] I see that the right hon. and learned Gentleman is at it again. He cannot resist talking all the time. If only he said something, it would not be so bad, but he managed to talk today for about 45 minutes without saying a word. I wish that he would shut up for a minute now.
    One of the interesting aspects of the current slow-down, recession or whatever one wishes to call it, is that there has been—[Interruption.] He is at it again. Some of us realised a long time ago that it is difficult to have one's ears and mouth open at the same time. The right hon. and learned Gentleman has not learnt that.
    It is obvious to some of us who are engaged in the world of business rather than merely the world of politics and the weasel words of the law, that there has been a considerable slow-down in the economy, but it has not been uniform. One aspect of the slow-down which has been immediately obvious to those of us who travel around the country is that the recession has hit hardest and earliest in the south-east, in industries such as retailing and distribution. It is the first such slow-down or recession in this country. For a long time, the north and manufacturing were not affected. It is now clear that the slow-down is reaching the north, and it is cutting into manufacturing industry.
    I can tell my right hon. Friends on the Front Bench and the right hon. and learned Member for Monklands, East that a time is coming when present policy should be eased.
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    There is another respect in which this recession is different from some earlier recessions—in the quality of commercial undertakings today compared with 10 or 12 years ago. As the House will know, I am a non-executive director of a number of companies, including British Telecom. The rate of growth in the telecommunications industry has slowed markedly but, none the less, better cost control has meant that profits have increased. That is a safeguard for investment, which is running at twice the level in real terms that it was when the industry was nationalised.
    The right hon. and learned Member for Monklands, East talked about the poor quality of British firms today. He could travel anywhere in the world and ask about British Telecom's reputation. Every great multinational company in the world would place British Telecom among the top three telecommunications companies in the world. Would they have done so in 1987? Would they hell. That is not an isolated example. All the companies with which I am associated are having difficulties, naturally enough, as the economy slows down, but they all look upon this as a time when they have to cut costs and prune back to become more competitive, knowing full well that it will not be long before the economy is booming again, and they will be in good shape.
    The attitude of the management and the work force—I do not like to distinguish between the two, because the work force stretches from the board to the shop floor without distinction, in my view—is totally different now and more realistic than it has ever been. There is no bleak pessimism in any of the businesses with which I am associated.
    I must tell my right hon. Friends on the Front Bench that it is clear that tight monetary policy is healing the inflationary wound inflicted by earlier excessively loose monetary policies. For the productive economy, the time is fast approaching when we should ease interest rates and allow growth to resume. It is clear that inflation is on a downward path.
    I appreciate that, in the present atmosphere of political uncertainty, it may be difficult for the Chancellor to ease interest rates, since we are locked into the ERM. At some stage, my right hon. Friend the Chancellor will be faced with the unpleasant dilemma of whether to hold interest rates higher than would be right for our domestic purposes because of his obligations under ERM. That does not mean that I am necessarily against entry into the ERM, but that "it ain't no free lunch".
    Not long ago, Opposition Members saw the ERM as the answer to all our problems—until we joined, when they turned against it, as they always do.
    The ERM leads me naturally to the problem of a common or a single currency within the European Community. In the debate on the Queen's Speech this year, I have heard two speeches which I thought were quite remarkable of their kind—another speech was quite remarkable because it was unkind, but that is another matter. The first speech was that of the right hon. Member who was the former leader of one half of the alliance—I do not wish to be objectionable, but I cannot remember his constituency for the moment. [HON. MEMBERS: "Plymouth, Devonport."] Yes, the right hon. Member for Plymouth, Devonport (Dr. Owen), who spoke on Wednesday. There was scarcely a word that he uttered with which I or my right hon. Friend the Prime Minister

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    would disagree. There can be no politician more devoted to the European ideal than the right hon. Gentleman—he walked out of the Labour party over it.
    Mr. Beith: No.
    Mr. Tebbit: That was one of the reasons. Perhaps some of the other reasons were even uglier than the quarrel over that policy. I do his former right hon. Friends the favour of saying that he walked out over policy rather than style.
    The second remarkable speech was that made today by my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). He chose to make his resignation speech in a debate in which he could be challenged. There were few who challenged a word of what he said. I only wish that certain Opposition Members, particularly the right hon. Member for Bethnal Green and Stepney (Mr. Shore) had been here. I know, from the way that he nodded during the speech of the right hon. Member for Plymouth, Devon (Dr. Owen), that he would have agreed with just about every word that was uttered by my right hon. Friend the Member for Cirencester and Tewkesbury. That is because these are great issues with which we are dealing.
    Perhaps I felt that they were good speeches because I agreed with them. They revolved around issues that I have tried to raise—issues not of sovereignty but of the political rights of the people of this country. That is what we mean by sovereignty. We should do well to use such blunt words. They also revolved around the issues that my right hon. Friend the Member for Cirencester and Tewkesbury raised. With merciless logic, he exposed the fact that, if a single currency were to be imposed across Europe, it would necessarily involve huge transfers of wealth from the wealthiest countries to the poorer countries.
    "Good," many people might say. However, my conclusion is exactly the same as that of my right hon. Friend: that it would not be long before all the old sores of nationalism were reopened, as the Germans began to say, "This is no good for us. We don't mind our farmers in Bavaria remaining fat on the common agricultural policy, but we're damned if we see why we should he bled white not only by our commitment to sort out socialism in East Germany, among our brothers, but also by having to sort out socialism in Greece and the consequences of socialism elsewhere in the European Community."
    The break-up of the Community would be brought about by the refusal of the wealthier countries, as my right hon. Friend said, and as I believe the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) implied, to do that. Although they could stomach substantial transfers of wealth within their own boundaries, they would find it increasingly difficult to stomach them widely across national boundaries. We should be embarking on policies that would inevitably increase, not reduce, nationalism in Europe.
    Wearing my business hat, the idea of a common currency—with a strong commitment to maintaining the relative parity of sterling—or of a single currency looks highly attractive, but the former would make less likely and the latter would make impossible devaluations to restore the competitiveness that had been lost by a deterioration in cost control, howsoever brought about. I fancy, therefore, that even some of those in the
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    Confederation of British Industry who are most enthusiastic about such policies might find that their enthusiasm was tempered quite soon after a common currency, let alone a single currency, was imposed.
    There are other implications. It is right to raise one of the simple conundrums of a single currency, which is this: where are there two Chancellors per currency, let alone 12? There can be only one Chancellor for a currency. There is one for the dollar, another for the rouble and yet another for the deutschmark. As soon as the deutschmark spread across East Germany, the East German Finance Minister closed the door of his office and went home. There was no place for him.
    The case was made—disgracefully, I believe, by Sir Leon Brittan because the case was unworthy of the integrity and intellect of that very considerable politician—that we could get around these difficulties by putting sterling on one side of a piece of paper and the ecu on the other. That was a good enough idea to fool the Leader of the Opposition, but to fool intelligent people one has to go a long way beyond that.
    Today, in this kingdom, the Royal Bank of Scotland can print notes with a distinctive motif on them but the currency is sterling and Scotland's Chancellor of the Exchequer is my right hon. Friend the Member for Huntingdon (Mr. Major)—no one else. No doubt Sir Leon Brittan and his fellow commissioners would be prepared to allow a Scottish ecu with thistles on one side, a Welsh ecu with leeks on one side and an Irish ecu, which would probably come with the shamrock or the red hand of Ulster, according to taste, on one side. Perhaps there could be English ecu notes with red or white roses on one side, according to taste. However, that would not make four, six or eight Chancellors out of one. There can be only one Chancellor for one currency.
    Mr. David Trimble: I hate to spoil the right hon. Gentleman's interesting and entertaining analogies, but I ask him to consider the currency of the Republic of Ireland. It was firmly linked to the pound sterling from its inception in 1921 until about 10 years ago. There were two Chancellors for a currency that was firmly linked.
    Mr. Tebbit: The hon. Gentleman makes the fatal error of failing to distinguish between what is in effect a common or linked currency and a single currency. Such monetary discipline as there is in the Republic of Ireland is imposed by the need of the Chancellor there to maintain some value for his currency relative to that of sterling. That is the discipline. If people in the Republic of Ireland wanted to renege on the linking of their currency to ours, they would be free to do so. If they wanted to devalue or upvalue their currency, they would be free to do so. The parities between the two have changed from time to time. That is what could happen under the regime of a common currency, such as the hard ecu.
    Let me put it again more clearly than perhaps I did earlier to the right hon. and learned Member for Monklands, East the point about the hard ecu. Yes, if the hard ecu were adopted by our partners, it would accelerate this country towards that rubicon that we should have to cross to reach a single currency. It would have no effect upon that decision, but it would bring that decision closer. That, I believe, is what my right hon. Friend the Chancellor of the Exchequer meant.

    621
    To return to my analogy of the ecu decorated, according to taste, throughout the European Community, all that decoration would not give back to the people of this kingdom the right that they have today to sack or to elect a Government who are responsible for economic policy. No Government are entirely sovereign over their economic policy, but that is no reason for throwing away what sovereignty we have. It is a great idea to have an independent bank that would be responsible for making sure that the currency was in good shape. I am delighted to know of the trust that Opposition Members put in bankers. They have grown up a lot in recent years.
    The Opposition Chief Whip points at those who sit on the Liberal Benches, the implication being that it is not just the Labour party that has grown up in recent years. He has not, however, been listening to what his right hon. and hon. Friends on the Opposition Front Bench have said. He simply does not understand what they say.
    Mr. William Cash: Will my right hon. Friend give way?
    Mr. Tebbit: I hope that my hon. Friend will excuse me from allowing him to intervene. Many other hon. Members wish to speak, and I do not intend to detain the House for much longer.
    The right hon. Member for Ashton-under-Lyne also made a significant point about the relationship between the Gennan federal authorities and the Bundesbank. He said that, at the end of the day, on big issues, the politicians will have their way over the bank as they did in the reunification issue. That is fine, and I agree with him. That would be so. In that case, when are we going to discuss the democratic institutions that would control the politicians who would have control over the bankers when vital issues are at stake? We need to ask ourselves that question. I do not think that we should allow ourselves too much ambiguity, even in the cause of unity, when we are debating these matters.
    I recall that the right hon. and learned Member for Monklands, East said that the question of a single currency divides my party. I have to admit that there is a good deal of truth in that. It does not divide the Social and Liberal Democratic party. It has only one view and that establishes it for the non-party it is. To have a single view on such an issue can be accomplished only by a party with no more than half a dozen Members. When I asked the right hon. and learned Member for Monklands, East whether he would be willing to accept a single currency, which by common consent means the end of independent budgetary policy, he took refuge in the unity of ambiguity. I do not know why, because he had even made my point that such a decision would be irrevocable. That is an important step forward. At least the right hon. and learned Gentleman knows the magnitude of the decision that the Leader of the Opposition would take so lightly.
    It is long overdue that we should remove the ambiguities that surround these issues, even if it might bring about accord across the Floor of the House between those who take different views within their own parties. There is nothing wrong at times with agreement across the Floor of the House, and there is nothing wrong with an honest acceptance of the fact that, when issues as great as these arise, there can be differences within parties.
    I will fight for the whole of my political life to avoid a socialist economic policy being imposed upon the people
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    of this country. The right hon. and learned Member for Monklands, East will struggle against it as best he can, but if he were elected to office, his colleagues would make him eat his words and he would have to impose one. I shall also struggle for the whole of my political life for the right of the British people to have a socialist policy if they want one. I shall fight for them to have a free market, Liberal policy or even a salad policy or a green policy if they so wish.
    However, those decisions should be taken in this country by British people. We should not find ourselves in the position where our rates of tax and our budgetary policies are beyond the control of the people of this country. That is the great issue, on which my right hon. Friend the Prime Minister, and the right hon. Members for Devonport and for Bethnal Green and Stepney are right.
    6.33 pm
    Mr. Alan Williams: The right hon. Member for Chingford (Mr. Tebbit) started his speech with typical charm but, without being patronising, his speech then became worth listening to. His analysis of the trend of the present recession is faulty. He said that the recession is hitting first in the south of England and has not yet hit as hard in the rest of the country. That is natural when we are dealing with a deflation that is consumer based. It is not generally realised that Oxford street has the retailing turnover of Leeds. Therefore, when the Government decide that to achieve their recessionary impact they will hit consumer spending, inevitably it is the main retailing centres that feel the first blows.
    There is nothing novel or different about that. Indeed, even during the problems caused by the oil price increases, the north-east of England retained its employment levels far longer than the rest of the country. That was not because it was healthier but because it had long lead industries such as power plant and so on where existing contracts take time to work through. When the contracts had worked through, the recession hit. When there was an upturn, it was not felt in that area. Therefore, there is no solace for the regions in the pattern that is being followed in this recession. It is a natural consequence of the economic policy that has been adopted by the Government.
    Many of us have known the right hon. and learned Member for Surrey, East (Sir G. Howe) for a great many years. Without any hypocrisy, I should say that hon. Members on both sides of the House listened to his speech yesterday with great sympathy, because we understand the humiliations that have been heaped upon him by the Prime Minister. However, it was a limited sense of sympathy because, as a fellow Welshman, my hon. Friend the Member for Warrington, North (Mr. Hoyle), and my hon. Friends who represent the north and Scotland all remember that it was the right hon. and learned Gentleman's 1979 Budget that unleashed the industrial carnage that destroyed one third of the jobs in our manufacturing industry.
    When I was at the Department of Trade and Industry, Keith Joseph, now the noble Lord Joseph, and the right hon. and learned Member for Surrey, East, who then spoke for the Opposition, were the architects of British monetarism. They were the only people foolish enough to absorb the nonsenses of the Chicago school that had been the joke of economists for decades. We were the only

    623
    country to adopt those nonsensical policies. Galbraith thanked heaven that it started in Britain because they then knew that they should not try it in the United States.
    The right hon. and learned Member for Surrey, East together with Lord Joseph convinced the Prime Minister that she should adopt monetarism. It was a conquest of persuasion over comprehension. In his speech yesterday, the right hon. and learned Gentleman was somewhat selective about history. He said, quite rightly, that he had brought inflation down from 22 per cent. to 4 per cent. However, I remember that he put inflation up to 22 per cent. in the first place. It was his opportunity Budget and his doubling of VAT that led to us having to have high interest rates and high sterling for many years. That made it impossible for us to sell abroad, compete or invest. He was rather like the captain who is claiming credit for getting off the rocks the ship that he put on the rocks in the first place. He tried to ignore the fact that he lost 2 million of his industrial crew along the route and severely damaged the engine room at the same time.
    This may be the last year of the Government. What do we find? We have rising unemployment again, inflation is higher than when they came to office and we have a balance of payments crisis. It is a measure of the mess in which we find ourselves that the Chancellor was boasting that the balance of payments deficit next year will be "only" £11 billion. That is the third highest in our history. That is the measure of 11 years of achievement by the Government. All that is left to them and their Thatcherite revolution—the Prime Minister, the Chancellor and others keep returning to it—are claims relating to improving fundamentally Britain's productivity. However, even that was laid to rest on Monday.
    There was a fascinating article in The Guardian by Victor Keegan, based on a 20-year study by academics at Aston and Leicester It showed that nearly all the productivity gain that is claimed by the Government is actually technological productivity. Before Conservative Members say, "Good, that is what we want," I warn them that it is not necessarily in their favour. Nearly all the productivity that has been gained since the Government came to office is technology-based rather than labour-based. The Government have not produced the enormous turnaround in attitudes and so on that they talk about. That was not the problem. As my hon. Friend the Member for Warrington, North, with his union background, will no doubt tell the House later, we do not have the back-up in capital, equipment, machinery and labour that our competitors have.
    Mr. Doug Hoyle: My right hon. Friend should add that the Government came to office to bring down inflation, and that inflation is now higher than it was in 1979, despite one third of manufacturing industry having been destroyed.
    Mr. Williams: It is just one more example of the way in which the Government ignore points that are difficult for them to explain.
    Less than 10 per cent. of the increase in productivity has been labour based. The rest has been technology-based. The significant point about why the Government have nothing to boast about is that more than half that increase and improvement took place in the first three years of the
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    decade. It took place despite the fact that investment in manufacturing had fallen 41 per cent. under this Government. As the article points out, they were enjoying the benefits of the record level of investment that they inherited. The article states:
    "But, whatever the reason, the actual rise in labour productivity is pretty small beer … compared with the very sharp increases in technological productivity of about 36 per cent. recorded over the decade."
    The article goes on to state:
    "Thus, the 10·8 per cent. a year peak increase in technological productivity during the early Thatcher years until 1983 … was really caused by the investment boom of the outgoing Labour administration."
    That is what we always told them. That is what the industrial strategy was all about—improving productivity and bringing industry up to date. In the early part of the decade, the Government lived on the seedcorn of the 1970s, and in the rest of the decade their economic policy has been kept afloat by North sea oil revenues.
    Let us think about what could have happened to our competitiveness, productivity and unit costs if only the Government had sustained investment—£20 billion more would have been invested had they sustained the level that they inherited, and £30 billion more would have been invested, according to the Chancellor of the Exchequer, had they maintained the rate of growth in investment under the Labour Government. The tragedy of this decade—it will probably not be fully realised by the British people for many years—is that we have thrown away the one and only chance in the whole post-war period to have sustained growth. It was the only time when we could look ahead and know that, because of the oil revenues that were to come, we were to be free of the stop-go pressures that were the result of the balance of payments crises that have beset all Governments of both parties in the post-war period.
    Despite having a £130 billion cushion against foreign currency pressures of the decade, the Government have still ended up with balance of payments crises and without the break into continuous and sustainable growth that we could have had. We are now back at "stop" yet again. Today, the Chancellor came as near as he is likely to for some time to admitting that the country is now in recession.
    We heard yesterday in the resignation speech how, five years ago, the then Chancellor and the then Foreign Secretary threatened resignation unless the Prime Minister gave a nebulous guarantee that, at some time in the future, she would take the country into the ERM. Indeed, some hon. Members might say that perhaps she was at least more faithful to her beliefs over those five years than the then Chancellor and the then Foreign Secretary were. One is bound to ask what has happened. After all, the Chancellor who threatened to resign has already resigned and gone. The then Foreign Secretary who threatened to resign was a trivialised and irrelevant member of her Cabinet.
    The pound could not be in a more difficult situation. We have high inflation. What made the Prime Minister say, "Although for five years I have resisted all threats of resignation and all the better opportunities that there have been to go in, I shall now go into the ERM"? There can be only one explanation. It is purely electoral. It is because she sees an electoral benefit which is sufficiently great to overcome the antipathy that enabled her to alienate members of her Cabinet and resist their pressures for all those years.

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    Why did she do that? With £30 billion of private enterprise hot money—a sort of private enterprise version of the international monetary fund loan—swilling around and that the Government have to keep here, in an election year the Government need the extra shield that the collective reserves of the central banks of Europe will give them to carry them through times of pressure. The crucial point—it is why there is a gap in the autumn statement—is that the key is in interest rates and the need for interest rate cuts.
    We had a 1 per cent. cut when the Government entered the ERM. The aim—it is probably unattainable—is to get a total 3 per cent. cut, and more if possible, but 3 per cent. is the probable level between now and the spring. Let us consider what that means in economic and political terms. A 1 per cent. cut in the mortgage interest rate puts £2 billion of spending money in people's pockets—that is after allowing for MIRAS. It represents a £2 billion boost to spending for a Chancellor who is always saying, "But of course we are spending too much." If the Government attain the target of a 3 per cent. interest rate cut—it is the explanation of the gap in the autumn statement—they will release £6 billion of purchasing power into the economy within the next six months, or they will start the process.
    Of course, the political impact is somewhat different from a change in income tax. Whereas 21 million people pay income tax, only 9 million people will get the benefit of the mortgage interest rate reduction. For those who have mortgages, the relief will be the equivalent of a 6p in the pound cut in income tax. In the south-east of England, excluding Greater London, because of the average level of mortgage rates there, it will be the equivalent of a 7p cut in income tax. In Greater London, because of the higher level of mortgages, it will be the equivalent of an 8p cut in income tax. That is the gap in the autumn statement and it is the key to the tactic and the argument that persuaded the Prime Minister to go into Europe.
    Mr. Tebbit: I must apologise; I was trying to follow the right hon. Gentleman's argument, but my attention lapsed for a moment. I therefore did not hear him say whether he thinks that the Government should have joined the ERM, whether interest rates should be kept high to keep purchasing power out of the hands of people who have mortgages or whether they should be cut. I am a little confused about what he thinks should happen.
    Mr. Williams: Of course I want a reduction in interest rates, but a major, national strategic economic decision has been taken not in the national strategic interest but in the short-term electoral interests of the Conservative party. The purpose is to create a window of opportunity——
    Mr. Hoyle: A fleeting opportunity
    Mr. Williams: That is right. We are not going from stop to go; there will be only a slight selective movement. As I said, because of the way in which mortgages are geared, the major benefit will be felt in the south of England. I do not have to spell out for hon. Members the selective advantage of that for the Conservative party's political interests.
    Mr. Alex Salmond: Is the right hon. Gentleman aware that the disproportionate effect of
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    mortgage tax relief in the south of England will be more than £1,000 million this year, which is more than the entire regional aid budget for the United Kingdom?
    Mr. Williams: Ministers and Conservative Members speak of regional policy and of assistance for the regions, but nowhere has had more money pumped into it than the south-east of England. Further, £23 billion has been given to the top 5 per cent. of wage earners, more than half of whom live in the south of England. The amount of regional assistance for Northern Ireland, Wales, the north and Scotland is dwarfed into irrelevance compared with the incredible injection of purchasing power into the south of England. That explains why the property boom began in the south so early and why prices have escalated so rapidly compared with elsewhere in the country, creating not only an income gap but a capital gap between the regions. The gap is widening as a result of taxation policy.
    Mr. Ian Bruce indicated dissent.
    Mr. Williams: The hon. Gentleman will no doubt take part in the debate. I am glad that at least I am keeping him awake.
    The ERM has nothing to do with the strategy for national economic recovery but everything to do with the election. When the £6 billion that I mentioned is pumped into the economy, as we have a marginal propensity to import of 36 per cent. —one of the highest levels in the western world—£2 billion will immediately be spent on drawing in extra imports. As mortgage funds feed through into spending power later in the year, the balance of payments deficit, which the Government say is reducing to only the third worst in history, will worsen. By the end of next year and the beginning of 1992, when our unit costs will be higher than those of Europe, when the pound will still be far too high and when our inflation will be higher than that of any of the major industrial EC countries, our balance of payments will become even worse. That is why the Chancellor has concentrated his attention on the third quarter of next year.
    We shall then be in a renewed stop, having barely had a period of go. The Government's aim must be to jump during that very short opportunity, because after it has gone we shall be back in a recession from which there will be little hope of recovery. As the Government know, as industry knows and as the right hon. Member for Chingford must know, given his industrial experience, we have joined the ERM at an unsustainable rate of sterling.
    6.45 pm
    Mr. Ian Bruce: I am grateful to be called in probably the first economic debate in which I have spoken since becoming a Member, and at a time when much interest is being expressed in our European policies.
    I must disagree with hon. Members who have attached such high importance to what is happening with the ERM. Strangely, we seem to be holding a leadership election based on European policy and how people perceive it—there have even been resignations about it—yet we should be concerned about the underlying strength of our economy. When talking about a single currency, one finds that the vast majority not only of the Conservative party but of the Labour party and of our constituents agree with the Prime Minister's policy.

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    One of my local free newspapers, the Swanage and Wareham Advertiser—this is probably the first time that it has appeared in Hansard—spoke to ordinary people in the street who were Labour or Liberal voters, but it found only one person who disagreed with the Prime Minister's policy. They said all sorts of terrible things about the Prime Minister, but they wholly agreed with her policy to ensure control of our economy.
    We are beginning to realise that the ERM is not a panacea but simply a tool, like so many other tools of economic policy, such as linking with the gold standard, or the Bretton Woods system. We have always needed such flexibility in our monetary policy.
    In the past five years, there have been enormous changes in the value of sterling. In a difficult market, we have had to ensure that our underlying economy was strong. In the recent past, employment, investment in industry and the improvement in our productivity have been extremely strong. We have done extremely well with our debt repayment, which goes against the trend of almost all other countries, which have financed much of what they have done through deficits. The real wages of poor and rich people alike have been doing extremely well—perhaps too well, given the current level of inflation.
    I was interested in the speech of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who made an interesting point about the requirements of bankers and politicians. He said that we should not rely solely on monetary policy to overcome difficulties in our underlying economy.
    The social charter is far more serious for European policy. Our European partners would like us to agree to a raft of measures that are socialism writ large. It is nonsense for the Labour party to speak of the minimum wage as a percentage of the average wage, because any mathematician knows that, as soon as the minimum wage is made a percentage of the average, the average increases and keeps increasing. The only way of achieving what our European partners want is for everyone to be paid at the highest level.
    Leaving aside the mathematical impossibility of the Labour party's suggestion, the minimum wage, as suggested in the social charter, would ratchet up costs within the European Community, which would be bad for Europe, for jobs and for many other matters. It is easy to sell the idea of giving more maternity pay, more sick pay, more time off for training, more this, that and all the other things, but it all ratchets up the cost to our industries.
    As a Young Conservative, I remember us Tories talking about the difference between direct and indirect taxes, but that is not something about which we hear much these days. When we came to power, we deliberately put up VAT and increased indirect taxation. Our policy was to reduce direct taxation by bringing down income tax. The ratio between direct and indirect taxes has improved, as we have reduced income tax. However, in some economic respects, we do not have a level playing field with our European partners. In fact, we are tipping the playing field against us in terms of VAT.
    VAT in the United Kingdom is probably the lowest in the Community, and that has a strange effect. VAT is imposed on every product when it gets to the shops, whether an import or an export. If there is high taxation
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    through VAT, or any other form of indirect tax, on all products when they get to the shop, imports and home-produced goods are taxed equally. We try to front-end-load the costs of our manufacturers with such things as employers' national insurance contributions which, under the Government of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) were 5 to 6 per cent. and then rose to 11 per cent. We have must reduced that slightly, but we have told companies that they will have to pay a greater proportion of sick pay.
    We should concentrate on reducing the direct costs that go into the costs of manufacturers and service industries—for example, the rates bill, which has just increased by 10·8 per cent.—and transferring them to the VAT side of the equation. We would thereby reduce the basic costs for our manufacturers and service industries. All the goods and services that are purchased in the United Kingdom would be taxed. That would increase the price of imports. If the basic costs to a home manufacturer were cut, the consumer would pay more or less the same for home-produced goods, even though VAT was added.
    Goods exported to France or Germany end up with 25 per cent. VAT, whereas at home the rate was 15 per cent. French companies which import have a lower cost base, because VAT in France is 25 per cent., and only 15 per cent. is levied at this end. A graph wold show that we were tipping the scales against exporters and in favour of importers. Treasury Ministers should consider this point. I have written to my right hon. Friend the Chancellor about it.
    From my constituency point of view, we are looking forward to a reduction in defence costs, but that can have severe economic implications. There is a naval base, a Fleet Air Arm base and an Army base in my constituency as well as a body which is involved in military research, and manufacturers which service that industry. It is important for constituencies such as mine that the Government look at the problems of reducing defence expenditure, to ensure that the burden does not fall on one community. The Government should have the overall responsibility to ensure that they do this sensibly. We know that we will have to take cuts and we gladly accept our share, as long as the cuts are spread correctly.
    Many people may say that the Queen's Speech referred to few radical measures, but the Government have an enormous job to do in terms of education, with the local management of schools; in ensuring that the right percentage is given to schools rather than held in county halls; and in the national health service in ensuring that the additional money we give is used efficiently. Although the Queen's Speech may be seen as a consolidation measure, firm management of our changes is needed. I believe that we have the right team in Cabinet to see them through. I commend the Queen's Speech.
    Several Hon. Members rose——
    Mr. Deputy Speaker (Sir Paul Dean): Order. I remind the House that the 10-minute limit on speeches is now in operation.
    7.5 Pm
    Mr. Ken Livingstone: The main gap in the Gracious Speech, as identified in the amendment tabled by my right hon. and hon. Friends, is in economic policy. It is a damning indictment that we should face this situation

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    after 11 years of Conservative Government. That is I I years in which we have had the bonus of North sea oil—a bonus denied to our major competitors—and we have squandered it. Can we imagine what would have happened in Germany or Japan if they had had the benefit that this Government had of revenues of £12·5 billion in the best year? Those Governments would have invested it in industrial regeneration, research and development and training. We have invested it abroad in the economies of our major competitors and have squandered much of the rest of it in completely spurious consumer booms aimed at winning the 1983 and 1987 elections.
    Conservative Members have complained that the problem is that the measures we took to avert the major slump after the stock market crash in October 1987 led to the problems we face, but that is nonsense. The measures that were agreed by all the G7 nations were broadly similar, but the same problems do not afflict the economies of our major competitors in the Group of Seven. The problems which we face are the result not of an attempt to avoid that slump but of the Government's short-sighted, profligate and wasteful policies at home.
    For all the talk of monetarism, the Government have been prepared massively to inflate the money supply to save their own neck as elections have come along. We now have the most recent gimmick—the idea that, if we join the exchange rate mechanism, this will save us from our problems with the British economy. It is a gimmick, and that is why the market is not supporting the level at which we joined the ERM.
    The international financiers who will have to consider what to do with their money know that we entered the ERM at an unrealistically high level, and they are not prepared to prop up the pound at that level. As everyone who looks at the figures knows, they know that, whoever wins the next national election, or the election next week, will have no alternative but to devalue the pound, or we will waste years propping up an unrealistic exchange rate, just as the 1964–70 Wilson Administration did. We must not repeat that mistake.
    The real indictment of the Government is that, over their 11 years in office, the percentage of GDP that we export has declined by 3·5 per cent. That may not sound like much, but each percentage point of GDP means £5 billion. Let us compare that record with those of our two most similar European competitors.
    Over the same period, France has increased the proportion of its GDP going into exports by 2·5 percentage points, and Germany by eight. It is against that background that we should judge the Government's record. These are reasonably comparable European neighbours who have faced the same broad international circumstances and have had roughly the same opportunities as we have—indeed, our opportunities have been better, given North sea oil, but we have thrown them away.
    Now people are jumping up and grasping at the exchange rate mechanism as though it will save us from further difficult problems. Hon. Members on both sides of the House and editorial writers outside it are saying that entry into the ERM will lead to a convergence of our economies: that somehow, by the simple miraculous act of joining the ERM, we can achieve German levels of economic productivity and competitiveness. But that is not what happened to the nations which composed the ERM before we joined it. France, the Low Countries and
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    Germany achieved roughly equivalent increases in productivity in 1962 and 1963 and they stayed broadly close together throughout the succeeding two and a half decades. That allowed them to have an exchange rate mechanism that linked their currencies.
    Many people are looking at this the wrong way round—putting the cart before the horse. We must achieve the same increase in productivity in the British economy if we are to sustain any realistic membership of the ERM; otherwise, as regularly as clockwork, we shall have to devalue, and our hold on what remaining markets we have will be continually eroded.
    I am not here merely to attack the Government. I believe that we must propose positive alternatives. There is not the slightest doubt that, while we remain in the ERM at this level, we shall not be able to get our economy working properly. We should immediately devalue to about DM2·50. Indeed, I would go further and suggest that we go to DM2·40, so that the pound would be positively undervalued and then tied to the narrow 2·5 per cent band.
    That would send the message to all markets that the Government are committed to a massive expansion of our industrial base. It would show that we were putting our industrial economy ahead of our financial and City interests. That basis would give the British economy sustained growth——
    Mr. Gerald Howarth: On what basis does the hon. Gentleman calculate that DM2·50 is just the right rate for the British economy?
    Mr. Livingstone: I said that we should undervalue, taking my advice from economists who have calculated that, from the viewpoint of our exports, we should be in the range of DM2·50 to DM2·60. That represents a broad consensus among economists, and in linking such a decision to an immediate cut in interest rates of 2 per cent. we should also take measures similar to ones that have been used in the past, although not the simple reintroduction of exchange controls. I do not believe that they are necessary, but we need to take measures with our domestic financial institutions to slow down the flow of wealth out of Britain and to ensure that, instead of investing abroad, we invest in building our industrial base.
    Let us remember that half of all the investment abroad under this regime has been in the economy of the United States of America, one of our major competitors; and the profit that we have received back from that investment has done nothing to help to close the real gap which has opened up in our trade deficit as American workers have got the jobs that British wealth has created. The trade deficit has developed as we have imported what they have made because we are not creating it here.
    Moreover, to help the balance of payments deficit, we have had to keep our interest rates high to attract short-term hot money. I challenge Conservative Members to go out and explain that to the people of Britian—that to allow our financial institutions to invest in the economies of our major competitors and create jobs there, we are prepared to keep our interest rates high and hence impose a heavy burden on every mortgage holder in Britain. The people would say that that was mad. If we had followed policies like that in the second world war. it would have been called economic treason and Churchill would have shot whoever did it.

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    We are in an economic war with our major competitors, and we should put our interests first. The problem is that the Conservative Benches are littered with people who think that we have a special relationship with the United States which overrides our own immediate interests. We subordinate ourselves again and again in domestic, economic and foreign policy to the interests of the United States.
    Finally, we should initiate a major cut in defence spending of up to 50 per cent. over five years, thereby releasing wealth for a major programme of investment in industrial regeneration and in training. If we took those measures tomorrow, we should broadcast to the whole world that we intended to end 100 years of relative industrial and economic decline and to commit ourselves to an expanding economy that was capable of sustaining growth and providing the wealth to support the level of social services that the people in this nation have a right to expect. It would be an economy capable of rivalling within a decade the West Germany that is and the united Germany which will rapidly develop.
    The debate on the ERM has been unrealistic. In or out of the exchange rate mechanism, in or out of the Common Market, whoever wants to govern Britain well in the 1990s and avoid disastrous increases in unemployment must implement the sort of measures that I have described, which my party has argued for throughout these years that the locusts have eaten, when the best opportunity that the British economy ever had has been squandered.
    7.16 pm
    Mr. Terence Higgins: It is traditional to debate economic affairs on the final day of the series of debates on the Gracious Speech, but that has the disadvantage that the Leader of the House has to deal with a whole range of debates from previous days when he comes to wind up today. I hope that he will pick up just one point in the opening speech by the shadow Chancellor of the Exchequer, who dealt at great length with the issue of whether we were or were not in a recession—after which he said not a single word about what the Labour party would do to deal with the recession. I hope that my right hon. Friend will pick up on that.
    I shall eschew commenting on the autumn statement, because the Treasury and Civil Service Select Committee will be taking evidence on it from officials next week, and then from the Chief Secretary and the Chancellor, and we shall have an opportunity to debate the statement in depth once the Committee has reported to the House.
    I shall therefore concentrate on the main thrust of today's argument—the relationship between the economy and Europe. Before doing so, however, I wish to comment on one other aspect of the Queen's Speech. I am delighted that it includes provision for compensating those affected by road programmes, which have long constituted what can only be described as highway robbery. I fear that such compensation will not be able to cover everyone affected by such schemes, especially those off the main routes, but we look forward to seeing the details and I am pleased that we can make some progress. I am also glad that my right hon. Friend the Secretary of State for Transport in his speech last Friday referred to me as advocating this idea.
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    The question of a single currency has proved to be the touchstone of this debate. It is extraordinary that it should be the centre of our discussions, given that there is no realistic prospect of a single currency being implemented for many years to come. The most bizarre suggestion that I have heard in recent days was the suggestion in The Economist that we should have a referendum on the subject. I am and always have been wholly opposed to referendums. I believe that Edmund Burke was right to stress the importance of our representative system of democracy and I have therefore always regarded the idea of a referendum as incompatible with that system.
    It would be particularly extraordinary to hold one on this subject, not least because many of our parliamentary colleagues appearing on radio and television recently have failed to distinguish between a common currency and a single currency and have treated them as though they were the same. There is a fundamental difference between a common currency, which runs alongside an existing one, and a single currency which would involve the abolition of all existing EC countries' currencies. If our colleagues are so confused, it is clear that this would not be a good subject for a referendum.
    This is a highly technical subject. This afternoon, I was delighted to hear my right hon. Friends the Members for Cirencester and Tewkesbury (Mr. Ridley) and for Chingford (Mr. Tebbit) pick up a point that I have been making for some considerable time in debates and at Question Time. They have said that opting for a single currency would mean that we would be giving up for all time the most effective means of adjusting for regional variations in costs and prices. Over a period, for an extended geographical area, that would inevitably lead to high unemployment in some parts of the Community and to the accumulation of financial imbalances between one part of the Community and another.
    As I stressed when we originally debated the exchange rate mechanism, the idea that that can be compensated for by financial flows contrasts with our experience, which shows that even within the United Kingdom such transfers are ineffective and do not make up for regional variations. There would be no guarantee that such flows would take place. Together with the sovereignty issue, that is the fundamental objection, which must be brought out as strongly as possible. I am glad that both my right hon. Friends made that point.
    In present circumstances, an area about the size of a deutschmark bloc—Germany, France and the Benelux countries—could continue to operate without impossible strains. It is clear, however, that if we extend the area to include Spain, Greece, the United Kingdom and Italy, the strains will be completely intolerable. I hope we can convince our fellow members of the Community of the real risks.
    There would be other dangers as well. If we were to implement a single currency over an extended area, it would be far more difficult for countries in eastern Europe such as Hungary and Poland to join as full members. It would tend to make the Community inward-looking rather than outward-looking. My right hon. Friend the Prime Minister was right to stress the dangers of protectionism and the importance of making the European Community an outward-looking Community instead of an inward-looking one.
    The basic manifestation of that inward-lookingness has been the common agricultural policy and the intrinsic

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    schizophrenia, which has existed in the Community ever since its foundation of a general policy for industry which is in favour of competition and trade across borders and a policy on agriculture which is essentially protectionist. We must stress that point in the discussions.
    A great deal of attention has been focused on the remarks of Doctor Pohl, the president of the Bundesbank, for whom I have the greatest respect, particularly at a technical level. He has stressed his objections to the Government's proposal for a hard ecu. They need analysis and I do not agree with them. However, insufficient publicity has been given to the effects that Dr. Pohl believes that the Delors proposals will have. In many ways Dr. Pohl is more opposed to those proposals than to the hard ecu proposals. He is clear that it would be a mistake to rush into the kind of proposals that Mr. Delors has been putting forward.
    However, I am a little puzzled by Dr. Pohl's attitude to a European central bank. He seems anxious to design that in the greatest detail, but it seems to have been put into cold storage until it is needed. That is rather uncertain. Dr. Pohl raises all the issues that have been raised by my right hon. and hon. Friends as to who would be accountable for democratic control in such a European central bank. In that regard, it is important that the Government argue those fundamental points in the IGCs. I hope that it will be possible for my right hon. Friend the Chancellor, in what will be a very difficult task, to get the support of Spain and Greece for his proposals. A parallel currency would have considerable advantages at the moment.
    I am afraid that there is a danger of rushing into a treaty amendment, which would not be acceptable for the reasons that I have given. We would then face the difficulty of deciding whether to use the veto and there might be a danger that some Community members might set up their own arrangements for a single currency. I cannot help but feel that the economic analysis of those issues must lead us to conclude that that would be a mistake. However, the Chancellor will have difficulty persuading those countries, although I am sure that he will carry out his task most effectively. I believe that there is no great division of opinion on the matter on either side of the House. Of course, there are hon. Members at either end of the spectrum, but the vast majority of hon. Members are not in favour of a rush towards a single currency or stages 2 and 3 of the Delors proposals. I hope that my right hon. Friend the Chancellor will bear that in mind.
    The Community must concentrate on the other difficult issues, not least the problems with agriculture. The Commission's proposal in the Uruguay round is inadequate. We should not simply be pressing for a 30 per cent. reduction in agriculture subsidies. We must recognise that there should be urgent reforms. Measures for economic integration should be worked for steadily, but they must rely on greater convergence of the economies. That must come first, rather than our seeking to establish a single currency which would inevitably create quite intolerable strains.
    7.26 pm
    Mr. Jack Thompson: I have listened carefully to nearly all the speeches that have been made today. Hon. Members referred to the broad brush situation of our economy and I found it intriguing that the speeches today have been dominated by our relationship
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    with Europe. That is all very well, but we must remember that other elements of the economy must be considered. I make no apology for referring to the position in my region. I am the secretary of the northern group of Labour Members and I have a great interest in my part of the country. I am sorry that the Chancellor has just left the Chamber. If he had spent more time visiting the north of England, he would have discovered that the recession has existed there in various stages for 10 years. In fact, we have never really been out of a recession.
    It is often repeated that this nation's chief economic resource is its people and that the maintenance and improvement of material, intellectual and environmental living standards depend upon the people's skills, knowledge, ingenuity and application. A further powerful influence are Government policies, which in the past 10 years have done little to enhance those attributes in the northern region of England. In fact, the vast reservoir of skills and talents has been deliberately stifled and wasted in terms of the uncontrolled destruction of the region's traditional industries, causing thousands of highly skilled personnel in the shipbuilding, engineering and mining industries to lose their jobs and future prospects of employment for their children.
    Even if the argument is accepted that the old industries had to decline—and that is an argument in its own right—a huge pool of skilled workers were left with no future and many of them still languish on the banks of the Tyne and Wear, in Cumbria, Cleveland, Durham and Northumberland. They suffer when a planned change in the industrial base of the region could have harnessed their talents without the traumatic events of the past few years. Those people are not the sort to adapt easily to working in the tourist or service industries. Their backgrounds and traditions preclude that. Their skills, knowledge, ingenuity and application have been wasted in the pursuit of free market dogma and can never be replaced by the pseudo, superficial training schemes which have been introduced, revised, revised again and are still found wanting.
    The issue of closer links with the EEC greatly concerns many who have an interest in the economic advancement of the northern region. Increasing numbers of people feel that the only genuine support that the region will get is from the Community, because it is clear that the Community is far more sensitive to the problems of peripheral regions than the present Government are. Those people do not see EEC support as a handout but rather as a return on investment. The Government do not recognise that, being notable in their reluctance fully to adopt the principle of additionality.
    Many of my constituents and others in the northern region are not particularly concerned about a single European currency. They tend to think in terms of what is happening in the region. We have a substantial amount of Japanese industry, some German-based industry and some Canadian-based industry. My constituents recognise the value of the Canadian dollar, the yen and the deutschmark as being every bit as important as the value of the British pound.
    The approach of the single European market is of great concern in the region. Due to the Government's lack of interest in regional regeneration, we lag far behind in communications, especially road systems north of Newcastle and west to Carlisle. They are vital links in developing the region. We lack skills training for our young people and need more modern plant. All those

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    factors add to our problems, which the Government could have helped us to overcome. We are not inspired by the advent of the channel tunnel without proper links to the north. The northern region could cope with those changes if it were allowed to compete at the same level as other regions. We do not ask for privileges—only fair treatment.
    Equality of opportunity was evident in the 1960s and 1970s, when industries were specifically encouraged to establish in the region. Examples in my constituency are Alcan Aluminium, Glaxo, Searle and a number of others. Boots, Merck Sharpe and Dohme, and Bristol Myers are in the constituency of my hon. Friend the Member for Blyth Valley (Mr. Campbell). All those industries responded to the opportunities made available to them, mainly by the Labour Government, and they continue to survive despite the pressure of high interest rates, inflation and the unified business rate. The only real efforts being made to regenerate the region are coming from two organisations—the Northern Development Company and the Northern Region Councils Association, both of which are doing splendid work on behalf of the region with only minimal Government support for the NDC.
    There is urgent need for a proper regional dimension in Government policy. I fully support the Labour party's proposals to introduce a form of regional structure, decentralising some of the Government's inward-looking services and allowing more scope for local input and decision making. There are too many decision makers cocooned in Whitehall and Westminster, unaware of the real situation in the far-flung reaches of the Thatcher empire. Flying visits by Ministers of a half or one day's duration do nothing to inspire confidence in remote decision making.
    In a recent report in the Newcastle Evening Chronicle, Mr. Paul Briggs, chairman of the Northern Confederation of British Industry, said:
    "As a nation we need to force-feed investment. This is not whingeing and whining—this is reality. Time is not on our side and we cannot achieve increased productivity, lower unit costs and consistently low unemployment without the equipment to make it possible. Investment in manufacturing industry had a very small share of the national investment and without it—we cannot keep up with our overseas competitors."
    I agree entirely with those sentiments because he, at least, is a man who lives with the problems and knows some of the answers to them.
    7.33 pm
    Mr. Gerald Howarth: Anybody watching our proceedings on television, as many seem to do nowadays, cannot fail to be impressed by the contrast between the speech of my right hon. Friend the Chancellor of the Exchequer and the entertaining speech of the right hon. and learned Member for Monklands, East (Mr. Smith). My right hon. Friend was right to suggest that the speech from the Opposition Front Bench was incredibly shallow. If it revealed anything, it was that, as far as we could determine the Opposition's policy on Europe, it was identical to that of the Government.
    I, too, welcome the Gracious Speech, not least because we are promised a Session of rather less frenetic activity than we have been accustomed to in recent years. It will not do hon. Members any harm to get home to their wives at a more civilised hour.
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    It is a great privilege to serve in this Parliament and it has been a privilege to serve throughout the past two Parliaments, especially under the leadership of my right hon. Friend the Prime Minister. She has unquestionably brought about an enormous resurgence in Great Britain's standing throughout the world. Wherever one goes now Britain is a respected country. Indeed, even where people do not know the name of our country, they know the name of our Prime Minister. That high standing has been transferred to the United Kingdom economy where welcome and dramatic changes have taken place.
    The hon. Member for Wansbeck (Mr. Thompson) mentioned foreign investment in the United Kingdom. He answered his hon. Friend the Member for Brent, East (Mr. Livingstone), who complained that United Kingdom profits were invested overseas. The hon. Member for Wansbeck has demonstrated that investment is a two-way process. Thanks to the liberal trading climate that we have created in the United Kingdom, foreign investors want to invest here alongside British investors.
    We have seen a massive 50 per cent. increase in productivity over the past 11 years, record growth in the past eight years, strikes becoming less and less frequent, a low taxation regime and, the greatest achievement of all, balanced budgets. Those are sound, solid achievements, on which this Queen's Speech builds.
    Like my right hon. Friend the Member for Worthing (Mr. Higgins), I welcome the proposal for compensation for compulsory purchase. That will go a long way towards ensuring that the infrastructure projects that we need are unlocked rather more quickly than they are at present.
    The Opposition have no constructive policies to offer. As time goes on, more and more of our people will take things for granted as their unhappy experience of socialism in the United Kingdom fades into the distance.
    Privatisation has been one of the great jewels in the crown of successive Conservative Governments since 1979. It has been a spectacularly successful policy. It is worth reminding the British people, our electorate, of the four principal benefits that it has brought. First, it has released the flair and enterprise of managers and people working in industry. Secondly, it has given people a stake in the business for which they work. They now have more commitment and reason for commitment. Thirdly, it has released those industries from Treasury control. Now they can invest funds in much needed investment when they believe that it is right and not have to take their place in the queue as the Treasury thinks fit, competing with other political priorities. Fourthly, it has brought better service to customers, which is most important. Fifthly and incidentally, it has raised about £28,000 million for the Exchequer, but that is only a happy by-product.
    Privatisation has been most successful where we have introduced competition. There has been competition in the airline industry and it is no accident that British Airways is the world's favourite airline. It has been transformed beyond all recognition from the days when it was in the public sector.
    Mr. Salmond: What does the hon. Gentleman think of competition in the privatised steel industry?
    Mr. Howarth: Wherever there is competition, it is good for consumers, whether private individuals or corporations.

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    We have seen enormous changes in British Telecom. It has been transformed from a moribund industry where there was no choice, into an industry that is successful and meets the demands of customers. It is now possible to buy a telephone for less than £20. Under the socialists we had no choice—just what was on offer. The investment has taken place at a rate of £3,000 million in the latest year, in addition to a total investment of £40,500 million. That shows that the private sector invests in technology for the benefit of consumers when it can make profits and run its own affairs. We were told it would not be interested in the consumer or in public service, but not only do 96 per cent. of payphones work, but whereas in 1984 there were only 77,000 payphones, today there are 95,000. Mercury is providing real competition, and I look forward to Friday when I shall be opening a new Mercury payphone in my constituency.
    The success of the denationalised industries is shown by the transformation in their finances. Whereas, in 1978–79, those industries that have since been privatised received Government subsidies of £19 million, excluding capital grant and public dividend capital, in 1989–90, those same companies contributed no less than £1,500 million to the Exchequer in corporation tax. That is a demonstration of the success of privatisation. Those companies have been turned round in an exciting development.
    Other countries have followed our example. Recently, Argentina privatised its telephone service. Even the Opposition are paying lip service to competition, although I thought that it was rich for their spokesman to say yesterday, "While we welcome competition … " Every time that the Government have introduced competition, the Opposition have opposed it root and branch. They do not like the consumer having choice. The British people will not trust a party that pays lip service to the ideas that we established and carried to fruition.
    We have a great deal further to go, but we are making progress. We have introduced choice in education. Local management of schools is proving to be a great success. Our proposals on health are going through. I am pleased that privatisation will feature in this legislative Session.
    These are not the easiest of times for the Conservative party. Inflation is the litmus test by which we judge ourselves, and there is no doubt that we have not been as successful at containing inflation as we should have been. However, my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe)—I am sorry that he is not here now—was wrong to suggest that, had we joined the ERM five years ago, we should have been able to contain inflation. There is no evidence to sustain that argument, and my right hon. Friends the Members for Chingford (Mr. Tebbit) and for Worthing (Mr. Higgins) have demonstrated without any doubt that fixed exchange rates offer no solution to the problems of the United Kingdom.
    When my right hon and learned Friend was Chancellor of the Exchequer, he distinguished himself by being the Chancellor of floating exchange rates. We should have kept to that policy, for in that lay a mechanism by which the strains and imbalances of trading patterns could be taken care of by the marketplace rather than politicians. It was ridiculous of the hon. Member for Brent, East to suggest that DM2·50 is the rate at which the pound should be linked to the deutschmark. He has no idea what the right rate is, and nor does anybody else. It should be left to the markets to determine. Fixed exchange rates will
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    inevitably lead to centralised monetary and economic control and my belief is that that will lead to severe and dangerous tension throughout Europe.
    While I welcome much in the Queen's Speech, there is one omission. The hon. Member for Ashfield (Mr. Haynes) will agree that it is a shame that there is no Bill on coal-mining subsidence. I hope that my right hon. Friend the Leader of the House will be able to devote time to ensuring that that will come before the House during this Session.
    Several hon. Members rose——
    Mr. Deputy Speaker: Order. The winding-up speeches are expected to begin at 9.10 pm. Six hon. Members wish to speak in the debate. If my mathematics is correct, that means that I can somewhat relax the 10-minute limit on speeches, but were any hon. Member to abuse that. I should have no hesitation in putting on the clamps again.
    7.44 pm
    Mr. Alex Salmond: I shall concentrate in today's debate on the economy on the Scottish steel industry, but I shall first pick up on four speeches. First, I listened with some interest to the right hon. Member for Chingford (Mr. Tebbit), who made a plea for self-determination, control and the ability to sack Governments and Chancellors. I wish that he had extended that important right to the nation of Scotland, which has been trying to sack this Government and successive Tory Chancellors over the past 10 years.
    I suspect that the major difference between the right hon. Gentleman and me on Europe, and the reason why I am friendly to the developments taking place in the European Community and he is so hostile to them is that we in Scotland are starting from zero self-government, zero control and zero self-determination. Therefore, any improvement on our position, or the raising of our status to that of other member states over the next few years, will be a major achievement for Scotland.
    I also listened with interest to the speech of the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) and to his appeal to hon. Members representing constituencies in Northern Ireland, the north of England and Scotland to show their support of his view that those areas have been disadvantaged within the monentary union of the United Kingdom. The hon. Member's economic views are probably as popular with the people of Northern Ireland, Scotland and the north of England as are his political views with the Germans, the French and the Irish. His views would have a great deal more credibility were it not for the fact that, as Secretary of State for Trade and Industry, he presided over the demolition of regional policy in the United Kingdom. Someone from his background does not have the right to lecture other Europeans on whether they would be prepared to make a fiscal contribution to offset the disadvantages of monetary union to areas of low productivity.
    Such a policy could be introduced. We could, for example, have surrogate devaluations, such as labour subsidies, in the community. There are many debates in Europe on how such fiscal assistance could be introduced in the monetary union of the Community. I should be more confident of the interest and ability of other

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    Europeans to take part in such a policy than I would ever be of the right hon. Member's wish to do so, given his track record on regional policy.
    I listened with interest to the Prime Minister's speech, and I re-read it last night to remind myself of what the right hon. Member for Yeovil (Mr. Ashdown) called a "chilling" passage on the Gulf. I was concerned by the circumstances in which that passage arose. The deputy Prime Minister had resigned, her leading political rival was poised to strike and she was expecting an assault from the Leader of the Opposition. She was not to know that her position would be strengthened by the time that he sat down! Her speech was calculated. That passage seemed to me to be designed to divert attention from domestic political difficulties in much the same way as the American President used sabre rattling on the Gulf to divert attention from his domestic problems two weeks ago.
    I cannot see the point in sabre rattling on the Gulf. A dictator like Saddam Hussein will not meekly withdraw from Kuwait, because the loss of face involved would lead inevitably to the demise of his regime. It does not seem that the western world is prepared to offer him the golden bridge of diplomacy, which would allow a peaceful settlement to be negotiated. The consequences of a war in the Gulf are becoming all the more clear, and may include 100,000 dead and substantial if not gigantic environmental and economic damage to the international community.
    The only real option in the Gulf is the determined application of sanctions to get hold of the windpipe of the Iraqi economy, to keep hold of it and gradually increase pressure until internal dissent brings about the demise of the Iraqi regime. Such a policy demands patience, real guts and determination, rather than the saloon-bar patriotism offered by the Prime Minister last week.
    The Prime Minister's political difficulties are substantially greater than they were at this time last week. I hope that, in the midst of the Tory party's internal election battles over the next four days or so, we do not see the Gulf card played once again as a diversion from domestic political difficulties.
    I found it interesting that the Leader of the Opposition managed to achieve the not inconsiderable performance of delivering a speech in which he did not lay a glove on the Prime Minister, never mind a knockout blow. I re-read it carefully last night to try to ascertain whether that was part of a grand strategy or merely natural ability. I have no doubt that, while natural ability comes into it, the right hon. Gentleman's speech was designed to ease the pressure on the Prime Minister. Indeed, it was designed to put no pressure upon her. If the Conservative party wants once again to alter the rules of its internal election contests, I suggest that it extends the franchise to the Labour Front Bench, where it will find some of the few remaining Members of this place who are extremely anxious to keep the Prime Minister in office.
    If it is true, as I understand the hon. Member for Cunningham, North (Mr. Wilson) wrote in the West Highland Free Press only last week, that the Labour party calculated their interest to be in the retention in office of the present Prime Minister, I suggest that it tries to keep that quiet, safely away from the notice of the electors of Paisley, Renfrew and Johnston over the next two weeks.
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    I shall say a few words about the Scottish steel industry. The hot strip mill at Ravenscraig is under a death sentence from British Steel, despite its high productivity. The Clydesdale seamless tube works is also under a death sentence, despite the fact that a modest investment could make the works competitive in the one major steel market in Europe which is expanding. The Dalzell plate mill still awaits a decision in respect of a single plate mill strategy. It is still anxiously wondering whether it is to be the chosen plant, despite the fact that a Glasgow university study showed clearly that the cost of concentrating on Dalzell would be about £125 million, while the cost of the green-field site option would be £425 million.
    First, I should like to hear a firm commitment from the Opposition Front Bench on the position of Dalzell within the single plate-mill strategy. I should like the Labour party unambiguously to back Dalzell as the best option for such a strategy. Secondly, I should like to hear from Conservative Members at least—the hon. Member for Cannock and Burntwood (Mr. Howarth) made a plea earlier about competition in markets—that they are prepared to support a reference to the Monopolies and Mergers Commission, or, even better, to the European Commission, designed to examine the exploitation of the monopoly in domestic steel production in which British Steel is undoubtedly engaged.
    Mr. Doug Hoyle: I do not know whether the hon. Gentleman is aware that the Select Committee on Trade and Industry, of which I am a member, took the right decision today to examine the position at Ravenscraig. We know how essential it is for Scotland and the entire British economy. I think that we shall all join the hon. Gentleman in doing our best to save the steel industry in Scotland for the nation.
    Mr. Salmond: I thank the hon. Gentleman for his intervention. I welcome the decision of the Select Committee. I hope that it will extend the terms of reference of the inquiry to include the Dalzell plant. I hope also that it will examine the network of deals in which British Steel has engaged across Europe to carve up markets and restrict competition. That is the folly of privatising as a monopoly, and that applies certainly to British Steel.
    Thirdly, I should like to hear some commitment from the Labour party on public ownership. It seems to me and to many others in Scotland that, if the Opposition parties are to have any influence on the actions of the board of British Steel, we need to convince Sir Robert Scholey and the other members of the board that, unless he changes course and stays the hand of the executioner over the Scottish steel industry, there will be a day of reckoning. If he and his board are engaged in an act of industrial vandalism—that is the only possible description of the rundown of the Scottish steel industry—such a strategic industry cannot be left to the likes of them. The Opposition parties should say clearly that, if British Steel continues on its present course, it will be a candidate for public ownership. That is something that the Opposition parties could do now that might have an immediate influence on British Steel's decision making for Scottish plants.
    I believe that the Labour party is not making that demand and not engaging in that sort of rhetoric because it is frightened of the concept of public ownership. It is not now "respectable" to sell public ownership south of

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    Birmingham, to that part of the electorate on whom it has targeted so many of its political efforts. About 20,000 jobs are linked to the Scottish steel industry, either directly or within the plants of immediate suppliers. If we include industries which depend on the sourcing points for steel that would be affected by price increases if the steel industry in Scotland were run down, perhaps as many as 100,000 jobs in Scotland would be touched in one way or another by closures and the demise of the Scottish steel industry.
    What country in history has discovered oil and ended up poorer but Scotland? What country in Europe would be running down its indigenous steel industry in the face of the large and expanding North sea market but Scotland? What country but Scotland has had to endure the level of economic incompetence that has been imposed upon it by a succession of United Kingdom Chancellors of the Exchequer?
    7.58 pm
    Sir William Clark: I welcome the Gracious Speech. My only regret is the speech of my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe). I found it disappointing and, in some sections, unfair.
    I welcome especially the items in the Gracious Speech that are related to transport, whether they be planning applications or increased investment in our transport system. I welcome also the privatisation of the Export Credits Guarantee Department, the insurance department for exports.
    The Gracious Speech is tied up with the autumn statement. It is right to put on record again the congratulations of my right hon. and hon. Friends and myself on the achievements of my right hon. Friends the Chancellor of the Exchequer and the Chief Secretary to the Treasury. Week after week and month after month, we suffered rumours about what was happening in the economy. These originated from the media and the pundits. The House will recollect that the overshoot of public expenditure for next year was said to be about £12 billion. In fact, the public expenditure increase will be increased by about £8 billion. The media and the pundits were about £4 billion out on that score alone.
    If we discount the reverse element within public expenditure of £3·5 billion, the increase in public expenditure for next year has been contained to £4·5 billion. The Government's commitments to pensions, welfare payments and the rest of it will all be honoured. Many local authorities—mainly those which are Labour controlled—have overspent, and the Government's control of public expenditure is a remarkable performance.
    My right hon. Friend the Chancellor of the Exchequer rightly castigated the right hon. and learned Member for Monklands, East (Mr. Smith), the shadow Chancellor of the Exchequer, for not once mentioning any of the achievements of the Conservative Government in terms of the economy since 1979. I know that Opposition Members do not like good news. They should stop talking down the economy. We have more people in work today than in 1979. I accept that inflation is high, but it has come down from 26 per cent. ——
    Mr. Bruce Grocott: When was that?
    Sir William Clark: It was 22 per cent., and rising rapidly, when we took office.
    Our exports have risen since 1979. In addition, our net overseas assets, as a percentage of gross domestic product, are the largest of any major industrialised country. Another important point is that all the doom and gloom about new businesses in fact relate to those that fail. Currently, the net increase in new businesses—those that are set up minus those that fail—is 1,300 per week. That is not a bad record. Of course, there are many fewer strikes now.
    There has been a transformation in our economy, to which the Opposition should at some point pay tribute. The national debt next year will be reduced by £29 billion. I remind Opposition Members that that is equivalent to 12p in the pound at the standard tax rate. The interest on that sum would be about 1·5 to 2p on the standard rate each year, so it is a considerable achievement.
    There has been a great deal of talk about the exchange rate mechanism, which Britain has entered with a 6 per cent. margin either way and at a deutschmark rate of 2·95. Some people have questioned whether that was the right rate at which to enter, but hon. Members should remember that Britain will eventually move to a 2 per cent. margin either way. If at that time it is felt that the 2·95 rate is too high, it can be adjusted.
    I am convinced that the hard ecu should not be written off. The bond issues in the ecu market on the London international financial futures exchange are growing. That currency is being used for bond issues. In March next year, the exchange intends to introduce a futures market in the ecu. We should not set any time limit, but rather wait to see what evolves from that. In five or 10 years—who knows?—the hard ecu may be acceptable. In the meantime, we could have a parallel currency with a European monetary fund.
    In each of our economic debates, the Opposition are asked what they would spend in Government, and how much it would cost. We never have an answer. They promise increases in pensions and in spending on the national health service and on education. Whatever one cares to name, they promise to provide it. They say that they have not costed their proposals, but I can help them, as Liverpool university has costed all their promises——
    Mr. Grocott: Oh?
    Sir William Clark: If the hon. Gentleman does not believe me, I can send him a copy of Professor Patrick Minford's report. He has costed the Opposition's proposals at £22 billion—[Interruption.] If Opposition Members do not accept that figure, they should tell us their figure. I am prepared to accept Liverpool university's estimate.
    I remind Opposition Members of what that would mean for taxpayers. A Labour Government would have to find that money and they could do it through an increase in the standard rate of tax from 25p to 35p. That would produce £20 billion. As the higher rate taxpayer would also have his rate increased, that would produce a little extra revenue. If the Labour party does not want to do that, it could raise value added tax by 10 per cent., which would produce just over £20 billion. I am convinced that the general public are entitled to know how much all the glowing promises from various Opposition spokesmen will

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    cost the taxpayer—[Interruption.] If Opposition Members do not agree with the Liverpool university figure, they must tell us their figures.
    I accept that the medicine of high interest rates is unpalatable and unpleasant, but it is worth it because the economy has slowed. However, I agree with my right hon. Friend the Chancellor that it will pick up next year. We must be realistic and pragmatic and take various factors into account—the Gulf, the United States economy, and so on. I accept that we are in rough seas, but we have been there before and we have come through.
    We have achieved a tremendous amount. We have achieved a strong economy, and we must not deny that or talk it down. We must continue with the present policies. We do not want any U-turns. I am convinced that we shall come through and that Britain will return to prosperity. That is why I welcome the Gracious Speech.
    8.8 pm
    Mr. Doug Hoyle: If ever there was typical complacency, it was the speech of the hon. Member for Croydon, South (Sir W. Clark). Indeed, there has been a series of complacent speeches by Conservative Members, from the Chancellor onwards. At least the Chancellor admitted that Britain is in a recession. Of course, we are not simply in a recession—we are in a deep recession. All that the hon. Member for Croydon, South could talk about was Labour party promises—not what the Government will do to remedy the mess into which they have got this country.
    The Government are inept. There has been a high degree of economic mismanagement. They have had £91 billion in oil revenues—they have been positively awash with oil—since they took office in 1979, but we have little to show for it.
    It is not much good Conservative Members talking about the new companies that have been created when there were 16,500 bankruptcies in the first nine months of this year and 64 per cent. more liquidations in the third quarter of this year than there were in the same period last year. That is not a record of success—it is a record of failure.
    Building employers tell us that there will be 50,000 redundancies this year in the construction industry and a further 50,000 redundancies next year. In the real world in which many of us live, unemployment is increasing. When we talk about unemployment we must remember the misery that it brings not only to those who are unemployed but to their families, who suffer falling living standards, bills that cannot be met and the difficulties of paying for a roof over their heads. That is the real world under this Government after 11 years in office.
    Anyone who doubts what is happening has only to consider the Government's unpopularity as shown in the two recent by-elections. That unpopularity has caused such a flurry in the dovecotes that Conservatives no longer know whether they want the Prime Minister.
    At long last, whether they like it or not, the Government have had to join the European exchange rate. One can argue about whether DM2·95 to the pound is the right rate. The truth is that it is too high for British industry and British industry is uncompetitive, which
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    means that more firms will go bankrupt, there will be more liquidations and more unemployment. That is the real tragedy of what is occurring.
    The Prime Minister is now against EMU. She huffs and puffs like the big bad wolf at the wall, but it was she who erected that wall when she agreed to the single European market, when she took us into the ERM. She is well on the way, whether she likes it or not, and she is the person who is responsible. The Prime Minister may say that she will not accept something, but she always does in the end. That is the tragedy of the record of the Prime Minister and her party on Europe. As a result of that attitude, we are always responding to rather than shaping events.
    Next we will have a European bank under the control of bankers rather than under political control. What we should be arguing for in Europe is for more regional aid and for regional policies as outlined by Labour Members. Nor, despite the crisis in British industry, is anything being done to bring about the necessary investment. Investment in industry is already lagging far behind that of our competitors, which means that we shall fall even further behind. We all know that the present situation in Britain means that investment in industry will be cut yet more, making our industry even more uncompetitive.
    Labour Members also stress the importance of training, but rather than increasing training the Government will be cutting spending on training by £1 billion in real terms by 1993–94. Here again, we are falling behind our competitors—we do not have the highly mobile, highly trained work force that they have, and that augurs ill for the future.
    I realise that there is a crisis of confidence in the Conservative party. There is a little local difficulty. We hear from the Prime Minister that she will not duck the bouncers, that she will not stonewall, that she will knock the bowling all over the field. As a keen student of cricket, I can tell her that the person who plays that kind of game may succeed but may also be bowled first ball. If she does not believe me, let her ask Ian Botham. She may well be bowled first ball in the election that is to take place—I do not know—but I do know that it is not the Prime Minister alone who is responsible. The Cabinet must share responsibility for the situation in which we find ourselves. Whoever is elected will also have to bear responsibility for 11 wasted years. Despite the benefits that should have accrued from oil revenues, we are not in a good position to face competition.
    What we need is not a private cricket match but a cricket match in which all can join. We need a general election with a new captain, a new team and a new start. We need a team that believes in industry and in revitalising manufacturing industry so as to create the wealth to pay for our social programme, for education and for a better health service. That is what we need, but without competitive industry we shall not be in that league.
    For 11 years there has been a concentration on service industries, but because of our handling of European matters we are in danger not only of losing out on the European bank—the City of London may also lose out and the centre of finance may move from here to Paris or, more likely, Frankfurt. Whether we like it or not, in or out of the Common Market, we are affected by what happens to the deutschmark. We cannot get away from that. The Government cannot lead us forward, nor can we recover from the economic mess in which we find ourselves

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    without a new approach and a new team who will put money into industry and training and prepare us to meet the challenges of the 1990s.
    8.17 pm
    Mr. David Howell: With some exceptions, this has been a rather enjoyable debate, contrary to the expectations of some of us, certainly on the Conservative Benches. My right hon. Friend the Member for Chingford (Mr. Tebbit) was in cracking form when he spoke earlier, but his view that Chancellors should be the sole controllers, and could be the sole controllers, of modern economies was a bit romantic.
    It is risky to hold such a view because that devalues the role of the other authority in any modern economy, whether a large continental one or a national one, and that is the role of the central bank and its governor—the central monetary authority. Therefore, I am concerned when I hear hon. Members talk as if there were some magic world to which we could somehow return in which all the economic factors of our nation could be controlled by the politicians, the Minister of Finance or, in our case, the Chancellor.
    I go further and say that if there is one overriding and burning need in Britain in order that we may perform more effectively and have a sounder monetary policy and be better members, or effective members, of the ERM, it is that we should somehow achieve a less politicised monetary policy. It is the countries that can run a depoliticised monetary policy, with perfectly sensible and democratically controlled fiscal policies and broad national policy, which have been most successful in getting their currencies to perform and whose currencies are most respected, traded and sought in world currency markets.
    Whether we are in the ERM or not, and on the whole it adds some reinforcement, it is no substitute for the fundamental need for Britain to secure and run a sound monetary policy. When world markets look in on this country and see that, however determined are our political leaders, they are still the people who pull the precise levers of monetary policy—short-term interest rates—those markets are bound to attach less credibility to such decisions than if we had a separate, more independent monetary authority.
    There can never be a completely independent authority, because a subtle nexus of relationships must exist between central bank governors and any democratically elected Government. However, unless we can establish greater separation of the powers of our central monetary authorities in operating monetary policy, and remove from the shoulders of my right hon. Friends the burden of carrying the political responsibility for setting and changing short-term interest rates, we shall not succeed in establishing credibility for our currency and thus the lower interest rates at which it can be traded in a stable way that we really deserve. That touches on a fundamental misunderstanding that I believe that I saw reflected in some of the notions of my right hon. Friend the Member for Chingford, much as I agreed with many of his other remarks and enjoyed his speech.
    However, the real muddle in this afternoon's debate was to be found not in the remarks of my right hon. Friend but in those of the right hon. and learned Member for Monklands, East (Mr. Smith). I do not deny that we are in a bit of a muddle, too—it would be silly to suggest
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    otherwise. However, it was comical to witness the right hon. and learned Gentleman—who is usually so incisive and crisp, and considered such a dreaded lawyer, and who will carve everyone up at the Dispatch Box—wade into deeper and deeper difficulties as he tried to grapple with his own party's policies on Europe and its monetary affairs.
    The right hon. and learned Gentleman is himself being sucked into a religious war—from which my right hon. and hon. Friends have not been entirely free—over issues of tax theology that are of remote practical importance. The great religious wars of the late middle ages were fearsome affairs and were fought with terrible ferocity, but when they ended, few people could remember what they were about or the point of those conflicts. I fear that he same is true of our arguments over a single currency and a European central bank.
    Some of my right hon. and hon. Friends and Opposition Members fail to realise that the chances of a central bank ever coming about are very remote. If it happens in years to come, that will be decided not by politicians, on dates set by bureaucrats in Brussels, and riot even by treaty amendments. It will be determined by markets—industry, customers, consumers, and to some extent by central bank governors. They will decide whether it will be more convenient to operate a single currency running from Lisbon to Berlin, and from Reggio Calabria to Glasgow, or whether it will be more convenient, sensitive, flexible and articulated to operate separate currencies broadly within national zones.
    Dame Elaine Kellett-Bowman: Does my right hon. Friend agree that that is exactly what my right hon. Friend the Prime Minister said? If a sufficient number of countries want to use a single currency, they will do so—and if not, they will not do so.
    Mr. Howell: That is exactly the argument made by my right hon. Friend the Chancellor in respect of the hard ecu, to which I shall refer shortly.
    If people imagine that Karl Otto Pohl, the Bundesbank's distinguished governor, does not understand that argument, they are wrong. He knows perfectly well that it will take years to establish a central bank. He is in no hurry, even though he is chairman of the committee that is supposedly drafting its structure. He understands perfectly well that such a concept is possible on the other side of nowhere. Therefore, he is almost certainly drafting models that are so perfect as to be unattainable. His latest suggestion is that such a bank should be free not only of all national political control but of any political control whatever, and should be spinning in space, run by a lot of platonic philosophers and bankers in a dreamy way that could never be acceptable to nation states and their Governments, or even to the Community.
    A great deal of unnecessary energy and aggro has been expended over a concept which probably will not be realised, and over which we anyway have no control. There is no hurry, and in the meantime, as my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) points out, the opportunity exists for markets to decide whether to trade on their local currencies or on a good strong ecu. The ecu already exists, and many people choose to use it. Invoicing in the ecu already occurs. Some people are paid in that currency, but need to change it in to their local currency at a bank.

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    The hard ecu is not a bad idea, and I would argue with Mr. Pohl about dismissing it out of hand. The hard ecu offers the market a menu, to ascertain whether it wants to use that currency. I am surprised that some people are disparaging about its use. If there were a hard ecu as good as the deutschmark, I should be happy to be paid in it and to trade in it. I am sure that many commercial concerns throughout Europe would be equally happy to trade, invoice and run their books in a hard ecu, although others may prefer pesetas or sterling.
    I make a plea to my right hon. Friends and to Opposition Members who are not beyond listening not to turn on each other and to tear each other's eyes out. Instead, we should confront the realities and speak positively to our European friends—those who are perhaps a little too excited about establishing a single currency and who want to set dates, and those who are amenable to positive and co-operative argument rather than to defensive attacks and assaults.
    It seems to me that the operation of a single currency is very unlikely to happen, as it would require the total convergence of the European economies. I do not accept the view that such a convergence would be impossible because some nations are poor and others are rich, nor the view of my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), who seemed to put us in the forever poor category—as though Britain is permanently handicapped and will never catch up with the big boys.
    The future might be quite different. The famed united Germany could get into trouble. It is about to run the most gigantic budget deficit, almost as large as America's—DM140 million, or about £50 billion—for next year. It seems likely that Germany will have to raise interest rates to cope with that, and it may no longer be the overwhelming, strongest magnet for attracting all capital in Europe. Germany is attracting such support now, which is dangerous in that it forces up the interest rates of us all. Nevertheless, I do not accept the view that the United Kingdom is a dispossessed region that is bound to lose out from fixed exchange rates or freer trade. That view has been expressed down the years by all opponents of the single market, but it is totally wrong.
    We must be realistic and accept that the United Kingdom will have high interest rates for a good time to come—probably several years. The German affair is turning out expensive, and there is a vast shortage of capital in the world. Japan has ceased to export capital, and it will become more expensive stuff. If we want to maintain a sound currency, we shall have to keep our interest rates high. We have no choice. If we lowered them, capital would immediately move away, sterling would weaken and inflation would increase. Any attempt to expand our economy by escaping high interest rates would lead on the contrary to its contraction. That is the nature of the international monetary system.
    There is little discretion available even to Parliament. It may be magnificent to stand here and say that this Parliament should have ultimate control of this country's monetary and fiscal policy, but in reality any Chancellor or central bank governor has only limited discretion. Those who stand up and make fine speeches, saying that Parliaments shall prevail in the matter of interest rates, are
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    practising a cruel deception on the people. The reality is that, in open economies, there is little room for manoeuvre.
    It is not good for the House or the country to be diverted from the realities. In the year ahead, we face some kind of recession. I hope that it will not be deep, but the United States is facing a recession and Japan is getting into grave difficulties over its financial structure. Those waves will be far bigger than anything that we can counter. We cannot avoid recession. Nor would any other Government be able to avoid it.
    We can act prudently in adversity and we can possibly run a slightly—I emphasise the word slightly—less tough fiscal policy than we would otherwise have to pursue. We could move away from budget surpluses to perhaps just a balanced budget or a small deficit—let us consider what the Germans are doing—that would be prudent, but it would have to be carefully done. Other than that, the constraints upon the Chancellor, on the governor of the central bank—who should be reinforced—on this Parliament and on any realists are enormous. If we do not tell people so, we are deceiving them.
    What we can do is to improve the supply side of our economy, as we have sought to do over the years. I do not accept that we are a crippled outlying country in Europe. We certainly have some weak patches. For a decade, I have argued that we should do more to maintain our infrastructure. I argued that in 1981–82 when I was in Government and I made no progress. I argue that case again today. Our transport infrastructure is inadequate and the education and training infrastructures also need to be built up in difficult times.
    The reality is not that some wonderful control over the great forces of international monetary policy exists, which can be regained by Parliament, but simply that 1991 will be a damnably difficult year for all of us. To see this nation through we shall need prudent fiscal and monetary policies.
    I have no doubt but that with the right leadership we can certainly go through and regain the lost momentum of the 1980s, based on sound finance, a strong and positive role in Europe and vigorous enterprise. It can most certainly be done and those who suggest otherwise are conjuring up bogeys and fantasies, which we should not accept and which should not frighten us away.
    8.30 pm
    Mr. David Trimble: Last week at our party meeting when I said that I wanted to speak today I looked forward to discussing the economy. I specially looked forward to telling the House of my experience when I recently visited an enterprise in my constituency—an enterprise which had had a growth rate in excess of 11 per cent. for most of the last decade. I was told that in recent months its export orders were running at a mere 40 per cent. of the previous year's level, the drop being due to an overvalued currency. We entered the exchange rate mechanism at too high a level. The enterprise I visited told me that it could have lived with a rate of between DM2·60 and DM2·65. At present, this country and that enterprise will suffer.
    With the House's indulgence I intend to speak on a different aspect of the Queen's Speech—security, and especially security in Northern Ireland. The reason for my

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    change of course was the events in my constituency at the weekend—the massacre at Castor Bay on the shores of Lough Neagh.
    Mr. Deputy Speaker (Sir Paul Dean): Order. I remind the hon. Gentleman that we are discussing the amendment in the name of the Leader of the Opposition dealing with the economy. I am sure that he will be able to use ingenuity to bring his remarks within that context.
    Mr. Trimble: I am not sure that I wish to let so serious a subject be raised only indirectly and as a matter of ingenuity. I have been anxious to speak this evening simply to bring the grave concern of my constituents, and the great danger that what happened at the weekend will spark off yet another round of killings, to the attention of the House. If it is not possible to raise those important and grave matters before the House, then I have no desire to resort to subterfuge.
    8.33 pm
    Mr. William Ross: There was no murder in my constituency at the weekend, although there have been many elsewhere in previous weeks. Therefore, I shall not speak about the security situation, other than to say that the violence that we have experienced in Northern Ireland has had a grievous effect upon our economy, as it has upon all that we desire for the wealth of the people in Northern Ireland.
    The Government have asked us to support their policy on the economy this evening, as it is outlined in the Gracious Speech on page 3, where it says that the
    "Government will maintain firm financial policies, strengthened by the Exchange Rate Mechanism, designed to reduce inflation and foster the conditions necessary for sustained growth … They will maintain firm control of public expenditure with the aim of keeping its share of national income on a downward trend."
    That is a laudable objective, but the Opposition take a rather different view, and have tabled an amendment. The Government's point of view is open to many interpretations, but I regret that they do not seem prepared to do more for manufacturing industry, which is the well from which our wealth is drawn. Not only do we have to consider what the Government say in the Queen's Speech, we have to take into account other Government statements, not least the autumn statement made last week. We also have to take into account the Government's actions with regard to the exchange rate mechanism.
    Twice in the course of this afternoon, we have heard references made to the German budget deficit. According to some hon. Members, it will be about £50 billion, and according to the tape, it will be half that sum. In either case, it is a considerable amount of money.
    I remind the House that that money will have to be found somewhere. If the Germans do not raise internal taxation to take account of it, they will have to put up interest rates and, under the terms of the ERM, no doubt they will seek the support of sterling and other member currencies for the deutschmark. I mentioned this when I spoke on the subject when we entered the exchange rate mechanism. No one else has mentioned it today. It seems strange to me that this aspect of the ERM appears to have been forgotten in the general melee on the Government Benches, but it should not be forgotten by the House, so I remind hon. Members of it.
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    As I pointed out in a previous debate, this country will help to pay for German reunification, and it will get very little or perhaps nothing out of the benefits which will eventually flow from it.
    Hon. Members have listened with care to what ex-Ministers have had to say today and yesterday, particularly the interesting speech by the right hon. and learned Member for Surrey, East (Sir G. Howe). It was clear from what he said, and from what has been said in the past in the House for public consumption, that past statements were designed to conceal the reality of the deep and bitter disagreements about Europe which all of us knew in our hearts still existed within the Conservative party. The right hon. and learned Gentleman said that his quarrel was more about style than substance, but I suggest that there was little argument about style and a heck of a lot about substance. Our argument is about policy and his basic belief about the powers that the House should surrender to a supranational identity.
    The consequences of what is going on in the Conservative party are now known to the world at large. Indeed, listening to Conservative Members in the Lobbies yesterday evening, I was irresistibly reminded of a flock of headless hens. It was quite interesting. I never thought I should see the day when the Conservative party would lose its head to the extent that it has clearly done in the past 24 hours.
    Conservative Members now seem to be getting their legs under them again and to be trying to pull themselves together. Some of their speeches today have been carefully designed for that purpose and have been fairly successful. At least, that is the appearance to the outside world, although God knows what is happening under the surface—paddling away like a duck, I suppose. At least members of the Unionist party are united in our attitude to Europe. There has never been any doubt about where we stand. We are extremely sceptical of that organisation and of its work.
    Mr. James Molyneaux: We have been for 20 years.
    Mr. Ross: As my right hon. Friend the leader of our party says, we have occupied that position consistently for 20 years. Would to God other Members of the House had done the same. We simply cannot understand how a person can stand for election and thereafter complain when they did not tell the electorate their true attitude. They say that they have no faith in the ability of their countrymen to earn their living in the world. I have such faith in my fellow countrymen throughout the kingdom: I believe that they can earn their living in the world. Furthermore, they do not believe that they are capable of so organising the finances of the nation as to create the necessary conditions to allow their fellow countrymen to earn their living in the world. They want, therefore, to seek shelter, in some form or another, in Europe. Finally, they say that we should move towards a united states of Europe.
    The right hon. and learned Member for Surrey, East (Sir G. Howe) tried yesterday in his speech, as reported at column 463, to give the impression that there is a middle way, but I was surprised and disappointed to find that he took no steps to spell out that middle way. I am led to the conclusion that that was beyond even his considerable

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    powers. There is no middle way. Either we run our own affairs or they are run for us by someone else. It is as simple and straightforward as that.
    If we go down the path towards a totally united Europe, the House will learn the lesson that Ulster learned over a very long period. Under the Government of Ireland Act 1920, we rapidly found out that, if we wished to remain within the kingdom, we had to keep in step. My party consistently made sure that that happened. Moreover, we found out that, by keeping in step, we had to be subsidised. Therefore, we were totally under the control of those who sit on the Treasury Bench, especially when it comes to Treasury matters.
    We accepted that as the price of staying within the Union, which is where we decided to remain. That meant that freedom of movement was so limited that Stormont was reduced to rubber-stamping much of the legislation. Local councillors in Northern Ireland find that they are now in a similar position. They have no freedom of movement whatsoever.
    The House will find that it is rapidly placed in a similar position if we introduce a single currency that is controlled by a central bank. The path that has been set before us would lead not to a great but to a little Europe, with limited horizons. I should like the House to consider that prospect.
    The Opposition ask us to support their motion. They condemn the Government but they express no view on the question that is rending the Conservative party asunder. All hon. Members know that the same argument rages on the Opposition Benches. So far, it has not come to the surface, but the argument rages under the surface on this side, just as it has raged on the Government side for so many years. I do not know when it will come to the surface, but it most assuredly will come to the surface one day.
    The right hon. Member for Chingford (Mr. Tebbit) reminded us that there is all-party agreement on certain subjects. As I listened to the speech of the right hon. and learned Member for Monklands, East (Mr. Smith), I was irresistibly reminded of the circus act in which a fellow rides two horses at once. In the case of the Conservative horses, they slowly part until at last the elastic legs do not stretch far enough and the rider has to get on to one horse or the other. The Labour party also seems to be trying to ride two horses. The problem is that one is going clockwise while the other is going anti-clockwise. That is an extremely difficult act to perform. The rider will fall off very soon. The sooner the debate in the Labour party is out in the open so that the people of this country can decide, so much the better it will be for the nation, the House and both major parties.
    The marketplace for this nation is the world, not Europe. We need freedom of action. Power over the economy and control of the money supply, which the House fought for centuries to wrest from the Crown, should be retained. The right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) referred to that much more elegantly than I could ever do. Control of the economy should remain with the House and all the people we represent. That is fundamental to the life of the nation. The more clearly that is understood by the electorate and all hon. Members, the better it will be for us all.
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    I am well aware that Governments manipulate the economy so that they can be re-elected. However, that does not always work; the electorate sometimes decide that a change of Government is needed. The debate will continue not only during but after the election of the leader of the Conservative party. Our immediate and continuing concern, however, is the need for sound money. Problems will arise soon because of what is happening in Germany. The rise in public expenditure outlined in the autumn statement caused me to ask how the United Kingdom Government intend to maintain sound money. According to the tables of projected expenditure, in real terms there is to be a rise in public expenditure of £15 billion up to 1993–94. In cash terms, that is £35 billion. A large element of inflation must be built into that figure.
    I hope that the Minister will tell us how the Government expect that huge and continuing rise in public expenditure to be financed. I asked the Chancellor of the Exchequer the same question last week, during the exchanges after he had made his autumn statement. He said that he did not believe that the United Kingdom would experience the problem that the Germans now face for the first time in many years—a public sector borrowing requirement. Are the Government confident that they can raise this huge additional sum by means of a buoyant economy? Are the Government certain that the British economy will be able to generate the money, or will they once more have to go to the money markets for a huge sum? I should deeply deplore such a course, which would leave a trail of misery in its wake. The further we keep away from a public sector borrowing requirement the better.
    We need to be told exactly what the position is. The Government ought to provide their real economic projections and tell us how on earth they intend to finance this huge extra expenditure.
    8.47 pm
    Mr. John Battle: The key phrase that we associate with the Prime Minister is the one that she used some time ago: there is no alternative, or TINA. She created the impression that nothing could be done other than according to her approach. Hers was the only option; her option was to be accepted, or else. That approach was applied throughout the economy.
    We were told that we had to accept, almost as an article of faith, that this country was subject to the perfect workings of the free market. When the free market was tried, tested and found wanting, we were told that the market had to be free and fair. Phrases such as "the level playing field" were introduced. Then we were told that inflation was out of political control, that it was an arithmetical equation, beyond political and economic intervention. We were also told that it was an accident, almost a non-insurable risk, even an act of God.
    Yesterday in the House, we learned, perhaps in the most significant statement by the right hon. and learned Member for Surrey, East (Sir G. Howe)—it was a most revealing personal remark, and press comments have been made about how personal the right hon. and learned Gentleman's speech was—that he pinned personal responsibility for high inflation and high interest rates on the Prime Minister. He pointed to the Prime Minister as

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    the cause of inflation. He said that her domineering approach to economic policy in the last few years was the cause of inflation.
    What has been the impact of the Prime Minister's economic policies? It reveals itself increasingly as the deliberate manufacture of unemployment. There was also propagated the view that unemployment was not caused by Government policy. However, Patrick Minford from Liverpool university, who was referred to earlier, argued that unemployment and low pay should be used as a key instrument in bringing down inflation.
    Mr. John Marshall: The hon. Gentleman said that the Government are following a course of deliberately creating unemployment. Will he accept that the level of job creation in the United Kingdom since 1983 is much greater than the level of job creation in any other European Community country?
    Mr. Battle: I am grateful for that intervention, because it shows how eclipsed the minds of Tory Members are becoming. The hon. Gentleman talked about 1983. Perhaps he would like to return to the beginning of his Administration in 1979. He would then find that the unemployment graph rose massively under his Government, to a figure approaching 4 million. Even the figures with which we are presented now—we all accept that they are fiddled down, after 26 changes—show that unemployment is still higher, at 1·63 million, than it ever was under a Labour Government or in the preceding decade. We have had high unemployment under this Government, and from that high base it is now moving up again.
    Underlying the Government's policies is the manufacture of unemployment. What is worse, underpinning that has been the policy of chipping away at the social security for those who are unemployed. I have sat in the House and watched Bills go through which make the unemployed wait longer for access to benefits after losing their jobs. I have seen the Bill containing the availability for work test with the condition that people accept any job regardless of the level of pay—and in areas such as Leeds, West, pay can be very low.
    The Government have a conscious policy of pricing people into work. That may be becoming a footnote. Even the poverty figures became a footnote to a parliamentary question on the last day of the Session in the summer. We express shock and horror when Saddam Hussein turns the language round and describes the hostages as guests. However, the Government have been using and manipulating language in the same way. The Prime Minister has said that everyone in Britain is participating in increasing wealth. That is patently not true, even according to the Government's own figures.
    We know that unemployment has been higher during the time of this Government than ever before. However, the key shift is not from employment to unemployment but from manufacturing to the financial and services sector. Accompanying that has been the shift to temporary, part-time and low-paid work. Unless we analyse and understand that, we cannot understand the damage that has been done to our economy over the past 10 years. Let us not forget that it was the right hon. and learned Member for Surrey, East (Sir G. Howe) who was
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    responsible for the erosion of our manufacturing base, when one of his first Budgets effectively wiped out one third of the manufacturing jobs in this country.
    In constituencies such as mine, the staple employment was in engineering, clothing, textiles and printing. The loss of such jobs has a devastating effect. I accept that there has been a growth in the financial and services sector. Leeds has a banking sector and an office sector, and development is still taking place. However, that does not replace jobs on a scale to match the loss that has occurred in the past decade.
    On Canal road in my constituency, there is a helpful image. On the left-hand side is the Armley industrial museum, in which one can see textile machinery and engineering as it took place in the past. Schoolchildren visit the museum to see the industrial and manufacturing past of Leeds. On the other side of Canal road is Farnell electronics. That is a new technology industry. It is expanding but it is not replacing the jobs lost in the textiles, engineering and printing industries shown in the museum.
    I could cite daily reports from the regional Confederation of British Industry and the chambers of trade and commerce which show that a further erosion of our manufacturing base is taking place now at a time of high interest rates and when firms are threatened with the uniform business rate. Rather than invest in the manufacturing base of our country, the Chancellor referred to investment in the commercial sector. That is interesting because the commercial sector includes the financial and services sector as well as manufacturing. If one isolates and examines the manufacturing sector, it is clear that there has been a lack of investment because the Government chose the consumer boom approach.
    When the Chancellor derides credit controls, it may be worth his reflecting upon the fact that artificially engineered house price booms, especially in the south-east, resulted in people staking the rapidly increasing asset value of their property against further borrowing for cars, holidays and so on. That spending has resulted in the massive trade deficit now facing us.
    Areas such as mine in Leeds understand the need for a dynamic manufacturing base. However, the Government's policies make the outlook bleak. Before the people are again asked to pay the price of the Government's mismanagement, they should be given the opportunity to elect a Labour Government who would adopt a dynamic and different approach to the manufacturing base.
    8.57 pm
    Mr. William Cash: I was interested in the line taken by the hon. Member for Leeds, West (Mr. Battle). The argument about economic and monetary union will lead to the socialists squealing loudly when they realise that the charge capping arrangement that will be imposed under binding rules by the proposed central bank will cause maximum dislocation for the regions which they purport to represent most effectively in the House. Also, others elsewhere in the European Community will suffer, because when the paymaster, which is likely to be the German economy, finds that the poorer countries are running budget deficits, somebody will be sent over to say, "We do not like the fact that you are spending this money," and then, "You cannot spend it." The binding rules that will be imposed by the independent,

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    unaccountable and unelected central bankers will thus impose upon those whom Opposition Members purport to represent the sort of misery that will create internal divisions and jealousy within Europe.
    Further, it is part of the arguments that I have heard from some members of my own party and from others elsewhere that we should have a hard-core federal system which should exclude those very people in eastern Europe who most need investment to enable them to attach to the growth in their countries the democracy so hard won over the past couple of years. In reality, a central bank and a single currency are the worms in the bud of the EC, and their impact upon democracy and the withdrawal of consent which go along with them make me so bitterly opposed. As I said the other day, it would be the greatest irony if the springtime of nations turned into a silent spring for the people of eastern and central Europe when the penny drops and they find that that is the consequence.
    Some people have said that all that will not happen and that it is just a jeu d'esprit on the part of other member states, that it is simply no more or less than a figment of the imagination and that we do not need to get too worried about it. The arguments for the central bank and the federalism underpinning it are constructed on arguments of the 1950s, whereas the arguments that we propose are relevant to the 1990s and to the next century.
    A few days ago, the Commission published its own paper entitled, "One Market, One Money" in which it graphically described what it expects to happen. It stated:
    "The role of national budgetary policies will be substantially revised, with new needs for autonomy to permit flexibility combined with enhanced discipline over excessive deficits and coordination to ensure an appropriate policy-mix for the Community."
    That means that the European Commission and those who support the proposed treaty amendments will gain control over the budgetary policies which lie before the House. Those who criticise the Prime Minister—I noticed my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) making this criticism yesterday—for not apparently going down the route of automatic progression ——
    Mr. John Marshall: Does my hon. Friend agree that what the Prime Minister was seeking to do before she got on the train of economic and monetary union was to ask where the train was going and what the price of the ticket would be? Surely most passengers would adopt that approach in respect of any train.
    Mr. Cash: I could not more fully support my hon. Friend's view. I put it to my right hon. and learned Friend the Member for Surrey, East in his last attendance at business questions that that was no more than a one-way ticket to federalism. That is exactly what lies at the heart of our objections to the line being taken within the Community and the Commission. The proposals are now before us. There is no doubt whatever that those who seek to suggest that all this will take place only in the year 2000 or in 1994 are missing the central point.
    The treaty amendments are due to be discussed and negotiated at the intergovernmental conference which is to take place within a few months. If the treaty amendments implementing the proposals are made, the effect will be to set irrevocably in concrete the very arrangements that
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    Opposition Members say will not happen. I make the same point with respect to some of my hon. Friends. They must appreciate that this is a determined drive to achieve a federal Europe. My hon. Friend the Member for Nottingham, East (Mr. Knowles) nods—he is an honest federalist, he knows what is in the pipeline and he wants it to happen. The difference is that I do not.
    However, no responsible leader, contender or challenger, such as my right hon. Friend the Member for Henley (Mr. Heseltine), could possibly have agreed, and nor could the Leader of the Opposition possibly have agreed, to the proposed 1994 deadline without actually having proposals put before them. It would have been the height of irresponsibility. Nor can they say that there is an automatic progression towards that goal, because if that were the case there would be no need for the treaty amendments which are being proposed.
    We need to get the message out to the public at large to make sure that they understand that the issue is not merely about a theoretical sovereignty but about their right as ordinary individuals and electors to choose the kind of Government they want. It is a simple question and it goes to the heart of the reason why we are in this House—to represent the interests of our electorate.
    That applies equally to Conservative and Labour Members. As I said in a debate the other day, the question is, "Who governs?" We are aware of the draft amendments being proposed and we know the answers to the questions. The other member states have attempted to pre-empt the issue by setting the date of 1994 before discussions have taken place. It would have been the height of irresponsibility for us not to take the position that we took.
    I ask the British electorate, the man in the street, to consider the implications for them of not only general public expenditure but specific expenditure on defence, health, education and social services being capped. If countries were to spend more than they were allowed, the squeeze would immediately be put on them. Those who, like my right hon. and learned Friend the Member for Surrey, East, that my right hon. Friend the Prime Minister was tending to lead people astray are themselves guilty of ducking the issue and leading people astray.
    We did not sign up to the next stage of Delors or to automatic progression to a federal Europe, and the evidence is there for all to see. Some people want us to take that route and are prepared to issue ultimatums if we do not agree to do so. The reality is that the House is on the line. We have a responsibility to discharge, and I believe that the majority of hon. Members, let alone Conservative Members, will support the Prime Minister in the challenge to her.
    9.6 pm
    Mr. Keith Vaz: Labour Members are fed up with the debate on the Queen's Speech being turned into personal statements by Conservative Members about whom they support in the leadership election. We are simply not interested in the internal wrangling of the Conservative party or in Conservative Members washing their dirty linen in public. We are far more concerned about the facts about this debate and this Administration. The only thing on which I agree with the Prime Minister

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    is her statement that the next few days and weeks should be conducted on the basis not of personalities but of the facts before the nation.
    The facts show a nation in crisis and a party unfit to govern. The Queen's Speech provides no benefits for my constituents. For example, 1 million people are on the waiting list for operations. In the past 10 years, 300 hospitals have closed and 70,000 beds have been lost. If we are to believe newspaper reports, by March a further 4,500 beds will be lost on economic grounds. My constituent, Mr. Pemberton, who is 74 and who served in the second world war defending this country, has to wait 29 weeks for a hip replacement operation. He was told by the Leicester Royal Infirmary that he must wait in a queue of several hundred people. Within the Leicestershire health authority area, 9,600 people are on the waiting list for operations.
    Tomorrow, in Leicester we shall welcome the shadow Secretary of State for Education, who will speak to local teachers and visit local schools. The bill for repairs to our schools is £3 billion, there are 10,000 teacher vacancies and more than half the profession has left in the past 11 years.
    There are no solutions to the housing crisis in the Queen's Speech. More than 1·25 million people are on housing waiting lists, 11,000 of whom are in Leicester. People visit my surgery and those of other hon. Members asking for transfers and for homes because they want to begin a life on their own.
    As for the crime figures, 4 million crimes were committed in Britain in the past year alone. By the time this last hour of the debate concludes, a further 10 crimes will have been committed in my county of Leicestershire. Then there are the overcrowded gaols. Young people in Armley prison committed suicide to escape the appalling conditions there.
    The economy is in crisis. The trade deficit is so embarrassing that the Chancellor does not wish to mention it any more. The director general of the Confederation of British Industry, a friend of the Prime Minister, urges the right hon. Lady to get her act together. In the last month alone, 487 firms went bankrupt under this Government.
    I wish to make a special plea in the closing minutes of the debate on the Loyal Address for the 1990–91 Session. It is a plea for the textile and footwear industries which have been devastated by the Government's policies over the past 11 years. High interest rates and the high level of imports are affecting the lives of ordinary people in my constituency. Two jobs are lost every hour in those two industries. Hon. Members are united on such issues as the multi-fibre arrangement. Both sides of the House agree that something must be done to protect those two vital industries. In one way or another, one third of my constituents depend on them for their livelihood. If this trend continues and nothing is done within the next year, I am afraid that those industries will cease to exist. They will go the same way as the textile and footwear industries in America, which have been destroyed by the high level of import penetration.
    The problem of the way in which this country has been governed over the past 11 years cannot be solved by a leadership election. Nothing will change if the right hon. Member for Henley (Mr. Heseltine), or the Leader of the House or the Foreign Secretary succeed the Prime Minister. It does not really matter. What matters is the election of a new Government with policies which will directly benefit the people of Britain.
    9.11 pm
    Dr. John Cunningham: My responsibility is to review six days of debate—a task so formidable that there is not exactly a sell-out in the Chamber.
    The first of several aspects of the debate which impressed me were the speeches of the mover and seconder of the Loyal Address. The right hon. Member for Ayr (Mr. Younger) and the hon. Member for Richmond and Barnes (Mr. Hanley) charmed and amused the House with their wit and humour. Their speeches were excellent. The right hon. Member for Ayr talked of his predecessor, whom I may call Younger the Elder, as that was one of his ancestors. [Interruption.] I am delighted to see the right hon. Gentleman take his seat. He referred to former Conservative Members for his constituency. I have to observe, however, that, despite the right hon. Gentleman's formidable career and record in the House, I fully expect that he will be the last Tory to sit for that constituency. The hon. Member for Richmond and Barnes perhaps gave us a hint of his own wistful crystal ball gazing when he referred to the policemen at the House being back after the next election. He may have been thinking that he would not be so lucky.
    There have been moments of accidental humour, too. Yesterday, the Secretary of State for Trade and Industry said:
    "This country enjoys one of the most open and dynamic telecommunications markets in the world."—[Official Report, 13 November 1990; Vol. 180, c. 449.]
    I suspect that his hon. Friend the Member for Wiltshire, North (Mr. Needham), the Parliamentary Under-Secretary of State for Northern Ireland, agrees. There have been many other moments of humour, some intended and some not, and a wide variety of effective speeches from both sides of the House. Last year I paid tribute to Ian Gow's speech in the equivalent debate. I miss his puckish wit, his friendliness and his courage. We also miss Allan Roberts, Sean Hughes, Mike Carr, Pat Wall, Allen Adams and Norman Buchan, and my thoughts and those of my right hon. and hon. Friends are with their families.
    It is a pleasure to congratulate my hon. Friend the Member for Knowsley, South (Mr. O'Hara) on an excellent maiden speech during the debate. He brings to this place a formidable knowledge of education at many levels. His humour, too, will be welcomed, but as a lifelong supporter of Newcastle United I will not make any jokes about Everton.
    I am delighted to welcome two new colleagues—my hon. Friends the Members for Bootle (Mr. Benton) and for Bradford, North (Mr. Rooney) whose crushing victories against the background of this debate and the autumn statement are merely the latest expression of the continuing strong desire of the British people to be rid of the present incompetent, discredited Government. After those stunning Labour results, many more Conservative Members—not only the right hon. Member for Ayr and the hon. Member for Richmond and Barnes—will be nervously scanning the "situations vacant" columns. Indeed, on those results, about 190 Conservative Members will not be returning after the general election.
    I must make a passing reference to the right hon. and learned Member for Surrey, East (Sir G. Howe), the former Lord President of the Council and Leader of the House of Commons. After yesterday, I shall miss him even more than I had imagined, and I shall certainly miss him in his role as Leader of the House. He had an excellent

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    record in that post, but there was one blemish on and otherwise good record. I refer to the Government's continuing failure to establish, as they have a duty under Standing Orders to establish, a Select Committee on Scottish Affairs. They have wholly defaulted on that obligation, and we look to the new Leader of the House to remedy that as soon as possible.
    This is the 12th Gracious Speech that we have considered in the Government's term of office.
    "My Government affirm their strong commitment to the European Community. They intend to play a full and constructive part in its further development and enlargement … My Government will give priority in economic policy to controlling inflation through the pursuit of firm monetary and fiscal policies … The quality of education will be maintained and improved".
    Those are laudable aims, to be sure, and I see the hon. Member for Pembroke (Mr. Bennett) agreeing with them. The problem is that they are not from the Gracious Speech of 1990 but from the Gracious Speech of 1979. Eleven years on, the Government are still making identical promises to this House and to the people of Britain.
    Now, after three Parliaments with large majorities, after 11 years in power, after every penny of £91 billion of oil revenues has been frittered away, we are back to the promises of 11 years ago. Now, with inflation at 10·9 per cent. compared with a European Community average of 5·4 per cent. and an average among the other countries in the exchange rate mechanism of just 4 per cent., now, with interest rates at 14 per cent., with a balance of payments deficit forecast by the Chancellor of £15·5 billion this year, with Britain in recession however the Chancellor chooses to describe it, and with rising unemployment, this year's Gracious Speech says that the Government will
    "reduce inflation and foster the conditions necessary for sustained growth."
    Who can believe that? Why should we believe it? The Government's record is a mixture of incompetence and deception. I searched in vain during the six days of debate for any recognition of the Government's abject failures in the speeches by Tory Members, but with one or two notable exceptions, my search was a waste of time.
    Observers of the debate will recognise a common theme in many Tory speeches. It is to be found in the words of the old song, "Just One More Chance". After a decade of division at home and in Europe, with a Prime Minister isolated and indeed embattled in her own party and completely out of touch with the people, that is the plea from Tory Members more interested in saving their skins than in saving the country. Putting Tory party interests before those of the nation will probably extend to the engineering of a mini-boom. That is the Government's short-term election strategy now, as it was in 1987, and it would be a further disaster for the long-term interests of the British economy.
    By a remarkable stroke of fate, on 14 November 1985 the Prime Minister gave an extended interview to the Financial Times. The article stated
    "Mrs. Thatcher wants another five or six years as Britain's Prime Minister in order to complete the economic transformation of the country that she embarked upon when she was elected in 1979."
    Having had the other five years, she has got us right back to square one. This is where she came in.
    My right hon. and hon. Friends have graphically illustrated the Government's litany of failures and the fact
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    that their only strategy for the 1990s is to repeat the mistakes of the 1980s. We have also shown that only the Labour party has the workable policies and commitment to tackle the problems that Britain faces. A Labour Government will ensure a properly balanced economy in the United Kingdom. We will take action to bridge the skills gap through a coherent national training stategy.
    According to the Chancellor's autumn statement, the Government are set to cut the employment budget by £300 million in the forthcoming year. They are also reducing the employment training scheme for the long-term unemployed. The next Labour Government will end such cuts. We know that training is one of the keys to a more successful future.
    We are also committed to a modern regional policy along the lines of our main competitors in Europe and elsewhere. Already this year there has been a cut of 67 per cent. in regional enterprise grants. Regional development grants are crucial, especially in areas like my constituency, where even now Ministers are refusing to allow us to take advantage of European regional development fund money. They are denying that investment to west Cumbria as a deliberate act of ministerial policy.
    Britain needs a Government prepared to work in partnership with industry, management and employees.
    Mr. Cash: Does the hon. Gentleman subscribe to the idea that under the new arrangements, of which the Labour party apparently approves, there could be a central bank? If so, how can he equate the amount of money that he is now saying should be spent with the binding rules and the imposition of budget deficits that would be imposed on his Government by that bank?
    Dr. Cunningham: I am sorry that I gave way to the hon. Gentleman's obsession with that subject. Nothing that has been said from the Opposition Front Bench in six days of debate has committed the Labour party to a central bank beyond political control, and the hon. Gentleman is aware of that.
    Over the past 11 years, the Government have imposed contentious and ill-conceived changes on the state education system. Standards are declining and schools all over the country, including the Valley infant school in my constituency, are simply crumbling before the eyes of parents, teachers and pupils.
    The Government's neglect is widespread. Despite a national outcry, the Government could find only £77 million extra for school building and repairs. That may sound a lot to people outside this place, but when that is set beside the more than £50 million allocated to a tiny percentage of pupils in city technology colleges, it is clear where the Government's priorities lie.
    Our great universities are also suffering. In the very important area of science and engineering research, the Government are funding only one half of the alpha-rated proposals going to the Medical Research Council. It is increasingly difficult to recruit postgraduate research students of the right calibre. That cannot be allowed to continue if we are to compete in Europe in the 1990s and beyond. Britain's education system requires sustained commitment, which only the Labour party is willing to provide.
    I was pleased to hear the new Secretary of State for Education and Science—the third in 15 months—make a public commitment to the state education system. It would

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    carry more conviction if he and his fellow members of the Cabinet sent their own children to state schools. All those Secretaries of State have been rapidly moved on by the Prime Minister. Even her latest appointment is already being undermined for his rejection of education vouchers. To borrow a phrase of the right hon. and learned Member for Surrey, East the new Secretary of State is
    "being subverted by some casual comment or impulsive answer."—[Official Report, 13 November 1990; Vol. 180, c. 465.]
    A Labour Government will increase choice and opportunity and help the one third of children who, in the words of Her Majesty's senior chief inspector of schools, are getting a raw deal under this Government. Those are not our words. We aim to make our young people the best educated and trained in Europe.
    Why is it that, after 11 years of the Prime Minister's policies, our great hospitals are closing children's wards? The most famous children's ward in the most famous children's hospital in Britain, and probably in Europe, has been closed. Thousands of sick children have been nursed back to health in the Peter Pan ward of Great Ormond street hospital since it was opened in the late 1930s. That ward is now closed. How bitter that news must be for the millions of people who contributed so generously to the wishing well fund to maintain that hospital and its care for children. So much for caring Conservatism.
    The authoritative British Social Attitudes annual report due out tomorrow shows that British people reject the values espoused by the Government. Now, the Government and the Conservative party are irrevocably split and it is shameful that at such a critical time for Britain at home and abroad we are left with a disabled Prime Minister and no effective Government or leadership. Once again, the Tories are letting Britain down.
    In the debate on 1979 Loyal Address, the present chairman of the Conservative party, speaking of the Prime Minister, said:
    "it is difficult to find that narrow strip of land that lies between rebellion and sycophancy."—[Offical Report, 15 May 1979; Vol. 967, c. 57.]
    Contemporary research does not record whether he ever found it. Nor are there any prizes for guessing, if he did, which way he jumped off it. At any event, he is now deeply engulfed in a quagmire of his own choosing, as the failed Tory campaigns continue to demonstrate. The same cannot be said of the right hon. and learned Member for Surrey, East.
    Contrast the two: the Prime Minister in secrecy stabbed him in the back—he in public stabbed her in the front. The right hon. and learned Member, in a speech of considerable courage and stunning candour, confirmed the Opposition's and the country's worst fears. In my 20 years in the House, I cannot recall a more devastating indictment of a Prime Minister of any party. The right hon. and learned Gentleman confirmed many of Labour's accusations and criticisms in the past decade and his words about the Prime Minister support the oft-repeated views of my right hon. Friend the Leader of the Opposition.
    The right hon. and learned Gentleman's accusation of her misconduct of Cabinet Government, his determination to expose her serious misjudgment of Britain's best interests, illustrate how strongly he believes that the Prime Minister has failed our country. His exposure of the Prime Minister's reckless determination to have her own way at any price explains his own and other resignations from the
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    Cabinet. The Prime Minister clearly puts her own prejudices and desire to dominate before sound policies and good Government.
    The Cabinet's divisions over Europe have not prevented the Government from supporting disastrous policies at home. That is why we now have poll tax, private water monopolies, crumbling schools and a run-down national health service. That is why Britain is isolated and lagging behind other western nations. The Tory Government have failed precisely because Cabinet Minister have never had the guts to stand up and be counted in front of the Prime Minister.
    There is no doubt that a Prime Minister who regularly talks tough about inflation has been an engine of inflation, or that a Prime Minister who regularly claims to want to create a climate for enterprise has damaged British interests, or that a Prime Minister who boasts about defending British interests has, through impulsive outbursts, seriously damaged them. So far as we can tell, the Prime Minister is the only politician on record who has received directions to the taxidermist from an alleged dead sheep and an alleged dead parrot. As she surveys her Government and a Conservative party split asunder, seething with revolt and destabilised by the blows of the electors, she must reflect on the words of Thomas Wyatt:
    "They flee from me, that sometime did me seek …
    I have seen them gentle, tame, and meek, that now are wild".
    Against that background of hopeless divisions, continuing policy failure and manifest incompetence, is it any surprise that we have seen this week a programme from the Government devoid of ideas, courage or Ministers of the calibre to do what is best for Britain? Our country does not need another member of that broken team or that divided party to lead another Tory Government into failure, for they all share the guilt. What people want is a general election. They want to decide who the next Prime Minister will be. As they have shown throughout Britain in 1990, that choice will be a Labour Government, led by my right hon. Friend. That election is the only way to end the present debacle. For us, it cannot come too soon. We are ready to govern. Let the people decide.
    9.33 pm
    The Lord President of the Council and Leader of the House of Commons (Mr. John MacGregor): It is a great personal privilege for me to follow my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) as Leader of the House. Many have already paid great tributes to my right hon. and learned Friend for his long and most distinguished service to this country in so many capacities over the past 25 years, and I warmly join them in that.
    I want tonight to single out my right hon. and learned Friend's role in the past 16 months as Leader of the House and thank him for the splendid way in which he carried it out. He has a well-deserved reputation as a reforming Leader of the House. I look forward to continuing the work that he set in hand under your aegis, Mr. Speaker, and in conjunction with the hon. Members for Copeland (Dr. Cunningham) and for Berwick-upon-Tweed (Mr. Beith) and the House of Commons Commission, to modernise the way in which we organise our affairs in the House. I look forward also to the continued co-operation of colleagues too numerous to mention on both sides of the

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    House on whom I shall rely in the Services Committee and its Sub-Committees, in the Select Committee on Televising of Proceedings of the House and the Privileges Committee, and to suggestions—always I hope, helpful and supportive—from my hon. Friend the Member for Honiton (Sir P. Emery) and my right hon. Friend the Member for Worthing (Mr. Higgins).
    I wish to join the hon. Member for Copeland in his tributes to the proposer and seconder of the motion, my right hon. Friend the Member for Ayr (Mr. Younger) and my hon. Friend the Member for Richmond and Barnes (Mr. Hanley). I have always regarded my right hon. Friend the Member for Ayr as one of the wisest and most level-headed Members of this place. As a fellow Scot, and now as Chairman of the Select Committee on Televising the Proceedings of the House, I hope that he will assure the constituent to whom he referred that the cameras present no threat to the honourable tradition of quoting from Rabbie Burns. That is something that one would expect, as television was invented by another Scot, John Logie Baird.
    My hon. Friend the Member for Richmond and Barnes delighted the House with his mimicry and acting talent, for which there will clearly be a continuing demand. It is complemented by acute intelligence and knowledge and experience of the issues in which he specialises.
    I am glad also to congratulate the hon. Members for Knowsley, South (Mr. O'Hara) and for Eastbourne (Mr. Bellotti) on their maiden speeches. Both mentioned education matters, which are of great interest to me. I cannot let the charge of underfunding pass, which one hon. Gentleman raised and which the hon. Member for Copeland tried to make stick a moment ago. In schools, we have increased spending per pupil by over 40 per cent. in real terms in the past 10 years. The autumn statement confirmed that both capital and current spending by local education authorities in 1991–92 will be able to rise by 16 per cent. There will be a total of over £3 billion extra for education next year. That massive increase demonstrates our continued commitment to education as a priority.
    Mr. Ian Bruce: I wonder whether my right hon. Friend saw the edition of the Daily Mail, which carried a report on how the money to which he referred was being spent, especially in Labour areas, in putting teachers in front of pupils or in spending on bureaucrats. I hope that my right hon. Friend will be urging on his successor as Secretary of State for Education and Science, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), that that ratio is not brought into effect generally.
    Mr. MacGregor: I know that my hon. Friend will realise that I was focusing upon that in relation to the amount of money that was being held back in respect of local management of schools when I was in my previous capacity. I know that my successor and his ministerial colleagues will continue with the campaign.
    Before I refer to the economy, there are two matters——
    Mr. Robert Hughes: Will the right hon. Gentleman give way?
    Mr. MacGregor: I am coming to the point that I think the hon. Gentleman wishes to raise.
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    Before I refer to the economy, there are two matters to which I should refer as Leader of the House. First, my hon. Friend the Member for Honiton raised earlier in the debate several procedural matters to which I wish to reply on other more suitable occasions. But there was one to which I believe that it would be appropriate to respond tonight. He asked that I should announce the parliamentary calendar at the start of this Session as recommended by the Procedure Committee in 1979, and beguilingly suggested that that could establish me as the most popular man in the House.
    I cannot go quite that far, so I must forgo that pleasure. But I hope that it will be for the convenience of the House if I say now that, subject to the satisfactory course of business, I expect the House to adjourn for the Christmas recess on Thursday 20 December and to return in the week beginning 7 January. As Easter next year falls at the end of March, the Easter recess will include the week immediately after Easter day, Sunday 31 March. I hope that my hon. Friend the Member for Honiton will regard that as responding in the right spirit to the Procedure Committee recommendation of which he spoke.
    Secondly, I know that hon. Members are interested in a Select Committee on Scottish Affairs. I have been looking into it and will continue to do so. But I have to say that I very much doubt whether it will be possible to resolve the impasse to which my right hon. and learned Friend the Member for Surrey, East referred last year, which had lasted up till then, and to which no practicable new solutions have emerged since.
    Mr. Robert Hughes: I am grateful to the Leader of the House for giving way as I wrote to him about the Select Committee on Scottish Affairs the day after he was appointed. Does not he recognise that a powerful report has come to the conclusion that the Standing Orders of the House have not been complied with and that he has a duty to say that he will do more than merely look into a Select Committee on Scottish Affairs, and point out the dangers of the present position? Will he not say now that he will use his best endeavours to have such a Committee established?
    Mr. MacGregor: I have said that I shall consider it, but I know from reading the documents that it is not an easy matter to resolve. As the House knows, there have been many opportunities to probe Scottish matters——
    Dr. Cunningham rose——
    Mr. MacGregor: I want to move on to the debate itself, so this is the last time that I shall give way.
    Dr. Cunningham: I shall be brief, as I do not want the Leader of the House to run out of time. There is no impasse. We are perfectly prepared to establish a Select Committee on Scottish Affairs. Indeed, the Leader of the House has a duty to the House to establish that Committee.
    Mr. MacGregor: I shall certainly consider the matter, but I am aware of the real difficulties——
    Several Hon. Members rose——
    Mr. MacGregor: I must not give way again, because we began the replies late and there is a great deal to which to respond.
    The speech of the right hon. and learned Member for Monklands, East (Mr. Smith) was astonishing for its total

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    lack of any reference to Labour's policies, as my right hon. Friend the Member for Worthing so accurately pointed out. Empty phrases—or complete waffle, as several of my hon. Friends put it—rhetoric, not reality, were the hallmarks of his speech. I know why he did not mention a specific Labour policy. He knows that, where it is not empty, it is ambiguous. How right my right hon. Friend the Member for Chingford (Mr. Tebbit) was when he said that the right hon. and learned Gentleman's phrase this afternoon, "You will not find unity in ambiguity", will return to haunt him for months to come. Where Labour policy attempts to be specific, it is fatally flawed.
    shall mention just four fatal flaws. First, the Opposition have no policy on inflation. Indeed, the whole thrust of their policies would be to accelerate every inflationary trend, as they did when they were last in office. There would be increased spending and increased borrowing—and more of that in a moment—and the imposition of a national minimum wage, which, coupled with their plans to give unions major new rights and their wholehearted support of the social charter, would greatly add to inflationary wage pressures. They would shy away from interest rates to reduce excessive demand, and instead give a commitment to credit controls that are widely acknowledged to be unworkable.
    No wonder the right hon. and learned Gentleman did not mention that this afternoon, because the last thing that he wanted was to be questioned about what it actually meant and how it could conceivably work. Even the Opposition's acceptance of membership of the ERM is hugely qualified and devalued by a determination to undermine its anti-inflationary rigour. Their intention to intervene in both public and private sector prices is about their sole distinctive contribution—as before—on inflation.
    Of course that leads to the second fatal flaw—the Opposition's dislike of the enterprise economy and their gut reaction to every economic issue, which is to seek further intervention and control. The response yesterday of the hon. Member for Dunfermline, East (Mr. Brown) to my right hon. Friend the Secretary of State for Trade and Industry's statement on telecommunications was a litany of interference, regulation and control; a yearning, as my right hon. Friend observed, for a return to a nationalised system, self-regulated, with no choice and no competition. They simply do not understand what makes a free market economy tick. Once again, as their amendment reveals, they will pursue a so-called industrial strategy, which means taking from successful businesses to pursue the state control and the state-directed national investment plans—my right hon. Friend the Chancellor read out the catalogue of intervention and direction—which failed so markedly in the past.
    That leads to the third fatal flaw, that the Opposition do not understand the benefits of competition and choice, even when they are so evident before their very eyes. It is competition in telecommunications that has produced the range of choice and degree of innovation in the products now available to consumers; the competition in long-distance transport that has produced the better services and lower prices. In education, the grant-maintained schools, the city technology colleges, the assisted places schemes, the competition being induced by open enrolment and the funding mechanisms of local management of schools are extending choice for parents and helping to raise standards.
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    They are proving popular with parents, but it is that very popularity that so bugs the Opposition. They embrace conformity. They dislike the very idea that parents may have the chance to choose the opportunity that they seek for their child, rather than being forced to do what a remote authority compels upon them. They do not realise that it is the release of energy, the flowering of talent and enterprise that competition and choice involve, which has done so much to raise living standards in the past 10 years.
    It is the fourth fatal flaw that will once again destroy the Opposition. There is a huge credibility gap between their spending ambitions and their so-called tax commitments. If the Opposition really
    "don't want a level of taxation that is going to depress effort"
    as the Leader of the Opposition said in a recent television interview, why did they vote against every Budget that reduced income tax? There is no point in reading the lips of the Leader of the Opposition. They will tell one something different every week.
    Once again the Opposition's sums simply will not add up. Before the last election I undertook the task of costing the Opposition's then programme. I remember clearly how the jaw of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) dropped when I first gave him the figure—£28 billion. But try as he might, he could not refute it. By the time of the election, it had risen much further—to £34 billion. He simply could not resist his colleagues' spending urges. When we told the electorate what that would cost them in increased taxes, and the electorate responded with horror, the Opposition were rumbled.
    That is why the right hon. and learned Member for Monklands, East is now trying to put the shackles on his Front-Bench colleagues. So now we have a new version—the latest great Labour con-trick. The Opposition criticise us for what they describe as the lack of resources devoted to the health service, education or the road programme. They therefore imply that the Labour party would spend more. The hon. Member for Copeland was at it again a few minutes ago, time after time. But they know they could not. They know that it is a sham. Again they are being rumbled.
    Take education. A recent interview that the hon. Member for Blackburn (Mr. Straw) had in "The Walden Programme" was a classic. The transcript says:
    "Brian Walden: … It turns out that Labour has a Big Idea for education …
    Jack Straw: Yes …
    Brian Walden: And you have a whole series of proposals.
    Jack Straw: Yes.
    Brian Walden: And when I say to you 'And have you got the money for these', you say 'Well, as a matter of fact, immediately, no, it's all a bit hypothetical …
    Jack Straw: No … we shall put more money into it.
    Brian Walden: You'll borrow to do that, will you?
    Jack Straw: No, we shall put more money into it than this
    Government.
    Brian Walden: Smith has told us the tax increases we're going to have, they're very well defined. He's also told us where the money's … going … education's not going to get a penny of it, it's going to go on child benefits and pensions. Now where's your slot coming from?
    Jack Straw: Our slot will come from the budget of the incoming Labour Government …
    Brian Walden: So, you are going to borrow it?
    Jack Straw: I don't know whether we shall borrow it …
    Brian Walden: Of course … and you're going to borrow the money?
    Jack Straw: No …

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    Brian Walden: If you don't get it out of taxation—and you promised you won't.
    Jack Straw: Yes.
    Brian Walden: You have got to get it out of borrowing.
    Jack Straw: I've not promised you don't get it out of taxation.
    Brian Walden: Ah, so you might increase taxes beyond what John Smith has pledged?
    Jack Straw: … of course not …
    Brian Walden: Well, then, it doesn't add up, Mr. Straw.
    Jack Straw (hysterical): It does add up, it does add up, it does add up because this country is a country where, even under this Government there is some economic growth, we intend that there would be …
    Brian Walden: Ah, it's from hypothetical economic growth that you haven't got yet and you can't measure."
    That just about sums it up. Of course, the Labour party has not got the policies that will produce economic growth. The right hon. and learned Member for Monklands, East is not a very successful choir master. He has taught his members the chorus, "As resources allow", but they keep forgetting the words of the verse.
    Already the strains are showing. The right hon. and learned Gentleman quoted this afternoon from a Midland Montagu Greenwell analysis. Let me quote from another, in June this year. Its economists estimated that the full cost of Labour's spending plans is £50 billion a year. At an absolute minimum, they say that public spending would rise by £12 billion in the first year of a Labour Government. By the third year, Labour would have turned a budget surplus into a deficit of between £16 billion and £27 billion, and they lave hardly even started.
    As the election approaches, the shadow Chief Secretary will be submerged in a flood of spending promises to every conceivable pressure group to which the Labour party has never been able to say no. We would be back to the high spending, high taxation, Labour party of the past, and every Opposition Member knows it. Just about the most astonishing statement in the Opposition amendment today is that which calls upon the Government
    "to prepare for the competitive challenges of the Single Market after 1992".
    Astonishing, because, as the CBI recognised on many occasions recently, the 1980s has been the decade when the competitive position of British companies and the British economy have been so greatly improved. But even more astonishing because it was only comparatively recently—in June 1986—that the Leader of the Opposition said:
    "The Single Market is an abdication of responsibility…an apology for action".
    As in so much else, he has had to swallow his words and come closer to our policies, because time and again they have been proved right.
    It was not many elections ago—in 1983, to be precise—that the Leader of the Opposition was still calling for British withdrawal from the European Community—complete withdrawal. There are rather too many recent converts in the Labour party among those who have spent a lifetime fighting British membership of the Community, and who now do not know what it is about. They have changed their minds not once or twice, but six times in the past few years.
    No wonder the right hon. and learned Member for Monklands, East blustered and flustered in reply to the question of my right hon. Friend the Member for Guildford (Mr. Howell) about the number of anti-European Labour Members. He was afraid to admit the
    668
    figures, but I believe that Labour's Common Market safeguard committee claims to have the support of about one quarter of Labour Members.
    By contrast, the vast majority of us on Conservative Benches are not only committed wholeheartedly to Britain's membership of, and full participation in, the European Community, but always have been. One of the first things that I did in politics was to propose a resolution at a university student conference urging the Government of the day to seek Britain's membership of the then Common Market. That was in the late 1950s, well before the Macmillan Government's first negotiation for entry. My commitment has remained complete ever since, in common with so many of my right hon. and hon. Friends, who took a similar view in their early life in politics.
    That is why I so much agree with the comment of my right hon. Friend the Prime Minister in her Guildhall speech on Monday night, when she highlighted the breakthrough of the British and French tunnel deep below the channel as the really significant European news because it was "history in the making". She went on:
    "As I have many times said, so much of our history has been in Europe and our destiny lies in Europe".
    But equally, my experience of the day-to-day reality of Community negotiations—and I had four intense years of it—has always led me to distinguish between grand designs and great phrases, and the reality of building our common Community. And the reality is that, in the practical business of developing the plans and implementing the decisions, it is so often the United Kingdom that takes the lead and gets actual results.
    It does need constantly to be said that, during my right hon. Friend's premiership the United Kingdom has been, and still is, in the lead in the implementation of the specific measures needed to bring into effect the single market programme. We have all put massive effort and commitment into that.
    The United Kingdom played a leading part in getting the earlier reforms of the common agricultural policy through. As one who was involved in that, in the engine room, I can testify to the degree of commitment and knowledge that my right hon. Friend displayed. In the past few months and weeks, it was the United Kingdom that supported the Commission against French and German opposition in ensuring that we do now—very belatedly, indeed dangerously late—have a Community stance on agriculture in relation to the GATT Uruguay round. The United Kingdom developed the practical plans for the next stage of economic and monetary development.
    Yes, we may have a tendency to cut through the waffle and get down to brass tacks, the practical work. But the Community is very often the better for it. As the right hon. Member for Plymouth, Devonport, (Dr. Owen) said last week about the next stages of European monetary union:
    "The detail is everything. It is a crime to hold out for the detail and to argue that those are fundamental questions? Of course it is not."—[Official Report, 7 November 1990; Vol. 180, c. 62.]
    I agree, and this afternoon my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) also had some salutary worth to say about the importance of getting the detail right.
    Two other aspects of Community reality during my right hon. Friend's 'premiership need constant stressing. The first is that, as I have so constantly seen myself, every Minister stands up for national interests quite regularly—and some do that on points of detail, and some with

    669
    great obstinacy. We all understand that in the Community. We have seen one of the clearest examples in these past few weeks—not by Britain, but by France and Germany, in the agricultural discussions for the Uruguay round. It was the United Kingdom that was so clearly communautaire.
    At the United Kingdom's instigation, the Commission and other member states are now paying much closer attention to the vital question of the implementation of single market legislation. The latest figures show that the United Kingdom has maintained its excellent record. We and Denmark remain in the lead. During the past decade, the United Kingdom has had the second best record, after Denmark, on the number of references to European Court of Justice.
    I pay tribute to all that my right hon. and learned Friend the Member for Surrey, East has done to further Britain's work in the Community. He has indeed played a leading part throughout, but I have to say that I simply do not believe that our European credentials are in doubt. I agree with him that our business people, our financiers, our young people and many others want us to play a full and constructive part. I believe that that is what we are doing. With my right hon. and hon. Friends, I intend to continue doing all that I can to see that the Community develops effectively and constructively.
    I referred earlier to the spending trap that the Labour party is already getting into. As my right hon. Friend the Chancellor said this afternoon, that is in stark contrast with our record. By the end of this year, we expect to have repaid £29 billion-worth of public sector debt over four years, a saving of £2·75 billion in annual interest payments, giving us the strongest fiscal position of any G7 country apart from Japan. That is far from being the only way in which the policies of the past 10 years have strengthened Britain's economy. The right hon. and learned Member for Monklands, East mentioned employment. Employment in Britain is at its highest level ever. The work force has increased by 3·75 million in the past seven years. Some 71 per cent. of the United Kingdom's population is in employment. We are well ahead of the EC average—indeed, we have the second highest figure in the EC.
    The right hon. and learned Member for Monklands, East mentioned capital investment. Private sector business investment has risen dramatically, as my right hon. Friend the Chancellor said. It went up by 45 per cent. over the three years to 1989 and it is expected to be high again this year—more than £57 million. When my right hon. Friend the Chancellor said that it is more than 50 per cent. higher than it was in 1979, I heard someone on the Opposition Front Bench mutter, as another has just done, "What about manufacturing investment?" I can tell Opposition Members that manufacturing investment in 1989 was up 9 per cent. on the previous year and reached its highest ever level.
    Public sector capital investment will be £30 billion this year and there is a further £1·5 billion in the autumn statement. Private sector investment on training, which the right hon. and learned Gentleman went on about, amounts to more than £20 billion a year and the number of employers who are reporting recent training for their work force has gone up by 70 per cent. during the past five years. There is also a splendid response by employers to the training and enterprise councils.
    The right hon. and learned Member for Monklands, East continues to spew out rhetoric about investment and training, but the facts about Britain's recent performance
    670
    refute utterly his charge. We are succeeding. We have been laying the basis for a sound and competitive economy in the 1990s.
    As my hon. Friend the Member for Surrey, North-West (Mr. Grylls) said, the enterprise ethic in Britain is now thoroughly re-established. The latest figures show a net increase in business—after losses—of about 1,700 a week, compared with 300 in 1980. I pay tribute to my hon. Friend's work in helping the small business movement. My right hon. Friend the Member for Chingford rightly said that there has been a substantial improvement in management performance.
    We are witnessing a substantial change in the underlying strength of the British economy. That is the most important issue before the country tonight. It has been achieved by pursuing our policies during the past 10 years.
    The Loyal Address is also about the major programme of legislation in the Queen's Speech, upon which we are about to embark. It is a full programme of work. As before, it does not identify all the measures that may be brought before Parliament. Indeed, seven which were not in the Queen's Speech have already been introduced. The main programme, however, is concentrated on carrying forward the continuing fight against crime, continuing to strengthen family responsibility, improving efficiency and safety in transport, carrying forward the privatisation programme, new pay negotiating machinery for teachers, new benefits for the disabled and a good deal more. All those issues are important and of great concern to our constituents, as we know from our constituency meetings, surgeries and postbags. I commend them, and our economic policies, to the House.
    Question put, That the amendment be made:—
    The House divided: Ayes 225, Noes 333.

    Division No. 2]

    [10 pm

    AYES

    Abbott, Ms Diane

    Callaghan, Jim

    Allen, Graham

    Campbell, Menzies (Fife NE)

    Alton, David

    Campbell-Savours, D. N.

    Anderson, Donald

    Canavan, Dennis

    Archer, Rt Hon Peter

    Carlile, Alex (Mont'g)

    Armstrong, Hilary

    Cartwright, John

    Ashdown, Rt Hon Paddy

    Clark, Dr David (S Shields)

    Ashley, Rt Hon Jack

    Clay, Bob

    Ashton, Joe

    Clelland, David

    Banks, Tony (Newham NW)

    Clwyd, Mrs Ann

    Barnes, Harry (Derbyshire NE)

    Coleman, Donald

    Barnes, Mrs Rosie (Greenwich)

    Cook, Robin (Livingston)

    Barron, Kevin

    Corbett, Robin

    Battle, John

    Corbyn, Jeremy

    Beckett, Margaret

    Cousins, Jim

    Beith, A. J.

    Cox, Tom

    Bell, Stuart

    Crowther, Stan

    Bellotti, David

    Cryer, Bob

    Benn, Rt Hon Tony

    Cummings, John

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

    Cunliffe, Lawrence

    Benton, Joseph

    Cunningham, Dr John

    Bermingham, Gerald

    Dalyell, Tam

    Bidwell, Sydney

    Darling, Alistair

    Blair, Tony

    Davies, Rt Hon Denzil (Llanelli)

    Blunkett, David

    Davies, Ron (Caerphilly)

    Boateng, Paul

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

    Boyes, Roland

    Dewar, Donald

    Bradley, Keith

    Dixon, Don

    Bray, Dr Jeremy

    Dobson, Frank

    Brown, Gordon (D'mline E)

    Doran, Frank

    Brown, Nicholas (Newcastle E)

    Duffy, A. E. P.

    Bruce, Malcolm (Gordon)

    Dunnachie, Jimmy

    Buckley, George J.

    Eadie, Alexander

    Caborn, Richard

    Evans, John (St Helens N)

    671

    Ewing, Harry (Falkirk E)

    Martlew, Eric

    Field, Frank (Birkenhead)

    Meacher, Michael

    Fisher, Mark

    Meale, Alan

    Flannery, Martin

    Michael, Alun

    Flynn, Paul

    Michie, Bill (Sheffield Heeley)

    Foot, Rt Hon Michael

    Michie, Mrs Ray (Arg'l & Bute)

    Foster, Derek

    Mitchell, Austin (G't Grimsby)

    Foulkes, George

    Morgan, Rhodri

    Fraser, John

    Morley, Elliot

    Fyfe, Maria

    Morris, Rt Hon A. (W'shawe)

    Galbraith, Sam

    Morris, Rt Hon J. (Aberavon)

    Galloway, George

    Mowlam, Marjorie

    Garrett, John (Norwich South)

    Mullin, Chris

    George, Bruce

    Murphy, Paul

    Gilbert, Rt Hon Dr John

    Nellist, Dave

    Golding, Mrs Llin

    Oakes, Rt Hon Gordon

    Gordon, Mildred

    O'Brien, William

    Gould, Bryan

    O'Hara, Edward

    Graham, Thomas

    O'Neill, Martin

    Griffiths, Nigel (Edinburgh S)

    Orme, Rt Hon Stanley

    Griffiths, Win (Bridgend)

    Parry, Robert

    Grocott, Bruce

    Patchett, Terry

    Hardy, Peter

    Pendry, Tom

    Harman, Ms Harriet

    Pike, Peter L.

    Hattersley, Rt Hon Roy

    Powell, Ray (Ogmore)

    Heal, Mrs Sylvia

    Prescott, John

    Healey, Rt Hon Denis

    Primarolo, Dawn

    Henderson, Doug

    Quin, Ms Joyce

    Hinchliffe, David

    Radice, Giles

    Hoey, Ms Kate (Vauxhall)

    Randall, Stuart

    Hogg, N. (C'nauld & Kilsyth)

    Rees, Rt Hon Merlyn

    Home Robertson, John

    Reid, Dr John

    Hood, Jimmy

    Richardson, Jo

    Howell, Rt Hon D. (S'heath)

    Robertson, George

    Howells, Geraint

    Robinson, Geoffrey

    Howells, Dr. Kim (Pontypridd)

    Rogers, Allan

    Hoyle, Doug

    Rooney, Terence

    Hughes, John (Coventry NE)

    Rowlands, Ted

    Hughes, Robert (Aberdeen N)

    Salmond, Alex

    Hughes, Roy (Newport E)

    Sedgemore, Brian

    Hughes, Simon (Southwark)

    Sheerman, Barry

    Illsley, Eric

    Sheldon, Rt Hon Robert

    Ingram, Adam

    Shore, Rt Hon Peter

    Janner, Greville

    Short, Clare

    Johnston, Sir Russell

    Skinner, Dennis

    Jones, Barry (Alyn & Deeside)

    Smith, Andrew (Oxford E)

    Jones, leuan (Ynys Môn)

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

    Jones, Martyn (Clwyd S W)

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

    Kaufman, Rt Hon Gerald

    Smith, J. P. (Vale of Glam)

    Kennedy, Charles

    Snape, Peter

    Kinnock, Rt Hon Neil

    Soley, Clive

    Kirkwood, Archy

    Spearing, Nigel

    Lambie, David

    Steel, Rt Hon Sir David

    Lamond, James

    Steinberg, Gerry

    Leadbitter, Ted

    Stott, Roger

    Leighton, Ron

    Strang, Gavin

    Lestor, Joan (Eccles)

    Straw, Jack

    Lewis, Terry

    Taylor, Mrs Ann (Dewsbury)

    Litherland, Robert

    Taylor, Matthew (Truro)

    Livingstone, Ken

    Thomas, Dr Dafydd Elis

    Livsey, Richard

    Thompson, Jack (Wansbeck)

    Lloyd, Tony (Stretford)

    Turner, Dennis

    Lofthouse, Geoffrey

    Vaz, Keith

    Loyden, Eddie

    Wallace, James

    McAllion, John

    Walley, Joan

    McAvoy, Thomas

    Warden, Gareth (Gower)

    McCartney, Ian

    Wareing, Robert N.

    Macdonald, Calum A.

    Welsh, Andrew (Angus E)

    McKay, Allen (Barnsley West)

    Welsh, Michael (Doncaster N)

    McKelvey, William

    Williams, Rt Hon Alan

    McLeish, Henry

    Williams, Alan W. (Carm'then)

    Maclennan, Robert

    Wilson, Brian

    McNamara, Kevin

    Winnick, David

    McWilliam, John

    Wise, Mrs Audrey

    Madden, Max

    Wray, Jimmy

    Mahon, Mrs Alice

    Young, David (Bolton SE)

    Marek, Dr John

    Marshall, David (Shettleston)

    Tellers for the Ayes:

    Marshall, Jim (Leicester S)

    Mr. Frank Haynes and Mr. Ken Eastham.

    Martin, Michael J. (Springburn)

    672

    NOES

    Adley, Robert

    Dunn, Bob

    Aitken, Jonathan

    Durant, Tony

    Alexander, Richard

    Dykes, Hugh

    Alison, Rt Hon Michael

    Eggar, Tim

    Allason, Rupert

    Emery, Sir Peter

    Amery, Rt Hon Julian

    Evans, David (Welwyn Hatf'd)

    Amess, David

    Evennett, David

    Amos, Alan

    Fenner, Dame Peggy

    Arbuthnot, James

    Field, Barry (Isle of Wight)

    Arnold, Jacques (Gravesham)

    Fishburn, John Dudley

    Arnold, Sir Thomas

    Fookes, Dame Janet

    Ashby, David

    Forman, Nigel

    Aspinwall, Jack

    Forsyth, Michael (Stirling)

    Atkins, Robert

    Forsythe, Clifford (Antrim S)

    Atkinson, David

    Forth, Eric

    Baker, Rt Hon K. (Mole Valley)

    Fowler, Rt Hon Sir Norman

    Baker, Nicholas (Dorset N)

    Fox, Sir Marcus

    Baldry, Tony

    Franks, Cecil

    Banks, Robert (Harrogate)

    Freeman, Roger

    Batiste, Spencer

    French, Douglas

    Beaumont-Dark, Anthony

    Fry, Peter

    Beggs, Roy

    Gale, Roger

    Bellingham, Henry

    Gardiner, George

    Bendall, Vivian

    Garel-Jones, Tristan

    Bennett, Nicholas (Pembroke)

    Gill, Christopher

    Benyon, W.

    Gilmour, Rt Hon Sir Ian

    Bevan, David Gilroy

    Glyn, Dr Sir Alan

    Biffen, Rt Hon John

    Goodhart, Sir Philip

    Blackburn, Dr John G.

    Goodlad, Alastair

    Blaker, Rt Hon Sir Peter

    Goodson-Wickes, Dr Charles

    Body, Sir Richard

    Gorman, Mrs Teresa

    Bonsor, Sir Nicholas

    Gorst, John

    Boscawen, Hon Robert

    Grant, Sir Anthony (CambsSW)

    Boswell, Tim

    Greenway, Harry (Eating N)

    Bottomley, Peter

    Greenway, John (Ryedale)

    Bottomley, Mrs Virginia

    Gregory, Conal

    Bowden, A (Brighton K'pto'n)

    Griffiths, Peter (Portsmouth N)

    Bowden, Gerald (Dulwich)

    Grist, Ian

    Bowis, John

    Ground, Patrick

    Boyson, Rt Hon Dr Sir Rhodes

    Grylls, Michael

    Braine, Rt Hon Sir Bernard

    Gummer, Rt Hon John Selwyn

    Brandon-Bravo, Martin

    Hague, William

    Brazier, Julian

    Hamilton, Hon Archie (Epsom)

    Bright, Graham

    Hamilton, Neil (Tatton)

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

    Hampson, Dr Keith

    Bruce, Ian (Dorset South)

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

    Buchanan-Smith, Rt Hon Alick

    Hargreaves, Ken (Hyndburn)

    Budgen, Nicholas

    Harris, David

    Burns, Simon

    Haselhurst, Alan

    Burt, Alistair

    Hawkins, Christopher

    Butler, Chris

    Hayes, Jerry

    Butterfill, John

    Hayhoe, Rt Hon Sir Barney

    Carlisle, Kenneth (Lincoln)

    Hayward, Robert

    Carrington, Matthew

    Heath, Rt Hon Edward

    Carttiss, Michael

    Heathcoat-Amory, David

    Cash, William

    Heseltine, Rt Hon Michael

    Channon, Rt Hon Paul

    Hicks, Mrs Maureen (Wolv' NE)

    Chope, Christopher

    Hicks, Robert (Cornwall SE)

    Churchill, Mr

    Higgins, Rt Hon Terence L.

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

    Hill, James

    Clark, Dr Michael (Rochford)

    Hind, Kenneth

    Clark, Sir W. (Croydon S)

    Howard, Rt Hon Michael

    Clarke, Rt Hon K. (Rushcliffe)

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

    Colvin, Michael

    Howarth, George (Knowsley N)

    Conway, Derek

    Howarth, G. (Cannock & B'wd)

    Coombs, Anthony (Wyre F'rest)

    Howe, Rt Hon Sir Geoffrey

    Coombs, Simon (Swindon)

    Howell, Rt Hon David (G'dford)

    Cormack, Patrick

    Howell, Ralph (North Norfolk)

    Couchman, James

    Hughes, Robert G. (Harrow W)

    Cran, James

    Hunt, Sir John (Ravensbourne)

    Currie, Mrs Edwina

    Hunter, Andrew

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

    Irvine, Michael

    Davis, David (Boothferry)

    Irving, Sir Charles

    Day, Stephen

    Jack, Michael

    Devlin, Tim

    Jackson, Robert

    Dickens, Geoffrey

    Janman, Tim

    Dorrell, Stephen

    Jessel, Toby

    Douglas-Hamilton, Lord James

    Johnson Smith, Sir Geoffrey

    Dover, Den

    Jones, Robert B (Herts W)

    673

    Jopling, Rt Hon Michael

    Porter, David (Waveney)

    Kellett-Bowman, Dame Elaine

    Portillo, Michael

    Key, Robert

    Powell, William (Corby)

    Kilfedder, James

    Price, Sir David

    King, Roger (B'ham N'thfield)

    Raffan, Keith

    Kirkhope, Timothy

    Raison, Rt Hon Timothy

    Knapman, Roger

    Redwood, John

    Knight, Greg (Derby North)

    Renton, Rt Hon Tim

    Knight, Dame Jill (Edgbaston)

    Rhodes James, Robert

    Knowles, Michael

    Riddick, Graham

    Knox, David

    Ridley, Rt Hon Nicholas

    Lamont, Rt Hon Norman

    Ridsdale, Sir Julian

    Lang, Ian

    Rifkind, Rt Hon Malcolm

    Latham, Michael

    Roberts, Sir Wyn (Conwy)

    Lawrence, Ivan

    Ross, William (Londonderry E)

    Lawson, Rt Hon Nigel

    Rossi, Sir Hugh

    Lee, John (Pendle)

    Rost, Peter

    Leigh, Edward (Gainsbor'gh)

    Rumbold, Mrs Angela

    Lennox-Boyd, Hon Mark

    Ryder, Richard

    Lester, Jim (Broxtowe)

    Sackville, Hon Tom

    Lilley, Peter

    Sayeed, Jonathan

    Lloyd, Sir Ian (Havant)

    Scott, Rt Hon Nicholas

    Lloyd, Peter (Fareham)

    Shaw, David (Dover)

    Luce, Rt Hon Richard

    Shaw, Sir Giles (Pudsey)

    McCrindle, Sir Robert

    Shaw, Sir Michael (Scarb')

    Macfarlane, Sir Neil

    Shephard, Mrs G. (Norfolk SW)

    MacGregor, Rt Hon John

    Shepherd, Colin (Hereford)

    MacKay, Andrew (E Berkshire)

    Shepherd, Richard (Aldridge)

    Maclean, David

    Shersby, Michael

    McLoughlin, Patrick

    Sims, Roger

    McNair-Wilson, Sir Patrick

    Skeet, Sir Trevor

    Madel, David

    Smith, Sir Dudley (Warwick)

    Maginnis, Ken

    Soames, Hon Nicholas

    Major, Rt Hon John

    Speed, Keith

    Malins, Humfrey

    Speller, Tony

    Mans, Keith

    Spicer, Sir Jim (Dorset W)

    Marland, Paul

    Spicer, Michael (S Worcs)

    Marlow, Tony

    Squire, Robin

    Marshall, John (Hendon S)

    Stanbrook, Ivor

    Martin, David (Portsmouth S)

    Stanley, Rt Hon Sir John

    Mates, Michael

    Steen, Anthony

    Maude, Hon Francis

    Stern, Michael

    Mawhinney, Dr Brian

    Stevens, Lewis

    Maxwell-Hyslop, Robin

    Stewart, Allan (Eastwood)

    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

    Sumberg, David

    Mills, Iain

    Summerson, Hugo

    Miscampbell, Norman

    Tapsell, Sir Peter

    Mitchell, Andrew (Gedling)

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

    Mitchell, Sir David

    Taylor, John M (Solihull)

    Molyneaux, Rt Hon James

    Taylor, Teddy (S'end E)

    Monro, Sir Hector

    Tebbit, Rt Hon Norman

    Montgomery, Sir Fergus

    Temple-Morris, Peter

    Morris, M (N'hampton S)

    Thatcher, Rt Hon Margaret

    Morrison, Sir Charles

    Thompson, D. (Calder Valley)

    Morrison, Rt Hon P (Chester)

    Thompson, Patrick (Norwich N)

    Moss, Malcolm

    Thorne, Neil

    Moynihan, Hon Colin

    Thornton, Malcolm

    Mudd, David

    Thurnham, Peter

    Neale, Gerrard

    Townend, John (Bridlington)

    Needham, Richard

    Townsend, Cyril D. (B'heath)

    Neubert, Michael

    Tracey, Richard

    Newton, Rt Hon Tony

    Tredinnick, David

    Nicholls, Patrick

    Trimble, David

    Nicholson, David (Taunton)

    Trippier, David

    Nicholson, Emma (Devon West)

    Trotter, Neville

    Norris, Steve

    Twinn, Dr Ian

    Onslow, Rt Hon Cranley

    Vaughan, Sir Gerard

    Oppenheim, Phillip

    Viggers, Peter

    Page, Richard

    Waddington, Rt Hon David

    Paice, James

    Wakeham, Rt Hon John

    Parkinson, Rt Hon Cecil

    Waldegrave, Rt Hon William

    Patnick, Irvine

    Walden, George

    Patten, Rt Hon John

    Walker, Bill (T'side North)

    Pattie, Rt Hon Sir Geoffrey

    Walker, Rt Hon P. (W'cester)

    Pawsey, James

    Waller, Gary

    Peacock, Mrs Elizabeth

    Walters, Sir Dennis

    Porter, Barry (Wirral S)

    Wardle, Charles (Bexhill)

    674

    Warren, Kenneth

    Winterton, Nicholas

    Watts, John

    Wolfson, Mark

    Wells, Bowen

    Wood, Timothy

    Wheeler, Sir John

    Woodcock, Dr. Mike

    Whitney, Ray

    Yeo, Tim

    Widdecombe, Ann

    Younger, Rt Hon George

    Wiggin, Jerry

    Wilkinson, John

    Tellers for the Noes:

    Wilshire, David

    Sir George Young and Mr. David Lightbown.

    Winterton, Mrs Ann

    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 coherent policy to secure for the people of the United Kingdom the benefits of the economic, monetary and political union of the European Community.—[Mr. Beith.]
    Question put, That the amendment be made:—
    The House divided: Ayes 20, Noes 323.

    Division No. 3]

    [10.15 pm

    AYES

    Alton, David

    Kennedy, Charles

    Ashdown, Rt Hon Paddy

    Kirkwood, Archy

    Barnes, Mrs Rosie (Greenwich)

    Livsey, Richard

    Beith, A. J.

    Maclennan, Robert

    Bellotti, David

    Michie, Mrs Ray (Arg'l & Bute)

    Bruce, Malcolm (Gordon)

    Steel, Rt Hon Sir David

    Campbell, Menzies (Fife NE)

    Taylor, Matthew (Truro)

    Cartwright, John

    Thomas, Dr Dafydd Elis

    Howells, Geraint

    Hughes, Simon (Southwark)

    Tellers for the Ayes:

    Johnston, Sir Russell

    Mr. James Wallace and Mr. Alex Carlile.

    Jones, Ieuan (Ynys Môn)

    NOES

    Adley, Robert

    Bright, Graham

    Aitken, Jonathan

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

    Alexander, Richard

    Bruce, Ian (Dorset South)

    Alison, Rt Hon Michael

    Buchanan-Smith, Rt Hon Alick

    Allason, Rupert

    Burns, Simon

    Amery, Rt Hon Julian

    Burt, Alistair

    Amess, David

    Butler, Chris

    Amos, Alan

    Butterfill, John

    Arbuthnot, James

    Carlisle, Kenneth (Lincoln)

    Arnold, Jacques (Gravesham)

    Carrington, Matthew

    Arnold, Sir Thomas

    Carttiss, Michael

    Ashby, David

    Cash, William

    Aspinwall, Jack

    Channon, Rt Hon Paul

    Atkins, Robert

    Chope, Christopher

    Atkinson, David

    Churchill, Mr

    Baker, Rt Hon K. (Mole Valley)

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

    Baker, Nicholas (Dorset N)

    Clark, Dr Michael (Rochford)

    Baldry, Tony

    Clark, Sir W. (Croydon S)

    Banks, Robert (Harrogate)

    Clarke, Rt Hon K. (Rushcliffe)

    Batiste, Spencer

    Colvin, Michael

    Beaumont-Dark, Anthony

    Conway, Derek

    Beggs, Roy

    Coombs, Anthony (Wyre F'rest)

    Bellingham, Henry

    Coombs, Simon (Swindon)

    Bendall, Vivian

    Cormack, Patrick

    Bennett, Nicholas (Pembroke)

    Couchman, James

    Bevan, David Gilroy

    Cran, James

    Biffen, Rt Hon John

    Currie, Mrs Edwina

    Blackburn, Dr John G.

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

    Blaker, Rt Hon Sir Peter

    Davis, David (Boothferry)

    Body, Sir Richard

    Day, Stephen

    Boscawen, Hon Robert

    Devlin, Tim

    Boswell, Tim

    Dorrell, Stephen

    Bottomley, Peter

    Douglas-Hamilton, Lord James

    Bottomley, Mrs Virginia

    Dover, Den

    Bowden, A (Brighton K'pto'n)

    Dunn, Bob

    Bowden, Gerald (Dulwich)

    Durant, Tony

    Bowis, John

    Dykes, Hugh

    Boyson, Rt Hon Dr Sir Rhodes

    Eggar, Tim

    Braine, Rt Hon Sir Bernard

    Emery, Sir Peter

    Brandon-Bravo, Martin

    Evans, David (Welwyn Hatf'd)

    Brazier, Julian

    Evennett, David

    675

    Fenner, Dame Peggy

    Jopling, Rt Hon Michael

    Field, Barry (Isle of Wight)

    Kellett-Bowman, Dame Elaine

    Fishburn, John Dudley

    Key, Robert

    Fookes, Dame Janet

    Kilfedder, James

    Forman, Nigel

    King, Roger (B'ham N'thfield)

    Forsyth, Michael (Stirling)

    Kirkhope, Timothy

    Forsythe, Clifford (Antrim S)

    Knapman, Roger

    Forth, Eric

    Knight, Greg (Derby North)

    Fowler, Rt Hon Sir Norman

    Knight, Dame Jill (Edgbaston)

    Fox, Sir Marcus

    Knowles, Michael

    Franks, Cecil

    Knox, David

    Freeman, Roger

    Lamont, Rt Hon Norman

    French, Douglas

    Lang, Ian

    Fry, Peter

    Latham, Michael

    Gale, Roger

    Lawrence, Ivan

    Gardiner, George

    Lawson, Rt Hon Nigel

    Garel-Jones, Tristan

    Leigh, Edward (Gainsbor'gh)

    Gill, Christopher

    Lennox-Boyd, Hon Mark

    Glyn, Dr Sir Alan

    Lester, Jim (Broxtowe)

    Goodhart, Sir Philip

    Lilley, Peter

    Goodlad, Alastair

    Lloyd, Sir Ian (Havant)

    Goodson-Wickes, Dr Charles

    Lloyd, Peter (Fareham)

    Gorman, Mrs Teresa

    Luce, Rt Hon Richard

    Gorst, John

    McCrindle, Robert

    Grant, Sir Anthony (CambsSW)

    Macfarlane, Sir Neil

    Greenway, Harry (Eating N)

    MacGregor, Rt Hon John

    Greenway, John (Ryedale)

    MacKay, Andrew (E Berkshire)

    Gregory, Conal

    Maclean, David

    Griffiths, Peter (Portsmouth N)

    McLoughlin, Patrick

    Grist, Ian

    McNair-Wilson, Sir Patrick

    Ground, Patrick

    Madel, David

    Grylls, Michael

    Maginnis, Ken

    Gummer, Rt Hon John Selwyn

    Major, Rt Hon John

    Hague, William

    Malins, Humfrey

    Hamilton, Hon Archie (Epsom)

    Mans, Keith

    Hamilton, Neil (Tatton)

    Marland, Paul

    Hampson, Dr Keith

    Marshall, John (Hendon S)

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

    Martin, David (Portsmouth S)

    Hargreaves, Ken (Hyndburn)

    Mates, Michael

    Harris, David

    Maude, Hon Francis

    Haselhurst, Alan

    Mawhinney, Dr Brian

    Hawkins, Christopher

    Maxwell-Hyslop, Robin

    Hayes, Jerry

    Mayhew, Rt Hon Sir Patrick

    Hayhoe, Rt Hon Sir Barney

    Mellor, David

    Hayward, Robert

    Meyer, Sir Anthony

    Heath, Rt Hon Edward

    Miller, Sir Hal

    Heathcoat-Amory, David

    Mills, Iain

    Heseltine, Rt Hon Michael

    Miscampbell, Norman

    Hicks, Mrs Maureen (Wolv' NE)

    Mitchell, Andrew (Gedling)

    Hicks, Robert (Cornwall SE)

    Mitchell, Sir David

    Higgins, Rt Hon Terence L.

    Molyneaux, Rt Hon James

    Hill, James

    Monro, Sir Hector

    Hind, Kenneth

    Montgomery, Sir Fergus

    Howard, Rt Hon Michael

    Morris, M (N'hampton S)

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

    Morrison, Sir Charles

    Howe, Rt Hon Sir Geoffrey

    Morrison, Rt Hon P (Chester)

    Howell, Rt Hon David (G'dford)

    Moynihan, Hon Colin

    Howell, Ralph (North Norfolk)

    Mudd, David

    Hughes, Robert G. (Harrow W)

    Neale, Gerrard

    Hunt, Sir John (Ravensbourne)

    Needham, Richard

    Hunter, Andrew

    Neubert, Michael

    Irvine, Michael

    Newton, Rt Hon Tony

    Irving, Sir Charles

    Nicholls, Patrick

    Jack, Michael

    Nicholson, David (Taunton)

    Jackson, Robert

    Nicholson, Emma (Devon West)

    Janman, Tim

    Norris, Steve

    Jessel, Toby

    Onslow, Rt Hon Cranley

    Johnson Smith, Sir Geoffrey

    Oppenheim, Phillip

    Jones, Robert B (Herts W)

    Page, Richard

    676

    Paice, James

    Stokes, Sir John

    Parkinson, Rt Hon Cecil

    Sumberg, David

    Patnick, Irvine

    Summerson, Hugo

    Patten, Rt Hon John

    Tapsell, Sir Peter

    Pattie, Rt Hon Sir Geoffrey

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

    Pawsey, James

    Taylor, John M (Solihull)

    Peacock, Mrs Elizabeth

    Taylor, Teddy (S'end E)

    Porter, Barry (Wirral S)

    Tebbit, Rt Hon Norman

    Porter, David (Waveney)

    Temple-Morris, Peter

    Portillo, Michael

    Thatcher, Rt Hon Margaret

    Powell, William (Corby)

    Thompson, D. (Calder Valley)

    Price, Sir David

    Thompson, Patrick (Norwich N)

    Raffan, Keith

    Thorne, Neil

    Raison, Rt Hon Timothy

    Thornton, Malcolm

    Redwood, John

    Thurnham, Peter

    Renton, Rt Hon Tim

    Townend, John (Bridlington)

    Rhodes James, Robert

    Townsend, Cyril D. (B'heath)

    Riddick, Graham

    Tracey, Richard

    Ridley, Rt Hon Nicholas

    Tredinnick, David

    Rifkind, Rt Hon Malcolm

    Trippier, David

    Roberts, Sir Wyn (Conwy)

    Trotter, Neville

    Ross, William (Londonderry E)

    Twinn, Dr Ian

    Rossi, Sir Hugh

    Vaughan, Sir Gerard

    Rost, Peter

    Viggers, Peter

    Rumbold, Mrs Angela

    Waddington, Rt Hon David

    Ryder, Richard

    Wakeham, Rt Hon John

    Sackville, Hon Tom

    Waldegrave, Rt Hon William

    Sayeed, Jonathan

    Walden, George

    Scott, Rt Hon Nicholas

    Walker, Bill (T'side North)

    Shaw, David (Dover)

    Walker, Rt Hon P. (W'cester)

    Shaw, Sir Giles (Pudsey)

    Waller, Gary

    Shaw, Sir Michael (Scarb')

    Walters, Sir Dennis

    Shephard, Mrs G. (Norfolk SW)

    Wardle, Charles (Bexhill)

    Shepherd, Colin (Hereford)

    Warren, Kenneth

    Shepherd, Richard (Aldridge)

    Watts, John

    Shersby, Michael

    Wells, Bowen

    Sims, Roger

    Wheeler, Sir John

    Skeet, Sir Trevor

    Whitney, Ray

    Skinner, Dennis

    Widdecombe, Ann

    Smith, Sir Dudley (Warwick)

    Wiggin, Jerry

    Soames, Hon Nicholas

    Wilkinson, John

    Speed, Keith

    Wilshire, David

    Speller, Tony

    Winterton, Mrs Ann

    Spicer, Sir Jim (Dorset W)

    Winterton, Nicholas

    Spicer, Michael (S Worcs)

    Wolfson, Mark

    Squire, Robin

    Wood, Timothy

    Stanbrook, Ivor

    Woodcock, Dr. Mike

    Stanley, Rt Hon Sir John

    Yeo, Tim

    Steen, Anthony

    Younger, Rt Hon George

    Stern, Michael

    Stevens, Lewis

    Tellers for the Noes:

    Stewart, Allan (Eastwood)

    Sir George Young and Mr. David Lightbown.

    Stewart, Andy (Sherwood)

    Stewart, Rt Hon Ian (Herts N)

    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 Britian 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 of Her Majesty's Household.

    PETITIONS

      Mining (Antarctica)
      10.29 pm
      Mrs. Alice Mahon: I wish to present a petition from my constituents, who are alarmed that the Government are supporting a treaty which will allow mining in the Antarctic. They believe that the Antarctic is the last great wilderness left on earth and it should be kept that way. It is the one place on earth free from commercial development. I agree wholeheartedly with them and I am very proud to present the petition on their behalf.
      To lie upon the Table.

      Health Services (Devon)
      Mr. Simon Hughes: I have been asked by my Liberal Democrat colleagues in north Devon to present a petition of nearly 6,000 people which was collected more widely in Devon in opposition to the current proposal for the local health service to opt out as a self-governing NHS trust. I do this in the place of my colleague who is our health spokesman. I present the petition in that capacity and I hope that it will be taken fully into account when the deliberations take place in the office of the Secretary of State for Health in the next few days.
      To lie upon the Table.

  Post Office (Burslem)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kirkhope.].
  10.30 pm
  Ms. Joan Walley (Stoke-on-Trent,North): I am particularly grateful for the opportunity to raise in this Adjournment debate the issue of Burslem post office and the Post Office Counters Ltd. proposal to downgrade that post office. Only last night, the leader of the city of Stoke-on-Trent collected an "England for Excellence" award from the English Tourist Board. It is remarkable that the city has won that award. That is good news for Stoke-on-Trent and for tourism and it has a great deal to do with this Adjournment debate about the proposed closure of Burslem post office.
  Burslem is the mother town of the Potteries, with the greatest concentration of historic buildings, and the only one of the six towns whose entire centre is a designated conservation area. Not everyone knows about the Potteries. [Interruption.] I have just heard Conservative Members referring to Arnold Bennett. Were he living today, he would no doubt be writing in great detail in journals and novels about the history of Burslem—or Bursley, as he referred to it. I am sure that he would refer in great detail to the ridiculous and unbelievable proposals by the Post Office to downgrade the purpose-built Crown post office located in the centre of Burslem.
  Those who are not familiar with the work of Arnold Bennett and those who have not visited Burslem should be aware that many poeple visit Burslem via the canals. Hundreds of thousands of visitors come from all over the world to visit the mother town of the pottery industry. They come from America and all over. The fact that Stoke-on-Trent city council won that major tourism award shows that we intend to bring even more people to Burslem, but that will not happen if the Government have their way and allow Post Office Counters Ltd. to downgrade our purpose-built Crown post office.
  Burslem may be the best of the pottery towns, and we are very parochial in Stoke-on-Trent, but it must be said that of late Burslem has become a run-down town. Many shops in the centre have closed down and industry in the centre of the town is having great difficulty, not least because of the Government's economic policies. Despite that, however, the city council is doing all that it can to revitalise the area, in close co-operation with local residents, local councillors, the local chamber of commerce, local industry and everyone with a legitimate interest in Burslem. That is being done in close co-operation with the Civic Trust, which to its credit has chosen to work with us in Burslem in much the same way as it has worked with other major cities, such as Halifax where the work has resulted in a major revitalisation.
  I am not sure whether the Parliamentary Under-Secretary of State for Corporate Affairs should reply to this debate—perhaps he oversees post offices—or whether it should be a Minister from the Department of the Environment who oversees the revitalisation of inner-city areas. Either way, it makes no difference, because the issue is what the Government intend to do to assist inner-city areas such as Burslem and a Minister from either Department should make sure that his colleagues in other Departments know of the needs of Burslem.

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  Some of the successes of Stoke-on-Trent city council include its commitment to a rolling programme of £50,000 per annum to be invested in the regeneration of Burslem over the next five years. That has the full support of Staffordshire county council. The city council, has consulted some 70 local organisations about a local draft plan which is going full speed ahead with the full co-operation of the Civic Trust. Part of that includes plans to go ahead with the St. John's square lighting scheme for one of the principal public places in the town centre.
  The city council is holding a major survey of the old town hall, which is a grade 2 listed building, and its work to increase the leisure activities will be a major asset to the town. It is going ahead with the Waterloo road face-lift scheme, at a cost of about £71,000 in phase 1 and £63,000 in phase 2. It is also acutely aware of the problem of car parking and has a project for the Nicholas street community car park.
  Cultural activities add to the quality of life. I am thinking particularly of the Burslem road race and the Potteries folk festival which we may develop even further in view of the increasing emphasis on tourism. We have a continuing strategy to work towards re-establishing an open market in the centre of town. Work has already commenced on a by-pass which will take traffic out of the town centre. There is a major investment of about £200,000 by Staffordshire county council in the Burslem enterprise centre. Up to 40 units will be created once it is completed. I have the fullest regard for the work of my colleague, councillor Mike Tappin, in that respect.
  The city council has plans to work jointly with English Heritage and its historic buildings fund. Royal Doulton, a key industry in Burslem, has selected a site in front of the old town hall to erect the Sir Henry Doulton statue. The magnificent old town hall and Queen's theatre complex is about to be revamped and again key money will be spent on making it a centre for cultural activities of one kind or another. Just down the road we have started to build the northern area leisure centre. Clearly a great deal is happening in Burslem.
  In this key town in the very centre of the Potteries is the purpose-built Crown post office erected in 1937. Over the years, the post office staff have provided an important service to our local community. Every resident and everyone connected with Burslem in any way wants the post office to remain in the purpose-built building, providing the service that its trained staff have performed so carefully over the years.
  In the midst of all that, the Post Office delivers a body blow to Burslem. There has been no recognition from the Commission, the Department of the Environment or the Government generally of the real need to revitalise Burslem. They have rejected all our attempts—every effort that we have made—to get special inner-city status for Burslem. We have not had the help which the Government say that they are giving to inner-city areas such as Burslem. We have not had the help which it was suggested in the Queen's Speech that the Government would give to inner-city areas. Instead, the Government are standing over the counter services of post offices and suggesting that Crown post offices can be downgraded. It is a body blow for Burslem and we do not wish to see the downgrading take place.
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  The Post Office has refused to have any genuine consultation procedure for its plans and future proposals for the Crown post office at Burslem. The problem is not confined to Burslem. In north Staffordshire—at Kidsgrove, in my constituency—there has been a similar proposal, as there has at Stone, which has been met by a vigorous campaign. It is important to put the proposals into a national context and to recognise that it is proposed to downgrade 380 Crown post offices. Burslem is not alone.
  Given the joint partnership scheme that we have with the Civic Trust and the unique consultation exercise that the city of Stoke-on-Trent has undertaken in Burslem, it is not for the Post Office to say that the post office must be downgraded. We do not even have an assurance that the service will be continued in the purpose-built building. The letter that I received from Mr. Grey, who has been responsible for the Post Office's plans, suggests that he will be looking for other accommodation in the town. It is unacceptable that our assets should be sold off, or got rid of, to enable the Post Office to run a service elsewhere. The Government are not providing a subsidy for an important local service and everything is being done at Burslem's expense. Main post offices have served the local community diligently for many years. They have provided a professional, courteous and confidential service. I say to all those involved with the communication workers that we support the work that they are doing.
  As I have said, the consultation exercise on which the Post Office has embarked has been a sham. When there were rumours that the Post Office would seek to downgrade the Crown post office at Burslem, I at once contacted the Post Office and Mr. Grey. Public meetings were organised immediately in Burslem, and I organised a meeting with Mr. Grey. He said that it was pure speculation and that there was no intention on the Post Office's part to consider either the closure or downgrading of Burslem Crown post office.
  Extensive details have been given as to why the downgrading should not take place at this time. The Civic Trust remains as committed as I am, and as local residents and the city council are, to ensuring that the post office retains its Crown status in its purpose-built building. The debate provides an opportunity to ask the Government exactly what help they are prepared to give. Will the Post Office ride roughshod over local people in each and every one of the 380 towns where the consultation procedure is taking place? When the consultation procedure ends, will it say, "The Post Office has not really listened to what you have said and has not taken into account all the work that the city council and the Civic Trust have done; we shall downgrade the Crown post office and the service can go to any other building"? That will undermine every initiative that the city council, with the support of the entire community, is taking in Burslem.
  I welcome the opportunity to hear from the Minister exactly how he intends to ensure that, at least in Burslem, the Post Office undertakes a proper consultation exercise, listens to local people and allows us to keep our Crown post office in the building specially built for it in the centre of Burslem.
  The one message that I want to get across today is that just as this is the mother of Parliaments, Burslem is the mother town of the Potteries and in no circumstances do we want our post office downgraded.
  10.45 pm
  The Parliamentary Under-Secretary for Industry and Consumer Affairs (Mr. Edward Leigh): I am delighted to have this opportunity to reply to the hon. Memlber for Stoke-on-Trent, North (Ms. Walley). I congratulate her on drawing a place in the ballot and also on being a fine ambassador for Stoke-on-Trent. It did not surprise me that, when my hon. Friend the Member for Dorset, North (Mr. Baker) made a literary allusion, the hon. Lady was quick off the mark and topped it with one of her own.
  I am delighted to be supported by my hon. Friends this evening. I am not sure whether you, Mr. Speaker, are aware that this is the first time that I have had the opportunity to speak from the Dispatch Box.
  Mr. Speaker: That is why I am here.
  Mr. Leigh: I am grateful, Mr. Speaker.
  Mr. Nicholas Baker: It is the first of many speeches.
  Mr. Leigh: I hope that it will be the first of many.
  The debate gives me an opportunity to explain Government policy in two areas about which we feel strongly and to which we are entirely committed—urban regeneration and the provision of efficient post office services. I shall start with urban regeneration because the hon. Lady dealt with that at some length. We wish to establish a climate of enterprise led by industry and commerce, which will lead to a lasting revival in our inner-city areas. We believe that that primarily depends on the effective working of the market. However, the Government recognise the need for effective Government assistance to those areas that traditionally have faced difficulties. This is contrary to the impression given by the hon. Lady. The Government have committed up to £4 billion in their action for cities programme. It is a record of which the Government can be proud, and it shows our commitment to the area.
  Ms. Walley: Had I realised that this was the first time that the Minister had appeared at the Dispatch Box, I too would have added my congratulations. Can he tell us exactly how much money has been allocated to Stoke-on-Trent?
  Mr. Leigh: I am delighted to answer the hon. Lady. During recent years, Stoke-on-Trent has benefited from substantial aid under the Government's inner-city programmes. For example, since 1979–80, more than £14 million has been paid in derelict land grant to assist with the cost of land reclamation. The Government are aware of the problems and are committed to helping.
  It must be said that inner-city regeneration is not just a job for the Government. It is being achieved through the joint efforts of many organisations and individuals who have a stake in the future of our inner cities. Local problems will benefit most from a local approach. The project to which the hon. Lady referred is an example involving the local authority, voluntary organisations and the private sector in action to conserve and improve an historic centre. The House listened with care to what the hon. Lady said about the historic nature of the centre of Burslem and sympathised with her point of view.
  The hon. Lady drew attention to the place of Burslem main post office in the regeneration of the town. In the short time available, I shall try to explain the
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  Government's position on the post office, and especially their position on counter services. Post Office Counters Ltd. was incorporated in 1987 and is a wholly-owned subsidiary of the Post Office. Since then, it has made a small operating profit on its turnover of £875 million.
  Conservative Members can be proud of the Government's record in turning this part of the Post Office service into a profitable enterprise, especially as Post Office services are increasingly becoming subject to competition. Automated funds transferred directly into bank and building society accounts provide an alternative means of delivering pension and benefit payments and for the payment of bills.
  Stamps—an interesting point of which I was not aware until this week when I started to take a particular interest in these matters—are now sold in some 40,000 other retail outlets. That is the kind of competition that the Post Office is facing and meeting, and on which it is moving from success to success.
  Another interesting point of which hon. Members may not be aware is that the Post Office has a network of more than 20,000 post offices throughout the United Kingdom. That is considerably more than any bank or building society, and it is worth pointing out that it is more per head of population than in France, Germany, Japan or the United States.
  In urban areas, our aim is to have nothing less than offices distributed in sufficient numbers so that no one is more than one mile from a post office, and in rural areas no more than two miles. In the United Kingdom, post offices are, rightly, easily accessible to all except those in the remotest areas. Therefore, we have made clear our commitment to the Post Office and I am more than happy to do so again today. It is also important that I make it clear that we are committed to having a post office network adequate to fulfil its statutory duties. I also know that the Post Office has made clear its own commitment to the maintenance of its network.
  The hon. Lady dealt at some length with what she took to be a downgrading from Crown status to agency status, so in the few minutes available to me, let me reply to that point.
  We must not forget that it has always been the case that only a small proportion of post offices, now some 1,300 out of more than 20,000, are directly owned and operated as Crown post offices by Post Office Counters. Sub post offices have always formed the vast majority of the network, and there are at present about 19,300. These are franchised by Post Office Counters to self-employed agents, sub-postmasters and sub-postmistresses, the great majority of whom operate a private business alongside their post office counters.
  That arrangement has worked well and brings benefits to both parties. The post office brings in a nucleus of business from regular customers who buy stamps, post parcels and collect benefits and pensions, which provide potential customers for the sub-postmaster or mistress's private business. The range of private businesses is wide, including general stores, confectioners and newsagents.
  The important point which was not made by the hon. Lady, is that overhead costs are shared between the two businesses. Sub and agency offices can therefore have significant advantages over the directly run Crown offices, because the shared overheads make them generally less expensive to run.

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  That was recognised by the Monopolies and Mergers Commission in its 1988 report on the provision of counter services at Crown post offices. The report noted that, at the time, the unit costs of Crown offices could be 60 to 100 per cent. higher than those of sub offices, and it endorsed Post Office Counters' plans to convert Crown offices to agency offices.
  Those conversions are part of a process, which began in 1988, of restructuring the post office network to give a more cost-effective service and, like any other retail network, to respond to movements in population.
  The hon. Lady made some unpleasant remarks about downgrading. What she said was an insult to the thousands of sub-postmasters and sub-postmistresses who provide an excellent service, which has been recognised as such by the Monopolies and Mergers Commission and of which we should be proud.
  Ms. Walley: Does the Minister accept that there is a problem with security, that there has been an increase in attacks on premises which have not been purpose-built and that one asset of the Crown post office is that extra security is built into its design? Does the Minister further accept that, if a Crown post office were to be downgraded, the people there would be made more vulnerable?
  Mr. Leigh: We are determined to ensure that will not happen, and no doubt the Post Office will take full account of that aspect in the consultation process.
  The hon. Lady implied that an agency post office will be less efficient than a Crown office, but there is no evidence to support that suggestion. Exactly the same services are provided by an agency office as by a Crown office. If only one thing comes out of this debate, I hope that at least that is now clear.
  As to the people of Burslem—the House is concerned with the provision of services to the public, not just with status—they will receive exactly the same service as they did before.
  Mrs. Teresa Gorman: A better service.
  Mr. Leigh: If not a better service, as my hon. Friend the Member for Billericay (Mrs. Gorman) says.
  Despite my confidence in the proposals, because of the place of the post office in a local community, changes to the network require careful consultation. I give the hon. Lady an assurance that we are insistent that such consultation will take place. I understand that Post Office Counters is currently consulting local interested parties about its proposals for the conversion of Burslem post
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  office to agency status. No final decisions will be taken until that process is completed in December. No doubt the hon. Lady will make her views known to the Post Office directly, but if it helps, I shall ensure that tonight's debate is brought to the attention of the chairman of the Post Office.
  However, it would not be appropriate for me to intervene in the consultation process or in the final decision. Decisions about the day-to-day running of Post Office business, such as the type and level of service provision in particular areas, are for the Post Office board. The Government's role is rightly confined to broad issues of general policy and overall financial control.
  Nevertheless, I shall make a general point about conversions. It is wrong to suggest that Crown offices are in some way intrinsically superior to agency offices. They are not. I cannot stress that enough.
  Despite the competition that it faces, Post Office Counters has been able to maintain its business, by improving efficiency and competitiveness. At present, we see no reason to embrace the strategy of managed decline that was suggested in the Monopolies and Mergers Commission's recent report on counter services. We are fully committed to maintaining a network adequate to enable the Post Office to fulfil its statutory duties.
  As I said, converted offices will continue to offer all the services available at the Crown offices that they replace, together with the flexibility of the sub-postmaster to offer non-Post Office business. We heard nothing on that aspect from the hon. Member for Stoke-on-Trent, North. We have a scheme to ensure that all existing services are provided, and at the same time the public will be able to profit and benefit from all the other services offered as part of the business.
  Local offices are required to meet quality service standards set by the Post Office, and we recognise the vital role that they play as a focus of the community, as well as in delivering a service. Although business volume has remained more or less static in recent years, Post Office Counters performed well—meeting both its profit and cost reduction targets. We hope and expect that it will continue to operate successfully.
  I am delighted to have this first opportunity to speak at the Dispatch Box, and I apologise if my delivery has been somewhat halting—but it has been a rather nerve-wracking experience. I am delighted to be able to emphasise the total commitment that this Government have to a successful and vibrant Post Office network that will meet the demands of the public right into the next century.
  Question put and agreed to.
  Adjourned accordingly at one minute to Eleven o'clock.

ATTORNEY-GENERAL

  Deaf People
  Mr. Ieuan Wyn Jones
  To ask the Attorney-General what facilities are made available in the courts at all levels for people who are deaf or hard of hearing.

  The Attorney-General
  In the magistrates courts, it is for the court to ensure that it can communicate adequately with deaf persons appearing before it. Where a defendant who is deaf or hard of hearing does not himself arrange for the services of an interpreter, magistrates courts make use of interpreters provided through the agency of local directors of social services and voluntary bodies such as the Royal National Institute for the Deaf.

  In the Crown court, and in the civil courts, interpreters must be provided by the parties. Court staff will always advise parties where a list of interpreters may be obtained. In Crown court cases fees for interpreters are paid from central funds. In civil cases the payment of fees is a matter for the parties.

  Provided that court staff are given sufficient warning of the needs of a party or a witness who is hard of hearing, arrangements can generally be made to ensure that that person will be able to sit as close as possible to, and with an unobstructed view of, the judge and the witness box.

  Many of the purpose-built courtrooms have excellent acoustics and many are equipped with microphone and public address systems which may be used to enhance the ability of the hard of hearing to follow proceedings.

  Attendance Allowance Appeals
  Mr. Hinchliffe
  To ask the Attorney-General what was the average waiting time from an appeal being made against an attendance allowance decision and the appeal decision, for the last period for which figures are available.

  The Attorney-General
  The office of the social security commissioners does not record information on the average waiting times for appeals in relation to individual categories of benefit or appeal.

PRIME MINISTER

  Ethnic Minorities
  Mr. Cohen
  To ask the Prime Minister if she will list those provisions in legislation which give local authorities powers in relation to a single ethnic minority group.

  The Prime Minister
  There are no such specific provisions in legislation, although section 71 of the Race Relations Act 1976 places a duty on local authorities to ensure that they carry out their various functions with due regard to the need to eliminate unlawful racial discrimination and promote racial equality, and section 35 136
  of that Act recognises that it is sometimes necessary to meet the special needs of racial groups regarding their education, training or welfare.

DEFENCE

  Radar
  Mr. Cohen
  To ask the Secretary of State for Defence whether there has been any change in the financial arrangements for the relocatable over-the-horizon radar.

  Mr. Alan Clark
  No.

  RAF Bentwaters/Woodbridge
  Mr. Cohen
  To ask the Secretary of State for Defence what is the reason for building new housing for United States personnel at RAF Bentwaters/Woodbridge.

  Mr. Archie Hamilton
  I refer the hon. Member to the answer I gave to the hon. Member for Carlisle (Mr. Martlew) on 1 November, at column 770.

FOREIGN AND COMMONWEALTH AFFAIRS

  Gulf Crisis
  Mr. Prescott
  To ask the Secretary of State for Foreign and Commonwealth Affairs at what time and day his Department learnt of the invasion of Kuwait by Iraqi forces, in Greenwich mean time and Kuwait local time; and at what time British Airways was informed.

  Mr. Douglas Hogg
  It was not until approximately 0300 GMT (0600 Kuwait local time) on 2 August that we had clear evidence of a full-scale Iraqi invasion of Kuwait. This was approximately one hour after the closure of Kuwait airport. The news became public at about 0400 GMT (0700 Kuwait time).

  Foreign Affairs Council
  Mr. Colvin
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will publish in the Official Report a statement on the outcome of the Foreign Affairs Council on 12 November.

  Mr. Hurd
  The Foreign Affairs Council met in Brussels on 12 November. My hon. Friend the Minister of State, Foreign and Commonwealth Office represented the United Kingdom.

  Ministers discussed the Iraq-Kuwait crisis and reaffirmed their determination to bring about the release of all hostages in Iraq and Kuwait, the refusal of their Governments to negotiate with Iraq and their condemnation of Iraqi treatment of hostages. They agreed to give the highest priority to the role of the United Nations and to continue to put pressure on Iraq to receive the Secretary-General's special representative. They agreed a United Kingdom proposal to make demarches to a large number of countries and groups of countries to convince them to pursue these same aims in contacts with the Iraqis.

  The Council discussed the proposed EC/United States and EC/Canada declarations and asked the Commission and presidency to continue to work with the Americans and Canadians to achieve agreed texts to be exchanged in the margins of the Paris CSCE summit.
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  The Council had an initial discussion of the draft negotiating mandates for association agreements with Poland, Hungary and Czechoslovakia. The United Kingdom looks forward to early detailed examination of the mandates with a view to their approval this year.

  The Council reviewed policy towards Asia and Latin America and noted that the programme for the 1990s would be considered by a special Development Council later in the year. The Council discussed again the Commission's proposals for a new Mediterranean policy which were remitted for further detailed work. Finally, the Council discussed progress in the Community's negotiations with EFTA for the creation of a European economic area. The United Kingdom called for renewed EC efforts to maintain the momentum of the negotiations through a constructive approach to outstanding issues.

  In the margins of the Council, Ministers held an informal meeting with Foreign Ministers of the Arab Maghreb Union. The meeting discussed a wide range of political and economic topics of mutual interest including the development of EC/AMU relations and the Gulf crisis. On behalf of the Twelve the EC presidency urged the AMU to join in exerting pressure on Iraq to accept the UN Secretary-General's envoy and to release all hostages.

TRANSPORT

  Greater Manchester Relief Road
  Mr. Lewis
  To ask the Secretary of State for Transport how many letters his Department has received from residents of Worsley, Whitefield, Radcliffe and Bury about the proposed Greater Manchester western and northern relief road; and how many of those supported the proposals as outlined in the White Paper "Roads for Prosperity".

  Mr. Chope
  Several letters have been received but none has been in support of the outline proposed in the White Paper. Full public consultation will take place after details of a route have been published.

  Mr. Lewis
  To ask the Secretary of State for Transport if he will arrange for an environmental impact assessment to be carried out in respect of the Greater Manchester western and northern relief road route.

  Mr. Chope
  An environmental assesment will be undertaken before proposals are put forward for public comment.

  Mr. Lewis
  To ask the Secretary of State for Transport if he will make a statement on the implications of the construction of the Denton to Middleton section of the M66 for the Greater Manchester western and northern relief road.

  Mr. Chope
  Completion of the M66 between Denton and Middleton will have no significant effect on traffic flows on the M62 west of junction 18. There are no implications for the Greater Manchester western and northern relief road.

  Mr. Lewis
  To ask the Secretary of State for Transport whether he has revised the traffic forecasts for the Greater Manchester western and northern relief route.

  Mr. Chope
  We have not yet prepared detailed local traffic forecasts for this scheme.

  Lancaster Avenue—Thurlow Park Road Junction
  Mr. Fraser
  To ask the Secretary of State for Transport what plans he has to improve the junction between Lancaster avenue and Thurlow Park road, London SE27.

  Mr. Chope
  The Department has no current proposals to improve the A205 south circular road at the junction of Thurlow Park road and Lancaster avenue. The London borough of Lambeth, as the Department's agents for this part of the trunk road, was asked in March 1988 to investigate the feasibility of improving traffic movement and safety at this junction. Its report is still awaited.

  The Secretary of State recently decided to terminate the agency agreement with Lambeth with effect from 1 April 1991, and to appoint consultants instead. We shall ask the consultants to look into possible improvements to this junction.

  Municipal Airports
  Mr. Blunkett
  To ask the Secretary of State for Transport what contributions have been made, net, from the charge fund to the running of municipal airports at Manchester, Birmingham, Luton and East Midlands; and if he will make a statement.

  Mr. McLoughlin
  No such contributions have been made.

  Lorries
  Mr. Flynn
  To ask the Secretary of State for Transport if he will list all defects and contraventions discovered by checks carried out by his Department, the Health and Safety Executive and the police to assess on-the-road compliance with regulations for the mechanical safety and roadworthiness of lorries during the past three years.

  Mr. Chope
  Information on mechanical defects found at annual tests of heavy goods vehicles is given on page 19 of the vehicle inspectorate executive agency's annual report for 1989–90, and details of vehicles inspected at roadside spot checks with prohibition rates are given on page 22. Copies of the report are in the Library.

  A27
  Mr. Bellotti
  To ask the Secretary of State for Transport when he expects to announce detailed possible routes for the proposed dual carriageway between Lewes and Polegate on the A27; and if he will make a statement.

  Mr. Chope
  I hope that there will be public consultation on possible routes for the proposed A27 Lewes to Polegate improvement in late 1991. The timetable thereafter will depend on the issues that the consultation raises, the progress that can be made with the design of the chosen option and the statutory procedures.

  Underground Escalators
  Mr. Cohen
  To ask the Secretary of State for Transport what information he has as to London Underground's policy towards easing access to the underground by the disabled, elderly or those with young children when escalators are out of action for considerable periods; and if he will make a statement.

  Mr. Freeman
  During periods when escalators are unavailable, London Underground Ltd. attempts to ease
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  access for all its customers. It does so by providing alternative routes through stations, wherever possible, and by the use of temporary signs and announcements on stations and trains. In addition, uniformed staff, trained to take care of travellers with special needs, are at hand. Details of how people with mobility handicaps can plan the best routes to avoid escalators are set out in London Transport's publication "Access to the Underground", a copy of which is in the Library.

  Fuels (Pollution)
  Mr. Roger King
  To ask the Secretary of State for Transport if he will discuss with the oil companies the development of less-polluting fuels for vehicles.

  Mr. Chope
  My Department and the Department of Energy are in frequent contact with the motor and the oil industries on this subject.

  Vehicle Pollution
  Mr. Flynn
  To ask the Secretary of State for Transport what new measures he plans to reduce pollution caused by motor cars and lorries.

  Mr. Chope
  I have little to add to my hon. Friend's answer to the hon. Member for Newport, West on 30 October, columns 464–66. The Government are doing everything they can to achieve the earliest possible agreement within the European Community on a new, consolidated directive to reduce car emissions. We shall also urge the Community to adopt tighter noise limits for all vehicles when this matter is discussed next year.

  Air Accidents
  Mr. Harry Barnes
  To ask the Secretary of State for Transport whether the air accidents investigation branch of his Department proposes to make any recommendations to the Civil Aviation Authority to help it determine further action as a result of the reports of the crashes of two light aircraft on the Coal Aston airstrip, Derbyshire, published in the air accidents investigation branch bulletin 11/90.

  Mr. McLoughlin
  I refer the hon. Gentleman to the reply I gave him on Thursday 1 November, Vol. 178, column 707.

  The Minches
  Mr. Dunnachie
  To ask the Secretary of State for Transport if his Department will declare the Minches an area to be avoided; and if he will make a statement.

  Mr. McLoughlin
  Her Majesty's Government took the lead in establishing the internationally recognised deep water route to the west of the outer Hebrides. This is clearly marked on charts, with a recommendation that laden tankers of over 10,000 gross registered tonnage should use it instead of the Minch when weather conditions permit.

  It is important that tanker masters retain the freedom to use the Minch in poor weather. The outer route in the Atlantic is subject to much stronger winds and rougher seas than the sheltered waters of the Minch, and greater stresses are thus imposed on both vessels and crew. These stresses slightly increase the chances of an equipment
  140
  failure. More significantly, the weather conditions and the remoteness of the outer route mean that in the event of failure, the chances of preventing the vessel from going ashore are lessened. In poor weather, therefore, the chances of both loss of life and pollution may be greater if the vessels use the outer route than if they go through the Minch.

  In these circumstances the Government's role must be to ensure maximum use of the outer route in appropriate conditions. An "area to be avoided" is recommendatory and the Government are not convinced that establishing one in the Minch would have any greater effect than the existing recommendatory deep water route. An alternative sometimes suggested is a mandatory traffic separation scheme in the Minch. The problem with this is that it might encourage tankers to take the route through the Minch. It would also inhibit fishing vessels, which would be obliged to comply with its provisions.

  The Government consider that the best course is to continue to urge the use of the outer route in appropriate conditions, internationally through the International Maritime Organisation, nationally by contact with the oil companies and locally by means of notices to mariners issued at Sullom Voe.

  East London River Crossing
  Mr. Evennett
  To ask the Secretary of State for Transport when he expects the public inquiry into the east London river crossing to be concluded.

  Mr. Chope
  [holding answer 13 November 1990]: The conduct of the inquiry and the timing of its closure are matters for the inspectors of the joint inquiries, but I understand that there is a full programme arranged until the Christmas recess.

HOME DEPARTMENT

  Refugee Children
  Miss Lestor
  To ask the Secretary of State for the Home Department if he will make a statement on the Refugee Council's proposals to provide reception and assessment services to unaccompanied refugee children.

  Mr. Peter Lloyd
  No. The Refugee Council's proposals to provide reception and assessment services to unaccompanied refugee children were sent to the Minister for Health and my right hon. and learned Friend. They make a useful contribution to consideration of the issues in this complex area and are being considered by both Departments. I intend to respond to the Refugee Council. on behalf of both Departments, as soon as possible.

  Electoral Registration
  Mr. Ron Davies
  To ask the Secretary of State for the Home Department what guidance he has issued to electoral registration officers regarding the removal of electors from the register; what degree of discretion electoral registration officers have in applying Home Office guidelines; whether electoral registration officers seek advice from local authorities; for what purposes electoral registration officers may use the community charge register; and what statutory duties local authorities have with regard to canvassing potential electors for inclusion in the electoral register.
  141
  Mrs. Rumbold
  In a circular issued on 10 August 1990 as part of its guidance to electoral registration officers (EROs) in England and Wales, the Home Office made recommendations about the use of information on the community charge register in compiling the electoral register. This included that a person's name should not be carried forward from one electoral register to the next if that person does not respond to the electoral canvass and his or her name does not appear on the community charges register. It also recommended that where such a name does appear in the community charges register it should not be carried forward for more than one year without further inquiries to establish eligibility.

  Electoral registration officers are responsible to the courts in the performance of their statutory duties and are not obliged to follow Home Office guidance. They are appointed, in England and Wales, by district or London borough councils and are free to seek advice, including legal advice, from the local authority by which they were appointed, or its officers, if they so wish.

  Under section 29 of the Local Government Finance Act 1988, EROs in England and Wales may, for the purpose of exercising their functions, inspect the community charges register of any charging authority. The purpose of the Home Office guidance issued on 10 August was to enable and encourage EoOs to make the fullest and most effective use of this right of access, to assist in the preparation of an accurate electoral register.

  Electoral registration officers have a statutory duty to prepare and publish each year registers of electors for the

  North Yorkshire

  South Yorkshire

  West Yorkshire

  Humberside

  (a)

  (b)

  (a)

  (b)

  (a)

  (b)

  (a)

  (b)

  1987–88

  10

  4

  12

  3

  11

  3

  10

  6

  1988–89

  10

  4

  12

  3

  12

  3

  10

  6

  1989–90

  10

  4

  12

  3

  13

  3

  10

  6

  1990–911

  10

  4

  12

  4

  14

  3

  10

  6

  1Estimated.

  South Yorkshire Police (Dedicated Suites)
  Mr. Redmond
  To ask the Secretary of State for the Home Department if he will list by location for the South Yorkshire police force those that have(a) dedicated rape suites, (b) dedicated domestic violence units and (c) dedicated child abuse (i) units and (ii) suites.

  Mr. Peter Lloyd
  Dedicated rape suites are situated at Phoenix house, Doncaster, Barnsley district general hospital, and the sexual offences and child investigation unit at Wath.

  There are no dedicated domestic violence units in the force area, but consideration is currently being given to incorporating the work of such units in the facilities which are already provided for the reception and interviewing of victims of sexual offences.

  Child abuse units have been established at police divisional headquarters at Heeley and the Old Police house at Wath; there are child abuse suites at Phoenix house, Doncaster, the sexual offences and child abuse investigation unit at Wath, and the Children's hospital at Sheffield.
  142
  area for which they are responsible. To this end, they are required to have a house-to-house or other sufficient inquiry made as to the persons entitled to be registered.

  Emergency Planning
  Mr. Redmond
  To ask the Secretary of State for the Home Department if he will list by location for the three counties Yorkshire and Humberside, and by year for the last four years to date, the local authorities that have developed emergency control centres; and how many(a) emergency planning officers and (b) clerical support staff for emergency planning officers have been employed.

  Mr. John Patten
  The following emergency centres have been established to meet minimum recommended Home Office standards over the past four years:

  County

  Emergency Centre

  Year

  North Yorkshire

  Craven

  1989–90

  North Yorkshire

  Richmond

  1987–88

  North Yorkshire

  Scarborough

  1988–89

  West Yorkshire

  County Standby (located in Calderdale)

  1990–91

  West Yorkshire

  Calderdale

  1990–91

  Humberside

  County Standby (co-located with Great Grimsby)

  1989–90

  Humberside

  Beverley

  1987–88

  Humberside

  Cleethorpes

  1987–88

  Humberside

  East Yorkshire

  1989–90

  The number of (a) emergency planning officers and (b) clerical support staff employed over the last four years are:

  Horserace Totalisator Board
  Mr. Alexander
  To ask the Secretary of State for the Home Department when the chairman of the Horserace Totalisator Board was appointed; and when his appointment will terminate.

  Mr. Peter Lloyd
  The chairman of the Horserace Totalisator Board, Lord Wyatt of Weeford, has been chairman of the Tote since I May 1976. His present term of appointment runs to 30 April 1991.

  Remand Prisoners
  Mr. Cox
  To ask the Secretary of State for the Home Department what was the number of remand prisoners being held in prisons in England and Wales on 1 January and 1 November.

  Mrs. Rumbold
  At the end of December 1989, 9,485 untried and convicted unsentenced prisoners were held in prison service establishments in England and Wales and none in police cells. The corresponding figures for the end of September 1990, the latest date for which the information is available, were 9,377 in prison service establishments and 768 in police cells.

  Belmarsh Prison
  Mr. Cox
  To ask the Secretary of State for the Home Department how many women prison officers will be employed at Belmarsh prison.

  Mrs. Rumbold
  Individual prison officers have not yet been allocated to Belmarsh in significant numbers. It is therefore not known how many female officers will work there.

  Police Cells
  Mr. Redmond
  To ask the Secretary of State for the Home Department if he will provide figures for each month, from May onwards, for the number of remand prisoners and newly sentenced prisoners being held in police cells in the three counties of Yorkshire and Humberside police authority areas who would normally have been housed in Her Majesty's prison establishments; and if he will show in his answer by month(a) the location of the police cells, (b) their sex and (c) the number of prisoners they have had under their care.

  Mrs. Rumbold
  The average number of prisoners. who have been held in police cells in the Humberside and Yorkshire police authority areas each month since May 1990, are given in the table. All the prisoners are male.

  Number

  May

  203

  June

  247

  July

  204

  August

  219

  September

  345

  October

  295

  November

  1291

  1Average to date.

  The police cells which were in use for this purpose on Monday 12 November 1990, are given in the table:

  Police cells

  Number of prisoners

  Humberside

  Beverley

  12

  Grimsby

  32

  Hull

  37

  Scunthorpe

  9

  North Yorkshire

  Clifford street, York

  9

  Northallerton

  9

  Richmond

  9

  South Kirkby

  6

  York

  3

  South Yorkshire

  Barnsley

  5

  Doncaster

  29

  Eccleshill

  17

  Rotherham

  11

  Sheffield

  20

  West Yorkshire

  Bingley

  3

  Brighouse

  4

  Dewsbury

  5

  Halifax

  10

  Holmfirth

  4

  Huddersfield-Bridewell

  14

  Keighley

  6

  Leeds-Bridewell

  6

  144

  Police cells

  Number of prisoners

  Millgarth

  8

  Morley

  7

  Shipley

  4

  Weetwood

  8

  Wetherby

  6

  Wood street, Wakefield

  10

  This information is not collected in a way that enables remand and newly sentenced prisoners to be readily identified separately. Details of the police stations in use for the whole of the period in question could be provided only at disproportionate cost.

  Women Prison Officers
  Mr. Cox
  To ask the Secretary of State for the Home Department what was the number of women prison officers working in male prisons in England and Wales on 1 November.

  Mrs. Rumbold
  On 1 November, 441 women prison officers were working in male prisons in England and Wales.

  Deaf People
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for the Home Department what guidelines are issued to probation officers to ensure that the needs of deaf people or those who are hard of hearing are taken into account when reports are being prepared for the courts prior to sentencing.

  Mr. John Patten
  Current guidance to the probation service on social inquiry reports (SIRs) is contained in Home Office circular 92 of 1986, a copy of which is in the Library. This circular emphasises the need for the SIR to contain an impartial and objective assessment tailored to the circumstances of the individual offender. The offender's deafness or other hearing impairment would be referred to in the SIR if the officer considered that it was relevant to the court's decision on how to deal with that offender. If the hon. Member has a particular case in mind perhaps he would write to me.

  Correspondence
  Mr. Kaufman
  To ask the Secretary of State for the Home Department when he intends to reply to the letter to him dated 27 September from the right hon. Member for Manchester, Gorton with regard to Mrs. Bibi, 95 Boreford road, Manchester.

  Mr. Peter Lloyd
  This case has involved making inquiries abroad, which have now been completed. I hope to reply shortly.

ENERGY

  Electricity Privatisation
  Mr. Dobson
  To ask the Secretary of State for Energy (1) why page 149 of the electricity privatisation pathfinder prospectus makes no reference to Labour party commitments on insulation, energy conservation or the establishment of the Renewable Energy Agency;
  145
  (2) why page 149 of the electricity privatisation pathfinder prospectus made no mention of the need for long-term contracts to promote the use of renewable energy services covered on page 24 of the Labour party document "An Earthly Chance".

  Mr. Wakeham
  As is stated, pages 148 and 149 of the pathfinder prospectus provide only a summary of those Labour party policies which Her Majesty's Government believe are of particular relevance to the flotation of the regional electricity companies.

  Energy Council
  Mr. John Greenway
  To ask the Secretary of State for Energy if he will make a statement on the outcome of the European Community's Council of Energy Ministers on 29 October.

  Mr. Wakeham
  The Council took further steps to liberalise the Community's energy market. The directive on the transit of electricity, on which political agreement had been reached at the previous Energy Council earlier this year, was adopted. A broad agreement was reached by qualified majority on the parallel directive on gas transit, opening the way for a common position at a later date. Although the directives do not. go far towards liberalising the Community's energy markets, the United Kingdom has supported them as a step in that direction. The Council also agreed, subject to the opinion of the European Parliament, to the repeal of the 1975 directive controlling the use of gas in generating electricity. The United Kingdom has long sought the repeal of that outdated measure.

  The Council also discussed the current oil situation and concluded that world market supplies were adequate and that member states' stocks were high. It also agreed that the Commission's proposals to update existing contingency measures needed further study.

  The Commission introduced the proposed SAVE programme (specific actions for vigorous energy efficiency) which is intended to co-ordinate member states' own

  Table 2

  NHS Land and Property Sales—Receipts

  £s rounded to nearest '000

  1983–84

  1984–85

  1985–86

  1986–87

  1987–88

  1988–89

  1989–90

  Clwyd

  Cash Prices

  341

  119

  95

  383

  Nil

  63

  44

  Constant Prices

  471

  157

  119

  463

  Sales

  67

  44

  East Dyfed

  Cash Prices

  Nil

  Nil

  286

  78

  295

  90

  35

  Constant Prices

  Sales

  Sales

  357

  94

  339

  96

  35

  Gwent

  Cash Prices

  223

  108

  209

  108

  67

  323

  141

  Constant Prices

  308

  142

  261

  131

  77

  346

  141

  Gwynedd

  Cash Prices

  26

  31

  16

  1,031

  Nil

  49

  918

  Constant Prices

  36

  41

  20

  1,246

  Sales

  52

  918

  Mid Glamorgan

  Cash Prices

  119

  156

  672

  737

  663

  145

  532

  Constant Prices

  164

  205

  839

  891

  761

  155

  532

  Pembroke

  Cash Prices

  2

  25

  Nil

  Nil

  43

  250

  144

  Constant Prices

  3

  33

  Sales

  Sales

  49

  268

  144

  Powys

  Cash Prices

  58

  43

  237

  57

  53

  438

  66

  Constant Prices

  80

  57

  296

  69

  61

  469

  66

  South Glamorgan

  Cash Prices

  18

  476

  60

  67

  429

  165

  Nil

  Constant Prices

  25

  627

  75

  81

  492

  177

  Sales

  West Glamorgan

  146
  energy efficiency programmes. The Council welcomed the initiative which is intended among other things to lead to action on energy efficiency labelling and minimum standards for electrical appliances. The initiative emphasises the need for market-based measures.

  There was also on 29 October a joint Energy/ Environment Council. I refer my hon. Friend to the written reply given to my hon. Friend the Member for Swindon (Mr. Coombs) by my right hon. Friend the Secretary of State for the Environment on 31 October 1990, Official Report, columns 540–42.

WALES

  NHS Surplus Land and Property
  Mr. Barry Jones
  To ask the Secretary of State for Wales what was the value of sales of surplus national health service land and properties in total and by health authority for each financial year since 1979 in(a) cash prices and (b) constant prices.

  Mr. Grist
  The information requested for the years 1983–84 to 1989–90 is shown in table 2. Cash prices are shown for all years and constant prices are revaluations at 1989–90 price levels.

  Details relating to land and property sales between 1979–80 and 1982–83 by health authority are not available. Total figures for this period were:

  Table 1

  Cash prices

  Constant prices (at 1989–90 price levels)

  £

  £

  1979–80

  200,000

  403,000

  1980–81

  700,000

  1,192,000

  1981–82

  200,000

  310,000

  1982–83

  1,400,000

  2,025,000

  147

  1983–84

  1984–85

  1985–86

  1986–87

  1987–88

  1988–89

  1989–90

  Cash Prices

  Nil

  389

  40

  230

  121

  268

  3,594

  Constant Prices

  Sales

  512

  50

  278

  139

  287

  3,594

  Total

  Cash Prices

  787

  1,347

  1,615

  2,691

  1,671

  1,790

  5,475

  Constant Prices

  1,087

  1,774

  2,017

  3,253

  1,918

  1,917

  5,475

  Ministerial Advisers
  Mr. Wigley
  To ask the Secretary of State for Wales if he will state the terms of reference of the appointment of the special adviser, Mr. Rod Richards, in the Welsh Office, indicating whether this appointment is for a fixed term or is a permanent appointment.

  Mr. David Hunt
  Mr. Rod Richards has been appointed personally by me to advise on subjects that I will specify and for as long as I consider necessary.

  Mr. Michael
  To ask the Secretary of State for Wales (1) if he will set out the salary, hours, terms and conditions of the appointment of Mr. Rod Richards as his personal adviser and the period for which the appointment wile, run;

  (2) if he will list all his personal advisers who are paid for from public funds with the total annual cost of each adviser and the topics upon which each is called to advise him.

  Mr. David Hunt
  I refer the hon. Gentleman to the reply I gave him on Tuesday 13 November, column 106.

OVERSEAS DEVELOPMENT

  Aid and Trade
  Mrs. Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether there are departmental guidelines regarding the ratio of aid and trade provision grants to the total cost of the aid and trade provision supported contract.

  Mrs. Chalker
  Grants from the aid and trade provision are made in accordance with OECD consensus rules and thus currently cover a minimum of 50 per cent. of the United Kingdom content of the contract for least-developed countries and a minimum of 35 per cent. of the United Kingdom content of the contract for other developing countries.

  Turkey
  Mrs. Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list all aid to Turkey since 1979 under(a) country programme aid, (b) aid and trade provision, (c) multilateral aid and (d) other aid, respectively.

  Mrs. Chalker
  Details available of British aid given to Turkey since 1979 are as follows:

  £'000

  Country programme aid

  ATP

  Multilateral aid attributable to United Kingdom

  Other

  1979

  4,198

  —

  n/a

  54

  1980

  8,019

  —

  960

  16

  1981

  32,105

  —

  3,670

  4

  148

  Country programme aid

  ATP

  Multilateral aid attributable to United Kingdom

  Other

  1982

  16,872

  —

  3,220

  10

  1983

  5,302

  —

  6,220

  96

  1984

  375

  —

  6,960

  32

  1985

  10,253

  —

  3,010

  27

  1986

  4,627

  —

  13,850

  23

  1987

  2,462

  559

  5,160

  20

  1988

  1,365

  1,044

  2,920

  51

  1989

  714

  2,384

  n/a

  591

  Mrs. Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) what is the purpose of the natural gas conversion project in Turkey;

  (2) what arrangements were made by his Department for seeking tenders for the natural gas conversion project in Turkey;

  (3) when aid was offered for the natural gas conversion project in Turkey; whether aid has been disbursed; and if he will make a statement.

  Mrs. Chalker
  The main objective of the project is to convert Ankara's gas distribution system to natural gas and to improve and extend the system. The conversion to natural gas will assist the eradication of severe atmospheric problems caused by the present use of oil, coal and lignite as domestic fuels. The contract with the Ankara electricity, gas and omnibus authority was awarded after international competitive tender. The offer of aid to the Turkish Government to support a long-term concessional loan was made on 9 March 1987. Disbursements to date total £3,426,481 and represent payments in respect of interest due on the loan which is funding 85 per cent. of the cost of British goods and services.

  Southern Africa
  Mrs. Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs what percentage of aid to southern Africa is tied to the purchase of British goods; what percentage is for local costs; whether there are any procurement conditions which encourage procurement from countries other than the recipient within the southern Africa region; and if he will make a statement.

  Mrs. Chalker
  In 1988, the last year for which we have figures, the proportion of our bilateral aid to southern Africa, defined as the present membership of the Southern African Development Co-ordination Conference (SADCC) plus South Africa, tied to the purchase of British goods was 76 per cent., and the proportion for local costs was 2 per cent. Proportions vary from year to year and from country to country.

  However, Britain announced in September this year that procurement under British financial aid to countries listed by the United Nations as least developed would in future be opened up to producers in all developing

  149
  countries with a GNP per capita of up to US $1,135 in 1989. In southern Africa the least-developed countries are Botswana, Lesotho, Malawi, Mozambique and Tanzania. Of the countries in the region, only Botswana, the Republic of South Africa and Namibia, for which we have no data, are thought to have had a GNP per capita of more than US $1,135 in 1989.

NATIONAL FINANCE

  Incomes
  Mr. Maxton
  To ask the Chancellor of the Exchequer if he will give the same figures as those provided in his answer of 29 October,Official Report, columns 363–64 (a) exclusive of privatised investment and (b) deflated by the general deflator.

  Mr. Norman Lamont
  Figures, excluding privatised investment, are not readily available and could be provided only at disproportionate cost. Regional deflators are not calculated and the CSO believes that the use of a

  Shareholdings1 in privatised and former government-controlled companies

  Size of share register

  Company

  Date of Privatisation

  Initial

  Highest since privatisation

  Current

  Proportion of shares initially retained by

  Proportion and dates of subsequent HMG disposals

  Number

  Date

  Number

  Date

  HMG

  British Aerospace

  February 1981

  157,829

  120,200

  December 1986

  97,600

  December 1989

  48·43%

  48·43%/10 May 1985

  Cable and Wireless

  October 1981

  27,320

  210,994

  March 1986

  166,179

  31 March 1990

  50·64%

  27·54%/November 1983: 23·1%/December 1985

  Amersham International

  February 1982

  10,051

  8,601

  June 1982

  5,787

  June 1990

  Nil

  Britoil

  November 1982

  37,257

  241,000

  owned by BP

  49%

  49%/8 August 1985

  Associated British Ports

  February 1983

  37,205

  12,321

  Jule 1989

  12,000

  31 December 1989

  48·5%

  48·5%/17 April 1984

  Enterprise Oil

  June 1984

  13,695

  14,166

  January 1985

  10,207

  31 December 1989

  Nil

  Jaguar

  July 1984

  125,000

  64,126

  November 1984

  owned by Ford

  Nil

  British Telecom

  November 1984

  2,051,373

  1,649,722

  November 1985

  1,200,655

  31 March 1990

  49·8%

  0·8%/December 1987

  British Gas

  December 1986

  4,407,079

  3,100,000

  July 1987

  2,480,564

  30 April 1990

  3·3%

  1·6%/January 1990: 1·6%/July 1990

  British Airways

  February 1987

  1,200,000

  450,000

  July 1987

  314,039

  15 May 1990

  2·5%

  1%/June 1987: 1%/March 1990

  Rolls Royce

  May 1987

  2,000,000

  925,000

  December 1987

  738,659

  31 December 1989

  0·4%

  0·4% sold during 1987

  BAA

  July 1987

  2,187,500

  1,350,000

  November 1987

  798,643

  June 1990

  4·36%

  1·42%/August 1990

  British Steel

  December 1988

  650,000

  400,000

  January 1989

  318,025

  23 August 1990

  0·05%

  0·04% disposed of during 1989. On 12 November 1990 HMG held about 0·002%

  Water and Sewerage Companies

  December 1989

  2,650,0002

  N/A

  l,318,3522

  June 1990

  1·62%

  1 These figures are not an exact guide to the number of shareholders in each company because some holdings are held jointly in more than one name. They also include holdings in employee share schemes.

  2 The offer allowed for holdings by individuals in any or all of the 10 companies and therefore holders may appear on more than one register.

TRADE AND INDUSTRY

  Discussions
  Mr. Nellist
  To ask the Secretary of State for Trade and Industry when the Minister for Trade last met Mr. Henderson of Matrix-Churchill; what was discussed; and if he will make a statement.

  Mr. Sainsbury
  As far as I am aware, I have never met Mr. Henderson.

  Mr. Nellist
  To ask the Secretary of State for Trade and Industry what were the topics discussed between the Minister for Trade and Mr. Bailey, of BSA Tools Ltd. and Automatia Investments Ltd., at their meeting on 19 October; and if he will make a statement.
  150
  deflator which applies to total United Kingdom investment may lead to misleading figures. It also believes that it would be inappropriate to apply the United Kingdom deflator to foreign investment.

  Estimates of United Kingdom manufacturing investment at current and constant prices are given in tables 13.6 and 13.7 of the 1990 edition of the "United Kingdom National Accounts" (Blue Book) which is available in the Library.

  Shareholders
  Mr. Nellist
  To ask the Chancellor of the Exchequer if he will update his answer to the hon. Member for Newham, North-West (Mr. Banks)Official Report, 18 November 1986, column 82, as to the number of individual shareholders retaining shares in each of the concerns privatised since 1979.

  Mr. Maude
  The table shows the number of shareholdings in each of the companies privatised since 1979. Where Her Majesty's Government retained a shareholding on privatisation this has also been shown.

  Mr. Sainsbury
  I met Mr. Bailey and other representatives of the Machine Tool Trade Association on 24 October. It is not our practice to disclose the content of such private discussions.

  Liberia
  Dr. Thomas
  To ask the Secretary of State for Trade and Industry how many licences for the export of armoured vehicles, aircraft and other military equipment to Liberia were granted in 1989; what level of underwriting by the Export Credits Guarantee Department of the sale of such equipment was approved; and if he will make a statement.
  151
  Mr. Sainsbury
  [holding answer 12 November 1990]: Two individual export licences for military equipment were issued for Liberia in 1989.

  ECGD has been unable to identify any credit underwritten by the Department in 1989 in respect of the export of military equipment to Liberia.

  Ms. Quin
  To ask the Secretary of State for Trade and Industry under what guidelines the Export Credits Guarantee Department operated on the granting of cover for the former regime in Liberia; and if he will make a statement.

  Mr. Sainsbury
  [holding answer 13 November 1990]: ECGD cover has been and remains available for exports to Liberia on short-term credit—up to 180 days—where payment is secured by irrevocable letters of credit from acceptable banks.

  No support for medium-term credit has been available since 1980 except for the sale of ships where payment is wholly secured from outside Liberia. No such ships business has, however, been undertaken during the past five years.

  Exporters (Insurance)
  Ms. Quin
  To ask the Secretary of State for Trade and Industry if his Department requires the Export Credits Guarantee Department to take environmental considerations into account when giving insurance cover to exporters.

  Mr. Sainsbury
  [holding answer 13 November 1990]: The Export Credits Guarantee Department is seeking to establish appropriate means to take account of environmental considerations when giving insurance cover to exporters as required under the terms of the Montreal protocol.

EDUCATION AND SCIENCE

  Religious Education
  Mr. Anthony Coombs
  To ask the Secretary of State for Education and Science if he will list the standing advisory committees on religious education which have sent an annual report to the National Curriculum Council.

  Mr. Eggar
  The Education Reform Act requires all standing advisory councils on religious education to publish an annual report of their work. My right hon. and learned Friend has said that he believes that copies of SACRE reports should be sent to local schools and teacher training institutions and to the National Curriculum Council, although there is no fixed timetable for doing so. We understand that the NCC has currently received 45 reports.

  Nursery Education, Stockport
  Sir Thomas Arnold
  To ask the Secretary of State for Education and Science what is the current provision for nursery education within the metropolitan borough of Stockport.

  Mr. Eggar
  The current nursery provision in the metropolitan borough of Stockport is nine nursery schools and 16 nursery classes attached to infant or primary schools.

  Teacher Training
  Mr. Kilfedder
  To ask the Secretary of State for Education and Science what was the intake to teacher training courses in England and Wales in 1989–90; and what assessment he has made of the adequacy of the numbers to provide for the needs of primary and secondary schools and institutions of further education in the years after 1993.

  Mr. Fallon
  In 1989 over 21,700 students started approved courses leading to qualification to teach in schools in the maintained sector in England and Wales: 1,500 more than in 1988 and 2·5 per cent. above our target. The targets take account of our assessment of future demand for teachers in maintained primary and secondary schools. The Government do not control the intakes or the course content of training for teaching in further education institutions. My right hon. and learned Friend intends to publish shortly a document describing our projections of school teacher demand and supply, a copy of which will be placed in the Library.

  Mr. Evennett
  To ask the Secretary of State for Education and Science what information he has concerning the proportion of students graduating from teacher training institutions who do not enter the teaching profession.

  Mr. Fallon
  Some 70 per cent. of newly qualified teachers enter teaching in maintained schools in England and Wales immediately after successfully completing their training. A further 10 per cent. enter after a year or more. Some of the other 20 per cent. will go into teaching in FE colleges, in independent schools or in other countries.

  Mr. Evennett
  To ask the Secretary of State for Education and Science how many students enrolled on teacher training courses(a) this year, (b) in 1989, and (c) in 1985.

  Mr. Fallon
  Data on recruitment to teacher training courses in the current academic year are being collected and will be available shortly.

  The annual intakes to initial teacher training courses in 1989 and 1985 were as follows:

  Total

  BEd

  PGCE

  1989

  21,757

  10,812

  10,945

  1985

  16,725

  8,053

  8,672

  School Crossings
  Mr. Vaz
  To ask the Secretary of State for Education and Science what extra financial provision is made available to local education authorities to provide protection to school children, by supplying adequate traffic patrol and crossing services outside schools; and if he will make a statement.

  Mr. Fallon
  Provision for local authority spending on school crossing patrols and road safety is not separately earmarked within annual local authority grant settlements, although it is taken into account in determining those settlements and their allocation between the relevant services for grant distribution purposes. It is then for each local authority to decide, within the overall resources available to it, what level of spending is appropriate in its circumstances to ensure adequate traffic patrol and crossing services.

  Teacher Vacancies
  Mr. Evennett
  To ask the Secretary of State for Education and Science how many unfilled teacher vacancies there were at the start of the present terms in(a) England and (b) Greater London; and if he will make a statement.

  Mr. Fallon
  All 109 LEAs responded to the Department's survey of teacher vacancies at the start of this term. They reported 1,470 vacancies in England, of which 561 were in Greater London. Detailed results are in the Library. They show that LEAs worked very hard and with considerable success to fill over 23,500 vacancies during the summer.

  A-levels
  Mr. Evennett
  To ask the Secretary of State for Education and Science when he expects to make a statement on the future of the GCE A-level examination.

  Mr. Eggar
  My right hon. and learned Friend will make a statement after he has received and considered the further advice which he requested from the School Examinations and Assessment Council, together with all other views expressed to him. He expects to receive this advice around the turn of the year.

  Mr. Evennett
  To ask the Secretary of State for Education and Science what representations he has received concerning this summer's GCE A-level examination results; and if he will make a statement.

  Mr. Eggar
  My right hon. and learned Friend has received two letters. Representations about individual GCE examination results which cannot be resolved through the normal appeals mechanisms should be addressed to the independent appeals authority for school examinations (IAASE).

  GCSE
  Mr. Evennett
  To ask the Secretary of State for Education and Science what representations he has received concerning this summer's GCSE examination results; and if he will make a statement.

  Mr. Eggar
  My right hon. and learned Friend and I have received five representations on this issue. We would expect inquiries about individual results which cannot be resolved through the appeals mechanisms of the examining groups to be addressed to the independent appeals authority for school examinations.

  Teachers (Recruitment)
  Mr. Evennett
  To ask the Secretary of State for Education and Science what information he has concerning the number of former teachers re-entering the profession; and if he will make a statement.

  Mr. Fallon
  In 1987—the most recent year for which reliable data are available—some 16,200 former teachers returned to the profession; over half all entrants. The Government are supporting LEA expenditure of £12 million over two years, 1990–92, which will help authorities to maintain the recruitment of returners at a high level.

  Numeracy
  Mr. Evennett
  To ask the Secretary of State for Education and Science what representations he has received concerning the numeracy standards of school leavers; and if he will make a statement.

  Mr. Eggar
  Ministers have received a small number of letters from individuals expressing concern about the numeracy standards of school leavers. The proportion of candidates achieving grades A to C in GCSE mathematics in 1990 rose by 2·1 per cent. to 40·2 per cent. compared with 1989.

  Dyslexic Students
  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science what co-ordination is exercised through his Department to ensure that examination boards provide similar facilities for the benefit of specific categories of dyslexic students; and if he will make a statement.

  Mr. Eggar
  This Department has no powers to ensure that the independent GCSE examining groups make such provision. The groups have, however, agreed common arrangements to ensure that, as far as possible, candidates should not be disadvantaged by their dyslexia. I will write to the hon. Member about a particular case which he has brought to the attention of my right hon. and learned Friend.

  School Leaving Age
  Mr. Dunnachie
  To ask the Secretary of State for Education and Science what proposals his Department has to promote full-time participation in education after the age of 16 years; and if he will make a statement.

  Mr. Eggar
  Full-time participation in post-compulsory education has increased substantially over recent years. For 16-year-olds in England, it has increased by about 15 percentage points, from 40 per cent. in 1978–79 to over 55 per cent. in 1989–90. Between 1987–88 and 1989–90 alone, the improvement has been seven percentage points, mainly attributable to the introduction of the GCSE.

  As my right hon. and learned Friend said on 13 November, Official Report, column 484, he will strive to achieve further increases in the number of young people receiving some form of education and training. Our examination reforms are raising standards in schools, giving more young people the qualifications and motivation to stay on. As the Education Reform Act comes increasingly into effect, we can expect standards to continue to rise and more young people to choose to stay on. The Government will keep under review whether more needs to be done.

  Student Unions
  Mr. Anthony Coombs
  To ask the Secretary of State for Education and Science what action he proposes to take concerning local student unions, the National Union of Students and freedom of speech; and if he will make a statement.

  Mr. Alan Howarth
  I will shortly embark on consultations with representatives of the higher education
  155
  institutions and various student bodies on the operation of the 1986 legislation on freedom of speech in higher and further education institutions; on the pattern of membership and financing of local student unions and the NUS; and on the proper use of public funds by local student unions and the NUS.

ENVIRONMENT

  Nature Conservancy Council
  Mr. Pawsey
  To ask the Secretary of State for the Environment by how much funding for the Nature Conservancy Council has increased since 1979; and what level of funding is proposed for the council in the coming financial year.

  Mr. Trippier
  Grant in aid to the Nature Conservancy Council (NCC) has risen from £7·9 million in 1979–80 to £44·819 million in 1990–91. Funding for the NCC's successor body in England, the Nature Conservancy Council for England, has been set provisionally at £32·411 million for 1991–92, with £1·05 million allocated to the NCC's residuary body. Provision of £1·093 million has been made for the transfer of the NCC's pension liabilities to my Department. Allocations for the Nature Conservancy Council for Scotland and the Countryside Council for Wales have not yet been announced.

  Homelessness
  Mr. Fraser
  To ask the Secretary of State for the Environment what measures he is taking to provide accommodation for the homeless.

  Mr. Michael Spicer
  My Department is making available capital resources of nearly £2 billion to local authorities in 1991–92. Support for housing associations through the Housing Corporation will rise to £1·7 billion in 1991–92 and to over £2 billion by 1993–94. The special homelessness allocation for local authorities and housing associations in London and the south-east has now been increased to £300 million over this year and next. In addition we are providing £100 million between now and 1993 for the initiative to combat single homelessness in London.

  Rural Development Commission
  Mr. Barry Field
  To ask the Secretary of State for the Environment when he next intends to meet the chairman of the Rural Development Commission to discuss progress relating to the economic and social development of rural areas.

  Mr. Heathcoat-Amory
  My hon. Friend the Minister for the Environment and Countryside plans to meet Lord Shuttleworth shortly.

  Waste Paper
  Mr. Tredinnick
  To ask the Secretary of State for the Environment what change there has been in 1990 in the recycling of waste paper; what recent initiatives he has taken to encourage the recycling of waste paper; and if he will make a statement.

  Mr. Heathcoat-Amory
  Over 2,000,000 tonnes of waste paper were recycled during the first nine months of this 156
  year, which is a 12 per cent. increase over 1989. The Environmental Protection Act requires all collection authorities to draw up and publish recycling plans; and will give financial help through the system of recycling credits.

  Carbon Dioxide Emissions
  Mr. Bellingham
  To ask the Secretary of State for the Environment what action is proposed to reduce emission of carbon dioxide over the next year.

  Mr. Chris Patten
  The White Paper on the environment—"This Common Inheritance"—which was published in September outlines a range of measures we intend to take to curb emissions of carbon dioxide and other greenhouse gases.

  English Heritage
  Mr. Couchman
  To ask the Secretary of State for the Environment what increase he plans next year in funding for English Heritage.

  Mr. Chris Patten
  Grant in aid to English Heritage in 1991–92 will total £89·2 million. This is £9·5 million above previous plans and includes the first £2 million tranche of new money for repair grants to historic cathedrals. Over the three years to 1993–94 resources for cathedral repairs will total £11·5 million. The increases for English Heritage's existing activities will enable it to strengthen its grant programmes for other church and secular buildings and to press on with visitor facility and maintenance works at some of its important properties-in-care. In addition, the extra resources will enable English Heritage to take forward a number of the initiatives set out in the White Paper, "This Common Inheritance"—in particular greater priority for assistance to historic town centres and industrial heritage, a comprehensive register of historic landscapes and gardens to inform the planning process, and the development of heritage-related education initiatives. By 1993–94 grant in aid to English Heritage is planned to increase to over £100 million.

  National Rivers Authority
  Mr. David Davis
  To ask the Secretary of State for the Environment if he will make a statement on the progress of the National Rivers Authority and on his future plans for funding it.

  Mr. Pike
  To ask the Secretary of State for the Environment if he has any proposals to increase the funding or powers available to the National Rivers Authority.

  Mr. Trippier
  In its first year of existence the National Rivers Authority has shown itself to be a dedicated and effective guardian of the water environment. The Government announced substantial extra financial support for the National Rivers Authority in the autumn statement. Grant in aid will be increased for 1991–92 by £23 million to £106 million, an increase of 28 per cent. over previous plans. Together with increased income from charges on dischargers, this will enable the authority to increase its total spend on environmental activities next year to about £217 million compared to this year's level of some £170 million.

  Kirklees Henry Boot Partnership Ltd.
  Mr. Riddick
  To ask the Secretary of State for the Environment whether the Government have provided any financial support for the Kirklees council Henry Boot joint venture company; and if he will make a statement.

  Mr. Portillo
  The Government have provided no financial support to the Kirklees Henry Boot Partnership Ltd.

  Bedfordshire County Council
  Mr. Madel
  To ask the Secretary of State for the Environment what is the percentage increase of external finance that Bedfordshire county council will receive in 1991–92 as compared with 1990–91; and if he will make a statement.

  Mr. Key
  The provisional figures issued by my right hon. Friend on 31 October indicate a 23·9 per cent. increase in the total level of external support for districts in Bedfordshire taken together.

  Derelict Land
  Mr. Sayeed
  To ask the Secretary of State for the Environment how much derelict land has been reclaimed through the use of derelict land grant and the activity of the urban development corporations.

  Mr. Atkins
  Figures for the amount of land reclaimed with the aid of derelict land grant before 1974 are not available. In the period 1974–75 to 1989–90 a total of 20,366 hectares was reclaimed. Urban development corporations have reclaimed over 1,200 hectares in their areas since designation.

  Liverpool City Council
  Mr. Parry
  To ask the Secretary of State for the Environment if he has any plans to meet the leader of the Liverpool city council to discuss central Government funding for the city.

  Mr. Portillo
  In response to a request from the city council for a meeting to discuss a number of issues, I have written to the leader suggesting that we should arrange it as soon as convenient.

  Domestic Waste
  Mr. Trimble
  To ask the Secretary of State for the Environment what steps are contemplated to reduce the use of open landfill as a means of disposing of domestic waste.

  Mr. Heathcoat-Amory
  Landfill, properly located and operated to the highest standards, is expected to remain a major option for the disposal of domestic waste in the United Kingdom. Recommended standards need to be imposed through disposal licensing controls and these should include requirements for daily cover of tipping areas and the consequent reduction of open operations to the minimum. The provisions of the newly enacted Environmental Protection Act 1990 will improve the effectiveness of licensing controls and similar legislation will be brought forward for Northern Ireland.

  Rates (Brent)
  Mr. John Marshall
  To ask the Secretary of State for the Environment by how much non-domestic rate poundages increased over and above inflation in Brent between 1979–80 and 1989–90.

  Mr. Portillo
  The rate poundage in Brent increased by 89 per cent. between 1979–80 and 1989–90 over inflation. During the same period, locally set non-domestic rate poundages in England rose by an average of 37·4 per cent. more than the retail prices index. This contrasts vividly with the new system under which the national non-domestic rating multiplier cannot rise by more than the rate of inflation.

  Birds
  Mr. John Greenway
  To ask the Secretary of State for the Environment what representations he has received about proposed reform of the Wildlife and Countryside Act 1981 about the protection of birds.

  Mr. Chris Patten
  I have received many representations in response to the proposal to introduce a licensing scheme for the control of pest bird species which we put forward as a way of bringing our practice into line with the requirements of the EC birds directive. The great majority of those responding argued that there are no conservation reasons for changing the law and that our traditional practices are fully in line with the spirit of the directive. The Government agree and I therefore intend to take no further action on this proposal but shall continue to press the European Commission to bring forward a proposal for amending the directive so that member states can operate sensible pest control practices.

  Shared Purchase Schemes
  Mr. Bowis
  To ask the Secretary of State for the Environment how many properties have been bought by(a) a council tenants and (b) housing association tenants either outright or through shared purchase schemes in the past 10 years.

  Mr. Michael Spicer
  It is estimated that 1·1 million council tenants and 53,000 housing association tenants purchased their homes either outright or through shared ownership schemes in England in the years 1980–81 to 1989–90.

  Waste Recycling
  Sir Trevor Skeet
  To ask the Secretary of State for the Environment what policy instruments he proposes to use to encourage more recycling of waste.

  Mr. Heathcoat-Amory
  The Environmental Protection Act 1990 sets a framework designed to promote recycling. The new duty of care on disposers of waste will increase the standards required in disposing of waste by landfill. The Act requires all local authorities involved in waste disposal and collection to give priority to recycling, wherever practicable, in their plans: and allows authorities to specify environmentally friendly options for waste disposal, such as recycling, even if they are not the cheapest in financial terms. The Act also requires local authorities to pay recycling credits and those involved in waste collection to produce recycling plans.
  159
  The White Paper on the environment "This Common Inheritance" sets out a number of measures that we will be pursuing to ensure successful recycling. We will be pressing industry to increase both the recycling of materials and the use of recycled material; encouraging retailers to provide collection facilities for recyclable material for their customers; and persuading industry to expand its capacity to process reclaimed material.

  In his autumn statement the Chancellor announced that £40 million in supplementary credit approvals will be available over the next three years to enable local authorities to invest in facilities and equipment needed to set up effective recycling schemes.

  The White Paper was printed on recycled paper and my Department is setting an example in its use of recycled paper for all ministerial correspondence and for photocopying.

  Sewage Outfalls
  Mr. Michael
  To ask the Secretary of State for the Environment what contribution his Department will make to the costs of providing full treatment in respect of new sewage outfalls.

  Mr. Heathcoat-Amory
  The costs of providing treatment will, in the first instance, fall to the sewerage undertakers, but may be eligible for consideration for cost-pass-through under the terms of their licences. This will be a matter for the Director General of Water Services to determine.

  River Pollution
  Mr. Ian Bruce
  To ask the Secretary of State for the Environment what information he has on the importance of river pollution as a contributor to North sea pollution; and what is Britain's contribution to the problem.

  Mr. Heathcoat-Amory
  Rivers and estuaries are the most important source of contaminants in the North sea and, together with direct coastal discharges, represent about 40 per cent. of total North sea pollution.

  A recent study by the International Centre for Water Studies in Amsterdam indicates that the Rhine and Elbe are the most significant of these, together contributing about 65 per cent. of river-borne contaminants. The United Kingdom accounts for about 20 per cent. of the river-borne total.

  Local Government Finance
  Mr. Andy Stewart
  To ask the Secretary of State for the Environment if he will make a statement on progress in collecting the community charge in Nottinghamshire.

  Mr. Key
  I understand that over 85 per cent. of charge payers in Nottinghamshire had made payments up to the end of September. The figures vary between a creditable 94·7 per cent. in Broxtowe borough council to a disappointing 67·9 per cent. so far in Nottingham city council. I look to all charging authorities to make full use of their wide powers to see that these figures approach 100 per cent. during the next five years.

  Mr. Redmond
  To ask the Secretary of State for the Environment if he will list to date for the South Yorkshire valuation and community charge tribunal how many 160
  applications have been lodged in respect of the community charge; how many objections to domestic rates are still ourstanding; what are the figures for the other counties of Yorkshire and Humberside; and by what percentage these figures differ from the national average.

  Mr. Key
  The information requested is as follows:

  Community Charge Appeals

  Total appeals received to date

  Variation from national average

  per cent.

  South Yorkshire VCCT

  73

  −28

  North Yorkshire VCCT

  218

  +116

  West Yorkshire VCCT

  110

  −9

  Humberside VCCT

  763

  +655

  Total appeals in England

  14,230

  —

  National VCCT average

  1101

  —

  1At 30 September 1990.

  Domestic Rating Appeals

  Appeals outstanding

  Number

  Per cent.

  South Yorkshire VCCT

  2,660

  +19

  North Yorkshire VCCT

  1,494

  −33

  West Yorkshire VCCT

  2,623

  +17

  Humberside VCCT

  1,566

  −30

  National VCCT average

  12,235

  —

  1 At 30 September 1990.

  Business Rates
  Mr. Butterfill
  To ask the Secretary of State for the Environment what was the national increase in the business rate poundage in real terms in the 10 years to 1989–90.

  Mr. Key
  In the period 1979–80 to 1989–90 locally set non-domestic rate poundages in England rose by an average of 37·4 per cent. more than the retail prices index. This contrasts vividly with the new system under which the national non-domestic rating multiplier cannot rise by more than the rate of inflation.

  Bathing Waters
  Mr. Sillars
  To ask the Secretary of State for the Environment if he will provide the latest figures which are available on the compliance of bathing waters with the European Community bathing water standards.

  Mr. Trippier
  I refer the hon. Member to the reply I gave earlier today to the hon. Member for Angus, East (Mr. Welsh).

  Mr. Pawsey
  To ask the Secretary of State for the Environment what progress has been made in improving the quality of bathing waters, and when he expects all bathing waters to meet the standards in the EC bathing water directive.

  Mr. Chris Patten
  Provisional results for the survey carried out during the 1990 bathing season showed that 77 per cent. of the 446 identified bathing waters in the United Kingdom met the mandatory coliform bacteria standards of the EC bathing water directive. This compares with 76 per cent. of the 440 identified bathing waters in 1989.

  Although this maintains the steady improvement of recent years, I believe that more urgent action is required

  161
  to bring all our bathing waters up to the highest standards. Last March I announced that in future all substantial discharges of sewage to sea should be treated at a sewage treatment works. The estimated cost of this was £1·5 billion. I am now able to announce that following discussions with the water companies in England and Wales, they have agreed to provide additional treatment for around 40 improvement schemes at an estimated cost of about £600 million over the next five years. This is on top of the £1·4 billion bathing water compliance programme announced last year which the companies have also agreed to advance where possible.

  Bathing Waters. Survey—1990 results for England, Wales, Scotland and Northern Ireland

  Compliance with bathing Water Directive (76/160/EEC): Coliform Standard

  Pass

  Fail

  Total

  England

  Northumbrian Region

  21

  (20)

  12

  (12)

  32

  (32)

  Yorkshire Region

  17

  (18)

  5

  (4)

  22

  (22)

  Anglian Region

  27

  (23)

  2

  (5)

  29

  (28)

  Thames Region

  3

  (3)

  0

  0

  3

  (3)

  Southern Region

  48

  (45)

  18

  (20)

  66

  (65)

  Wessex Region

  39

  (31)

  0

  (7)

  39

  (38)

  South West Region

  118

  (113)

  15

  (19)

  133

  (132)

  North West Region

  10

  (11)

  23

  (22)

  33

  (33)

  Wales

  35

  (40)

  15

  (8)

  50

  (48)

  Scotland

  12

  (16)

  11

  (7)

  23

  (23)

  Northern Ireland

  15

  (16)

  1

  0

  16

  (16)

  Totals

  345

  (336)

  101

  (104)

  446

  (440)

  Results for 1989 are in brackets.

  Housing Associations
  Mr. Hannam
  To ask the Secretary of State for the Environment (1) what percentage of housing association new build comes from off-the-shelf programmes;

  what percentage of housing association new build is shown to be to mobility standard as a result of the scheme audit;

  what percentage of housing association new build comes from rehabilitation programmes.

  Mr. Michael Spicer
  These are matters for the Housing Corporation. I have therefore asked the chairman of the corporation to respond to my hon. Friend direct.

  Air Pollution
  Mr. Cohen
  To ask the Secretary of State for the Environment what representations and information he has had and from whom, concerning implications of the moving of the east London air quality monitoring station 2 km to the north-west for the accuracy of monitoring of air pollution; and if he will make a statement.

  Mr. Heathcoat-Amory
  My right hon. Friend has received no such representations. The Department has no responsibility for the east London air quality monitoring station in question.

  Mr. Cohen
  To ask the Secretary of State for the Environment if he will update the figures in his answer of 26 July,Official Report, columns 381–82, for all of 1990 so far; and if he will list the dates, number of hours over 60 ppb, and maximum levels, from the ozone monitoring network covering the London area.

  Mr. Heathcoat-Amory
  The dates, number of hours over 60 ppb and the maximum levels of ozone in ppb
  162
  This means that bathing waters will be improved sooner, and for many discharges the standard of treatment provided will be better than previously planned. Our aim is to complete the improvement programme for all bathing waters that presently fail to comply with EC standards by 1995, although present indications are that this may not be practicable for nine large schemes where there are major technical difficulties.

  The 1990 results for the United Kingdom are set out in summary form. I shall arrange for a more detailed summary of the results to be placed in the Library shortly, and we shall also be sending the results to the Commission of the European Communities.

  measured at the Department of the Environment monitoring sites in the London area so far during 1990 are as follows:

  Date

  Number of hours over 60 ppb

  Maximum hourly mean, ppb

  Central London Laboratory, Minster House, Victoria

  May 5

  6

  88

  6

  6

  79

  June 17

  4

  67

  July 8

  4

  69

  15

  1

  64

  18

  2

  61

  20

  3

  79

  21

  7

  96

  August 1

  3

  69

  3

  3

  74

  4

  5

  83

  Bridge Place, Victoria

  July 15

  1

  64

  18

  2

  61

  20

  3

  79

  21

  7

  96

  August 1

  4

  82

  3

  3

  90

  4

  9

  108

  24

  2

  68

  25

  6

  79

  Stevenage, Hertfordshire

  April 1

  1

  63

  June 17

  4

  82

  29

  2

  64

  July 15

  11

  100

  18

  1

  63

  19

  6

  101

  20

  9

  110

  21

  13

  126

  August 21

  7

  89

  163

  Date

  Number of hours over 60 ppb

  Maximum hourly mean, ppb

  2>

  8

  118

  3

  12

  136

  4

  8

  90

  24

  4

  75

  26

  5

  81

  29

  1

  63

  Harwell, Oxfordshire

  April 29

  4

  71

  30

  5

  85

  May 3

  4

  90

  4

  6

  85

  5

  9

  100

  6

  6

  81

  28

  3

  67

  June 16

  4

  70

  17

  9

  71

  July 15

  10

  89

  17

  9

  79

  18

  7

  82

  19

  7

  83

  20

  9

  84

  21

  13

  132

  25

  5

  78

  26

  2

  63

  27

  1

  67

  August 1

  7

  81

  2

  11

  106

  3

  18

  113

  4

  10

  89

  24

  5

  76

  25

  7

  68

  28

  4

  67

  29

  5

  69

  Mr. Cohen
  To ask the Secretary of State for the Environment when his Department was notified that the BBC was prepared to use air quality information supplied by his Department; when the service was arranged to start; why the supply of information was withdrawn; when his Department notified the BBC of the need for a press conference about air quality; when the press conference took place; and if he will make a statement.

  Mr. Heathcoat-Amory
  The arrangements for the new public air quality information system were made with the Meteorological Office. It already supplies weather information to the media, and advised that there would be a demand for air quality data supplied at the same time. The service was launched by my hon. Friend the Member for Rossendale and Darwen (Mr. Trippier) at a press conference on 24 October. I am not aware of any break in availability of data from the Meteorological Office. The prominence given by the media to the information at any particular time will, of course, depend on the pollution levels reported.

  Mr. Cohen
  To ask the Secretary of State for the Environment what advice he has given to people to protect themselves from increased susceptibilities to infection and disease resulting from high levels of ozone.

  Mr. Dorrell
  I have been asked to reply.

  The Department of Health has established an advisory group on the medical aspects of air pollution episodes. This group will consider what advice, if any, should be given by central Government about personal protection measures when levels of air pollution are high. It will give guidance on to whom this advice should be addressed, and what criteria should be adopted for issuing it.
  164
  A "Layman's Guide to Ozone" was issued in 1989 by the Department of the Environment with input on health aspects from the Department of Health. A copy is available in the Library.

  Ivory
  Mr. Cohen
  To ask the Secretary of State for the Environment what is Her Majesty's Government's policy on the lifting, in any respect, of the current ivory ban; and if he will make a statement.

  Mr. Heathcoat-Amory
  The Government remain firmly committed to maintaining the ivory trade ban for as long as it is necessary to ensure the survival and recovery of elephant populations. The CITES convention provides for species to be removed from appendix I when no longer endangered, but the Government have no plans to initiate proposals for such a reclassification.

  Pollution
  Ms. Ruddock
  To ask the Secretary of State for the Environment if he will make a statement on the progress made to date on implementing the provisions of the Control of Pollution (Amendment) Act 1989; what regulations have been laid; and what regulations he expects to lay arising from the Act.

  Mr. Heathcoat-Amory
  The regulations necessary to implement the Control of Pollution (Amendment) Act 1989 are now being finalised with a view to their being issued for consultation before the Christmas recess. The proposed regulations will:

  (a) require each waste regulation authority to establish and maintain a register of carriers of controlled waste;

  (b) set out the manner in which the registration system is to operate; and

  (c) set out the steps which a regulation authority must take before applying for a warrant to seize a vehicle which it believes has been used in the illegal disposal of waste (fly-tipping).

  A separate commencement order will be made to bring the 1989 Act into force.

  Home Repossessions
  Mr. Nellist
  To ask the Secretary of State for the Environment if he will publish in the Official Report his letter in response to the written question from the hon. Member for Barnsley, East (Mr. Patchett), Official Report, 1 November, column 694, on home repossessions.

  Mr. Key
  The text of the reply sent on 12 November was as follows:"I was unable to provide an answer to your question about mortgage possessions before the Recess and in my reply of 1 November I said I would write.
  The available information on the number of properties taken into possession is based on statistics provided by the largest building societies (and Abbey National). These figures are published every six months by the Council of Mortgage Lenders and a copy of their latest press release is enclosed, with the figures you require at Table 1. I understand that the CML is planning to extend the coverage of these statistics to other mortgage lenders, including banks, insurance companies and finance houses.
  Local authorities have also provided limited mortgage lending where buyers have found it difficult to obtain funds from elsewhere. The scale of such lending is now very small. The information provided by English local authorities on properties taken into possession in the financial years 1978–79 to 1989–90 is given in the attached table."
  165
  Copies of the documents referred to are in the Library.

  Environment Statistics
  Mr. Flynn
  To ask the Secretary of State for the Environment if he will set out Her Majesty's Government's reservations expressed in regard to the European Commission proposal to the Council on COM (90) 319 final on the gathering of regular official statistics on the environment.

  Mr. Heathcoat-Amory
  [ holding answer 12 November 1990]: The Government support in principle the Commission's proposal to establish a formal programme for the regular collection of official statistics on the environment to inform Community environmental policy. There are a number of important areas which the Government wish to clarify in refining the details of the proposal. These include:

  (a) The relationship between this proposed programme to be implemented by the Statistical Office of the European Communities, that of the European environment agency when operational, and those of other international organisations such as the OECD, needs thorough examination in order to avoid duplication of effort.

  (b) Member states should be given a greater management role in shaping the scope and direction of the programme.

  (c) A clearer distinction should be made between information that could be gathered in the short term and aims for more comprehensive data gathering in the longer term.

  (d) Proposals for any new surveys or extensions to existing surveys need a clear assessment of the costs, benefits and the possible burdens on industry.

  Residential Development
  Mr. Matthew Taylor
  To ask the Secretary of State for the Environment on how many occasions in each of the last five years he has permitted residential development which took the total dwellings for a sub-plan area beyond his own recommendations.

  Mr. Atkins
  [holding answer 12 November 1990]: This information could be obtained only at disproportionate cost. Figures for housing provision in development plans will carry weight as material considerations in the determination of planning applications and appeals, but they are not necessarily overriding. Each case has to be decided on its particular merits, and all relevant material considerations must by statute be taken into account.

  Homelessness, Newham
  Mr. Tony Banks
  To ask the Secretary of State for the Environment what information he has on the number of people on the homelessness register in the London borough of Newham in each year since 1980.

  Mr. Michael Spicer
  [holding answer 13 November 1990]: Local authorities report the number of households accepted and found accommodation under the homelessness provisions of the Housing (Homeless Persons) Act 1977 and the Housing Act 1985.

  Available figures from Newham's housing investment programme returns are:

  Households

  1980–81

  n/a

  1981–82

  568

  1982–83

  720

  1983–84

  660

  166

  Households

  1984–85

  1,263

  1985–86

  898

  1986–87

  1,511

  1987–88

  1,566

  1988–89

  637

  1989–90

  1,039

  Airport Companies
  Mr. Blunkett
  To ask the Secretary of State for the Environment what contribution has been made from the surplus at local authority-controlled or influenced airport companies to the provision and funding of local services; and if he will make a statement.

  Mr. McLoughlin
  I have been asked to reply.

  The 15 public airport companies publish annual reports and accounts in accordance with the Companies Act. These record the following dividends as having been paid to the shareholder local authorities for 1989–90:

  £ million

  Birmingham

  1·6

  Bournemouth

  0·2

  Bristol

  0·6

  Cardiff

  0·2

  Luton

  0·2

  Manchester

  8·5

  Newcastle

  2·0

  Norwich

  0·3

SCOTLAND

  Cleveland Fuels Ltd.
  Mr. Dewar
  To ask the Secretary of State for Scotland if he will take account of the draft European Community directives on the incineration of hazardous wastes when considering the current application by Cleveland Fuels Ltd. for a licence for the incineration of waste residues at Renfrew.

  Mr. Rifkind
  I understand that the draft directive on the incineration of hazardous wastes is at an early stage in its preparation. I shall however take note of the current proposals when considering the application by Cleveland Fuels Ltd. for registration as an incineration works.

  Mr. Dewar
  To ask the Secretary of State for Scotland if he will consider prevailing levels of atmospheric pollution locally when considering the application by Cleveland Fuels Ltd. for a certificate of registration for the incineration of waste residues at Renfrew.

  Mr. Rifkind
  I understand from Glasgow district council that recent measurements of sulphur ioxide in parts of its district, close to the site of the incinerator proposed by Cleveland Fuels Ltd., show average levels appreciably higher than would be expected from data currently available from the national survey of smoke and sulphur dioxide. I shall consider this point further when setting limits on the discharge of sulphur dioxide from the proposed plant.

  Mr. Dewar
  To ask the Secretary of State for Scotland if, when he considers the application by Cleveland Fuels
  167
  Ltd. for a certificate of registration for the incineration of waste residues at Renfrew, he will take account of the formulation used for the pollution assessment contained within the application.

  Mr. Rifkind
  Two different approaches, both of which gave acceptable results, were used by Cleveland Fuels Ltd. to assess the environmental impact of its emissions.

  Her Majesty's industrial pollution inspectorate will however carry out its own assessments before determining the appropriate content of the certificate of registration for the company.

  Mr. Dewar
  To ask the Secretary of State for Scotland if, when considering the application by Cleveland Fuels Ltd. for a certificate of registration for the incineration of waste residues at Renfrew, he has taken account of(a) the nature of the feedstock and (b) the description of the nature of the feedstock provided in the application.

  Mr. Rifkind
  Cleveland Fuels Ltd. has provided a generic description of the fuel it intends to use, specified primarily by maximum pollutant content and to a lesser extent by source. In assessing its application for registration I will not only take account of this description but also give consideration to such other likely characteristics of the waste as may give rise to nuisance. The company will be required to provide such equipment and to carry out such tests as are necessary to minimise their impact on the local environment.

  Mr. Dewar
  To ask the Secretary of State for Scotland if, when considering the application by Cleveland Fuels Ltd. for a certificate of registration for the incineration of waste residues at Renfrew, he will take any steps to force the company to fulfil the undertaking given in the application that it would operate an open door policy.

  Mr. Rifkind
  I have been assured by the company that it wishes to be as open as possible with the local population and to discuss with them any difficulties occasioned by the operation of the plant. If the proposal proceeds, Her Majesty's industrial pollution inspectorate will actively encourage the development of good working relationships between the company and its neighbours.

  Mr. Dewar
  To ask the Secretary of State for Scotland if he will give a breakdown of the representations he received in connection with Cleveland Fuels Ltd.'s application for a licence including(a) the names of those organisations and individuals making representations and (b) how many supported and how many opposed the proposed development.

  Mr. Rifkind
  Her Majesty's industrial pollution inspectorate has received nine representations directly, one of which included a petition, as a result of the public advertisement by Cleveland Fuels Ltd. of its application for registration as an incineration works. There has also been one letter from a Member of Parliament about the application. All were opposed to the development.

  Respondents were not however advised that their names and affiliations may be made public. I must honour the implied confidentiality and cannot therefore list: them as requested.

  Forth Valley Health Board
  Mr. Galbraith
  To ask the Secretary of State for Scotland if he will ask Mr. A. R. Robertson, general manager, Forth Valley health board, to reply to the letter of 17 September from the hon. Member for Strathkelvin and Bearsden.

  Mr. Michael Forsyth
  This is a matter for Forth Valley health board but I have asked officials to draw the hon. Member's question to the attention of the board.

  Waste Incinerators
  Mr. Dewar
  To ask the Secretary of State for Scotland if he will list all the applications in(a) the last 12 months and (b) currently under consideration for the siting of waste incinerators in Scotland and the company requesting the operating licence in each case.

  Mr. Rifkind
  Her Majesty's pollution inspectorate has received the following applications for registration as waste incinerators:Isola Werke, UK Ltd., Cumbernauld—tail gas incinerator;
  Lothian Chemical Co., Edinburgh—tail gas and waste materials incinerator;
  Cleveland Fuels Ltd., Renfrew—waste materials incinerator.

  Besides these, all of which are still under consideration, the deemed registrations as a result of changes to the statutory position contained within the Control of Air Pollution (Registration of Works) Regulations 1989 for the following incinerators have still to be determined:

  (a) Local Authority Municipal Incinerators

  East Tullos, Aberdeen District Council

  Alloa, Clackmannan District Council

  Baldovie, Dundee District Council

  Linwood, Renfrew District Council

  St. Ola, Orkney District Council

  Roma Head, Shetland District Council

  (b) Industrial Waste Incinerator

  Lanstar (Scotland) Ltd., Ardersier.

  Mr. Dewar
  To ask the Secretary of State for Scotland how many applications for licences for waste incinerators in Scotland have been received in the last 10 years from(a) Caird Development Ltd., (b) Cleveland Fuels Ltd. and (c)any other subsidiary of Caird Development.

  Mr. Rifkind
  Only Cleveland Fuels Ltd. has applied for the registration of a waste incinerator.

  Mr. Dewar
  To ask the Secretary of State for Scotland how many complaints were received by Her Majesty's inspectorate of pollution in connection with incinerators operated by Caird Development or its subsidiaries in the last five years.

  Mr. Rifkind
  Caird Development or its subsidiaries have not operated any incinerators in Scotland over the last five years. Her Majesty's industrial pollution inspectorate therefore has no record of complaint.

  The company's operations in England and Wales are inspected by Her Majesty's inspectorate of pollution and questions related to the company's operations there should be addressed to the relevant Secretaries of State.

  Police Arrests
  Ms. Gordon
  To ask the Secretary of State for Scotland to what extent, and in what form, information on the number of arrests by police(a) by force and (b) nationally is maintained.

  Lord James Douglas-Hamilton
  Information on the number of arrests by police is not held centrally in Scotland. Within police forces records of arrests are kept at the station of detention or relevant divisional office.

  Heart Attacks
  Mr. Michael J. Martin
  To ask the Secretary of State for Scotland how many patients within the Greater Glasgow health board area have suffered heart attacks while awaiting coronary angiography during the last 12 months.

  Mr. Michael Forsyth
  Information on the number of patients who suffer heart attacks is not recorded.

  Nurses (Grading Appeals)
  Mr. Kirkwood
  To ask the Secretary of State for Scotland if he will make a statement on current progress being made in each health board in Scotland on nurses' clinical grading appeals.

  Mr. Michael Forsyth
  I understand that at the end of September, eight out of 15 health boards had completed the appeals currently before them. The rest have undertaken to complete their appeal hearings by the end of March 1991.

  Health Councils
  Mr. Wray
  To ask the Secretary of State for Scotland if he will make a statement about the direct representation of patients, medical and paramedical staff and community interests in local health councils.

  Mr. Michael Forsyth
  Under the terms of the NHS (Scotland) Act 1978, as amended, members of local health councils are appointed under the provisions of schemes prepared by health boards and approved by the Secretary of State.

  British Rail
  Mr. McAllion
  To ask the Secretary of State for Scotland when he will discuss with the British Railways Board the proposals for the future of Speedlink services discussed by the board at its meeting on 1 November.

  Lord James Douglas-Hamilton
  British Rail will submit the conclusions of its review of Speedlink services to my right hon. Friend the Secretary of State for Transport. My right hon. and learned Friend will consider the implications for Scotland of any action which is proposed.

  Rents-to-mortgages Scheme
  Mr. Dunnachie
  To ask the Secretary of State for Scotland if his Department has considered the numbers of completions and applications achieved under the rents-to-mortgages scheme in its first year as against the target set by Scottish Homes; and if he will make a statement.
  170
  Lord James Douglas-Hamilton
  The pilot rents-to mortgages scheme was introduced in October 1989 and has been monitored carefully by Scottish Homes and the Scottish Development Department. At end October 1990 over 1,400 inquiries had been received and 82 sales had been completed, with a further 100 applications in the pipeline. I expect that over 200 sales will have been completed by March 1991.

  This position is comparable with the early stages of the right-to-buy scheme. In 1979 under the voluntary arrangements then operating the Scottish Special Housing Association sold only 10 houses to sitting tenants but by 1980 there were more than 1,400 sales. We expect the rents-to-mortgages take-up also to show a marked increase in future.

  Mr. Dunnachie
  To ask the Secretary of State for Scotland on what grounds it is proposed to exclude from participation in the rents-to-mortgages scheme council tenants in receipt of housing benefit.

  Lord James Douglas-Hamilton
  Home ownership carries with it substantial responsibilities and it would be wrong to encourage tenants to take on financial commitments under the pilot rents-to-mortgages scheme which they then may be unable to meet properly.

  Bathing Water Quality
  Sir Hector Monro
  To ask the Secretary of State for Scotland if he will announce the results of the 1990 survey of bathing water quality; and if he will make a statement.

  Lord James Douglas-Hamilton
  The results of the monitoring carried out by river purification boards this year showed that 12 of the 23 identified Scottish waters met the mandatory standards for coliform bacteria set by the EC bathing water directive. This compares with 16 in 1989 and 12 in 1988. While it is disapppointing that last year's apparent improvement has not been sustained, the better weather in 1989 was, as I indicated in my announcement on 25 January this year, likely to have been a factor in the better 1989 results.

  Real and lasting improvements depend on the completion of the capital works programme now in hand with increased financial provision to achieve compliance as soon as possible. The provision for water and sewerage services in Scotland now amounts to more than £500 million over the three-year period 1990–93. As a further positive measure to assist in accelerating progress I am, as previously announced and subject to parliamentary approval, making available to sewerage authorities in Scotland up to £130 million in grants over the next three years for projects which bring environmental benefits, including bathing water improvements.

  A full report of the 1990 results, including details of the action now being taken to secure the compliance of individual bathing waters, has been placed in the Library and the results are also being made known to the Commission of the European Communities.

  The 1990 results are set out in the table.

  Result

  Nairn (East Beach)

  Fail

  Cullen

  Pass

  Fraserburgh

  Pass

  Aberdeen

  Pass

  Montrose

  Pass

  171

  Result

  Arbroath

  Fail

  Carnoustie

  Pass

  St. Andrews (West Sands)

  Pass

  Kinghorn (Pettycur)

  Pass

  Aberdour (Silversands)

  Fail

  Gullane

  Pass

  North Berwick (Milsey Bay)

  Pass

  Yellowcraigs

  Fail

  Dunbar (Belhaven)

  Pass

  Pease Bay

  Pass

  Sandyhills

  Fail

  Girvan

  Fail

  Turnberry

  Fail

  Ayr (South Beach)

  Fail

  Prestwick

  Fail

  Troon (South Beach)

  Pass

  Irvine-Gailes (New Town)

  Fail

  Saltcoats/Ardrossan (South Beach)

  Fail

  Child Care, Fife
  Mr. McLeish
  To ask the Secretary of State for Scotland if he will make a statement on the award to Professor Mapstone, the adviser to the inquiry into child care policy in Fife, of a Government grant in her role as director of the centre for child care and protection studies to examine the relationship between local authorities and the children's hearing system.

  Mr. Michael Forsyth
  [holding answer 13 November 1990]: Professor Mapstone was awarded a research grant for a project as a result of a process of competitive tendering. The research is concerned with an examination of the factors that promote the development of an integrated child care strategy linking residential and non-residential resources. There is no conflict between her research work and her activities as adviser to the Fife inquiry under the chairmanship of Sheriff Kearney.

EMPLOYMENT

  Welsh Language
  Mr. Wigley
  To ask the Secretary of State for Employment if he will place in the Library a copy of the policy guidelines of his Department in relation to the use of the Welsh language in Wales on matters relating to his Training Agency.

  Mr. Jackson
  A copy of the Welsh language policy requested by the hon. Gentleman will be forwarded to the Library. It should be noted that the guidance will come into effect in March 1991.

  YTS Accidents
  Mr. Redmond
  To ask the Secretary of State for Employment if he will list by year since its inception to date for the Yorkshire and Humberside region(a) the accident and (b) fatality figures for people on YTS training.

  Mr. Jackson
  The table gives the number of fatal, major and minor reportable accidents to YTS trainees in Yorkshire and Humberside region from 1 April 1983 to 30 September 1990.
  172

  Dates

  Fatal

  Major

  Minor

  April 1983 to March 1984

  —

  11

  88

  April 1984 to March 1985

  —

  14

  157

  April 1985 to March 1986

  —

  27

  209

  April 1986 to March 1987

  1

  38

  205

  April 1987 to March 1988

  —

  75

  401

  April 1988 to March 1989

  1

  86

  390

  April 1989 to March 1990

  —

  67

  365

  April 1990 to September 1990

  —

  47

  1213

  1 Three quarters only.

  Notes:

  (a) Training Agency figures are compiled on a similar basis to those prepared by the Health and Safety Executive on employed people. However, the Training Agency's figures will include a number of accidents to trainees in education establishments and road traffic accidents which may not have been reportable to the Health and Safety Executive had the individuals been employed.

  (b) Major injuries are classified according to the severity criteria laid down in the Reporting of Injuries,Diseases and Dangerous Occurrences Regulations 1985

  Young People (Employment)
  Mr. Ted Garrett
  To ask the Secretary of State for Employment what steps have been taken to improve the employment prospects of young people in north Tyneside.

  Mr. Jackson
  Youth training enables young people to acquire the higher levels of skills and qualifications for which employers are looking. An offer of a suitable place on youth training is guaranteed to all young people under 18 who are not in full-time education or a job.

  The Tyneside training and enterprise council will have the resources and the flexibility to address the employment and training needs of young people in its area.

  Claimants (Tests)
  Mr. Hinchliffe
  To ask the Secretary of State for Employment what representations he has received concerning the actively seeking work tests and associated forms which have to be completed by claimants; and if he will take action in order to simplify such forms.

  Mr. Jackson
  I have not had any representations concerning the actively seeking work tests and associated forms. The matter of reviewing the forms falls within the responsibility of the Employment Service executive agency. I have therefore referred this issue to Mr. Mike Fogden, the agency's chief executive, for reply.

  Social Security Act 1989
  Mr. Hinchliffe
  To ask the Secretary of State for Employment (1) what additional cost to his Department has been incurred in order to implement the Social Security Act 1989;

  (2) in which languages forms associated with enforcing the Social Security Act 1989 are available; whether all unemployment benefit offices hold stocks of such forms; and whether resources will be made available for trained interpreters to assist members of ethnic minority groups in actively seeking work interviews;

  (3) what provisions he has made for the illiterate within budgets for the implementation of the Social Security Act 1989.

  Mr. Jackson
  Questions on operational matters in the Employment Service executive agency are the responsibility of Mike Fogden, the agency's chief executive, to whom I have referred this question for reply.

  Action Credit Schemes
  Mr. Dunnachie
  To ask the Secretary of State for Employment (1) if claimants in designated pilot areas for action credit schemes who do not wish to participate will be subject to any restriction of benefits or any other discriminatory sanction; and if he will make a statement;

  (2) if his Department will publish in full the market research conducted into the action credit scheme in the west of Scotland; and if he will make a statement.

  Mr. Jackson
  Questions on operational matters in the Employment Service executive agency are the responsibility of Mike Fogden, the agency's chief executive, to whom I have referred this question for reply.

  Mr. Dunnachie
  To ask the Secretary of State for Employment if his Department will publish in full upon completion its evaluation of existing action credit schemes; and if he will make a statement.

  Mr. Jackson
  Any decisions relating to publication of the evaluation report of the action credit pilot scheme will be made after the report has been completed. This will not be before the end of November.

  Availability for Work Test
  Mr. Nellist
  To ask the Secretary of State for Employment what information he has as to the number of claimants in Coventry who have had their benefit suspended or ended in each month since the introduction of revised procedures for testing availability for work in November 1986.

  Mr. Jackson
  Questions on operational matters in the Employment Service executive agency are the responsibility of Mike Fogden, the agency's chief executive, to whom I have referred this question for reply.

HEALTH

  Elderly People
  Mr. Cohen
  To ask the Secretary of State for Health what information he has, or representations he has received, alleging that some elderly people who cannot bath themselves are falling through a gap between their health authority district nursing service and their local authority social services; if he will issue guidelines stating which authority is responsible for running the service; and if he will make a statement.

  Mr. Dunnachie
  To ask the Secretary of State for Health if his Department will make available funding to ensure that health authorities can provide weekly bathing services for all elderly people; and if he will make a statement.

  Mr. Dorrell
  We have received a copy of the Age Concern report on "Bathing Services for Elderly People in London". Our response to the report is under consideration. It is for local health and social services authorities in England to co-ordinate services, including bathing services, locally. It is also for them to decide within the overall resources available what is to be spent on these services. Our general guidance on community care management, to be issued shortly, will encourage and assist health and social services authorities to co-operate in the provision of care services for the elderly.

  Nursing Homes (Drugs)
  Mr. Hinchliffe
  To ask the Secretary of State for Health what representations he has received from local authorities and other organisations concerning the administration of drugs in nursing homes.

  Mrs. Virginia Bottomley
  None. Health authorities are responsible for ensuring that nursing homes make adequate arrangements for the recording, safekeeping, handling and disposal of drugs.

  Residential Homes (Medicines)
  Mr. Hinchliffe
  To ask the Secretary of State for Health (1) what plans he has to update the memorandum of guidance issued by the Department of Health and Social Security in 1977, concerning the custody, administration and disposal of medicines in residential homes;

  (2) what response he has made to the National Union of Public Employees' document "Administration of Drugs in Residential Homes".

  Mrs. Virginia Bottomley
  The memorandum of guidance on the arrangements for health care in residential homes for elderly people, including the section on the custody, administration and disposal of medicines, is currently being revised.

  The National Union of Public Employees' document "Administration of Drugs in Residential Homes" will be considered in the revision of the memorandum.

  Hepatitis
  Mr. Alton
  To ask the Secretary of State for Health if he will commission an investigation into the recent outbreaks of hepatitis A in Liverpool schools.

  Mr. Dorrell
  The public health laboratory service communicable disease surveillance centre regularly reports on outbreaks of hepatitis A virus in its communicable disease report (CDR). A recent CDR gave information on a number of family and school outbreaks, including those from the Mersey region, and I understand the centre is investigating the outbreaks fully. Consultants in communicable disease control in Mersey are aware of the problems and have advised appropriate control measures.

  Mr. Alton
  To ask the Secretary of State for Health (1) how many cases of jaundice have been recorded in Liverpool schools in the last two years;

  (2) how many cases of hepatitis A have been recorded in Liverpool health authority schools in the past two years.

  Mr. Dorrell
  We do not hold this information centrally. The hon. Member may wish to contact Mr. J. B. Fitzpatrick, the chairman of Liverpool health authority, for details.

  Mr. Alton
  To ask the Secretary of State for Health what advice is given to teaching staff, cleaning staff and parents at schools where there is an outbreak of hepatitis A.

  Mr. Dorrell
  It is the responsibility of the directors of public health and environmental health officers jointly to provide advice and guidance, in consultation with community paediatricians or senior community medical officers responsible for community schools health services.
  175
  In 1977 advice was issued by the Department of Health and Social Security in the memorandum "Control of Communicable Disease in Schools" which was addressed to individual health authorities and to specialists in community medicine (child health) for them to provide guidance to local education authorities, schools and teachers.

  Advice on hepatitis A is also contained in the latest edition of the handbook "Immunisation Against Infectious Disease" which was issued to all doctors in May 1990. Copies are available in the Library.

  Mr. Alton
  To ask the Secretary of State for Health what action has been taken to end the outbreak of hepatitis A in Liverpool schools; and if he will make a statement.

  Mr. Dorrell
  Letters were sent to all general practitioners in Liverpool from the consultant in communicable disease control on 15 January and 24 October suggesting the best medical practice to control hepatitis A. The letters advised general practitioners to exclude all patients from school or work for seven days after onset of jaundice or until clinical recovery.

  Preventive Health Care (Schools)
  Mr. Alton
  To ask the Secretary of State for Health (1) if he will make a statement on preventive health care in primary and junior schools;

  (2) what guidelines his Department gives to local education authorities on routine medical inspections of pupils in primary and junior schools.

  Mr. Dorrell
  The paper "Prevention in the Child Health Services"—a copy is available in the Library—issued by the Department of Health and Social Security in 1980 asked health authorities, in consultation with local education authorities, to devise programmes for health prevention and promotion in schools designed to meet the circumstances and needs of the local community.

  The paper advised that all children should have a comprehensive medical assessment during the first year of compulsory schooling. It suggested that, with the improvements in the detection of handicapping conditions, routine medical examinations should not be

  £ million

  Regional health authorities

  Local authorities

  Voluntary sector

  Department of Health

  HEA

  1985–86

  —

  —

  0·10

  0·52

  —

  1986–87

  —

  —

  0·16

  7·60

  —

  1987–88

  25·1

  —

  1·30

  6·74

  4·47

  1988–89

  61·7

  —

  1·09

  —

  10·00

  1989–90

  122–8

  7·0

  1·60

  —

  12·00

  1990–91

  127·5

  9·8

  1·80

  —

  10·00

  We are fully committed to taking effective action to curb the spread of HIV infection in all sections of the United Kingdom population. In the absence of either a vaccine against HIV infection or a cure for AIDS education and prevention remain the cornerstones of our strategy. The priority that we attach to this is demonstrated by the fact that we continue to spend more on AIDS health education than on any other single health education programme
  176
  necessary thereafter. Instead health surveillance should be based on serial screening of vision, hearing and growth by school nurses supported as necessary by a doctor who, at any age in infancy or childhood, should be prepared to investigate health problems reported by the nurses, teachers or parents.

  We are currently considering whether there is a need for further central guidance on the management of school health services.

  AIDS
  Mr. Nicholas Winterton
  To ask the Secretary of State for Health what has been the total expenditure by Her Majesty's Government upon the health education programme relating to AIDS in each of the last five years for which figures are available; and what is the total expenditure estimated to be in the current financial year.

  Mrs. Virginia Bottomley
  The table shows spending since 1985–86 by the Department of Health and the Health Education Authority (HEA) on the development of the national AIDS public education campaign, including the running costs of the national AIDS helpline and related telephone information and advice services. The HEA assumed responsibility for the further development of the campaign in October 1987. The HEA has built on the success the campaign has achieved in raising levels of public awareness and knowledge of the risks of HIV infection. The HEA plans to launch the next phase of the mass media campaign in early December. This will focus on increasing individual perception of the risks of HIV transmission. Not shown in the table are the sums spent by other interested Government Departments on I-IIV prevention work.

  The table also sets out total allocations to regional health authorities, local authorities and to the voluntary sector as a contribution towards the development of HIV and AIDS-related services, including the development, of local HIV prevention initiatives. We have also asked each district to appoint an HIV prevention co-ordinator to spearhead this important aspect of authorities'remit and draw together the work of agencies in the statutory and voluntary sectors.

  Mr. Nicholas Winterton
  To ask the Secretary of State for Health what information he has concerning the total funding from Government sources made available to research into AIDS in each of the last five years for which figures are available; and what is the total such expenditure estimated to be in the current financial year.

  Mrs. Virginia Bottomley
  Finance made available by Government Departments for AIDS research since 1985–86 was:
  177

  £ million

  1985–86

  0·667

  1986–87

  2·460

  1987–88

  9·834

  1988–89

  11·924

  1989–90

  16·835

  A total of £20 millon has been made available for 1990–91 for AIDS research

  Mr. Nicholas Winterton
  To ask the Secretary of State for Health what funds have been given by his Department to the Terrence Higgins Trust since such public funding began.

  Mrs. Virginia Bottomley
  The Department has awarded the Terrence Higgins Trust section 64 grants as follows:

  £ thousand

  1985–86

  35·5

  1986–87

  118·6

  1987–88

  300·0

  1988–89

  400·0

  1989–90

  450·0

  1990–91

  450·0

  Heart Disease
  Mr. Nicholas Winterton
  To ask the Secretary of State for Health what has been the total expenditure by Her Majesty's Government upon the health education programme relating to heart disease in each of the last five years for which figures are available; and what is the total expenditure estimated to be in the current financial year.

  Mr. Dorrell
  The health education programme relating to heart disease in England is the "Look After Your Heart" programme, run jointly by the Department of Health and Health Education Authority. Launched in April 1987, total expenditure on the programme is as follows:

  £

  1986–87

  465,000

  1987–88

  2·5 million

  1988–89

  4·55 million

  1989–90

  4·4 million

  1990–91

  1 4·907 million

  1 Estimated.

  The figures do not take into account funds for associated life style work, such as activity on smoking, cancer preventions, nutrition and so on.

  Mr. Nicholas Winterton
  To ask the Secretary of State for Health what information he has concerning the total funding from Government sources made available to research into heart disease in each of the last five years for which figures are available; and what the total such expenditure is estimated to be in the current financial year.

  Mr. Dorrell
  The Medical Research Council (MRC), which receives its grant in aid from the Department of Education and Science, is the main agency through which the Government support biomedical and clinical research in the United Kingdom. During the period 1985–86 to 1989–90, the MRC spent £24·3 million on research into cardiovascular disease as follows:
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  £ million

  1985–86

  4·6

  1986–87

  4·3

  1987–88

  4·6

  1988–89

  5·3

  1989–90

  5·5

  An estimate for the current financial year, 1990–91, is not available.

  In addition, the Department directly funded some £0·25 million of research into heart disease and related conditions in 1989–90 and plans to spend a similar sum in 1990–91. Information on research in previous years is available in the Department of Health's yearbook of research and development, copies of which are available in the Library. Information on research into cardiovascular disease funded by other agencies is not collected centrally.

  Defective X-ray Equipment
  Mr. Dunnachie
  To ask the Secretary of State for Health if he will make a statement on the successful prosecution by the Health and Safety Executive at Oxford Crown court of Medical X-Ray Supplies, Kingsbury, north London, for supply of a defective machine which subjected patients to excessive radiation; and if he will make a statement.

  Mr. Dorrell
  On 22 October 1990 Medical X-Ray Supplies Ltd. was prosecuted by the Health and Safety Executive and fined a total of £6,000 at Oxford Crown court for its failure to carry out a critical examination of breast screening X-ray equipment supplied to a private health screening company and installed in a mobile health screening unit between January 1988 and May 1989.

  Although the radiation dosages given by the defective machine were greater than normal for that machine, the additional dosage was comparatively small and risks to the health of the women concerned were minimal.

  Self-governing Trusts
  Ms. Harman
  To ask the Secretary of State for Health if he will publish the recommendations that he receives from the regional health authority in respect of each application for self-governing trust status.

  Mrs. Virginia Bottomley
  No. This is a management exercise and is confidential.

  Kidney Treatment
  Mr. Dunnachie
  To ask the Secretary of State for Health if his Department has plans for provision of renal dialysis machinery and centres and appointment of consultant nephrologists to meet the projected increase in demand within the next 10 years; and if he will make a statement.

  Mr. Dorrell
  The planning and provision of renal services and the appointment of consultants is a matter for health authorities to decide, taking into account local needs and priorities.

SOCIAL SECURITY

  Disabled People
  Mr. Hannam
  To ask the Secretary of State for Social Security (1) what action he plans to take following the recommendation made by the Social Services Committee
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  in its ninth report, "Community Care: Social Security for Disabled People" that the independent living fund be provided with additional resources specifically to collect information about characteristics of application, to and awards from the fund;

  (2) what action he plans to take following the recommendation contained in the Social Services Committee's ninth report "Community Care: Social Security for Disabled People" that the Government conduct and publish on-going research on the actual and potential costs of disability in conjunction with organisations representing disabled people;

  (3) what action he plans to take following the recommendation made by the Social Services Committee in its ninth report "Community Care: Social Security for Disabled People" that the Government publish details of work on models using a points system as the basis of a comprehensive disability income so that the problems identified by these models may be examined by other interested groups.

  Mr. Scott
  We are in the process of examining and considering the contents of the report and we will be publishing our response in due course.

  Mr. Hinchliffe
  To ask the Secretary of State for Social Security if he has received a copy of the Disablement Income Group's report "Short Changed by Disability"; and if he will make a statement.

  Mr. Scott
  We have received a copy of the DIG report and considered it carefully. DIG does not itself claim that the results of its survey of only 87 disabled people are a fair representation of the needs of all disabled people. In drawing up our proposals for the reform of disability benefits, we have had the benefit both of the OPCS surveys of disability which had a sample of 10,000 people and a follow-up survey based on the family expenditure survey.

  Disability Employment Credit
  Mr. Kirkwood
  To ask the Secretary of State for Social Security (1) if he will publish the details of the process of consultation engaged in by his Department prior to the introduction of the proposed disability employment credit;

  (2) what plans he has to engage in consultation with organisations representing people with disabilities on the proposals for a disability employment credit.

  Mr. Scott
  When we published "The Way Ahead: Benefits for Disabled People", comments were invited from many representative organisations; and on 5 April I held a meeting with the Disability Benefits Consortium. Careful consideration was given to the comments we received.

  On 12 November, we published a note which sets out the provisions of the new benefit, which, following research and discussion, we have decided to call disability working allowance. Copies of this document have been sent to 120 organisations, including those which commented on the disability living allowance document "Disability Allowance: Assessment and Adjudication".

  Benefits System
  Mr. Jack
  To ask the Secretary of State for Social Security what research his Department is currently undertaking into the effects on different client groups of the current benefits system.

  Mrs. Gillian Shephard
  Research currently being undertaken or commissioned by the Department into the effects on different client groups of the current benefit systems is set out in the table. In addition to these projects, research into invalid care allowance, lone parents, maternity rights and personal pension optants has recently been completed.

  Client group

  Title of research

  The unemployed

  1. Effects of the "Actively Seeking Work" provisions

  2. Survey of Incomes In and Out of work1

  Young people

  The effect of severe hardship payments for 16 and 17 year olds

  Pensioners

  Survey of retirement and retirement plans

  All

  1. Methods of payment of benefit

  2. The operation of the Social Fund

  1 This is a large project comprising a number of individual studies.

  Social Fund
  Mr. Hinchliffe
  To ask the Secretary of State for Social Security if he will provide statistics showing total numbers of social fund refusals for grants and loans and total numbers of social fund refusals for grants and loans due to insufficient priority, for each local social security office in the United Kingdom.

  Mr. Scott
  The information could be obtained only at disproportionate cost.

  Local Office, Glasgow
  Mr. Dunnachie
  To ask the Secretary of State for Social Security if he will detail options currently under consideration by his Department in relation to the site, catchment area and projected opening date of the planned Glasgow, Pollok local office; and if he will make a statement.

  Mrs. Gillian Shephard
  The new Glasgow (Pollok) office would cover the present catchment areas of the offices in Muirhouse street and Paisley road west. The opening date of the new office will depend on the site chosen and the availability of funds. Meanwhile, a plan covering service proposals is being drawn up, which will be subject to local consultation.

  Departmental Accounts
  Mr. Dunnachie
  To ask the Secretary of State for Social Security if his Department has considered the queries raised by the Comptroller and Auditor General concerning its annual accounts for 1989–90; and if he will make a statement.

  Mrs. Gillian Shephard
  We have, of course, given careful consideration to the Comptroller and Auditor General's comments, and action has been taken to improve the Department's accounting performance.

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Worcester.
Lord Braybrooke Lord Braybrooke —Sat first in Parliament after the death of his father.
Lord Daresbury Lord Daresbury —Sat first in Parliament after the death of his father.

Economic Recession: Definition
Lord Donoughue Lord Donoughue asked Her Majesty's Government:
What definition is currently used by the Treasury to identify an economic recession in the United Kingdom.
The Minister of State, Department of Trade and Industry (Lord Hesketh): My Lords, there is no unique definition of recession nor, for any significant operational reasons, do we need one. But the US definition of two successive quarters of falling output is widely used, though even that is not without its problems.
Lord Donoughue: My Lords, I thank the Minister for that reply. I presume that "recession", rather like a camel, does not need a definition but you know it when you have got it. What assumptions—and I do not say forecasts—about unemployment for 1991 are included in the Autumn Statement forecasts as regards social security expenditure on unemployment?
Lord Hesketh: My Lords, I am surprised that the noble Lord, Lord Donoughue, asks that question because with his knowledge of the Treasury 1 am sure that he is aware that the Treasury does not forecast unemployment. However, it is fair to say that with the desire to reduce inflation, the economy has slowed. Therefore, there must be an assumption that there is a possible increase in unemployment.
Lord Stoddart of Swindon: My Lords, is it not a fact that the present recession is as a result of the crass incompetence of the previous Chancellor of the Exchequer in unleashing an unprecedented consumer and credit boom? Will the noble Lord tell the House whether he believes that our entry into the ERM will or will not cause a much deeper and longer recession with more unemployment than would have been the case had we not joined?
Lord Hesketh: My Lords, in answer to the noble Lord's first question, it is right to remember that interest rates were universally cut in many countries after the stock market crash of 1987. It is worth remembering that the Labour Party said that those rates had not been cut sufficiently quickly. It is worth remembering also that we now have an economy which, in the third quarter of 1990, has manufacturing output at a record level.
Lord Peston: My Lords, I congratulate the Minister on his Answer. He always says that he has had no
328
academic education but I thought that his Answer was a very good opening sentence to a standard examination question. He did not seem to feel the need to give us the rest of the essay.
If we are able to identify an economic recession, will the Minister tell your Lordships' House whether it is the Government's view that at present we are in a recession? Further, his right honourable friend the Chancellor of the Exchequer referred to us being in a "moderate recession". What is the difference between a "recession" and a "moderate recession'"?
Lord Hesketh: My Lords, in answer to the noble Lord's first point, I am sure that your Lordships' House will be very grateful that I did not complete the essay to which he referred, particularly at Question Time.
In response to his second point, one can define and re-define. As regards definitions, one can go from recession to downturn to upturn and boom and one could even sub-classify further. I am sure that later this afternoon there will be variations on the theme to which the noble Lord, Lord Peston, referred.
Lord Molloy: My Lords, can the noble Lord address his mind to the reality of the situation and not to all these hypothetical economic statements? With the present rate of inflation and because employment will probably fall, as he has already said, the people who will be hit hardest will be those buying their own homes. Those people have already suffered enormously at the hands of this Government. Can the noble Lord say that special consideration will be given to those people who are encouraged to buy their council houses and then find that they cannot pay the mortgage and those who are buying private houses and find themselves in difficulty? When unemployment increases, can something be done to help those people who are in that grievous situation?
Lord Hesketh: My Lords, the Government have always maintained that those who are weakest in society are those who are poorest and on fixed incomes. They are the greatest victims of inflation. The Government's policy is to curb inflation.
Lord Cledwyn of Penrhos: My Lords, perhaps I may ask the noble Lord to look for a moment beyond Offa's Dyke. Is he aware that the number of Welsh companies going into receivership has increased fourfold during the first nine months of this year, while at the same time the Government have cut aid to industry by 20 per cent.? Can the Minister explain that?
Lord Hesketh: My Lords, I must repeat to the noble Lord the Leader of the Opposition what I said earlier. We believe that the greatest evil of all is inflation, and that must be tackled. There is a price to be paid for tackling inflation, but inflation must be conquered.
Lord Hatch of Lusby: My Lords, if I heard the Minister correctly he said—to applause from the Benches behind—that manufacturing output had been at a record level in the third quarter of this year. Is it not the case that manufacturing output in the third quarter was down 1 per cent. on that for the second quarter of the year?
Lord Hesketh: My Lords, the tables before me show that the figures for the third quarter of 1990 were 7.5 per cent. higher than those for the previous peak year, which was 1973.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the figures from the Financial Times show manufacturing output to have declined by 1.8 per cent.?
Lord Hesketh: My Lords, I am answering on behalf of the Government and not the Financial Times.
Viscount St. Davids: My Lords, I meant to make this point later in the debate this afternoon, but due to ill-health I shall not be able to attend. Is it not true that a limited amount of inflation and damage to the economy can be a good thing, but that like all medicines it has limitations? Like many medicines, it is good in limited doses, but beyond a certain point it becomes damaging.
Lord Hesketh: My Lords, on behalf of all Members of your Lordships' House I am sorry that the noble Viscount, Lord St. Davids, will not be attending the debate this afternoon. However, I cannot agree with his proposition.
Lord Donoughue: My Lords, in my supplementary question I did not ask for forecasts, knowing the Treasury; I asked for assumptions. Can the Minister helpfully explain what those assumptions are for unemployment next year?
Lord Hesketh: My Lords, we forecast that in our battle to control inflation there will be a slow-down in the economy. That leads to the assumption that there could possibly be an increase in unemployment.
Lord Hatch of Lusby: My Lords, the noble Lord said that he was answering on behalf of the Government. May I sincerely ask him to look again at his figures and come back to the House when he has confirmed them? As I understood the position, he admitted to me that manufacturing output has fallen by over 1 per cent. in the third quarter over the second quarter of this year. I understand that those are government figures, not dependent on the Financial Times.
Lord Hesketh: My Lords, I fear that there may be disagreement over which set of tables and figures is being used. However, if the noble Lord is correct I shall write to him. We could finish up in a complicated argument regarding which set of figures is being used by whom and for what.

Dock Labour Scheme: Abolition Cost
2.49 p.m.
Lord Hatch of Lusby Lord Hatch of Lusby asked Her Majesty's Government:
What was their original estimate of the cost of abolishing the National Dock Labour Scheme and what is their latest estimate.
Viscount Davidson: My Lords, the Explanatory and Financial Memorandum to the Bill which became the Dock Work Act 1989 estimated that the dock workers' compensation scheme might cost £25 million
330
over three years. It also made it clear that no precise forecast could be given. To date, the actual cost to the Government has been £115 million. The final cost will depend on decisions still to be taken by individual harbour authorities. We expect it to be of the order of £135 million.
Lord Hatch of Lusby: My Lords, do not the figures given by the noble Viscount demonstrate that when the House debated this Bill it was misled by the Government as to the cost? If the Government had brought forth those figures at that time the debate would have been very different. Further, is it not the case that since the abolition of the National Dock Labour Scheme over 5,000 dockers—more than half the labour force—have been declared redundant?
Viscount Davidson: My Lords, the Government made clear when the Bill was going through the House that the number of redundancies was uncertain. The estimate was based on the available evidence and on previous experience. However, the abolition of the scheme and attendant circumstances, including the timing of the dock workers' strike in relation to the enactment of the legislation abolishing the scheme, created an unprecedented situation so that we were unable to forecast the redundancies at the time.
Lord Boyd-Carpenter: My Lords, can my noble friend confirm that, whatever the cost to public funds of the initial action, the improvement in service rendered by the ports will more than compensate for it?
Viscount Davidson: My Lords, I am grateful to my noble friend. It is now clear that the extent of overmanning exceeded all estimates. Restrictive practices have been swept away and new business has been attracted to a number of former scheme ports. There is more flexible use of labour and industrial relations have been improved. The new climate of competition in industry has meant lower rates for cargo and has helped the whole economy.
Baroness Turner of Camden: My Lords, is the Minister aware that a number of companies in this industry took the opportunity afforded by the termination of the scheme to dismiss a large number of people who had been trade union activists? Is he further aware that this has led to the longest running industrial tribunal hearing in the history of industrial tribunals? Is that not a totally unforeseen additional expense?
Viscount Davidson: My Lords I suggest that the reason for the dismissals was the dock strike which took place just after the Act was implemented.
Lord Rochester: My Lords, will the noble Viscount accept that for once I find myself in agreement with the noble Lord, Lord Boyd-Carpenter? In my view, abolition of the Dock Labour Scheme has been amply justified by the improvement in productivity and in our industrial performance that has followed.
Viscount Davidson: My Lords, I am grateful to the noble Lord for his support.
Lord Underhill: My Lords, is it not the case that under the Act abolishing the Dock Labour Scheme the time for claiming compensation payments by

331
redundant dock workers is still open? We now have the proposed privatisation of the trust ports, a number of which were scheme ports. Have the Government taken into consideration that one of the claims by those who support the privatisation of the trust ports is that there can be free development; in other words, asset stripping'? Therefore, have the Government also taken into consideration that there might be wholesale redundancies among dock workers at those trust ports?
Viscount Davidson: My Lords, I am unable to reply to the noble Lord on that point and I shall write to him.
Lord Harmar-Nicholls: My Lords, in view of the two supplementary questions from the Opposition Front Bench, does my noble friend gather that in the event or the Labour Party ever forming a government it will want to reintroduce a national Dock Labour Scheme, as it previously existed?
Viscount Davidson: My Lords, I do not think that is a question that I can answer; it is best put to the Opposition Front Bench. However, I suggest that the much higher cost of abolishing the Dock Labour Scheme reflects the very high level of overmanning which the scheme had perpetuated for a very long time.
Lord Molloy: My Lords, can the noble Viscount explain to the House what he understood was the reason for introducing the Dock Labour Scheme—
Noble Lords: Cross-Benches.
Viscount St. Davids: My Lords, is it not now clear that the costs involved in abolishing the Dock Labour Scheme have been far and away completely buried by the extra value which has been generated from the use of the large quantities of land which were entirely frozen and devastated by the scheme? That has made any costs entirely irrelevant.
Viscount Davidson: My Lords, there is much in what the noble Viscount says.
Lord Hatch of Lusby: My Lords, I return to the first question that I put to the noble Viscount. Is it not the case, as the figures he has given to the House show, that the actual cost of the abolition of the scheme is five times the figure given to Parliament by the Government when the Bill was debated? Is that not in line with the Government's cavalier attitude towards statistics? Does not the noble Viscount now agree that Parliament was misled when the Bill abolishing the scheme was debated in this House and in another place?
Viscount Davidson: My Lords, I know that the noble Lord, Lord Hatch, does not always listen to replies given from the Dispatch Box. I have already said that the significance of the timing of the dockers' strike is that it took place after the enactment of legislation abolishing the Dock Labour Scheme. We believe that some employers took the opportunity of releasing as many former registered dock workers as possible and many workers preferred to volunteer for redundancy rather than join in the strike. As a result there was a much greater reduction in the labour force than employers had previously believed possible.

School Admission Registers: Access
2.55 p.m.
Baroness Blackstone Baroness Blackstone asked Her Majesty's Government:
Whether they approve of political parties gaining access to school admissions registers.
Lord Cavendish of Furness: My Lords, school admission registers in maintained schools are not public documents and the regulations governing the compilation and use of school records provide that they may only be used for educational purposes.
The regulations do not apply to independent schools but records held by these schools are subject to the ordinary law. They are the sole responsibility of each school and proprietors are under no obligation to divulge the information they hold to any third party.
Baroness Blackstone: My Lords, I am interested in the Answer given by the noble Lord speaking for the Government. However, does he approve of school admission registers in independent schools being used for party political purposes? That is the nature of my Question and I have not received a reply.
Lord Cavendish of Furness: My Lords, I thank the noble Baroness for that additional question. The Government's attitude is enshrined in law and regulations. My department's responsibility must be confined to ensuring that no records are divulged to unauthorised people.
Lord Peston: My Lords, I am still at a loss. This is a straightforward Question in which the word "approve" appears. Are we not entitled to an answer? Does the noble Lord disapprove of this activity? There is no doubt that it took place. Will he not at least tell your Lordships that he disapproves of it? That is the important part of the Question.
Lord Cavendish of Furness: No, my Lords. I am not here to talk about approval or disapproval. Our attitude is enshrined in law and regulations and I made that clear in my opening Answer.
Lord Peston: My Lords, as a minimum, therefore, I assume the noble Lord will say that he approves of people obeying the law. Will he at least say that?
Lord Cavendish of Furness: My Lords, indeed I do.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that there is an increasing tendency on the Government Front Bench for Questions to be avoided rather than answered? Will the noble Lord endeavour to avoid that tendency in future?
Lord Cavendish of Furness: My Lords, I am not aware of that.
Baroness David: My Lords, is the Minister aware that the latest advice from the Government goes right back to 1956? I refer to the Administrative Memorandum 531, School Registers and Records. As that memorandum was sent out so long ago perhaps the Government will consider updating the advice. At the moment if companies can get hold of these registers they can be extremely useful. Schools have to

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raise additional income. Companies would find it useful to put out mail shots to parents. Will the Government consider updating that old regulation?
Lord Cavendish of Furness: My Lords, I thank the noble Baroness for that suggestion. I am not entirely clear on the present position. I believe that updating is in hand at the moment, but I shall be pleased to write to the noble Baroness in that connection.
Baroness Blackstone: My Lords, will the Minister at least agree that some parents find it distasteful for their names to be given and used for propaganda purposes on a party political basis? Surely the Minister must agree that that can upset many parents and that the practice should therefore stop in independent schools as well as maintained schools.
Lord Cavendish of Furness: My Lords, some parents could be upset and I believe that the law and other provisions protect them from that.
The Earl of Halsbury: My Lords, we have spent 20 minutes on Questions and there is still one question to be taken. Are we not dragging our feet?

Housing: Completions and Starts
3 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
What are the latest available figures for housing completions and starts both in the private and public sector.
The Parliamentary Under-Secretary of State, Department of the Environment (Baroness Blatch): My Lords, in Great Britain during the first nine months of 1990 103,900 dwellings were started by private enterprise, 12,700 by housing associations and 7,300 by local authorities and other public sector bodies. The corresponding figures for completions in the same period were 112,000, 9,000 and 12,700, respectively.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for giving those detailed figures. In relation to the public sector, is she aware that the figures are probably the lowest within living memory? Is she also aware that between the early 1920s and the late 1970s local authorities, whatever their political control and under whatever government, built more than 6 million houses for people within their areas? Why are the Government persisting with a policy of seeing local authorities as enablers and not builders? It is clear that the charitable and housing associations cannot fulfil that role, and the private rented sector certainly cannot do so. Will the Government now do an about-face and allow the local authorities increased access to more than £2 billion that has been raised from council house sales but withheld in order to let them get on with a rapidly increased building programme to provide the houses that are badly needed?
Baroness Blatch: My Lords, there is a fundamental difference between the noble Lord and the Government on this issue. The noble Lord believes that those in local authorities should be the only
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people in the business of providing housing for the community. Credit approvals for local authorities have increased by £102 million for 1991–92; revenue subsidy has reached £3,490 million; by 1993 gross expenditure on housing corporations will have bust the ceiling of £2 billion, which is an 88 per cent. increase on the current year; and home ownership has increased from 50 per cent. in 1979 to 69 per cent. this year. Given the difficulties of this year, a record number of first-time buyers have entered the market. We believe in a pluralism of provision and the important issue is that people are housed.
Lord Gisborough: My Lords, can my noble friend say why one sees so many blocks of council houses with windows boarded up?
Baroness Blatch: My Lords, I cannot give the reason. Some local authorities manage their housing stock better than others. Where houses are boarded up we appeal to the local authority to do what it can to bring them back into use as soon possible.
Lord Mellish: My Lords, the Minister will understand that the construction industry is a barometer of the nation's economy. No Member on either side of the House can deny that at present the industry is in a bad state. When is there likely to be an upturn in the industry and in its output?
Baroness Blatch: My Lords, the noble Lord, Lord Mellish, is right in saying that these are difficult times for the construction industry. However, I must link my reply to one given by my noble friend Lord Hesketh earlier today. The enemy is inflation and there are signs of it falling; indeed, interest rates have begun to fall. That will do more to help the construction industry to get back on track than almost anything else.
Baroness Fisher of Rednal: My Lords, is the Minister satisfied that the housing corporations have the ability to solve the housing crisis? Does she agree that the local authorities need a massive amount of money in order to solve the problem of homelessness? Ten years ago in Birmingham 2,700 people presented themselves as being homeless. Last year the figure had risen by 244 per cent. to 8,700. When the Minister speaks she must think of the dire misery of the homeless in this country.
Baroness Blatch: My Lords, the noble Baroness posed many questions in that statement. The housing associations alone are not the answer; nor are the local authorities alone. There must be an amalgam of all the agencies that I mentioned in my Answer. As regards the homeless, the Government have recognised that there is a difficulty. During the next two years an additional £130 million will be made available. Of that, £50 million will be made available to relieve local authorities' provision of poor temporary accommodation and £80 million will be paid to housing associations to relieve those sleeping rough on our streets and in our cities. There is a total of £300 million intended specifically to aid the homeless.
Baroness Hollis of Heigham: My Lords, does the Minister agree that permitting local authorities to recycle the housing receipts into new housing would,

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at a stroke, add to the plurality of provision and meet the needs of the homeless as I am sure all Members of the Hc use would wish?
Baroness Blatch: My Lords, I do not agree with the noble Baroness. Often the best receipts are in areas which are not the poorest and where the need is greatest. Therefore, one must consider a distribution mechanism. Secondly, as I have said in two previous answers, putting the issue in the hands of the local authorities does not increase pluralism. We are increasing the amount of money given to local authorities but we believe that other agencies are equally and sometimes better able to provide accommodation for the homeless and those who wish to buy homes in the private sector.
Lord Glenamara: My Lords, is the Minister aware that the point of view that she put forward in her reply would be more credible if private builders were building more low-cost houses? They are not doing so because that is not as profitable as building bigger houses. Is she further aware that in hundreds of villages in the North of England private builders are buying up sites and building houses in the £150,000 to £200,000 range, which does nothing to help local people? Will the Minister persuade her friends in the private building sector to build low-cost houses even though that may reduce their profits a little?
Baroness Blatch: My Lords, I shall not condemn the private sector by saying that it is not building. It is providing housing across the range from low-cost to high-cost housing. As regards low-cost housing specifically, registered housing associations already provide homes for more than 1 million people and are now the main providers of subsidised homes for rent and low-cost home ownership for those on low incomes and with the greatest housing need. In recognition of its new role the Housing Corporation's capital investment programme is planned to double between 1989 and 1993. In addition, Housing Estate Action has been given a boost of funds to deal with the refurbishment of our large estates. More money has also been made available for low-cost housing in rural areas where there are exciting and innovative schemes by local authorities and housing associations.
Lord Hailsham of Saint Marylebone: My Lords, is it not the case that these intricate matters of argument on both sides are better reserved for argument in debate rather than oral Questions?
Lord Dean of Beswick: My Lords, the Minister gave many complex figures but the fact is that the Government's reports show that the nation needs at least a further million houses for rent by the turn of the century. At the present rate of progress announced by the Minister there is no possibility of reaching that target by the end of the next century. When are we to make a start on eating into the present figures?
Baroness Blatch: My Lords, given the fact that there is always further to go, I believe that the Government's record on tackling all housing problem; on all fronts is greater than that of any previous government, particularly that of the noble Lord's party. Today more people own their own
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homes and are buying for the first time. More people are being helped at the bottom of the income scale, more low-cost housing is being provided and more is being done for the homeless. We are tackling the problem on all fronts and it would help the Government if energies were geared towards that end.
The Earl of Shrewsbury: My Lords, is my noble friend aware that, contrary to what the noble Lord opposite said about low-cost housing, many of the major house building companies in the West Midlands are setting their sights firmly on building low-cost housing, especially considering the fall in land prices during the past six or seven months?
Baroness Blatch: My Lords, I am grateful to my noble friend for that question. Considerable acreages are being made available on land in rural areas that would not normally be available for housing. Much is happening on the housing front.

Address in Reply to Her Majesty's Most Gracious Speech
Debate resumed on the Motion moved on Wednesday last by Lord Kimball—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".
3.10 p.m.
The Lord Privy Seal (Lord Belstead): My Lords, we have now reached the final day of the debate on the gracious Speech. During the previous three days the House has heard most excellent maiden speeches and today we look forward to hearing for the first time from the noble Baroness, Lady Castle.
Last year no less a body than the Organisation for Economic Co-operation and Development concluded a report on the United Kingdom economy with these words:
"UK economic performance in the 1980s has been marked by an unusually sustained expansion and by distinct signs of improvement on the supply side".
Nevertheless, the Opposition have put down a highly critical amendment about the Government's general conduct of economic policy. In the light of the OECD's comments, the amendment surely cannot be referring to the past decade as a whole. So what of the more recent record?
As your Lordships will know, 1987 and 1988 saw the fastest growth in both demand and non-oil output in any two-year period since 1945. But as demand outstripped capacity to meet it, inflationary pressures re-emerged. Once the extent of demand became apparent, interest rates were raised sharply. In saying that, I certainly recognise that the slow down in demand has been considerably more gradual than we anticipated; but I think it is fair to make the point that the resilience of the economy in the face of very tight

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policies, a resilience which has surprised everyone both within and outside government, is in itself testimony to the greater strength of the economy.
With hindsight it can be argued that interest rates should have been raised earlier. But there were good reasons for not acting sooner; there were the effects of the stock market crash of October 1987, and the statistics that were available at the time simply did not paint a picture of over-rapid demand expansion. But did those who now accuse the Government of incompetence—that is what the amendment says—actually recommend tighter policy then? Did they interpret what was happening in 1987 and 1988 better than the Government? The answer on both counts, as noble Lords opposite are well aware, is no.
I shall not pretend that in the short term we face anything other than a brief period in which output is likely to fall. In the economic forecast which he presented just under a week ago, my right honourable friend the Chancellor of the Exchequer foresaw a small fall in gross domestic product between the first and second halves of this year, but thereafter the forecast is for some recovery, with GDP growth of more than 2 per cent. from the second half of 1990 to the second half of 1991. I have heard it asserted within the past few days that the current economic situation is comparable to 1980 and 1981 and that over the decade nothing really has changed. But that is not so. I ask the House to look back over those 10 years.
In the early 1980s output fell by a total of 5 per cent., leaving it only 6 per cent. above the level prevailing back in 1974. Now output is expected to rise by the end of next year to a level nearly a third higher than it was in 1981. The scale of the inflationary problem that we face now is also very different from a decade ago. Demand growth had risen to just over 4 per cent. in 1978; but inflation subsequently soared to a peak of nearly 22 per cent. in 1980. This time demand growth reached a remarkable 8 per cent. in 1988 but inflation looks set to peak at around its present rate of just under 11 per cent.; that is much too high but is a very different story compared with 10 years ago. The noble Lord, Lord Williams of Elvel, will not be entirely surprised when I say that on this side of the House we shall be unable to agree to an amendment which regards it as "incompetent" that the inflation rate has risen to its present level, an amendment, if the noble Lord will forgive me for saying so, put down by the party opposite which 12 years ago sowed the seeds for the subsequent peak inflation of double that amount; namely, 22 per cent.
Meanwhile, it must be very important for our country's future competitiveness—
Lord Callaghan of Cardiff: My Lords, I am sorry to interrupt the noble Lord, but he seems to be forgetting that his Government were in charge when inflation soared to that figure. When I left office, inflation was at 10.3 per cent. It rose very quickly afterwards because Sir Geoffrey Howe doubled value added tax. If we are going to have comparisons, let us have some fair ones.
Lord Belstead: My Lords, the noble Lord is always fair and I shall attempt to be fair in reply. The noble Lord is absolutely right when he says that the then Chancellor of the Exchequer, my right honourable and learned friend in another place, increased the rate of VAT; but there was a package which included the cutting of tax rates. What I cross swords with the noble Lord about is that he seems to have forgotten that the Government under his command faced a total collapse of incomes policy in the winter of 1978–79 which led to the inflation rate of 10.3 per cent. when the noble Lord and his Government left office—an inflation rate which inevitably rose higher and higher and eventually peaked at 22 per cent.
Meanwhile, it must be very important for our country's future competitiveness that our fiscal position is stronger today than any of the Group of Seven countries with the single exception of Japan. The present financial year is expected to be the fourth year running that the Government have achieved a budget surplus, an outcome unprecedented in the past 40 years. The new planning totals for expenditure next year, announced last week in another place by my right honourable friend the Chancellor of the Exchequer and by my noble friend Lord Hesketh, who is to reply today, in this House, represent a tight overall public expenditure settlement which, although involving tough decisions, is affordable and prudent. Nonetheless, within those extra resources we have been able to concentrate more money in three main areas: social security; health; and support for local authorities with improvements in the key areas of education, public transport and the environment.
One matter which is common ground on all sides of the House is that there is never enough public money to pay for all that we want for our country. But a strong, sustained rate of economic growth certainly helps, to put it mildly. It enables the country to put increased resources into its public services, without having to resort to higher and ever higher taxation or higher borrowing to finance them. And the key to economic growth is the private sector—the wealth creating sector.
The Government have recognised this basic truth, and in the 1980s the economy of the United Kingdom, together with that of Spain, has grown faster than any of the other major Community countries. It is the first post-war decade in which the United Kingdom economy has grown faster than the economies of France and Germany. This strong growth has brought with it prosperity and an increase in living standards which have had widespread benefits. While it is true that employment has reacted inevitably to the slow down in the economy, it needs to be remembered that our unemployment is still well below the average rate in Community countries, and that today there are very nearly 2 million more people in employment than there were 11 years ago.
In the long term, growth and employment depend on improvements in the supply side of the economy. I think it is fair to claim that the need for such improvements is recognised throughout the industria-lised world and now, not least, by the new democracies

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in Eastern Europe. So it is very important that we in the United Kingdom have gone further than most in the supply side reforms which will stand us in good stead for the future.
The most obvious example is the labour market. The proper framework of law which is now in place has transformed industrial relations. The number of stoppages is now at its lowest level for over half a century and about one third of what it was in 1979. Flying pickets are, thankfully, a thing of the past. The 3.75 million jobs created since 1983 reflect the greater opportunities in the labour market of today. Since 1979 the numbers of self-employed people have risen by 75 per cent. and there are ever increasing numbers of women joining the job market. The enterprise allowance scheme, which owes its existence to my noble friend Lord Young of Graffham who will be speaking in the debate, has encouraged over 500,000 people to start up on their own and the small firms loan guarantee scheme has helped to finance around 26,000 smaller businesses.
The once intractable problem of long-term unemployment has also been tackled head on, as it needed to be. The numbers have fallen by 850,000 from their peak. The creation of the new employer-led training and enterprise councils should sustain this moment um and they will almost certainly be spending more next year than they are likely to spend this year.
Elsewhere we have done everything possible to sweep away unnecessary regulations and controls. But the most dramatic restoration of the market framework has been the privatisation programme. Already half of the state owned commercial sector of 1979, some of it at that time making enormous losses, has been transferred to the private sector.
Previously industrial policy meant trying to override the market. Decaying industries were artificially resuscitated and new industries were supported according to the views of the government of the day. By contrast, we have relied on competition policy to give new life to industry, while responding in ways which I have indicated to the particular needs that we believe have emerged.
That policy has borne fruit. Last year business starts exceeded stops by 1,700 a week, so that there were 25 per cent. more firms in existence than in 1980. That has not been concentrated in one area at the exclusion of others. In fact, the regions which appear to be least affected by the current slowdown are the areas traditionally associated with industrial decline, such as the North East.
One clear piece of evidence of the improvement that has come about concerns manufacturing productivity. Where the United Kingdom was at the bottom of the league table of major industrialised nations in terms of productivity in the 1960s and the 1970s, we now find that the UK actually headed the league in the 1980s, and of course the recent export performances of our manufacturers have continued to be strong.
The principles we have followed at home, and which I have been endeavouring to outline, have also guided us in our approach to 1992. In the single
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market, for example, we have helped to shape many of the most liberal directives which are creating exciting opportunities for people and businesses in the Community. With Denmark we lead the field in implementing single market measures in our national legislation and we continually argue that a single market must not lead to a fortress Europe. That is why we have been enthusiastic supporters of plans to extend the benefits of the single market to the EFTA countries and to develop the plan for association agreements with the countries of Eastern Europe.
At the same time the Government fully support Stage 1 of the Delors Report which includes completion of the single market. I fail to see, therefore, how the amendment of the noble Lord, Lord Jenkins, can imply that the Government are in some way "separating" the single market from progress towards economic and monetary union. Far from it. My right honourable friend the Chancellor of the Exchequer has put forward concrete proposals for progress beyond Stage 1.
The practical merit of the proposals for a hard ecu and a European monetary fund is that it would allow the Community to move forward together. It would be a common currency for Europe, and it could develop into a single currency if that is what peoples and governments so choose.
The Government's disagreement with the noble Lord's amendment is more fundamental than that. The main reason for our entry into the Community 18 years ago was to join a common market of over 300 million people close to our shores. But the Community is not even yet a true common market and each advance towards the goal of 1992, each directive which puts into effect a genuine single market within Europe has had to be argued for and worked for and in that Britain has played its part. At the same time, we have had a tremendous task in encouraging British industry and commerce to prepare for the single market.
So I must say that the Government take issue with the implication in the noble Lord's amendment that the Government's single market credentials are questionable because of another issue which is to be the subject of an intergovernmental conference which has not yet taken place!
Today's debate centres around the Government's economic record. There has indeed been record growth in investment and in employment and something of a revolution in production. So today the economy is better placed to meet difficulty and challenge. What is more, we have taken action on three very important fronts.
First, we have made it possible for a great deal of restructuring of British industry to take place in advance of the single market. Secondly, our public finances are strong, our current fiscal position being stronger than that of Germany, France or Italy—a remarkable record in anyone's book! Thirdly, tight policies to slow demand and reduce inflationary pressures are now clearly working and a sharp fall in inflation is expected next year.

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Those are not "incompetent" actions; they are actions which faced up to doing the things that needed to be done, and which will stand our country in good stead for the years ahead.
Lord Molloy: My Lords, before the noble Lord sits down, can he explain a matter which is perplexing many people in this country? I refer to the fact that the Confederation of British Industry could hardly agree with anything that he has said this afternoon. Therefore, will he say that what the CBI has stated in the press, in its magazines, and in statements made by Mr. John Banham, should be ignored because it is incorrect?
Lord Belstead: My Lords, I think that we should wait for the noble Lord to make his own speech in the debate. I have sketched out the way I believe that the economy is going both at home and abroad. In the meantime, I wait to hear what other noble Lords have to say.
3.27 p.m.
Lord Williams of Elvel Lord Williams of Elvel rose to move, at the end of the Address to insert: "but regret the incompetence of Your Majesty's Government in their general conduct of economic policy".
The noble Lord said: My Lords, I should like first to join with the noble Lord the Lord Privy Seal in looking forward to the contribution of a most distinguished maiden who now graces our Benches. I refer to my noble friend Lady Castle of Blackburn. I am sure that her contribution will be well worth hearing and that it will be as uncontroversial as was her long political career.
I turn now to deal with my amendment which the noble Lord the Lord Privy Seal accused of being—how shall I put it? —perhaps somewhat brutal. If that is so, I apologise for its language. However, I think that your Lordships know me well enough to know that I see no point in mincing words. So far as I am aware, a spade never suffered from being called a spade.
Lord Hailsham of Saint Marylebone: A bloody shovel!
Lord Williams of Elvel: My Lords, I refer the noble and learned Lord to the conventions of parliamentary language.
Having worded the amendment in plain English, it is obviously my task, and that of my noble friends who will follow me, to substantiate the charge. Our charge is this: over the past few years there have been serious mistakes in economic management. In short, there have been blunders. Furthermore, those blunders were not provoked by external shocks, or for that matter unforeseen domestic events, but have been the direct and predictable result of Government decisions. Taken all in all, our charge is that the Government have been, and still are, incompetent in their management of economic affairs.
I should perhaps first say a word about the amendment to be moved by the noble Lord, Lord Jenkins of Hillhead. I have a certain sympathy with
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the Lord Privy Seal over that. With the greatest of respect to the noble Lord, I mean that genuinely. I rather regret the tabling of that amendment. I was hoping that this afternoon's debate could concentrate upon the domestic economy. I fully recognise that we cannot debate the domestic economy without reference to the broader European economy since the two are clearly interlinked; but we shall have the opportunity to say pretty well everything we want to say on European questions in the debate which will take place on Thursday of next week on the report of your Lordships' Select Committee on European Monetary Union and Political Union—a report, incidentally, that I have read with the greatest interest. I congratulate the committee and its chairman the noble Lord, Lord Aldington, on its report.
The wording of the noble Lord's amendment also strikes us as being uncharacteristically imprecise. After all, the Community properly takes a wide range of "initiatives"—to quote the words of the amendment—in a number of different directions. Many of them should be separated from the single market. A Community initiative, for example, on hostages in Iraq has nothing to do with the single market; nor—if I may move from the important to the absurd—does the latest Community initiative to define in a directive the status of a carrot, which is, I gather, to be regarded as a fruit when used to make jam and a vegetable for other purposes.
On the other hand, I have great sympathy with the notion that the single market is not the be all and end all of the Community in the way that a number of government spokesmen would frequently have us believe. If the noble Lord had done us the courtesy of consulting us on the wording of his amendment in the way that I consulted his party on the wording of ours, we could probably have devised something which would have commanded the support of all of us on this side of the House. I am sorry that that has not happened.
The gracious Speech tells us little about the Government's economic policies. We learn only that the Government intend,
"to reduce inflation and foster conditions necessary for sustained growth".
Those words of course have a fairly familiar ring. That is exactly what we were told in 1979, and we now find ourselves, 11½ years later, not merely with no reduction in inflation but in a period, not of sustained growth, but of negative growth; in other words, what is known by any definition as recession.
Why? What has happened? Why is it that after all this time, after the enormous benefit that we have received from North Sea oil, after the suffering of unemployment, homelessness and of the sick and disabled, the Government have landed us in this mess? There are two reasons. They relate, first, to short-term mistakes; and, secondly—and perhaps more fundamentally—to a lack of vision.
Let me examine first the short-term problem. I believe that it is now common ground—I think that the noble Lord the Lord Privy Seal alluded to this—that there were serious policy errors in the period

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1987–88. It was a combination of the rise in house prices and de-regulation of the financial markets that allowed, and indeed encouraged, a raging boom in consumer expenditure with a consequent explosion in the monetary aggregates. Houseowners, seeing the value of their properties rise almost daily, were able, without penalty, to increase their mortgages and indeed call upon other sources of de-regulated credit to pay for the good life—and that they did in full measure. Between 1985 and 1989 personal consumption rose by nearly 25 per cent. Nothing on that scale had ever happened before. Total indebtedness of households in that period increased by over £200 billion. The result was predictable and was predicted. Inflation took off. The balance of payments went into deep deficit. In turn, the consumer rampage, once started, was fed by unnecessary and unwise income tax cuts. That was not just a consumer boom: there was an accompanying upsurge in what became known as business investment.
That term can mean anything, but the truth is that it is designed as an expression to hide the fact that that upsurge in investment when set off was directed to entirely the wrong sectors. Instead of a major increase in manufacturing investment which was, and still is, so badly needed; the big increases took place in the service sector: in office blocks, retailing and financial services. Investment in manufacturing came in the end, but it came right at the end of the queue.
In response to that situation, the Government took the deck ion to rely upon one weapon to fight the inflation for which they themselves were responsible. It was the weapon of short-term interest rates. The immediate effect of that decision was predictable, and indeed predicted: inflation, because of the consequent rise in mortgage rates, instead of going down, went up. That in turn led to increased claims for wages and salaries, not least, may I say, from directors and senior executives of large companies who were themselves committed to high mortgages. However, the use of interest rates as the sole way of reducing demand has at least two serious disadvantages.
In the first place, the size and timing of the impact are extremely uncertain; and, secondly, the interest-rate weapon is just as likely to cut investment as consumption. That is the last thing that we need. Nor was the policy, if I may say so directly to the noble Lord the Lord Privy Seal, helped by a series of ministerial pronouncements to the effect that inflation would soon be brought under control so that the public need not worry too much about some short-term discomfort. There would be, we were told, a soft landing—your Lordships perhaps remember that expression—under which procedure inflation would be eliminated without undue hardship for the majority of the public, or at least for Conservative voters. That expression was repeated constantly, and Ministers, surprisingly enough, were taken at their word, to the point where no one really believed that their own personal position would be affected, other than in the very short term, and so all continued to borrow a they did before.
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At that point, in the Autumn of 1989, it was clear that the economy was in serious trouble. There was a change of Chancellor. Mr. Lawson's name was duly blackened, and, after his short detour at the Foreign Office, we were presented with Mr. Major. Here, it was said, was the real tough guy. If it did not hurt, it was not working; and, suddenly, it started to hurt. Some time in the summer of this year, the economy went into a nosedive. We now have an economy that is sharply contracting, not in a mild recession of the type described by the noble Lord the Lord Privy Seal, but in a sharp recession. If ever there was a hard landing, this is it. But it is by no means finished yet. Even by the Government's Autumn Statement forecasts, real GDP is to continue falling well into next year. The CBI October industrial trends survey shows a grimmer picture, suggesting a trough around the middle of next year at GDP growth of about minus 2 per cent. The business optimism indicator is about where it was at this stage in the deep recession of 1980. The export optimism figure has collapsed. Substantial de-stocking is predicted. As a result, unemployment will certainly rise, profits will certainly fall, and investment with them.
Instead of an inflationary mess, we now have a deflationary mess. What do we do now? What is the proper policy response? Classically it would be an easing of monetary policy at this stage of the cycle by means of a cut in interest rates. If it is true that the headline rate of inflation is to come down 5½ per cent., as the noble Lord claimed—it may well do so if the recession is deep enough —then one could argue that there might be some relaxation in monetary policy.
Is there any scope for interest rate cuts? Not really very much. This is partly because any monetary reflation at the present moment of domestic demand would soon spill over into our already horrific balance of payments deficit and partly because, now that we are in the exchange rate mechanism, we have lost control of our interest rate policy. We went in to the exchange rate mechanism, as I remind your Lordships, purely to achieve an interest rate cut in time for the beginning of a Conservative Party conference. The result was that the ERM honeymoon, as it was called, lasted about half an hour. Sterling has been bumping along as the laggard in the ERM ever since. This morning, it dropped below 2.90 deutschmarks. The market is even now fearful of the possibility that interest rates will actually have to rise again if sterling is not to slip off the edge.
It seems to me that we have accumulated, one after another, problems for ourselves by faulty, hasty or ill thought-out decisions. We ask ourselves: who is to blame? We can immediately eliminate one possible scapegoat—the international economy. There are no oil shocks such as we had twice in the 1970s. Growth in the major industrialised countries has tapered off but there is still growth—in Germany and Japan, quite fast growth. The world scene is quite unlike that of the 1970s and early 1980s. The growth of world trade in manufactures, for instance, is forecast to stay in 1990 and 1991 at around the average for the 1980s.

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Nor can anyone seriously argue that there have been any unforeseeable domestic events that have made a great impact. Of course we understand that if there were a war in the Gulf the whole world would change, but we have to follow the lines of the Autumn Statement and assume that we shall be successful in avoiding it. The introduction of the poll tax had inflationary implications. These were easily foreseeable and were foreseen. Electricity privatisation will also be inflationary, if it ever happens. But that is government policy too.
I return to my first and central theme. The Government have nobody to blame but themselves and we have nobody to blame but the Government. Of course, it is the general rule of this Government, when they run into economic difficulties, to put all the blame on to those lucky enough to have a job. We see it happening again. It is the poor old worker who is to blame; if he tries to keep his pay packet up in line with inflation, he is doing something wrong. That is the normal stuff we get from Ministers. They have not yet blamed the financial markets, as they used to, but that will come in time.
I am afraid that the sad fact is—and I say this directly to the noble Lord the Lord Privy Seal—that people no longer have faith either in what Ministers say or in what they think they will do. That message comes across quite clearly in the opinion polls and the by-election results.
Moving to the longer term, it is the longer term lack of vision that will be the most serious legacy that this Government leave behind them. As long ago as 1985 your Lordships' Select Committee pointed out that there was one key requirement to bring our economy into balance and that without it all the clever manoeuvres in the world would be of no effect. That requirement was a recovery in manufacturing industry. They were right then; they are right now and we are right to repeat their argument. The British economy has had and still has a continuing and serious structural problem. Here I come to the long term effects of government incompetence. It is a problem that the Government have not simply allowed to develop but have actively exacerbated during their period in office. Not until we recognise that fact fairly and squarely shall we be able to mount a serious attempt to do something about it.
Perhaps I may give an example of what I mean. For all the ministerial boasting about investment in manufacturing industry, the truth is that net fixed capital formation in real terms was negative in manufacturing from 1981 to 1986, apart from 1985. Although it was positive in 1987 to 1989, the decline in capital stock has not been made up and is therefore lower than it was in 1979.
Another example of a field in which we have fallen behind in the past decade is civil research and development. Everybody knows it, it has been said a thousand times in your Lordships' House and will be said again. Not a squeak comes from the Government.
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A third example is our balance of payments. Again, the importance of manufacturing is paramount. In 1990 it looks as though exports will have increased by 50 to 60 per cent. over 1980 but imports of manufactures will have increased by 110 to 120 per cent. No strategy is viable which does not somehow or other ensure that that adverse trend is halted and then reversed. So what do the Government do? They announce yet another cut in the industry budget in the Autumn Statement.
None of these considerations seems to have entered the Government's thinking at all. They seem to be wrapped in a fog of complacency. But perhaps just for once they might do us the honour of listening to what we and the rest of the world are saying. The imbalances that have traditionally characterised the British economy have not in any way disappeared. Far from it; they have actually intensified in the past decade but have been masked by North Sea oil. We enter the 1990s with the most serious structural problems, which urgently need addressing. Let us for goodness' sake recognise that before it is too late.
Finally, we can now rewrite the Conservative manifesto for the General Election of May 1979. It runs something like this: "We intend to remain in power for three parliaments. By the end of 1990 our target is to achieve, after much pain and suffering, an inflation rate similar to the one we inherit, but with an economy in recession and with a balance of payments surplus that we inherit turned into a £15 billion annual deficit in spite of North Sea oil. Unemployment will about double to over 2 million, in spite of our efforts to keep the total as low as possible by fiddling the figures. We expect to receive nearly £70 billion from North Sea oil revenues, which no government have ever had before, and a further £25 billion from the proceeds of selling assets to the public who already own them. We will fritter away these vast sums either in direct tax cuts or in redeeming gilt-edged stock. We do not propose to lighten the total tax burden but we will make sure that that burden is shifted away from those who can afford to pay on to those who cannot. Finally, we expect Britain to be overtaken in terms of per capita GDP not just by France, Germany, Belgium and Holland but also by Italy and possibly Spain. We should be most grateful if you would go out and vote for us".
Of course, that was not their manifesto, but it is their record. That I call incompetence. I beg to move.
Moved, at the end of the Address to insert: "but regret the incompetence of Your Majesty's Government in their general conduct of economic policy".—(Lord Williams of Elvel.)
3.48 p.m.
Lord Jenkins of Hillhead: My Lords, I begin by saying that I do not wish the amendment in my name on the Order Paper in any way to pre-empt the debate which we shall have on monetary and political union on 22nd November. I regard it as vital that your Lordships' House should have a full and reflective debate on the most valuable report produced by the committee presided over by the noble Lord, Lord

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Aldington. We are greatly indebted to him and to the noble Baroness, Lady Serota, for the service they render to the House and the nation on matters of European policy. I shall therefore steer my European remarks today as far away as possible from the specific issues with which the report so authoritatively deals. At the same time I do not think it would be remotely reasonable, at the present juncture in our affairs, that this House should impose upon itself a kind of trappist vow of silence on Europe for the next eight days.
It will not have escaped the notice of your Lordships that matters are currently moving rather fast in the evolution of this country's European argument. I also do not think that the debate on the Address should be allowed to pass without the party which I have the honour to lead in this House setting out and indeed voting upon its own clear-cut and consistent line on what is the dominant issue of the day for this Parliament and for the country.
The Conservative Party is manifestly in a state of almost unprecedented disarray on the issue. I remember how recently it was that the noble Lord, Lord Belstead, in those familiar and well loved terms, expressed more in sorrow than in anger the fact that he had to rebuke us for having such nasty thoughts. He repudiated the idea that there was any serious difference between the Prime Minister and the Deputy Prime Minister. I remember how excited one or two noble Lords became when I suggested, in connection with the Statement on the Rome Summit, that the Prime Minister's xenophobia had become a major disadvantage to the interests of this country. That view was almost precisely endorsed by Sir Geoffrey Howe in his speech yesterday.
I can certainly think of no occasion, at least since the last days of the Balfour Government, when the Conservative Party in government was in such continuing confusion. I may add the comforting thought that it then took the Conservatives 10 years to get back to office of any kind and 17 years to get back to independent power. I should very much like to hear the views of the noble Lord, Lord Blake, on the matter to which I am about to refer. Some historians of the 19th and 20th centuries might take the view that one would have to go back still further, to 1846, to find a state of affairs with such a deep-seated capacity of reverberation. Some 28 years passed before a return to more than a snatch of power occurred.
I wish to turn for a moment to the official Opposition in response to the views expressed by the noble Lord, Lord Williams of Elvel. I gathered before and I gather today that the Labour Party is not altogether happy about our amendment. One distinguished noble Lord was reported as saying that the Labour Party may not be able to vote for the amendment. That, if I may say so, is its problem. If, as may well be the case, the Labour Party will soon be in government, it is not a bad thing that it should be brought up against the fact that one cannot have all the political advantage of running with the European hare while hunting with the anti-European hounds. Otherwise the period that Labour is in government will be just another sad chapter in the bungled history
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of our relations with the Continent over nearly the whole of the past 40 years; namely, fair words in opposition and foolish performance in government.
I have a high regard for the European record of the noble Lord, Lord Cledwyn. He played a notable part in the referendum campaign of 1975. I believe also that the noble Lord, Lord Williams of Elvel, has strong European instincts. However, it must be said that, as a political entity, the Labour Party has an appalling record of tergiversation and opportunism on the issue of Europe. I shall mention only one instance of that. The convincing nature of Mr. Kinnock's criticisms of the present isolationism of the Prime Minister are to say the least somewhat vitiated by the fact that only seven years ago he was enthusiastically advocating the complete withdrawal of Britain from the European Community.
I become increasingly convinced that the two party politics in this country have served the vital question of our relations with Europe remarkably and almost impartially badly. The European card was played quite strongly by the Conservatives in the late 1940s and the very beginning of the 1950s, partly because the Labour Government believed—I think they were probably mistaken in that—that the Durham miners would not let us join the Coal and Steel Community. But in office all that led to was the disaster of Anthony Eden refusing to let us participate in the Messina Conference.
The Labour Party under the noble Lord, Lord Wilson of Rievaulx, behaved in a reverse fashion. In opposition he denounced the Common Market as just an arrangement for trying to sell washing machines in Düsseldorf. But in government, after a fairly short interval he moved towards initiating the second British application to join the Common Market in 1967. Then, in opposition in the early 1970s, he devoted more attention to party unity than to consistency. That began the disintegration of the Labour Party as a party of government, at any rate for some time.
Meanwhile the Conservative Party became the great party of Europe. In the referendum campaign it was almost united whereas the Labour Party was deeply split. Even the noble Baroness, Lady Castle of Blackburn, whose speech I greatly look forward to but who I cannot see in the Chamber at the moment, was disunited with me on that issue. That may seem unbelievable. It seems to me in retrospect that what united the Conservative Party was the confluence of two quite different streams. Those who had a strong genuine Heath-like enthusiasm for Europe were still strongly placed and were buttressed by others without much genuine enthusiasm but who looked to Brussels in those days for protection against the threat of an insular socialism that they still took seriously.
The Labour Party at government level was then lukewarm. Great though my respect is for the noble Lord, Lord Callaghan of Cardiff, it must be said in honesty that it was his government who first kept us out of the exchange rate mechanism of the European monetary system. At party level that Government's stance became increasingly hostile. Then the great

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reversal of position that first occurred in the mid-1980s began. The Labour Party lost its hopes of insular socialism and began to find 10 Downing Street a more intransigent foe of its aspirations than the Berlaimont. It also saw an opportunity of twitching the tail of an increasingly isolated Mrs. Thatcher. The Conservative Party as a natural corollary lost its fears of insular socialism, not because it liked it any more but because that concept became more improbable. With a shift in the internal balance of the party, some natural chauvinism reasserted itself.
It has been a dismal tale of party prejudices and party manoeuvring which has prevented us from playing either an effective and consistent hand in Europe or developing a distinctive and inspiring national vision of what we want to achieve. That does not need to be an extreme or homogenised federal vision. My view of Europe is not very different from that expressed by Sir Geoffrey Howe yesterday. I do not want to see the analogue of the United States of America imported into a Europe which will and should retain many distinct national characteristics. I do not regard the Delors plan as written on tablets of stone. One would have to be an even more charitable person than I am to regard every pronouncement of one's successor—even if it is one's successor but one —as being immutable truth in all circumstances. I do not believe that the Rome Summit was conducted very considerately, although Mrs. Thatcher's manner on such occasions is not calculated to inspire or deserve consideration from others.
However, I believe that it is essential to see European problems overall and I do not believe that one can compartmentalise them. In my view there have been few more narrow-sighted and meanly materialistic views than that one could have a Europe of the single market and nothing else, a Europe of freely moving lorries which had nothing to do with a common currency, a stronger parliament, a common foreign policy or all the wider aspirations which move the hearts and minds of men and women as opposed to merely moving packages and which make the European Community such a beacon of hope— primarily non-materialistic—to the emerging de-mocracies of Eastern Europe.
Until we see things in that overall pattern and rise above the exigencies of party gain, we shall not get our relations with Europe right. In my view the trouble with Britain's relations with Europe has always stemmed much more from politicians than from the people who would always have responded to a constructive lead.
When we vote on the amendment tonight we may be in a fairly small lobby, what with the Labour Party trying to reconcile its conscience with its sense of party tactics and the Conservative Party trying to hold together some part of the wreckage. Nevertheless, I almost guarantee—one should never guarantee the future—that within a few years the policy of whichever party is then the government of this country will be in line with the sentiments of my amendment
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today. If only we could for once do something early and gracefully rather than late and sourly. How very welcome that would be!
4.4 p.m.
Lord Harris of High Cross: My Lords, whatever our differences, we are all looking forward with the keenest anticipation to the maiden speech of the noble Baroness, Lady Castle. I hope she will not steer away from the European issue, on which she has considerable experience, since some of us wish to know in which direction she may bestow her greatly valued favours.
We are debating a humble Address to thank Her Majesty for the gracious Speech. The first amendment stands in the name of the noble Lord, Lord Williams of Elvel. I cannot help reflecting from the Cross-Benches that if there was any gratitude in politics he might have moved a rather different Motion: still humble thanks, but to a rather different lady. After all, the Labour leaders owe an enormous unacknowledged debt to the Prime Minister. It was she above all others who shamed them into dropping their socialist baggage and adopting at least the rhetoric of the market economy. In the process Labour is said to have become electable. We shall see, that was the idea behind their graveside conversion.
I say that because the noble Lord, Lord Williams, talked about not mincing words. For 10 years I have watched the Labour Party, even in this House, opposing tooth and nail every market measure that the Tories brought forward. Now they appear to go in for drag, stealing Mrs. Thatcher's foundation garments with their designer labels of trade union reform, deregulation, supply side policies, low taxes and even the right to buy.
The noble Lord, Lord Williams, may have been especially thankful to the Prime Minister because in 1977 he was languishing as chairman of the Price Commission engaged, like some amiable East European apparatchik, in a daily hand-to-hand struggle against rising inflation. It proved an unequal battle even for the noble Lord's formidable talents. It was from that unhappy impersonation of King Canute that he was rescued by Mrs. Thatcher in 1979.
The noble Lord's Motion speaks of Her Majesty's Government's,
"incompetence in … their general conduct of economic policy".
We all regret economic or other incompetence, especially in others. However, it has to be said that there is a powerful amount of incompetence wherever there is over-extended government. Indeed, the Labour Party has a long and intimate acquaintance with economic incompetence, as seen during its 11 years in power from the glad, confident morn of 1964 to the nightmare of 1979, by which time the noble Lord, Lord Jenkins of Hillhead, had taken refuge in Brussels.
It cannot be denied that the present Government have recently displayed a deplorable degree of incompetence in their central battle against inflation. However, their record suggests to a well-disposed

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observer a number of possibly extenuating circumstances. First, their present lapse comes after a much longer period of notable economic success. In the circumstances they might be charged with inadvertent incompetence whereas Labour when in office practised incompetence as a way of life.
Secondly, the Government's failure does not stem from their market reforms of state industries, labour supply, lower taxes and higher productivity. Most of their worst problems come from the remaining socialised sector—education, health care and local government. All three stubbornly display the same incorrigible deficiencies everywhere associated 'with politicised control; namely, financial laxity, overman-ning, public sector unions, national wage setting, misdirected investment and insensitivity to consumer choice and convenience. That is why I believe that we need more Thatcherism and not more fudge.
Thirdly, the Government's most surprising income-petence is the failure to keep down inflation. Again, it is not a failure of market policies but of the politicised sector, which reflects no credit on any party. The noble Lord, Lord Williams, displayed a good deal of hindsight in his criticisms. Liberal and Labour spokesmen throughout the 1980s vied with one another in scoffing at monetary policy and calling for more government spending and lower rates of interest. According to Professor Tim Congdon, it was the abandonment of monetary targets and the switch to shadowing the deutschmark that fuelled the Lawson inflation after 1987.
The question that neither the Treasury nor the Opposition—nor the noble Lord, Lord Williams—seems capable of answering is the following. If the Bundesbank can deploy monetary policy to regulate the deutschmark why cannot we rediscover the success that enabled Sir Geoffrey Howe, assisted by the noble Lord, Lord Cockfield, and, from a distance, Professor Alan Walters, to bring down inflation from 20 per cent. to below 5 per cent. in the early 1980s? I fear that the necessary discipline will prove no more palatable for tying sterling at an arbitrary rate to the deutschmark inside the ERM. Indeed, we may soon find that the result will be to throw a still heavier burden of adjustment on high interest rates and unemployment.
I come now to the second amendment, in the name of the noble Lord, Lord Jenkins of Hillhead, which regrets that Her Majesty's Government,
"persist in separating the single market from other European Community initiatives, notably a single currency".
I shall try to match his moderation of language and tone and the avoidance of cricketing metaphors.
As a strong supporter of the open single market, associated with the name of the noble Lord, Lord Cockfield, I hope to avoid the self-righteous moralising of some Euro-zealots, of which I detected just a whiff in the mostly earnest waffle of my old friend Sir Geoffrey Howe yesterday. My settled view is that the intemperate campaign that we have witnessed to make M. Delors' timetable for the EMU a test of Euro virility ill serves the aim of full economic integration through the single market, which should
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unite us all as our still far from accomplished priority. I shall content myself with posing some further questions which can no longer be dodged in the coming days.
My first question is whether we can be sure that a single currency promoted by the same people who manipulate the common agricultural policy would prove as stable as the deutschmark—which anyway has lost two-thirds of its value since 1950. The second question follows on: how can true independence of a central Eurobank be reconciled with some degree of accountability? It may be noticed that even President Pohl of the Bundesbank seems less independent of Chancellor Kohl at some times than at others.
Thirdly, does the EC conform to the textbook requirements for an optimum currency area, or would its economic diversity aggravate political tensions and require huge continuing regional subsidies to the adversely affected regions? Fourthly, would a single currency impede entry of East European nations, to which I am becoming increasingly attached as a regular visitor to the Soviet Union? Fifthly, would a single currency be designed by the characteristic European processes of national interest bargaining and compromise beloved by Mr. Heseltine, which so easily descend into shifty prevarication and retreat in the name of some phoney consensus?
Sixthly, is a single currency imposed in the end by political clout preferable to the evolution of a stable currency tested in practice—like the old gold standard —by the evolutionary discovery procedure of competition? Seventhly, with so many uncertainties, might M. Delors' pet EMU turn out to be the greatest gamble since the South Sea Bubble which, as your Lordships remember, invited support for projects that "will hereafter be promulgated"?
For too long, those questions have been ducked by those whom I shall now christen the Euro-dodgers. My final question therefore is: when such conscien-tious doubts, widely shared by leading scholars in Europe and beyond, are, whether loftily or cynically, falsely dismissed as evidence of anti-European sentiment, is the Prime Minister not performing yet another invaluable service to our country and beyond by expressing them with all her characteristic candour? If present local difficulties provoke an open and balanced national debate of our relations with a wider Europe, I have no doubt that the Prime Minister's stand will be vindicated. Meanwhile, I suggest that there are reputable and weighty grounds for noble Lords to vote against both these unbalanced amendments.
4.13 p.m.
Lord Young of Graffham: My Lords, this is the first time I have had the pleasure of addressing your Lordships' House since I had the privilege of sitting on the Front Bench. This is in many ways my real maiden speech, for this time the words are all mine and not those of nameless officials labouring deep into the night. If your Lordships' House has benefited from my absence for the past 16 months—as I suspect it has —I have to say with great sadness that I fear that the

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noble Lord, Lord Williams of Elvel, has not. His grasp of economic policy and his understanding of the current position has advanced little, if at all, since I stood down, but I am an optimist by nature and have great hopes for his ultimate redemption.
This afternoon I do not wish to deal with the general thrust of government economic policy; that was ably dealt with by my noble friend not many minutes ago. But I should like to deal with two specific areas: first, Europe, and then the duopoly review which my right honourable friend in another place, the Secretary of State for Trade and Industry, announced yesterday. In connection with the latter, in the presence of my noble friend Lord Sharp of Grimsdyke, my predecessor, I should like to declare an interest as the executive chairman of Cable and Wireless, whose subsidiaries, Mercury and Mercury Personal Communications, operate in our domestic telecommunications industry.
An enormous amount has been said about Europe over the past two or three weeks. The amount of paper consumed debating the points will have destroyed countless trees, if not forests. But when all was said and done, what was it that the Prime Minister was saying in Rome? I believe she was saying simply that we should get our priorities right. It may well be that one day we shall have a single currency in Europe; it may be that one day we shall have some form of political union across the whole of Europe. That day is still distant. Whether it takes one year, two years, decades, or even centuries, we will all one day find out.
In the meantime, there is a far more urgent and pressing question; the GATT round. Here I must declare another interest because I happen to be a member of a faintly ridiculously-named group called the Eminent Persons Group on World Trade. Part of our function for the past nine months has been to draw to the attention of world leaders the real problems facing us all if the Uruguay round of GATT is not successfully concluded.
I can say without fear of contradiction that GATT is one of the most boring subjects around. During my time in office at the DTI I had to summon all of the willpower I had just to get down to the minutiae of details that it entailed. But it is just as important as it is boring. Let none of us in this House forget the terrible decade of the 'thirties that led on to the orgy of destruction of the 'forties, which was not caused by the stock market crash of 1929 or indeed of any other year. After all, time after time we have seen how the world carries on after stock market crashes. What took the world down into that awful depression was the sound of barriers being erected in country after country, first in the United States and then elsewhere —barriers erected as some form of protection, in the mindless thought that it would protect home industries.
We are today very close to history repeating itself. One has only to read the protectionist speeches being made day after day in Congress to know that, if the Uruguay round were to fail or be fudged, one could see a series of bilateral deals being negotiated by the
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United States of America. Only 10 days ago Senator Lloyd Bensen was here, and I am told he was arguing that if the round fails it will, in his words, reward the virtuous and penalise the bad. The definition of "good" and "bad" depends only on where one is sitting.
One has only to read the recent press statement of M. Calvet to realise that similar protectionist views are to the fore in France. He for one—and he represents a considerable strand of Community thinking—would like to deem all Japanese cars built in this country which have an agreed 80 per cent. European content as Japanese until at least the turn of the century. What would that do for the average citizen of the Community? Why should we all be condemned to pay more for an inferior product?
What has that to do with Europe? The principal complaint of the Prime Minister was that the agricultural Ministers could not agree a position with which to return to the negotiating chamber. We, the Community, were the only party out of more than 100 negotiating parties who could not agree a position to negotiate. When a great deal is said about Europe we should remind ourselves that those who were foremost in advocating a united Europe were foremost in resisting an agreement in their own national self-interest.
But—I fear too late—we may have come to an agreement. I remind your Lordships' House of the position. The American attitude was that it wanted a 75 per cent. reduction in agricultural subsidies over a five-year or 10-year period. The painfully agreed position of the Community—a 30 per cent. reduction —is seen at first sight to be a step forward until one realises that it is calculated from 1986 levels and is probably worth at best no more than 12 per cent. or 13 per cent. I am told that fine print, negotiated in the last hectic hours of that negotiation, negates much of that saving. My information is that the Cairns group and possibly the United States are thinking seriously of walking out from the negotiating chamber.
We have less than one month left. The consequences of a failure of the GATT round would be far greater than the failure of those talks over Europe. I can think of no better example of the battle of form over substance than the spectacle of our other 11 partners in Europe refusing even to discuss GATT in Rome but instead spending all their time and energies on setting a date for the start of new financial disciplines that have yet to be agreed.
Not only have they yet to be agreed; they still have to be defined. Are we talking of one independent central bank or are we talking of 12? Will countries within the Community run their own deficits; or will there be independent central control over national expenditures? Shall we have a hard ecu, a parallel ecu or a single ecu? Those are questions that have not yet even been formulated let alone answered. We are surely returning to the days of debates over how many angels can dance on the head of a pin if we agree the starting date first and think of the substance later.

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I should like also to make some comments about telecommunications policy and in particular about the duopoly review. I remind noble Lords of the interest that I declared a few moments ago. I have always been a supporter of open markets. That prescription applies to telecommunications as much as to any other industry. I championed liberalisation when I was in government. However I was always conscious that some regulation was needed to keep the telecommunications market open.
Perhaps I may give three examples of what liberalisation has already achieved. The earliest example of liberalisation was in the equipment field. The Government announced early in 1981 that in future members of the public would be able to buy their own telephone. Many noble Lords will remember that until that time we had a choice of two: a Trimphone from BT, or nothing. Two days after that announcement, I remember seeing a notice in a shop window in Mayfair announcing that telephones were for sale. They were all totally illegal at the time. However the market responded. Today we have a tremendous choice of equipment for people to use in their own homes.
Secondly, let us consider cellular mobile tele-phones. In about 1984 or 1985, West Germany and the United Kingdom agreed to introduce forms of cellular telephones. West Germany has 20 per cent. more population and the standard of living income was 25 per cent. higher than that in this country. However, both of us estimated that by the end of the decade we would each have about 100,000 subscribers. In Germany they licensed one operator; in this country we licensed two. The Germans achieved their target. There were 100,000 subscribers in 1980. We have I million users. The power of competition reduced the price. That ensured that this country has a better mobile telecommunications market than almost anywhere else in the world.
My final example of the beneficial effect of competition is closer to home. I hope that noble Lords will forgive a small commercial. Last week Mercury reduced the price of a three-minute call to the United States to £1.20. Ten years ago, when there was only one carrier, the call cost the equivalent of £3.03 in today's money. How many other commodities have dropped in price by over two-thirds in real terms over that period?
Competition has already brought better quality services, more variety and lower prices. I therefore welcome the Government's discussion document published yesterday which emphasises a further opening of the market. The proposals in that document continue the process of telecommunications deregulation of which my noble friend Lord Joseph is the father. My involvement in that process began when I had the privilege to serve as his special adviser. I should like to comment briefly from the perspective of my personal experience. Before doing so perhaps I may say that the reaction within Cable and Wireless and Mercury to the duopoly review is to welcome it with a sense of excitement at the opportunities, and confidence in the future. With more opportunities to
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offer a greater variety of services to more customers, they regard the review as positive for their customers and indeed for themselves.
Putting that interest aside, my personal reaction stems from my belief that more open markets will benefit the consumer. I do not agree with those who argue that ending the duopoly will harm the cause of BT's competitors—quite the contrary. The more open the market the greater the opportunities that it will bring. In due course perhaps the market will evolve a second force, not one imposed by government fiat but a much stronger one imposed by market forces.
If there is one measure in yesterday's document which I commend to your Lordships' House it is the support given to the principle of equal access. It provides the most effective way of introducing competition into long-distance communications. It dramatically lowers the barriers to entry. The United States has adopted equal access as the main means of introducing competition into long-distance com-munications. Competitors have taken 35 per cent. of the market from AT&T. In one part of the United Kingdom we too have a competitive regime. It is in Hull. Over the past two years Mercury has taken more than a 50 per cent. share of the long-distance market because it has the virtue of open access.
I very much hope that all parties in the industry will accept the proposal that equal access should be implemented. I hope that all will co-operate in its implementation and that few will obstruct it. Some critics have accused the industry of conspiring against the consumer. Early implementation of equal access by all parties in the industry will enable us to prove them wrong.
This afternoon I have touched upon two topics: Europe and telecommunications. I believe that both are critical to our country's economic future. Neither topic is easy. In both cases I believe that the general thrust of government policy is correct. There will of course be a great debate about the details, but the policy is correct. The details will follow later.
4.29 pm
Baroness Castle of Blackburn: Fellow Peers, this is the third maiden speech that I have made in my three phases of parliamentary life. The first was in the House of Commons; then I spoke in the European Parliament; and now in this historic House. You may say, "Some maiden after 45 years of public life!". Indeed a journalist said to me at lunch-time today that politics must be the only profession in which one can be a maiden three times.
The House will understand if I feel more than usually irked by the conventions attaching to a maiden speech. I am also very conscious of the fact that we all have half our minds on the excitement going on in another place, with dead sheep and dead parrots leaping to life all over the place. Nonetheless, I feel that this is a good moment for me to make my maiden speech, because it is a moment at which both this House and another place are deeply exercised in their minds about what should be Britain's relationship with the European Community.

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I have watched for 10 years in the European Parliament the British Government muddling through a love-hate relationship with the European Community: willing to wound and afraid to leave. It has been very interesting to observe that the European Parliament and indeed the members of the Commission had a greater respect—I might almost say affection—for those of us who had been overtly against Britain's membership in the first place and remained highly critical. They felt that at least there was there a sincerity and a curious kind of comradeship, whereas the British Government continued to patronise them. The Prime Minister, even when she was conducting a very legitimate battle to reduce Britain's contribution to European funds, outraged the Parliament by talking about "our money" when she among others had voted for Britain's entry into the Community on terms which meant that we clearly earmarked part of our money to be their own resources.
All along, they felt there was something deeply insincere about the British Government's attitude, although they talked about being good Europeans and of course the Prime Minister, at Stuttgart and other summits, signed the communiqué pledging herself along with the rest to proceed rapidly towards European union. And ever since she has complained that the others did not know what they meant by it. Of course she enthusiastically endorsed the internal market. We were one of the prime instigators in that. Now she complains about the threat to national sovereignty. What is the internal market but a threat to national sovereignty? It is far more than just a wider commercial market: it is the introduction of a situation in which any Community firm, Community worker or Community professional will have equal rights with their British counterpart in our country.
Finally, she takes us into the Exchange Rate Mechanism simply as a political sop to her own restive party conference. Do not think this goes unobserved over there in Europe. They are not fools: they have got us all sized up. She took us in on the worst of all possible terms. Madrid was forgotten. She has taken us in on an over-valued currency at a time of record inflation and at a time of the worst balance of payments situation in Europe, with one of the lowest growths in Europe and in a situation in which we are least well equipped to deal with the disciplines involved.
It is no wonder the Chancellor of the Exchequer admits at last—it is dragged out of him—that in this country we are heading for a recession. He says it is moderate, but that is not what the CBI says or what its survey reveals. So it is a question of recession and it is going to get worse in 1991. He admits that growth will fall to 0.5 per cent. Unemployment will rise, perhaps by 1 million—certainly to well over 2 million —and already, under the constraints of this recession, made worse by the terms of our membership of the ERM and the way we went into it, firms in this country are cutting back on the investment of which we are already so dangerously short. Take some small
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businesses of the kind that have been referred to earlier by other speakers. I was in my local butcher's shop only the other day: a nice prosperous little local butcher's shop. The owner said to me, "Mrs. Castle, if this goes on I will be shut in six months' time." That is happening all over this country, and the way in which we have tied ourselves to a new form of the gold standard can only make that matter worse.
So, as a country, we are now faced—all because the economists tell us that this is only the start and it will lead us irresistibly on to a single currency and a European central bank—with a dreadful choice. If the economists who are enlightening us on all these complex matters in column after column of the business sections of our great national newspapers are correct, we shall at last belatedly have to face the choice into which we have drifted as a result of this Government's policies. Either we must go forward into greater monetary union, which will wreak havoc on our weakened economy, or we shall be left out.
I do not like either of those choices and I do not think the majority of the Members of this House like them either. So what are we to do? We have left it very late: perhaps too late. But one always has to work constructively and hope for a third way. I believe there is just an outside chance of a third way, a way in which we could at last regain the ear of the European Community which is now closed to us by the Prime Minister's style, and not only by her style but also by her philosophy.
I think the way is this. I know from my experience in the European Parliament, where I had so many good friends with whom I could argue constructively and effectively, that their desire for union is very strong and very deep. I remember talking to a couple of young Belgian socialists who said, "You know, Barbara, we were born into the Community: we do not like a lot of it any more than you do but we have never known anything else." That is a scenario which will not be altered by lecturing, hectoring and bullying. You have to understand it, and they do want closer integration.
However, what has happened because of so much confusion of thought in Europe is that the financiers, the big boys, the bankers, the City boys have jumped in and turned that desire for greater integration into their form of monetary and economic union, with all the consequences that we all know for the weaker economies. The Chancellor of the Exchequer himself said the other day to Peter Jay on the BBC's "Money Programme" that to go for a single currency with so many unequal economies in Europe would lead to massive unemployment and massive movements of population from the weaker areas to the more prosperous ones. My heavens! he must have been reading my speeches.
He is right of course, but what has he offered as an alternative? There is an alternative for which the European Community itself is crying out. That alternative is a planned Community policy to create the convergence between the stronger and weaker economies which at present does not exist. We know —do we not?—that we fall into the category of weaker

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economies. Herr Pail told us this during his recent visit to London. He said that weaker economies should not join the monetary union because they could riot stand the pace and they had better stay out and wait a bit. He meant us.
I tell the House that Europe does not like the idea of a two-tier Europe: the people of the Community do not like it, nor, certainly, do the members of the European Parliament. In that body I have heard as much talk about the need for convergence in order to bring tie economies closer together as I have heard about mechanistic monetary union. There have been many reports and resolutions on the need for a stronger regional policy and for a battle against unemployment; for the helping of the smaller man; for the extension of training standards and harmonisation of the human elements; for the treatment of the elderly and guaranteeing them a minimum standard of life; and the fight for women's rights. All those matters have occupied the European Parliament. That is what is meant by a European Community—a people's Europe. That should bring the lowest up to the standard of the highest. Even the strongest economies like Germany know that that is absolutely essential if the Community is to work.
The other day there was a debate on monetary and economic union and on the internal market. I can remember a Portuguese socialist reminding the Parliament that a worker in a German factory earned eight times as much as a Portuguese worker in the same type of factory. That is not what Germany wants. It can see that the whole thing will blow up in our faces unless we harmonise in the most constructive way.
I tell the Members of this House why that is so. The Community is alienated from our British Government not merely because of the Prime Minister's Boadicea chariot-type nationalism but because of her nine-teenth century Victorian values which are out of date: unregulated free enterprise; keep government out. When she rejected Jacques Delors' charter of fundamental social rights she said, "I am not going to have socialism brought in by the back Delors"! Do not believe that those remarks go unnoted. Why should we be listened to when we are no longer strong? Also, we are not listening nor are we co-operating in the great Community effort to lift the economic standards; throughout the whole Community to the level of the best.
The issue is this. We should lead that campaign in Europe by saying that convergence must come before monetary union. Left to itself, monetary union will make matters worse. I believe that millions of voices are ready to listen to us in the European Community.
4.42 p.m.
Lord Walston: My Lords, little did I think, when I first had the privilege of meeting the noble Baroness, Lady Castle, some 40 years ago that I should have the privilege and pleasure on behalf of your Lordships of thanking her for the most stimulating and exciting maiden speech to which I have listened. I did not listen to her other two maiden speeches, which may have
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been the same. I suspect that they were. However, it is good to know that after all her experience not only has she not lost her fire, her enthusiasm and her capacity for straight speaking but she has been able to combine them with the traditional non-controversial speech which is our custom. It makes me even more anxious to listen to her future speeches when she will not be trammelled by any such impediments of convention.
So far we have been listening to a series of fine, able, electioneering speeches, with the exception of the speech by the noble Lord, Lord Young of Graffham. I hope that your Lordships will not be surprised and will not object if I do not follow the electioneering speeches which we have been privileged to hear. However, I shall follow the first point raised by the noble Lord, Lord Young of Graffham, because I agree with him that when one compares the problems of the Uruguay round with the other problems which are exercising politicians in this country and in Europe today, there can be no question but that a successful outcome to the Uruguay round will have a far greater impact on the prosperity of the whole world than any of the other matters which we have been discussing. I share the noble Lord's fears as to what will happen to world trade if we fail to reach agreement. There is not now much time to enable such agreement to be reached.
There can be no doubt in any of our minds that the reason that we are having such difficulty in the Uruguay round is solely because of the Community's agriculture. Several points must be borne in mind when we are discussing that. First, throughout a very large part of the world—and we must not forget the third world in particular—and certainly within the European Community agriculture is going through a very difficult time. I know that it is nothing new for farmers to complain of recession, bankruptcy, and so on. However, on this occasion I say quite frankly that they are speaking the truth. We have a grave problem in agriculture which must be faced today.
I shall not weary your Lordships with too many figures, but since 1979 there has been a decline in the real income of farmers which averages 9 per cent. per annum in real terms. That is a quite serious and steady decline. Interest payments to the banks by farmers in the same period have risen from something less than £260 million per year to something over £950 million. Total bank borrowing has risen from just over £2 billion to £6.5 billion. Those figures are far more important than any statistics produced about bankruptcies, and so on. Farming is particularly resistant to the bankruptcies of the butcher of the noble Baroness, Lady Castle, smaller shopkeepers and people of that kind. When farming profits decline, the farmer does not do his job properly and he knows that. Above all, and of particular interest to the public at large, he is unable to do his duty in looking after the environment.
We need only look at what happened in this country during the agricultural depression of the late 1920s and early 1930s to see what that meant. I am firmly convinced that help must be given to farmers not only in this country but throughout the world. I

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do not believe that people realise sufficiently what an enormously capital-intensive industry is agriculture. The reason we have such good agriculture today—we are proud of it, and the consumer benefits from that as does the country's economy as a whole—is that for the past 50 years we have enjoyed stability. That has encouraged not only farmers to invest their money but also manufacturers to invest their money in producing new appliances and in developing them also.
The chemical industry spends billions of pounds a year conducting research into various agro-chemicals which make possible a new and efficient form of agriculture. The seed breeders, the basic scientists and the genetic engineers for plant breeders have all contributed. Their work will take 20 years to come to fruition; they will not invest that money unless there is a degree of stability in the industry, something which has fortunately been given to us over the past 50 years.
That is a lesson learnt by virtually all countries throughout the world. For more than a century most European countries have protected their agriculture; certainly for half a century we have done so in Britain. But it is not only a matter considered within the Community. I apologise for bringing statistics to your Lordships' attention, but they are significant. They are taken from the OECD publication of 1989. New Zealand, the least protected country of all, gives 2,000 dollars per head to each of its farmers; Australia gives 4,000 dollars; the EC, surprisingly, gives only 8,000 dollars—double Australia's support; Canada gives 13,000 dollars; Japan gives 15,000 dollars; the United States gives 20,000 dollars to each farmer. The differences, to a large extent, are dependent on whether the farms in those countries are large or small.
I shall restate those figures as a percentage of a farmer's income. New Zealand farmers depend on subsidies of one kind or another for a mere 5 per cent. of their income; in Australia the level is 10 per cent.; in America it is 27 per cent.; in Canada 35 per cent.; in the EC 38 per cent., and in Japan a colossal 72 per cent. Therefore the Community should not be the only scapegoat. It is simply doing the same, to a greater or lesser extent, as all the other countries. Without some, often substantial, help, many farmers throughout the world would face bankruptcy and much land would be deserted.
Help is needed. I hope that point is accepted by noble Lords and others. However, the help should not be that provided by the present common agricultural policy. That may possibly have been sufficient when first introduced in the old days for a Community of six, with food shortages and memories of war and all the troubles that then existed. Today it is completely useless and harmful to the agriculture and trade of the Community and the world. We must wipe the slate clean and evolve an entirely new policy. In so doing there is another factor which must be borne in mind.
Within the next five years or possibly sooner, the countries of Eastern and Central Europe will have revived their agriculture. They will once more become, as they were in the years before the war, major
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exporters of agricultural products. Interestingly, two years before the war Bulgaria exported 30 billion dollars' worth of agricultural produce; Czechoslovakia exported 25 billion dollars' worth, and Poland 43 billion dollars' worth. Hungary, Romania and what was until recently East Germany were also huge producers of surpluses, and were countries which were looking for overseas markets for those surpluses.
That situation will return once their economies begin to thrive. At the same time they will be more closely associated with the EC than at present. Any plans which are evolved for dealing with the present problem must bear in mind that it is not only the need to contain our existing surplus in the Community of 12 which must be considered; we shall have to deal with the far greater export surplus of those other countries.
I shall not repeat at this stage what I have said on other occasions regarding the right way of dealing with the problem. I simply remind those noble Lords who may have listened to me on other occasions of the kind of approach there should be. First, we should abolish intervention buying, and the enormously costly and trade-disruptive method of subsidised exports. That would greatly please all our colleagues in the GATT. At the same time farmers and the countryside must have support, so we must make payments to them of some kind or another. It should be left to each individual member state, without disrupting the Community and its agricultural policy, to decide the best way to distribute such sums as are allocated from Brussels among farmers so as to fulfil the purposes of, above all, maintaining and improving the environment; paying farmers for doing what the public want rather than producing food which the public does not want.
Those are the bare outlines of a scheme. It is, alas, too late to work out the exact details of such a plan in time for the Uruguay Round. However, I urge Her Majesty's Government to speak to their colleagues in Europe and try to persuade them to go to the Uruguay Round with proposals along those lines. They should say, "We suggest this. We will collaborate with you, and if you have a better idea let us use that". Above all, they must abolish intervention buying and the dumping on world markets of export surpluses. At the same time they must protect our own farmers and our environment.
4.59 p.m.
Lord Butterfield: My Lords, I am honoured to have the opportunity to convey my personal congratula-tions, and I am sure those of other noble Lords, to the noble Baroness, Lady Castle, on her third maiden speech. I am particularly grateful to the Whips for giving me this opportunity. When I was a lowly professor and vice-chancellor in Nottingham I received the most courteous and kind reception and help from the noble Baroness when she was running the Department of Health and Social Security. I should like her to know that for many years—it is still to be found on my bookshelves—her work on the priorities in medicine was a great help to me when I

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was thinking about the future of the health service; it is one of the most thumbed reference books from the government of all my collection.
I can say in the presence of the noble Baroness, Lady Dunn, that we have had an outstanding series of maiden speeches. The noble Baroness, Lady Castle, has certainly maintained the high standard.
I conclude my congratulations to the noble Baroness by saying that I only wish I could speak with the same fervour, eloquence and enthusiasm that she commands on European issues which I espouse just as strongly and deeply as she does.
I shall speak about a quite different and, in my view, quite precious part of our economy; namely, our young people and particularly our able young people. Europe has different forms of educational process. I am intrigued by the German procedure which permits people to repeat parts of their courses. I do not believe that that would be popular in this country, although I have to tell your Lordships that I had to repeat a course when I was a medical student. I returned from the States, failed an obstetrics exam and had to take it again. When I attained the position of Regius Professor of Physic at Cambridge I was pleased to hear from my immediate predecessor, Professor Joseph Mitchell, that he too had failed obstetrics. It is a great help when speaking to distressed students who have failed an exam to be able to start the exchange by saying, "I have done the same and I know exactly how sad you feel".
The other side of the German system which may cause some difficulties for our young people is that it takes a long time to get through the educational process. Indeed, young people in their late twenties and early thirties are just emerging from their masters degrees in German universities and going on to the labour market. Therefore, there is a way of employing young people in Germany which probably assists the employment figures.
By contrast—and here I am grateful to the noble Baroness, Lady Elles, for providing me with a report from the Thames-Chiltern Chamber of Commerce and Industry about European school education—it is disturbing to hear how distressing it is for people visiting Nantes, a university town with over 20,000 students, to find that they are solicited so often by young unemployed people who are begging.
Therefore, although I know that all our young people have a great hope of becoming Europeans I am sure they will want to proceed step by step into the new situation. I do not know whether that is what the noble Baroness, Lady Castle, meant by convergence but if it is, I know that that is what the young people are striving for in the university world, in the polytechnics and elsewhere.
I put down my name to speak in this debate because I was anxious that at least someone should say how pleased they were that in the gracious Speech the Government indicated their intention to take action to improve quality in education. I am sure that all noble Lords were as delighted as I was to hear later, in the Autumn Statement, that the Government are to spend
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an additional £500 million on education, and that a great deal of that is to finance the record number of students that we now have in higher education.
I have to tell your Lordships that I spoke to people in the office of the Committee of Vice-Chancellors and Principals and I shall report directly what was said. They are pleased with the outturn of the Autumn Statement. Indeed, one lady said that perhaps we should subscribe to send the Chancellor a bunch of roses. I am not sure of the political significance of the rose but that is exactly what was said and it is a point on which the Government can take some pleasure.
I have also spoken to Sir Ronald Dearing, chairman of the Polytechnic and Colleges Funding Council. He is delighted with the additional infusion of money for the rising number of students, but he is worried that there is still a backlog of maintenance work that needs to be carried out on the polytechnic buildings. Your Lordships will remember that the polytechnic buildings stayed under the control of local authorities long after it was clear that they were to be transferred to a funding council. Not surprisingly, maintenance was not a high priority within the local authorities who were to give away these buildings.
I should also point out, lest people think that we are over-pleased and over-optimistic, that there is hardly a research laboratory in British universities where people are not lamenting that much better equipment is available to those with whom they are competing in Germany, Japan and sometimes, perhaps I may say to the noble Baroness, Lady Dunn, in Hong Kong. Therefore, I should not like it to be thought that, although we are doing better and achieving a much higher proportion of the 18 to 19 age group getting into higher education, we shall not be continuing, like everyone else to make pleas and demands for support for our young people in the way they are polished and assisted in their way forward.
I conclude by saying that there are other parts of the work of universities which fit in with points in the gracious Speech. The gracious Speech stated that the Government,
"will promote further international co-operation on environmental issues".
I remembered, and extracted from my filing system, the work that the universities are doing on the environment generally. I give your Lordships a few examples so that you can see that a good investment is being made in our universities and young people, which is the main point that I wanted to make. Computer models from the University of Anglia Climatic Research Unit are being used to predict the global greenhouse effect and to provide information for planning in the future. Bradford University is mapping the lichens on trees in order to follow what is happening as a result of acid rain. The University of Manchester Institute of Science and Technology is mapping acid rain hot spots in Britain. As regards the ozone hole, which is related to the greenhouse effect, I am glad to say that atmospheric modelling at the University of Cambridge is providing international workers in that field with helpful information. I could

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go on and refer to the investigation of natural resources at Reading, Newcastle and Strathclyde. Others are keeping a close eye on oceanography.
Perhaps I should also mention that the gracious Speech included a reference to the Government maintaining a substantial aid programme for the developing countries. I should like you to know that there are committees of the British Council which do great work in assisting developing countries. Your Lordships will also be well aware that the Association of Commonwealth Universities does all it can to find people to assist the universities in the Commonwealth. A great deal of private work is going on. I have the privilege occasionally of going to Oman. Qaboos University in Oman is largely based on advice given by university administrators from Oxford University.
I hope that with those few brief words I have been able to remind your Lordships that we have an important economic heritage—perhaps "asset" would be a better word, although it is becoming a heritage —in our young people, and I hope that the Government will continue to do all they can to foster them.
5.9 p.m.
Lord Boyd-Carpenter: My Lords, as one who has had the privilege and pleasure, on and off, during the past 45 years of listening to the noble Baroness, Lady Castle of Blackburn, perhaps I may say what a personal pleasure it was for me to have the opportunity of hearing her again this afternoon. I hope she will allow me to say that that pleasure was accentuated by the fact that, far from having lost any of her previous vigour, she seems stronger and more determined than ever. As such, she gave great pleasure to all her admirers, among whom I venture to number myself. I am sure that she will be a very great asset to your Lordships' House and I hope she will speak frequently on issues, though I somehow doubt whether I shall always find myself in the completest agreement with her.
I am in agreement with the noble Lord, Lord Williams of Elvel, on one point. At the beginning of his speech he said, I thought very rightly, that it was a pity that the noble Lord, Lord Jenkins of Hillhead, had put down his amendment on a very important subject; but it is a separate one which your Lordships' House will in any case be debating on 22nd November.
I shall, therefore, confine myself to the amendment which the noble Lord, Lord Williams of Elvel, so eloquently, forcefully and inaccurately proposed. When I looked at the Order Paper and saw the extraordinary proposition which he had tabled by way of amendment I began to feel that he had an unsuspected sense of humour. For the spokesman of the Labour Party to come forward with criticism of anybody else for incompetent management of the economy argued a degree of courage, determination and forgetfulness that I had not previously associated with the noble Lord.
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One must admit that on the subject of incompetent economic administration the Labour Party speaks with enormous authority. It has great experience on the subject; it has displayed it in every administration that it has formed. I am glad to see the noble Lord, Lord Jay, in his place. As he will recall, the government of which he was an ornament, until I succeeded him as Financial Secretary in 1951, left our economy in the most awful mess. It is unnecessary to remind the noble Lord, Lord Callaghan, that in the 1970s the Labour Government had to call in the IMF to bail us out. Therefore, it argues extreme determination and courage on the part of the noble Lord, Lord Williams, to accuse the present Government of incompetent management of the economy—
Lord Jay: My Lords, perhaps the noble Lord will allow me to say that every government to which I have belonged, whether as ornament or not, began life with a huge balance of payments deficit left by a Conservative Government and ended their term of office with a balance of payments surplus.
Lord Boyd-Carpenter: My Lords, if the noble Lord is trying to attribute blame he will recall that the government of the late Lord Attlee to which I referred succeeded a coalition government in which Lord Attlee was Deputy Prime Minister. I forget whether the noble Lord, Lord Jay, was a member of that government—
Lord Jay: My Lords, the noble Lord is not even accurate about that. They succeeded a caretaker government which did not include the Labour Party.
Lord Boyd-Carpenter: My Lords, the noble Lord is of course pedantically right; they succeeded a caretaker government which lasted for about four weeks. However, that is utterly irrelevant to the argument and no one knows that better than the noble Lord. The succession as regards the management of economic policy fell to the coalition government and the noble Lord will well recall that in 1951 they left behind them a mess.
The noble Lord, Lord Williams of Elvel, charges the present Government with incompetent manage-ment of the economy. Does he realise the actions which this Government have taken? For nine successive years there has been a substantial growth in the economy, the first time that has happened in this century. Business investment is now at an un-precedented rate. Is that incompetent management of the economy? There are more people at work in this country today than ever. Is that incompetent management of the economy? The unemployment rate in this country is one of the lowest in Europe and it is particularly low among young people. Is that incompetent management of the economy?
The noble Lord mentioned the fact, apparently critically, that living standards have risen substanti-ally. He will find that most people outside this House are thankful for that. The standard of life for ordinary people is higher than ever, and there is frequent possession of cars, television sets, washing machines, refrigerators and so forth. That represents a higher

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standard of material life and existence than this country has ever known. Is that attributable to incompetent management of the economy?
As was mentioned by my noble friend the Lord Privy Seal, for three successive years there has been a repayment of the national debt which is now lower than at any time since before the 1914 war. That is a change which will save subsequent generations substantial interest payments and it has liberated capital for productive use. Can that be described as incompetent management of the economy? It does not appear that the noble Lord has begun to establish a case for that argument. The noble Lord tended to dismiss the service industries as being unimportant, yet their growth has done an enormous amount to build up the strength of the national economy. The noble Lord may be aware that the more advanced an economy the higher the proportion of its effort is in the service industries as compared with the manufacturing industries. He has only to look at the United States to see that that is so. In addition there has been a steady reduction in the levels of taxation. Most people would not regard the reduction in the levels of direct taxation as being a mark of incompetence. Most people are grateful for it and would "like to see it go further.
The noble Lord was wrong to quote the CBI in defence of his position. He may have seen the letter published in The Times last Thursday written by my noble friend Lord Hanson who is a major supporter of the CBI. It includes the following sentence:
"This government has achieved immeasurable benefits for everyone in industry over the last ten years and now that the country is facing a downturn the last thing we need is statements which can be seen as attacks from what might ordinarily be perceived to be the industry's natural supporters".
If the noble Lord, Lord Williams, was trying to quote the CBI, his witness appears to have let him down.
Noble Lords who travel regularly on the Underground will be familiar with the intoned advice, "mind the gap". When I listen to the noble Lord's speeches the expression "mind the gap", comes into my mind. There always appears to be a gap between the argument that he is trying to sustain and the facts that he is presenting in support of it—
Lord Williams of Elvel: My Lords, is it the gap in the noble Lord's mind to which he is referring?
Lord Boyd-Carpenter: My Lords, I am delighted that the noble Lord should equate himself with me but I refer to the gap in his distinguished mentality. Probably he does not have to use the Underground but the expression "mind the gap" is only too familiar to those of us who do. There is a gap in the noble Lord's reasoning.
Noble Lords may recall that when speaking the noble Lord, Lord Williams, never touched on what is the really important issue: that the creation of wealth is what everything else depends on. Many noble Lords, myself included, can make appeals for various good directions of expenditure—areas where we should like to spend more, where we could relieve poverty and improve the situation. However, that is
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all dependent upon the creation of wealth. Unless the economic policy of a government helps in that way all the other good things that they may wish to do become impossible. Yet the noble Lord devoted none of his speech to the basic question: what is the best way of creating wealth and are the Government going the right way about it? It is upon the correct solution of that problem that the solution of all our other problems absolutely depends.
I shall devote the remaining part of my speech to one or two suggestions for making even further improvements in the creation of wealth. If we can create more wealth there is so much more that we can do. As the experience of the Labour Party should convince the noble Lord, failure in the creation of wealth results in failure to achieve all the other admirable public-spirited objectives that one may have.
I suggest that a 40 per cent. rate of direct taxation, although lower than it used to be, is still very high indeed. I trust that my noble friend will be able to hold out some hope that the rate will come down. Such a high rate hampers wealth creation. It gives an incentive to able people, particularly able young people with a high earning capacity, to go abroad where they do not have to submit to such a heavy levy. It is also an incentive to older people to remove themselves to the Channel Islands or other places where they are not subjected to these heavy rates of taxation.
It is an illusion to believe that a high rate of tax brings in a high revenue return. That does not happen because the higher the rate of tax the greater the incentive to people to avoid it, either by perfectly legal and technical methods or by illegal methods and refusal to disclose. Therefore the higher the rate of tax the smaller the percentage of the nominal yield. The converse is undoubtedly true—and experience has shown it—that the lower the rate of direct taxation the higher the proportion of the possible yield going to the Treasury.
I very much criticise the incidence of VAT. It is an inflationary tax, particularly where it is imposed upon labour costs. From that point of view it compares very badly with the old purchase tax, which the noble Lord, Lord Jay, will recall, as he used to administer it before I followed him in doing so. The old purchase tax was adjustable so that it did not inflate the cost of living. It was very high on luxuries. I recall that the rate was 66.66 per cent. on jewellery. It did not apply at all to many necessities. It certainly did not apply to children's clothing. It was therefore a much more flexible instrument of taxation with the additional advantage that it did not add to inflation. I very much hope that the Government will adopt a severe attitude towards those, including those in the European Community, who are always urging us to extend the scope of VAT.
There is one especially shocking example of its drawbacks. If one buys a car one pays not only the price of the car but tax on the car and then VAT on the cost of the car as inflated by the tax already paid on it. That is not only unfair but also inflationary. It

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is distressing to see that the European Community, about which we have heard so much from the noble Lord, Lord Jenkins of Hillhead, now proposes to extend VAT and wishes to apply it to airline fares. I hope that the Government, from the point of view of the proper management of our economy, will be quite resolute in resisting efforts to extend VAT, with all its damaging effects.
I should like to hear a little more from my noble friend Lord Hesketh about what is being done to deal with the massive payment which we in this country have to make to the common agricultural policy. The policy does much harm to the world economy and to non-European producers of food. The damage it has done to New Zealand has been very serious indeed. It derives from the fear which French and German politicians have of their small farmers. It is a fact that the working of the Code Napoléon in France has meant that there is a large number of small farmers. Noble Lords will recall that, under the Code Napoléon, when someone dies his land or farm cannot go only to his first born but is spread equally among all his children. The result is that there are many small farms. They are too small for economic administration but large enough to constitute large bodies of voters. It is the indirect effect of the Code Napoléon which motivates this excessive expenditure on the common agricultural policy. I hope that my noble friend Lord Hesketh will be able to tell us how much the policy will cost the country this year. The figure is indeed substantial. If we could eliminate it we would be able to make further tax reductions.
My next point arises on the amendment of the noble Lord, Lord Jenkins. Until the European Commission shows the ability and will to deal with the common agricultural policy many of us will be hesitant to entrust any further responsibilities to it. One must doubt whether a body that is incapable of controlling the common agricultural policy could handle the infinitely more difficult matter of a common currency.
Perhaps my noble friend can tell us how much of the British contribution to the common agricultural policy goes for the infamous purpose of subsidising tobacco growing. It is mainly in Spain and Greece that tobacco is grown. As consumption of tobacco in the advanced countries diminishes as education spreads, more and more of the exports of this crop go to Africa. It is quite immoral that we should subsidise the production of this health damaging commodity simply to maintain in business those who wish to grow it in Community countries. I hope that the Government will be resolute and say that, quite apart from the expenditure, from a moral point of view it is wrong to subsidise the production of this commodity. Morally there seems to be little difference between doing that and subsidising cannabis and having done with it.
In connection with tobacco, it is my only regret that, in the current Finance Act—I hope it will be remedied in the next one—we have not substantially increased the duty on tobacco. I say that with no
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hostility to those who wish to smoke, but I would say that those who follow a practice which must inevitably increase the cost of the National Health Service, with all the illness and disease that it will breed, should at least be called upon to contribute something extra towards the cost of maintaining that service. That makes good sense.
We have had an interesting year in which the handling of the economy has not been free from difficulty. But it appears that we are getting a grip on inflation and that exports are rising. We already export more per head than either Japan or the United States. The economy is responding to the Government's firm handling. I very much hope that the Government will not allow themselves to be induced to weaken that firm handling simply because of criticisms such as are contained in the amendment. I am quite sure that if they persist in this policy the economy will come fully right, their policies will be justified and the country will be able to go forward once again with confidence and good will into a prosperous future.
I believe that this lies within our hands if we do not lose our nerve. I hope that the House will reject the amendment of the noble Lord, Lord Williams, and then show its emphatic support for the Government's policies which have worked so well over the years and which are working so well today. We can then go into the future with quiet confidence.
5.30 p.m.
Lord Callaghan of Cardiff: My Lords, I should like to begin by adding my congratulations to my noble friend Lady Castle for her maiden speech. Running through many of the themes of today's speeches, it seems to me that we have experienced a rather fresh breeze. I do not know whether she is already having the effect on us that she had on the European Parliament, but certainly the robust frankness which she expressed in her speech seems to have been reproduced in the speeches of others. For myself, I must say that I am beginning to feel rather at home. I trust that I shall be able to continue in that particular vein.
I listened this morning to Mr. Kenneth Baker on the radio; indeed, I always seem to be listening to him on the radio. He said that there has been a fundamental transformation in the fortunes of our country. In the same programme Mr. John Cole referred to another Conservative who said that the Government have effected an economic miracle. Well, in the robust spirit which has characterised the debate thus far, I must ask: who do they think they are kidding? That is absolutely absurd. Moreover, Mrs. Thatcher made the brazen comment at the Guildhall that she had broken,
"the post-war mould of bureaucracy and decline".
That is a new line; usually she just blames my noble friend Lord Wilson and myself for what has happened. However, the noble Lord, Lord Boyd-Carpenter, had better note that this time she includes him. It is not just the government I led and that led by my noble friend Lord Wilson, it is also the government

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led by Mr. Heath—perhaps that is not surprising—by the noble Lord, Lord Home, by Sir Anthony Eden, by Harold Macmillan, by Winston Churchill and by Mr. Attlee. I have noticed that the noble Lord is very ready to condemn the government of Mr. Attlee; but he cannot escape being part of the bureaucratic mould which the Prime Minister has removed during the past few years. I see that he is anxious to intervene. I am happy for him to do so.
Lord Boyd-Carpenter: My Lords, I hope that the noble Lord, Lord Callaghan, will withdraw the charge that he made against me of having been a member of Mr. Heath's Government.
Lord Callaghan of Cardiff: My Lords, I did not mean to say that. In any event, I apologise to Mr. Heath and congratulate the noble Lord.
As to breaking the bureaucratic mould, I must say that that is a bit rich coming from one of the prime mover; of the poll tax which has been fastened on this country in recent years. If we wish to get nearer to the truth about what the position is in our economy, we must consider other factors. I propose to make further distinct party comments about them in a moment. I give noble Lords opposite that warning so that they may leave the Chamber if they wish to do so.
It would be nearer the truth to admit that in our economy today, as in our economy 11 years ago, the tendency to inflate whenever the economy is growing is as great today as it was in the 1970s; indeed, there has been no fundamental change. The tendency to consume more than we produce is the same today as it was in the 1970s. There has been no fundamental change in those attitudes. Therefore, for the Government and government apologists to pretend otherwise is self-delusion and is concealing the truth of a serious situation which has not been fundamentally changed, despite what has been said by noble Lords opposite.
Admittedly, the fundamental change was brought about of making the rich pay less in order that the poor might pay more. That was supposed to bring about a change of attitudes. However, it has not worked, as I shall show your Lordships later. Of course the 1980s yielded a new breed; namely, the Yuppies, which is an ugly word but one which adequately describes the greed and selfishness of the era which spawned Thatcherism.
I intend to back what I have said by a snapshot of the economy as it existed in 1979 and as it exists today. All the figures I shall use have been culled from government statistics. It is my desire not only to remove the smears that I have heard about the Labour Government of 1974–79—although that washes over me like water over a duck's back —but also to show the country, if I can, and certainly make your Lordships comprehend, that the situation we face is as grave today as it was in the 1970s and that it has still to be remedied.
Chancellors of the Exchequer always use four main indicators to measure the health of the economy at any one time. The first is the rate of growth of the economy; the second is the rate of inflation in the
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economy; the third is the level of unemployment in the economy; and, the fourth is the balance of our payments with other countries. I shall deal with them one by one. In 1978 the rate of economic growth was 2.7 per cent. In 1990 it is expected to be about 1 per cent. The government apologists will no doubt say, "Ah, this is only a temporary slow down after a long period of record growth". However, next year's growth will only be one-half of 1 per cent.
Let us be fair. Let us take a run of years just in case objection should be taken to my abstracting a single year for comparison. We can consider a run of years of the 1960s, the 1970s and the 1980s to see whether there has been this fundamental change in the rate of growth during that period. In the 1960s, the average rate of growth was about 3 per cent. per annum; in the 1970s—a decade for which I have some responsibility—the average rate of growth was 2 per cent. per annum. That was a decline. There was the great oil shock which I shall neither explain nor defend because everyone knows about the situation at that time—indeed, both governments shared part of the guilt.
During the Thatcher decade the rate of growth has not been 2 per cent. or 3 per cent.; it has been about 2.2 per cent., and that ignores this year's figure of 1 per cent. and next year's of one-half of 1 per cent., or whatever it may be. Where is the fundamental change? There is not much sign of it in the economy and fortunes of this country.
I turn now to the rate of inflation. I have already had an exchange of words about this with the noble Lord, Lord Belstead. In fact, I agree with him that when I left office wages were increasing. There had been the Ford settlement which, incidentally, the Conservative Opposition at that time supported wholeheartedly. It helped to break that particular issue. In any event, I agree that wages were increasing. However, I believe that the noble Lord would accept—I think he has already done so—that what Sir Geoffrey Howe did in doubling the rate of VAT clearly added to inflation; indeed, there was almost a runaway in inflation after that time. Nevertheless, I stand on the figure in my snapshot. When I left office it was 10.3 per cent. and it is now 10.9 per cent.
Perhaps I may emphasise the point made by my noble friend Lord Williams of Elvel in what I thought was an outstanding speech. He said that we have always inherited a higher rate of inflation than that which we left. I wonder how many of your Lordships remember that when the Labour Government took over the government of this country in 1974 the rate of inflation was 13.5 per cent. and that in one month it had risen to 15 per cent., because of events which had taken place beforehand. We took over with an inflation rate of 15 per cent. but when I left office it was 10.3 per cent. I see no reason to be ashamed of that situation.
There has been no fundamental transformation from a government who were supposed to be returned in order to rid this country once and for all of inflation. This is the third bout of inflation that we have experienced under this Government. Perhaps I may re-interpret Oscar Wilde: to have one bout of

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inflation might have been careless; two was reckless; but, to have had three, as my noble friend said, is sheer "incompetence". On that ground alone we are entitled to vote this evening. I believe that Sir Geoffrey Howe has let the cat out of the bag. He has told us that, but for the Prime Minister's obstinacy, the third bout of inflation could have been avoided.
The third Treasury indicator is unemployment. When the Labour Government which I headed left office, the number of unemployed people in this country stood at 1,140,000, and it was falling. Conservatives were deeply shocked. Saatchi and Saatchi produced that famous poster showing a long queue of unemployed people with the caption, "Labour isn't working", and displayed it on every hoarding in the country. It helped the Conservatives win the election. Today another half a million people are standing in that queue. The latest total is 1,667,000 and it is rising. There has been no fundamental transformation there unless it is for the worse.
The fourth major indicator is the balance of payments—the ultimate test of whether Britain is more competitive than it was and whether it is paying its way. I almost hesitate to mention the figures. It is almost indecent to do so. When we left office there was a small surplus of £1 billion. I hope that noble Lords are aware of the figure today—an expected deficit of £15 billion. If our industry is so much stronger, so much leaner, so much fitter, and has shed so much of its inefficiencies, why is it that a small surplus of £1 billion has been translated into a deficit of £15 billion? That is something that would have been unheard of in the days when I had some responsibility for our affairs. I shall be interested to hear the Government's explanation of that point. I have my own, but I shall not give it because I should be speaking for too long. I am afraid I am making rather a long speech, but I want to put some of these points on the record. I shall not refer to them again, but whenever I hear a Minister stand at the Dispatch Box and tell us how much worse things were in 1979 I shall have my copy of Hansard in my pocket.
In 1979 our share of world trade was 9.7 per cent. If we have effected that fundamental transformation in our economy, why has our share of world trade diminished from 9.7 per cent. to 8.2 per cent? So I could go on.
Lord Graham of Edmonton: Go on!
Lord Callaghan of Cardiff: My Lords, all right, I shall give one or two more examples. I am always ready to yield to a little encouragement. I was told that interest rates were high under a Labour Government. I agree that they were inhibiting growth and development. They were 12 per cent. Today they are even higher at 14 per cent. Where is the fundamental transformation there? Where is the economic miracle that I was told about by Mr. Kenneth Baker on the radio this morning? The mortgage rate is 14.5 per cent. When we left office it was 11 per cent. Personal savings were about 13.5 per cent. Today they are about 5 per cent. to 6 per cent. As for the health of this
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entrepreneurial economy, there were more bankruptcies in the three months ending October than there were in the whole of 1979.
I have produced enough evidence to demonstrate that claims of an economic miracle are a mirage, a sham and a confidence trick, made believable only by clever propaganda. Of course the Government made some important changes. Of course the Government have made some improvements. Not even this Government could be in power for 11 years without doing something worth while, but the truth is that there has been no fundamental change in our position. We face the same problems as we faced in 1979, and there has been little improvement in the way in which we handle them.
The problems are long-standing, but, as Sir Geoffrey Howe pointed out in his speech yesterday, it is the nature of the challenge that is changing. That is something that he recognises even if others do not.
The 1992 process, the unification of Germany, the growing links—political and economic—of the Community, Eastern Europe and the EFTA countries, and the intense pressure from Japan and America, to which the noble Lord, Lord Young of Graffham, referred—I agree with much of what he said on that point—make the pace and form of economic and monetary integration hard to predict, but I am certain that it will come. I have no doubt of that. Equally I am convinced that Britain's best interests will be served by making it clear to our partners that we fully accept economic and monetary integration as a final long-term goal, and that we shall play a constructive and leading role in shaping its form.
Our requirements are—as my noble friend Lady Castle said —economic convergence (that is vital); the evolution of democratic practices as we transfer competence from the national level; parallel development of all regions in the Community; and the establishment of understanding between the social partners: between commerce, industry and agriculture, and between employers and trade unions. In that last respect many countries in the European Community are well ahead of us. That is one reason—I shall return to this point in a moment—why the trade unions of this country have started to view the future of the Community with rather less suspicion than they did some years ago.
Starting from that position, Britain will be well placed to give a lead in the difficult task—I agree with what the noble Lord, Lord Boyd-Carpenter, said about this—of setting a long-term, open-ended timetable for economic and monetary union; but I believe that it should be set, and that when we have set that open-ended timetable it is one towards which member states can move at their own varying speeds.
I support the decision to join the ERM, although I fear that Mr. Major has made a serious mistake in entering at a central rate of 2.95 deutschmark to the pound sterling. That rate is too high. I can see his dilemma. Fix the rate too low, and he runs the risk of fuelling inflation. Fix it too high, and he restrains

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exports and increases unemployment—perhaps up to as much as 2 million within a relatively short time, and certainly within the next 18 months. That is the course he has chosen. Ministers defend it by pointing to the recent improvement in export levels. We heard that this afternoon, but that has occurred because sterling was much lower than 2.95 deutschmark when the improvement in exports took place. I have the figures. As recently as last January, the sterling/deutschmark rate was 2.80 to the pound, not 2.95. Since then, sterling has risen against the deutschmark by 7 per cent., although inflation has been rising at the same time. It cannot be right to have chosen such a rate against that combination of economic circumstances.
Mr. Major has taken a substantial risk. It brought back to my mind the classic decision of Mr. Churchill after the first war when he fixed the dollar/sterling rate at five dollars to the pound—a decision that led directly to the General Strike of 1926. I hope that my fears are misplaced on this occasion. I do not believe that that would happen, but the decision that has been taken to fix the rate at that level will rebound. I do not know whether we shall be able to hold it. If Mr. Major holds it, it will only be at the price of more unemployment and lost jobs and of some of our industries going to the wall.
There is little doubt that a European central bank will be created. The question is not whether we can veto it—we cannot—but whether Britain will be a founder member. The answer must be yes. Should it be independent? Here a little history of the 1930s is needed. Many of your Lordships will recall that it was the idiosyncrasies of Montagu Norman (Mr. Skinner), when he was Governor of the Bank of England in the 1920s and 1930s, and the economic consequences of his handling of the Bank of England at the time, that convinced many of us who were then young in politics that the Bank of England should not be entrusted wholly to the bankers without some accountability, and led to its nationalisation. So it was in 1946.
I observe today's banking fraternity. I do not have undiluted admiration for it, but there is no doubt that the banking fraternity of 1990 is different from what it was in the 1920s. Even so, a new central bank cannot be wholly independent. I agree that there will be difficulties in working out how it should operate, but its objectives are clear. The principal one must be the avoidance of inflation. These objectives and others must be laid down clearly by governments, but at the same time an appropriate means must be found to make the central bank accountable at regular intervals. I could suggest a number of devices for that purpose that would begin to make it accountable. I am sure that: they are in your Lordships' minds in any case. Under those conditions and subject to the fulfilment of those conditions, I am sure that such a central bank should have strategic and tactical operational independence.
As I said, an important development has been the more positive attitude taken by the British trade unions to the Community. They have spotted that with the removal of trade barriers a European labour market is developing with growing cross references in
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wage claims and other negotiations. The social action programme put forward by the Commission to which this Government have taken exception is one reason why the suspicion in the 1970s by the trade unions is now giving way to this more affirmative approach.
Given the concern of Ministers about the adverse effect of large wage increases—which they constantly express while saying that they can do nothing about it—I simply do not understand why the Government have spurned what seemed to be constructive ideas put forward by the TUC and some trade unions. For example, I refer to ideas such as the proposal to synchronise the wage round in order to avoid leap-frogging; the idea of pendulum arbitration in order to encourage wage claims that are realistic and responses from the employers that are reasonable.
On these and other matters it seems to me that in such areas as training and retraining, how to get the best out of employment for women, not only for their own sakes but for the sake of the economy, the trade unions have much first-hand experience and goodwill that they would have placed at the disposal of the Government if the Government had had the wit to take them up.
I conclude. The Government's claim that Britain has experienced an economic miracle and a fundamental transformation is untrue. Until we face that fact, we shall not be ready to take the steps that are necessary in order to improve our situation and make the claim true. My noble friend used these words; I had already written them down and I must repeat them because the same great idea occurred to both of us. What is more, the British people have ceased to be taken in by such claims. People no longer believe what Ministers say because the evidence of their eyes tells them that it is not so. That is where we are. We have a Prime Minister who is so blinkered that she cannot come to terms with the changes that are taking place; and so domineering in Cabinet that Ministers are prevented from doing what they believe to be necessary in the economy's interests. We should be failing in our duty tonight if we did not record our votes.
5.53 p.m.
Lord Ezra: My Lords, we have had many important speeches in the debate so far, not least from the noble Lord, Lord Callaghan. I was especially pleased, like the rest of your Lordships, to hear the maiden speech of the noble Baroness, Lady Castle. I had the pleasure of sharing a platform with her in the late 1960s when together, but on different subjects, we addressed the National Union of Mineworkers in Lancashire. I was impressed then with the vigour of her presentation, as we all have been today. I should like to come back to the substance of her remarkable speech in a moment.
I begin by turning to the remarks of the noble Lord, Lord Williams. He drew attention, as other noble Lords have done, to the difference between the estimates in the Autumn Statement which was read to us the other day and the views of how the economy is

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likely to go in the short term, expressed from other quarters, notably the CBI in their various publications.
I remind your Lordships that the estimates contained in the Autumn Statement were that by about the middle of next year growth would be resumed, the balance of payments gap would be substantially closed, unemployment would start falling and headline inflation would be cut in half. That is a very convenient degree of timing. We must be sure whether these are realistic estimates. Until one recognises the nature of the problem, it is difficult to determine the remedy.
The noble Lord, Lord Boyd-Carpenter, purported to report the position of the CBI from a letter of the noble Lord, Lord Hanson. However, I read from the CBI's report on the economic situation for October 1990, which must be taken as its authoritative statement. The review showed the largest drop in business confidence for 10 years, with manufacturing reporting sharp falls and output and orders both at home and overseas also falling. Investment intentions have fallen likewise. These were hard words to read. They can be contrasted with the rather more positive statements indicated by the Government in their Autumn Statement.
I believe that we must try to resolve these problems (which will be relatively short-term, if the Government are right, or longer term if the CBI is right) not by short-term expedients but by recognising the importance of longer term solutions. The worrying aspect of all this is that we seem to be returning to the stop-go or boom and bust situation. Who is to say that after some degree of recovery, following the present recession, we do not again get into difficulties?
It seems that we should look for remedies which have a longer term impact. The noble Lord, Lord Williams, referred to a longer term vision. We need to see whether we can find remedies which will enable the economy to be maintained on a sustainably higher basis than previously. I wish to make some suggestions as to what might be contained in such a policy by referring specifically to monetary policy, infrastructure policy and industrial policy.
As to monetary policy, the difficulties that we have had in recent years—they emerged in statements made only yesterday in another place—are in large measure ascribable to changes in the approach to monetary policy made by the Government in the mid-1980s. Until that point, they had regarded the control and limitation in the growth of broad money as being of importance. Broad money, of course, includes credit. However, from 1985 onwards they seem to have given that up.
At the same time the currency was fluctuating widely. So we had neither the restraint of a currency linked with stronger currencies nor the control of broad money supply. As a result, as we know, the growth of credit mounted enormously. It is from that that we now suffer.
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The decision to enter the ERM will impose some measure of discipline which we were then lacking. I believe it is now commonly agreed on virtually all sides that we would have been far better advised to have entered the ERM in 1985. Whatever the case, we are there now. It is important to build on the situation. I agree with the noble Lord, Lord Callaghan, when he says that we shall inevitably have to enter into monetary union. There is no way round it. We are members of the Community; we fully subscribe to the single market; and we have entered the ERM. We cannot just stand still at this point. That is precisely what lies behind the amendment proposed by my noble friend. The amendment seeks to emphasise that we must move forward. To move backwards would mean getting out of the Community. And to stand still is an impossibility. Therefore we must move forward. The question is: what role should we play in that forward momentum?
The noble Baroness, Lady Castle, with her unrivalled experience of debates in the European Parliament has pointed to the importance of obtaining some convergence of economies before we finally enter monetary union, and particularly before a single currency is established. I agree that that would be highly desirable but nothing in my view emerged from the last meeting of the Council which suggested that a single currency would be introduced tomorrow. The Council has talked about it being introduced in the year 2000. There are to be discussions between governments in December on the way this is to be achieved. It would be perfectly appropriate for the view expressed by the noble Baroness, Lady Castle, to be aired at that stage. It would, of course, be far better and more effective for a greater economic convergence to be achieved before the final step is taken towards a single currency. However, my belief is that the two should go together. We have, therefore, the opportunity in a European context, of establishing a more effective monetary policy than we have hitherto had. That should lead to sustained control of inflation.
It has been a worry to many of us on this side of the House that the Government's policies towards the various aspects of the infrastructure have not been drawn up on a co-ordinated basis. Two days ago there was a debate in this House on transport in which my noble friend Lord Tordoff said that the Government's
"transport proposals show … lack of coherence".—[Official Report, 12/11/90; col. 173.]
My noble friend went on to explain how that had arisen. The Government keep telling us that they are spending substantial amounts of money in such important sectors as transport, education and health. However, every time we suggest that there should be some co-ordinated policy in those matters, the Government draw back. The idea of a co-ordinated policy is not something that they accept; yet unless we can move ahead on that basis it will be difficult to know whether the Government's expenditure in these areas will be justified, as expenditure in one part of the transport network may well create difficulties in another unless they are all brought together. It is

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possible that we need more expenditure in certain parts of the infrastructure: we certainly need a much more co-ordinated approach on a long-term basis.
There is also the matter of industrial policy. Here the problems from which industry, and particularly manufacturing industry, suffer are well recognised and have been well rehearsed. Inadequate effort is put into research and development. There are many ways in which this could be put right; for instance, additional expenditure on basic research. That must inevitably fall on the public purse. We need a stimulus to industry to carry out more applied research. This can be achieved by fiscal measures, as is the case in many other countries.
I now turn to training. There is continuing debate about education and the training of young people at school. However, the continued training of people at work is equally important, particularly when technology is developing at such a fast pace. Here again, some fiscal incentive to industry to extend its training facilities and operations is highly desirable.
Finally, there is the question of investment in industry. For a long time recommendations have been made that there should be an additional fiscal incentive for manufacturers in particular to invest in plant and machinery. This incentive was reduced some years ago to a figure of 25 per cent. The CBI strongly recommends that the figure should be increased to 40 per cent. I fully support that recommendation. If the figure were increased to 40 per cent., manufacturers could write off in tax terms the value of equipment of this kind in two-and-a-half years. That seems about right.
We face a difficult situation. The depth of it is a matter for debate and argument, but its existence is beyond doubt. The argument that I put forward—I have referred to the speeches of other noble Lords in support of my argument—is that in trying to resolve present difficulties we should adopt long-term solutions. There are ways of doing that and we should make a start now.
6.5 p.m.
The Viscount of Oxfuird: My Lords, I too wish to congratulate the noble Baroness, Lady Castle of Blackburn. It is the first time that I have ever seen her take part in public debate. I am sorry that she is not in the Chamber at the moment. We hope to see her again very soon.
I speak not as an economist but as one who works daily in the manufacturing sector of British industry for a company called Lansing Linde, which makes mechanical handling equipment. Certainly our sector of industry is more depressed than at this time last year. However, that has not prevented my company from starting on a £40 million investment programme on a world-leading production unit.
We should not forget that since 1983 some 3 million new jobs have been created in this country. That figure does not just apply to the service sector. Although the Chance for forecast no overall increase in manufacturing output for this year, there still abound pockets of
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real growth in places where hard-working and dedicated teams of men, both managers and workers, are welded into a force that defies the forecasters.
The survey of European companies carried out by P E International that was summarised in the Sunday Times on 4th November adds to the reality of this debate. That survey quantified the truth that British companies are still Europe's top corporate performers. The survey, which covered Europe's 250 biggest companies, confirmed that our major British industrial enterprises are top on all of the three parameters measured which comprised the return on total assets, margins of profitability and added value per employee. Some 80 per cent. of the top 10 and 54 per cent. of the top 50 companies in the survey are British. Why is it then that we hear so little about this good news? Does it raise the old question that good news does not sell media products?
The word "loyalty" comes to mind in this connection. I mention that concept in the context of loyalty to our country's endeavours, its achievements, its hopes and its workforce. Why is it that we seem to take a delight in discounting our national abilities? If one looks at other European industrialised nations which are also under strict economic pressures, one is led to the belief that we are incapable of describing our cup as being half full but are much happier with the thought that it is half empty. The spreading of doom and gloom seems to be a national sport. Bad news sells newspapers and success is quickly forgotten. Yet in reality this process is contrary to human nature, for pain and unhappiness are harder to recall than joy and felicity.
When we look at the increase of 21 per cent. over the next three years in the external assistance programmes of the Overseas Development Administration, we are looking at a cup that is well on the way to being full if not overflowing. We may have problems, but let us get up in the morning acknowledging that for every problem there is a solution. Being subjugated by problems and revelling in self-criticism will do nothing to improve our economic performance.
For too long we have been bedevilled by short-term views. We must seek to change that mental attitude and to think in the longer term. The company director is wasting his talents if more than 50 per cent. of his time is spent keeping his bank manager happy. The bank manager cannot be regarded as loyal if he has to change the goalposts with each and every economic fluctuation. Perhaps noble Lords who are directly involved in the banking world would care to think deeply as to their loyalties at this time and not withdraw their support from those industries which have been accorded the red carpet treatment in the recent past but now face the pressures of anti-inflation policies, which must be long term.
Long-term solutions need wise and long-term support and the courage to keep British customers first. Let us consciously unite and display a loyalty to our industries and reject the tears-before-bedtime amendments before the House tonight.
6.11 p.m.
Lord Donoughue: My Lords, this is proving a very good debate. I should like to begin by congratulating the noble Baroness, Lady Castle, on her characteristically rousing, punchy, and—I dare say in her absence but I should be more nervous if she were present—lengthy maiden speech. I should also like to congratulate my noble friend Lord Williams for his very effective and enjoyable demolition job, and also my noble friend Lord Callaghan who brought his customary authority to our proceedings. I apologise to the Minister that I shall be absent from the inevitably rather late conclusion of the debate as I have to host a long-standing engagement.
The most striking and disappointing feature of this Government as it draws unquietly to its close is the sad sense of déjà vu. How long ago seems the initial excitement generated by the Thatcherite militia and their friends in the media concerning the hope that at last the chronic weaknesses of the British economy were being tackled. It is a matter of public record that even from an opposing political position I personally wished them well because Britain would have benefited had they succeeded.
Now we are back where we were a decade ago and there has been much suffering among the unemployed, the poor and the homeless along the way. As my noble friend Lord Callaghan made very clear, all talk of the economic miracle and the fundamental restructuring of the British economy, all the hype which surrounded the 1987 election campaign which often filled the speeches of the noble Lord, Lord Young, to this House, has faded. It was rather like the Saatchi and Saatchi advertisement to which my noble friend Lord Callaghan referred, and just as bogus.
Instead, what are the headlines today? There is a recession. That has finally been admitted by the Chancellor on television. It is already the third worst recession since the war. Bankruptcies have risen by 60 per cent. over the past year and are at their second highest level ever. Inflation is in double figures. Unemployment is shooting up beyond 2 million. I see that today Goldman Sachs forecast unemployment of 2.2 million by the end of next year. There is a multi-billion pound annual trade deficit which is forecast to total over £60 billion in the period since the last general election in 1987. Sterling is very weak. Interest and mortgage rates have been at record high levels for record lengths of time. Labour productivity, of which the Government were previously rightly proud, has sadly been falling since mid 1988. Even the domestic budget, which is often paraded before us, has been briefly in surplus but is expected to be several billion pounds in deficit by the end of next year. That is a depressing tale. Not even the much-maligned Labour Governments of long ago did as badly as that in an off year.
To adapt the lovely old song by Tennessee Ernie Ford, which I am sure is familiar to all noble Lords and noble Prelates opposite, "You work 12 years, And what do you get? Twelve years older, And deeper in debt" that might almost be the theme song of the Thatcher administration. I say that without pleasure
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or venom since we all lose from any government's economic failure and many would have benefited had the Thatcher experiment worked. Sadly, it has not.
I should like to look more closely at three aspects of that long litany of economic failure: the recession, inflation, and sterling in the ERM. I shall try to be brief, but those three aspects interact in complex ways and have created an economic box for the Government. It may prove a coffin. It is not easy to see how the Government can solve the problems relating to those three aspects, especially within the timescale of the next election. That is not least because the obvious short-term remedies for one, such as recession, tend to aggravate another, such as inflation. Sterling's position in the ERM, at a perilously high rate, takes away some of the Government's room for manoeuvre. Being of Irish descent, it is tempting for me to say that the best solution would be not to start from here.
As to the recession, the Chancellor has been curiously coy and the Prime Minister characteristically blinkered in denying its existence until this week, when on television Mr. Major was pressed on the matter. Even the Autumn Statement ducked the word. The Minister, with his customary charm and skill, ducked it at Question Time again today. The forecasts in the Statement make it clear that we are now in recession in the second half of 1990. British industry has made it clear to all who would listen for some time that we are in recession. The latest City forecasts show real growth presently to be negative, right through the year to mid 1991. They show it to be zero in the calendar year 1991. That is not a modest recession, that is very painful. There is little doubt in my mind that the Chancellor's forecasts in his Autumn Statement last week will once again prove to be optimistic. The recession will be longer and deeper than he presently admits.
In such a recession it would be natural to ease interest rates. It is bizarre to contemplate interest rates of 14 per cent., or even 13 per cent. as they may be in the New Year, in the middle of such a recession. However, the Government do not have that freedom because of their failure on inflation and because of the sterling factor. They are boxed in. Therefore interest rates will stay in double figures next year.
The headline rate of inflation will inevitably fall next year as the Government-induced increases of the recent past —mortgages, poll tax, excise duties, various public sector charges—drop out, but the underlying rate will stay stubbornly high. I should like to ask the Minister whether he will then, like his recent predecessor, still press this House to focus on the underlying rate and ignore the headline rate. Will the headline rate still be described as meaningless when it is falling?
I have a further question about inflation. Has the Minister any views which he is prepared to make in public about the Treasury's record on forecasting inflation?
This year we have an inflation outcome double the forecast in the last Autumn Statement and 50 per cent.

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up on the Budget forecast. Perhaps I bored noble Lords throughout the summer by repeatedly questioning the noble Lord's predecessor on the validity of those forecasts. He stuck to them, shrewdly declined to take a bet on them and then wisely moved on to more distant problems before the truth emerged. Perhaps the present Minister will tell us how he proposes to be less exposed to bad Treasury forecasts.
After recession and inflation the third wall that is boxing in the Government's economic policy is sterling. Perhaps I may say that the fourth is the Prime Minister, but I shall leave that issue to the private grief of noble Lords opposite and Members in another place. Sterling's entry into the ERM was a two-day wonder which has since gone very sour. The stock marker is down to its pre-entry level and sterling is towards the bottom of its ERM range. That was before the Prime Minister's present troubles. Why is that? The reason is that entry into the ERM was fatally mismanaged and was clearly initiated for party political reasons. The currency markets know that the decision was not taken as part of a planned monetary strategy. I should declare that I employ a team of currency traders—I may be in a minority on this side of the House in that position. They know that the Chancellor and the Bank of England had a later date in mind for entry when interest rates and inflation would be more convergent. They know that the Prime Minister panicked ahead of her party conference and intervened to decide to cut interest rates, prematurely in the view of the Bank. They know that entry into the ERM was an after-thought extracted from a reluctant Prime Minister by the Chancellor as the price of agreeing a premature rate cut.
In sum, the markets know that it was a panic package and that our monetary authorities were unhappy with it. That is why the currency traders remain unhappy with the conduct of our monetary policy and why they will sell sterling at the first smell of further political interference. Confidence, once it has been handbagged, is hard to win back. That closes the box. Ideally, normally, to help the domestic economy the Government should cut interest rates drastically. It cannot do so because of the impact that that would have on sterling. It should reflate the economy but it dare not do so because of the impact on inflation.
In this dilemma we must all wish the Chancellor well because Britain loses if he fails, and the next government suffers if they inherit a greater economic mess. But it is not a happy story. After 12 years of this Administration these problems are of their own making. We look forward to hearing the Minister tell us how he will get out of the box. I am not that sure he can.
Lord Young of Graffham: Before the noble Lord sits down, since he was kind enough to refer to me during the course of his speech—although I found the use of the word "bogus" perhaps a little unkind—perhaps he would explain to your Lordships' House how the very witty refrain "12 years old and further in debt" applies to the National Debt.
Lord Donoughue: My Lords, the National Debt has been reduced; but that is a single aspect. I am sure the noble Lord does not think that is the only aspect of debt which concerns the economy, or the 50 million or so people of this country.
6.23 p.m.
Lord Moran: My Lords, I had some hesitation in putting my name down for this part of the debate on the gracious Speech, for to take part in a discussion of economic affairs is, for me, an unusual experience. I am doing so today because the questions of a single European currency and a European central bank seem to me of transcendent importance, and a single currency is referred to specifically in the amendment moved by the noble Lord, Lord Jenkins of Hillhead. It has given me the opportunity to listen to an exciting maiden speech, full of fire and eloquence, from the noble Baroness, Lady Castle of Blackburn.
Essentially, I want to make two points. First, in the national debate which has now begun, I think those with knowledge and experience of economic and international affairs have a plain duty to put this issue to their fellow citizens in a clear, comprehensible and, above all, frank and honest way. Not all of them are doing so at present.
Secondly, I believe that any profound change in the way in which our country's affairs are run, and certainly a revolutionary change of the kind now being considered, should be made only when the broad consent of the people of this country is not in doubt. As yet, they have not been asked.
What would a single European currency mean to us and to our fellow countrymen? Those in favour of it frequently argue that it would not affect our sovereignty. For example, Mr. Heseltine is reported to have said on 9th November that nobody seriously expected the creation of a federal Europe in which the member states surrendered their sovereignty to a common government, and that only a handful of people thought such a thing conceivable. In his speech yesterday to the Kangeroo Club in Hamburg, he said, rather more ambiguously, "I do not expect the emergence in the foreseeable future of any political structure that would submerge the instincts of national sovereignty". I am not sure what he meant by inserting the word "instincts". The Foreign Secretary similarly told the CBI the other day that "no one is seriously expecting Britain to submerge our Parliament … into a federal state". But I think that is exactly what those who want rapid progress towards economic and political union are expecting, though obviously not immediately. However, in this country those who believe in a fully integrated Europe appear to be reluctant to come out and say so.
By contrast, I listened to the President of the Bundesbank, Herr Pöhl, on television the other day, just after he had seen the Chancellor, and he at any rate explained clearly that he expected the creation of a European central bank and a single currency to lead to centralised control of economic and financial policies, and in due course to centralised control of political decisions. That must surely be right, but who

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is saying it in British public life? I know of no instance in which a single currency does not mean a single nation. The Library has kindly checked for me with the Treasury, which says that it is unaware of any example of a common currency being sustained by two or more countries for any appreciable length of time. It is true that the pound sterling and the Irish punt were effectively linked until the late 1970s but that scarcely seems a relevant precedent.
Lord Jenkins of Hillhead: My Lords, why does the noble Lord dismiss the Latin Currency Union which persisted from 1861 to 1914 and which included France, Belgium, Switzerland, Italy and Greece?
Lord Moran: My Lords, I must confess that that seems to have escaped the notice of the Treasury which did not mention this point to the Library. Money is fundamental and, as I see it, the establishment of a single, as opposed to a common, currency would mean not just the extinction of sterling but that the key step in the creation of a European state had been taken. The Queen and this Parliament might continue in being, but their essential sovereignty would have gone.
Three and a half years ago, when we were discussing in this House the Single European Act designed to "transform relations as a whole among their states into a European Union," my noble and learned friend Lord Denning said that sovereignty was being eroded and we were coming under another sovereignty—that of Europe—and that it looked as though that was one step towards a federal union. It is true that we have already surrendered a good deal of our sovereignty, but not yet the capacity to take independent action, or our freedom of choice, or our ability to call to account our own elected Government.
Of course we need to work closely with our partners in the Community and to present a common front when we attempt, for example, to deal with Japanese protectionism. But that is not in question. What we are talking about is the way in which the Community should develop from now on.
We now have the report of your Lordships' committee under the chairmanship of the noble Lord, Lord Aldington, on Economic and Monetary Union and Political Union. It will be debated on 22nd November. I saw it only on Monday and have not yet had time to study it carefully. But I see that committee argues that there is a strong economic case for a single currency but says that this must involve a willingness to make political commitments and indeed sacrifices. The report states in paragraph 75:
"One concern has been that a single currency would jeopardise national sovereignty. The Committee do not consider that the power to issue and regulate a national currency is in itself of such importance that a decision to pool this power would mean that Member States' international sovereignty would have been lost. In any case, in an interdependent world economy, Member States' freedom of action is in practice severely curtailed. However, power over currency does normally rest in the hands of national States, and a decision to relinquish control over monetary policy will not be taken lightly".
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It may be that in itself a single currency would not automatically mean the loss of member states' sovereignty. However, my view is that it is such a giant step that sooner or later—and probably sooner if M. Delors has anything to do with it—it would mean the creation of a European state.
I believe that it is very important that there should be more frankness in the public debate. There have been a number of recent pronouncements, from Sir Leon Brittan among others, which seem designed to soothe, to allay fears, to suggest that nothing very unusual is happening and that there is nothing to worry about, coupled with suggestions that anxieties could be met by putting the Queen's head on one side of the ecu used in the United Kingdom, or something like that. I believe that that does the public a disservice. I can see no reason why those who honestly and sincerely desire a European state should not say so. Why, I wonder, are they so reluctant to say plainly what they mean? There is a case for it. Equally clearly, some of the leaders of other Community countries want to move rapidly in that direction.
Apart from the "softly, softly" integrationists, another group adopts the "it's all over bar the shouting" approach. I confess that I find it extraordinary that Mr. John Banham, director general of the CBI, should say on 4th November:
"We do not want the United Kingdom's commitment to a single currency to be questioned".
I emphasise "questioned", my Lords. He continued with what seems almost quasi-religious dogmatism:
"We believe in economic and monetary union. We believe in the long run in the desirability of one currency".
I think that what we need, contrary to Mr. Banham's wish, is the asking of every kind of question, in fact a genuine debate on the pros and cons of a single currency, and of M. Delors' concept of Europe, with the issues clearly brought out and put before the public in a form that they can understand. I do not believe that the public are stupid. They are entitled to know what knowledgeable people in public life really think or believe. They should not be fobbed off with bromides. The debate needs to focus on the real issue of what the Community is to be and how we as a country can best help it to develop on sensible lines. It does not help, as Dr. David Owen pointed out in a notable speech in another place on 7th November, if the issue is trivialised. The BBC and some of our newspapers have been presenting it purely in terms of personalities and of manoeuverings within the Conservative Party. The issue is more important than that.
I come to my second point. A change of this magnitude ought not to be made without broad consent from the British people. Too often in the past they have not been asked—whether about the transformation of British society since the war through mass immigration, or beforehand about entry into the Community, or about the Single European Act. I believe that they have a right to be asked. In refusing to give way to pressure to commit this country to an arbitrary timetable for the transfer of responsibility for economic and financial policy before

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it is clear precisely what we shall be letting ourselves in for, the Prime Minister, as I see it, has been defending the fundamental interests of this country. She has been violently attacked for doing so and the vigour of her defence does not seem to have won her too many friends in her own party. She is fully accountable to Parliament week in and week out and fears that that accountability may disappear.
Are her fears justified? Your Lordships may have seen the first page of the business section of today's edition of The Times where it is reported that the draft statute for the European central bank,
"is understood to include provisions that would completely insulate the ECB from national or even supranational political control, while giving it sweeping powers over the domestic monetary policies of member countries".
If that is correct, what sort of accountability or democracy is that?
I do not think it is fair to describe the Prime Minister's vigorous objections to this sort of proposal simply as "obsessive xenophobia", as did the noble Lord, Lord Jenkins of Hillhead, in this House the other day. Is it not rather M. Delors—who does not have to face any prime minister's question time—and some other European leaders who have been trying to bounce the Prime Minister into signing up for policies which do not seem to her, or to Her Majesty's Government, wise or appropriate?
Surely the right way to build a united Europe is to allow Europeans to get used to working together, to establish mutual confidence, to let close co-operation grow naturally into a common approach, to take account of national feelings, prejudices and sensitivities, and to use tact and courtesy, and not to hector and force the pace?
If I were convinced that a solid majority of my countrymen considered that the independent British nation had run its course and that our future lay as part of a European state, I should be immensely sad, but I would accept that. But I am quite sure that it would be wrong to go further in surrendering our sovereignty without firm evidence of general assent by the British people. The Prime Minister pointed out in another place on 30th October that that House decided to go into the Community by a majority of eight votes. I do not believe that that is the way to take great historic decisions. We should have a thorough debate. We should put the issues to the public squarely and honestly. Then, before taking any irrevocable step, we should, I believe, have a national referendum.
6.37 p.m.
Lord Bruce of Donington: My Lords, I listened to the noble Lord, Lord Moran, with great interest. Were it not for the fact that we shall be debating the subject in detail next Thursday, I should have liked to take his argument a stage further.
In one respect he is quite right. It is the utmost intellectual arrogance for anyone proposing a certain course of action to say, "It is inevitable anyway". Nothing is inevitable until it has happened. Inevitability depends upon the experience of the event. I am by no means persuaded that because an author
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advocates certain courses of action—either in relation to the European Community, or in relation to the world at large—as inevitable, they are thereby rendered inevitable. All such courses can be and ought to be subject to proper argument with all the facts and inferences to be drawn from them laid before the country and before Parliament. Nothing is inevitable until it has happened.
The noble Viscount, Lord Oxfuird, made a speech about pessimism and a general sense of gloom. He surely missed the point. I am a confirmed optimist. I believe that many of the evils and disabilities that are suffered by a country can be or will be altered. I do not lack faith in my country. I lack faith in the present Government. I am determined to change them. On this side of the House there are reasonable grounds, not for glee, because there is nothing to be gleeful about yet, but for cheerfulness. Perhaps after the necessary political changes and the economic directions that will follow from those political decisions have taken place we shall move into slightly balmier times.
My noble friend Lord Williams of Elvel has put down an amendment in terms of excessive moderation. He merely complains of the incompetence of the Government. Had it been left in my hands I should have used the words "gross incompetence", because only a government of the type that is at present inflicted on the country could have achieved the record to which my noble friend Lord Callaghan referred and achieved such a dismal result, after having had the benefit of £8 billion worth of North Sea oil revenues. Only a government who have lost all contact with any kind of reason could possibly have achieved the results that this Government have achieved.
There has been talk of an economic miracle. For approximately 250,000 people, or probably slightly more, there has been an economic miracle. The rich have had massive tax reliefs; they are able to disport themselves and their yachts all over the world and their spiritual homes, which is where their money is, can be spread not necessarily within the counties of England but in the Seychelles, in the Antilles, in Guernsey, Lichtenstein, Luxembourg and indeed possibly in the south of France by the Gran du Roi or La Grande Motte, where their yachts lie in basins, or in Gibraltar. They have had a wizard time, and for them there has been an economic miracle.
However, for the rest of the population, and particularly its poorer sections, there has been no such miracle and none is yet in sight. There are many people in the little streets of Britain tonight who have every reason to curse and to refer in the bitterest terms to the infliction upon them of burdens imposed by Mrs. Thatcher's Government. Many of them are living lives of misery, to which most noble Lords in this House are not accustomed and of which they have very little knowledge.
In dealing with the incompetence of the Government, I am bound at the same time to express some fears. I am optimistic that we shall get over them but I think there is a danger, possibly within my own

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party, of underestimating the difficulties that are going to face the next Labour administration. One thing bothers me and it may also bother your Lordships. One of the figures that was not given owing to the time that had passed referred to manufacturing investment in the United Kingdom. Such figures have not been part of the success story. Valued at 1985 prices, investment in manufacturing industry in 1979 was £11 billion. The average for the next 11 years, during which Her Majesty's present Government have been in office, was £8,690 million—a considerable drop.
Therefore in order to be competitive, particularly under fluctuating sterling rates of exchange against the dollar and the deutschmark, we have exerted an upward pressure on unit labour costs by failing to invest at the same rate as our competitors, because unit labour costs are composed not only of wage levels themselves paid to individuals but also of other costs. If one neglects research and development and also training, there is pressure to send up unit costs. How could it be otherwise? Wage rates in the United Kingdom are from 20 per cent. to 30 per cent. lower than those obtaining on the Continent of Europe. The reason unit costs tend continually to press upwards in competition with our competitors is precisely that there is a shortfall of manufacturing investment, a shortfall in training and a shortfall in research and development.
The trouble is that it is one thing to recognise this and another thing to be able to take action. The fact has to be faced that there will have to be a two-year gestation period before any improvements can take effect in order to counteract this monstrous lack of investment which has been part of the Government's policy—partly because they tend to encourage overseas investment rather than internal investment from our own financial resources, as the figures show very well.
This has resulted in there now being profound skill shortages. If one looks at the manpower survey of skills and shortages one finds these figures, as reproduced in the Financial Times for 15th October last:
"Nearly half of Britain's employers were experiencing shortages of skills in mid-year according, to a survey of 1,400 personnel officers published by Manpower, the employment services company.
Nationally 44 per cent. said they were experiencing a shortage of skills, a figure which rose to 50 per cent. in the Midlands, 53 per cent. in the South and 72 per cent. in the West and South Wales".
The figure for Scotland was under 28 per cent. and that for the North West 34 per cent.
This situation has resulted in employers competing with one another for the skills available. That stokes up wages claims. All these things will become chronic unless they are tackled speedily. I take the view, and always have, that there has to be a degree of consensus between all sections of our community in solving national problems—the kind of consensus which has been so successful in Japan, Germany and many other countries.
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Confrontational politics in the old style, apart from the normal confrontation in debate, as I am sure your Lordships appreciate, are out. One has to induce in the United Kingdom a spirit of co-operation between those who work on the shop floor, those providing the services, the supervision and management, those who determine policies and those who finance them, government services, educational services and everything else. There has to be a degree of co-operation, but for this Government "consensus" is a dirty word. One of the daftest things they have done in the past month is to snub the TUC approaches at Neddy for there to be tripartite discussions on the future development of the economy. That is something the Government will regret. The only cause for optimism that they will not be in office for very much longer.
6.50 p.m.
Viscount Massereene and Ferrard: My Lords, the noble Lord who has just spoken says that in Europe wages are far higher than in this country. However, he cannot say that about the whole of Europe. In certain countries in the EC wages are definitely lower. Also, he has not taken housing into consideration. I am an employer in agriculture and industry. From my knowledge, our housing is far superior to what I have seen in many countries in the EC. Of course there may be exceptions. However, I shall not follow the noble Lord in everything he said because that would take too long and I intend to be brief.
I am against a single currency. The Single European Act came to the House of Lords on the day before the Recess, having been rushed through the House of Commons. We did not know that it was coming here so soon. I saw a sheet of paper and did not even know what it was until I read it. We were astounded that here was an Act which would alter the whole of British law of which we had no advance information.
I believe that the noble and learned Lord, Lord Denning, spoke on that occasion, as did about five other noble Lords. I spoke briefly but I am small fry compared to the noble and learned Lord, Lord Denning. The noble and learned Lord was very upset about the matter. I was concerned that he might have a seizure. The noble and learned Lord is a great expert on the law and he was very upset. The Act has now been softened somewhat. However, that was quite an experience.
About 18 months ago I wrote a letter to the Daily Telegraph about Mr. Delors. He had said, although he probably regretted the remark subsequently, that when the Single European Act came into force it would destroy 80 per cent.—he must have been exaggerating—of British law. That was an amazing thing to say. My letter was published but there was no response to it. I do not believe that the answers were known. However, it is a fact that he said it.
I was delighted when we discovered oil around Britain, as I am sure was everybody. I said at that time that I hoped that the Government would re-equip our factories and modernise them from the proceeds of our fairy godmother: oil. Those proceeds amounted to a considerable sum, I believe some £80 billion. The

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problem is that, for example, at Ashford two large companies have folded as have companies all over the country. I wish that the proceeds from oil had been used for the benefit of our industry. The Government have of course used those proceeds beneficially in other ways, but our industry is very important.
The Government have improved considerably the standard of living of the people of this country during the years in which they have been in power. They must take same credit for that. They have improved it in a number of ways; namely, by denationalising many industries and by reducing the national debt. That has saved the country a good deal of money in interest payments. On the whole, therefore, the people of this country are far better off than when the Government came to power, inheriting as they did from the former government an extremely serious economic position.
Mr. Lawson tried to achieve parity with the deutschmark. Had he been able to do so, that would have been satisfactory. However, he failed. As a result, very high interest rates were imposed. Before the Conservative conference this year there was a cut in interest rates. But until that time we were paying 18 per cent. We are now paying 17 per cent. That causes considerable difficulties, however efficient the employer I have never dismissed a man. It is very difficult. I am a chairman of a public company, but I am not talking about that. The position is very difficult for private employers because they know all their employees and become fond of them. I have never dismissed a man even if he is redundant; I would never do so. However, it may become impossible for me to pay my employee because of the very high interest rates.
Inflation is a very serious problem. However, I do not believe that it is as serious as having a great number of companies closing down. I hope that in the near future the Government can and will bring down interest rates. One cannot start up a new business if one has to pay such high rates of interest. I hope that something can be done.
7 p.m.
Lord Dormand of Easington: My Lords, in one of the less well publicised speeches made at the recent national conference of the CBI the chairman of a company used these words,
"Inflation is not an act of God. High inflation is a man-made disaster like southern beer and nylon shirts. It is caused by economic mismanagement".
I quoted from that speech for two reasons. First, I hope that the Government will take more notice of a successful businessman than they do of those of us on these Benches, who have been saying exactly that for a long time. Secondly, when we on these Benches raise the great economic disasters of this Government—inflation, high rates of interest, balance of payments deficit and unemployment—the Ministers' replies express concern, yes, but they are couched in language that suggests such problems occur in the natural way of things; that they could not possibly have been brought about by the incompetence of the Government. In fact it is the sheer incompetence of the Government that has caused the present difficulties.
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My noble friend Lord Williams of Elvel made that one of the themes of his excellent opening speech. It was confirmed by my noble friend Lord Bruce in his excellent speech, and I have no hesitation in supporting that view.
The Government, during their time in office, have trotted out a number of reasons for the difficulties; for example, the militancy of the trade unions. They cannot now say that. One of their most frequent boasts is that they have smashed the power of the unions; they have tamed them. That excuse cannot be used any more. They also frequently called in aid the importing of inflation. That indeed occurred from time to time. But they cannot use that reason now. Most of the countries from whom we import have much lower rates of interest than we. The average rate of our European partners is half our own. We were told a thousand times that industry and business were not investing enough. We are now informed that we are investing more than ever, yet we have these major problems in our economy.
There is yet a further reason why the words of that company chairman are valid. This Government have had unbridled power for more than 11 years. When a government have been in power for one Parliament they can legitimately claim that they did not have time to do everything that they wanted to do. They can, though with less conviction, say the same thing after two periods of office. What they cannot do is use that reasoning in their 12th year in office. Given that, and the other reasons I mentioned, this Government have nowhere and nobody to turn to. The sheer incompetency is there for everyone to see; it has been reflected in opinion polls and election results for several months.
There have been two fundamental causes for the present sorry state of affairs. First, the problems caused by the so-called Lawson boom. The Government—not just Lawson—were so obsessed with cutting taxes, particularly in 1988, that they paid insufficient attention to the growth in domestic demand that eventually came about. Consumer spending was projected to rise by 4 per cent.; in fact it rose by 8 per cent. That is only a 100 per cent. error! In that context, it was a most serious mistake.
Allied to that was the incredible under-estimation of the effects of financial de-regulation on the spending of both ordinary people—if I may so describe them—and the company sector of the economy. Almost everyone took advantage of the easily available credit. It can be argued that the Government are still doing little or nothing about that. That also was a mistake of great proportions.
All of that took place against a structure which is of fundamental importance in a modern society. I refer to the essential need of a sound industrial base. The devastation of our manufacturing capacity in the early 1980s caused by the monetarist policies of those days was such that we have not yet fully recovered from it. It is significant that our industrial manufacturing rate is now 20 per cent. as a proportion of gross domestic product compared with 30 per cent. in Germany and Japan. The difference is crucial. It is the difference

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between success and failure. If the industrial base is not rebuilt, living standards cannot be raised. The substantial needs of the health service, education, transport and all the matters that we hear about in your Lordships' House almost every day, will not be met unless that base is not only restored but improved.
Things might be better if we could see light at the end of the tunnel. However, there is no doubt that the economy will become worse. That friend of the Government, the Confederation of British Industry, tells us that is so. I assume that the Government will take notice of what it says even though they do not take notice of what we on these Benches say. In its recent report, which I am sure your Lordships have read—the gloomiest report for several years—the CBI say that output will remain flat in the coming months; investment is under threat; jobs are being lost, and order books are at their weakest for eight years. How that differs from the reeling off of the success stories that we heard from the noble Lord the Leader of the House in his opening address today! I thought I was living in a different country when I heard that contribution.
All that I have said stems from a government who we are constantly told understand business, understand money, know what being an entrepreneur means, and know how to maximise profit and efficiency. They are even refraining—my noble friend Lord Donoughue referred to this—from using the word "recession", when the evidence is all around us that we are well and truly into a recession.
The figures for my own part of the country are probably no worse than those elsewhere. In the North as a whole 3,500 businesses failed in the first nine months of this year—that is 600 more than in 1989 —and another 72 firms have called in the receiver. A disturbing feature of those figures is that all types of business are being affected, from heavy engineering employing hundreds of men—for example, Northern Engineering Industries, which announced 600 redundancies only two weeks ago—to the smallest service firms employing only two or three people.
The Forum of Private Business—the Minister will note that I always quote from friends of the Government to be absolutely impartial on these matters—said in its recent report that high interest rates, the poll tax, and other direct government policies have strangled hopes of expansion for businesses and robbed the northern region of thousands of jobs. Perhaps I may remind the House that the northern region has always had the highest rate of unemployment outside Northern Ireland. In the past two or three years I must say that there has been some improvement, in spite of some unimaginative policies such as the wholesale closure of pits in areas where no alternative employment was available.
However, we are once again on the slippery slope. Unemployment in the country as a whole has increased in each of the past six months as a direct result of government policy. When we raise unemployment matters on this side of the House the standard response from the Government is, "We have
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more people in employment than at any other time in our history". We heard that again today in the opening speech of the noble Lord the Leader of the House. That may be true, but in view of the doubts —indeed, the proven inaccuracy—of government statistics these days we have to be generous in accepting them.
What is true is that the number of unemployed is still higher than it was when the Labour Government left office in 1979. If, after getting on for 12 years in office, the economic miracle still has 1.5 million unemployed then the word "incompetence" does not begin to meet the inadequacy of government policies.
I believe, and I say this sincerely, that noble Lords opposite and Ministers in particular do not know what unemployment means. The personal devastation and the effects on families have to be experienced to be fully realised. The worst feature is that of long-term unemployment; people who have, by definition, been unemployed for more than a year but who in fact may have been unemployed for several years. Long-term unemployment is now again on the increase. There can be no stronger condemnation of the Government's economic policies than that. It is significant that the word "unemployment" does not appear anywhere in the gracious Speech. We have to assume, therefore, that a figure of 1.5 million for unemployment is the norm for this Government.
The unemployed have become the forgotten people of our society. I ask the Minister who is to reply to the debate to deny that the number of people who will be unemployed by the end of next year will be 2 million. The only satisfaction I obtain from the present economic situation is that the Government have at last been rumbled by the people of this country. Their incompetence has been exposed as never before in their 11 years in office. The result of the next general election will not be changed whether it comes in 1991 or 1992. Perhaps I may also add—and I end on this because of the present circumstances of the Conservative Party—that it will be regardless of who is leader of the Tory Party.
7.12 p.m.
Lord Grimond: My Lords, I wholly agree with the noble Lord, Lord Dormand, in his criticism of the Government and with his insistence on the importance of manufacturing industry. I was also particularly struck by two previous speeches—one by my noble friend Lord Ezra and the other by the noble Lord, Lord Callaghan. I am sure that my noble friend Lord Ezra was right to stress that what we need are some long-term measures to assist the economy of the country. As for the noble Lord, Lord Callaghan, who has held all the great offices of state—he particularly graced the office of Prime Minister in which his performance was much better than in other offices —my heart warmed to his dismissal of the myth that some sort of Thatcherite miracle has been performed. It is absolute nonsense and high time that someone in authority exploded that myth.
The noble Lord, Lord Callaghan, pointed out that in every major index of our economic success the

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Government that he presided over, which is now regarded particularly in Tory circles as something of a disaster, was far better than we can produce today. Future historians will be amazed that we were conned into believing that there was any kind of major miracle in our affairs. The only changes—nearly all for the worse—are an increase in bureaucratic attitudes and in the extent of government. The nanny state has extended vastly more under this Government than ever it did under any Labour Government.
I see sitting next to the noble Lord, Lord Callaghan, in a semi-recumbent position, the noble Lord, Lord Jay. As far as I remember, the noble Lord, Lord Jay, was pilloried for suggesting that the gentlemen in Whitehall knew best. It is quite possible that in that highly technical matter relating to nutrition the gentlemen did know best; but now the gentlemen in Whitehall, the town halls and in innumerable quangos are thought to know best about everything. The whole extension of the bureaucratic attitude for which the noble Lord, Lord Jay, got into trouble has been enormously extended. In fact, he stands out now as a rather rugged individualist in a semi-socialist world.
The next change has been that the division between rich and poor has enormously increased. The third change is that there has been a considerable increase in materialistic greed. Finally, there is now the belief that public relations can cover up all ills.
The noble Lord, Lord Callaghan, dealt with the internal position in this country, but in comparing this country with foreign countries the position is just as bad. I am amazed at the complacency of the Government. The noble Lord, Lord Williams of Elvel, read out what he thought the Conservative manifesto at the last election should have contained in view of what has happened since then. Noble Lords on the Government Front Bench might at least have blushed but they show not the slightest sign of anything except being well content with an absolutely disastrous performance.
Compared with this country our neighbours on the continent —France, Germany, Belgium, Italy and the Netherlands—have all increased exports and decreased their imports in recent years. Taking the years 1979 to 1985, one need only refer to the report from the Select Committee on Overseas Trade, and particularly the graphs on pages 8 and 9. The position has not improved since then but the Government appear to be completely satisfied. With a smaller workforce and with no oil—I cannot too often emphasise that any success this Government have had has been due to the enormous bonanza of North Sea oil—the German national income has increased by 46 per cent. more than ours since the war.
Our record in manufacturing is particularly bad, as the noble Lord, Lord Dormand, said. Employment in manufacturing industry has fallen by 63 per cent. since 1958 but by only 17 per cent. in Germany. When the North Sea oil pipes were laid I remember being struck by the fact that they were nearly all manufactured in Japan or on the continent. Now we see that the major pipe producing works in Scotland at Clydesdale are to
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be closed. Why cannot we make pipes in competition with the continent or Japan bearing in mind that for 15 years we have had oil on our doorstep?
Incidentally, I should like to know what the Government intend to do about the steel industry in Scotland. I do not believe that a steel industry is essential to a nation and I would not expect British Steel to keep open the works in Scotland if convinced that the works are uneconomic, but I have to say that the treatment in this matter has been appalling. Even the Secretary of State for Scotland has protested strongly against the methods used. These have been to make promises that something will happen, which does not happen, and then gradually to cut down, not only at Clydesdale but at Ravenscraig and other steelworks in Scotland. The Scots are entitled to know whether the Government have washed their hands of the industry—certainly the Secretary of State does not appear to have done so—and if not, what attitude they propose to take. The Government should at least make up a package of steel production in Scotland which, if the board cannot operate it, can then be offered on the private market.
In regard to investment generally, it is true that we have invested enormous sums of money, a great deal of it abroad. Again, the Government have boasted that they have attracted investment into this country. In fact, between 1980 and 1989 the outflow was 108 billion dollars more than the inflow of investment in this country; and the return on that investment is only 11 per cent. compared to the figure for Germany of 20 per cent.
The Government have also told us that it is Japanese management that has made the motor car industry in this country semi-successful. If that is their assessment, and it appears to be, it seems strange that every year those in management and on the boards of companies receive increases in salary far beyond the rate of inflation while calling upon their workers to take less. How can we expect the workers of this country to take less when in many cases management increases its salary, perks, pensions and every other emolument regardless of whether there has been an increase in profit?
If too much money is chasing too few goods one of our troubles is that the chase is led by the top people. Only yesterday we read that Members of the Cabinet increased their salaries by 8.5 per cent. We are told that that is well below the rate of inflation. However, only last week the Chancellor of the Exchequer told us that the rate of inflation will fall to 5.5 per cent. If the Cabinet really believes that it will fall to 5.5 per cent. surely it can rub along on its not totally insufficient salary for a month or two until it comes down to that figure or lower. Only a year ago the Government were going to abolish inflation. Members of the ordinary public are not given much confidence if the Cabinet feels it necessary to take an increase of 8.5 per cent. while saying that inflation will fall to 5.5 per cent.
Another issue that we must look at is indexation. It began by being a perfectly sensible policy but now it is wholly out of hand. Practically everything is indexed. I discover that as a Member of the House of

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Lords my car allowance is indexed and rises along with that of God knows how many others in the Civil Service. I reckon that if I had a car I could live on my car allowance. I believe that we should look at indexation. We shall never stop inflation unless people have an incentive to stop it—and the top people do not—and while there is a failure to achieve wage awards and so forth far below the present rate of inflation. Indexation prevents both those things.
I am sure that we are an under-trained nation and that we should train more. However, my experience is that no amount of training will do any good unless it is properly applied. There is a lack of skill. One sees in this House the lack of skill in drawing up statutes. One sees on the Underground the lack of skill in keeping escalators running. All around this country there is a grave lack of skill which can be cured to some extent by training. However, it requires more than training.
I remember that during the war the Germans in Normandy had practically no airforce or artillery and an army of only old men and boys. However, they had a few good tanks and one or two nasty mortars. They held up the whole British and American effort because they were skilful at using what they had to hand. When we arrived the Falaise Gap was full of horses because a great deal of their transport was still horsedrawn. Yet they held us up because they knew what to do with it. I do not believe that training is enough and I suspect that German success still relies not upon their expertise and up-to-date machines—although they may exist —but upon the fact that they use their resources so well.
I do not share the view that the Government have controlled the money supply or credit with any efficiency whatever. I agree with the noble Lord, Lord Dormand, that to flood the place with credit, totally fail to control the broader money supply and then to be surprised by inflation is a bit much. However, that was the Government's policy. We are now told by the Chancellor of the Exchequer that the Government's great hope is to be able to continue with their policies. If they do, goodness knows where we shall end up! So far their present policies have hardly cured the troubles that we face. We face serious troubles, including a recession. In doing so we are led by a broken-backed government in which not even the Conservative Party has any confidence. The Government are introducing no new thoughts upon those matters whatever. In my view, the sooner we have a general election the better.
7.24 p.m.
Lord Jay: My Lords, it was a pleasure and like old times to listen to my noble friend Lady Castle of Blackburn. After listening to her uncontroversial speech today I look forward with great pleasure to her controversial speeches to come.
In our previous economic debate in July I was optimistic enough to express the view that if the Government were to enter the ERM the euphoria would last for a few months or perhaps a few weeks. In fact, it lasted only two days which is a shorter
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period than that after a party conference. My noble friend Lord Williams said only two hours, but on this issue I am slightly more charitable.
Apparently some people believed that joining the ERM meant an automatically fixed exchange rate behind which we could do what we liked with interest rates and other internal policies. Unhappily, under any system, if more people sell your currency than buy it, the rate will fall. Therefore, we are now compelled to maintain a cripplingly high interest rate which damages the domestic economy. For that reason we as a country have in effect abandoned the control of interest rates in addition to exchange control, credit control, low-cost food imports and any incomes policy. It is not surprising that after decontrol on that scale—an orgy of decontrol—the economy is now wholly out of control. Indeed, for the first time since 1945 we have at once a huge balance of payments deficit, high and rising unemployment and falling output, profits and investment.
For a deficit country to fix its exchange rate is, in effect, to deprive itself of the one effective mechanism for returning into external balance. But, in addition, to fix it at a grossly over-valued rate is not so much a gamble as an act of unilateral disarmament. That the rate of 2.95 deutschmarks to the pound is over-valued is proved by the fact that we are suffering from unemployment and a balance of payments deficit at the same time. The right exchange rate for any country is that which enables the country at once to employ its full productive capacity and preserve a sustainable balance of payments. In our case the probable over-valuation is at least 20 per cent.
The tragedy is that we have been through all this more than once. In these matters a little experience is worth a ton of theory and a mountain of political propaganda. In 1925 the sterling exchange rate was fixed at a rate probably over-valued but by only 10 per cent. All the promises that we have heard during the past year were then peddled around. We were told that we were to have stability and a strong currency. After six months of euphoria we had a prolonged coal strike, a general strike and six years of rising unemployment until the over-valued rate was abandoned in 1931. After that we enjoyed five years of rising output and employment.
In 1979–80 roughly the same mistake was repeated. The rate was allowed to rise to the hopelessly over-valued level of 2.40 dollars to the pound whereupon output fell disastrously, unemployment rose by 60 per cent. in less than two years—that had never happened before—and we lost valuable industrial capacity which has not yet and may never be regained. It was only in 1985–86 when the exchange rate fell substantially against the deutschmark that the downward plunge was halted. The then Chancellor of the Exchequer discovered that for a short time he had created an economic miracle.
The same lesson stares us in the face from overseas. Nobody has mentioned this point, but from 1931 to 1935 France, Belgium, Switzerland, Italy, Holland and Poland operated what was then called the gold bloc, an almost exact prototype of the ERM today,

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with fixed parities and exchange rates and close central hank co-operation. In those four years, while the United Kingdom recovered after the drop in the exchange rate, the gold bloc suffered deeper and deeper depression and higher and higher unemployment until Belgium broke ranks in 1935 and France in 1936. It has all happened before.
In one crucial respect however the ERM is even more crippling to the deficit country than either the old gold standard or Bretton Woods. Both the gold standard and Bretton Woods put some pressure on the creditor country to reflate as well as on the debtor country to deflate. The ERM puts all the pressure on the debtor country alone, and thus is an even more primitive system than the classical gold standard. If we were to slide down the slope any further and plunge recklessly into the extremism of a single currency, the result in terms of unemployment would be even worse. In that respect I wholly agree with what the present Chancellor said on television on Sunday. I shall not pursue the argument today because I understand that we are to discuss European Community matters next week.
What must be expected from all these policies over the next year or two? The over-valued exchange rate will subsidise imports and discourage exports, both those tendencies increasing unemployment, reducing output and increasing the payments deficit. Incidentally, the Autumn Statement estimates for the balance of payments and for the RPI are simply not credible. We must not forget that when France and Italy joined the ERM unemployment increased very substantially. In France it has doubled since that country joined. In our case, as a result of the worsening of the balance of payments, the exchange rate will sink towards the ERM minimum—indeed, it has already done so—and interest rates will have to be kept very high to prevent a further fall. That will depress real investment. Indeed unemployment may well reach 3 million again on present policies by the end of 1991. Reserves will be lost and more foreign exchange borrowed on top of the £20 billion a year which we are now borrowing to cover the deficit in the current account. All this will inevitably weaken the country further, economically and diplomatically.
We are asked to endure all this damage in order to restrain the rise in the RPI. I am not surprised that the Government are worried. The Government are trying again to cure a cost inflation in the belief that it is a demand inflation. In fact it is money costs which are rising because the Government have no incomes policy other than exhortation. And exhortation will not be heeded from a Government who have not lifted a finger or raised a voice to restrain company chairmen and City operators paying themselves outrageous salaries. Even the previous Chancellor of the Exchequer, since he left office, has not exactly been a shining example of pay restraint.
How right Winston Churchill was in 1925 in writing a private minute in the Treasury in which he said:
"I would rather sec finance less proud and industry more content".
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Lasting damage has been done and is being done by the present over-valuation of sterling and other policies. Fundamental changes will be necessary before our economy is really restored.
7.35 p.m.
Lord Alexander of Weedon: My Lords, perhaps I may first make the briefest mention of the Uruguay round of GATT talks and the contentious issue of agriculture. Western Europe is, in world terms, comprised of rich countries. It seeks to promote free trade within the Community. It seeks access to world markets on a multilateral basis. Yet in regard to agriculture it has been and is protectionist, and is currently grudging in the concessions that it offers. For many of the 107 countries taking part in the Uruguay round, countries less rich than those of the Community, the main hope in negotiations is to secure big gains from cuts in farm protection. It was wholly appropriate that this should have been the principal topic on the agenda for the recent Rome meeting of heads of government. It was wholly inappropriate that the issue was not debated then and that the stance of some Community countries remains curmudgeonly and self-seeking.
I very much hope that the present ungenerous position will be modified as the GATT talks come to a climax. It would be not only sad but highly damaging if those talks were to fail. I agree with every word said by my noble friend Lord Young of Graffham on this topic. I speak on this subject more strongly because I believe firmly in the progress of the Community. Participation of this country in that progress depends on two principal factors: our domestic economic and monetary attitudes, and our commitment to the development of Community institutions.
I start with our domestic challenge. It is heartening that the Chancellor of the Exchequer consistently pledges the Government to the task not only of reducing inflation but also, when this is done, of maintaining for the future a low inflationary discipline. To achieve this will be painful. At present we are "boxed in" to a thoroughly unattractive corner. Industry requires, as the CBI reminds us, a significant reduction in interest rates to avoid continuing damage to the corporate sector. Yet such a reduction of interest rates, quite apart from its potential effect on the value of sterling within the ERM, would carry the risk of renewing inflation through increased personal spending. There is said to be a good deal of pent up demand for housing. We dare not, as I see it, risk the encouragement of any new surge in house prices or in personal spending.
Shortly after the recent interest rate reduction, I read a newspaper report which suggested that house prices might start to rise a little. The headline read "Good news for house prices". A senior German banker, to whom I mentioned this last week, suggested that in his country the headline would have read "Bad news for house prices". We cannot afford any such inflationary risks, in the same way that a false "boomlet" before the next election should. I believe,

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be regarded as wholly off the agenda. We should give the Chancellor the fullest and continuing support in his resolute stance against inflation.
Our membership of the exchange rate mechanism should obviously require us to impose an anti-inflationary discipline. That is one reason why in my view it is to be welcomed. Another is the opportunity it gives us to be taken seriously in the coming inter-governmental talks. I cannot begin to match the knowledge of economic history of the noble Lord, Lord Jay; but on practical grounds I diffidently but firmly disagree with his conclusions. I believe, with respect, that they ignore the dynamic of reality. It is difficult to over-emphasise how vital it is that we as a country should play a full and constructive part in the next stage of negotiations.
Much of our past history in our dealings with the Community has been unfortunate. We stood aside from the initial shaping of Community institutions and rules, only to join later on terms which had been agreed by others. Those terms included the common agricultural policy, which I mentioned earlier, and that should surely serve as a salutary reminder of the dangers of absence from the table.
Surely now our participation is even more important because of our present status as a member of the Community. In many aspects of economic and social affairs, Community laws override our own. Except on those issues which require unanimity, we can be out-voted. In practical as well as legal terms, the impact of Community developments affects our affairs: we have for a long time had scant real sovereignty over our exchange rate, and 60 per cent. of our exports already go to Europe. Decisions are taken there which affect our ability as a country to compete. It is a major issue of foreign policy that we should use our full negotiating skills to ensure that we are not disadvantaged at this crucial time.
What then should be our stance? Perhaps I may join those who paid tribute to the report of the Select Committee on the European communities. In general, I respectfully share their views and I do not propose to rehearse them again tonight. However, I should like to emphasise that the Government's proposal for a hard ecu, so ably and tirelessly explained across Europe by Mr. Robin Leigh-Pemberton, has merits. It focuses the arguments on the need for economic convergence to precede currency union, and for such union to take place when, and only when, the market-place is ready for it. There are clearly elements in the proposal which could form part of Stage 2 of the route to currency union.
One problem is that, when initially proposed, the hard ecu proposal was regarded as a stalling device. It is sadly true that we carry at present less credibility than we would wish in Europe. Some are even doubtful as to whether we are sufficiently committed to an anti-inflationary discipline should the going prove tough, as it did in France when it accepted the need to maintain a stable exchange rate early last decade. We must continue to strive to dispel that impression, as we have much to contribute. In
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particular, we can help in our pragmatic way to ensure that the impetus for speedy progress is tested on a hard-headed but constructive basis. One virtue of the hard ecu proposals is that they concentrate minds on how much there is still to be thought through.
I believe that the hard ecu proposal cannot ever begin to carry any weight abroad unless the Government acknowledge that it is intended as a constructive way forward to ultimate monetary union. There are undoubtedly difficulties to overcome and the process may not be as simple as some may hope. There is no reason to be starry-eyed or idealistic about what still falls to be achieved. The Community as a whole is a long way from economic convergence; nor is there a clear acceptance by all governments of the need for an independent, central European banking institution which will, after all, replace some of the powers of the Bundesbank as well as those of the Bank of England.
The division of responsibilities between central and national banking will need to be negotiated carefully. Yet the principle of subsidiarity, so relevant to this task, has yet to be precisely defined or made enforceable in Community law; nor have we worked out whether, or to what extent, fiscal powers will need to be exercised from Brussels. All those are momentus questions. Monetary union will undoubtedly increase calls for economic and political integration. As an adherent of the need to make progress, I accept that fact. However, those are but illustrations of the hurdles to be crossed.
I also believe that the logical coin of a single market is a common currency. It would reduce transaction costs, eliminate exchange rate uncertainties and, above all, it would further the simplicity of trade within the market. We must also accept that our partners in the Community increasingly and understandably pursue this objective. We must play our part in making certain that we traverse the route in a thoroughly practical way with the goal clearly in mind.
If we do not adopt that approach, other countries will probably seek to go ahead without our participation. That possibility is increasingly spoken of on the Continent, and we should not regard the idea as posturing or as the idle beating of drums. As has been said by others, two speed Europe carries a logic for those countries ready to move ahead. But for us it has the danger of being a two-tier Europe. I, and many others, are much concerned at the effects of such a development on the City's current position as Europe's leading financial centre.
London has been a dominant financial centre for so long that some assume its place is immutable. It is in the middle of time zones, its skills base is formidable and wide-ranging and leading financial institutions from abroad currently have their base here. But competition from Frankfurt and Paris is determined and it is accelerating. In the past, the deregulated nature of our markets has helped us enhance our competitive edge. But this advantage is diminishing as our European partners themselves deregulate their own markets. It would be of the greatest concern if we

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were rot in the mainstream of the next developments which promote economic integration and growth in the Community. It would put at risk our dominance if other countries furthered their political, economic and monetary integration and we stood as an island apart. We would be seen to be peripheral, away from the centre of gravity where commercial interests are determined.
This Government, under the courageous leadership of the Prime Minister, have done, as my noble friend the Leader of the House mentioned briefly earlier this afternoon, so much to reverse the decline of this country. I hope that they will have the confidence, which they are entitled to have, to take and keep our rightful place in the mainstream of Community decisions.
I shall end with one final thought which I hope is wholly non-contentious. It is undoubtedly right, whether or not we agreed with the idea, that membership of the ERM, and further progress towards monetary union, will limit the scope for us to seek to influence individually our own monetary policy. We shall lose the ability to seek to secure competitiveness by financial adjustments in the future. That will throw us back even more on fundamentals. It will mean that education, training, investment, productivity and infrastructure will provide the essential long-term keys to competitiveness. The extent of our commitment to these basic qualities in our society will be the touchstone of our future success I believe that that is healthy, but it is also a mighty challenge to all of us.
Viscount Massereene and Ferrard: My Lords, before my noble friend sits down, I should like to ask him a question. I am a sheep farmer in England and Scotland. Now that the price of lamb is half what it has been, can he tell me why it is that butchers are charging exactly the same price for it as they did last year, bearing in mind the fact that it was actually more expensive at that time?
Lord Alexander of Weedon: My Lords, the House will not be surprised to know that I cannot answer my noble friend's question. However, I very much look forward to being present in the Chamber when he puts forward such a question for answering at Question Time.
7.48 p.m.
Lord McCarthy: My Lords, it is a pleasure to begin my speech by congratulating my noble friend Lady Castle on what I suppose is technically a maiden speech. I would have said more about that, but it appears that the lady has vanished and therefore it is perhaps better left unsaid until the next time we meet.
In supporting this amendment, which was especially well argued by my noble friends Lord Williams and Lord Callaghan, I do not wish to follow the general line of the debate. That is what people usually say when they want to change the subject. However, that is not quite the case. I wish to focus upon part of the area covered by my noble friends Lord Callaghan, Lord Dormand and Lord Bruce of Donington; but not, I am afraid, that covered by the
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noble Lord the Leader of the House or by any government speaker. In some ways that is remarkable, but it is also perhaps healthy.
Recent speeches made by Ministers in another place—namely, the Secretary of State for Employment, Mr. Howard, in a speech which he gave to the Institute of Personnel Management, and the Chancellor of the Exchequer in a contribution he made to the recent meeting of NEDO—have focused on the need to solve the Government's problems and the problems of the economy by reducing the level of wage settlements. Several Ministers, especially those two, have said that what we need to solve the difficulties which Members of the House have discussed this evening, to stop the increase in unemployment, to reduce the increase in prices and to regain competitiveness is not real wage improvement but real wage decline. In other words, we now need a period during which the level of wage settlements is significantly below the level of price increases, especially the level of increases in historical prices in the RPI.
I have four questions. My first question is: is that economic policy? Although it has been mentioned by the Ministers to whom I have referred, it has not been mentioned in the House tonight. Do the Government believe that an essential part of our economic recovery, even of our economic survival, is that we should now move through a period of negative real wage growth; that is, a period in which wage increases fall below the level of price increases? If the Government are saying that, a number of further questions follow.
If they are saying that, why is there so little evidence that the difficulties we are in—the deficit in the balance of payments, inflation, high interest rates and the recession—have been caused by undue real wage advances? There is no evidence for that. Between 1982 and 1989 earnings in this country were remarkably, and most unusually, stable. The increases were between 7 per cent. and 9 per cent. Over those years, the average was 7.9 per cent. Prices moved up and down for various reasons and in some years produced a real wage improvement and in other years did not, producing a real wage advance over the period 1982–89 of something like 2 per cent. a year.
The Government won two elections, partly by pointing to that real wage advance. They contrasted it to the detriment of the previous Labour Government, and said that of course during much of the period of that Labour Government there was no real wage advance. If noble Lords remember, in those days that was part of the Prime Minister's economic miracle. It may now be Sir Geoffrey Howe's economic miracle or Mr. Lawson's economic miracle. Mr. Heseltine may claim that it was his economic miracle, but a miracle it was. The problem is that that miracle—that modest but sustained increase of 2 per cent. or 3 per cent. in real wages in that period—went wrong. It went wrong in particular after 1986; after the long period of devaluation; after the Government's own goals on

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poll tax; after the election boom; after the RPI began to rise. It rose between 1986 and 1990 by 66 per cent. That is what eroded the real wage advance.
The annual rate of increase in the RPI between 1986 and 1990 rose by 66 per cent., but earnings increased by only about half that rate—31 per cent. Annual earnings were remarkably laggardly in following the upward movement in prices, as a result of which between 1986 and 1990 the whole of the previous real wage advance was wiped out. This year the figures suggest that we shall have negative real wage growth: an increase of about 10.2 per cent. in annual earnings and 11 per cent. or more in the level of prices, and so a period of negative real wage growth after a period of remarkable stability in earnings.
Lord Monson: My Lords, I am sorry to interrupt the noble Lord, but he claimed that the RPI increased by 66 per cent. between 1986 and 1990. If he checks the figures I believe he will find that he is incorrect, because as far as I am aware the RPI has increased by 60 per cent. since 1982.
Lord McCarthy: My Lords, I do not think that the noble Lord is right. The point I am making (and I think he will find that I am correct) is that the RPI has increased considerably more than the increase in earnings. That is the essential point, and so any advance in real earnings over the past decade has now been wiped out. I do not believe that the noble Lord will challenge the fact that we now have negative real wage growth.
That brings me to my third question: if the Government are still committed to real wage decline —if that is the Government's policy despite the fact that it has not been mentioned this evening—how much real wage decline do we need and how long must it go on? When Mr. Lawson was Chancellor of the Exchequer he was committed to the notion that there were all kinds of advantageous consequences if one could only get down the level of real wages. He produced a document entitled, The relationship between employment and wages: empirical evidence for the United Kingdom, published by the Treasury in 1986. That document was much disputed at the time, especially by those who were said to have contributed to its conclusions and who said that it suggested a much more positive relationship between the level of wages and the level of employment. Nevertheless, we can take that publication as some kind of index of what the Government believe that they might achieve by negative real wage growth.
"Lawson's law" suggests that a 1 per cent. reduction in real wages produces another 165,000 jobs. In other words, a 3 per cent. reduction in real wages cuts unemployment by about 500,000, or about 2 per cent. My question therefore is: is that the Government's policy? Do they accept that relationship? Do they still accept Lawson's law? Do they believe that to cure the problem of rising unemployment and to knock something like 500,000 off the figures we should now see a reduction in real wages of
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about 3 per cent.? If that is the Government's policy, how long would it need to continue to produce that result?
Is that policy practical? In that respect, we can look back to the few occasions when we have managed to reduce real wages. It is unusual to reduce real wages. After all, if real wages did not rise people would never be better off. If real wages did not rise we would still have the standard of living that they had in Dicken's day. The main way in which working people raise their standard of living is by obtaining wages which are slightly ahead of prices. It happens in all countries virtually all the time. Nevertheless, since the 'sixties we have managed to drive down the level of wages below the level of prices one year in six.
The problem is that except on one or two occasions that has been followed by a compensating rise in real wages in the following year, or the one after, which has largely wiped out that position. The only two occasions that I can see when we can argue that there has been a more or less lasting (not permanent) reduction in real wages is in 1981–82 when the unemployment rate rose by about 10 per cent. to 12.1 per cent. and there was a small reduction in real wages. So my next question is: is that what the Government foresee —a return to the unemployment levels of 1981–82? Is that how we will drive down real wages? If so, we cannot say that we are doing it to increase employment.
Secondly, there was the much despised period of 1975, 1976 and 1977, with the concordat with the TUC, when as a result of an incomes policy which I am bound to say in retrospect was much too ambitious and tough the Labour Government got the RPI down from about 24 per cent. to about 7.8 per cent. in three years. Is that the model? Perhaps not under this Prime Minister but the next, will the Government launch a wages policy? History would suggest that there are only two models to get real wages down: mass unemployment or an incomes policy.
I do not suggest, and I hope that noble Lords will not think that I do, that there is no relationship at all between real wage growth and economic activity and prosperity. I do not suggest that it never matters to the economy how far real wages move ahead. Indeed, if we look at some of the countries whose economies have been praised in the debate this evening—Germany and Japan—we see that the notion of sustainable real wage growth is an essential part of their economic success. It is understood in those economies that there must be something like a rate each year, depending on circumstances, in which real wages can advance. If real wages systematically attempt to advance beyond that sustainable rate, various things must happen which the economy will not like and which would probably bring real wages down.
We have had something like that in the past. There have been periods when it was reasonable to argue that the rate of real wage improvement was a problem. In the 1960s there was undue escalation in real wage growth in the upswing of the cycle. That upswing

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produced all kinds of shortages in the labour market which the noble Lord, Lord Bruce of Donington, has mentioned. This fed further wage increases. We thought that the answer was incomes policy. I do not believe that it is. The answer is on the supply side. The answer is training, to try to meet the shortage of skills before the upswing.
There are occasions—and there was one in the 1970s—when, as a result of some external factor (in that case a deterioration in the terms of trade), there needs to be a reduction in real wage growth. If the external factor is sufficiently severe, there may even need to be not a reduction in real wage growth but a period of negative real wage growth. That is what we tried to achieve in the 1970s with the incomes policy. As a result of the two oil shocks we suffered a traumatic deterioration in the terms of trade which necessitated a reduction in real wages. We tried to bring it about by the incomes policy. The Labour Government did so. They were so successful that in one year they reduced real wages by 7 per cent. and the next year they ran away.
I do not suggest that there are no circumstances in which Teal wage growth is a problem. There are two ways of solving it. One way is the way of the Left which has been mentioned in this debate. It is to try to have some kind of round table economic assessment with a new bargaining agenda and some way of bringing the parties to the bargaining process to discuss the state of the economy and to try to arrive at an understanding of sustainable real wage growth. Presumably that is not obvious or available at the moment.
However one action can be taken. I wish to end by suggesting this to the Government: they must stop trying to talk out and rubbish the historical notion of the RPI as a measure of the justice or adequacy of a wage settlement, in favour of what they now use—the forecast rate of the RPI. They must recognise that they have failed to predict the RPI for three years. I have looked at the economic surveys and it seems to me as though since 1980 the Government have forecast the RPI too low on five occasions; too high on one occasion and just right on five occasions.
The difficulty is that the times when they forecast too low include the past three years. That has devalued the notion of forecasting the RPI. Again, I calculate that in the past three years the actual increase in the RPI has been 25 per cent. in the period during which the forecast increase was 14 per cent. Thus the postulations of the RPI have been more than 50 per cent. out. That is why the Government must go for the historical RPI. It is the only figure that makes sense to working people. If the RPI continues to go up and down from year to year, as it has in the past, then it all comes out in the wash. If we try to relate wages to historical prices and they fall next year, we are better off. If they rise next year, we are worse off. It all comes out in the wash.
If the Government are right and the RPI is now heading steadily downwards, never to rise again, to the 0 per cent. in which Mr. Lawson used to believe, then we can afford it. If we have a declining RPI which
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will not rise in the foreseeable future, we can afford real wage growth. If, as I suspect and as many speakers on this side have said, the forecast of a 5 per cent. RPI by the end of next year is hopelessly optimistic, then it is a good thing that we should not seek to link pay settlements to it.
I believe that even this Government could get somewhere near common sense if they would say, for example, in the public sector and certainly generally that a historical measure of the RPI is the best way to talk sense about wage settlements. There may be companies that cannot afford the RPI. They have to say to their employees that this year the RPI means bankruptcy. That makes sense. Other companies will say to their employees, "We can only just afford the RPI. If you want more than that there must be a contribution, some productivity, some improvement". At least in those circumstances we have a base of sense on which to talk.
In the meantime and in any case, I reiterate my questions. Do the Government consider that declining real wage growth is a key to recovery? If so, for how long? How much? How do they believe it would affect unemployment? Why not accept the case for a historical RPI?
8.7 p.m.
Lord Briginshaw: My Lords, I rise to support the amendment proposed by the noble Lord, Lord Williams, and congratulate him on his presentation. I should like also to make one or two brief remarks in response to Her Majesty's Government's proposals for the coming Session. I wish to talk about three subjects which, for our purposes, can be called: the big problem; the big question and the big idea.
What is the big problem? It is that this Government have, after 10 years in office, utterly and miserably failed to place the nation's economy on an internationally competitive footing. How has this come about? The answer is depressingly simple. The Government have sacrificed, are sacrificing, and plan to continue to sacrifice, our manufacturing industries and capacity in favour of what can only be described as speculative and short-term economic arrangements.
We need look no further than the square mile for the evidence. The City's verdict on the ill-timed entry into the European exchange rate mechanism makes plain the Government's failures. The exchange rate mechanism was not designed as a panacea. Its stability is only valuable as a background to proper economic management. It is a facility rather than an answer to the problem. Its likely short-term effects make this abundantly clear.
It is possible, though far from certain, that come the spring there will be a temporary revival in the southern British economy based on an easing of interest rates. The property sector may recover enough to enable those who are clever enough to do so to take their money and run. The aim, of course, is to shore up the crumbling walls of the so-called Tory heartlands. Interest rates, however, can only ease if the pound remains at its current high level. This is not good news for our manufacturing industries, still based largely in

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the Midlands and the North, as they need a lower pound to compete in the international market place. By entering the exchange rate mechanism with this high pound, the Government have ensured that manufacturing industry will suffer in the coming year. They have once again sacrificed a prospect of sustainable growth for political rather than economic gain. We admire the Germans and the Japanese. However, they are not sacrificing their manufacturing sectors. They encourage them at all costs. We should do likewise. However, there is no such encouragement outlined in the Government's plans for the new Session.
What, then, is the big question that I referred to? It is the question of who will manufacture and sell the goods to satisfy the vast market that is unfolding to the east of Germany. It looks at this moment as if the American/German axis will supply the mechanics of the answer to what has been the most important question to face Europeans this century. A conclusion that denies British interests is not however inevitable. The expansion of potential and existing trade eastwards will take up much of the next four decades. If, in the short term, manufacturing industry is given the support it deserves and in the long term proper investment in education and technology is made, we can still participate in the prosperity that we would otherwise miss.
Finally I turn to the big idea that I referred to. My party espouses this idea of education. A skilled and educated workforce is the greatest form of long-term encouragement to manufacturers who seek to compete with the Germans and the Japanese. Patchwork measures such as a few city technology colleges do not qualify as encouragement in the real world. What is needed is billions more pounds than the sums currently proposed to be spent on creating a modern and technologically advanced educational infrastructure. It is all very simple. Better education means greater manufacturing strength.
8.3 p.m.
Lord Boardman: My Lords, I join other speakers in congratulating the noble Baroness, Lady Castle of Blackburn, on her maiden speech. I do so with particular pleasure because I made my maiden speech in another place on an occasion when the noble Baroness was on the Front Bench conducting a transport Bill through that House. I am afraid that I made far less impact upon her and upon the House on that occasion than she made upon me and upon this House on the occasion of her maiden speech today.
The topical issue today is the amendment which has been moved by the noble Lord, Lord Jenkins of Hillhead. However, before I discuss that, I must refer to the amendment moved by the noble Lord, Lord Williams of Elvel. All kinds of statistics have been bandied across the Floor of the House. I do not propose to do likewise. I noticed that the noble Lord, Lord Callaghan, perhaps drawing inspiration from what the noble Lord, Lord Donoughue, said, drew his figures from a date which happened to be particularly
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convenient for him. We are now in a period where the economic position is less favourable than it has been in the past.
I shall sum up the present economic position by saying that we have had 11 years of ever-increasing prosperity. Rising standards of living have occurred in that period. The noble Lord, Lord Peston, shakes his head, but he can argue with me when he has the opportunity to speak. There has been rising prosperity and rising standards of living for young and old alike across the board. The noble Lord will no doubt try to refute that but I hope he will choose his statistics less selectively than has been the case in some speeches today.
As I have said, the economic position today is less favourable than it has been in the past. We are going through a difficult period. We are going through what I believe was referred to earlier this afternoon as a technical recession. However, that phenomenon is very different from the kind of depression which previous generations experienced when the economy of this country suffered from bad political management.
I believe that the main cause of our present downturn, if it is a downturn, was mentioned by the noble Lord, Lord Williams of Elvel. There is no doubt that overgenerous credit has been granted worldwide in previous years. Today this has resulted in a worldwide credit squeeze. That applies across the board. The Opposition cannot deny that. When I was a banker I was constantly criticised for the banks having failed to provide the money needed to enable expansion and growth to take place. Now my successors are criticised by the very same people for making improvident loans which are causing problems as regards repayment.
As I have said, there is now a worldwide credit squeeze. That is having, and will have, an adverse effect upon world trade for some time to come. The United States of America, Japan and Europe are all suffering from similar symptoms. This situation may well last throughout the year ahead. Britain has now entered the exchange rate mechanism. That is imposing, and is intended to impose, a severe discipline upon us. Your Lordships will recall that that step was necessary as the value of sterling had fallen by an average of 5 per cent. per annum against the deutschmark since 1970. Therefore United Kingdom exporters were able to retain their markets while increasing wages to a higher level than those of Continental firms. However, the exchange rate mechanism will mean that such a process will no longer be possible.
Increases in wages must now be in line with those of our major competitors in Europe or else we will suffer a heavy loss of jobs. I hope that noble Lords opposite, including the noble Lord, Lord McCarthy, who has now left us, will wish to press for salary and wage restraint in line with that in the Community. That is a strong medicine and in the short term it will he quite painful and not entirely pleasant. However, I believe it is right. The noble Lord, Lord Callaghan, referred to the point at which we entered the exchange

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rate mechanism. He asked whether the figure of 2.95 deutschmarks was correct. I do not know whether that figure was right. It was a difficult decision which had to be taken. However, on balance, I support the Chancellor in fixing the rate at that point.
There is one area of the economy which causes me exceptional concern; that is, agriculture. My noble friend Lord Alexander of Weedon referred to this matter earlier. I do not wish to start a discussion on agriculture but I must voice my concern. I believe agriculture is the most important industry in this country and it is getting a raw deal both from the Community and beyond. There are signs of major bankruptcies occurring. My noble friend Lord Young of Graffham referred earlier today to transatlantic telephone calls. He gave an example of where competition had brought down the price of transatlantic calls. He appeared to challenge any other industry to match that achievement. However, agriculture is suffering from prices which in real terms are far below those which existed even before the war. I believe the consequences of that are somewhat alarming. I do not expect my noble friend to deal with this matter today, but it is an area which demands special attention. I should declare an interest because I have a small involvement in a farming business.
I turn now to the amendment standing in the name of the noble Lord, Lord Jenkins of Hillhead. I recognise that we shall have an opportunity to debate the Select Committee report in a few days' time and that perhaps it would be more appropriate to save most of my remarks for that occasion. However, one cannot avoid mentioning the single currency in an economic debate because it is such an important factor in our economic planning for the years ahead.
I hope that I am a good European. I have consistently supported measures aimed at producing a wider and fairer Europe. I see the attraction of a single currency, but I also see some of the problems. It must inevitably mean a European central bank with authority over many matters which are at present under the control of individual nations. It must mean control of our monetary policies, control of interest rates and the pooling of reserves of gold and foreign currencies. Those are major decisions. It is also conceded by all the advocates of a single currency that it must mean a degree of political union. At the same time it must be free of political control.
The Bundesbank is often quoted as an example of the type of central bank that Europe should have. I question, however, whether it has the degree of independence that some advocates claim for it. Dr. Pöhl himself, when giving evidence earlier this year to a select committee, said that Parliament could change Bundesbank law with a one-vote majority. That is not complete political independence. We all know that when a very important decision had to be made on the basis on which the deutschmark and the ostmark would merge the decision was more that of Chancellor Kohl than of Dr. Karl Otto Pöhl.
If there is to be a European central bank I question how it would be created and democratically controlled. Earlier the noble Lord, Lord Moran,
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referred to an article in The Times today which mentioned the draft statutes which had been agreed, but not published, by the central bank governors and apparently claimed that a European central bank must be independent. I understand that. So too must all the national central banks, which again I accept would be a logical consequence. The draft statutes also state that the governing council should be appointed by the Council of Ministers. Its members should have long tenures and should not he subject to recall or replacement by national governments or the European Parliament. I ask, therefore, how democratic control is to be exercised. I wonder how many of the other 11 members of the Community would be prepared to leave their economies to be ruled by such an undemocratic process. Of course I see the attraction of a single currency to tourists, exporters and, largely, to the City.
Tonight is not the time to deal with questions of regional policy. That is a matter which I hope can be debated when we debate the report some time next week.
Finally, it would be ironic if Europe were to move towards a federation or confederation, or whatever name is given to it, because the pooling of our resources into a European central bank with political and monetary union must move in that direction, while at the same time the other major economies were delegating such authority to their constituent parts, such as in the USSR. Those are matters which need consideration. I have no concluded view. I am not trying to be an advocate for or against, but I believe that the proposals need much more thought, not just by us but by the other countries involved in the operation. I hope that that consideration will be given before any decisions are made.
8.25 p.m.
Lord Mulley: My Lords, the House always listens with great respect to the noble Lord in view of his wide experience and the well-informed contributions that he makes to our debates. However, I fear that on a number of the points I cannot agree with him. I agree entirely however that the position in Europe is central to the whole of our economy.
I had thought of making a comparison and taking Shakespeare's words that a rose by any other name would smell as sweet and saying in reverse that a recession by any other name is equally unpleasant and disastrous. I cannot possibly agree with the noble Lord, Lord Boardman, that we are now in the midst of a technical recession. That is a new term. My noble friends have already documented the extent to which the economy is on an uncontrolled downward trend. I would go so far as to say that we are back to the dreaded stop-go method of controlling the economy which was the nightmare of successive governments in the 1960s and 1970s. One stopped when there were desperate balance of payments problems and then boosted the economy in the month before one expected to have a general election. That, at least, was the policy of successive Conservative governments. It is very likely that that is what is happening now.

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We all thought that once we had the God-given gift of North Sea oil the position would change and we would never have the problems suffered by the governments of which I had the privilege to be a member under the noble Lords, Lord Wilson and Lord Callaghan, of facing the IMF simply because of the lack of exports to sustain necessary imports. It was widely believed that the 1979 election was a particularly good election to win because the new government would have the benefit of the flow of oil. I venture to say that if anyone in your Lordships' House had suggested at that time that the deficit on the balance of payments, which was £1 billion, would amount to £15 billion in 1990 it would have been widely thought that there was a second reason why that noble Lord should not have a vote in parliamentary elections.
In the same way, I believe that anyone who years ago had predicted the present dramatic changes in Eastern Europe would have found little support. We discussed such questions in detail yesterday but they have a bearing on our economic circumstances. I confess that I am anxious about the position of President Gorbachev, without whose immense influence the transformation in Eastern Europe could not have happened. I cannot understand why we do not raid the larders of the Community and get rid of the stocks of meat, milk, cheese and even the wine lake and send them out there. President Gorbachev does not need lectures on capitalist economics or how to run a market economy to sustain him. He needs something to put on the shelves for the consumers. It is widely understood that living standards in his country are a great deal lower today than when he first came to power. I should have thought that what I propose, together with assistance from our friends in the United States and Canada who must have plenty of grain which they could contribute, would make the transformation which is essential for stability in Europe.
I want particularly to talk about our relations with Europe and what, I believe, sadly, is a history of lost opportunities. Until we can assess the situation with our European friends we need to face up to what place and role we have in the world—something that we have never done. There are still those who think that we are a great power; we are not. In my view, we cannot be a great power. As my noble friend Lord Williams pointed out in moving his amendment, in what I thought was an extremely able and persuasive way, our standard of living was certainly higher (with the possible exception of neutral Sweden and Luxembourg, based on the steel industry) than anyone else's in Europe in 1945 and in 1957 when the Common Market started. Now, except for southern Italy, of the original Six we are well behind. In my view we have not faced up to the circumstances of a changing world.
In a sense, I think one can compare our problem with that of Austria which in 1919 found itself to be a very small state, having had an enormous empire. Austria had a bad time over the years, ending up, as
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one knows, with the Anschluss to Nazi Germany. They faced up to the situation, and Austria is now a very prosperous country.
I feel it is probable that in our relations with our European friends we have lost 45 years. My own views about European union were shaped by that great European, Jean Monnet. I had the privilege of visiting him when he had just become president of the Coal and Steel Community. After dinner in a long conversation, fortified, I confess, by some excellent brandy from his family firm, he persuaded me of the essential role that we all had to play in Europe. He said that as a Frenchman he believed France had a contribution to make to the world and could not make it alone. That was why he felt that France had to work in conjunction with European allies. As an Englishman, I believe we have a contribution to make. I also believe we cannot do it alone. That is why we should use the Community to pursue the ends that all of us wish to achieve.
I accept that since we were offered the leadership of Europe at the end of the war and turned it down, it could be alleged that the Labour Government of the late Clement Attlee and Ernest Bevin were mistaken in not joining the Coal and Steel Community in 1951. But I think they had already done a tremendous job in harassing, or rather harnessing, the United States to Europe (with a little bit of harassment as well) through the Marshall Plan and the Treaty of Brussels which led to NATO. I think their contribution was enormous and will be duly recognised by history. But in those circumstances one can understand that they tended to have a transatlantic rather than a European view. I am bound to say that many thought that the idea of a supra-national authority was a totally alien concept. I recall people flicking their fingers through the index of Erskine May and not finding any reference to it at all. That was one opportunity lost.
There were great expectations in Europe when the 1951 Government came to power because that great man, Winston Churchill, had raised many expectations in Europe with his speech at The Hague, his great oratory at the foundation of the Council of Europe, and his proposal that there should be a European army. There was great disappointment in Europe when it was found that he followed the same foreign policy as his predecessors.
It is worth reflecting that the reason that the concept of a European army failed was because France was not prepared to join together with Germany without us. That is in stark contrast to the recent history of the Community when we have all been a little concerned about the dominance of the Franco-German alliance. It was possible for German re-armament to take place only when, in the modified Treaty of Brussels, we committed ourselves, uniquely within NATO, to a 55,000-troop commitment and a tactical air force commitment on the Continent. In the contributions that we have made to NATO we have stretched our resources rather more than we should. The fact is that we missed all those opportunities. I was not surprised when Paul-Henri Spaak told me that it was his intention next time not to get just some

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commodities into a European framework; but they were going to have something which would control the whole of the economies. That led to the conference at Messina which led to the Treaty of Rome. For reasons that I have never understood, we were not represented, even by an observer, at the Messina Conference. We lost a great deal as a result. I am quite certain that things would have been very different had we been there. People sometimes talk nonsense when referring to sovereignty; it is quite ridiculous because every time one signs a treaty one does it in good faith; one is giving up a certain amount of one's sovereignty. In a rather important area, the British Parliament has given de facto if not de jure sovereignty to the Falkland Islands—to what I should imagine amounts to a rather small parish council—by giving them a veto over our affairs with the Argentine. In this day and age in no way can it be accepted that one can be totally in charge of all one's affairs.
Although belated, I welcome, as did the noble Lord, Lord Boardman, our membership of the ERM. Unlike him, I think that we have gone in at the wrong time, at the wrong parity and for the wrong reasons. I have never been taken with the idea that sterling is something sacred; I believe it is so only in politicians' speeches, not in any other real sense. One understands that when one runs at a very adverse balance of payments deficit, to have a lower rate of sterling against the mark and other currencies is in the short run an immense problem. It increases the attraction of imports and probably makes it more difficult to get a quick balance. But in the long run it is the only way to reach a solution; namely, more exports and fewer imports. I have never been persuaded that we should allow sterling to dictate our economic policy.
Equally, I believe that a great deal of nonsense has been talked about the importance of a high rate of interest in order to bring down inflation. While I was very much in agreement with the noble Lord, Lord Boyd-Carpenter, who stressed the importance of indirect taxes in pushing up the inflation rate, for many people their increased poll tax is rather more serious than marginal increases in VAT.
Let us face it. The real reason that the rate of interest came down, and why we joined the ERM to obtain some stability for sterling, was because it was widely reckoned that with the likely loss of capital through the decline in the value of the pound because of our declining economy, we should not be able to borrow the necessary money to bridge the deficit between our exports and imports. That is the main reason why a fall—in my view a too small fall—in the interest rate occurred. However, whatever happens down the corridor was put into perspective by a French journalist. This morning on the BBC, when asked his view about whether or not there would be an election within the Conservative Party, he said, "It will not make front page news in France. We have far more serious issues to consider. We have a students' strike at the moment." It is probably salutary to consider matters in that context.
We must avoid some of the mistakes that we have made in the past, very largely from a lack of
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understanding. We have not accepted as right some of the different procedures—in parliament and in government—that our Continental friends adopt. However, we should avoid the arrogance of saying that our way is the only way and necessarily the best. We would do better to listen more, to learn, and to preach rather less.
The preamble of the Treaty of Rome is in very eloquent prose. It states the virtues—and I believe in many of them—of a collective Europe and its contribution to world peace and prosperity. Among the annexes and protocols one finds, for example, that there had to be special arrangements for Luxembourg agriculture. I did not realise that in the 1950s this was one of its problems. I thought it was prosperous as a result of the Arbed steelworks. We also find a special arrangement to import an extra quota of bananas to Germany. We find special arrangements for imports of unroasted coffee beans to Italy and the Netherlands. In a sentence, one has to speak the language of the preamble and look after one's national interest, as in the spirit of the annexes.
My experience in Europe is that if one is thought not to be looking after one's own national interest, there is something extremely suspicious about one. I worry every time the right honourable lady the Prime Minister embarrasses 11 colleagues by banging the table and saying that her job is to look after our national interests. What does she consider that the other 11 are engaged upon in that gathering? I suggest that the difference is that many of them look after their national interests rather more effectively and efficiently than we have managed to look after our own.
Finally, I know that it is the greatest crime in politics to be right if one's party is wrong. If one is wrong and the party is right one can be forgiven. But if it is the other way round, one is never forgiven. However, in the interests of Europe and of our own national interests, I believe that many more people in all parties ought now to take that risk.
8.45 p.m.
Baroness Seear: My Lords, first I should like to join with others who have congratulated the noble Baroness, Lady Castle (elusive though she may be) on her very powerful maiden speech. It was a remarkable speech. To have achieved triple maidenhood must be a near miracle. In addition, I should like to say how grateful I am, as another woman, to the noble Baroness for all that she has achieved in her career on behalf of women. It will not surprise noble Lords that I frankly do not agree with a great deal of what the noble Baroness says or does. However, I very much agree with the work that she has undertaken in that area. She and Margaret Thatcher—and I recognise that they are not always coupled together—must forever have killed the myth that women do not have the stamina, the toughness, the determination, or even the sheer downright beastliness when required, to play the game of politics and to play it very successfully.
Looking back over the past 20 years, I am also extremely grateful to her for the initiative that she

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took to get the equal pay legislation on to the statute books. No doubt she had to fight not only opponents on the other side of the House, but opponents inside her own party. I was never privy to those debates but it would surprise me very much if she had not encountered considerable difficulties on both sides of the House. However, the determination that we saw this afternoon carried it through. Ahead of what was being done in other countries in the Community, it was the start of the improvement of the position of women which was of the greatest importance and which we undoubtedly owe to her.
Listening to the speech of the noble Lord, Lord Williams—it now seems a long time ago—I felt that one had to have a very short memory if one were to accept the argument implicit in everything he said: that the Labour Party is the party of financial responsibility, efficiency in government, and clear economic vision; and that its economic policies had brought success to this country, and would do so again.
In my pocket I have a little chart. It shows the decline of the UK share in world markets in manufacturing. It is a steady downward trend through both governments with very few upward blips. It is a decline in both volume and in value. When the noble Lord spoke of the failure of the Government to control inflation, I cannot but remember the days when, for example, the noble Lord, Lord Shepherd—sitting where the noble Lord, Lord Belstead, now sits—stated in a debate in 1975 that the country looked over the abyss of appallingly high inflation and then drew back.
Nor can I forget the heavy overmanning that characterised industry during the days when Labour was in power. They were unable to tackle it because of their subservience to the trade unions. I know that the noble Lord, Lord Bruce, wishes to take me by the throat, but I do not propose to give way at this time of night. Nor do I forget the inadequacy of the Labour Government's contribution to training and to education. It is our greatest disaster that we are woefully behind our competitors in Europe and in the Asian countries in good training. However, that did not start with the Conservative Government. The Labour Government had been in office long enough in order to have had an opportunity to put that right, and that they failed to do. There is great joy in Heaven over the one sinner that repenteth, and I am almost prepared to believe that the Labour Front Bench here has repented. We may or may not have the opportunity to see whether they can put their new determination into practice.
That being so, on the Government's performance, which is what we have been discussing today, I would say that in the early days of the Conservative Government they did a number of things that very greatly needed doing. They took on the issue of the trade unions. That needed to be done. I remember canvassing in 1970 in my last totally unsuccessful attempt to get into another place and being told in
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Labour neighbourhoods, "We are Labour here, of course; but what are you going to do about the unions?"
I believe that today the Conservative Government have gone too far in their attack on unions; and you cannot run an industrial country without some trade unions. However, the unions were completely out of hand before, and the reforms that were brought in were necessary. Also necessary was a very great deal of the de-manning inside industry. Industry needed to be made a great deal more efficient. Those of us who studied these things at the time know perfectly well the comparative studies which were done inside companies then using the same machinery and making the same products in different countries. They proved again and again the low level of our productivity in relation to the productivity of factories in other countries. The noble Lord, Lord McCarthy, talked about levels of pay. I was very interested because at no point did he talk about the relevance of levels of productivity in relation to levels of pay. He talked only about the RPI in relation to levels of pay. But surely both must be taken into account if you do not want inflationary pay settlements of one kind or another. I agree that excessive payment to top managers has been unwise and has given an extremely bad example.
However, just to get the record straight, I should like to say that while the increases to the very top people have been outrageous in many cases, the average level of pay to our managers in this country is low in comparison with their competitors elsewhere. That may in fact have something to do with our poor performance. But it is by no means as simple an issue as has been represented by some speakers today here and elsewhere. There were therefore some very big improvements, and getting into people's heads the value of the market—something which we have heard very little about—and the importance of competition have been genuine gains.
Having said that, things have gone pretty badly wrong since; and I think there is a bigger failure on the part of the Government. I should like to spend a little time on that aspect. I believe that the years 1989, 1990 and 1991 will be seen in the future as historic years of major dramatic changes in the world, politically and economically. We are moving into a global economy. The changes are of a very great order of scale and importance and I do not believe that this Government have framed strategies on a long-term basis to deal with the totally new order of challenge with which we are being presented at the present time.
I should like to give one or two examples, but before doing so I should like to give the Government up-to-date credit for one thing, and here I echo the noble Lord, Lord Alexander. I am very glad that they are fighting for the Uruguay round. Strong European though I am, I am ashamed that we are holding up the settlement of the Uruguay round because of differences in farming policies inside Europe; and the Government are right to be fighting this battle. However, as I said a moment ago, they have not

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prepared adequately either themselves or the country for the scale of change with which we are being confronted.
The scale of change is global. I have just mentioned the Uruguay round, and part of that change involves our attitude towards developing countries: our trade with them, our policies towards them, our debt policies and our policies in relation to population. These all form part of the problems of the economy and tonight does not give us time to spend on them. However, I would remind your Lordships that in this great global change that is going on we are facing a doubling of world population between now and the year 2025. That is a figure which dwarfs almost all other figures in importance economically, politically and socially. Any policy dealing with the change that is going on in the world as a whole must be a policy to deal with the problems of developing countries.
Not least of those problems is the poverty of those countries; so there is management of debt, there is trade and, used judiciously, aid. There are opportunities for training there. The need is of the highest order and we have heard very little about it. There is very little, if anything at all, in the gracious Speech about what attitude we are going to take towards that whole segment of the world, which is important not only in its own right but important to our trading position in the future.
Then there is the problem of getting our competitiveness right in two major ways. We have talked about it so often before. Infrastructure is one element and making the most of the opportunities which will open up with the Channel Tunnel is another. How extraordinary it is that the money has gone into the Channel Tunnel but that we are failing to provide the necessary transport links so to make it possible to put goods on the train in Liverpool or Newcastle and take them off in Dusseldorf. Money invested to achieve that would pay off in a very short period of time in so many ways; in straight trade terms and in the alleviation of unemployment in various parts of the country. It is so short sighted. I think it is the short-sightedness of the Government for which they are most culpable. It is so short sighted not to see that money put into this now will pay dividends again, again and again in the years not very far ahead.
As to training and education, I have talked so often about this that perhaps the noble Lord, Lord McCarthy, might say it should be put to music because it is the same old song. But the fact remains that we are grossly behind and the tinkering that we are doing in those areas at the present time does not begin to meet what is needed. There will not be work for the semiskilled, and the unskilled in this country and in the highly industrialised countries of the world in the future, except for a very small number.
We should be looking in every possible place and seeking in every possible way to up-rate the levels of knowledge, skill and competence of all the people in this country, young and old. The sixteens to eighteens are very important indeed; but so are a great many people in the older age groups, who, because they never had training before they left school and left
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school only too willingly, have never really acquired any skills or competences. Much can be done if the resources are there to upgrade those skills. The prejudice against employing older people is keeping many women of a high level of potential out of the labour market where they are very badly needed. These are just some of the major schemes on a long-term basis which we urgently need to have developed if we are to meet the real problems of the future.
Again, another example which has already been referred to many times today concerning the lack of a long-term policy of the Government is their attitude towards Europe. Of course we went into the ERM at the wrong moment. We went in at the last possible moment and we should have been in five years ago. We were urging the Government from these Benches to enter five years ago, and they did not do that. Changes are taking place whether or not we want them. I shall not spend a lot of time on this matter this evening because we shall discuss that next week when we debate the report from the Select Committee. However, unless we are there to influence what is happening, we shall lose out extremely badly.
We should have been at Messina. Had we been there, the balance in favour of agricultural interests against industrial interests would not have taken place because we, as an industrial power, would have ganged up in our own interests, as the noble Lord, Lord Norrie, said—and why not?—in order to see that there was a proper balance between the industrial and agricultural interests. However, we were not there. Again and again we have not been there.
Of course, I believe in the single market, a single currency and a central bank as general ideas. Nobody yet knows what their shape will be. The important matter is to be in on the shaping so that it comes out in a form and in a way which is acceptable to us. As we have said before from these Benches, the Government should not continue to say "No, no" but should say, "Yes, but" and be there to argue the toss. It is very important to be there to argue the toss.
Here I disagree with much that was said by the noble Baroness, Lady Castle. As she is now here, perhaps I may say to her how much I enjoyed her maiden speech although she would not expect me to agree with all of it.
I do not believe that Brussels should be laying down in detail what should be done in social terms. There should be some social programmes to match the economic development. Without that, there will be no economic development. That is two sides of the same coin. However, the details of that should not be laid down by Brussels. The details of general principles, laid down in Brussels and agreed by the Council of Ministers in the parliament, should be worked out in the individual countries. That is what subsidiarity—a horrible word—is all about. However, we should be there to explain what is involved in subsidiarity and to insist that we get it right and that the right decisions are made in the right places.

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On a previous occasion I believe that I quoted the words of Paul-Henri Spaak—a great socialist European. I make no apology for repeating those words because they are so apt to our circumstances today. Thirty years ago I heard Paul-Henri Spaak speaking in Chatham House, and he said, "At the end of the war you people in the United Kingdom could have done anything you wanted with Europe. We expected you, we waited for you, you did not come, so we went on alone". Are we going to do that again?
9.3 p.m.
Lord Peston: My Lords, most of the relevant topics have been covered. I hope therefore that I shall be forgiven if I concentrate on only a few themes. Of course, I begin by congratulating my noble friend Lady Castle on her maiden speech. I was particularly impressed by the balance of her exposition and by her objectivity. Perhaps I may echo the words of the noble Lord, Lord Walston. I cannot wait to hear her when she feels truly able to speak her mind.
I wish to deal with one remark made by the noble Lord, Lord Belstead, which was repeated by the noble Lord, Lord Boyd-Carpenter. The noble Lord, Lord Belstead, produced the standard cliché on wealth creation and the private sector. Is he saying that the purveyors of pornography in Soho are the wealth creators while the people in the medical profession who help the workforce to return to work are not? Is that what he means when he pushes the private sector against the public sector? Is he saying that the Sun newspaper, with its disgusting front page yesterday attacking his honourable friends, is an example of wealth creation while the teachers in our schools are not?
Both of those private sector activities are designed to make money. To my mind, or that of any reasonable person, that should not be called wealth. I believe that when noble Lords produce those clichés, they should reflect rather more on exactly what they are saying.
While I am criticising the noble Lord, Lord Boyd-Carpenter, I pursue the point made by my noble friend Lord Jay that the noble Lord should get his facts right. He referred to nine successive years of growth as being unprecedented in our economy. From 1959 onwards for 15 years there was continuous economic growth. Indeed, that was the heyday of Keynesianism and again that is something which he should not forget. Indeed, I believe that he was a Minister at that time and although it seems to me that he is currently anxious to go down with a sinking ship, he should not underestimate the contribution of his own government.
Lord Boyd-Carpenter: My Lords, while thanking the noble Lord for the compliment to the late Conservative administration, which is unusual from him, does he not realise that the long continued development under this Government is a complement and continuation of that? There is no conflict between the two ideas.
Lord Peston: My Lords, there is merely a conflict of fact. I believe that one should get one's facts right. He said that nine years is unprecedented, but 15 is a larger number than nine. Therefore, he is simply mistaken. That is the only point I am making.
While I am in this mood, perhaps I should make a similar comment to the noble Lord, Lord Boardman. He referred to 11 years of continuing prosperity. That number should be eight or perhaps nine because we do not yet have the figures for 1990. Noble Lords opposite seem to have a problem with 1981 and 1982. In both of those years output fell. Sigmund Freud may have understood their desire to repress those two years but it is somewhat beyond me.
Perhaps I may turn to the noble Lord, Lord Young of Graffham, who I cannot see in his place. When I was preparing for today's debate, I looked forward to hearing his speech. In particular I thought I should try to predict what he might say. In my personal life I am deeply conservative and absolutely hate change. The noble Lord, Lord Young of Graffham, did not let me down. He devoted the opening part of his speech to a personal attack on my noble friend Lord Williams of Elvel. He has been doing that for four years and much as I always seek to protect my noble friend, I was delighted that the noble Lord, Lord Young, did not feel able to change his standard pattern. However, he said something with which I agree. Indeed, the noble Lord, Lord Alexander of Weedon, said exactly the same thing. They emphasised the importance of the GATT round. It is vitally important that that should succeed. From reading newspaper reports many of us are extremely gloomy that the whole thing may collapse.
Curiously, the noble Lord, Lord Young, referred to the tariff barriers of the 1930s. I cannot help but reflect on the history of that time. It was essentially members of the Conservative Party who were the greatest exponents of tariff barriers in those days, aided and abetted by the Beaverbrook press. The great figure who encouraged us, when the war was coming to an end, to fight above everything else to move towards free trade was Maynard Keynes. Again, he was a figure much denigrated on those Benches. If one favours free trade arrangements and suitable monetary affairs one should recall the great contribution that Keynes made.
I turn to the remarks of the noble Lord, Lord Jenkins of Hillhead, who again does not seem to be in his place. I am not sure what is happening with his amendment; perhaps it has been withdrawn. We shall no doubt be told about that in a moment. I was surprised by some aspects of his comments. When I was a student I was taught, and still believe, that the essence of British parliamentary democracy is party government. I do not, and never would, apologise for being concerned with party unity. I make that point especially to noble Lords opposite as a non-party matter. Party unity is extremely important.
On the European issue I can say that I am in favour of the European Community. I regard those who take the opposite view as mistaken. I do not regard them as evil or as enemies. I simply disagree with them. Again

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addressing noble Lords opposite, as well as my own friends, I do not regard this great European question as a valid ground for leaving a party, let alone destroying a great political party.
I do not propose to say much more in this debate on the European Community or on EMU. I was a member of the committee chaired by the noble Lord, Lord Aldington. Its survey of the subject and analysis of the problems are first rate. In my view its conclusions are sensible, and your Lordships will be able to debate them in detail next week. I am not a Euro fanatic. If I may recycle an old joke, the only way I can retain my degree of pro-Europeanism is never to visit Brussels. Merely setting foot in the Berlemont converts me into a raging anti-European even more than one or two of my noble friends.
More seriously, realism requires us to recognise that we are permanently in the Community, and the only way to go is forward. I for one wish to see us lead that forward march in a sensible direction, not lagging behind like a recalcitrant child moaning and groaning and—to continue the simile—asking for a smack.
Perhaps I may refer briefly to a remark made by my noble friend Lord Donoughue which was of extreme importance. One or two noble Lords referred earlier to the reduction of the national debt and the government claim that that is some kind of achievement. Reducing the national debt simply involves a reduction in internal transfers from taxpayers to interest earners, and many of those are the same people. In discussing the cumulative balance of payments on current account deficit, the noble Lord, Lord Donoughue, put the figure at £50 billion but I would put it higher. He referred to that correctly as a reduction in the net assets of this country. That is what is so important and also so frightening.
Turning more generally to the balance of payments deficit, if there has been a supply side transformation, and if the rate of exchange was right—whatever that means—the deficit must be attributable to excess demand on a massive scale. But that excess demand is directly attributable to the Government's policies. All that can be said for the Government at the moment is that they are attempting to rectify, albeit belatedly, their own errors.
Unfortunately, matters are worse than that. We must ask what level of capacity utilisation and what level of unemployment the Government are aiming at. In particular, we must ask what they are aiming at which is compatible with a satisfactory balance of payments. The Chancellor of the Exchequer is careful not to tell us. However, we can infer from his pronouncements that it will he a long time before we return to anything like stability. The sustainable position for the real economy will continue to involve large-scale unemployment. In the Government's view, 5 per cent. to 6 per cent. unemployment is the best we can do even in the long term.
Finally on this point, to reiterate what my noble friend Lord Williams said, the Government's position implies that what is called core or underlying inflation will be permanently stuck at around 5 per cent. Per
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annum, which means that the value of money is halved every nine years. As my noble friend Lord Callaghan and others said, that really means that improvements on the supply side have been on an altogether smaller scale than the Government claim. Our manufacturing base is far too small. Without active policies involving more research and development and much more training we cannot reach a viable position. Apropos the Autumn Statement, it is disgraceful that in these circumstances the training programme is being cut back, that research and development is not given a central position and is not being strongly enhanced.
As for the rate of exchange, the silence on this matter is disturbing. I understand the anti-inflationary benefits of a high nominal value for the currency. However, that only works if those who set incomes and prices act rationally and rapidly. But what are the Government doing to encourage that? They are pursuing a covert incomes policy in the public sector. Clearly again from the Autumn Statement the Government expect workers in the public services to suffer real wage cuts in the coming year. That is so, even though no one is arguing that the cause of our troubles is excessive real wages in the public sector.
The Government offer pathetic exhortations to the private sector which in my view are echoed by even more pathetic remarks from the leadership of the CBI. Both the Government and the CBI were silly, as my noble friends have said, to reject the initiative offered by enlightened union leaders at the recent NEDC meeting. I should like to add, while on the theme of the CBI, that it looked as though the CBI had learnt that its role was not to be a slavish devotee of this Government. After all, the recent policy antics of this Government have been so damaging to British industry.
I cannot emphasise too much therefore my distaste at recent statements by the CBI which appear to imply that given a choice between a Labour Government which would help industry and the Conservatives, its friends, it would go for the latter. I remind the CBI, since there may be one or two noble Lords present who know the people involved, that it seems increasingly likely that there will be a Labour Government fairly soon and that leading figures in business will have to learn to co-operate with us, whether they like it or not.
Reverting to the rate of exchange, sadly one is obliged to take note of recent events in the Conservative Party. I had intended to refer to what has happened as the "twilight of the gods" but that would be to exaggerate the stature of some of the people involved. Nonetheless, the instability of government that has emerged and which must now, whatever happens, continue right up to a general election is extremely damaging to sterling.
I wondered why the Chancellor of the Exchequer, when he took us into the ERM, chose to go in with broad bands rather than narrow ones. It certainly did nothing for national pride to justify that, as he did, by drawing a comparison with Spain and Italy. However, now I understand. Clearly he had a very strong inkling of the likely political background and sterling could

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not have been kept within the narrow bands in the midst of a political crisis. As it is, the position remains perilous.
To get a perspective on the whole of Tory rule it is worth looking at some of the key ratios in the economy. What emerges is startling. Certainly over the decade—I take the whole decade of 1979 to 1989 and I hope I can be forgiven for not referring to 1990 because, as I said, we have not yet gone through the whole of this year—there has been a small decline in the ratio of current government spending to the gross domestic product. Noble Lords opposite may favour that but I, for one, do not—a point I have often made in the past. There has also been a rise in the ratio of total investment to GDP, but, as my noble friend Lord Williams and others have indicated, much of that is poorly structured and if we do take account of what I agree are the rather poor figures on depreciation it is not even obvious that net investment has risen at all.
What does stand out is the rise in the ratio of consumer spending to GDP, an even bigger rise in the import ratio, and a serious fall in the export ratio. That is what lies behind all our troubles. If one asks what has happened to North Sea oil, the answer is simply that it has been spent on consumer goods from abroad.
Recently, the Minister replied to a Question from my noble friend Lord Bruce of Donington, who emphasised the fall in the export ratio. My noble friend's view was rejected by the Minister, who quoted figures in constant prices to rebut my noble friend's assertions. However, my noble friend was right. When we refer to the balance of payments, it is figures in current prices that matter. That is why the fall in the export ratio is of such great significance. If the noble Lord doubts that, I point out that bills, not least those occurring on current account to our foreign creditors, have to be paid for in current money. I regret to say that one cannot pay in so-called constant money because there is no such thing, except in the minds of economists.
I come to my conclusion. I listened most attentively to the Leader of the House, but I have to say that it was not so much that I was puzzled by what he said in his speech but that he himself must have been puzzled by what he said. If there has been so much success, if people are so contented, if they are so much better off, why do all the tests of public opinion show the nation to be so pessimistic? Why do they view the future with such concern? Why are the Government so committed to so stringent a set of policies? Why are the opinion polls, let alone the by-election results, so bad for the Government?
Since becoming a Member of your Lordships' House I have learnt that the Government specialise in blaming everyone but themselves for our economic ills. Are they now, as it appears, to blame an ungrateful electorate? If so they must soon recognise that the ungrateful electorate has turned on them. For once the short-termism of the Government—by which I mean their desire to be elected no matter what
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happens to the country—cannot succeed. It is time for a change of government and a change of economic policy.
9.20 p.m.
Lord Hesketh: My Lords, I was in no way surprised by the speech of the noble Baroness, Lady Castle of Blackburn. I mean that in the most complimentary manner. I was expecting a superb performance. Your Lordships' House was well rewarded and its chalice overflowed. I cannot wait to see the noble Baroness when she is really in high dudgeon.
I now wish to make an apology. Earlier today when answering a Question I pointed out to your Lordships' House that I was unable to answer on behalf of the Financial Times. No doubt that was of great relief to the shareholders of the Financial Times. The noble Lord, Lord Bruce of Donington, had referred to a quarterly figure. It was for the second quarter rather than the third quarter to which I had referred. I did not have the second-quarter figure and was unable to confirm the figure that he gave. I am now able to confirm the fall of 1.8 per cent. I hope that the noble Lord will accept that my omission was not intentional.
The noble Lord, Lord Peston, went to some length to take apart the Government's record. A tremendous restoration has occurred this evening because in the noble Lord we saw a re-emergence of scientific socialism. The Government's aim is to keep firm control over public spending totals to bring a steady fall in the share of public spending in national income. That is essential to defeat inflation and to keep the burden of taxation to a minimum.
In this aim we have had success. Since 1982 we have reduced the ratio of public spending to national income by a full 8 percentage points from nearly 50 per cent. to under 40 per cent. In doing so, we reversed an upward trend which had lasted for nearly 30 years. In this survey, despite a weakening of economic activity, we have held the ratio stable for the next two years. In 1993–94 the downward trend is set to resume with the ratio falling to 39 per cent., the lowest level since the mid 1960s.
Our second aim has been to ensure that resources are directed towards priority areas of spending. Spending on the health service has been increased in real terms by nearly half since this Government came to office. In this survey we have provided for resources for the NHS to increase by £3 billion next year. We have protected these most in need. Planned spending on social security benefits is up in real terms by more than 40 per cent. as compared with when we came into office. Benefit spending for the long-term sick and disabled has more than doubled in real terms.
Investment in transport has been increased dramatically. During the next three years we plan to invest some £7 billion in public transport; that is twice as much as in the past three years. Spending on trunk roads and motorways will rise to more than £2 billion in the next three years. The settlement also allows local authorities to carry out road improvements worth nearly £2½ billion during the same period. All this has been achieved by careful budgeting within planning

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totals which are prudent and affordable. Total spending is projected to rise by 1·75 per cent. a year in real terms, well within the trend growth of the economy.
This Government's commitment to investing in infrastructure can be seen clearly by comparing our record with that of the previous administration. Investment in British Rail has risen by more than 40 per cent. in real terms. Under the previous government it rose by only 8 per cent. Investment in London Transport is up in real terms by more than 200 per cent.
Capital spending on trunk roads and motorways next year will be more than double the real level of Labour's last year of office. Under Labour, spending fell by more than 40 per cent. Capital spending on schools per pupil has risen by more than a quarter in real terms since 1978–79. Under the previous administration it fell by 60 per cent. Capital spending on hospitals in England will be nearly 60 per cent. higher next year in real terms than in 1978–79. Under Labour it fell by 16 per cent. We are now funding the largest ever programme of capital spending in the history of the National Health Service.
We are also investing heavily in improving the environment, in waste recycling, in energy efficiency programmes, in improving the quality of drinking water in Scotland and Northern Ireland where it remains in the public sector, and in building up our flood defences.
I have spoken at some length about public spending. I should now like to return to where my noble friend the Lord Privy Seal so eloquently began the debate—by discussing the economy as a whole. I am in something of a difficult position here. Traditionally a wind-up speech should address the issues raised during the debate. But after this particular debate, that will prove difficult. Many of the comments made and the suggestions put before us seem to apply to another age, a bygone age. I know that many noble Lords present would wish that they could turn the clock back 10 years to 1980, or better still right back to 1974, when we still had five years of economic mismanagement to look forward to. But they cannot. It is 1990 and the situation, as the Lord Privy Seal made clear, could not be more different from what it was then.
Those who wish to draw a comparison must be clinging to a straw. By highlighting the fact that 1980 was the last year that saw the economy's output actually fall for more than one quarter in succession, they beg the question as to what happened in the period between. I shall tell the House. In the 37 quarters since and the nine and a quarter years between the first quarter of 1981 and the second quarter of 1990, GDP has fallen only four times and each time for only a single quarter and by an average of 0.1 of a per cent. Much more importantly, for the other 33 quarters it has risen and done so strongly.
I think the House will agree that this is an impressive record of strength and stability especially when set against the previous decade when GDP was
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up one minute and down the next. It is also a record which puts the current slowdown in its proper perspective. Noble Lords are no doubt tiring of statistics and I sympathise. But they do need reiterating; otherwise those who work on the principle that if you say something enough times you will make it true will win the day. Fiction—and we have heard a good deal of it today—will supplant fact and we really will be back where we started all those years ago.
What are the facts? In 1990 the economy's output will be more than 25 per cent. larger in real terms than it was in 1979. In other words, after allowing for inflation, the economy is a quarter larger now than it was then. That is solid achievement. This growth has helped to bring about prosperity. Real personal disposable income has increased by more than a third since 1979. That is a fact.
The statistics leave no doubt as to the very real improvements in economic performance achieved by this Government. For my own part, I have never been completely comfortable surrounded by statistics. I hope that a simple analogy will work better. I hope that noble Lords will bear with me for a moment if I ask them to imagine the economy as a motive force, designed to move forward something like a train. After a necessary and for some an undoubtedly painful overhaul that was long overdue, the past nine years have seen impressive forward progress by the economy. As I have said, at times the speed has varied and there have been four brief halts at stations before the train has picked up momentum again. Now we are faced with another such halt. Some of the slowing down was entirely necessary. The demands on the engine in 1987 and 1988 were too great and it was in danger of overheating and wrecking the engine permanently. But this behaviour does not indicate any structural problem. The train has not been derailed as it was in the 1970s. This confidence stems from two features. First, because the private sector has been reinstalled in its rightful position at the front of the train, as I pointed out to the noble Lord, Lord Peston, recently, the whole of the economy will move and the whole of the community will benefit.
Secondly, the Government have thankfully given up their attempts at old-style demand management which, interestingly enough, I note will be restored. Indeed, I was fascinated by the interesting remark made by the noble Lord, Lord Peston, that industry will have to learn how to co-operate: "We the Labour Government have ways of making you co-operate; we know how to have a demand economy; and we know how to run industry better". It is very attractive. I have been at the DTI for only about three months and some days I already sense that I could be out there running an industry. The temptation is too great to resist. However, if there were a Labour administration the price we would pay would be borne by those least capable of bearing it.
My noble friend the Lord Privy Seal gave many examples of the improvements that have been made. I should now like to draw the attention of noble Lords to one particularly crucial area; namely, investment. It

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is perhaps less tangible than the increase, consumption that is evident all around us, but it is of equal if not greater importance for our future prospects.
The UK's record on investment over the 1980s as a whole is a microcosm of what the Government's approach has set out to achieve. In 1984 there was a major reform to the structure of corporation tax. The rate of tax was cut from 52 per cent. to 35 per cent., giving the UK one of the lowest rates in the industrial world—an incentive to invest in itself. At the same time, we scrapped the distortionary tax breaks which led to investment being undertaken as a way of reducing tax bills, rather than because it was expected to earn an economic return. We were told at the time that cutting back on investment tax breaks would lead to a collapse in investment and that no one would invest without the carrot of a 100 per cent. depreciation allowance in the first year. But what actually happened? After 1984 investment grew and grew. That applied particularly to business investment, which increased by 45 per cent. in the three years to 1989 alone.
It was not only, or mainly, the tax reforms which produced the investment boom. A lower inflation rate than that experienced in the 1970s provided the environment necessary for companies to plan ahead with confidence. There was a marked recovery in the rate of return, which meant that investment became profitable again—without tax breaks. Taking the 1980s as a whole, UK growth in business investment outstripped that of every other major industrial country with the exception of Japan.
By the end of the decade the United Kingdom was no longer investing at a lower rate than our competitors. Indeed, the proportion of GDP accounted for by non-residential investment in the UK in 1989 was among the highest of the major industrialised countries. Let me remind noble Lords that this investment record is only one aspect, albeit an important one, of the progress that has been made. Such progress will ensure that in the years ahead the United Kingdom, facilitated by the completion of projects such as the Channel Tunnel, will be competing alongside the best that Europe and the world have to offer. Let me also assure noble Lords that by simplifying the situation I have no intention of trivialising it—far from it. The Government are keenly aware that the current economic situation has left some businesses and consumers in difficulties. But the Government have never shirked from difficult circumstances.
Let us take the example of manufacturing. We heard much in the debate regarding its plight, as we have heard for much of the past decade. Incidentally, at times I wonder whether some speakers are aware of the other three quarters of economic activity which takes place apart from manufacturing. That is not to deny that manufacturing is still an important element in our economy. We have to face up to the fact that, as in all other major industrial countries, its
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importance has diminished over the past 30 years. I speak as someone who dirtied his hands bashing metal in the Midlands.
Nor do I wish to play down the traumatic experience of manufacturing at the beginning of the 1980s. But the manufacturing sector which emerged after that inevitable shakeout was more productive, more profitable, less strike prone, and much better equipped to hold its own in world markets, and that is borne out by the much improved performance of UK manufacturing since then. In each of the three years to 1989 manufacturing output grew faster than the whole economy, at an average annual rate of over 5½ per cent., and 1990 is likely to be regarded as the second year running that sees an increase in our share of world trade in manufactures. Until the 1980s, the story had been one of decades of decline.
There are two further items, one of which was mentioned by the noble Baroness, Lady Seear, who rightly pointed out that the solutions to the manufacturing problems are not entirely fiscal. The noble Baroness referred to the level of middle management pay; she may well have a good point there. We must remember something else. Manufacturers depend upon consumers. There has been a huge change. We are no longer making cars that no one wishes to buy. We are making cars that people wish to buy. Design is important. Marketing is important. The concept that by one twist of the economic button we can restore good faith in the nature of British manufacturing is a myth, and a dangerous myth, to sell to the country.
Notwithstanding that news, it is clear that our economy is in a difficult phase. The Government have no wish to conceal that and no interest in doing so. Rather the opposite. The more aware people are of the threat posed by inflation the quicker our current difficulties can be overcome.
Inflation must be squeezed out of the economy once and for all so that it can never return to plague us. As the noble Lord, Lord Harris of High Cross, pointed out, there is no room for complacency or half measures. The assertion that it is policy that has pushed the economy into recession conveniently ignores the threat posed by an inflation rate at its present level. The alternative to our tight policies to defeat inflation is a continuing acceleration of inflation. While inflation is not under control, the economy is existing on borrowed time, continually on the brink of a descent into economic destruction.
That is why the defeat of inflation remains the Government's overriding objective, and why we shall not reduce interest rates further until it is safe and prudent to do so. Membership of the ERM reinforces our counter-inflationary policy.
I refer now to the concise way in which the noble Lord, Lord Callaghan of Cardiff, summed up the position of the ERM and difficulties over the rate of entry. I was grateful, as I am sure were other noble Lords, for his summation, which was neat and easy to understand, which is a great advantage in all European matters. But the one figure that has never

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been given from the other side of the House all day is a suggested alternative rate at which to join the ERM. I have waited for suggestions from a party which is talking about power. No suggestions came.
Lord Bruce of Donington: My Lords, 2.60 deutschmarks.
Lord Hesketh: I turn now to the subject of economic and monetary union. I shall limit myself to a few observations since we shall be debating that important subject at much greater length next Wednesday. On economic and monetary union, the Government continue to play an active and a positive part in discussions—a fact which some commentators seem strangely to have ignored. Perhaps they have been dazzled by the brilliance of the federalists' rhetoric, for they certainly cannot have been looking at the substance. Others may have made grandiose statements. The UK has made concrete proposals.
One is tempted to contrast the ease with which some in the Community sign up to the Delors' prescription for a single currency with the difficulty they experienced in agreeing urgent practical proposals on GATT, which, I immediately concede, the noble Lord, Lord Peston, and my noble friends Lord. Boardman and Lord Alexander, pointed out. The noble Lord, Lord Walston, gave some interesting facts and figures which are worth thinking about. He brought to your Lordships' attention the reality of Eastern Europe's potential agricultural output. He reminded your Lordships' House that in 1939 Poland exported 42 million dollars' (1939 dollars) worth of agricultural produce. These are relevant and important issues to which we shall no doubt return.
The noble Lord, Lord Boyd-Carpenter, asked me to supply him with the information on tobacco. Men are still scurrying in Whitehall, but I fear I have to admit to the noble Lord that I do not yet have the figure and I shall write to him.
I turn to some of the points which were raised. Reference was made to businesses going into receivership. It is important to remember that business formation is still riding at high levels. It is worth remembering that business registrations, using VAT as the only way to obtain a reliable figure, were only 300 a week in 1980. Even today in difficult circumstances the 1990 figures still outstrip deregistrations.
The noble Lord, Lord Peston, referred to 1982 as another year of no growth. I am reliably informed that output as measured by GDP increased by 1.8 per cent. in 1982, if that is of use and assistance to the noble Lord. I do not intend to bandy statistics because of the lateness of the hour.
The noble Lord, Lord Boardman, referred to the noble Lord, Lord Callaghan, taking advantage of his better years. I feel that I could do nothing that the noble Lord, Lord Callaghan, would find to his benefit in arguing the toss over which year what happened. As a possible exception, I remind your Lordships that a matter not mentioned this afternoon is our old friend—or rather old enemy—the PSBR. That is a memory, and a fine thing that it should be so.
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The noble Lord, Lord Butterfield, drew your Lordships' attention to his failure in his obstetrics examination and that of his predecessor. The noble Lord congratulated the Government on the increase in funding that they had provided and it was gratifying to hear that at this Dispatch Box.
The national debt has been rather derided by the Labour Party, but as long as this Government are in office they have an interest in reducing the national debt. The noble Lord, Lord Moran, expressed concern over the public debate on European currency. He also regretted the trivialisation of the debate and referred to accountability. I am sure that he will return to the subject next week, and I look forward with interest to listening to him.
The noble Lord, Lord Bruce of Donington, made interesting observations on the value of the word "inevitability". The noble Lord, Lord Grimond, drew your Lordships' attention to indexation, which he deplores, and also to Scottish steel. He then went on in a separate reference to mention returns of British companies at 11 per cent. compared with German companies at 20 per cent. I should add to that the outcome of government intervention in the positioning of steel plants. There are three different positions which I believe are impossible to reconcile to produce a world leader.
The noble Lord, Lord Dormand of Easington, suggested that Ministers on this side of the House had no experience of unemployment. I wrote that down carefully. I assure noble Lords that I have had the experience of having to tell colleagues that they are unemployed. I remind the noble Lord, Lord Dormand, of what he said.
The noble Lord, Lord Donoughue, moved us into a four-argument reason why this Minister would be boxed in. The difficulty is that every box I have ever seen has six sides. I await with interest the remaining two arguments which will ensure that the noble Lord, Lord Donoughue, is correct.
Great play has been made on this side of the House of wealth creation, but very little reference has been made to it on the other side of the House. When we talk about wealth creation, let us consider what the Labour Party means by it. If I were asked to tell an English or foreign businessman what I knew about prospective Labour Party policy it would be that they announced one quite interesting proposal: a 10p. increase in the top rate of tax and the uncapping of NIC. I should have to advise someone that if they wished to come into the United Kingdom and start a business they could look to pay 70 per cent. tax as the cost of employing a manager in the UK. That is Labour's big idea to get us back on the road to success. However, I do not think it works.
The noble Lord, Lord Williams, in erecting his temple of doom, placed beautifully in its place, like a master mason, the theory which suggests that nothing has happened in 12 years and that the level of inflation is roughly the same today as it was in 1979. However, there is a vital difference. In 1979 inflation was going west to 21 per cent. whereas today it is going south to

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5.5 per cent. According to the great argument of the noble Lord, Lord Williams, whom I greatly admire, inflation was brought about through low interest rates in late 1987 and early 1988. I hope I may take advantage of the noble Lord, Lord Williams, in the subtlest of ways in pointing out that he was in a way insinuating that there had been a bonfire of financial vanities. However, it is worth recalling who else was standing behind and beside this figurative bonfire of explosive growth and over demand. It was said at the time that interest rates must be cut significantly. It was further said, "This is a time for judgment and that judgment decrees that there should be a big cut in interest rates". Thus spoke the Leader of the Opposition, Mr. Neil Kinnock. However, noble Lords may feel that he sometimes fluffs figures on television.
However, according to Mr. John Smith, a much admired man, then was the time to cut interest rates to stimulate the economy. The fact of the matter is that there is only one answer and that is to curb inflation. This amendment has one problem: it is 11 years too late. It should have been moved by the Conservative opposition in 1978 to 1979.
9.47 p.m.
Lord Williams of Elvel: My Lords, it is my duty to thank all noble Lords who have taken part in this debate. I thank the Minister for his winding-up speech, which was full of jokes. However, I think most of them were unconscious jokes. I understand that he is uncomfortable with statistics, but we shall get back to that matter in time. I am also glad to see so many noble Lords opposite whose faces I do not recognise. I am so glad that they have been attracted to your Lordships' House tonight by the quality of the speeches in the debate. My noble friend Lord Peston tells me that many of the noble Lords were not in the Chamber to listen to the speeches. However, I am sure they were listening very carefully in the bar, or wherever they were. It remains for me simply to ask noble Lords whether they agree with my amendment.
On Question, Whether the amendment shall be agreed to?
Their Lordships divided Contents, 87; Not-Contents, 171.

Division No.1

CONTENTS

Addington, L.

Ewart-Biggs, B.

Ardwick, L.

Ezra, L.

Barnett, L.

Falkland, V.

Birk, B.

Gallacher, L.

Blackstone, B.

Galpern, L.

Bonham-Carter, L.

Graham of Edmonton, L. [Teller.]

Bottomley, L.

Bruce of Donington, L.

Grey, E.

Callaghan of Cardiff, L.

Grimond, L.

Campbell of Eskan, L.

Haden-Guest, L.

Carmichael of Kelvingrove, L.

Hampton, L.

Carter, L. [Teller.]

Harris of Greenwich, L.

Castle of Blackburn, B.

Hatch of Lusby, L.

Cledwyn of Penrhos, L.

Holme of Cheltenham, L.

Cocks of Hartcliffe, L.

Hooson, L.

David, B.

Howie of Troon, L.

Dean of Beswick, L.

Hutchinson of Lullington, L.

Dormand of Easington, L.

Hylton, L.

Ennals, L.

Irvine of Lairg, L.

434

Jacques, L.

Peston. L.

Jay, L.

Pitt of Hampstead, L.

Jeger, B.

Prys-Davies, L.

Jenkins of Hillhead, L.

Rea, L.

Jenkins of Putney, L.

Richard, L.

John, Mackie, L.

Robson of Kiddington, B.

Kilbracken, L.

Rochester, L.

Kirkhill, L.

Roll of Ipsden, L.

Llewelyn, Davies of Hastoe, B.

Russell, E.

Lockwood, B.

Seear, B.

Longford, E.

Stedman, B.

Macaulay of Bragar, L.

Stoddart of Swindon, L.

McCarthy, L.

Taylor of Blackburn, L.

McIntosh of Haringey, L.

Tordoff, L.

Mackie of Benshie, L.

Turner of Camden, B.

McNair, L.

Underhill, L.

Mayhew, L.

Varley, L.

Milner of Leeds, L.

Walston, L.

Mishcon, L.

Wedderburn of Charlton, L.

Monkswell, L.

Whaddon, L.

Morris of Castle Morris, L.

White, B.

Mulley, L.

Williams of Elvel, L.

Nicol, B.

Winchilsea and Nottingham, E.

Ogmore, L.

Winstanley, L.

Oram, L.

Young of Dartington, L.

NOT-CONTENTS

Abinger, L.

Faithfull, B.

Aldington, L.

Fanshawe of Richmond, L.

Alexander of Weedon, L.

Fisher, L.

Allerton, L.

Forbes, L.

Ampthill, L.

Forte, L.

Arran, E.

Fortescue, E.

Barber, L.

Fraser of Carmyllie, L.

Bathurst, E.

Fraser of Kilmorack, L.

Beaverbrook, L.

Gainford, L.

Belhaven and Stenton, L.

Geddes, L.

Beloff, L.

Gibson-Watt, L.

Belstead, L.

Gisborough, L.

Bessborough, E.

Goold, L.

Birdwood, L.

Gray of Contin, L.

Blatch, B.

Grimthorpe, L.

Boardman, L.

Haig, E.

Borthwick, L.

Hailsham of Saint Marylebone, L.

Boyd-Carpenter, L.

Hardinge of Penshurst, L.

Brabazon of Tara, L.

Harmar-Nicholls, L.

Brentford, V.

Harris of High Cross, L.

Bridgeman, V.

Harrowby, E.

Brookes, L.

Henley, L.

Brougham and Vaux, L.

Hesketh, L.

Buckinghamshire, E.

Hives, L.

Butterfield, L.

Holderness, L.

Byron, L.

Hood, V.

Caithness, E.

Hooper, B.

Caldecote, V.

Howe, E.

Carlisle of Bucklow, L.

Hylton-Foster, B.

Carnock, L.

Ingrow, L.

Cavendish of Furness, L.

Ironside, L.

Clanwilliam, E.

Jenkin of Roding, L.

Cochrane of Cults, L.

Johnston of Rockport, L.

Coleraine, L.

Joseph, L.

Colnbrook, L.

Killearn, L.

Colwyn, L.

Kimball, L.

Constantine of Stanmore, L.

King of Wartnaby, L.

Cork and Orrery, E.

Lane of Horsell, L.

Davidson, V. [Teller.]

Lauderdale, E.

Denham, L. [Teller.]

Long, V.

Derwent, L.

Lothian, M.

Dilhorne, V.

Lucas of Chilworth, L.

Downshire, M.

Lyell, L.

Dudley, E.

McAlpine of West Green, L.

Eccles, V.

McColl of Dulwich, L.

Eccles of Moulton, B.

Mackay of Clashfern, L.

Eden of Winton, L.

Macleod of Borve, B.

Elibank, L.

Mancroft, L.

Ellenborough, L.

Manton, L.

Elles, B.

Margadale, L.

Elliot of Harwood, B.

Masham of Ilton, B.

Elphinstone, L.

Massereene and Ferrard, V.

Elton, L.

Merrivale, L.

435

Mersey, V.

Rochdale, V.

Middleton, L.

Rodney, L.

Monk Bretton, L.

Romney, E.

Montgomery of Alamein, V.

St. John of Fawsley, L.

Morris, L.

Saltoun of Abernethy, Ly.

Mottistone, L.

Selborne, E.

Mountevans, L.

Selkirk, E.

Moyne, L.

Shrewsbury, E.

Munster, E.

Skelmersdale, L.

Murton of Lindisfarne, L.

Southborough, L.

Nairne, Ly.

Stanley of Alderley, L.

Nelson, E.

Stodart of Leaston, L.

Norfolk, D.

Strathcarron, L.

Norrie, L.

Strathmore and Kinghorne, E.

Northesk, E.

Swinton, E.

Nugent of Guildford, L.

Thomas of Gwydir, L.

Oppenheim-Barnes, B.

Thorneycroft, L.

Orkney, E.

Tranmire, L.

Orr-Ewing, L.

Trefgarne, L.

Oxfuird, V.

Trumpington, B.

Park of Monmouth, B.

Tryon, L.

Pearson of Rannoch, L.

Ullswater, V.

Peel, E.

Vaux of Harrowden, L.

Peyton of Yeovil, L.

Wade of Chorlton, L.

Platt of Writtle, B.

Watkinson, V.

Plummer of St. Marylebone, L.

Wedgwood, L.

Polwarth, L.

Whitelaw, V.

Quinton, L.

Wise, L.

Radnor, E.

Wolfson, L.

Reay, L.

Wynford, L.

Redesdale, L.

Yarborough, E.

Renton, L.

Young of Graffham, L.

Renwick, L.

Resolved in the negative, and amendment disagreed to accordingly.
9.59 p.m.
Lord Jenkins of Hillhead: rose to move at the end of the Address to insert: "but regret that Your Majesty's Government persist in separating the single market from other European Community initiatives, notably a single currency".
The noble Lord said: My Lords, I am not a great believer in second speeches, particularly at this time of night. Therefore I am inclined to move formally my amendment. However, in view of the fact that the noble Lord, Lord Hesketh, did not reply to it at all, I must comment. At first, I thought that maybe it was a little discourteous; then I decided that it was a really wise move. The noble Lord is an ardent and buoyant government spokesman. Who knows what European policy he will have to speak to in two weeks' time? I congratulate him on his wisdom. I beg to move.
Moved, at the end of the Address to insert: "but regret that Your Majesty's Government persist in separating the single market from other European Community initiatives, notably a single currency".—(Lord Jenkins of Hillhead.)
On Question, Whether the amendment shall be agreed to?
Their Lordships divided: Contents, 32; Not-Contents, 149.

Division No. 2

CONTENTS

Addington, L.

Grey, E.

Barnett, L.

Grimond, L.

Bonham-Carter, L.

Hampton, L.

Craigavon, V.

Harris of Greenwich, L.

Ezra, L.

Holme of Cheltenham, L.

Falkland. V. [Teller.]

Hooson, L.

436

Howie of Troon, L.

Robson of Kiddington, B.

Hutchinson of Lullington, L.

Rochester, L.

Hylton, L.

Roll of Ipsden, L.

Irvine of Lairg, L.

Russell, E.

Jenkins of Hillhead, L.

Seear, B.

Mackie of Benshie, L.

Taylor of Blackburn, L.

McNair, L.

Tordoff, L. [Teller.]

Mayhew, L.

Whaddon, L.

Mulley, L.

Winchilsea and Nottingham, E.

Ogmore, L.

Winstanley, L.

NOT-CONTENTS

Abinger, L.

Howe, E.

Ampthill, L.

Hylton-Foster, B.

Arran, E.

Ingrow, L.

Barber, L.

Jenkin of Roding, L.

Bathurst, E.

Johnston of Rockport, L.

Belhaven and Stenton, L.

Joseph, L.

Beloff, L.

Killearn, L.

Belstead, L.

Kimball, L.

Bessborough, E.

King of Wartnaby, L.

Birdwood, L.

Lane of Horsell, L.

Blatch, B.

Long, V.

Boardman, L.

Lothian, M

Borthwick, L.

Lucas of Chilworth, L.

Boyd-Carpenter, L.

Lyell, L.

Brabazon of Tara, L.

McColl of Dulwich, L.

Brentford, V.

Mackay of Clashfern, L.

Bridgeman, V.

Macleod of Borve, B.

Brougham and Vaux, L.

Mancroft, L.

Bruce of Donington, L.

Manton, L.

Buckinghamshire, E.

Massereene and Ferrard, V.

Butterfield, L.

Merrivale, L.

Byron, L.

Mersey, V.

Caithness, E.

Monk Bretton, L.

Caldecote, V.

Monson, L.

Carlisle of Bucklow, L.

Moran, L.

Carnock, L.

Morris, L.

Cavendish of Furness, L.

Mottistone, L.

Cochrane of Cults, L.

Mountevans, L.

Coleraine, L.

Moyne, L.

Colnbrook, L.

Munster, E.

Colwyn, L.

Murton of Lindisfarne, L.

Constantine of Stanmore, L.

Nairne, Ly.

Cork and Orrery, E.

Nelson, E.

Davidson, V. [Teller]

Norfolk, D.

Denham, L. [Teller]

Norrie, L.

Derwent, L.

Northesk, E.

Dilhorne, V.

Nugent of Guildford, L.

Dudley, E.

Oppenheim-Barnes, B.

Eccles, V.

Oxfuird, V.

Eccles of Moulton, B

Park of Monmouth, B.

Eden of Winton, L.

Pearson of Rannoch, L.

Ellenborough, L.

Peel, E.

Elles, B.

Peyton of Yeovil, L.

Elliot of Harwood, B.

Platt of Writtle, B.

Elphinstone, L.

Plummer of St. Marylebone, L.

Elton, L.

Quinton, L.

Faithfull, B.

Radnor, E.

Fisher, L.

Reay, L.

Forbes, L.

Redesdale, L.

Forte, L.

Renton, L.

Fraser of Carmyllie, L.

Renwick, L.

Gainford, L.

Rochdale, V.

Gibson-Watt, L.

Rodney, L.

Gisborough, L.

Romney, E.

Goold, L.

St. John of Fawsley, L.

Gray of Contin, L.

Saltoun of Abernethy, Ly.

Grimthorpe, L.

Selborne, E.

Haig, E.

Selkirk, E.

Hailsham of Saint Marylebone, L.

Shrewsbury, E.

Hardinge of Penshurst, L.

Skelmersdale, L.

Harmar-Nicholls, L.

Southborough, L.

Harris of High Cross, L.

Stanley of Alderley, L.

Henley, L.

Stodart of Leaston, L.

Hesketh, L.

Stoddart of Swindon, L.

Hives, L.

Strathcarron, L.

Holderness, L.

Strathmore and Kinghorne, E.

Hood, V.

Swinton, E.

Hooper, B.

Thomas of Gwydir, L.

437

Trefgarne, L.

Wedgwood, L.

Trumpington, B.

Whitelaw, V.

Tryon, L.

Wise, L.

Ullswater, V.

Wynford, L.

Vaux of Harrowden, L.

Yarborough, E.

Wade of Chorlton, L.

Young of Graffham, L

Watkinson, V.

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 ten minutes past ten o'clock.

  REFUGEES: INCOME SUPPORT
  REFUGEES: INCOME SUPPORT