Sitting of 5 December 1991

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

    KING'S CROSS RAILWAYS BILL (By Order)
    Order for consideration, as amended, read.
    To be considered on Thursday 12 December.

Oral Answers to Questions
  HOME DEPARTMENT

    South Yorkshire Police
    Sir Patrick Duffy: To ask the Secretary of State for the Home Department if he will make a statement on current manning levels in the South Yorkshire police.
    The Parliamentary Under-Secretary of State for the Home Department, (Mr. Peter Lloyd): At the end of September there were 2,998 officers in the South Yorkshire police—an increase of 438 officers or 17 per cent. since 1979. Eighteen additional police posts were approved with effect from 1 October 1991 and a further 15 posts from 1 April 1992.
    Sir Patrick Duffy: Is the Minister aware that 21 years of casework in Attercliffe have left me wholly admiring of, and grateful to, the South Yorkshire police? I am confident that they could make the streets of South Yorkshire safer if they could expand their manpower levels just that little bit more, but within the scope of the present standard spending assessment. Will he ask his right hon. Friends the Home Secretary and the Secretary of State for the Environment to bring that home to the support services and the district decision-takers in South Yorkshire and to urge on them the prior claim of South Yorkshire police at this time?
    Mr. Lloyd: I agree that the South Yorkshire police have a good record. Crime is lower in their area than it is nationally and the clear-up rate is higher. The hon. Gentleman asked me about future numbers. South Yorkshire police have asked for 17 posts for the coming year; they have been given 16. The SSA is up by 17·4 per cent., which enables them to increase the precept by 15 per cent. They should have no difficulty in paying for those extra officers.

    Northumbria Police Authority
    Mr. Clelland: To ask the Secretary of State for the Home Department when he next expects to meet the chairman of Northumbria police authority to discuss resources in the area.
    The Secretary of State for the Home Department (Mr. Kenneth Baker): I met the chairman of Northumbria police authority on 1 November when I visited Tyneside. Northumbria has received a generous increase in standard spending assessment of 17·3 per cent. In addition, it will be eligible for up to £3·66 million under the urban crime fund initiative that I announced on 26 November. Both the SSA increase and the experimental urban crime fund demonstrate clearly the Government's continuing commitment to a high level of police funding. The police authority has been facing serious difficulty in meeting the additional costs arising from the disturbances in Tyneside in September, so I am pleased to announce today that the Government will make a special payment towards those costs, at a rate of 95 per cent.
    Mr. Clelland: That news will come as a welcome relief to the authority, which has been waiting for more than three months for a reply from the Home Secretary. Will he confirm that the 5 per cent. that the authority must now find from its budget is on top of the £4 million shortfall and the 116-officer shortfall in an area with rising crime? When will he get together with the Secretary of State for the Environment to put an end to the nonsense of capping, which is squeezing resources at a time of rapidly rising crime?
    Mr. Baker: I do not agree with what the hon. Gentleman has said. I ask him to reflect on my answer. The increase this year in the Northumbria police SSA is 17 per cent. In addition, there is the experimental urban crime fund, from which Northumbria can benefit by £3·66 million. The 95 per cent. figure is the highest level that we have granted for any riot expenditure, and could involve a sum of between £5 million and £7 million, depending on the claims. That is a very generous, but correctly generous, settlement for Northumbria.
    Mr. Devlin: I am sure that the people of Northumbria will welcome the excellent news that my right hon. Friend has given the House. Will he reflect on the fact that one of the most unpleasant duties of the Northumbria police is having to drag the mangled bodies of motorists from cars that have gone into ditches alongside the A1 while on their way to Scotland? The sooner that that road undergoes a major programme of improvement, with it possibly increased to motorway status, the better. Will he make the appropriate representations to his colleagues at the Department of Transport?
    Mr. Baker: That question goes rather wide of the main question. I have driven along that road to Scotland many times and I know that beyond my hon. Friend's constituency it is not so good. I will draw my hon. Friend's suggestions to the attention of my right hon. and learned Friend the Secretary of State for Transport.
    Mr. Sheerman: Can I put the Home Secretary back on the right road by telling him that the reason why morale in the Northumbria police force is low and why chief constables generally despair is not because the right hon. Gentleman suddenly makes a generous offer of help in a

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    crisis, but because all chief constables, including the new chief constable of Northumbria, want consistency of funding so that they can be sure that they will get the officers and resources they require over a number of years? This year it has been impossible to plan policing in Northumbria because the force has 112 fewer officers than last year. That is not the way to run a police force, and that is why police morale is low. When will the right hon. Gentleman give that consistency and leadership to the police and back them for a change?
    Mr. Baker: I remind the hon. Gentleman that since we have been in office there has been an increase of 693 officers in Northumbria's police strength. I approved an additional 26 posts from 1 October of this year, with a further 27 from 1 April of next year. The hon. Gentleman talks of the need for consistency, but the only consistency under Labour was in cutting the numbers of police—and at that time the hon. Gentleman was a member of the Cabinet.
    Mr. Beith: Will the Home Secretary bear in mind that the rural areas of Northumberland have been especially difficult to police while the urban areas have been under great pressure and there has been a shortage of officers? Will he encourage the chief constable in the task that he has set himself of increasing the number of officers available for normal duties within the community?
    Mr. Baker: I could not agree more with the hon. Gentleman. There is a very high proportion of police officers on the beat, although it varies from force to force. I should like about 80 per cent. of a force to be on the beat. I have spoken to the new chief constable of Northumbria and he is a most impressive officer. I am sure that the hon. Gentleman has met him. We discussed the problems of policing rural Northumbria as well as the towns and cities. The hon. Gentleman's points are well made and I am sure that he will draw them to the attention of the chief constable.

    Passport Agency
    Mr. Robert B. Jones: To ask the Secretary of State for the Home Department what measures will be taken by the United Kingdom Passport Agency to raise its standards of service.
    Mr. Peter Lloyd: The Passport Agency has been very successful this year in speeding up the processing of passport applications. It has recently completed a major computerisation programme which will enable it to improve its service to the customer still further.
    Mr. Jones: I am grateful to my hon. Friend for that answer. The Passport Agency deserves our congratula-tions on the improvements that it has already achieved. Does my hon. Friend agree that it is time for the public to play their part? As the vast majority of applications occur in the same peak period, should not people try to spread them so that there is not the same concentration? To that end, would it be a good idea to impose a surcharge on passport applications in the peak period and give a discount in off-peak periods, so providing an incentive?
    Mr. Lloyd: My hon. Friend is right to say that there has been an enormous improvement. The average turnround for a passport application in the last year has been six
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    working days. I agree that many applications come in the holiday period and that that makes it difficult to maintain that average. The Passport Agency is using advertisements to suggest that people renew their passports at other times of the year. It is for the agency to consider whether it would be sensible to alter the price for a passport depending on the time of year and then to make any recommendations to the Home Office.
    Mr. Ronnie Campbell: Will the Minister consider establishing a passport office in the north-east, because at present people must travel to Liverpool or Glasgow to find the nearest office?
    Mr. Lloyd: The hon. Gentleman might suggest that his constituents make their applications by post, as most other people do. It is an efficient service and it causes the customer much less trouble.
    Rev. Ian Paisley: Does the Minister agree that his decision to retain the passport office in Belfast was a good one? He made that decision having listened to representations from hon. Members from Northern Ireland. Will he commend the Belfast office for being at the top of the league of all passport offices for getting passports out quickly for the people of Northern Ireland?
    Mr. Lloyd: We listened to the representations of hon. Members from Northern Ireland, but, more particularly, we observed the great efficiency of the passport office. We not merely retained it but expanded it, and it has fully justified our confidence. I pay tribute to it.

    Car Thefts
    Mr. Battle: To ask the Secretary of State for the Home Department what recent representations he has received about his proposal to introduce a Bill to address problems of youngsters under 17 years stealing cars.
    The Minister of State, Home Office (Mr. John Patten): My right hon. Friend introduced a Bill last week to strengthen the law against those who criminally take other people's vehicles. We had numerous written and oral representations from hon. and right hon. Members and from members of the public. I am happy to report that they were all in support of an early change in the law.
    Mr. Battle: I welcome the Bill, but will the Minister take seriously the views of the chief constable of West Yorkshire, whose recent report on vehicle theft—which has reached 85 per cent. in Leeds and 53 per cent. in West Yorkshire—stresses the need for preventive measures to identify potential offenders at an early stage, rather than wait for tragedies to occur? Does the hon. Gentleman agree that one of those measures could be a Government publicity campaign to warn youngsters that car stealing is as dangerous as alcohol or drug abuse?
    Mr. Patten: I am glad that the hon. Gentleman is in favour of more Government publicity campaigns and I shall listen to his advice on that. I have not read the report of the chief constable of West Yorkshire, but I shall do so. Yesterday I was in Salford in the metropolitan police area and I went to a crime prevention scheme that endeavours to divert youngsters from continuing with or getting into car crime. It is an excellent scheme and such schemes should be developed more generally.
    Mr. Lawrence: Does my right hon. Friend agree that if more people locked their cars fewer 17-year-olds would get into them? If car manufacturers treated alarm systems as standard, there would be even fewer. Will the Government look into a way to encourage car manufacturers to install alarm systems as standard equipment?
    Mr. Patten: I agree with my hon. and learned Friend. My right hon. Friend the Home Secretary and I shall see British car manufacturers again in the near future to urge them speedily to incorporate immobilisation devices into cars. My right hon. and learned Friend the Secretary of State for Transport is doing all that he can within Europe to achieve the speedy adoption of a Europewide directive, on which Great Britain has been in the lead, to get our Western European car manufacturing colleagues to do exactly the same.
    Mr. Trimble: I welcome the Government's moves in that matter. Does the Minister agree that, although the problem in English cities is bad—I do not wish to underplay the tragedies that have occurred there—the problem in Northern Ireland, especially in West Belfast, is much worse? Many more tragic and fatal accidents have occurred there. Should not the Government act with similar urgency to remedy that situation?
    Mr. Patten: I understand that my right hon. Friend the Secretary of State for Northern Ireland is considering whether to change the law in Northern Ireland to meet the ends to which the hon. Gentleman referred. While noting that what the hon. Gentleman says about west Belfast is right, we should also note that, setting terrorism aside, Northern Ireland is the most law-abiding part of the United Kingdom. Long may it remain so.
    Sir Michael Neubert: If my right hon. Friend is looking for ways to cut down car crime, will he have a word with the producers of "Inspector Morse". That police officer habitually, at the end of each episode, parks his red Jaguar unlocked and then strolls off—not into the sunset but into the nearest pub. What sort of an example is that?
    Mr. Patten: I am happy to inform my hon. Friend that that excellent series is filmed in my constituency. However, Inspector Morse's behaviour in not locking his car and in drinking heavily before driving is utterly disgraceful.
    Miss Lestor: I agree with what the Minister said. May I add that the promotion of fast cars and reckless driving by the media is not good for the youngsters attracted by such aspects? I refer the Minister to his reference earlier to a scheme in Salford, where my constituency is. Surveys have shown that of 4,500 youngsters on diversion schemes to stop them stealing cars, only about 100 have reoffended. Bearing in mind their success, does the Minister support such schemes, as many of us do, and will resources be forthcoming to finance them and make them viable?
    Mr. Patten: On the hon. Lady's first point. it is disappointing that car manufacturers advertise maximum speeds and acceleration more than security devices. In a period when car crime is a problem, I hope that manufacturers will begin to advertise cars using better security as a selling point.
    On the hon. Lady's second point, yes, I entirely support such schemes. They are an important part of our twin-track approach so that we not only come down hard on offenders who commit the crime of taking vehicles, but
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    we do all we can to prevent youngsters from offending. More resources will be made available through the safer cities scheme, which is funded by the Home Office.
    Mr. Marlow: Can we use a bit of common sense on this vexed problem? Is it not true that giving 17-year-olds fines does not work and sending them to prison is counterproductive? Could we arrange for such offenders to have a sound thrashing? Will my right hon. Friend do something about it?—[Interruption.]
    Mr. Speaker: Order. The hon. Gentleman has every right to express his views.
    Mr. Patten: As you know, Mr. Speaker, I often turn to my hon. Friend the Member for Northampton, North (Mr. Marlow) for common sense advice. However, I deplore the way in which he is becoming increasingly moderate. This week he urges a sound thrashing; last month he recommended immediate castration.

    Immigration and Nationality
    Mr. Maclennan: To ask the Secretary of State for the Home Department what discussions he has held recently with Ministers in European Community countries about immigration and nationality questions.
    Mr. Kenneth Baker: I attended meetings of European Community Ministers concerned with immigration matters at Berlin on 30 and 31 October. and at The Hague on 20 November. The Minister of State—my right hon. Friend the Member for Oxford, West and Abingdon (Mr. Patten)—attended a meeting on my behalf at The Hague on 2 and 3 December this year. In addition, I have had a number of informal bilateral discussions with European Community colleagues.
    Mr. Maclennan: As those matters are clearly occupying the time of Ministers in the European Community, and as interest in the issue is bound to deepen with the removal of internal border controls, does the Home Secretary accept the proposed draft treaty article A arrangements recognising the common interest of Community countries in such matters? Does he accept that there should be Community competence in that sphere? What will be the Commission's role in it in future?
    Mr. Baker: The draft treaty on immigration, which is to be discussed at Maastricht next week, contains a series of proposals starting with article A. That proposes that immigration and asylum matters, together with certain police, fraud and drugs issues, should not come under the competence of the treaty of Rome, but should be dealt with on an intergovernmental basis—a view with which the Government completely agree. Article K allows for those matters to fall within the competence of the treaty only after a double lock—first, the unanimity of Ministers, and secondly, the specific approval of the House. The Government support that position and do not believe that immigration and asylum matters should fall within the competence of the treaty of Rome.
    Mr. Robert G. Hughes: Does my right hon. Friend agree that while Jean-Marie Le Pen is legally entitled to come to this country, his obnoxious views on racism, immigration and nationality mean that he is simply not welcome in this country? His racist views will be rejected by all the people in this country regardless of party. Does

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    my right hon. Friend share my view that those people who may wish to have a dialogue with Mr. Le Pen are simply selling short their country and their countrymen? Will my right hon. Friend say how unwelcome Mr. Le Pen and his views are?
    Mr. Baker: I am sure that Mr. Le Pen's views are racially and politically unacceptable. I was asked as Home Secretary to consider whether I should ban his entry. I decided not to do so. I see that a former Home Secretary, the right hon. Member for Morley and Leeds, South (Mr. Rees), agrees with that decision. I think that it is correct. Apart from anything else, Mr. Le Pen is a Member of the European Parliament. However, I want to make it clear that, by allowing him to come to Britain, neither I nor any Conservative Member has any agreement whatever with the racialist views that he is peddling, and I am sure that that is true of Opposition Members as well.
    Mr. Winnick: On reflection, does the Home Secretary consider that if someone is due to come to Britain with the sole purpose of inciting race hatred there is no reason why he should be allowed in, and that Le Pen should have been excluded? I welcome the view of the hon. Member for Harrow, West (Mr. Hughes) that Le Pen—a person whose only claim to fame is the manner in which in France he has agitated to poison race relations and incite hatred—is completely unwelcome in Britain and should not have been allowed in. Is it true that Le Pen is to meet a number of Tory Members and, if so, will the Home Secretary make it clear that that would be wrong?
    Mr. Baker: The best way of dealing with poisonous views is to expose and destroy them, and that is what free speech does. Le Pen will have few converts in Britain. The views that he is peddling in France exploit the anxieties of many people in a ruthless and unacceptable way. We want none of his ideas here and I am sure that they will not become established.
    Sir Nicholas Fairbairn: Will my right hon. Friend consider the remarks of the hon. Member for Caithness and Sutherland (Mr. Maclennan), who suggested that we were moving towards a cross-border liberalisation and liberation? Can my right hon. Friend explain why the hon. Gentleman's party suggests that we should increase the differences between those of us who live north and south of the border in the United Kingdom?
    Mr. Baker: If these matters were to pass into European competence in the way that the Liberal Democrats want, there would be an inevitable weakening of our controls and our frontier controls, which I am not prepared to accept. We need greater co-operation in Europe in these matters, because immigration and asylum flows are a major political concern, as we have just noted from the exchanges about Le Pen and the way in which people are feeding upon his visit. However, that comes best through the co-operation of European countries rather than through competence under the European treaty.
    Mr. Darling: I welcome what the Home Secretary said about Le Pen's visit to Britain, but will he go a little further and dissociate himself from those of his colleagues who are seeking to meet that man?
    Mr. Baker: I have no information on who is meeting Le Pen. I have made my views clear—[HON. MEMBERS: "Come on."] I do not know who is meeting Le Pen and I
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    have made my views clear. I regard Le Pen's views as totally and utterly unacceptable, and I have made that clear.

    Neighbourhood Watch
    Mr. Lee: To ask the Secretary of State for the Home Department how many neighbourhood watch schemes are now in place.
    Mr. John Patten: At the end of December 1990 there were estimated to be more than 92,000 neighbourhood watch schemes in England and Wales, covering nearly 5 million households. They are multiplying fast.
    Mr. Lee: I am sure that my right hon. Friend will be pleased to know that my Pendle constituency has 96 of these excellent neighbourhood watch schemes involving almost 20,500 households. Does he agree that not only do those excellent schemes make a positive contribution towards crime prevention, but they build bridges between the police and the community?
    Mr. Patten: As my hon. Friend says, the schemes are valuable in building bridges between the police and the community. I was particularly interested to note that in the Whitefield area of Nelson in my hon. Friend's constituency, largely occupied by ethnic minority households, a neighbourhood watch scheme has recently been set up and is helping to build bridges between the ethnic minority residents and the police.
    Mr. Vaz: I, too, welcome the growth of the neighbourhood watch schemes. However, does the Minister realise that the schemes place a great burden on individual residents in a particular area and that they depend on the co-operation of the police? In Leicestershire, the police are spending a great deal of their valuable time assisting neighbourhood watch schemes. What additional resources can be provided to local police forces in order to make the schemes even more efficient than they are?
    Mr. Patten: Neighbourhood watch schemes are by their nature genuine voluntary organisations, although they receive Government support, in that substantial resources are devoted to them through the funding of the police, who themselves assist neighbourhood watch schemes.
    While I am on my feet, perhaps I may apologise for referring in an earlier answer to my hon. Friend the Member for Northampton, North when I meant my hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens), who made the suggestion.
    Mr. Malins: Neighbourhood watch schemes are very strong in my constituency and are a good example of the police and public working together in helping to beat crime. In the Croydon area, where neighbourhood watch schemes are strong, burglaries are down. Does not that show that public co-operation and awareness are major factors in reducing crime in our cities?
    Mr. Patten: My hon. Friend is absolutely right. That pattern is the same whether one is speaking of reasonably affluent, suburban Croydon, the outer estates of Luton, or the council house areas of Wythenshawe. Where there is sustained development of neighbourhood watch schemes, there is a sustained decrease in the number of burglaries.
    Mr. Randall: Does the Minister agree that not only crime but anti-social behaviour are causing immense alarm and distress throughout almost all of Britain? Does he accept that the overall effectiveness of the various schemes and agencies that contribute to crime prevention, including neighbourhood watch, is seriously impaired by the lack of co-ordination between them? Will he consider encouraging local authorities to formulate local strategies aimed at preventing crime and anti-social behaviour which are based on far greater co-ordination between the various agencies involved?
    Mr. Patten: We are consulting further on a recent report on those issues. Suffice it to say that no one owns neighbourhood watch schemes, except those who belong to them and who have helped to make them a success. The schemes are not in the ownership of the police, local authorities, any political party or any business. They are in the ownership of their communities, which we should support in their endeavours—not try to take over something that they started only in 1982, when the first neighbourhood watch began. There are now 92,000 such schemes, entirely due to the endeavours of individual active citizens and communities.
    Mr. Dunn: Will my right hon. Friend take time today to congratulate those who are running successful neighbourhood watch schemes in Dartford? Does he agree that neighbourhood watches can be deemed only an aid to proper policing, in terms of numbers and police efficiency? Will my right hon. Friend intervene with the chairman of Kent police authority to ensure that Dartford has its fair share of the new allocation of extra manpower for the county of Kent?
    Mr. Patten: I will certainly consult my noble Friend Earl Ferrers, who is directly responsible for those matters, and will draw my hon. Friend's remarks to his attention. The additional 1,000 police recently announced by my right hon. Friend the Secretary of State will be largely devoted to beat policing. My right hon. Friend has rightly ensured that 80 out of every 100 additional officers provided will go straight back on the beat, in Dartford and elsewhere.

    Derek Bentley
    Mr. Simon Hughes: To ask the Secretary of State for the Home Department if he will now announce the results of his consideration of the case for the posthumous pardon of Derek Bentley.
    Mr. Kenneth Baker: The representations made on behalf of Mr. Derek Bentley are still under consideration. I have asked the police to make inquiries and when I have the results of those inquiries I will be in a position to decide whether any action on my part is appropriate.
    Mr. Hughes: The right hon. Gentleman will be aware that the case for pardoning Derek Bentley was supported by his trial jury, which recommended mercy in 1952; by the Lord Chief Justice of the day; by the trial judge, who said subsequently that he believed that Bentley would not hang; a subsequent Lord Chancellor, Lord Hailsham; by many members of another place; by many right hon. and hon. Members of this House—nearly one third of whom signed a recent early-day motion; and by millions of our fellow citizens. On the face of it, the case for a pardon is
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    overwhelming. Will the Home Secretary expedite his consideration and either grant a posthumous pardon or at least instigate a public inquiry, so that what is regarded as the greatest injustice of our post-war criminal justice system left unremedied will be put right before the last member of the Bentley family dies without knowing the result?
    Mr. Baker: I know of the hon. Gentleman's interest in and concern about this; they are shared by many others. The Commissioner of Police of the Metropolis has been asked to look at the allegations and to arrange for certain persons who are said to be able to shed new light on the case to be interviewed. When I get his report, I shall, of course, examine it carefully and examine the full details of the case. Until I get that report, I will not get immersed in the details. I think it is right for me to receive the report and then to examine it.
    Mr. Alexander: Will my right hon. Friend, on the other hand, bear in mind the fact that when Bentley was apprehended and before PC Miles was shot, Bentley said to the police:
    "He's got a gun and it's loaded"?
    Will he bear in mind the fact that at no time did Bentley discourage Craig verbally from firing that gun, that he brought a 16-year-old accomplice, armed, to commit a robbery and that the Lord Chief Justice had every justification for what he did?
    Mr. Baker: These are the sorts of considerations that I shall have to take into account. I am quite clear that I shall have to go into the evidence very carefully when the police report is available to me. I hear what my hon. Friend says, as I hear all representations on this matter.
    Mr. Cryer: Will the Home Secretary acknowledge that fresh evidence was presented to him in the summer and that his review is long overdue? Will he acknowledge that this is an outrageous case of injustice? Derek Bentley could not have taken anybody anywhere; he could barely get himself around. He had a mental age of 11, although in body he was 19, and evidence of his mental incapacity was never produced during the trial. In view of that, will the Home Secretary make sure that he examines the evidence as rapidly as possible? Will he also acknowledge the sterling campaign carried out by the sister of Derek Bentley, Iris Bentley, in making sure that that grave injustice and wrong is righted as rapidly as possible?
    Mr. Baker: No one could accuse me of delaying consideration of allegations of miscarriage of justice when they have been presented to me. I have dealt with them very promptly, as, indeed, a Home Secretary should. I am awaiting further analysis of the evidence and I assure the hon. Gentleman that, when I get it, I will examine the whole case again.

    Ram-raiding
    Mr. Paice: To ask the Secretary of State for the Home Department what representations he has received regarding increases in the incidence of ram-raiding.
    Mr. John Patten: I have received representations from the London and Provincial Antique Dealers Association and from Sir Stanley Bailey, the former chief constable of Northumbria police.
    Mr. Paice: Despite the short list that my right hon. Friend read out, he will be aware that the problem of ram-raiding is increasing substantially in parts of the country. The difficulty with that type of crime is that, because of the speed with which it is executed, burglar alarms and security systems are relatively ineffective. The only way to protect property is by the construction of bollards and barriers, but that requires the consent of landlords and planning authorities. Will my right hon. Friend do all that he can to open a dialogue with representatives of landlords and planning authorities so that they can encourage and enable retailers to erect something to protect their property?
    Mr. Patten: That is a very constructive suggestion and I will certainly discuss it with my hon. Friend the Minister for Housing and Planning. I know that in some parts of the country, notably in the north-east, one or two local authorities have made it rather difficult for protective street furniture to be erected along the sides of roads where there has been ram-raiding. In my hon. Friend's own area in Cambridgeshire there have been no recent incidents. There have been many more incidents in the north-east, in particular, and that is why the recent transfer of Mr. J. A. Stevens from being deputy chief constable of Cambridgeshire will doubtless be welcomed in Northumbria. Cambridgeshire's loss is Northumbria's gain.
    Mr. Bermingham: Does the Minister agree that the next time one of these offenders comes before the courts for sentencing, if the sentence does not contain a deterrent element, bearing in mind the increase in this type of crime, it would be wise for the Home Office to seek the guidance of the Attorney-General so that the sentence can be referred to the Court of Appeal, which could then lay down a guideline sentence for this type of crime which contains a deterrent element?
    Mr. Patten: Again, I welcome the hon. Gentleman's constructive suggestion. I shall draw his views to the attention of my right hon. and learned Friend the Attorney-General. The decision on whether to lay down guideline sentences is for the Lord Chief Justice, the deputy chief justice and others in the Appeal Court, not for me.
    Mr. Janman: Although I agree with the sensible suggestion of my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice), does my right hon. Friend agree that we must try to prevent these crimes from happening and that the best way to do that is for him to instruct magistrates courts throughout the country to pass very harsh sentences on those who are convicted of this outrageous abuse of private property?
    Mr. Patten: I agree entirely that this is an outrageous invasion of private property, but I am sure that the House would not want Ministers to be able to instruct the judiciary to do anything, because we value its independence. A range of serious and severe penalties is available for those who are convicted of ram-raiding—for example, if robbery is involved, up to life imprisonment.

    West Yorkshire Police
    Mrs. Mahon: To ask the Secretary of State for the Home Department if he will make a statement on the allocation of police officers to West Yorkshire.
    Mr. Peter Lloyd: Fourteen additional police posts were approved with effect from 1 October 1991, providing for an establishment of 5,295. My right hon. Friend the Home Secretary announced on 28 November that he had not approved the police authority's application for 79 additional police posts in 1992–93.
    Mrs. Mahon: The victims of crime in West Yorkshire will not be satisfied with that answer. The Minister must be aware that, because of the threat of poll tax capping, by April 1992 we will have lost 200 police personnel on the beat and 200 civilian personnel. As the Government, with their policies of dividing society, have been responsible for the breakdown in law and order, cannot we at least expect bobbies back on the beat to protect us?
    Mr. Lloyd: I do not accept that capping, or the threat of capping, is responsible for West Yorkshire's inability to recruit its full establishment. I think that the hon. Lady will find the answer in Her Majesty's inspector of constabulary report for 1991, which notes that
    "West Yorkshire has one of the highest levels of expenditure per head of any police authority. If it could bring its cost-effectiveness nearer the average, it could recruit up to the establishment that the Home Secretary has recommended."
    The hon. Lady mentioned policemen on the beat. West Yorkshire has a smaller percentage of its force on the beat, which no doubt is partly due to its slow pace in the civilianisation of its various police activities.
    Mr. Donald Thompson: Is my hon. Friend aware that the chief constable of the West Riding and one of his policemen wrote to me recently to say that there are no outstanding matters with the Home Office and that they welcome the £3·16 million to fight crime and the refurbishment and establishment of new police stations in Bradford, Leeds and Pontefract? Will my hon. Friend do his best to ensure that constituents and police combine to spend the extra resources wisely?
    Mr. Lloyd: I am glad that my hon. Friend mentioned the extra expenditure under the urban crime fund, which is designed to tackle crime in particular areas. West Yorkshire has had the benefit of that. He is right that there are no outstanding issues with the Home Office. The outstanding issue is using the resources that the police authority has effectively.
    Mr. Corbett: Does the Under-Secretary accept that in the face of a tidal wave of crime there must be better planning in police manning in West Yorkshire, as everywhere else? Instead of the piecemeal approach, cannot he offer a three-year rolling programme of force levels to assist chief constables to make more effective use of manpower in a bid to prevent and combat crime?
    Mr. Lloyd: Of course, but decisions on the effective use of manpower are taken by the police authority and the police force. The inspector's report shows that there is room for improvement. As I said, there is certainly scope for further civilianisation.

    Police Interviews (Video Recordings)
    Sir John Farr: To ask the Secretary of State for the Home Department what plans he has to introduce video recordings of all interviews in police custody.
    Mr. John Patten: We will consider further introduction of video recordings of all interviews in police custody when the outcome of a joint study being conducted by the Association of Chief Police Officers and the Home Office has been fully considered. The pilot project is being carried out on three forces and an independent evaluation will be completed in the spring of 1992. We will announce our conclusions as soon as possible at that stage.
    Sir John Farr: Is my right hon. Friend aware that many miscarriages of justice have occurred recently due entirely to uncorroborated confessions? The sooner that that disgrace is ended, the better. One way of dealing with it, without waiting for the royal commission report, is by starting to video all such interviews forthwith. Will he do so?
    Mr. Patten: As my hon. Friend said, the issue is being considered by the royal commission, which will report as soon as possible. Perhaps my hon. Friend will be reassured when I announce to the House that we will be laying tomorrow an order to ensure that, for all indictable offences, there will be the compulsory taking of evidence by tape recording in police stations. That will apply throughout the country as soon as possible.

  PRIME MINISTER

    Engagements
    Mr. Bradley: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.
    The Prime Minister (Mr. John Major): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Bradley: Will the Prime Minister confirm that neither he nor the Chancellor of the Exchequer has taken any action to ensure that the European central bank is located in Britain? Does he now agree that it should be based in Manchester?
    The Prime Minister: I can confirm to the hon. Gentleman that there have been no serious discussions yet about the location of the European system of central banks. It is possible, but not yet certain, that there will be such discussions next week in Maastricht.
    Mr. Patrick Thompson: Has my right hon. Friend had time to see the OECD report on unsatisfactory unemployment levels in France and the clear evidence that its minimum wage policy has served to make unemploy-ment worse? Does he agree with the conclusions of the report? Has he noted that the Leader of the Opposition has turned this, like everything else, on its head?
    The Prime Minister: I have not seen that report, but I have expressed before the dangers that a minimum wage
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    policy would hold for employment levels. I believe that it would cost many people their jobs and would cause far more damage than good.
    Mr. Kinnock: Does the Prime Minister recall telling The Daily Telegraph six months ago that economic recovery was coming, in his words, "within weeks"? How did he get it so badly wrong?
    The Prime Minister: If the right hon. Gentleman would study recent CBI surveys he would see that domestic and export orders are rising, that export orders are at their highest level for over a year and that there is confirmation that business conditions are beginning to improve in line with confidence. That is not just my view, but the view of industry and commerce.
    Mr. Kinnock: Is the Prime Minister aware that building employers say that conditions are worse than they have been in 40 years, that car sales are down 20 per cent. on the year and that Lord Prior, chairman of GEC, says there is no improvement in trading conditions? If the Prime Minister thinks that all that adds up to recovery, he is not living in the real world.
    The Prime Minister: The right hon. Gentleman should get out of the habit of writing his supplementary questions before he hears the first answer. What is concerning the right hon. Gentleman is the fact that the economy is moving back into growth and he does not like it. Growth is good for the country but bad for the Labour party.
    Mr. Kinnock: After years of pushing Britain down, the Prime Minister is in no position to make that kind of claim. He has taken Britain into negative growth, rising unemployment and falling output. It is time he was out.
    The Prime Minister: The right hon. Gentleman is a specialist in talking this country down and does it week after week. The only way to get proper growth is to have an economic recovery based on low inflation and proper investment, not on the sort of policies that the right hon. Gentleman has advocated. The policies that he stands for —of high taxation and centralised control—are the policies that would drive this country to ruin.
    Mr. Favell: As my right hon. Friend prepares for Maastricht, may he be reassured that to return without a treaty would be no failure? Our European colleagues' vision of Europe is fundamentally different from ours and a shotgun marriage would be in nobody's interests—and good luck.
    The Prime Minister: I am grateful to my hon. Friend for his best wishes. I assure him I will return with a treaty that I can recommend to the House or come back without a treaty.
    Mr. Galbraith: To ask the Prime Minister if he will list his official engagements for Thursday 5 December
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Galbraith: As his experiences clearly influence his policies and following his recent interview in The Sun, can the Prime Minister now tell the House exactly when he was unemployed?
    The Prime Minister: I was unemployed in the early 1960s. As to the precise dates, that is not a matter which I can immediately remember. It was in the early 1960s.
    Mr. Churchill: Is not it unacceptable that pensioners should be defrauded of pensions to which they have contributed throughout their entire working lives, as is the case with the Mirror Group Newspapers pensioners? Will my right hon. Friend confirm that there will be swift Government action to remedy that situation and will he commiserate with the Leader of the Opposition about the fact that his and his party's principal supporter should turn out to be a crook?
    The Prime Minister: I am not able to comment on the Mirror Group pension fund as the Serious Fraud Office is examining it. We have greatly tightened the protection of pension fund members over recent years. Nothing, of course, can be complete proof against criminality.
    Hain: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Hain: The future of the Daily Mirror is now in hock to City spivs and business tycoons—[Interruption.] Hon. Gentlemen can shout as much as they like, but does the Prime Minister agree that citizens' rights are best protected by pluralistic ownership of the press? Or does he want to gag free speech and have every tabloid newspaper supporting the Tory party?
    The Prime Minister: I do not think that it would be proper for me to get involved in what is happening in terms of the Mirror Group pension fund. I commented as far as I am prepared to a moment ago.
    Mr. Roger King: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. King: The news that millions of new investors are seeking to invest in British Telecom is good news indeed. Will my right hon. Friend extend to them his best wishes on becoming part of the property-owning democracy and will he send a message of best wishes to the management and employees of West Midlands Travel—the country's biggest bus company—who yesterday concluded a £70 million buy-out? Is not it obvious that when employees own their own business, that is the Conservative way forward?
    The Prime Minister: Yes, Sir. The privatisation programme has been an enormous success in recent years and not the least part of that success has been the extent to which it has widened and deepened share ownership around the country. That will certainly increase in the years ahead.
    Mr. Ashdown: Will the Prime Minister reconsider his answer to me two weeks ago on mortgage repossessions? Does he realise that his answer was not only factually wrong, but betrayed a depressing complacency in the face of the scale of the homes repossession crisis which is now upon us? Does he realise that if he will not act on the
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    problem, it will not only produce a tide of human misery, but will bring to a clattering end any hope of economic recovery?
    The Prime Minister: The right hon. Gentleman touches on an important matter, but he misrepresents the views of the Government and he misrepresents what I said. As I said, my right hon. Friend the Secretary of State for Social Security has announced help in terms of income support assistance for those facing repossession and the loss of their homes. That help amounts to £400 million a year, which is very considerable and is necessary. The right hon. Gentleman should not misrepresent what the Government have said and are doing.
    Mr. Moss: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Moss: Does my right hon. Friend agree that privatisation receipts have helped the Government to increase public spending, to cut taxation and to pay off national debt? Does he further agree that it is sheer hypocrisy to oppose privatisation in principle and to promise more nationalisation, yet to claim that there will still be privatisation proceeds to spend, as did a Labour Front-Bench Treasury spokesperson this morning?
    The Prime Minister: My hon. Friend is entirely right. If the privatisation programme were to cease, it would have a damaging effect on the inflow of funds, as would proposals to renationalise parts of industry which is what the Labour party proposes. There is no doubt that there is a huge gap between Labour's spending proposals and its capacity to fund those proposals without huge increases in direct tax for the vast majority of people.
    Mr. Rooney: Does the Prime Minister have any intention of visiting Essex? If he does, does he have any retraining plans in mind for those of his hon. Friends who will not be here after the next election?
    The Prime Minister: The hon. Gentleman is ill-informed. We have gained four local council seats in by-elections in Essex recently.
    Mr. David Nicholson: To ask the Prime Minister if he will list his official engagements for Thursday 5 December.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Nicholson: As a former Social Security Minister, my right hon. Friend will be aware of the importance attached by the retired to occupational pensions and to the great and successful expansion of those over the past 12 years. Given the crocodile tears on those matters from the Labour party, is not it essential that my right hon. Friend should as soon as possible launch an inquiry into how people's pensions were protected by the prominent Labour party members who were directors and trustees of the Mirror Group Newspapers pension fund?
    The Prime Minister: It would not be proper for me to comment on individuals who may be trustees of that pension fund. Pension management is based on trust law and the good management of pension funds and the behaviour of trustees is, therefore, paramount. As I said

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    some moments ago, we have strengthened the law requiring trustees to disclose key information to members, to pensioners and to trade unions. People listening to this Question Time may wonder why Opposition Members wish to drown out the subject.
    Mr. Hume: Does the Prime Minister agree that it is impossible to have a genuine single market without a single currency? Does he also agree that the reservations in his party about a single currency have more to do with nationalism than with economics? Given that in the harmonisation process we have already got rid of the half crown and of the threepenny bit, what is the emotional difficulty about changing the pound coin to the ecu?
    The Prime Minister: The hon. Gentleman bases his question on a premise that I do not accept. I believe that it is possible to have a perfectly satisfactory single market without a single currency. The question whether it would ever be right to move to one at some distant date is separate.

    Balanced Budget
    Mr. Janman: To ask the Prime Minister in what financial year he expects to balance the budget between Government expenditure and revenue received.
    The Prime Minister: It remains our policy to balance the budget over the economic cycle. The balance between revenue and expenditure in any one financial year will depend largely on cyclical developments.
    Mr. Janman: May I urge my right hon. Friend to keep as tight as humanly possible control on public expenditure so as to meet the objective of a balanced budget as soon as possible? Does he agree that the idea of spending an extra £35,000 million a year would be absolutely disastrous for the economy of this country? That is precisely what the Labour party seeks to do.
    The Prime Minister: My hon. Friend is entirely right. We have repaid a great deal of debt over recent years. It remains our policy to move back to a balanced budget as speedily as possible. The Opposition always promise to spend more. They never say where the money is coming from and they never will, but the taxpayers know where it is coming from—it will be coming from them.
    Mr. Tony Banks: Am I being completely cynical—[HON. MEMBERS: "Yes!"] Give me a chance! Am I being completely cynical in thinking that the Government's announcement about the great increase in public expenditure has something to do with a general election?
    The Prime Minister: Yes, totally cynical.

Wandsworth Prison (Diplomatic Bags)
3.30 pm
Mr. Gerald Kaufman (Manchester, Gorton) (by private notice): To ask the Foreign and Commonwealth Secretary if he will make a statement about the diplomatic bags which have been lost in Wandsworth prison.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mark Lennox-Boyd): We learned some days ago that bags containing Canadian diplomatic mail had been discovered by staff at Wandsworth prison. Diplomatic bags are routinely sent to Wandsworth prison for laundering. [Laughter.]
Mr. Speaker: Order. I imagine that it is a Foreign Office brief. Come on.
Mr. Lennox-Boyd: I must get the answer right. On this occasion, the Canadian bags in question had been inadvertently included in such a consignment sent to Wandsworth. Steps were immediately taken to recover the diplomatic mail and to investigate the incident.
Mr. Kaufman: I am sorry—I hoped that there would be more.
Will the hon. Gentleman explain why the question is not being answered by the Home Secretary? On Monday —[Interruption.]
Mr. Speaker: Order. I remind the House that we have a busy day ahead of us. Interruptions will take up time.
Mr. Kaufman: On Monday, dealing with one case, the Home Secretary hid behind his predecessor. On another case, he hid behind his legal advisers and a junior Home Office Minister. Today, he is hiding behind the most junior available Minister in another Department.
Will the hon. Gentleman say what action has been taken to explain why the missing material was left in the bags sent to Wandsworth prison? Will he explain exactly when it was discovered that that material was in the bags sent to Wandsworth prison and when the search for it started? Is it true that an interval of several days elapsed between the discovery and the search? How much material is still missing? Is a search still going on for missing material? How much of that material, missing or retrieved, is sensitive material? [Interruption.]
Mr. Speaker: Order. This is taking a long time. The right hon. Gentleman should be allowed to complete his question.
Mr. Kaufman: Will the hon. Gentleman tell the House whether a watch was in the missing material and what guarantees—[Laughter.]
Mr. Speaker: Order.
Mr. Kaufman: What guarantees can the Minister provide that other metal objects cannot find their way into prison in the way in which that did and disappear as it did? When was the Home Secretary informed about this latest episode? Why have the Government not made it public? Would they have made it public if prison officers had not been aware of it? The hon. Gentleman says that the Government sent the material to be laundered—[Laughter.]
Mr. Speaker: Order.
Mr. Kaufman: Are the Government going to send other material that they want to launder to Wandsworth prison or are they now going to come clean about this episode? [Laughter.]
Mr. Lennox-Boyd rose—
Hon. Members: Answer.
Mr. Lennox-Boyd: May I take the right hon. Gentleman's question seriously? [HON. MEMBERS: "No."] Clearly, this is a matter for the Foreign Office—[Laughter.]
Mr. Speaker: Order. I am beginning to wonder whether I should have granted this private notice question.
Mr. Lennox-Boyd rose—
Mr. Joseph Ashton: On a point of order, Mr. Speaker. This is your responsibility. There are 3 million people on the dole and this country is in a deep economic crisis, yet all this is being shown on television and it is a disgrace.
Mr. Speaker: Order. Let us get this over as quickly as we can.
Mr. Lennox-Boyd: This is a private notice question tabled by the Opposition. The Government have a duty and I am here to answer it—[Interruption]—if the House will give me an opportunity. I think that this is important —[Interruption.] I am sure that the House will agree that this is important and that I should explain the background to the answer that I have previously given. I am sure that the House will bear with me for one or two minutes while I explain what has happened on this occasion. It is a serious matter.
The position is that the Canadian Government routinely send their diplomatic bags—[Laughter.] Should I go on?—to the Foreign Office for onward transmission [Laughter.]
Mr. Speaker: Order. When I decided to grant this private notice question, I took it to be a serious matter and I should like it to be taken seriously.
Mr. Lennox-Boyd: On this occasion, some of their bags were contained in the white diplomatic bag belonging to the Foreign Office, which they were using for convenience to contain their consignment—[Laughter.]—and, as I have explained to the House, that was the commencement of the error in question which, of course, we very much regret.
I have come to the House this afternoon from a meeting with a representative of the Canadian High Commission, with which we have been in constant touch from the outset of the incident. It is perfectly satisfied with the outcome of the preliminary investigation.
Mr. Robert MacLennan: Is not the difficulty that the Home Secretary is incapable of keeping in prison those people who should be and keeping out of prison those things which should not be?
Mr. Lennox-Boyd: That is as absurd a political point as was made by the right hon. Member for Manchester, Gorton, (Mr. Kaufman). Clearly, this is not a matter for the Home Secretary. It occurred in the Foreign Office and

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the Foreign Office, and I personally take full responsibility for it this afternoon before the House. Cheap politics is no way to investigate the matter.
Sir Peter Tapsell: Bearing in mind the fact that Prince Metternich eventually left Vienna disguised in a laundry basket—[Laughter.]—is not it clear that this incident is in the highest diplomatic tradition? Can my hon. and diplomatic Friend assure us that these important diplomatic communications were not ultimately put to any ignoble use?
Mr. Lennox-Boyd: As we know, Prince Metternich was not the only person to be put into a diplomatic bag. It happened on other occasions, but not on this one. Our friends in the Canadian High Commission and the Canadian Government are conducting their own assessment of the case. It is obviously not proper for me to comment further on what it concludes, but it is satisfied with our preliminary conclusions.
Mr. Tom Cox: As the Minister who represents the area containing Wandsworth prison, may I suggest to the Minister that if the exchanges of the past few minutes were conveyed to BBC television's "Yes Minister" they might indeed help to revive the Government's fortunes? But there is a serious point here. [HON. MEMBERS: "No."] There is a serious point. Prison officers are repeatedly subject to abuses from the Government about their lack of commitment to the job that they do. If the diplomatic bags contained metal objects that got through the system, surely the Minister or his right hon. Friend the Home Secretary should take note of the seriousness of the problem. There have been enough prison escapes under this Government. Surely this should be an opportunity for giving serious consideration to and providing serious answers on this major issue.
Mr. Lennox-Boyd: The allegation about a metal object being contained in one of the bags is new to me.

Business of the House
3.43 pm
Dr. John Cunningham: Will the Leader of the House tell us the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. John MacGregor): The business for next week will be as follows:
MONDAY 9 DECEMBER—Proceedings on the Aggravated Vehicle-Taking Bill.
Motion on the Teachers' Pay and Conditions Act 1987 (Continuation) Order.
TUESDAY 10 DECEMBER—Estimates day (1st allotted day). Until about seven o'clock there will be a debate on the financing of private residential and nursing home fees, followed by a debate on the future of the coal industry. Details of the estimates concerned and the relevant Select Committee reports will be given in the Official Report.
Motion on the Ministerial and Other Salaries Order.
At Ten o'clock, the House will be asked to agree the civil and defence votes on account and the outstanding winter supplementary estimates.
WEDNESDAY 11 DECEMBER—Until about seven o'clock, motions on the social security benefits uprating and disability benefits affirmative orders and regulations and any related negative regulations. Details will be given in the Official Report.
Afterwards there will be a debate on fisheries on a Government motion.
THURSDAY 12 DECEMBER—MOtiOn for the Christmas Adjournment.
Proceedings on the Consolidated Fund Bill.
FRIDAY 13 DECEMBER—Private Members' motions.
MONDAY 16 DECEMBER—Progress on remaining stages of the Local Government Finance Bill.
The House will also wish to know that European Standing Committee A will meet at 10.30 am on Wednesday, 11 December, to consider European Community documents Nos. 7816/91 and 8046/91 relating to speed limitation devices.
[Tuesday, 10 December
Relevant Documents
Estimates Day: Class XIV, vote 1, central Government administered social security benefits and other payments, in so far as it relates to the financing of private residential and nursing home fees; fourth report from the Social Security Committee Session 1990–91 (HC 421); first report from the Health Committee Session 1991–92 (HC 28); class V, vote 9, privatisation of the coal industry, in so far as it relates to the future of the coal industry; fifth report from the Energy Committee Session 1990–91 (HC 208): "Clean coal technology and the coal market after 1993"; first special report. from the Energy Committee, Session 1991–92 (HC 67); Government observations on the fifth report of last Session (to be published on Friday, 6 December at 11 am).
Wednesday 11 December
Social Security Orders and Regulations

1. Social Security Benefits Up-rating (No. 2) Order 1991

2. Social Security (Contributions) (Re-rating) (No. 2) Order 1991

3. Guaranteed Minimum Pensions Increase (No. 2) Order 1991

4. Statutory Sick Pay (Rate of Payment) (No. 2) Order 1991

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5. Social Security (Introduction of Disability Living Allowance) Regulations 1991

6. Social Security Disability Working Allowance (General) Regulations 1991

7. Social Security (Disability Living Allowance) Regulations 1991

8. Social Security (Adjudication) Amendment (No. 3) Regulations 1991.

European Standing Committee A
Relevant European Community Documents
7816/91 8046/91} Speed limiters
Relevant Report on European Legislation Committee HC 24-iii (1991–92).]
The House will also wish to know that, subject to the progress of business, it will be proposed that the House should rise for the Christmas Adjournment on Friday 20 December until Monday 13 January.
Dr. Cunningham: As someone whose motor car has just been stolen and used in a ram raid, may I give a personal welcome to the Bill which will come before the House next Monday? I am sorry that it has come a little late in my case, but I am sure that there will be a general welcome that the Government are at last taking action in that matter.
When the Home Secretary introduces that legislation next week, will the Leader of the House arrange for him to give the House a guarantee that it is not his intention, as reported in the newspapers, to stop publishing the quarterly crime statistics? Is that not yet another Government attempt to cover up their appalling record of the past 12 years and the explosion of crime which has taken place during their term of office?
Can we have a statement next week from the Government on regional industrial policy, especially on matters to do with assisted area status? May I sadly draw the right hon. Gentleman's attention to the announcement yesterday of several hundred more job losses in my constituency of Copeland? Is he not aware—and will he not make it clear to his right hon. Friend the Secretary of State for the Environment—that yet another Government inquiry into industrial decline and the huge increases in unemployment in west Cumbria is not necessary? We know of the job losses: what we want to hear about is some Government action, especially the provision of assisted area status for west Cumbria, and for Copeland and Barrow-in-Furness.
Will the Leader of the House arrange next week for the Secretary of State for Education and Science to explain in an oral statement how it has been possible so to order his priorities that he can easily find £26 million of taxpayers' money for prestigious new offices for himself and other Ministers, while throughout the country the Government are failing to provide cash to invest in crumbling schools and in our children's education?
Mr. MacGregor: I sympathise with the hon. Gentleman in the loss of his stolen car, as I have already told him. I am sure that he will agree that there are many other reasons for wishing to introduce the Bill, and he will know that we have moved as fast as possible to frame it and bring it before the House. I believe that it is the will of the
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whole House that the Bill should proceed as quickly as possible so that we can strengthen considerably the penalties involved in what is wrongly known as joyriding.
As to the question about crime statistics, we would be happy to debate the Government's record on all law and order matters and to outline the many measures that we have taken to strengthen the police and to improve police pay, as well as other measures dealing with increases in penalties for crime. That is not appropriate for next Monday, but we should be happy to debate those matters on any occasion with the Labour party.
On his second point, the hon. Member will know that there will be an opportunity to debate economic policy this afternoon. We would happily engage in a debate about all the policies that we have carried through to realise the high growth which was achieved throughout most of the 1980s, and which will certainly be achieved through the 1990s.
I cannot promise Government time next week to discuss assisted area status, but the hon. Gentleman will be aware that there will be a number of opportunities next week when individual matters can be raised.
I do not think that it would be appropriate for my right hon. and learned Friend to make a statement on education next week, but we shall be pleased on every occasion possible to talk about the 35 per cent. increase in capital allocation that has gone into the school building programme in the last two years. Our record is very good.
Several Hon. Members rose—
Mr. Speaker: Order. The House knows that I am always reluctant to curtail business questions, but today we have heavy pressure on debate, and I shall have to put a 10-minute limit on speeches. I therefore ask for questions to be related to the business for next week. I shall draw business questions to a close at 4.20, in the general interests of the House.
Mr. Patrick Cormack: Is it my right hon. Friend's intention to arrange a debate on the outcome of the Maastricht meetings next week or before Christmas, or to leave it till after Christmas?
Mr. MacGregor: As I said last week, the Prime Minister will make a statement to the House as soon as possible after the summit has been completed. We must await the outcome of the summit before deciding what further consideration might be given in the House.
Mr. James Wallace: Has the Leader of the House noted early-day motion 21 against the Control of Explosives Regulations 1991? [That an humble Address be presented to Her Majesty, praying that the Control of Explosives Regulations 1991 (S.I., 1991, No. 1531), dated 5th July 1991, a copy of which was laid before this House on 15th July, in the last Session of Parliament, be annulled.] Has he further noted that it has been signed by 80 hon. Members in all parts of the House—perhaps an unusual number of signatures against a statutory instrument—because of their understandable concern about rights being given to the police to enter houses without warrant, and for that to be possible by way of a negative order?
Will the right hon. Gentleman make time available, preferably in the Chamber but otherwise in Committee, to debate that important matter?
Mr. MacGregor: I shall look into the matter. From recollection, and from what the hon. Gentleman said, I believe that it is one of the early motions and that the time may have passed.
Mr. John Marshall: Following the visit of Mr. Le Pen, will my right hon. Friend arrange an early debate on racism so that many of us may take the opportunity to condemn his offensive and hateful doctrines?
Mr. MacGregor: There will be a number of opportunities next week for a whole range of matters to be raised in the House.
Mr. Ray Powell: Can the right hon. Gentleman make time available next week for a debate on the emotional subject of Sunday trading? He will recall the debates in 1986, when the majority of hon. Members rejected the proposals of the Government to alter the Shops Act 1950 and to introduce new legislation permitting Sunday trading. Is he aware that we must debate the matter urgently, because people in the Country are illegally opening shops, and people are able to go into them and buy goods, all of which is illegal and could be the subject of prosecution?
Does the right hon. Gentleman also recall the debates in 1986 when the House rejected the idea of bringing back the rope? If the Government intend to flout the law on Sunday trading, perhaps their next step will be to bring back capital punishment without the permission of the House and without the law of the land being changed. We in Parliament, not people in Europe, make the laws of this country. We need a debate so that everybody in Britain may know where Members of the House stand.
Mr. MacGregor: As the hon. Gentleman knows, prosecution of those matters is for local authorities to consider: it is for them to prosecute if they wish to do so. I well recall the debates in 1986 on the Auld committee report and on the Bill that the Government introduced to try to make sense of the current laws on Sunday trading. He will recall that there were a wide range of views about the matter at that time. That is why the Minister of State, Home Office is continuing to have discussions with all those involved to see if an acceptable way forward can be achieved. I do not think that that would be achieved by a debate next week.
Mr. David Shaw: Will my right hon. Friend arrange for an urgent debate next week on the plight of Mirror Group Newspapers pensioners? Will he also ensure that the debate is opened by the Attorney-General, who should deal with the question whether the Official Solicitor can step in, remove the trustees who have shown themselves to be totally useless, and obtain worldwide freezing orders on all the assets and money of the Maxwell family trust companies and Maxwell family companies? Will my right hon. Friend ensure that the debate is closed by the Foreign Secretary or the Chancellor, who can comment on the massive amount of income tax and capital gains tax of which the country has been defrauded by means of the Liechtenstein family trust, which has managed over the years to deal in other people's money free of tax, causing British taxpayers to lose millions of pounds?
Mr. MacGregor: I do not think that I can find Government time to debate that matter next week. As my right hon. Friend the Prime Minister said, the Serious Fraud Office is now conducting an inquiry into the Mirror Group Newspapers pension fund. IMRO, the investment fund regulator, is also conducting inquiries into Bishopsgate Investment Management Ltd. Those inquiries should be allowed to proceed on that aspect of the matter. As for who should participate, my hon. Friend would not be entirely right to ask that my right hon. Friends should participate in the debate.
Mr. Tam Dalyell: Are arrangements being made next week for a report back to the House by the hon. Member for Grantham (Mr. Hogg), the Minister of State, Foreign Office, who has been to Algeria, Egypt and Tunisia? Is the Leader of the House aware that some of us wish to argue the case for this country acceding to the Libyan request to send British and American judges to Libya?
Mr. MacGregor: No, I do not think that it would be appropriate to debate the matter in Government time next week, but there are opportunities this week for a number of matters to he raised, as the hon. Gentleman knows.
Mr. Bernie Grant: Has the Leader of the House had time to read a letter that I sent him regarding the treatment by the tabloid press of my appeal for information relating to the murder of PC Keith Blakelock? I appealed on television and elsewhere for anyone with information to come forward, and I offered to accompany them to the police. That has been distorted by the tabloid press, which has totally altered the position, thus creating difficulties in my constituency. An atmosphere has been created in which people will not co-operate with the police, as has happened in the past.
In view of the fact that right hon. and hon. Members have made comments in this House and in the papers about the situation, will the Leader of the House allow me time to make a full personal statement on the circumstances of the case, especially in view of the policy inquiry that has been launched today?
Mr. MacGregor: Personal statements, as the hon. Gentleman knows, are not a matter for me but for you, Mr. Speaker. Some of the statements made by the hon. Gentleman in the past have caused many people much concern.
Rev. Ian Paisley: Will the Leader of the House bear in mind the fact that part of his duty is to look after minorities in the House? When will we have a debate about accountability of Northern Ireland Office Ministers to Select Committees of the House? Yesterday in Dublin, the Prime Minister made it clear that he saw no reason why talks could not start immediately on stage 1. That is the conviction of the Unionist parties in this House—that talks should start before an election. Why cannot the Leader of the House get a Select Committee on Northern Ireland going so that, before the election, hon. Members will have an opportunity to question what is happening in Northern Ireland?
Mr. MacGregor: There are many opportunities to question what is happening in Northern Ireland—for example, in statements, at Question Time and in many of our debates. As for Select Committees, I have made it

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plain several times that my right hon. Friend the Secretary of State for Northern Ireland is willing to consider all those matters at the appropriate time but that we feel that the appropriate way to proceed is to get the talks going again.
Mr. John D. Taylor: Yesterday, our Prime Minister met the Prime Minister of the Republic of Ireland and agreed that, from now on, he will meet the Dublin Prime Minister twice a year to discuss the affairs of Northern Ireland. As the Prime Minister does not extend the same facility to the Unionist parties of Northern Ireland, whose members live in Northern Ireland, and are elected by and speak for the people of Northern Ireland, will the Leader of the House arrange for at least two debates a year in the House so that all hon. Members have the same rights as are now given to the Republican Prime Minister in Dublin?
Mr. MacGregor: I am well aware that we have more than two debates on Northern Ireland matters every year.
Mr. Speaker: I think that I inadvertently called two Members on the Opposition side, so I shall now balance that.
Mr. Rupert Allason: Bearing in mind the fact that there has been a Department of Trade and Industry inquiry into all aspects of the allegations of serious financial misconduct since March of this year, will my right hon. Friend arrange for his right hon. Friend the Secretary of State for Trade and Industry to make a statement to the House next week explaining exactly what the Government knew, and when, of the allegations made in March? Will he also arrange a full inquiry into "Mirrorgate", ranging from the allegations of the manipulation of the "Spot the Ball" competition, right through to the looting of £500 million from the Mirror Group Newspapers pension fund?
Mr. MacGregor: My right hon. Friend's Department is in close consultation with the Serious Fraud Office, which is now widening its investigation to include the Mirror Group Newspapers pension fund. I understand that my right hon. Friend the Secretary of State has made it clear that he will not hesitate to take immediate action if any issues emerge that justify an investigation by his Department, as long as doing so will not slow down the work of the SFO.
Sir Ian Lloyd: My right hon. Friend will know that the Advisory Committee on Science and Technology last week published its first triennial report raising a number of fundamental and far-reaching issues affecting this country's prosperity and future well-being into the next century. As there obviously will not be time to discuss the report next week, will my right hon. Friend ensure that he places high in his list of priorities a proper debate on those important subjects?
Mr. MacGregor: I agree with my hon. Friend about the importance of the subjects. He will know well my previous involvement in them. One reason why I agree with him is that I am well aware of the importance of those reports. I cannot promise time early in the new year, as we have a full
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programme of work. However, there will be two opportunities to raise the matter next week: Thursday and Friday.
Mr. Max Madden: The Leader of the House knows that the Asylum Bill is being considered in Standing Committee, but he may not know that the deliberations of the Committee are being made extremely difficult by the legal uncertainties that shroud the Bill. Clause 3 is widely seen as a breach of the Race Relations Act 1976. Clauses 4 and 5 cause difficulties because of the legal uncertainty about the future of the legal aid scheme.
Will the Leader of the House arrange for Law Officers to attend the Committee so that its members can receive the benefit of their advice or arrange for the Attorney-General to make a statement next week explaining why Law Officers are unwilling to attend the Committee?
Mr. MacGregor: I am not aware of those matters, and I shall discuss them with my right hon. and learned Friends.
Mrs. Maureen Hicks: In view of the disgraceful disturbances last night at Brinsford prison, near Wolverhampton, a spanking new £50 million prison in the constituency of my hon. Friend the Member for Staffordshire, South (Mr. Cormack), will my right hon. Friend the Leader of the House arrange for a debate on the problem of young offenders? We are too often given too many excuses. We have been told that the disturbances in our prisons are due to overcrowding and other conditions. However, Brinsford is a brand new prison that has just opened, and we should take the opportunity to link the debate on young offenders with the subject of young offenders outside gaol who are too often involved in joyriding episodes and other incidents that disturb our constituents.
Mr. MacGregor: My hon. Friend is quite right to draw attention to the considerable prison building programme undertaken by the Government. I shall not be able to find time for such a debate next week, but it may be a suitable subject to raise on the Consolidated Fund Bill.
Mr. Geoffrey Lofthouse: Is the Leader of the House aware that the Yorkshiree police authority, through its chairman and chief constable, has issued a press statement, followed up by a letter to West Yorkshire Members of Parliament, saying that the force is 200 policemen understaffed? Earlier this afternoon, during Home Office questions, a Home Office Minister and the hon. Member for Calder Valley (Mr. Thompson) suggested that that was not the case. Will the right hon. Gentleman arrange for an investigation to see who is telling the truth and for a statement to be made to the House next week?
Mr. MacGregor: That would not be an appropriate matter for a statement, but I shall ensure that the matter is brought to my right hon. Friend's attention and that he considers whether he should say something in some other form.
Mr. Jonathan Aitken: My right hon. Friend has given the impression from the Dispatch Box this afternoon that the involvement of the Serious Fraud Office in the affairs of the Daily Mirror somehow makes it impossible for the House to debate that subject. That view

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cannot be right in relation to one aspect of the affairs of the Daily Mirror—the uncertainties surrounding its future ownership. Will my right hon. Friend confirm that the House will be given an opportunity to debate any possible future transfer of the title, as it is required to do if the Secretary of State had to give his consent under the Fair Trading Act 1973 for a transfer of this important title?
Mr. MacGregor: I agree that only certain aspects are covered by the two investigations to which I have referred. I shall have to consider the matter that my hon. Friend raises, but it is unlikely that we shall be able to deal with it next week. If my hon. Friend wishes to raise other aspects of the matter, there will be plenty of opportunity for individual issues to be raised on two days next week.
Mr. Gerald Bermingham: As the Leader of the House is well aware, at 4 o'clock this afternoon the Government's latest proposals on the advertising of commercial and other credit facilities will be published. I fully appreciate that the matter can then be dealt with by way of statutory instruments in Committee, but, bearing in mind the seriousness of the matter and the importance of credit and credit display and warning, will the right hon. Gentleman give an undertaking that the matter will be dealt with on the Floor of the House at a later stage?
Mr. MacGregor: I have noted what the hon. Gentleman says. That will be a matter for us to discuss through the usual channels.
Mr. Kenneth Hind: My right hon. Friend will remember a Department of Trade and Industry report on Pergamon Press which said that Robert Maxwell should never be allowed to run a public company. Surely, in the light of Conservative Members' concern—
Mr. Geoffrey Dickens: Only Conservative Members.
Mr. Hind: —about what has happened to the Mirror group of companies, particularly the £500 million that has been taken from the pension fund, will my right hon. Friend provide time next week so that the matter can be properly debated?
Mr. MacGregor: As my hon. Friend knows, it was this Government who strengthened the law relating to directors and their disqualification a few years ago, after the particular case to which my hon. Friend refers in relation to Pergamon Press. The Government have also strengthened the law and the regulations in relation to pension funds. Again, my hon. Friend's point can be raised next week.
Mr. Jimmy Wray: Is the Leader of the House aware that the people of Scotland and England are living in fear of their lives as a result of the escalation of drug abuse and murder by firearms? A recent police report showed that there were 37 murders in the south-east of England and that parts of Scotland are becoming like Dodge City. When will the Home Office clean up the mess so that people can do their shopping and go out after dark in safety?
Mr. MacGregor: As the hon. Gentleman knows, the Government take such matters extremely seriously. That is why we have taken a range of measures to address them, including changes in the law relating to penalties for drug
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abusers and in many other ways. The Government's record is clear. We share the hon. Gentleman's concern; that is why we are doing a lot about it.
Mr. Phillip Oppenheim: Can we find time next week to broaden the debate on pension funds into a general debate on corruption in public life? For some time, Conservative Members have had to listen to Opposition Members moralising about "greedy business men" and "City spivs", but during the past few months the former Labour deputy leader of Liverpool council, who was backed up to the hilt by the Labour party when he was deputy leader, has been arrested for his shady dealings. There have been several leading councillors in north-east Derbyshire—
Mr. Speaker: Order. I am not personally aware, but is the hon. Gentleman sure that that case is not sub judice?
Mr. Oppenheim: I have checked on that, but I shall not pursue the matter.
We need a debate on the subject, particularly bearing in mind what has recently happened with regard to the Maxwell pension fund. Is it not the case that the real spivs are the Labour spivs who rip off pensioners and poll tax payers to line their own pockets?
Mr. MacGregor: I obviously cannot refer to the case that my hon. Friend has mentioned. He has made his point about the affiliations of some of the people about whom there is so much concern, but I cannot find Government time to debate it next week.
Mr. Andrew Welsh: Is the Leader of the House aware of the content of early-day motion 256, on the subject of genetic patenting?
[That this House notes with concern the proposed EC Directive which will allow the patenting of genetically engineered animals and plants, and which is designed to foster research in this field; believes that such patenting implies an ethically unacceptable view of animals as instruments for human use and exploitation and will lead to an increase in animal suffering such as that of the American pigs with human growth gene, which were arthritic and impotent and had deformed skulls; further believes that such patenting will increase the control of large concerns over genetic resources, thus harming the interests of farmers and of the Third World; further believes that it will lead to higher prices and curtailment of consumer choice; and calls upon Her Majesty's Government to reject this Directive and to advocate a moratorium on patenting of life forms to allow time for public debate.]
Is he aware also of public concern about the morality of creating and patenting life forms? Will he allow time to debate that important issue on the Floor of the House?
Mr. MacGregor: I am aware of early-day motion 256, but the Government consider that patent law is not the right vehicle for controlling genetic engineering activities. If an activity is not otherwise proscribed, then, in general, the benefit of the patent system should apply.
Mr. John Browne: Will my right hon. Friend accept that, in this day of the social charter, it must be wrong that members of the armed forces who are grievously injured in the course of duty should have to prove negligence by the mighty Ministry of Defence? When my right hon. Friend reads my new Bill, which sets

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out to reverse that unjust onus of proof, will he do so with a view to urging his Government colleagues not to kill my Bill?
Mr. MacGregor: I cannot comment on a Bill that I have not seen. However, I do not see how that relates to the social charter—which, as my hon. Friend knows, contains a number of measures that the Government feel could be deeply damaging to employment in this country, although not in the way that my hon. Friend describes. However, I have not yet read my hon. Friend's Bill.
Mr. D. N. Campbell-Savours: Has the Leader of the House noticed the large number of questions that Ministers are receiving on the subjects of policing and law and order? Given the breakdown in law and order throughout the kingdom, and having noted that last week the Home Secretary appointed four extra police officers for the whole of the county of Cumbria—which embraces half a million people—is it not time for the Government to make a full statement at the Dispatch Box so that right hon. and hon. Members in all parts of the House can press the Home Secretary on the need for additional policing in their constituencies?
Mr. MacGregor: But there are substantially more police in place now than when this Government took office, and they are better paid. There are not the problems of recruitment and retention that there were when the last Labour Government were in office, and many more officers are also on the beat, because the number of civilian workers in the police service has greatly increased. Penalties have also been increased, and expenditure has substantially increased. This Government have taken many more measures than the last Labour Government, with the result that the position in respect of the police is very much better than it was then.
Mr. Ivan Lawrence: There will be widespread appreciation that what comes out of Maastricht will be of monumental importance to the future of Britain. Will my right hon. Friend make sure that when that matter comes to be debated in the House, that is not done over one or two days, but that a whole week is set aside so that all right hon. and hon. Members may have an opportunity to express ideas and thoughts that will be so important for the future of Britain?
Mr. MacGregor: I repeat what I said to my hon. Friend the Member for Staffordshire, South (Mr. Cormack)—we have not yet taken a view on how further consideration of the outcome of Maastricht should proceed following the statement of my right hon. Friend the Prime Minister—which I made clear will be made as soon as possible. If we have a debate, I will endeavour to allow as much time for it as possible. However, in view of the amount of time that we have already given to those matters, and given the fact that we have a shortened Parliament—[HON. MEMBERS:"Oh? How shortened?"]—it is extremely unlikely that I will be able to allow a full week. However, if there is a debate, I will allow as much time as possible.
Mr. Ron Brown: The Government claim that the national health service is safe in their hands. However, the Royal Hospital for Sick Children in Edinburgh and the promised Leith hospital have been
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denied funding unless both are connected with the entrepreneurs—with the spiv society. Clearly that is a disgrace. Can the House debate that matter next week, because it is so important to my part of Scotland?
Mr. MacGregor: I do not know precisely to which individuals the hon. Gentleman refers in relation to those hospitals, but I should have thought that to describe them as entrepreneurs was entirely inappropriate. The hon. Gentleman will know of the considerable increases for the health service in Scotland in the coming year announced by my right hon. Friend the Secretary of State for Scotland. As to any debate, I made it clear that there will be a considerable number of opportunities for right hon. and hon. Members individually to raise such issues next week.
Sir Nicholas Fairbairn: Will the Leader of the House, as a good Scot, make a new year's resolution, if he is not able to do this before the new year, to have a debate, not on law and order, but on law, and on the comparative law of Scotland and England? If the law of Scotland applied in England, we would not need to waste our time on the Prison Securities Bill or the Aggravated Vehicle-Taking Bill—the Criminal Law Act 1977 does not apply and the Shops Act 1950 part II does not apply—or the release of innumerable people convicted of terrible crimes. If the law of Scotland applied here, the business of the House would be a great deal shorter and a great deal better done.
Mr. MacGregor: I am not sure about the last point, because I know that there are always so many candidates for Bills that, if some important ones did not come forward, others would take their place. My hon. and learned Friend is clearly not talking about next week in relation to a resolution that I might make on Hogmanay. I have a good deal of sympathy with the point that he makes about the Shops Act.
Rev. Martin Smyth: Will the Leader of the House undertake that, when the Prime Minister reports on Maastricht, he will include his talks leading up to Maastricht so as to allow hon. Members, particularly those from Northern Ireland, to probe about the meeting between him and the Prime Minister of the Republic of Ireland yesterday? Bearing in mind the disingenuous reply that he gave my colleague the right hon. Member for Strangford (Mr. Taylor) earlier, will he not accept that the Ministers in the Northern Ireland Office and in Dublin castle are not actually elected by anybody from Northern Ireland?
Mr. MacGregor: That is not the point that I was making earlier. The point that I was making was that there are a considerable number of opportunities to debate Northern Ireland matters and to ask questions on them in the House. I will draw to my right hon. Gentleman's attention the point that the hon. Gentleman makes about the Prime Minister.
Mr. John Wilkinson (Ruislip-Northwood): In the context of business next week, there are other European matters of importance beyond the Community that merit early consideration. Will my right hon. Friend urge the Secretary of State for Foreign and Commonwealth Affairs to come to the House next week and announce the official recognition by Her Majesty's Government of the newly

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eleted Government of Ukraine, which, in a referendum, by a majority of 9 to 1, has democratically endorsed the previous democratic decision of its democratically elected Parliament on its own sovereignty and independence? Her Majesty's Government ought to be seen to support these democratic movements.
Mr. MacGregor: Without making any commitment to a statement, I will draw the views of my hon. Friend to my right hon. Friend's attention.
Mr. Gavin Strang: May I draw the right hon. Gentleman's attention to early-day motion 249?
[That this House recognises with sadness the plight of those people infected with HIV as a result of contaminated National Health Service blood/ tissue transfers; recalls that the Government has given special financial assistance to haemophiliacs infected with HIV under National Health Service treatment by the blood product Factor VIII; notes that the Minister of State for Health has stated that haemophiliacs should be a special case; but believes that there is no logical or legal argument for the Government's refusal to extend aid to non-haemophiliacs infected by contaminated National Health Service blood/tissue transfers; regrets the Government's failure to recognise their obligations towards this small number of people; and calls upon the Government immediately to include non-haemophiliacs within the category of persons compensated for infection with HIV under National Health Service treatment.]
It has been signed by more than 170 hon. Members from all parties in the House, and calls on the Government to provide financial compensation to non-haemophiliacs who have become HIV-positive as a result of contaminated national health service blood transfusions or tissue transfers. Is the right hon. Gentleman aware that the Government Whips Office organised last Friday to prevent a similar motion from being debated in the House? I appeal to him to draw the motion to the attention of his right hon. Friend the Secretary of State for Health and to ask him to give it very careful consideration.
Mr. MacGregor: I think that the hon. Gentleman is quite wrong about the way in which debates are conducted in the House. He will know that many people often want to speak in individual debates. With regard to the early-day motion, I am sure that the whole House has every sympathy with the plight of those who have been infected with HIV as a result of blood transfusions, but the
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House decided only recently that it did not support the principle of no-fault compensation for medical negligence. If the NHS is proved negligent in a court, of course the Government accept their liability to pay damages.
Mr. Andrew MacKay: By now, my right hon. Friend will be aware of the very great concern on this side of the House about the crimes of fraud committed by Robert Maxwell and his associates, not least in respect of the raiding of the pension funds of Mirror Group Newspapers. May I, in supporting the request for a debate next week, put it to my right hon. Friend that there are millions of pensioners and contributors to company pension funds throughout the land who are today worried sick about the future of their pensions? We need to allay their fears by a debate to prove that not every company is crooked and not every group of trustees is negligent, as were those in the case of Mirror Group Newspapers.
Mr. MacGregor: I share the concern of my hon. Friend and of other Conservative Members, and I understand the anxiety of pensioners, and future pensioners, in the company. There is no doubt about where our concern lies. I am sure that my hon. Friend agrees that, under trust law, trustees have a duty to act in the interests of all beneficiaries. Many trustees of pension funds do so. The Occupational Pensions Board considered trust law in 1988. It saw no need to change the legal framework but recommended additional safeguards, which the Government enacted in 1990. I am sure that my hon. Friend agrees that many trustees of occupational pension schemes carry out their responsibilities responsibly. The reassurance that my hon. Friend wants can be given to many pension holders all over the country.
Several Hon. Members rose—
Mr. Speaker: Order. I will carefully keep the list of hon. Members who have not been called and will give them priority next week. I have a short statement to make.
Mr. George Foulkes: On a point of order, Mr. Speaker.
Mr. Speaker: No, I am on my feet.

Consolidated Fund Bill
4.20 pm
Mr. Speaker: I have a short statement to make about arrangements for the debate on the motion for the Adjournment, which will follow the passing of the Consolidated Fund Bill on Thursday 12 December.
Hon. Members should submit their subjects to my office not later than 10 pm on Tuesday 10 December. A list showing the subjects and the times will be published the following day. Normally, the time allotted will not exceed one and a half hours, but I propose to exercise a discretion to allow one or two debates to continue for rather longer, up to a maximum of three hours.
Where identical or similar subjects have been entered by different Members whose names are drawn in the ballot, only the first name will appear on the list. As some debates may not last the full time allotted to them, it is the responsibility of hon. Members to keep in touch with developments if they are not to miss their turn.

Points of Order
4.21 pm
Mr. George Foulkes: On a point of order, Mr. Speaker.
Mr. Speaker: I hope that it is not because the hon. Gentleman has not been called at business questions.
Mr. Foulkes: You kindly said that you would call hon. Members next week who had been rising. Somewhat eccentrically, the question that I was going to ask was about next Wednesday's business.
Mr. Speaker: What bad luck.
Mr. Foulkes rose—
Mr. Speaker: No—I am sorry, that was a bit provocative. However, I gave the hon. Member a very good run yesterday, and the day before.
Mr. Tony Marlow: On a point of order, Mr. Speaker—not related to business questions or to the fact that I am sulking or anything like that; it is a totally different matter.
Whenever there has been a whiff of financial scandal in the past, the Opposition, very much to their credit, have raised it and brought it before the public, and there has been a great hue and cry about it. Unaccountably, the Opposition have not requested a statement on one of the great scandals involving Robert Maxwell. Will you, Mr. Speaker, tell the House whether you have been approached on the subject, and, if so, have the Opposition told you why they do not want a statement on it?
Several Hon. Members: On a point of order, Mr. Speaker.
Mr. Speaker: The trouble with points of order like that is that they are highly contagious.
Mr. Dennis Skinner: In view of what you, Mr. Speaker, have had to say about the Consolidated Fund Bill, can you give some assurance that, if this matter about Maxwell and him laundering money is raised, you will ensure that people such as Arthur Scargill and Peter Heathfield will be given special tickets to sit in the Gallery so that they can hear the debate and so that they can draw the attention of various channels to the fact that perhaps Mr. Lightman should investigate the missing Maxwell millions, and perhaps we can find out whether Roger Windsor, Mr. Maxwell's nark, was paid £50,000 out of the Daily Mirror's missing millions. Those are the questions that we would like to be asked.
Mr. Speaker: There are opportunities to raise these matters next week. They would have to be raised in a parliamentary manner, and certainly couched in the proper terms.
Mr. Peter Thurnham: On a point of order, Mr. Speaker. Could you give guidance on the important matter of confidences given us by constituents? It is important that constituents should be able to consult us about confidential matters, but surely we should not go so far as to give comfort to murderers and bombers, as has been suggested. The hon. Member for Tottenham (Mr. Grant) said that he had been misquoted. Will you give a

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ruling, Mr. Speaker, that we are not like doctors, lawyers and priests, and that we should uphold the police and support them in their duties?
Mr. Speaker: I think I know to what the hon. Member is referring. The fact is that there is no privilege for confidences given to hon. Members. It is a matter for the discretion of hon. Members.
Mr. Bob Cryer: On a point of order, Mr. Speaker. In view of the point of order raised by the hon. Member for Northampton, North (Mr. Marlow), I ought to make it clear that we would very much like to see an investigation of the missing pension funds. Also, we have been calling for many years for legislation to get rid of the offshore tax havens of the sort that Lord Duncan-Sandys ploughed money into from Lonrho about 1970.
Mr. Speaker: I think that would be quite a good subject.
Mr. Tim Devlin: May I ask you about a serious point of order, Mr. Speaker? I have noticed the growing practice on Prime Minister's questions and on questions to other Ministers of Members on both sides of the House, but primarily Opposition Members, asking personal questions which do not relate to the Minister's responsibility. For instance, today the Prime Minister was asked about his period of unemployment.
Dr. Lewis Moonie: The hon. Gentleman might be unemployed soon.
Mr. Devlin: I doubt it very much. I wonder, Mr. Speaker, whether you could give us some guidance on the point. Surely Ministers are appearing at the Dispatch Box solely to answer questions about their governmental responsibilities.
Mr. Speaker: The hon. Member is absolutely right. In view of what he has said, I deeply regret having called him, I think on Question 2, to ask a question about the Northumbria police which had nothing to do with his constituency. I do allow a slight discretion in these matters.
Mr. David Winnick: The hon. Member for Northampton, North (Mr. Marlow) talked about an inquiry into the position of the Mirror Group pension fund. May it be made clear for the record that my hon. Friend the Member for Redcar (Ms. Mowlam), who is a junior Front-Bench spokesman, wrote to the Secretary of State this week asking for an inquiry? We are deeply concerned about the matter, about the theft that has taken place and about the laxity of the rules which allowed that to happen. We want a prompt inquiry.
Mr. Speaker: I think I called the hon. Member on business questions. Couched in the right terms, that seems to fall within the ambit of a Consolidated Fund Bill debate, or one of the Adjournment debates before we go off for Christmas.

Opposition Day
[2ND ALLOTTED DAY]

Economy and Recession
Mr. Speaker: I must announce to the House that I have selected the amendment in the name of the Prime Minister. Furthermore, in view of the late start and the number of hon. Members who wish to participate, I am putting a precautionary limit of 10 minutes on speeches between 7 o'clock and 9 o'clock. If the Front-Bench spokesmen and those who are called before 7 o'clock exercise discretion, it may be possible in the interests of the whole House to relax that limit.
4.28 pm
Mr. John Smith: I beg to move,
That this House deplores the Government's economic policies, which have caused the severe and continuing recession and which are damaging all parts of the economy and all areas of the nation; and calls upon the Government to initiate without delay an investment based recovery including financial incentives for investment in manufacturing, tax credits for the enhancement of technology, assistance for regional economic development and a major programme of education and training to tackle Britain's continuing skills crisis.
I happen for my sins to have been shadow Chancellor since the last election in 1987, during which period there have been three Chancellors of the Exchequer. The first was the right hon. Member for Blaby (Mr. Lawson), who is not remembered with exactly ecstatic affection by Conservative Members. Despite being described by the right hon. Member for Finchley (Mrs. Thatcher), then Prime Minister, as both "unassailable" and "brilliant, brilliant, brilliant", he is given a much lower rating by contemporary Conservative opinion. Whenever they gather in private, he is berated for the economic mess in which their political fortunes are floundering, although in public, as hon. Members know only too well, the fiction is resolutely maintained that Conservative economic policy has been a continuing success. The right hon. Member for Blaby will be remembered as the Chancellor who dismissed rising inflation as a temporary blip and who, having put up interest rates to 15 per cent., none the less assured us that the economy would have, to use his phrase, a soft landing. The right hon. Gentleman may personally have achieved a rather soft landing, but sadly that was not true for the economy of which he was in charge.
There followed the present Prime Minister who spent about a year in the job—a year in which the British economy went steadily downward into a deep and savage recession, paralleled only by the recession in the early part of the decade which was presided over by that other Tory Chancellor, the right hon. and learned Member for Surrey, East (Sir G. Howe).
The present Prime Minister assured us that there would not be a recession at all. Speaking to the Association of British Chambers of Commerce on 6 December 1989 he said:
"I do not myself think a recession is either likely or necessary."
Even 11 months later, in presenting his autumn statement to the House, he refused to use the word "recession" throughout and forecast:

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"the British economy is coming back on track".—[Official Report, 8 November 1990; Vol. 180, c. 125.]
To be fair to the right hon. Gentleman, he did appear to have a revealing glimpse of self-doubt in his own assessment when he told the Financial Times in an interview on 27 October 1990:
"It will take some time. It always does to change the economy. It's like turning the Titanic round as you know."
Well, we do not know; we do not think that that was the Titanic's problem.
I believe that there is a unifying characteristic about the three most recent Tory Chancellors—a stunning inability to predict even with vague accuracy what is about to happen to the economy, coupled with the disreputable technique of bogus reassurance which would put Arthur Daley to shame. In the latter respect, the present Chancellor is the undisputed champion. Shortly after he became Chancellor, he told the Treasury and Civil Service Select Committee on 5 December 1990 that the recession would be "short lived and shallow."
As the economy went into a nose dive, the right hon. Gentleman was soon proved to be absurdly wrong. Perhaps chastened by that experience, he seems to have decided by the time of the Budget that he would be more realistic in his forecasts for recovery. In his wind-up speech in the Budget debate on 25 March 1991 he told us:
"I am not in the business of publishing forecasts that are more optimistic than I think is the case, as that leads us nowhere. It is better to put the facts before Parliament and the country."
He went on to predict:
"There is every reason to expect that growth will start again towards the middle of the year."—[Official Report, 25 March 1991; Vol. 188, c. 698.]
He repeated that forecast a month later when speaking at a press conference of the International Monetary Fund in Washington on 29 April. According to The Times, the Financial Times and The Independent, the Chancellor said —and I quote from The Independent's copy:
"The recession would be over somewhere around the end of the second quarter"
that is, the second quarter of this year.
Therefore, the Chancellor, who was by that time careful not to be over-optimistic, predicted that recovery would begin in July of this year. By June of this year he was beginning to moderate that forecast somewhat. He told David Frost on TV-am on 2 June this year:
"In my Budget speech I said that from the middle of the year the recovery would begin … it may be slow at first. It will begin in certain sectors, probably in the housing market … there are … vague stirrings, but the signs arc there."
I have on previous occasions reminded the House of the outraged reaction of the building industry to the Chancellor's statement, but one person at least appears to have been persuaded—and that is the Prime Minister himself.
In an interview in The Daily Telegraph on 19 June this year, under the banner headline "Recovery coming 'in weeks'"—this way in June—the Prime Minister was asked about the faint stirrings that the Chancellor had detected in the housing market. The interviewer said:
"The Chancellor did speak of 'vague stirrings' in his recent television interview."
The Prime Minister replied:
"I think you can look anecdotally at what is happening."
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I am not sure how one does that, but I am quoting exactly what the Prime Minister said, and it must be right because it is in The Daily Telegraph. He went on:
"Anecdotally you look around you, you find lots of those For Sale boards now have Sold stickers on them."
To help the comprehension of the readers of The Daily Telegraph, there are photographs of signs with "Sold" stickers on some of them.
Mr. Den Dover: The right hon. and learned Gentleman says that signs of recovery are hard to find. Can he explain why unemployment in Chorley has gone down in the past two months and why several of the builders are doing very well?
Mr. Smith: The hon. Gentleman should look at the figures for the country as a whole. If he does so, he will find that that is not an encouraging sign. Some 850,000 people have been put out of work in the past 18 months and that is the figure about which the hon. Gentleman should think. If we are conquering the unemployment problem, why do vacancies keep falling? Vacancies have fallen again from 106,000 to 103,000. There are now 24 claimants chasing every notified vacancy and the number of vacancies in Greater London has almost halved, leaving a remarkable 84 claimants for each vacancy. Anyone who thinks that that is a satisfactory state of affairs has a lack of ambition for our economic success.
I return to the Prime Minister and the "Sold" signs all over the area at which he looks anecdotally. At this point one wonders what world the Prime Minister lives in, as repossessions mount to a record level, projected to be 100,000 in this year alone, and as the housing market remains wholly depressed.
No doubt encouraged by the Prime Minister's reassuring anecdotal ventures, the Chancellor continued into the early autumn promising recovery around the corner. He told the Financial Times in an interview on 16 September:
"Britain is coming out of recession. The statistics are highly encouraging and pointing very much in the right direction."
A month later, at the Conservative party conference in Blackpool, the Chancellor told the Tory faithful:
"the green shoots of economic spring are appearing once again".
I must bring the House rapidly up to date.
Interviewed by Mr. Walden last Sunday, the Chancellor appeared to be sadly bereft of statistics or even of anecdotal sightings of recovery. Rather lamely, he claimed:
"I have never changed my view about how I saw the path of the recovery … so far things have turned out very much as I expected".
In what I find an astonishing backtrack, he then told Mr. Walden:
"We are not assuming, in our view of the future, that there will be a great and sudden revival necessarily of the housing market … we arc not assuming that housing is leading the economy out of the recession on this occasion".
The words "on this occasion" should be translated as "in this interview". It was precisely the housing market in which the Chancellor claimed to detect the "vague" and faint "stirrings" which led the Prime Minister off on his anecdotal trail.
Will the Chancellor now admit that what he said in June on TV-am about "vague stirrings" in the housing market and what the Prime Minister told us about "Sold" signs everywhere was rubbish then, as it is rubbish now?

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What is most revealing is that if we accept that Ministers believed what they said at the time, they were woefully ignorant of the catastrophic effect that their policies were having on the housing market and on the construction industry generally.
Ministers appear to have no concept of the mortgage misery and the consequent alarming surge in repossessions and lost homes, which are the direct result of their economic mismanagement. The collapse in the construc-tion industry simply cannot be talked away. I noticed an article by Mr. Andrew Taylor in today's Financial Times which said:
"Bad news continues to pour out of the sector with no sign of the recession loosening its grip on residential and commercial property markets."—
The article quotes Sir Clifford Chetwood, chairman of Wimpey, Britain's second largest housebuilder, as saying:
"I have been in the industry 42 years. These are the worst conditions I have experienced."
The article goes on:
"Tarmac, the country's biggest housebuilder, said this week that trading conditions had deteriorated substantially during the last two months."
That is, the "last two months" in which recovery is supposed to be happening before our very eyes. Where are the encouraging statistics which are pointing very much in the right direction?
In his Mansion House speech given this year at the Guildhall, the Chancellor told us that the good news was that
"In Britain we are now on the road to recovery. Retail sales are on an upward trend."
The Chancellor felt so strongly about that matter that he waxed indignant in our previous debate. Indeed, he challenged me to withdraw my sceptical remarks about his statistical justification. Unfortunately for the Chancellor, since that debate the release of the latest figures for October shows a 0·5 per cent. fall in retail sales for the month, a 0·3 per cent. fall for the August-October quarter over the previous quarter, and even a 0·3 per cent. fall compared with the equivalent period a year ago. On 19 November, the Financial Times reported:
"The Treasury agreed that sales had been flat for the last three months."
It quoted a Treasury spokesman as saying:
"On the face of it the figures are a bit of a disappointment." We cannot look for recovery in that quarter—certainly if the Treasury assures us that it is not happening.
Construction is a disaster and retail sales are poor. What about industry? The Government claim that we should be encouraged by a 0·3 per cent. rise in GDP in the third quarter, a rise which has occurred exclusively, as they well know, because of the full resumption of North sea oil production after a period of interruption. However, in the onshore economy, non-oil GDP continued to contract by 0·3 per cent., with manufacturing flat and services falling. Over the past three months—sad to say—both the value and volume of exports have declined, and manufacturing output, which constitutes about a quarter of our GDP, has barely moved since April. Car production in October fell by 27 per cent. and sales of new cars plunged by 22·5 per cent. in the same month.
Perhaps the most worrying feature of all is the alarming growth in liquidations and the rise in unemployment. The Association of British Chambers of Commerce revealed last week that companies are going out of business at a faster rate than at any time in the past five years. Dun and Bradstreet tell us that, in the first nine months of this year,
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business failures are running at a rate of 930 per week—a 70 per cent. increase over the previous year and the largest increase for 11 years. Other alarming figures, from the real economy in which our constituents live, are that, in the past 18 months, unemployment has soared by 850,000 and 100,000 homes are being repossessed this year alone.
Against that tragic background, is it any wonder that consumer confidence has been slipping in successive months ever downwards—September down on August, October down on September, and November down on October? I agree, none the less, with the Chancellor on one point. In his Budget wind-up speech, he said:
"It is better to put the facts before Parliament and the country."—[Official Report, 25 March 1991; Vol. 188, c. 698.]
In the absence of candour from the Government, that is just what this debate is about.
Mr. Peter Thurnham: The right hon. and learned Gentleman has mentioned putting the facts before Parliament and the country. Will he put the facts before the country about Labour's spending pledges? Will he comment on the remarks of the right hon. Member for Manchester, Gorton (Mr. Kaufman), who said that he would increase overseas aid to 0·7 per cent., which would cost £2·3 billion? How does that square with Beckett's law that only old-age pensions and child benefit would go up?
Mr. Smith: I can understand the hon. Gentleman's anxiety to talk about almost anything except the recession. I have made our spending plans clear on innumerable occasions. We are discussing—I really must keep in order —the recession from which this country is suffering, even if there is a disinclination among those responsible for it to want it discussed in Parliament.
I ask the Chancellor how he can conceivably justify his claim earlier this year that the recession would be over "somewhere around the end of the second quarter." That is to say in the middle of this year. There is no doubt that he claimed that, and there is no doubt that that has not happened. Here we are, approaching the end of the fourth quarter, and the very best that one can say is that we arc bumping along the bottom of a deep and damaging recession. That is all too clearly understood by those at the sharp end in industry, commerce and finance, as well as by our constitutents.
The repeated claims of recovery around the corner, which are not fulfilled and which have been the Chancellor's stock-in-trade month after month, have fatally damaged his credibility and that of the Government as a whole. Indeed, the Chancellor's efforts are now regarded as risible as well as incredible. At the recent royal variety performance, Mr. David Frost, who was compering the proceedings, told the company that the Chancellor could at last give a completely firm forecast of when the recovery would occur—he said that it would happen definitely in the fifth quarter of the year. That statement has some aptness, because Mr. David Frost elicited the "vague" and "faint" stirrings that the Chancellor detected in the housing market.
What is deeply disturbing for Parliament and for the country is the "wait and see" attitude, which is the Government's substitute for a policy for recovery from recession. They hope for a consumer-led recovery. Indeed, on 4 June, the Chancellor told the OECD conference in Paris:
"Consumer spending led us into recession and I expect it to lead us out."

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Many people might think that high interest rates led us into the recession, but I let that point pass for the moment.
In the Walden interview, the Chancellor even seemed to lose confidence in that hoped-for salvation. On the retreat once again, he said:
"We are looking for part of the recovery to come from consumer demand, but by no means all … It does take time" —we have heard that before—
"what we need is what Disraeli once called the alchemy of time."
Intrigued by that reference to alchemy, which I did not think was all that honourable an occupation, I consulted "Collins English Dictionary", which I have in the office. According to that dictionary, alchemy—alchemy of time is what we are relying on—is
"the pseudo-scientific predecessor of chemistry that sought a method of transmuting base metals into gold: an elixir to prolong life indefinitely: a panacea"—
it is hardly believable—
"or universal remedy."
The Chancellor was being even more percipient than he realised. The truth is that, after 12 years in power and with an election fast approaching, the Government are merely hoping that something will turn up. In no sense is that an economic policy for this country.
What we need surely is an investment-led recovery which recognises the fast-approaching challenge in the form of the single market after 1992 and which seeks to rebuild the industrial capacity on which this country depends. Over the Conservative years, we have seen the persistent reduction in the capacity of our manufacturing sector, which, after all—we repeat it endlessly, but it is a fundamental truth about our economy which should be appreciated by the Conservative party—is our fundamen-tal wealth creator and the indispensable internationally tradeable part of our economy. For a country which has a tendency both to inflation and a balance of payments deficit, the overriding objective of policy must be to enlarge our capacity to produce the goods that customers wish to buy, both at home and abroad. That is exactly what is not happening now.
Mr. Phillip Oppenheim: The right hon. and learned Gentleman is correct to say that manufacturing is important, but is he aware that, according to the OECD's six-monthly series figures, manufacturing output fell under the last Labour Government, whereas it has risen by a quarter under this Government and rose faster in this country in the 1980s than in any other major country in Europe? Will he cast his mind back to the time when his party last implemented its industrial policy— when British Leyland was the butt of international jokes; when British Airways was rated beneath Aeroflot and when British Steel was the world's largest loss maker? As the right hon. and learned Gentleman has never manufactured anything except dodgy policies, how can he do any better?
Mr. Smith: As he often does, the hon. Gentleman has once again traded in bogus statistics. He is quite wrong about that—
Mr. Oppenheim: No.
Mr. Smith: As I recollect it, manufacturing investment is now lower in real terms than in 1979, which is pretty well the end of that argument.
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We do not have an investment-led recovery now—
Mr. Oppenheim: The right hon. and learned Gentleman is denying OECD figures.
Mr. Smith: To show that that is not just a view that is held uniquely by the Opposition, I shall quote from the National Institute Economic Review of May 1991, which argued—in my view, persuasively—that
"the loss of manufacturing capacity in the early nineteen eighties must be partly to blame for the overheating of the economy at the end of the decade and the consequential problem of inflation and payments imbalance. It's only too likely that the present recession will create the conditions for just the same kind of overheating to occur again sometime in the nineteen nineties if nothing is done to compensate".
So what is being done to compensate? Seemingly nothing.
Let us take the projections for investment, the very life blood of economic development. After a dramatic fall this year in gross fixed investment, which the Chancellor conceded in his autumn statement to be almost 11 per cent., the consensus of economic forecasts, which was helpfully compiled by the Treasury, shows an even further fall in gross fixed investment next year. According to the International Monetary Fund, the United Kingdom will be bottom of the investment league of the G7 countries next year and, according to the Confederation of British Industry, manufacturing investment, which is already falling this year by around 15 per cent., is expected to fall again next year by almost 4·5 per cent.
However, in this situation, the Government do not propose any action to bridge the investment gap. We appeal to them, before even more damage is done, to reconsider their rejection of the case for fiscal incentives to encourage company investment in manufacturing by increasing capital allowances and by introducing tax credits for research annd development expenditure to stimulate the adoption of new technologies in British industry. Those proposals are backed—
Mr. David Shaw: Will the right hon. and learned Gentleman give way?
Mr. Smith: I am sorry, but I have given way frequently and I really must get on.
Those proposals are backed by a wide consensus in industry. The excellent House of Lords report, "Innovation in Manufacturing Industry" of January this year, argued strongly for the principle of such fiscal incentives. It is also supported, as the Chancellor well knows, in Budget submission after Budget submission by the Engineering Employers Federation, the CBI and the Trades Union Congress. I have no doubt that, in anticipation of next year's Budget, the representations will be resumed with even more urgency than before as our industrial situation deteriorates even further. I hope that the Chancellor does not, on this occasion, turn a deaf ear. What is galling for our industry is that, allegedly in the name of creating a level playing field, the present Government have created a situation in which, in the context of international competition, our industry has to play uphill in both halves against competitors whose Governments specifically encourage industrial investment.
I make no apology for once again urging the compelling case for a new approach to education and training. In "Training Statistics 1991"—the Chancellor seems to find this amusing, but the skills shortage is the most serious problem that this country faces and should not be a subject for amusement. "Training Statistics 1991", issued recently

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by the Department of Employment, again reveals the astonishing prevalence of serious skills shortages even at a time of severe recession and high unemployment. It takes a bit of believing, but in the past 12 months, according to the Department of Employment, 24 per cent. of all enterprises reported skills shortages. The figure rose to 41 per cent. in high technology sectors, such as mechanical engineering.
The amount of training that employers are planning to provide has fallen dramatically. The balance of large manufacturing firms plans has become negative, falling by a staggering 67 per cent. between October 1989 and July 1991, with a balance of 20 per cent. of those firms planning to decrease training in the next 12 months. That is further evidence of the baleful effect of savage recession on industrial companies which are forced to cut essential investment and essential training simply to survive. According to the Government's own report, fewer than half the participants in employment training complete the course; 55 per cent. go straight back into unemployment; and only 23 per cent. find a full-time job at the end of it. That is no doubt why the Treasury quarrelled with the Department of Employment about giving it more money for schemes that achieve such poor results.
Perhaps most damning of all are the international comparisons. Our weakness in developing intermediate skills is starkly revealed in a paper by the National Institute of Economic and Social Research, which was published in January this year. It shows that, in Britain, 31 per cent. of technical workers in manufacturing had no vocational qualifications. In Germany, the figure was only 8 per cent. At higher levels of qualification, only 14 per cent. of British technicians were qualified, while in Germany the figure was 36 per cent.
It is absolutely clear that to compete, against Germany and others, in the single market after 1992 and in the world of constant technological change, those investment and training gaps must be closed. The Government can no longer shuffle off responsibility for training on to companies, particularly companies that have been debilitated by the recession. The Labour party believes that it is in the necessary marriage of technology and training and in the continuous enhancement of investment, particularly in manufacturing, that we can find the way forward to the competitive and productive economy that alone can guarantee our economic progress and support our standard of living.
As is often said, it is quite true that we need a recovery of confidence before we will see an end to recession. The Opposition believe that such confidence can be secured and maintained only by an investment-led recovery. Once this country starts investing in enlarging its industrial capacity, in enhancing its technological capability, and in developing the skills of our people, there will be a sound basis for self-confidence in our economic future. There is no sign whatsoever that this Government and this Chancellor comprehend those realities. That is why., after 12 years of failure, they will soon be relieved of the responsibilities of government.
4.47 pm
The Chancellor of the Exchequer (Mr. Norman Lamont): I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof:
"welcomes Mr. Chancellor of the Exchequer's Autumn Statement, which reaffirmed the Government's forecast of a
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modest recovery in the second half of 1991, with growth gathering pace in 1992; notes that the total output of the British economy rose in the third quarter of 1991, providing further confirmation of this forecast; and congratulates the Government on its sound and prudent economic policies, which have reduced inflation from nearly 11 per cent. to under 4 per cent. have allowed interest rates to be reduced from 15 per cent. to 101 per cent. and have laid the foundations for sustained non-inflationary growth.".
After four days of not always very exciting negotiations in Brussels, it is a great pleasure to return to the light entertainment that is provided by the right hon. and learned Member for Monklands, East (Mr. Smith). As usual, he has given an assortment of selective quotations and short-term statistics. If he has any constructive thoughts about the economy, he is determined to keep them firmly to himself. He has not offered the House any policies—he never does, and he never will. He knows that, as each month goes by and as the economy moves out of recession, the Labour party's position will become more difficult. He is desperate to talk down the British economy, but his opportunities are fast fading.
Much of the right hon. and learned Gentleman's speech dealt with forecasts. He told the House of the Government's stunning inability to foresee even the immediate future, but the right hon. and learned Gentleman himself has a bit of a past at forecasting. He, too, has a track record. In fact, his speech today bore an extraordinary resemblance to the speech that he made on 12 November 1984, when he forecast that unemployment
"will go on rising relentlessly and remorselessly."— [Official Report, 12 November 1984; Vol. 67, c. 435.]
In March 1985 he said:
"So long as the Tory Government remain in office, unemployment will continue to rise".—[Official Report, 11 March 1985; Vol. 75, c. 104.]
What happened after that brilliant forecast? Over the next four years unemployment fell by more than a million.
Dr. John Cunningham: It has risen again.
Mr. Lamont: It is lower today than it was when the right hon. and learned Gentleman made his point.
The OECD said:
"Between 1984 and 1990, the UK had by far the best job creation record of the larger EC countries".
So much for the right hon Gentleman's forecast.
Mrs. Gwyneth Dunwoody: Will the Chancellor give way?
Mr. Lamont: I will give way in a moment.
Far from being able to forecast the future, the right hon. and learned Gentleman has shown that he is singularly unable to forecast either the past or the present. In the same speech in March 1985 he was unable to do it. He said that he was amazed to be told that we were in the fourth year of economic recovery. What was happening? Between 1982 and 1985 growth had been running at more than 3 per cent. a year and the economy carried on growing for another four years after that. Not only did the right hon. and learned Gentleman not know where we were going; he did not even know where we had been. So much for his ability to forecast. What about the favourite subject of the right hon. and learned Gentleman, to which he returns in every speech—investment? On 12 November 1985 he predicted that,
"there will be a temporary upward blip in the figures. However, from 1987 onwards … there will be a return to the downward trend."—[Official Report, 12 November 1985; Vol. 86, c. 467.]

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That was an extraordinarily precise prediction, one might think, from someone who is so meticulous in his determination never to say anything. What happened? In 1987, 1988 and 1989 there was an unprecedented investment boom in Britain. Some downward trend! Even today, manufacturing investment is running at levels higher than those achieved in 1986. In view of those forecasts, is the right hon. and learned Gentleman in any position to give anyone lessons in forecasting? He does not even bother to make new mistakes; he just repeats the same ones that he has made before.
Mr. Robert Sheldon: While we are talking about the past and the nature of precise predictions, will the Chancellor recall the precise predictions that were made in 1985 about the way in which the money supply would diminish over the years and inflation would follow correspondingly year by year? The figures were precise—7 per cent., 6 per cent., 5 per cent., 4 per cent., year by year. That was the nonsense of all time.
Mr. Lamont: From the early 1980s inflation fell. The right hon. Gentleman knows that perfectly well. Inflation fell markedly and it has fallen again.
The right hon. and learned Member for Monklands, East and his hon. Friends have talked in the past of a recession made in Downing street. That is the phrase often used by the hon. Member for Dunfermline, East (Mr. Brown). My right hon. Friend the Prime Minister and I must have more influence than we thought because, as the right hon. and learned Gentleman knows only too well, throughout the industrialised world 1991 has been a year of either falling industrial growth or recession. Even in Germany industrial production is falling. Indeed, industrial production has fallen in the past year in every G7 country. The United States, Australia and Canada have been in recession for much of the past year. In Europe, Sweden, Switzerland and Finland are all in recession, while in turn growth is now slowing and unemployment is rising across much of the rest of Europe.
Overall, 1991 is likely to show the weakest growth in the world economy in a decade. We know that Opposition Members are still locked in their isolationist world. It is wilful ignorance to imagine that that factor could have no impact on the United Kingdom. Of course, the last year has been a difficult one for the British economy. Some sectors and many individual businesses have been badly hit. However, the right hon. and learned Gentleman's portrait of ever-deepening recession is fiction.
In my Budget statement last March, I forecast that growth would resume in the second half of the year. So far, the economy has developed in line with that prediction, so when I presented the autumn statement a few weeks ago there was no need whatever to depart significantly from my Budget forecast. I have no reason to revise my view that GDP will show a modest increase in the second half of this year and that recovery will accelerate next year. That is what I said in the Budget and in the autumn statement. That is what I say now.
Mr. Giles Radice: The Chancellor mentioned what is happening on the continent. Does he remember that the Governor of the Bank of England told the Select Committee that our recession was home grown?
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In view of the right hon. Gentleman's optimistic forecast, will he tell the House whether he believes that there will be a credit crunch this winter?
Mr. Lamont: I do not believe that there are reasons for thinking that there will be a credit crunch, if by that the hon. Gentleman means the inability of British banks, because of capital inadequacy, to meet the demands of borrowers, I do not believe that that is the position in Britain. Britain is better positioned in that respect than many other countries. I have demonstrated to the House that many countries are in recession and many countries are experiencing slowing industrial production. That plainly affects the world economy and the growth of world trade.
The right hon. and learned Member for Monklands, East did his best to suggest that my forecast for next year was over-optimistic, but my view is broadly shared by independent forecasters. Over half of the main City forecasters believe that growth in 1992 will be 2 per cent. or more and so do organisations as diverse as the National Institute of Economic and Social Research, the International Monetary Fund and the European Commission. The IMF forecasts that we will grow as fast or faster than Germany or France in 1992.
As for this year, the right hon. and learned Gentleman did his best to present my views and those of independent forecasters who support my views as unrealistic. However, he admitted that no one has ever suggested that we would see fast growth at this stage. In virtually every speech and public appearance that I have made since the Budget, I have made it clear that growth would be modest at first and that business conditions would remain difficult in some sectors for a while. I understand the frustration and impatience of business men who would like to see demand picking up more quickly, but it is simply not normal for the economy to move instantly from recession to speedy growth. Current conditions are exactly what one would expect to see at the turning point between recession and recovery. Mixed signals are inevitable but there are signs that the fall in output is behind us.
Industrial production rose by more than 1 per cent. in the third quarter. That was a larger increase than in the United States, Japan, Germany, Italy or France and larger than in all the G7 countries other than Canada. As one of my hon. Friends said, the rise in unemployment in October was the smallest for over a year. Unemployment fell in the north and Wales and fell in Scotland for the second month running.
Manufacturing investment, in which the right hon. and learned Gentleman claims to be so interested, rose in the third quarter for the first time in a year. Companies increased their stocks in the third quarter, again for the first time in a year. The narrow definition of money has moved into the upper half of its target range, again for the first time in a year. Manufactured exports are running at record levels and business surveys show that output, export and investment expectations are all up. After falling by I per cent. in the second quarter of this year, GDP rose by 0·3 per cent. in the third quarter. However the right hon. and learned Gentleman seeks to explain that away, it was the first time in a year that the total output of the whole economy had risen. Industrial production also rose in that quarter compared with the previous quarter, and by

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a larger amount than in other G7 countries. That fully justifies some of the remarks that I made in both the Budget and the autumn statement.
Mr. John Smith: Does the right hon. Gentleman accept that, as is reported in The Independent, he said in Washington on 29 April of this year that the recession would be over
"somewhere around the end of the second quarter"?
Is he saying that the recession is now over?
Mr. Lamont: As the right hon. and learned Gentleman knows, a recession is defined as falling output. Total output has ceased to fall and it rose in the third quarter. In that sense, technically, the recession has ended, as I have said publicly before.
Mr. George Foulkes rose—
Mr. Lamont: I will give way in a moment.
There are good reasons for believing that growth will gather momentum during coming months. Real incomes have been rising, consumer expenditure will increase as the full impact of lower interest rates works through to demand and, as world growth picks up, exports will increase further.
The right hon. and learned Member for Monklands, East and his hon. Friends seem confused. Today the right hon. and learned Gentleman talks of nothing but recession; in September, he absentmindedly started to use the word "recovery". Not only that, he and his right hon. Friend the Leader of the Opposition were so alarmed at some of the accounts appearing in the newspapers that the Leader of the Opposition said that Britain was heading for a short-lived boom fuelled by consumer credit. Which is it, recession or boom? The right hon. and learned Gentleman should have made up his mind.
Even during a boom, firms fail and people lose jobs —so it is not surprising that, as the economy emerges from recession, the right hon. and learned Gentleman always manages to come up with plenty of gloomy quotes., but his picture is highly selective. He should listen to the words of those who know far better than he does what is going on in the economy. Professor Doug McWilliams, chief economic adviser to the Confederation of British Industry, agrees that the economy "is edging up slowly." The president of the Association of British Chambers of Commerce said:
"Commerce and industry is on the road to recovery."
Even in the depressed housing market, the chief executive of Abbey National says that the worst is over.
The right hon. and learned Gentleman says that I am wrong, but does he think that all those people are wrong as well? He went on about retail sales again this afternoon, but they rose in the third quarter. It is true, as he said, that they fell back in October. Instead of talking so much about how bad business is, he should listen to some people in business.
Mr. Desmond Pitcher, the chief executive of Littlewoods, said:
"I am sure we have turned the corner."
Mr. Colin Evans, deputy chairman of Austin Reed, said:
"I believe the turnround has arrived."
The CBI's last survey of the retail trade said that the
"slow upturn in retail sales is now starting to gather momentum."
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That does not mean that all retailers view the position in the same way and that all retailers are experiencing the same conditions. Clearly, there are business men who believe that conditions are improving.
In the months ahead, there will be weeks when the figures are encouraging and weeks when they will be less so. Does the right hon. and learned Gentleman seriously think that the way to run the economy is to try to manage demand, quarter by quarter and week by week, changing our policy as each new statistic is published? What sort of stability is that for industry?
Mr Foulkes: As the Chancellor knows, I am a simple sort of soul. I do not know all the professors and chief executives to whom he refers. Every week I spend Friday, Saturday, Sunday and Monday in my constituency. I talk to the textile manufacturers, who tell me that they are in a slump. I talk to the motor sales men, who tell me that things are pretty bad. I talk to all of the people in my constituency, people who see the reality of rising unemployment—then I come back to the House and hear an entirely different story, divorced from reality, from the Chancellor. Does not he think that it might improve his credibility if he were to admit what is really happening outside, and say what he intends to do to resolve the problem?
Mr. Lamont: I am sorry that I gave way to the hon. Gentleman. He is not such a simple soul—only a bit of one. His intervention would have been more telling if he had commented on some of the facts and statistics that I have given. He made no attempt to reply to those.
The right hon. and learned Member for Monklands, East wrote me a letter last week—I have it here somewhere —calling for what he referred to as a "change of economic course". What change of course is he suggesting? Today he offered nothing in the way of serious policy proposals. He talked a great deal about recession, but did not say what alternative policies he would pursue, apart from training. What is this mysterious change of course that he keeps talking about? He implies that it exists, but he does not specify, or tell anybody, what it is. At the time of the Budget, the right hon. and learned Gentleman refused to say what his tax policies were. Now he tells me to change course. What does he want? Now is the time for him to tell us. Does he think that taxation is too high or too low?
At the time of the autumn statement, I asked him whether he thought that public expenditure was too high or too low. He asks us to change course, but what does he want? He will not say. I asked him a few weeks ago if Government borrowing was too high or too low or just about right. He calls for a change of course, but he will not tell us what he thinks the three main levers of policy— spending, taxation and borrowing—should be or how they should be used differently. He will not tell us because he has not got a clue.
Conservative Members have learnt the folly of fine-tuning, even if the right hon. and learned Gentleman has not. The sort of quick fix that he implies exists does not exist and could only undermine stability for business. It would encourage the illusion that Governments know best, that Governments produce economic recovery. As the history of Labour Governments shows only too well, attempts to pump up demand in response to short-term statistics end only in disaster. Businesses generate economic growth and prosperity. That is why we say that

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the Government must stick to doing what only they can do —providing the framework within which businesses can plan and invest in the expectation of a sustained recovery, something that never happened and never could happen under Labour.
The Government have kept control of public spending; under Labour, it ate up almost half the nation's wealth. The Government have cut taxation rates. We now have the lowest corporation tax rates in the Community and among the G7 countries. That is why we get more inward investment than anywhere else in Europe. All Labour wants to do is to put up taxes again. The Government take a long-term view of measures to promote competitiveness. We cut unnecessary regulation and help markets to work better.
The right hon. and learned Gentleman wants to smother business in bureaucracy and restore trade union power. The Government have brought inflation down—it is now 3·7 per cent., half the lowest rate that the last Labour Government ever achieved. Most important of all, by joining the exchange rate mechanism and sticking to its disciplines, the Government have demonstrated their determination to keep inflation down to levels comparable with the best in Europe.
Above all, it is our determination to secure low inflation that is laying the foundations for sustained recovery. Retail price inflation is down by two thirds. Underlying inflation, which never rose as high, has fallen less dramatically, but will fall further during the coming year. Factory gate inflation has fallen even faster than expected and by the end of the year should be down to the lowest level in more than 20 years.
As usual, the right hon. and learned Gentleman managed to go through a speech on the economy without mentioning inflation, exactly as his right hon. Friend the Leader of the Opposition did in his interminably long speech at the Labour party conference. There was not a word on inflation. We have been trying to get inflation down. All that the right hon. and learned Gentleman does is to try to get everyone down. His refusal to accept that the defeat of inflation must be the first priority—and, what is more, his refusal to understand and support the measures necessary to deal with inflation—would have led us to a far deeper and more damaging recession.
No matter what the level of interest rates, for years the right hon. and learned Gentleman has been arguing for a cut. In October 1990, when inflation was 11 per cent., he was calling for interest rate cuts. In October 1987, when interest rates were 9·5 per cent., he called for interest rate cuts. In March 1988, when interest rates were 8·5 per cent. —many people with hindsight believe that they were too low—he called for interest rate cuts. The right hon. and learned Gentleman proclaims his undying devotion to the ERM, but has never stopped him calling for interest rates to be cut further and faster. He never fails to choose soft options and easy answers. If I had taken his advice, it is all too clear what would have happened to the pound in the last few weeks.
In July, when the right hon. and learned Gentleman was asked about the effect on sterling of his policies, he made this extraordinary remark to "Newsnight":
"All I would have to do is pick up the phone and talk to someone on first name terms."
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I wonder who that would be. I have been thinking about it. One can imagine the conversation, "Alto Jacques, is that you? How are things in Brussels? Listen Jacques, I've got a bit of a problem here. Can you help? Yes, I know you had to bail us out last week, but the colleagues keep spending it—yes, all of it. Yes, I'm sorry Jacques". But even the right hon. and learned Gentleman must have realised that first name terms might not deliver the goods —[Interruption.] Two weeks ago he seemed to be having doubts about his own abilities because he said, in answer to a similar question, that before doing anything, he would have to take advice. A lawyer's cry. Advice from whom? I can give him some advice, though I do not think he will thank me for it. His death-bed conversion to monetary prudence will not convince anybody, least of all the foreign exchange markets. They have heard him week in, week out talking of lower interest rates. The truth is that his policies inevitably would have led to higher inflation and higher unemployment in the long run.
Mr. A. J. Beith: Does the Chancellor see much prospect for lower interest rates in the coming months? Is he prepared, if necessary, to allow higher interest rates if there is pressure on sterling?
Mr. Lamont: The hon. Gentleman knows that I never comment on the trend of interest rates—[HON. MEMBERS: "Answer."] I will answer his question by saying that we shall do whatever is necessary to sustain the pound's position.
Mrs. Dunwoody rose—
Mr. Lamont: I have given way several times.
The one policy that the right hon. and learned Gentleman always puts forward in answer to every problem, short term or long term, is training and investment. That is the one phrase he always uses. He became rather cross when, in a previous debate, I compared him with a parrot which knew only that one phrase—training and investment. Whatever the question, the answer is always the same from the right hon. and learned Gentleman—training and investment. When he was asked on the radio the other day how he would keep inflation down, he replied:
"We need a programme of investment and training."
In another broadcast, he said that the United Kingdom was in a poor competitive position, and he gave as his remedy more money for training and investment. When asked how he would keep the pound in the ERM, he replied that it would be done through
"a programme of investment and training."
When asked how Britain would be able to be ready for monetary union, he replied:
"A programme of training and investment, of course."
The right hon. learned Gentleman's letter to me last week called for action to initiate a programme of training and investment. That really will not do. He has refused to answer questions about taxing, spending and borrowing. We know why he refers to training and investment—because it is less embarrassing than talking about the things that other people want to talk about. Someone at some time should let him in on the secret that next year we shall be spending over two and a half times as much in real terms on training, enterprise and vocational education as in 1978–79.
Perhaps someone will tell the right hon. and learned Gentleman that employers' training expenditure is now

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running at record levels and that under the Conservatives the share of our total resources going into investment has reached record levels, far above anything achieved under Labour. Even with a fall in investment—and it always falls in recessions—the investment-GDP ratio will be far higher this year than at any point under the last Labour Government.
The truth is that the right hon. and learned Gentleman's much-vaunted programme for training and investment would only make it more difficult for business to train and invest. How would he pay for it? His hon. Friend the Member for Derby, South (Mrs. Beckett) tells us that the Labour party has only two spending commitments—increasing pensions and child benefit.
"Everything else is regarded as a desirable aim",
she tells us, and will have to be paid for "as resources allow" out of economic growth. So there we have it— Labour's main policy to create growth will have to wait until there is growth. Under Labour it would be a very long wait indeed.
Where will the right hon. and learned Gentleman find the money to finance the training and investment? He has talked in the past of financial incentives and tax credits, but he knows, or he should know, that one business's tax break is another business's tax increase. We have reduced corporation tax from Labour's 52 per cent. to 33 per cent. He would have to put the rate up again. He would be taxing away the money that businesses already use to finance training and investment.
The right hon. and learned Gentleman always forgets that people invest in the hope of making profits, but does he ever talk about making profits—not in our hearing. In the 1980s, profitability increased markedly. The result was that, contrary to the famous prediction that the right hon. and learned Gentleman made in 1985, business men invested on a vast scale. Business investment under Labour increased by barely 1 per cent. a year; under the Conservatives it has grown by over 2·5 per cent. a year. Despite the recession, business investment in plant and machinery is 50 per cent. higher than in 1979 and business investment will rise again next year as profitability recovers. Who is the right hon. and learned Gentleman to talk about investment? As I say, it is easier for him to talk about investment and training than more difficult issues such as taxing and spending.
Another point to which the right hon. and learned Gentleman never refers is the fact that the best way to get more investment is to have more savings. That is one of the first things students learn in economics, though not, apparently, in the Labour party. The more we save, the more investment we can have and the more interest rates can be lowered. We have had 10 years of cutting taxes on savings. What a contrast to the position of Labour Members, who still refer to income from savings as unearned income; they believe in taxing it as heavily as possible.
The Labour party wants to introduce a new tax on savings, disguised as national insurance contributions. That proposal, together with all of Labour's other tax increases, would slash the return on savings. As a result, savings would fall and so would investment. A Labour Government would end up, as they did before, with a miserable investment performance. As always, there is a yawning gulf between rhetoric and reality. In every area, the right hon. and learned Gentleman is determined to repeat the mistakes of his predecessors.
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Nowhere is that more true than on public expenditure. All over the country the right hon. and learned Gentleman's colleagues have been pledging extra spending —£35 billion worth of pledges at the last count, and still rising. Who is to pay for it? That is the key question. We do not know, they will not answer, they do not have an answer and they never will have an answer. There is a gaping hole in Labour's accounts, the same hole which last time they filled first by borrowing and then by running to the International Monetary Fund.
At the last election, at least the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was frank and honest. He told basic taxpayers where they stood—that they would be hit hard with higher rates. This time, the right hon. and learned Member for Monklands, East talks mysteriously only of new tax bands. We are told that they would not make basic-rate taxpayers worse off. What on earth is the point of introducing bands if they are not to take money from some people and give it to others? We do not get any answers.
On economic and monetary union, it is the same story. Is Labour in favour of a single currency? We have had no answer—or rather, we have had two answers, yes and no. Labour's leader opposes the opt-out clause that we want, but its shadow Chancellor refuses to make a commitment to a single currency. They think that things are better seen in perspective—facing both ways.
The Opposition called this debate on the economy today. I am more than happy to respond by expressing the confidence of the Government that the policies that we are following are right. Is not it extraordinary for the Opposition to use one of their parliamentary days to call for a change of course, then advance scarcely a single positive proposal or suggestion in the debate? Is not it amazing that they come to the House crying loudly for what the right hon. and learned Gentleman called in his letter a "change of course", without being able to give the slightest detail on that change of course or how the Labour party would make such a change? Perhaps it is all training and investment.
We know what a change of course really means. We have cut tax rates, controlled public borrowing, reduced inflation and brought down interest rates. The Opposition would change course all right—they would put up taxes, borrowing, inflation and, ultimately, interest rates, too. They are not only devoid of positive policy proposals for economic success, they actively hope for economic failure. They will be disappointed, and no amount of gloom, depression and hand wringing will stop the recovery gathering momentum. That recovery will be produced by policies that are clear, consistent and firm, not diverted or abandoned because of each passing statistic; policies designed to ensure sustainable growth in the future, on the firm base of stable, low inflation. Every hon. Member knows that those policies are right.
The only threat to renewed growth would be a return to office of a party that is reckless with inflation and profligate with taxpayers' money. Britain's economic recovery can survive the cultivated gloom of a Labour Opposition, but it certainly could not survive a Labour Government. That is why we shall continue with policies that have created the opportunity for renewed growth and increased prosperity. Our policies have laid the foundations for recovery and they deserve the support of the House.
5.30 pm
Mr. Robert Sheldon: There were two surprises in the Chancellor of the Exchequer's speech, but the one that struck me most was that he wants more saving. There seems to be some schizophrenia, because I understood that the Government's policy was to encourage people to spend, that they wanted a consumption boomlet that would last until the election. The right hon. Gentleman now says that that is not what was in his mind—that he is really trying to reconcile what he has been saying for many years.
It is unwise to make comparisons with past predictions, because in 1979 the Government increased VAT from 8 to 15 per cent., saying that it would not increase prices. I found that astonishing then, and I still find it astonishing. We need reasonable forecasts, not because we expect them to provide blueprints for the future but because they provide a guide so that policies can be changed. The Government, however, see the trends and continue to make the same forecasts. If they were realistic, they would admit that they need to change their policies, as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) has proposed.
The Financial Secretary to the Treasury (Mr. Francis Maude): What can we understand the right hon. Gentleman to be proposing?
Mr. Sheldon: I shall come on to that in great detail. I shall go into greater detail than my right hon. and learned Friend the Member for Monklands, East had a chance to do on the kinds of investment that can be produced, rather than the consumption boom which the Chancellor hopes for.
The debate is intended to bring the Government to account. They must account for their management of the economy. Naturally, I do not expect the apologists on the Government Front Bench to criticise the Government's policies, still less to condemn their actions. However, some of them might have had it in them to refrain from congratulating the Government on delivering the two worst recessions of the post-war years.
How did the implementers of the monetarist nonsense which brought about the first recession manage to produce a second recession? The Government came to office in 1979, when my constituency, Ashton-under-Lyne, was a manufacturing area with a level of prosperity higher than the national average. It earned its living then, as it does now, by making things, and it had many small to medium firms.
It used to have less unemployment than the regional or national average. In the district that embraces both my constituency and Stockport, there were 20,000 skilled engineers, many of whom were made unemployed. Today, there are no longer 20,000 but 5,000. At a time when skills are in demand, they have been wantonly discarded. That is why my right hon. and learned Friend continually puts forward those proposals, and he has the full support of the companies in my area, which understand those problems.
In the two years 1979–81, one third of the firms in my constituency closed. That was a devastating blow from which the constituency is struggling to recover. My right hon. Friend is right to talk about the industrial capacity being too low to produce the recovery we need. It is a long-term, essential and immediate job to bring industrial capacity back to what it should be. I have never forgiven
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the Government for what they did to my constituency in those two years. The good medium and high-tech firms all flourished in Germany, Japan and the United States—indeed, in all countries. They had a good past and a reasonable future, but they were ruined by the highest interest rates this century and an unrealistic exchange rate, which lost them export markets and provided further competition in their home markets.
We now have the present long-lived recession, which is a further injury to deal with. It will be some time before I have the figures to show how serious the second recession has been—how many firms have closed, how many jobs have been irrevocably lost, and how the finances of the survivors have suffered. However, I know of repeated pleas for action and the despair of so many small firms, one of which resulted in yet another suicide of someone whom I knew, resulting from business failure. Meanwhile, closures of important firms continue. There is no question of a weeding-out process. Many are firms that expanded and invested with no expectation of 15 per cent. interest rates. Even prudent companies' reasonable expectations have been destroyed by the Government's actions.
The Chancellor gives selective statistics, but I suppose that all our statistics are, to an extent, selective. I visit many manufacturing companies and ask them about the state of their order books. I do not ask what hopes or expectations they have, or what they are dreaming of, but what they are experiencing. There is no question but that firms that expect recovery do not lay off workers. Firms that are hopeful about the future do not take such measures. Therefore, the rising levels of unemployment are a direct consequence of what those firms are experiencing, not what they are hoping for. That should be of concern to the Chancellor.
In such circumstances, it is effrontery that my right hon. and learned Friend the Member for Monklands, East and my hon. Friend the Member for Derby, South (Mrs. Beckett) should be attacked for what they might do, instead of the Government being brought to account for what they have done and continue to do. Opposition Members want to return to common-sense methods of running the economy, encouraging investment and skills.
When I hear the attacks on that modest, even cautious, and certainly prudent programme, I must compare it with the gross waste of public money in which the Government have indulged. They spent billions of pounds on the nightmare of the poll tax, and millions of pounds were lost to the taxpayer when they sold off publicly owned assets at well below valuation. In fact, some of them were not even valued, so anxious were the Government to get rid of them. They waste our public services, and essential repairs are not carried out. The fabric of our schools, public buildings and roads store up bigger and bigger bills for the future.
Meanwhile, the Government are busy opting out of industrial policy. I recently asked Lord King of British Airways about his decision to buy Boeing aircraft and United States General Electric aero engines—not only that, but the fact that he was giving them a foothold in Britain at the expense of Rolls-Royce. I asked him what he had told the Department of Trade and Industry, and he said that he had said nothing. I was astonished, and thought that he had misunderstood my question. I asked what the DTI officials had said, and he said that they had told him nothing. I could not believe that, but he confirmed it openly and readily.

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If the Department of Trade and Industry is dealing with one of the most important companies in our country, it should hold a view on what that firm should do or how it might be helped to overcome its problems. I am not talking only about the position in countries such as Germany or Japan, but about second or third-world countries. We are dealing with the issue of investment and the necessity for it—which, I regret to say, the Chancellor of the Exchequer did not seem to understand.
The Confederation of British Industry has come round and is now talking about 40 per cent. capital allowances. I do not think that that is enough, but I am delighted that my right hon. Friends have again and again spoken of the necessity for plant and machinery. We must recreate the industrial structure that we once had and wantonly destroyed.
Mr. Tim Smith: Does not the right hon. Gentleman appreciate that, if we were to return to 100 per cent. capital allowances—which I think he may want—it could have a damaging effect on the quality of investment decisions, which are at present made for good, sound, commercial reasons? When I worked in industry in the 1970s, people took investment decisions for tax reasons, which are the wrong reasons for taking such decisions.
Mr. Sheldon: There is no doubt that the best way to invest is with the intention of selling more of the goods that come from those investments, and receiving a greater return on them. However, does the present level of 25 per cent. provide a level playing field? I do not believe that it does. Anyone who buys a piece of plant and machinery and tries to sell it back to the manufacturer at 75 per cent. at the end of the first year will be laughed at, because the value will then be much less—in some cases it will not even cover the commission of the salesman who organised the sale. That provides not an incentive to invest but a disincentive—a penalty. I understand why the Government call for neutrality, but the present position is far from neutral. I am in favour of some incentive beyond that represented by depreciation, because new methods tend to encourage new ideas of production, which is so important.
Again and again, I hear people say that it is a pity that we who produced the great ideas of the world did not actually manufacture their consequences. The feeling is that we had the idea, which was the crucial element, and anybody could manufacture the product, but that is not true. The great skill of Japanese and German manufacturers is that they know how to make things efficiently and well, which is what we are so bad at. Manufacturing requires the necessary industrial investment to transform the ideas into the articles that can be sold in the keenest markets. We must be more than neutral, but at present we are not even that.
Meanwhile, the Government are busy opting out of industrial policy. I asked Lord King of British Airways about the decision to buy Boeing aircraft and United States General Electric aero engines, giving that company a foothold in Britain at the expense of Rolls-Royce. We must turn our attention to that. When industry takes such decisions, the DTI must be involved and must know what is going on. I am not even sure that the Department's officials knew, but if they did, and they took no action, they are culpable in the extreme.
Mr. John Watts: Will the right hon. Gentleman explain to the House more clearly what sort of involvement he would expect from the DTI? Should it twist the arm of British Airways? Should the company have been subsidised with taxpayers' money in order to buy a British product? What sort of distortion of the market is he recommending?
Mr. Sheldon: The market is being distorted: if General Electric wants to come into this country, it gives a price concession which damages one of this country's crucial companies. The DTI should at least have investigated the issue and asked questions. Its officials may not have come to exactly the same conclusions as I did, but they should have tried to find out. If they had agreed with British Airways, I could understand that they might have left the issue alone, but they might have come to different conclusions and taken different action. However, the Government leave it to the financial operations of others, and meanwhile the economy is run on the basis that one might be able to regulate but not to promote. I totally disagree.
We are now hearing that our outlook is so bad that we had better leave it to an independent central bank to decide the important aspects of our future. I find it strange that people with whom I have been associated should now accept that independent bankers control so much of our destiny. I would expect them to be more cautious.
People point to the success of the German Bundesbank as a sign of the strength of the German economy. It is nothing of the sort. It is not the cause of German economic strength, but the consequence. Mercedes-Benz, Siemens and Bayer do not owe their success to the Bundesbank: the Bundesbank owes its strength to German industrial progress. Germany found itself facing an expansionist Europe and a booming industry. The strength of Germany derives from the skills of people in industry. It did not matter that so much plant and machinery, and so many factories, were destroyed in the war, because the skills of the people were not destroyed; they remained, to recreate the industrial strength which we once again admire and respect. That is the task facing us.
When my right hon. and learned Friend the Member for Monklands, East rightly speaks of the essential nature of skills, training and investment, he has it exactly right. It is terrible that, for 45 years, we have not done that—that is the scandal of our time. It is about time that we started to realise that the financial centre of London is not the key to our success. I do not deny that it plays an important part, but the key to our strength is our industrial might.
I find our love affair with the banking profession curious. From being the bogey of bankers, we are becoming the bankers' friend. I have played my part in defending the role of banks and the necessary role that they have, but I find myself a little outflanked by the new enthusiasm. If British industry were in the same powerful position as German industry, I might be a little more relaxed about economic monetary union, but I am worried about the time at which we are entering into new commitments.
The urge for an independent central bank and a proposed Euro central bank comes at a particularly dangerous time, when recessions, depressions and even a slump cannot be ruled out. We could be legislating well into the next century. Nobody can say that depressions were something peculiar to the 1930s. At times,

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Government intervention is required. This could be a time when Franklin Roosevelt's new deal, hated by bankers, could come into its own. It is a time for the Governments to act together to take charge of economics for the sake of the citizens that they, and only they, can represent.
I used to hold that an international depression was impossible because, faced with an economic catastrophe, the bankers, people and Governments would overcome their differences and co-operate with Keynesian methods to end such a disaster. There are goals other than conquering inflation. The Government and our times rightly attach great importance to conquering inflation, but it is not the only aim of a successful economy. Following the German inflation of the 1920s, there was enormous unemployment and the rise of Hitler. Nazism was the result not of inflation, but of the counter-inflationary measures that did so much damage. The trouble was that they voted against the large numbers of unemployed and voted for Fascist and Nazi Governments.
In 1945, the Bank of England was nationalised with some Conservative support because of the way it had handled the depression. Independence of the central bank would restore its power. I always thought that, if an international crisis similar to that of the 1930s were to recur, there would be international agreement to control such events. I cannot be sure now that that would happen. With a Eurobank, I would be even less sure.
My right hon. Friend the Member for Leeds, East (Mr. Healey) once told the Governor of the Bank of England that the latter had the better job. I do not think that he was joking. The power of day-to-day decision-making, even in a nationalised bank, is underestimated. How much greater would be the power of the Eurobank.
Of course we cannot be excluded from progress within the Community. We must accept our position in the Community, which will lead to a greater alignment between us, but the main solution to our economic problems lies in ourselves. It lies in our will, determination and good industrial sense, wherein the Government have been found seriously lacking.
5.50 pm
Sir William Clark: It is always a pleasure to follow the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). We have all listened to his speech with great interest. He certainly convinced me, and I am sure the rest of the House, that he is diametrically opposed to a central bank. In those circumstances, he seems to be at variance with his own Front Bench spokesmen. I do not know whether that is a serious matter, but given the right hon. Gentleman's experience and standing, I should have thought that the Opposition Front Bench spokesmen would take careful notice of what he says.
The right hon. Gentleman spoke about his constitu-ency. I agree that many jobs, particularly in manufacturing industry, have been lost since 1979, but one must remember that there was a great deal of overmanning in 1979. For example, in 1979 the steel industry employed roughly twice the number of people that it does now, producing the same amount of steel. That in itself meant that we took over an uncompetitive company. In order for it to remain competitive, jobs had to be shed.
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Politicians often succumb to the danger of talking down the economy. For example, if a Gallup poll goes against the Government, sterling starts to shake. Equally, when Labour politicians talk down the economy, saying how bad it is, that has an effect on the foreigner. Therefore, I hope that they can be persuaded to stop.
As my right hon. Friend the Chancellor said, the latest reports of the Institute of Directors and the CBI show that they are not pessimistic about the economy. In fact, they say that the increase in confidence has been the highest for some years. The chambers of commerce are not pessimistic. It does the economy no good for the Opposition continually to talk it down. Never once does one hear the Opposition say that, since 1981, manufacturing output is up 25 per cent., manufacturing investment is up by 33} per cent., and manufacturing production is up by more than 50 per cent.
Dr. John Marek: The Government took office in 1979.
Sir William Clark: If the hon. Gentleman just thinks about what he is saying, he will realise that it takes a Government one or two years to bring the economy round. The economy cannot change overnight. It is ridiculous to suggest otherwise.
The Opposition never mention manufacturing exports, which are up 75 per cent. since 1981. The export of motor cars in the past nine months is 90 per cent. higher than last year. Those are all pointers for the economy. Why do we not start talking about some of our successes?
Mrs. Dunwoody: Would the right hon. Gentleman therefore care to suggest what I should say to those 420 workers in Rolls-Royce who have been ejected from their jobs with scant courtesy and with no idea why it has happened, who have all the skills required for building motor cars and are not to be given the chance to do so?
Sir William Clark: I fully sympathise with the hon. Lady's constituents, but one must face the facts of life: in a recession, and coming out of a recession, jobs are always being lost.
In the third quarter of this year, our exports rose by 1 per cent. That is something that we should be talking about. There is a slowdown in destocking. Many manufacturing industries have been destocking during the past few years but now that is slowing down. That in itself is a sign that we are coming out of the recession.
In the third quarter of this year, pay settlements were down from an average of 10 per cent. to an average of 6·5 per cent. In manufacturing industry, pay settlements were down from an average of 9 per cent. to 5·5 per cent. Those are all steps in the right direction to make us more competitive; and if we are more competitive, we can obviously sell more of our goods.
As my right hon. Friend the Chancellor reminded the right hon. and learned Member for Monklands, East (Mr. Smith), he did not mention inflation once. He did not say that our inflation rate had been 10·9 per cent. and was now down to 3·7 per cent. It is just a little above that of Germany, but it is well below the EC average. Consequently, it is forecast that in 1992 our inflation rate will be below even the German average, which at the moment is 3·5 per cent.
In order to give people more confidence rather than surrounding them with gloom and doom, we should point

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out that, since 1979, GDP has risen 22 per cent. in real terms. There are 800,000 more jobs now than there were in 1979. The net income of an average family, a husband and wife with two children, is up by 37 per cent. in real terms.
Our corporation tax, which has already been mentioned, is the lowest in the EC. It is the lowest in the G7 countries. It has come down from 52 per cent. under the previous Labour Government to 33 per cent. now. Income tax has dropped from 33 per cent. to 25 per cent., and the top rate, a penal rate of 83 per cent., is down to 40 per cent. The investment income surcharge, which we abolished, had a top rate of 98 per cent.
The economy is also assisted by separate tax assessments for husband and wife. In many cases, that has given the family an added incentive and advantage.
Public expenditure is under control. In 1979, it was 44 per cent. It is now down to just over 40 per cent. Up to last year, we had repaid £26 billion of the national debt. That is unheard of. It is true that this year we have a public sector borrowing requirement of about £10 billion or £10·5 billion, but with the strength of sterling and of previous national sector repayments, borrowing, and debt, that is something we can meet.
I want to make a few suggestions to my right hon. and learned Friend the Chief Secretary about small businesses. Many of the new firms that started were under-capitalised and so went to the wall, but the net number has increased by many hundreds of thousands since 1979. One of the snags that confronts small businesses in particular is that of cash flow. They have orders—although perhaps not as many as they had—but also cash flow problems, because the companies they supply do not pay their bills on time.
It is time that the Government considered a system such as that operated by some of our retail stores. If one has an account at Harrods, for example, and does not pay one's bill by a certain date, a mandatory rate of interest is immediately added to the total.
Mr. Beith: Harrods does that?
Sir William Clark: Yes, it does—if one does not pay within the stipulated time.
When a small company arranges to supply a bigger client, settlement terms of, say, 30 days may be agreed. Once that period is exceeded, a mandatory rate of interest should automatically be added. The small supplier would then not be in the hands of his bank. As it is, his overdraft increases, and so do the interest charges, at two or three points over base. That penalty should be paid by the firms which owe money to a smaller business.
I also want to point out that the Trades Union Congress, with 6·5 million members, has six represen-tatives on the National Economic Development Council; the National Federation of Self Employed and Small Businesses, with 5 million members, has none. I believe that organisation ought to be represented.
As to the capital allowance, I was interested in the point made by the hon. Member for Ashton-under-Lyne, and I agree with the comments made by my hon. Friend the Member for Beaconsfield (Mr. Smith) in his intervention. One hundred per cent. capital allowances could lead to investment decisions being made entirely for tax reasons. What else could be done? At present, a 25 per cent. reduction is given on a reducing basis. In terms of cash flow, it takes a business man eight or nine years to get his money back on any machinery, for example, that he buys.
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Would it not be easier to offer a straight-line reduction, giving 25 per cent. capital allowance over four years? That way, a business man making an investment would know that he would get his money back within four years.
I hope that my right hon. and learned Friend will consider that suggestion. It would not cost the Exchequer anything more the first year, because a 25 per cent. allowance is already given. Only in the second year, when the allowance currently is 25 per cent. of 75 per cent., would any difference arise.
Mr. Sheldon: I am delighted that the right hon. Gentleman has come up with some further suggestions. There are probably many more. However, perhaps he could be more generous, given the present need for investment, and allow for a limited period, such as that which operated when the right hon. Member for Blaby (Mr. Lawson) was Chancellor. An allowance period shorter than the four years mentioned by the right hon. Gentleman might have an immediate and useful effect.
Sir William Clark: That is worth considering, but I am not completely sold on that idea. My right hon. Friend the Member for Blaby (Mr. Lawson) reduced corporation tax to 35 per cent., but at the same time he took away the 100 per cent. allowance. In that way, despite the fact that a company lost the capital allowance on the excess on its investment, it gained on the reduction in corporation tax, from—I believe it was—42 per cent. to 35 per cent.
During his 30-minute speech, the hon. and learned Member for Monklands, East did not once say where the money for his proposals—other than those on training and investment—would come from. Neither did he refute the two commitments made by the hon. Member for Derby, South (Mrs. Beckett) in respect of pensions and child benefit. Will Labour fulfil the £35 billion of pledges being given by its spokesmen throughout the country'? I understand that is a conservative estimate.
Mr. Austin Mitchell: It would be.
Sir William Clark: I meant, with a small c, in that some economists attach a higher figure to the cost of implementing those pledges.
There can be no doubt that, if Labour's pledges are implemented, even an increase in taxation from 40 per cent. to 49 per cent. would not produce enough revenue to pay for them. The ordinary person would inevitably be affected. Every person in this country earning between £10,000 and £30,000 would, if Labour implemented all its pledges, be worse off. Anyone earning more than £30,000 would be severely worse off.
Mrs. Margaret Beckett: The hon. Gentleman knows that we have answered that point many times, but I cannot let it pass. We have made it explicitly clear that none of the changes that we propose, either in tax or in national insurance contributions, will make a penny difference to any individual earning less than £21,000 a year. No one earning less than £21,000 will pay a penny more under us.
Sir William Clark: Rhetoric and promises are all right, but if Labour's pledges are to be honoured, there is no question but that the ordinary taxpayer will be affected —or that some of those pledges will have to be reneged upon. It is as simple as that.

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I have no doubt that, as my right hon. Friend the Chancellor said, Britain is coming out of the recession. The recovery is slow and patchy, but the policy is sound— [Interruption.] Labour Members who laugh and snigger at such remarks ought to ask themselves why it is that Britain of all the countries in Europe has the most inward investment from overseas investors.
Mr. Austin Mitchell: Because Britain offers them cheap labour.
Sir William Clark: That is simply untrue.
I agree with my right hon. and learned Friend the Chief Secretary that the British economy is basically sound. Our gold and dollar reserves are sound, and we can look forward with confidence to the future—provided that there is no change of Government.
6.10 pm
Mr. A. J. Beith: I was glad to hear the right hon. Member for Croydon, South (Sir W. Clark) reiterate his support for measures to help small businesses, in particular over the late repayment of debt. This is something for which my hon. Friends and I have pressed for some time. I hope that the right hon. Gentleman's call will be heeded by those on his own Front Bench, because it would be an extremely helpful and valuable measure.
The fairest statement that I have seen recently of the prospects of recovery was the one in the Greenwell Montagu Recovery Watch bulletin a few days ago. It said:
"The balance of evidence over the last month has been towards continued recession. Shafts of light from company statements and bullish confidence surveys are outweighed by gloomy economic data and depressing anecdotal evidence."
One can make one's own judgment a little to one side or the other of that. There is a mixture of indicators, but on the whole the adverse indicators seem heavier and more serious than the favourable ones, many of which are things such as confidence surveys, which do not tell one very much about what will happen.
We must, surely, eventually get to recovery, but we have been waiting for it for a long time. The Chancellor has been waiting for Father Christmas since the spring, and I do not think that Father Christmas will arrive for him before 25 December. Worse than that from the Government's point of view, I do not think that he will arrive in time for the general election.
The Government are laying great stress on the possibility of a consumer-led recovery. That is perhaps the area in which they are least believed by those closest to the reality of retailing and the experience of consumers. The Government produced in the autumn statement a graph of consumer confidence. It is the first time, as far as I can see, that what is in effect an opinion poll has found its way into the autumn statement. It is a bit like taking a poll of general election candidates asking them to state in public whether they think that they will win. Of course, they all say that they will win. How many meetings have we all been to, all of us in all parties, at which the candidate has said that he looks forward to winning? Consumer confidence is not all that far from that, but, from the retailer's point of view, it does not pay the staff wages. The people in the street outside may tell the market researchers that they are more confident than they were six months
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ago, but that does not take them into the shop, put their money over the counter or pay the staff wages of the retailer.
The Government do not seem to realise how severely consumers have been affected by the experience of recession. That is the factor that the Government are not considering. Consumers who saw their commitments enlarge so dramatically as a result of higher interest rates, who found themselves over-committed, and then found themselves unemployed and even less able to meet those commitments, will not rush out and spend money even if they have more of it. They are credit-wary, because their experience of credit has been a very adverse one in recent times. The Government fatally underestimate how very chastened many consumers are by the harsh experience of the last couple of years.
The main driving force of a consumer-led boom would have to be improvement in the housing market. That is where so much of the consumer boom of the 1980s came from. There is massive equity withdrawal from housing. There is no sign of that recovery in the housing market. That is perhaps the weakest of all the indicators on which the Government seek to rely. However hopeful we may be, however much we may snatch at the more encouraging indicators, we cannot look forward with any great confidence to a consumer recovery.
Mr. Tim Smith: Chart 2.7 in the autumn statement shows consumer confidence. It also shows that, since 1974, before every increase in consumer spending there has been an increase in consumer confidence—that the one always follows the other. What reason is there to suppose that this will not happen this time?
Mr. Beith: The reason that I just gave, which is the experience of recession. But I am prepared to wait and see. I advise the Government, however, not to take an indication of confidence as the same thing as money over the counter. One could never run any business on that basis.
Another danger which the Government face in the coming months is that of post-Maastricht pressures on sterling. There is considerable evidence that markets are expecting a realignment following the Maastricht negotiations and that there will be downward pressure on sterling, testing the Chancellor's resolve over interest rates. I believe that there is a strong likelihood that markets will seek to test that resolve. Nobody in the markets seems to believe that the Chancellor dare put up interest rates this side of the general election. Indeed, I have defended the Chancellor in some conversations on this very subject with people in these fields. I have said that I think that he might and they have all said that of course he will not; he dare not, they say, there is no way that he will put up interest rates this side of the general election. My touching faith in the Chancellor's resolve and commitment to anti-inflation policy was ridiculed by those with whom I had this discussion, who were obviously much more deeply cynical than I am. I have to warn the Chancellor that there is a widespread belief that he is not at all likely to take the measures that might prove necessary if intervention is insufficient to stem severe downward pressure on sterling in the coming months.
All this adds up to the likelihood that the Government cannot sort out the economy in the very short term and certainly cannot do so this side of the general election; they

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cannot generate the feeling of happiness and cheerfulness about the economy which parties traditionally rely upon to win general elections. I think that that is impossible. I do not think that any incoming party with any set of policies could turn the economy around over the next six months. It is a much longer-term task than that.
My plea to the Government, therefore, is that they concentrate on what they can do, and that is to improve the long-term prospects for the economy. If they fiddle around with the short-term situation that will not enable them to win; it will not enable them to get a better general election performance. They might get at least some credit if they were seen to be laying better long-term foundations for the economy. They must, at the same time, provide some immediate help to the main sufferers, particularly the unemployed, and take measures designed to reduce unemployment by investment in those areas which can produce some reduction in unemployment. I am thinking particularly of repairs in schools and housing, which can generate some employment.
The Government must get on with addressing the long-term solutions. One of these is, of course, the single currency. Our whole a witude to this is fundamental to the future of our economy. What an admission to make after 12 years of Conservative government that our economy is uniquely incapable of being signed up for participation in a single currency. That is one of the principal arguments of those on the Government Benches who say that we should not sign up, that we cannot say at this stage whether we are capable, as an economy, of participating without damage in a single currency. That is a terrible indictment of 12 years of Conservative government.
The alternative to participating in a single currency is higher interest rates in this country than within that currency. The opt-out clause which the Government have so anxiously sought, the clause that would enable Britain uniquely to opt out of participation in a single currency, is a health warning on the British economy. It is a label attached to the British economy which says, "Warning: This is the United Kingdom economy; we reserve the right to devalue our currency. If you invest here, your money may lose its value, your products cannot be reliably priced for trade across Europe; you may face high transaction costs; and you may not get the full benefits of a single market." That is the label which the opters-out wish to attach to the British economy.
Mr. Alan Williams: In that case, how does the hon. Gentleman explain how, under both the Labour Government and the Conservative Government, inward investment has been at its peak when there has been a floating currency, where that has been a possibility?
Mr. Beith: The right hon. Gentleman must address himself to the new situation which is developing and in which there will be a single currency. I believe that, if we are not participants in it, it will be severely damaging to inward investment. In the case of a Japanese company wishing to invest in this country, whereas hitherto the attractions of the United Kingdom economy, along with the English language, which is important in Japanese investment, have been significant, for the future we are issuing a warning to the Japanese investor to be careful; he may not be able to price across Europe in the future, he may experience high interest rates in this country and he may find it much harder to trade into the Community,
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because if we are not participating in the single currency we may not get all the benefits of the single market either. This is a warning which the Government must heed. It is not a label which I want to see attached to the British economy.
Sir Ian Stewart: What the hon. Gentleman has said is an absolute travesty of the position taken by the Government and, as far as I know, by the official Opposition as well.
The reason why it is considered so important that we should not make a commitment at this stage to join a single currency is that a single currency would involve not only a single central bank but single economic management and a commitment by the Government and people of this country to subsidise, if necessary, the trade deficit of Italy, the budget deficits of other countries and the different standards of living. That would be a major constitutional and economic decision which we could not possibly take here and now. That is the reason why that option has to be kept open. It has nothing to do with the arguments which the hon. Gentleman has put forward.
Mr. Beith: The right hon. Gentleman has not been listening to his hon. Friends. Unlike the Prime Minister, I am prepared to have a referendum on this fundamental constitutional issue. I am prepared to let the people of this country decide.
The right hon. Gentleman mentioned the independent central bank, which I believe is part of the long-term anti-inflation policy. It was significant that the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) expressed two views—that an independent central bank was a bad thing, and that there are worse problems than inflation. Inflation has been at the root of many of the worst economic problems that we have faced, and was certainly at the root of the problems in pre-war Germany, to which the right hon. Gentleman referred.
The Chancellor has clearly got the message about how an independent central bank would have to work if we had a single currency. He said:
"But the European central bank in stage 3 would have to be free to set interest rates without interference."
Significantly, he said:
"That is the view of every member state. In a Community of 12 countries, it simply would not be practical for 12 Finance Ministers to intervene in the monetary policy decisions of the central bank."—[Official Report, 21 November 1991: Vol. 199, c. 516–17.]
It is Government policy that if we have a single currency there can be no interference with the setting of monetary policy by the central bank. That is a significant step forward in Government policy. I accept that it is conditional on the decision to participate in a single currency, but I hope that Conservative Members have noted that the necessity of an independent central bank to such a system is accepted by the Government and other member states.
For the long-term benefit of the economy, the Government should invest to ensure that we have an adequate public transport system to move people to and from places of work without massive environmental pollution and to move goods. Our record compared with France, for example on the channel tunnel, is deeply depressing.
The Government should invest in housing to encourage labour mobility, and in training and education, which the Chancellor sought to ridicule as if they were unimportant.

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It is fair to point our that training and education were one of the few positive points that the right hon. and learned Member for Monklands, East (Mr. Smith) made. They are extremely important and, as the right hon. and learned Gentleman said, a frequent cry of industry and business is that those needs are not being met.
The Government should consider the genuine promotion of competition. The fiddling little Competition and Service (Utilities) Bill, which is being considered in Committee, does not address the need to promote competition in the economy, particularly among the massive privatised utilities that the Government have created. We have made proposals on the break-up of British Gas and British Telecom that are designed to promote competition, which the Government have not begun to do.
The Government must consider corporation tax and not simply brush it aside. I do not share the confidence of the right hon. and learned Member for Monklands, East in investment incentives. They run considerable risks of distorting investment decisions. It might be more productive to guarantee a stable tax environment for business by indexing corporation tax allowances, for example, so that business could predict with reasonable accuracy what its tax liability would be. In the long term, that might be a more effective way of encouraging investment than some of the short-term proposals that we have heard today.
The Government must establish the constitutional framework for stable and decentralised government. The Federal Republic of Germany has had both because of its electoral system and the decentralised way in which so much of Germany is governed, where many decisions are taken by the regions. Such changes would be to the long-term good of the United Kingdom's economy.
My advice to the Government is that they cannot sort out the problem this side of a general election, so why not get on with the job of laying the long-term foundations for a successful economy? There might be some credit for that.
6.24 pm
Sir Peter Hordern: I have just finished reading Roy Jenkins's memoirs, which I commend to you, Mr. Deputy Speaker. They are most civilised, and are rather like reading about Marie Antoinette in the French revolution: all elegance amid disaster. One would not dream that he was giving an account of the first visit to the International Monetary Fund.
More recently, in his excellent memoirs, Edmund Dell—an admirable person, I always thought—gave an account of his stewardship as Chief Secretary under the previous Labour Government. As he was in charge of public expenditure, it might help the hon. Member for Derby, South (Mrs. Beckett) to read what he said. He said that there had been
"No comparable example of such intellectual and political incoherence in a party coming into office. They had no economic policy except a 'social contract' of obeying trades unions which was worse than codswallop and an industrial policy that politicians should tell industrialists how to be industrial, which could not be taken seriously yet had to be taken seriously."
We all know where the Labour party's policies landed us then—the collapse of the economy and our
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infrastructure and a high Cuban-like tax regime. The basic rate of tax was 33 per cent., the top rate was 83 per cent. and tax on investment income was 98 per cent.
We are told that Labour has learnt its lesson, but the leaders of the previous Labour Government were highly intelligent, well-meaning people. All of them had firsts at Oxford and one never would have thought that they could make such a mess of the economy.
I wonder whether the Labour party has learnt its lesson. The hon. Member for Derby, South has said that there will be higher taxes to pay for higher pensions and higher child benefit. But is there not to be more money for training? Did not the right hon. and learned Member for Monklands, East (Mr. Smith) tell us that there will be more money for training? Did I not hear that there will be more money for the national health service? Were we not told that the Government are spending £6 billion too little on the NHS?
Mrs. Beckett: Those are the BMA's figures, not ours.
Sir Peter Hordern: So the hon. Lady disagrees with the BMA's figures.
Mrs. Beckett: The BMA is giving its impression of the level of underspending. It may be right. We have not committed ourselves to restoring that underspending, nor are we in a position to do so.
Sir Peter Hordern: That is helpful, because it is now clear that the Labour party has no assurances of increasing expenditure on the national health service—contrary to the impression that it has been giving.
Nationalisation of the water authorities is deeply embedded in Labour's policy. It will cost quite a lot to do that. We do not know how much, but Labour will inherit the capital expenditure programme of all the water authorities. When the authorities were nationalised, total capital expenditure was £8 billion. Today, it is £28 billion. Instead of being financed by borrowing and the private sector, it will count as part of the public sector borrowing requirement.
I do not know what the PSBR will be next year, but some estimates suggest that it will be as much as £20 billion. If we add a further £28 billion, what does the Labour party think that will do to its credibility as a potential Government? It would represent such an enormous increase in borrowing as to make its policy incredible. If the hon. Member for Derby, South would like to correct me, I shall happily give way. The hon. Lady is not prepared to deny the figures. Taking the capital expenditure programme of the water authorities, the PSBR will be almost £50 billion.
It is hard to understand, therefore, why the Labour party should be so enthusiastic for a single currency and a European central bank because in the plans for the European central bank in the Dutch draft the deficit cannot exceed 3 per cent. of GDP and with Labour's proposals it would exceed 5 per cent. very easily. The only possible conclusion is that the Labour party would devalue again, as it has always done in the past.
The European dimension is the most important element in our economic policy. We have always been a trading nation, but the single market will bind our trade and business even more closely to Europe. Over very many years we have learnt the lesson that we cannot be immune from casualties which occur in other countries. For

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example, the savings and loan debacle in the United States and the Government guarantees which were given at the time meant much higher borrowing for the federal Government. That affected interest rates everywhere throughout the world.
The collapse of stock markets in 1987 was universal; so was the response of lower interest rates. That was followed by a property boom. Perhaps more could have been done at that time. It is easy to argue in retrospect, but the Governor of the Bank of England could have been more explicit about what would happen because of the quantity of money that was borrowed for the property market. The difficulty now arises from the amount of money tied up in unproductive investment, such as empty office blocks here, in the United States and in Japan.
Now there is a new phenomenon. More and more money is being invested in east Germany in basic infrastructure— quite rightly, because they cannot proceed without it. But there is no immediate return from any of that investment. The return on trading activities throughout the world is inadequate. We cannot buck that trend. It is bound to be still with us, whichever party is in power in future.
However, there are some sensible things which we can do. One is to concentrate on the proper use of assets in the public sector. That is only a small example, but my right hon. Friends might consider it. I mean something as mundane as police stations. A police authority cannot sell a police station in order to build another one, because, although it may sell the station and put the money in the bank, it has to get Home Office permission to build a new one. That is absurd. There cannot be any possible financial loss in the transaction, because one set of assets will be paid for by the private sector and the police will be able to put the police station where they believe it should be sited. What the Home Office has to do with the calculation, I cannot imagine.
We can also continue to attract investment from abroad; in that we have been remarkably successful. The Japanese have invested in our country because they believe that is the best way of getting into the European Community; they invest because they reckon that we will be full partners in the Community. That is why Europe is so important.
That brings us back to the great debate. It is doubtful whether we would continue to attract so much investment from Japan and the United States if they felt that we were not full members of the European Community. The debate is between those who accept no diminution of our sovereignty and those who say that, having accepted membership of the exchange rate mechanism, we might as well take the next logical step and proceed to a single currency, believing that that is where our destiny lies.
I start from a different position. Let us look at the last 30 years. Are we satisfied with the stewardship of our economic sovereignty? This goes back over a long period, involving both political parties. In 1961, there were $2·80 to the pound; the exchange rate is now $1·79. There were FF13·7; there are now just over FF10. There were DM11·2; there are now DM2·85. We had fixed exchange rates with the dollar until 1972. After that, we floated; we floated downwards and we have done so ever since. That movement was a fair reflection of our economic performance relative to other major economies.
Parties of all political complexions have tried everything—prices and incomes policies, both voluntary
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and statutory, and monetary policies. They all failed. The prices and incomes policies failed because of their inherent absurdity, and the monetary policies because they were not strictly applied.
So we joined the exchange rate mechanism under my right hon. Friend the Member for Finchley (Mrs. Thatcher). I have reached independently the same conclusion as my right hon. Friend the Member for Blaby (Mr. Lawson). Since so much trouble had been caused by trying to manage monetary policy ourselves, why should we not hitch ourselves to the deutschmark, which is managed so much better? Sir Alan Walters and Professor Minford told us that that was an impossible and disastrous policy. Encouraged by their opinions, we should consider what happened. We have seen a fast fall in inflation and a rapid fall in interest rates. Now they say, "Look at the trouble you are in."
The position cries out for further cuts in interest rates but, hooked as we are to the deutschmark, it seems that interest rates may have to rise rather than fall. They may rise, but I think that Germany is in difficulty. When it is recognised that Germany's internal deficit amounts to 5 per cent. of GDP and is rising, I expect the pound to begin to rise against the deutschmark, which would give scope for cuts in interest rates. I think that the fear of a possible Labour Government is the only thing that is holding the pound back.
We have to face the fact that, over the last 30 years, our economic sovereignty has meant the sovereign right to devalue our currency. We have had a sovereign right always to accommodate high wage increases without increases in productivity. Our manufacturing companies especially have never bothered to be competitive, because they knew that they would always be bailed out by the Government, as they always have been. That is not the position now, and they know it. That is why we are seeing much lower wage increases and substantial improvements in productivity. If there was not an exchange rate mechanism, something like it would have to be invented.
What about our loss of sovereignty? After the House of Commons Committee of Secrecy presented its second report on the expediency of the Bank resuming cash payments on 6 May 1819, Britain was on the gold standard for a century and more. Nobody talked about our losing our sovereignty to South African, Californian or Australian gold miners then. For many years after the last war, under the Bretton Woods agreement, we were effectively subject to the US Federal Reserve. Nobody complained about loss of sovereignty. Nobody called Sir Winston Churchill, who presided over our membership of Bretton Woods, arrogant for not having a referendum. For the best part of the last 170 years, we have deliberately relinquished our economic sovereignty, first to gold and then to the dollar, and we are arguably the better for it.
So now, what is new? We are already in the exchange rate mechanism. We are moving towards a single currency and a European central bank. That move needs to be considered carefully. Clearly there are considerable doubts about the timing and whether it will work. That needs to be looked at at the right time. I do so now not because of any Euro-enthusiasm but because of a calm calculation of our national interest. What is that interest? It is the defeat of inflation; it is to create conditions for sustained growth, which only stable prices and competition can secure.
We could, of course, decide to go no further hut, as a member of the exchange rate mechanism, we would not

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have the protection of the single currency and we would be outside an arrangement of the dollar, the yen and the ecu. I do not believe that the position of sterling outside those major currencies would be sustainable for long. If it were, it could be sustained only by higher interest rates than would otherwise be the case.
What are we being asked to do? I understand that, according to the Dutch draft, no national deficit should be more than 3 per cent. of GDP. It is rather good to have such a limit. For those who believe—as I do—in monetary policy, such a limit is an acceptable—indeed, necessary —discipline. Of course, it will take some time to deliver. I understand that the Italians have a deficit of about 20 per cent. and no prospect of being able to deliver at the moment. However, it could lead in time to phase 3 of the negotiations for a European central bank.
Some people say that we cannot have economic union without political union. I recognise that that is a great difficulty, but I do not understand why it should be so, because the Federal Reserve in the United States does not attempt to conduct fiscal policy or to set the level of federal spending, and nor does the Bundesbank in Germany. It remains the policy that the federal Government of the United States and the German Government set fiscal policies and public spending levels, which is what Governments are for.
Provided always that the fiscal deficit overall is not more than 3 per cent., there is no reason why the countries of the European Community should not run their own fiscal and public spending policies and maintain their parliamentary sovereignty. There is no reason why there should be an even distribution of resources throughout the European Community. I do not go along with the idea of converging economies. I see no reason why that should be the case, any more than it is in the United States at present. If that were the case, it would allow us to allow entry to the eastern European countries in due course.
We must ask one question—what is it in our national interest to do? I believe that the acceptance in due course of a single currency and of a European central bank are plainly in our national interest and would bring about a stable and competitive economy and a rising standard of living for our people, which is what we are here for. It is not an easy policy. If the Opposition are genuinely interested in obtaining manufacturing investment and long-term investment of any kind, low—or better still, nil —inflation is required. It is no coincidence that Germany and Japan have had the lowest rates of inflation, the highest levels of investment and low interest rates for many years.
It would be easy to pump money into the system as the Opposition propose, but—
Mr. Dave Nellist rose—
Sir Peter Hordern: No, I am coming to an end. But it would also be fatal. By far the most demanding economic policy of the past 20 years is that which the Government are trying at present. I think that it is a courageous policy which deserves to succeed.
6.42 pm
Mr. Alan Williams: It would be sad enough if we were debating only one recession, but we are debating the consequence and continuance of the historic tragedy of the 1980s. I remind the hon. Member for Horsham (Sir. P. Hordern) that if the Government had not destroyed 20 per cent. of manufacturing industry, if they had sustained the record level of manufacturing investment that they inherited and if they had used the opportunity provided by £130 billion worth of oil from the North sea, we should not be talking about recession today —we would be celebrating our continuance in a virtuous circle such as that enjoyed by Japan and Germany for decades.
Instead of talking about high interest rates, we would be talking about the fact that we had balance of payments surpluses which gave us low interest rates which gave us the opportunity for higher living standards for our work force and low unemployment. Instead, we are talking about the monumental failure of the past decade and the recession is merely one sad—but sadly not final— symptom of that failure.
When the Government came to office, they took the £5 billion surplus in manufacturing trade and turned it into a £17 billion deficit by 1989. That represents a £22 billion turnaround in our trading position and I shall deal with that issue later. In fact, if one up-values that to current prices, it represents a £27 billion turnaround, because the 1978–79 surplus would be worth about £10 billion at today's prices.
The Government inherited a £594 billion current account surplus but turned it into a multi-billion pound deficit. Despite the £130 billion of balance of payments benefit from the North sea oil, they recorded a decade deficit of £25 billion. They took 10 years to equal the level of manufacturing investment that they inherited and, sadly, the recovery turned out to be a temporary blip, as hon. Gentlemen well know. Already, manufacturing investment has fallen another 20 per cent. and is due to fall again.
It is fascinating that, as they cooked the employment statistics, the Government have wriggled and tried to switch ground when talking about investment. When manufacturing investment was looking bad they switched to business investment so that they could include empty office blocks. In the autumn statement there was a switch to core investment, which includes the computers at race courses and supermarket checkouts—anything but face the reality of what they have done to this country.
We are now able to quantify what that destruction of investment has meant for this country, not on the basis of my figures, but on the basis of the Prime Minister's figures given to me in answer to a written question when he was at the Treasury. We have repeated those figures time and again—£20 billion of manufacturing investment has been lost merely because of the failure to sustain investment at the 1979 level. However, that does not mean anything—it is difficult to conceive it—so I shall illustrate what it could have meant.
The value of that investment is equivalent to 30 Nissan car plants washed away in the destruction of manufacturing investment. Nissan contributes £0·9 billion to the balance of payments each year. Had we been able to carry out investment on that scale—and I am talking illustratively—we could have been talking of a return on

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payments of between £20 billion and £30 billion a year. But let us halve that, because we must recognise that there are limits to the number of investment opportunities of that quality. Even so, we would still have rid ourselves of our balance of payments problem.
The virtuous cycle—the price that we sought for the whole of the post-war period—is the prize that was lost in a bout of monetarist madness. The Chancellor today spoke about running to the International Monetary Fund. Instead of the prize, we have the spectacle of a party which derided the £2 billion IMF loan—which, incidentally, had been paid back before the Government came to office—itself being dependent, and its policies conditioned by its dependence, on £80 billion of footloose hot money that it had to hold in this country to finance its payments deficits. Because it has had to hold that £80 billion, it has had to keep interest rates high and because it has kept interest rates high, the exchange rates have been high. As exchange rates have been high, our companies could not compete and because our companies could not compete they have closed and our people have lost their jobs. At the end, another balance of payments problem was created. Instead of generating a virtuous cycle, the Government have generated a vicious downwards spiral.
I said that we are facing not only a single recession but a symptom of the long-term structural decline which the Government have brought about. They did not do so calculatedly, because they did not have the intelligence to understand the consequences of what they were doing and do not now have the honesty to admit the consequences of what they have done. To listen to what the Prime Minister and the Chancellor say is to hear a masterpiece of public relations. They say repeatedly "Good news, the recession is hitting bottom." How many times have we heard that phrase?
I am reminded of the leader of the lemmings, plunging down a 1,000 ft. cliff, seeing the jagged boulders below him and looking over his shoulder and shouting, "Don't worry boys, we're nearly there." That is what the Government are saying. Hitting the bottom, about which the Chancellor has been boasting today, is not an achievement. For heaven's sake, is that an achievement? It is the culmination of failure. The dead bodies at the foot of the cliff are the 41,000 dead bodies of companies that have gone into liquidation in the past two and a half years alone. That is the cost of blindly following the ludicrous monetary policies which Ministers have espoused.
The Chancellor said today not only that we have hit the bottom, which is supposed to be so reassuring, but that the worst is over. What does he mean? At the bottom of the cliff, the survivors now have to get all the way back up again. That is what the Chancellor means when he says that the worst is over. The Government will now measure all growth from today—from the bottom of the chasm. When the Government climb all the way to the top again—
Mr. Austin Mitchell: If.
Mr. Williams: I will come to that. If they climb all the way to the top again, they will have got back only to where they started. Yet they will tell us, "Look how marvellously we have done in getting ourselves from down there, where we should not have been, to here where we started." They will not say, "If only we had had the sanity to cross the bridge, we would be so much further down the other side."
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As my hon. Friend the Member for Great Grimsby (Mr. Mitchell) said, we may not get back and we certainly will not do so in the life of this Government. There are economic time bombs in the cliff which have been manufactured by the Government's own policies. The Government are, for example, relying on the recovery of consumer spending to lead them out of the recession. However, if the £9 billion that has gone back into circulation on an annual basis as a result of the change in mortgage rates is spent, as the Government hope that it will be, in time to bail them out, a third of that, as I have said before, will go into imports and £3 billion will go on to the balance of payments. Before anyone says that that is rubbish, he should look at the autumn statement. The Chancellor said then that the balance of payments would worsen by £3·5 billion next year.
The other economic bomb that the Government have planted is a wage explosion, which will not be brought about by a trade union plot. It will be created, pushed and driven for by the marketplace. If there is a recovery, the shortages, to which my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) referred, that exist in key industries at the bottom of the cliff will be even greater as we start to find our way back up. As firms start to compete for finite skills resources, they will drive us into wage inflation on the way back up. The consumer boom that the Government hope to see will generate a balance of payments problem and wage inflation, prompted by business men and not by the unions, will generate an inflation problem.
As the balance of payments deficit grows over the next 12 months, as firms force up wages and as inflation inexorably rises as a result, the hot money will become increasingly volatile. The Government will be forced, if they are to retain it—and with an increase of £3 billion in the balance of payments deficit they cannot afford not to retain it—to increase interest rates.
I will make a purely personal observation. The hon. Member for Horsham and I came to the House at the same time and he knows that I am not given to seeking colourful or irresponsible solutions. We may disagree, and what I am about to say will inevitably attract the rebuttal of those on both Front Benches. I accept that. I would not make my observation if I did not think that it is essential that we face up to reality.
The heart of the problem was touched on by the hon. Member for Berwick-upon-Tweed (Mr. Beith), but he then sidestepped the implications. The heart of the problem is the exchange rate. We have gone into the exchange rate mechanism at the wrong rate of exchange. I remind hon. Members of my point about the gap of £155 billion and they will understand why I am giving a political hostage to fortune. If we have had over the decade £130 billion benefit in balance of payments terms out of the North sea, and if even with that we are in a £25 billion negative position, without the oil—and we all know that there will be less oil in the 1990s than there was in the 1980s—the gap in our capability of paying our way is £155 billion. That is the gap that we must close.
The rate at which we have gone into the ERM is the average rate over a period of years, according to the Government. How on earth in logic or in practice can anyone pretend that we can close a gap of £155 billion at the rate of exchange that created a gap of £155 billion? We must understand that truth, instead of making silly political points about this or that party being the party of

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devaluation. As I said when I intervened in the speech of the hon. Member for Berwick-upon-Tweed, who does not seem to understand much about economic matters, if devaluation is such a sin, why on earth did the Conservative party live for so long with a floating currency? That is not just devaluation, but oscillating currency. Whether devaluation or revaluation, it is left to the marketplace. It cannot be so wrong to say what I am saying; it is just politically inexpedient for the Government to say it.
Both the Conservative party and the Labour party have to recognise another fact. I realise that Front-Bench Members cannot support the conclusion to which I have come. I understand why they cannot endorse my remarks and why they will have to rebut them, but there is another consequence if my analysis is correct. A single currency is either an illusion or a suicide note. It is a suicide note because we cannot survive economically at the present rate of exchange, so we cannot guarantee our future. It is an illusion because at the present rate of exchange it is an economic impossibility to meet the requirements of convergence. [HON. MEMBERS:"No."] I ask hon. Members to think it through. The rate of exchange is such that by 1997 we shall not be able, at the present rate of exchange, to meet the convergence requirements that have been laid down in the proposals coming from Brussels and in the conditions set out by the Opposition.
I realise that the Government must say no to devaluation. However, I suspect that the real answer is, "No, at present." I suspect that it may not be no even before an election and it certainly will not be no after an election.
Mr. Austin Mitchell: My right hon. Friend should not he so embarrassed about the Government's position. Previous Conservative Governments have devalued the currency quite substantially. The Heath Government's own expansion was stimulated by a devaluation, which they called floating, and, in the same way in 1985–86, the pound went down about 30 per cent. in real terms against the deutschmark, which was one of the reasons for the Lawson expansion.
Mr. Williams: My hon. Friend's intervention is helpful. The Economic Secretary to the Treasury may find that his own Front-Bench Members are in a somewhat different position even before the election, not out of choice but out of necessity. I suspect that the Government would love to participate, not in a crude devaluation but in a nice respectable currency realignment. That is not devaluation —it is just tidying up the house. I do not care how it comes about and I do not care what label it is given, but if we do not face up to the reality that the rate of exchange is completely and utterly indefensible, Britain, which once boasted of being the workshop of the world. will become the back-street sweatshop of Europe.
Several Hon. Members rose—
Mr. Deputy Speaker (Sir Paul Dean): Order. At the beginning of the debate, Mr. Speaker announced a precautionary 10-minute limit on speeches, which meant that we would judge the state of play at 7 o'clock. I am glad to inform the House that I judge that it is not necessary to impose a 10-minute limit. However, if hon.
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Members are to have the opportunity to speak, I calculate that there should be a voluntary limit of about 12 minutes on speeches. I hope that right hon. and hon. Members will respond to that request.
7.1 pm
Sir Ian Stewart: I must immediately use one or two of my valuable minutes by saying a word about what the right hon. Member for Swansea, West (Mr. Williams) said. The most immediate response to his call for a devaluation of the currency is that, since sterling joined the exchange rate mechanism a year ago, there has been a substantial and sustained increase in British exports. That seems to undermine the main basis of the right hon. Gentleman's argument about the correct level of the exchange rate.
Both the right hon. Gentleman and the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) filled out a bit of the case that is being deployed by the Opposition on investment incentives. The right hon. Member for Swansea, West appeared to argue that only investment in manufacturing industry is relevant to the state and the prospects of our economy. As he knows, since the 1970s, an increasing proportion of investment has been in the oil and energy sectors, which are not part of the manufacturing sector, and in the service industries. Those trends have been followed not only in this country but elsewhere.
The level of investment in the economy has risen dramatically since the late 1970s, when the Labour party was in government. The benefit of that investment has been strongly demonstrated. It has meant a great increase in output during the 1980s, which can be closely related to the changes in the investment allowances which were introduced at the time. In the 1980s, we looked very carefully at the potential impact of reducing the 100 per cent. investment allowance and, at the same time, reducing the overall level of taxation on corporate profits. We came to the conclusion that it would be far better for companies to know that they could retain a much higher proportion of their profits than that they should have to shelter their profits from high rates of tax by resorting to artificial levels of investment allowances in order to save themselves having to pass over all their profits to the Exchequer.
Although it seems to have acquired a certain vogue that increased investment allowances are needed. the converse is an increase in the basic rate of corporation tax. That would be a step in the wrong direction. In the second half of the 1980s, following the changes in the investment allowance and corporation tax regime which we introduced at that time, we saw a considerable increase in investment. I have no doubt that if we were to reverse that change we would encourage a certain amount of investment which would not and should not otherwise have taken place, because it would be less concerned with profitability and more concerned with reducing the tax bill of the companies concerned. I do not believe that that would be in the interests of companies, and I am certain that it would not be in the interests of the British economy.
I strongly caution hon. Members who may be tempted to think that simply by increasing investment allowances, which would have to be offset by an increase in the rate of corporation tax, one would encourage investment in the long term, or even in the short term. A low rate of corporation tax of 33 per cent.—33 per cent. is the highest

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rate; the small company rate, of course, is only 25 per cent. —coupled with a reasonable flat rate of 25 per cent. for investment allowances is much more likely to encourage companies to retain profits for productive investment rather than the artificial system which applied before.
I wonder why the Opposition have chosen economic management as the subject of the debate. Perhaps they are beginning to realise that national health service trust reforms and other moves in that direction are beginning to show their worth and they no longer regard it as a suitable policy on which to try to create political difficulties for the Government. Nevertheless, it is remarkable that they should choose this subject for debate. I always enjoy the witty speeches of the right hon. and learned Member for Monklands, East (Mr. Smith), but I am always left wondering what is the economic policy of the Labour party. If Labour Members are to put themselves forward seriously as a prospective Government, they must answer some basic questions which have so far been left unresolved. The heart of the problem is the fact that Opposition Members' sums do not add up on public expenditure, taxation and borrowing.
My hon. Friend the Member for Horsham (Sir P. Hordern), who spoke about water authorities, put his finger on an important issue. At the very least, a Labour Government, if by some mischance they were elected, would discontinue the programme of privatisation and would therefore immediately deprive themselves of many billions of pounds of revenue over the public expenditure programme period. If they were to increase taxes on higher earners, savings income, capital gains and on the other matters that they threaten, they would only barely replace the money which they would lose by discontinuing the privatisation programme. That is without taking into account any money spent on renationalisation or deprivatisation, whatever the correct term might be, let alone bringing back into the public sector all the borrowings of companies which are currently in the private sector and which now do not count as part of the public debt.
The Opposition cannot have thought the matter through. We have had no explanation from them. Endless speeches, statements and policy documents have been produced by Labour Members, but not a single line has addressed the gap between what they say that they would want to spend and their means of raising the money to meet it. There is a serious conflict of interest in what they are trying to do. They are saying to people, "We want you, as voters, to believe that we will spend an extra £35 billion, £40 billion or £50 billion on wonderful public expenditure projects, and we will not tax you, as earners. All right, if you are on a higher income, you will get a big increase in taxation." However, everybody knows that increasing taxes on higher incomes does not produce anything like the revenue necessary to sustain Labour's public expenditure commitments. Opposition Members cannot have their cake and eat it. They must explain how they will bridge the gap. To put it another way, they cannot use the same financial resources twice.
Let us consider a parable. Let us suppose that a disreputable business man was running a great commercial empire with many public and private companies and had control of the group's pension funds. One could not take money out of the pension fund and put it into the private companies controlled by the same person and still have that money in the pension fund. One cannot use money
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twice over. Similarly, one cannot make commitments to huge public expenditure programmes while saying that one will not raise taxation ferociously to meet those commitments.
We need only look back at the past. The same sort of noises were being made in the 1970s that the hon. Member for Derby, South (Mrs. Beckett) is making now about not imposing extra taxation on people with low incomes. In the election, as a result of which I first became a Member of this House, I well remember the right hon. Member for Leeds, East (Mr. Healey) travelling around the country with a great grin on his face saying that he would squeeze the rich until the pips squeaked with his new tax policy. The Opposition are at it again now. They want to increase taxation on higher earners. The right hon. Member for Leeds, East did not say that "the rich" included all those on anything above half average earnings, yet those were the people who received the extra tax burden.
One has to increase taxation all the way down the scale, to those on average and low incomes, if one is to raise anything like the amount that Labour would need to fund its public expenditure programmes. That is why the last Labour Government stopped increasing personal allowan-ces in line with inflation and why, as a result, nearly 2 million people were brought into the income tax net. However, in the 1980s, under a Conservative Government, about 2 million people have been removed from the tax net. We have reversed the unsatisfactory direction that was taken by the last Labour Government. That is why take-home pay for a person on average earnings remained virtually unchanged under the previous Labour Government. Indeed, the income of the average single person actually fell whereas, since 1979 under a Conservative Government, the average increase for single and married people, and married couples with two children, has been no less than 40 per cent. in every category.
That is the difference between an economy that has tax rates that are set to encourage incentive—and earnings progress—and an economy with the suffocating levels of taxation that are inevitable under a Labour Government because of their huge public spending commitments. If a Labour Government raised the basic rate of taxation from 25p to 33p, which was their chosen rate at the end of their last period in government, they would raise in tax only about half of what is needed to meet the public expenditure commitments that they have made throughout the country in the past two or three years.
That is the scale of the mismatch between the Opposition's words and figures. I warn them—perhaps I am even trying to be helpful—that they will not do their cause any good if they continue to put forward financial and economic arithmetic that does not add up. They will not be able to do that during a general election campaign because it will be easy for us to point out the gaping holes in their arithmetic and nobody will believe them.
The Labour party should come clean. There is nothing wrong or immoral about saying that one wants to be a high tax, high public expenditure party and that that is the way in which one wants to conduct oneself in government, but one cannot say that one would form a high public expenditure, low tax Government; that simply could not work. It has not worked in the past and Labour Governments have come a cropper every time that they have tried it. One cannot use creative accounting to get out of that problem. The Opposition must face up to that. The

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sooner that they do, the better for them, but the better for the country also, because people will know where they stand.
7.13 pm
Mrs. Irene Adams: It is now just a year since I first became a Member of Parliament. In fact, I was elected on the very day that the right hon. Member for Huntingdon (Mr. Major) became Prime Minister. In my maiden speech, I told the House of the difficulties that my constituency faced and the rundown that had occurred there during the 12 years that the Tory party had been in power.
In my first few weeks here, I listened intently to the Government telling us, "Our difficulties are over now that Mrs. Thatcher has gone. Mr. Major is about to deliver unto us a bright new tomorrow." In fact, at that time the Prime Minister and the Chancellor were denying that we were in a recession, and even when they finally conceded that there might just be a recession, they continued to deny its depth.
Far from having a bright new tomorrow, my constituency has continued to suffer since the right hon. Member for Huntingdon came to office. All the key indicators have gone from bad to worse in that time. Unemployment in the country has increased by about 3,000 a day; businesses have failed at a rate of more than 200 a day; and in every working day of the past year 300 families have had their homes repossessed. The misery that homelessness brings to families is a terrible indictment of any Government.
During the past year, manufacturing investment has decreased by 12 per cent. and manufacturing output by 5 per cent. In the past year, 8,178 businesses have failed in Scotland. Again, that has caused abject misery.
My constituency has not fared any better than any other. The picture has become bleaker and bleaker. Paisley is essentially a mill town—or rather, it was a mill town until 1979 when the Tories came to power. At that time, United Thread Mills in Paisley employed 3,271 people, but today only 402 people are employed there. Only last week, we were told that Paisley is likely to lose those 402 jobs in the next few months. That is not because people no longer need thread or because it is no longer being manufactured, but because that company, which started its life in Paisley, is now a multinational company with investments all around the world. Because of the Government's policy on and attitude to manufacturing industry, the jobs are no longer in Paisley—and they are not likely to be there.
In a recent written reply to my hon. Friend the Member for Paisley, South (Mr. McMaster), the Minister responsible for Scottish industry admitted that, between 1979 and 1989, the Paisley postal area lost 76 per cent. of its manufacturing jobs. If that is updated to the present day to include the recent manufacturing job losses, the figure is now over 80 per cent. In fact, only today we heard that we are likely to lose another 320 jobs in the whisky industry in Paisley, South.
Our area now needs a major economic initiative to regenerate its manufacturing base. We have suffered a haemorrhage of job losses. That has not happened in one fell swoop; it has been death by a thousand cuts. We now need a genuine initiative, but not the sort that has
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happened in other areas, where jobs are simply transferred from one area to another without any new jobs being created. We desperately need a Government partnership with industry, such as the Labour party would initiate. As a result of the Government's lack of initiative and investment in manufacturing and training, we are in desperate danger of losing all our manufacturing skills. In my area, those were the skills of the thread-making industry and of heavy and light engineering.
During the by-election in which my hon. Friend the Member for Paisley, South and I were elected—on the day that the right hon. Member for Finchley (Mrs. Thatcher) resigned—I was campaigning when a newsagent said to me, "Look out at that road. I remember the day that Mrs. Thatcher came to power. I remember it well because a small boy was knocked down outside the shop when he was trying to cross the road. He was knocked down because the road was so busy with traffic and with people going to work in the manufacturing industries that he could not cross it safely. I looked out at that road this morning and there were two boys playing football on it." That is what the Government have done to the manufacturing industry of Britain. They have reduced it to absolute rubble.
Mr. Gordon McMaster: Does my hon. Friend recall that the newsagent made that statement on the very day that the right hon. Member for Finchley (Mrs. Thatcher) resigned? That is the legacy that she left us from that 10-year period.
Mrs. Adams: I agree with that.
As a result of the lack of investment in manufacturing and training, young people have not learnt the old skills that we had in manufacturing. Therefore, it is all the more difficult to convert those old skills to fit the new technologies of today. Indeed, we have missed a rung on the evolutionary ladder. The end result is that we miss out yet again because we do not have the necessary skills for the new industries that are coming along, so the vicious circle created by the Government becomes an ever-increasing downward spiral in the loss of manufacturing jobs that has so damaged my constituency.
The only new jobs that we have been offered are at a toxic waste incinerator. An application has been made to site one in Renfrew in my constituency. No one wants such an incinerator. It would cause greater damage to the industry than we already have because the nature of the business would discourage new investment in the area.
I have described the grim reality that people in my constituency face every day. The Government have presided over that loss of jobs. Coupled with that, a lack of investment in the construction industry, especially public sector housing, and a lack of funding for local authorities have created huge waiting lists for council housing and high levels of homelessness in my constituency. Council houses are in increasing disrepair. Renfrew district council estimates that it would need to invest some £300 million to bring its housing stock up to a tolerable standard.
Is it any wonder that people in my constituency continually question the sanity and morality of a Government who allow public buildings to fall into disrepair while building workers are unemployed, who have presided over record unemployment and record interest rates, who have created a level of homelessness in

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Britain that we have not seen for a hundred years, who refuse to invest in manufacturing industry and training, who are locked into a dogma of the past and who are bereft of new ideas? They are a Government in their death throes who cling on to power in the hope that something will turn up. I have to tell them that it does not look as though something will turn up. It is time for the Government to die with dignity; it is time to go now.
7.22 pm
Mr. Tim Smith: I had the pleasure of listening to the maiden speech of the hon. Member for Paisley, South (Mrs. Adams). She spoke then with the same passion with which she spoke this evening on behalf of her constituents in Paisley. It is entirely right that she should do so. As the character of this recession has been rather different from that of the previous recession, not only her constituents have been affected. 1n many ways this recession has been harder in the south-east. In some respects it has been a white-collar, middle-class recession and many of my constituents have also been affected. Therefore, I sympathise with what the hon. Lady said.
However, we must ask ourselves what policies are most likely to be effective in dealing with the problems that we face. The Government are right to give the highest priority to getting inflation down. I make no apology for repeating what I said at the end of July when we last had a debate on the economy. Reducing inflation should be the Government's top priority. Since we joined the exchange rate mechanism of the European monetary systern, we have had considerable success in reducing inflation.
In the autumn statement of 1990 the Chancellor forecast that in the fourth quarter of 1991 inflation would fall to 5·5 per cent. By the Budget of this year he forecast in the Red Book that in the fourth quarter of this year inflation would fall to 4 per cent. He has beaten both those forecasts. Today inflation is below 4 per cent. In the Budget he forecast that by the middle of next year inflation would be 3·75 per cent. In this year's autumn statement he forecast that inflation would be 4 per cent. by the fourth quarter of next year.
It is possible that the Treasury is being unduly pessimistic. There is every possibility that the underlying inflation, and indeed the retail prices index, will be below 4 per cent. by the end of next year. That is the benefit of having adhered through some difficult times to the policy of United Kingdom membership of the exchange rate mechanism. That is the great benefit which the ERM will deliver to the British economy in due course.
Of course, there is an important trade-off here between the short term and the long term. What would have happened if we had not joined the ERM a year or so ago? Interest rates might be 1 or 1·5 per cent. lower today. Almost certainly sterling would be lower than it is today, and, therefore, inflation would be higher. It does not follow—I am sure that the right hon. Member for Swansea, West (Mr. Williams) would disagree if he were still here—that exporters could have taken advantage of a weaker exchange rate in the way that he suggested.
As my right hon. Friend the Member for Hertfordshire, North (Sir I. Stewart) said, the record of exporters in the past 12 months was a good one, even with an exchange rate which some people claim is excessively high. I should have thought that most people would have learnt by now that devaluation of the currency is not an economic
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panacea and that they would see that countries which have had a firm exchange rate have been among the world's most successful exporters.
If inflation was higher than at present, house prices might be a little firmer and there might he a little more consumer confidence knocking around, but I suggest that that would give the illusion of improvement but no real improvement. There is no doubt that our membership of the ERM offers an opportunity to break the mould in which we have been stuck for the past 20 or 30 years. In the short term, it seems that everyone in the House agrees that there is no quick fix. I was doing a piece for the BBC World Service earlier this afternoon with the hon. Member for Redcar (Ms. Mowlam) in which she agreed that there was no quick fix. The right hon. and learned Member for Monklands, East (Mr. Smith) did not come up with any proposals that would have any short-term consequences on the economy. There are no policies designed to give it an instant kick start. All that the right hon. and learned Gentleman could come up with were the same policies that we have heard endlessly before. As my right hon. Friend the Chancellor said, those policies are the answer to every question about Labour's economic strategy—more investment and more training.
We all want to see more investment and more training, but, as I said to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the way to achieve that is not by increasing tax allowances to 100 per cent. That would have a distorting effect. My right hon. Friend the Member for Hertfordshire, North, who was a Treasury Minister at the time, was right to make the changes that were made in 1984. They have paid handsome dividends because the main source of cash for new investment is retained profits. If the taxes on retained profits are low, people have more cash for investment.
The Government have the right economic policy, even if it is frustrating that recovery seems to be so long coming. ERM membership brings a stable exchange rate and no one should under-estimate the value of that to Britain's exporters. It brings, and has already brought, lower inflation and in due course that will doubtless be followed by lower interest rates.
The Government also have the right fiscal policy. In a time of recession, it is right that we should move from the position three years ago, when we had a large public sector debt repayment, to the situation today when we have a growing but not unmanageable borrowing requirement, which will rise next year to about 3 per cent. of GDP.
Mr. Jimmy Wray: The hon. Gentleman says that the Government have the right fiscal policy now. They have been in government for 12 years. I feel sorry for the Opposition Front Bench, which will have to take over after April, because of the mess that the Conservatives will leave behind. There are debts totalling billions of pounds, but the Government have sold the assets of this country. How can the hon. Gentleman say that they have the right fiscal policy now?
Mr. Smith: The Government have had tremendous success in reducing the national debt. In the previous three years, there have been substantial repayments of public debt. We can contrast the position today with that under the last Labour Government, when the fastest growing head of public expenditure was debt interest. That Labour Government borrowed so much money. The bill has to be

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met by taxpayers today and by future generations. Our achievement in repaying some of the national debt is that future generations will not have to pay, today's taxpayers will not have to pay and that money is available to be spent on hospitals, schools and all the other things that we would like money to be spent on.
Hon. Members should read a written answer given to my hon. Friend the Member for Dover (Mr. Shaw), who asked which member state is doing best in the European monetary union stakes as regards public sector borrowing, which is one of the criteria for convergence. Hon. Members will find that one of the conditions is that the total national debt of a member state must be 60 per cent. of GDP or less. Some of the member states in the European Community have a national debt of more than 100 per cent. In the United Kingdom it is well below the 60 per cent., so we shall have no difficulty meeting that test, if and when the time comes. It would be irresponsible and wrong to go any further as regards fiscal policy. We should seek to place a ceiling on borrowing of around 3 per cent. of GDP, which is exactly what the draft economic and monetary union treaty does.
In comparing this recession with that in 1981, hon. Members will recall that in the 1981 Budget, contrary to conventional wisdom—although it was certainly the right decision at the time—my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) cut public sector borrowing in the middle of a recession. That was the right policy at that time and rapidly proved successful in terms of economic recovery.
Today we face a different situation. As I described, we start from a much stronger fiscal position and so it is right that we should now have a larger public sector borrowing requirement. I welcome the autumn and the fact that the Government want to increase public spending in key areas, including health and the transport infrastructure.
Mr. Frank Haynes: What about Blaby?
Mr. Smith: Does the hon. Member for Ashfield (Mr. Haynes), who is wittering from a sedentary position, want to intervene?
Mr. Haynes: What about Blaby?
Mr. Smith: I shall ignore that remark.
Mr. Haynes: You supported him, that is why.
Mr. Smith: On unemployment, the position now is very different from what it was after the recession of 1981, when unemployment continued to rise until 1986. The signs are quite encouraging. Unemployment is still rising, which is obviously unacceptable and a matter of considerable regret—certainly to those of my constituents who have lost their jobs.
However, although unemployment is normally a lagging indicator in the economy, already the monthly rate of increase in unemployment has declined substantially. Last month it was only 15,000 and it fell in Scotland, Wales and the north of England—[HON. MEMBERS: "No."] I have the Department of Employment's figures here. Unadjusted unemployment fell throughout the United Kingdom last month by 25,000. The figures rose by 16,000
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only on an adjusted basis. In Scotland, Wales and the north of England unemployment fell. That is also cause for some optimism.
On the question of economic and monetary union, I was sorry that the hon. Member for Berwick-upon-Tweed (Mr. Beith), who is no longer in the Chamber, grossly misrepresented the Government's position. He knows very well that the criteria are clearly set out, in the draft treaty. If he looks at them, he will realise that the United Kingdom will have no difficulty in meeting the criteria. That is not the point. The question is whether it is sensible to make a decision now about something that the treaty says will be considered in five years' time, at the end of 1996. No rational person would try to make that type of decision now. It should be for the next Parliament or for the Parliament after that to decide.
The United Kingdom will have no difficulty in meeting the criteria, which relate to inflation, to our fiscal position, our performance within the ERM and to interest rates. We meet all those criteria and we should continue to pursue policies which ensure that we meet them. I think that we shall.
The two written answers that I referred to, given to my hon. Friend the Member for Dover, show that many other countries in the European Community do not meet the fiscal criteria—either current borrowing of 3 per cent. of GDP or a total national debt of 60 per cent. of GDP. The United Kingdom is in a much stronger position than many other member states, and meeting those criteria will not be a difficulty.
I was disappointed by the speech by the right hon. and learned Member for Monklands, East. I want my hon. Friends to hear a little more detail about Labour's economic policies. That is not an unreasonable request when an election is imminent. People will start asking more detailed and more searching questions as the elections approaches. I am sure that my right hon. Friend the Member for Hertfordshire, North is right in saying that we hear so little because the Labour party has no answers to those questions. We hear the same tiresome statements about investment and training, but no answers to other questions. It is about time that we had some answers to those questions from the Labour party.
7.36 pm
Mr. Austin Mitchell: I do not intend to follow the hon. Member for Beaconsfield (Mr. Smith), because his economics is the economics of accountancy. He knows all about the figures but nothing about the reality behind them. It is his obsession with figures that leads him to make the crucial economic mistakes that he made. The debate is interesting in the light of those mistakes. It is almost a throwback debate to 1981, with the Government saying that things are bad but—a Micawberism—"Wait and see, something better will turn up, it might get a bit better."
Conservative Members have obviously been briefed by Conservative central office, because they cannot find anything good to say about their Government, so they give central office speeches attacking the Labour party and asking what it would do. They are attacking not a past Labour Government but the Labour Government who will take office next year. If that is all they have to say, if they can only attack Labour, it is a sad summation of 13 years in power. The reality is clear to all of us. My hon. and

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learned Friend the Member for Monklands, East (Mr. Smith) summed it up brilliantly—it is the state of the depression. It is horrendous—the mother of all recessions. It makes the Chancellor the Saddam Hussein of economics for accomplishing it in such a brief period.
I will not go on about the statistics. They are shocking. The consequences of those statistics are dismal for the future of this country. The manufacturing base, which is already nearing the limits of viability—it is only about 20 per cent. of GDP, compared to about 30 per cent. in Germany—is shrinking still further. We are losing all the supporting network of training, research, development and suppliers which keeps the manufacturing base in being.
The balance of payments has become a stranglehold. In the depths of recession, we are in a balance of payments deficit. It is horrendous. What happens when we expand? We cannot expand without making that balance of payments deficit worse. Every job we lose now, every factory we close, every production line that stops producing, means more imports later. It means, in other words, a tighter balance of payments deficit.
We shall be entering the single market in the coming year. That will be a highly competitive environment and we are entering it by jettisoning investment, research, design, development and all the other attributes that would allow us to compete in that market. We are not prepared for it, whereas our competitors are.
Firms that should be investing and preparing are throwing overboard, just to survive, research, design and everything, including model changes and investment, to struggle through a depression that the Government have created. That is the prospect not of success but of disaster later. It is a national tragedy for Britain.
The hon. Member for Beaconsfield said that, sadly, the depression had hit Beaconsfield. I remind him that it hit Grimsby bitterly between 1979 and 1981, and now we are having a second dose of it. with the loss of Findus Ltd. and 900 jobs, and the shrinking of labour forces by major employers. We are suffering the failure of viable businesses. It is a tragedy. People who put their lives, their effort, their everything into creating businesses have seen them close simply because of the level of interest rates, the depth of the depression that the Government have created and the hostile, unfavourable and unacceptable behaviour of the banks.
From where will the recovery come? What will produce it? I cannot see the answer. The Government are always making predictions, and in that sense the Chancellor may be described as the Mother Shipton—perhaps I should call him the Brother Shipton—of economics. I fear that we are in a new norm, a prolonged recession with no real recovery, rather than the real prospect of recovery. I say that because all the engines of recovery seem incapable of driving us out of the recession.
Housing is one such engine. From where will recovery in housing come, with interest rates at their present level, with house prices still having some way to fall and with a huge overhang of unsold houses? One house in five sold in Britain now is repossessed, and that depresses the house price market. That is why I ask where the recovery will come from in housing.
Where will it come from in terms of consumer demand if unemployment continues to rise? People are more
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frightened as unemployment rises and they have less money to spend. Credit, the debt level, presses on everyone and causes people to save and struggle rather than spend.
It will not come from companies. They are still struggling under a huge burden of debt. Nor will it come from exports, which are now falling because the pound is so overvalued that we cannot have export success at its present level of valuation. There might have been an improvement earlier with an expansion of the German economy, but that is now being deflated.
It will not come from Government spending, because the Government will have to borrow massively to keep going at the present mean levels of public spending. Hence none of the engines of recovery is available to pull us out of the recession. There is no escape and the tragedy is that the exchange rate mechanism—which the present aggressive, decisive Prime Minister bullied the hapless, shrinking right hon. Member for Finchley (Mrs. Thatcher) into entering all those months ago, forcing it on her against her will in such a decisive fashion—precludes recovery, because we cannot reduce interest rates.
It is paramount for us now to retain high interest rates, which are high in the historic sense, in real terms, and are high compared with Japan, and with America, where they stand at 5 per cent. Interest rates at 5 per cent. have not yet produced recovery in America. Yet our higher interest rates cannot be reduced; nor can we reduce the exchange rate, because high interest rates are necessary to support the exchange rate.
The right exchange rate is necessary for a country in deficit, as we are, to shift resources from imports to production and to attract investment into manufacturing industry by again making it profitable. The exchange rate, which in a market situation would fall, cannot come down because the whole dedication of Government policy is to keep the exchange rate at an unreasonable level. The result is that the market cannot operate. We have nailed down the lid on the recession.
There can be recovery only if we reduce interest rates and the pound with them. It is no good reducing interest rates on their own, because there is no point in just pumping out credit. It is like trying to push on a piece of string: it cannot be done. One can pull interest rates up., but one cannot push the string to get them down again. We must increase demand for British goods by adjusting the exchange rate so that demand is channelled to British goods through the price mechanism, making our goods and exports more attractive and cheaper and imports dearer.
It is no good telling me that the price mechanism does not work any more. The Government's alternative is to reduce prices in manufacturing from the uncompetitive levels to which they are forced up by the exchange rate, by firing people and depressing the price of labour. I agree that price is important, but the only way to achieve a reduction in prices and an ability to expand is to adjust the exchange rate. If inflation is too much money pursuing too few goods, it does not follow that we must—as we have been doing in this country—reduce the supply of money all the time and thus have the disastrous consequences for industry that have occurred.
We should expand the supply of goods, which simply means expanding the money supply and channelling demand to British production in Britain. If the exchange rate is kept at its present level, every coal mine, steel plant and textile mill that closes is due directly to the exchange

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rate and will produce a worse balance of payments problem later on. We are deliberately taking resources out of production by means of the exchange rate.
It is no answer for Ministers to keep saying that we need only reduce inflation to produce the conditions for recovery. That is not true. We produce nothing but a graveyard. Any fool can bring inflation down. The Conservatives, understandably therefore, have been successful in their graveyard economics. But what is to produce recovery once inflation is down?
Our tragedy has been that we have always cut the supply of money, and kept money at too high a price, because of the dominant interests of finance and the kind of economics about which the hon. Member for Beaconfield talked. It is rubbish in terms of production, because a high exchange rate means that we shift the balance from production in this country to production overseas—in other words, to imports—thereby making imports more attractive and our production more expensive. We shift the balance from investment in Britain to investment overseas, and we have been doing that for the last 13 years. We shift resources from production into consumption, as we have been doing over the years.
Mr. Tim Smith: Why has that not worked for the Germans?
Mr. Mitchell: A country with a powerful exporting sector can let its currency appreciate because it has the economic strength to ride that out. A country in which manufacturing has been shrinking needs the edge of a competitive currency to expand and rebuild back to the competitiveness which will allow its exchange rate to appreciate. It does not happen simply by putting up the exchange rate—that way comes rigormortis for industry —but from policies which make investment in this country profitable. It gives industry the prospect of being able to sell its production, and the only way to do that is to make the currency competitive. It is simple economics, although the Government do not understand that.
Instead, they have shifted the emphasis from production to consumption by the exchange rate. In other words, they have shifted from labour, which we represent, to wealth, which they represent. It has been a matter of simple social priorities for them. They have shifted it from manufacturing to finance. The whole policy of the Government has been dedicated to making money dear and people cheap, and they have succeeded. They have produced the sort of society that reflects that set of attitudes. Unemployment will increase because there is no way of stopping it increasing.
There is no way out unless we reverse the priorities. We must reduce interest rates, and with them the exchange rate. We must do that to channel demand to production. No other way will lead to recovery. Water cannot be made to flow uphill. By constantly preaching about defeating inflation, the Government simply shift the emphasis from the real economy to the mythical battle against inflation.
It is a mistake for a country to tie its currency to that of another, because a currency insulates a country against drops in another countries' economies. It is also a mistake to tie our economic cycle to that of Germany, which wants to increase interest rates and deflate its economy, whereas we want to hold interest rates down and expand our
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economy. Yet we are forced to keep interest rates high to suit Germany. It means that we cannot improve our balance of payments and market forces cannot operate. It is a mistake to make changes in our exchange rate dependent on competitors who have a vested interest in seeing that exchange rate overvalued, because it strengthens, confirms and sustains their access to our market.
To make all those mistakes and then compound them by entering the exchange rate mechanism at too high a rate is total folly. The Prime Minister took us in at that high rate, and it is the last nail in his coffin. The pound is 24 per cent. overvalued in real terms against the deutschmark and more than 40 per cent. overvalued in real terms against the dollar. British industry can never recover the ground that it has been forced to give up by that overvaluation. The estimate of John Williamson in the bulletin of the National Institute of Economic and Social Research is similar.
The overvaluation will cause a growing deficit in our balance of payments, more unemployment, less invest-ment and a Government who are twisting in the wind because they will be subject to every threat and challenge to the exchange rate. Governments who hang on in that way are usually challenged by their friends—in the present Government's case, the markets, which will test them in the next six months. Every year we are wasting production and there is a gap between what we produce and what we should produce, if we were on the trend growth line, even the low trend growth line of the 1980s. I do not know how much that amounts to. Sir Donald MacDougall came up with an estimate of some £60 billion a year in lost production just because of that economic folly. How much richer that would make us and how much more powerful as a nation, yet we are chucking it all away.
The position worries me, because I now see a deflation sustained by the exchange rate mechanism, which has become tripartisan policy. Each party is committed to the mechanism that imposes that deflation. It is strikingly close to the situation of the 1920s, when Winston Churchill took us back to gold at an overvalued rate in 1925. The consequence was the general strike of 1926, the depression of the rest of the 1920s, and the suffering of manufacturing industry and basic industries of this country because they could not leap the hurdle of overvaluation that the Government had imposed on those industries. The problem ended only in 1931, when a Conservative Government took us away from gold and devalued by 30 per cent. A Labour Government, who had broken their backs and given their all to keeping the country on gold, went out, with Ministers saying, "They never told us we could do that".
We now have the same orthodoxy, except that it is called "communautaire". It is called a commitment to Europe, and is placed higher than the recovery of our economy and jobs for our people. It is producing the same results, and the outcome can only be the same. There will be a breach, and we shall devalue because such suffering cannot be imposed on electorates through the hidden hand of the exchange rate. The Government cannot keep the lid down.
We have seen what is happening in Europe. Because of the futile quest of the exchange rate mechanism to get inflation rates down to Germany's abnormally low level, which it has achieved because of its powerful manufacturing sector, France now has the CRS using its batons on nurses and has experienced four rounds of public

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expenditure cuts, and Ministers cannot leave Paris without a police escort. A similar fate awaits us, because our deflation will be harder than that.
The only way out is to devalue. It will happen because it is the job of politicians in an untenable situation to walk out backwards, proclaiming that they are doing something different from what they are doing. I hope that it will be a Labour Government who do that because, without that devaluation, no Government can succeed, people can only suffer, our manufacturing base can only shrink further, and we shall be relegated to an indefinite, long-term future of crippling—[Interruption.] The hon. Member for Beaconsfield sneers.
The previous Chancellor of the Exchequer effectively devalued our currency by 30 per cent. against the deutschmark in 1986. That was the reason for the expansion and was a contributing factor to the Tory party's success in the 1987 election. So let us not have a sneering partisan attitude to that, because the fate of this country and British industry is at stake. British industry has been strangled by a crippling and excruciatingly high exhange rate, from which there will be no escape unless someone devalues.
7.55 pm
Mr. John Watts: Like my hon. Friend the Member for Beaconsfield (Mr. Smith), I was both puzzled by and disappointed by the speech of the right hon. and learned Member for Monklands, East (Mr. Smith). He started with a few good jokes, in true barrister style, then went through the ritual denunciation of the Government, but he said little about the Labour party's policy or anything relating to the motion on the Order Paper. I could not understand why that should be, but, as the debate has developed, the reasons have become crystal clear. Labour Back Benchers have said little in support of what I understand to be official Labour party policy.
We have just heard a powerful speech by the hon. Member for Great Grimsby (Mr. Mitchell), denouncing the Leader of the Opposition's commitment earlier this week, when he met his socialist comrades in Europe, to sign up to economic and monetary union with absolutely no conditions. We heard a similarly powerful speech from the right hon. Member for Swansea, West (Mr. Williams) in a similar vein, and the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) was not exactly fulsome in support of the line peddled by the Opposition Front Bench.
Therefore, all that the right hon. and learned Member for Monklands, East could do was try to pour scorn and ridicule on the economy's prospects for recovery. In recent weeks, the Labour party has cast itself in the role of someone scouring the country looking for bad news. Earlier this week, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who is clearly becoming rattled because the financial and management reforms in the health service are reducing waiting lists, felt that he had to rubbish the Government's policies on that.
Likewise, the right hon. and learned Member for Monklands, East disputed whether the economy was now starting to recover. He castigated my right hon. Friend the Chancellor for having forecast that the recovery would start from the middle of this year. Yet the GDP figures for
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the third quarter show a 0·3 per cent. increase, which is surely one sign that the worst is over, and that better times are coming.
Labour Members will then say that, if oil is taken out of the calculations, everything else is going flat. One can always pick and choose one's statistics, taking out all the good news and giving only the bad. Labour Members sought to do the same when my hon. Friend the Member for Chorley (Mr. Dover) intervened and asked, very reasonably, why, if everything was so dreadful, unemployment was falling in his constituency in the north of England over the past two months. The right hon. and learned Member for Monklands, East said that he should look at the national figures. If we do so, we find—as my hon. Friend the Member for Beaconsfield said—that, on an unadjusted basis, unemployment fell last month and, even on an adjusted basis, the increase was only 15,000 which is much less than most independent forecasters had expected.
In my constituency, unemployment is no longer rising but has peaked and levelled out at about 5 per cent. That is a problem for my constituents who are out of work and I look forward to the prospect of their finding work again when the economy recovers. But 95 per cent. of the working population in my constituency are in work and still earning good money.
The Slough industrial estate is still the largest in western Europe. The demand for power on the power station which serves the whole of the estate and therefore relates to a cross-section of businesses, and which provides employment for thousands of people, is higher this year than it was last year. That is another sign that industry in my constituency is recovering. The Thames Chiltern chamber of commerce and industry covers my constitu-ency and that of my hon. Friend the Member for Beaconsfield. In fact, it covers the whole of the Thames valley district north towards Aylesbury. In the past two quarters, the returns from a wide cross-section of businesses have been positive.
Opposition Members are wrong to seek to talk down the performance of the economy. They are equally wrong to pour scorn on the notion of an increase in consumer spending contributing to recovery. I may be too simple in my approach, but I do not think that I could find a business man in my constituency who would be prepared to invest in new capacity unless he believed that he had customers in the market who would buy those goods.
Some of that increased purchasing power in the domestic economy will come from the success of my right hon. Friend the Chancellor in squeezing down inflation and part will come from the benefits of lower interest rates, which mean that the disposable income that was being consumed—particularly by the servicing of mortgage debt —is now available for other expenditure. Some of that purchasing power could then be applied to increased consumer demand to give manufacturers the markets for their goods. That would be a positive development that should not be decried.
Similarly, our partners in the European Community should join us in concentrating on measures to complete the internal market to increase the market available to all producers in the Community rather than being sidetracked by issues of political union—which do not necessarily have to be decided at this juncture. They should also concentrate on making progress in the important negotiations on the general agreement on tariffs and trade

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to expand the prospects for trade worldwide. Such activities would expand the export markets for our producers.
The argument that financial incentives for investment will necessarily lead to greater investment in the absence of any increased demand is clearly flawed. I believe that it was my right hon. Friend the Member for Hertfordshire, North (Sir. I. Stewart), who explained that such tax allowances were necessary only if the Government ran a high tax regime. If profits are taxed at 52 per cent., 60 per cent. or 100 per cent., tax allowances are needed if companies are to have enough cash to fund their investment programmes. How much better it would be to have a low tax regime, so that even companies that make the largest profits can retain 67 per cent. of them tax-free and smaller companies can retain 75 per cent. of their profits after tax and spend the money on investment that they judge to be commercially viable.
Investment can be financed from the retained profits that companies are allowed to keep due to a lower tax regime, and private sector savings. The supply of savings would be fatally affected by the Labour party's policy of taxing private individuals heavily. If the higher rate of tax is effectively to rise from 40 per cent. to 59 per cent., from where will the extra tax revenues be diverted? Savings, not consumption, are far more likely to be squeezed.
All our experience of trying to slow down a booming economy showed that the last sector of expenditure that consumers were prepared to cut was consumption. Their savings went first, and a decline in the savings ratio was created as people tried to maintain their standard of living. That would be the response if a Labour Government— were one ever elected—were to impose their new high tax policies on both those who pay high rate tax and those who pay basic rate tax.
In an intervention, the hon. Member for Derby, South (Mrs. Beckett) reiterated that, under a Labour Government, there would be no increased burden of taxation for anyone earning less than, I think, £20,000 —it may have been £21,000. That simply does not square with the Labour party's spending commitment pledges, which my right hon. Friend the Chancellor and his colleagues have costed at £35 billion. I know that Labour spokesmen and women find it boring when Conservative Back Benchers or Ministers question them about their spending plans. They are in the habit of saying that our estimate of £35 billion is rubbish. Labour's Treasury team should take the opportunity of this debate to make the position absolutely clear. Do they dispute my right hon. Friend's costings which total £35 billion, or do they allege that what we have identified as their commitments are not really commitments? Either way, I believe that the electorate have the right to know.
There is a suspicion that the Labour party is making promises to bribe people with their own money. They throw out promises of extra spending but are unwilling to frighten the horses by telling those same people what they will have to pay in taxation. Even today, I learned that the Labour party has announced two new spending commitments—
Mr. Austin Mitchell: —it says here, in this Central Office brief.
Mr. Watts: No. I have that information from an hon. Friend who serves on a Standing Committee.
I understand that the Labour party has made a new commitment that the 20 per cent. contribution to community charge will be abolished by an incoming Labour Government so that the community charge benefit will rise to a maximum of 100 per cent.—[Interruption.] I am not talking about the council tax, on which I estimate that that policy would cost about £400 billion.
I understand that a Labour spokesman in the same Committee said that there would be no control over the level of local government expenditure if a Labour Government came into office. I understand that there would be no capping, no circulars, no friendly chats and no attempt to constrain the level of local government spending. That is a further commitment on top of those that have already been costed.
Mr. Nellist: When the hon. Gentleman talks of the minimum 20 per cent. contribution to the poll tax, is he saying that he is in favour of literally millions of people in this country being driven further into debt to try to pay that 20 per cent.? Is he not aware that, despite Treasury protestations that nobody who could not afford to pay the poll tax would ever go to prison for failure to do so, of the 100 people who have been sent to prison, 31 were unemployed, 15 were pensioners and three were on invalidity benefit? If the Government carry on with the 20 per cent. rule for at least another 15 months, those people will be joined by many more.
Mr. Watts: It is perfectly reasonable for Opposition spokesmen to make new pledges that, if a Labour Government came to office before the community charge was abolished, they would increase the benefit to 100 per cent. However, I want the Opposition Treasury team to say how such a policy will be funded, because it is very much at odds with the frequently reiterated statement of the hon. Member for Derby, South that a Labour Government would make only two commitments to increase spending: on pensions and child benefit.
I am sure, particularly as my right hon. and learned Friend the Chief Secretary is present, that Conservative Members will sympathise with the hon. Member for Derby, South. As shadow Chief Secretary, she has the difficult job of trying to keep under control the wild spending promises of her would-be ministerial colleagues. I am sure that my right hon. and learned Friend has had some experience of restraining some of the demands of his right hon. Friends.
The hon. Member for Derby, South must make it absolutely clear to the House and the country whether her frequently reiterated statement that the only increased expenditure would be on child benefit and pensions is still Labour policy. Is she saying that the other so-called commitments—the extra money for overseas aid that the right hon. Member for Manchester, Gorton (Mr. Kaufman) promised at the Labour party conference, the new commitment made today on community charge benefit and the extra spending on training and investment about which we have heard today—are not commitments, even though the training and investment proposals were contained in the speech of the right hon. and learned Member for Monklands, East? The House and the country are entitled to a clear answer on those matters.

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The speeches that we have heard tonight suggest that there is clearly much less confusion and division on the single currency on the Conservative Benches than on the Labour Benches. A substantial proportion of Opposition Members are unreconstructed 1960 devaluers, as the hon. Member for Great Grimsby made clear. It was a travesty of Conservative Members' position for the hon. Member for Berwick-upon-Tweed (Mr. Beith) to say that our concern was that the British economy was uniquely unfitted to meet the criteria for entry into a single currency system. On the contrary, the British economy is one of the few of the 12 which currently meets the criteria laid down in the draft treaty.
My concern relates to what is known as Club Med; whether, at the time that a single currency is introduced, a political decision will be made, in the interests of what is called social cohesion, to allow Greece, perhaps Italy, and other weaker economies which cannot meet the criteria, none the less to be allowed into the system, and then for massive financial transfers to be made from the northern states to Club Med in order to bail out their economies which could not take the effects of a single currency, any more than the east German economy would easily adapt to the introduction of the deutschmark.
That is a particularly strong concern because, along with the Germans, we are still the only consistent net contributor to the EC budget. If any such costs arose from social cohesion, they would fall heavily and unfairly on the shoulders of British taxpayers and, at the same time, would add to the balance of payments problem to which Opposition Members have referred.
We are already in the unhappy position of contributing more to our wealthier partners in the EC than we make available to the third world and eastern Europe through our overseas aid programmes. Unhappily, the public expenditure plans in the autumn statement show that that trend is to continue. By the end of the planned period, we shall be shelling out £3 billion a year to our rich Community partners without any changes in policy or additional burdens being imposed by the Community.
That is my concern about the arrangements for a single currency. That is why we are wise to insist that, while we should take part in the discussions about the institutions which would be required and the way in which a single currency should work, we should not commit ourselves to joining such a club until we know who the other members will be on day one.
8.12 pm
Mr. Giles Radice: I congratulate the hon. Member for Slough (Mr. Watts), who is a colleague of mine on the Select Committee on the Treasury and Civil Service, on his stout defence of the Government. It is clearly central to that line to attack the Labour party on public spending, as every Conservative speaker so far has done. That attack has been answered many times by my hon. Friend the shadow Chief Secretary, and no doubt it will be answered again with her usual ability this evening. Therefore, I shall not follow the hon. Gentleman in his remarks, but I shall take him up later on what he said about economic and monetary union.
Having had the pleasure of watching the Chancellor carefully for about a year, I have decided what his problems really are—and I should like to share my discoveries with the House. The Chancellor's first difficulty
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is that he has to fight an election in the next seven months. Left to himself, he is a man of realistic disposition, a pragmatic chap, the sort of person to see things as they are. By nature, he is by no means a Pangloss.
If the election were in 1993, things would be much easier for the right hon. Gentleman. He would be much more relaxed and he might even have told the House what he really thinks—but because the election is imminent he continually has to be promising a recovery. We have heard the stories this afternoon—dawn is nigh, the sunny uplands are in sight or, in the words of the old song, good times are just around the corner.
Last December, as I am sure the hon. Member for Slough will remember, the Chancellor told the Treasury and Civil Service Select Committee that he believed that the recession could be relatively short lived and relatively shallow. In fact, it was neither short lived nor shallow. We now know that output fell for four quarters in succession and that non-oil output fell for five quarters in succession. Output also fell by 3·7 per cent., the second deepest recession since the 1930s.
At the time of the Budget, as my right hon. and learned Friend the shadow Chancellor said, the Chancellor revised his position and said that the recovery would begin around the middle of the year. That prediction is looking precarious. The latest output figures show that in the third quarter there was a fall of 0·3 per cent. in the non-oil economy. The hon. Member for Slough did not mention that. During the past three months there has been a fall in retail sales, a dip in consumer confidence, and big companies such as GEC and Pilkington, which have reported during the past two days, see no sign of recovery. We should listen to what they have to say.
The Chancellor points to the stock-building figures. He says that there is a small rise in manufacturing investment and he points to a fall in the rate of increase in unemployment as evidence of the recovery. An objective observer would probably conclude that the jury is still out, that it is too early to say that there is a recovery. The Chancellor rather admitted that when, in a Freudian slip, he told the Treasury and Civil Service Select Committee that the recovery was slow in coming.
If there is a recovery, it is so imperceptible as to be a micro-recovery that cannot be discerned by the ordinary human eye. I suspect that the real situation is that the economy, after taking a nose dive for a year, is probably still bumping along the bottom and that any recovery, when it comes, will be slow and hesitant. It could be some time, even as much as a year, before we return to our productive potential. I suspect that that is what the Chancellor thinks; it is certainly what he should have said to us this afternoon. However, he did not dare say it because to do so would be politically disastrous for the Government.
The Chancellor has another obvious problem and that is that his predecessors, the right hon. Members for Blaby (Mr. Lawson) and for Huntingdon (Mr. Major), have left him an appalling inheritance. First we had the Lawson boom and now we have the Major slump. As to the Lawson boom, experts will continue to argue about the precise moment when the British economy went out of control. Monetarists emphasise the money supply figures and the explosion in the housing market. Keynesians point to the splurge in consumer spending and the succession of

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tax-cutting Budgets. It is certainly the case that by March 1988 the economy was seriously out of balance, and the March Budget accelerated the process.
I shall not accept this evening the hoary old argument that I am speaking from hindsight; I am not. I have looked again at the speech that I made at the time and that is what I said then, as did many other Opposition Members.
Mr. Oppenheim: Does the hon. Gentleman accept that tax cuts in 1988 amounted to only £4 billion, whereas the increase in credit that year amounted to £40 billion? Does not that show, therefore, that the real culprit was not tax cuts, but the fact that interest rates were too low, and they were cut in 1988 at just the wrong time?
Mr. Radice: I will reply to the hon. Gentleman's point about interest rates later. It is true that there was a credit explosion, mostly due to Government deregulation. However, the hon. Gentleman's figure for tax cuts was wrong: they amounted to £6 billion in a full year. Added to everything else, they led to the consumer boom and to the economy going out of control. Therefore, those cuts must be taken into account—as we said in our Select Committee report.
I do not believe that the explosion was an overreaction to black Monday. Other countries that relaxed policy in the immediate aftermath of black Monday subsequently tightened it. Britain could have done the same, if the then Chancellor of the Exchequer had not begun to believe his own propaganda, to the effect that Britain had experienced a supply side miracle. There was no miracle, but instead a very British boom followed by a very British recession. The Governor of the Bank of England told the Select Committee—as I reminded the Chancellor this afternoon —that it was a home-grown recession.
The recession of the right hon. Member for Huntingdon was caused by relying solely on raising interest rates to bring the economy under control. As many of us warned at the time, interest rate increases take a long time to work, have unpleasant side effects and clobber the economy. It would have been far better, as many of us also said, to have taken a more balanced approach—especially in respect of tax and credit control. The Government ignored our advice, and look what happened. The British economy did not slow down until the middle of 1990. Small and medium-sized companies went out of business at record rates. Investment dropped like a stone, the service sector suffered, and house owners were dispossessed.
When the economy eventually slowed down it fell over a cliff, and we are still crawling along at the foot of it. There is an undermining of public finances, which the Chancellor admitted to the Select Committee was caused by recession and inflation. Two thirds of the public sector borrowing requirement can be accounted for by recession and inflation. In other words, that is the cost of the Government's mistakes with the economy. Bankruptcy announcements and redundancy notices continue to be issued and "To Let" signs are still in all our high streets. We see all around us the waste of talent, enterprise and skill. I see the impact of recession in my own region and constituency and even in my own family.
My right hon. and hon. Friends reminded the House that the present recession is the second to be caused by the
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Government in 12 years. I remind Conservative Members that in the first ICI lost one third of its suppliers. That was not a question of dross or of overmanning, but of ICI—the bluechip flagship of our country—losing one third of its suppliers. That was a big recession and now we are experiencing another. It is a tragedy for the British people and no one can pretend that the Government are not responsible for it.
I want to conclude my speech with a few words on economic and monetary union.
Mr. Austin Mitchell: Oh, no.
Mr. Radice: My hon. Friend said a word or two about that matter, so I shall do so—especially as I am in line with party policy and he is not.
A good result will strengthen the prospects for our economy. There are strong arguments for Britain committing itself now to the objective of a single currency. They include savings on transaction costs, the elimination of exchange rate instability and the provision of a firm framework for economic and monetary growth. Instead of seeking an opt-out clause, which would weaken our bargaining stance in other regards at Maastricht, it would be better for the Government to have the courage to make up their mind now on a single currency.
It is no argument to say that no rash person would expect the Government to make up their mind now. Rational people in most of our partner countries are making up their minds in favour of a single currency—and some have an economic position that is less strong than our own. Uncertainty about our intentions will be bad for investment. Inward investment might switch from this country to the core EC countries, such as France and Germany, and uncertainty could be bad also for currency stability. If our position at Maastricht is seen to be too negative, we could have problems afterwards, and that might be bad for our reputation within the EC, which is bad enough anyway.
In contrast, a decision in favour of the objective of achieving a single currency would lend credibility to our anti-inflationary policies, underwrite the need to maintain a balanced macro-economic strategy—without the boom and recession we have had over the past five years—and provide the economic and monetary framework within which it would be possible to improve the supply side in the way that my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) described—through education and training, research and development, and high-quality investment.
The Chancellor made fun of those objectives. I cannot imagine what he was thinking about, for those are the ways to improve the supply side and the economy's productive potential. There is no other way. If we do not start tackling those problems we will be unable to improve the supply side. We need the framework of European monetary union and of a single currency to achieve that. Deciding on a single currency would help to promote economic change in the decade ahead and would make us ready for the third stage of monetary union.
Mr. Austin Mitchell: My hon. Friend mentioned earlier that he is in line with current policy. As I understand it, current policy is that we would be in favour of economic and monetary union, provided that there was convergence between the economies. I refer to a convergence according to a much wider range of measures, including productivity.

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The alternative would be a system of redistribution. Otherwise, we would see the same sort of tearing apart that hit East Germany. Is my hon. Friend suggesting that we should commit ourselves without insisting on either of those safeguards?
Mr. Radice: No, I am saying that if one accepts the objective of a single currency it will be easier to promote convergence. I am glad to learn that my hon. Friend wants convergence, because that implies that he is in favour of a single currency. That is splendid news.
The Government have lost their nerve. In 1987 and 1988, they set off an unsustainable boom, and in 1989–90 they forced the country into a deep and unnecessary recession. Now the Government are fudging the issue of a single European currency instead of giving a decisive lead. That is not a good record.
The Government have failed the British people, but fortunately they will soon be replaced by a Labour Government committed to preserving balance and to improving the country's productive potential—unlike the Government, who do not want to invest in education, training, research and development or high-quality investment. A Labour Government will also at last give a lead in the European Community.
8.28 pm
Mr. Phillip Oppenheim: The hon. Member for Durham, North (Mr. Radice) made a cogent case for Britain's entry into European monetary union. Earlier, other Labour Members argued that Britain should not follow that course. No wonder members of the Opposition Front Bench take an ambivalent attitude towards the issue. Members of the Opposition Front Bench have not told the House, either today or in previous debates, whether they want Britain to go full speed ahead into EMU in the 1990s, or approve of the Government's negotiating position—which is that Britain should have the right to opt out of the European monetary union if the conditions at the time are not right. I really think that an Opposition which takes its own policies on Europe so seriously and now says that it is the party of Europe should at least come clean and have a positive, definite policy on this very important issue.
It is also worth noting that there seems to be a certain amount of division on the Opposition Benches. I for one believe that it is better to have an honest debate on this crucial issue than to be dishonestly united, which is what the Opposition have tried to present to the country over the past year or so.
Mr. Chris Smith: The hon. Gentleman will recall that the Prime Minister, when asked by my hon. Friend the Member for Sunderland, South (Mr. Mullin) whether he accepted the principle of a single currency, said:
"It is entirely clear from the documents in front of us in the treaty that what we are doing is entirely enabling for ourselves to have an option to opt in and we are not committed to opting in by anything either in clause 2 or any later part of the treaty."
What on earth did that mean?
Mr. Oppenheim: I hope that my right hon. Friend is not catching bad habits from the Leader of the Opposition. My understanding of the Government's position is that we
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want the option to go into EMU in the mid-1990s if conditions are right. I hope that that is a straightforward view that can be understood.
The hon. Member for Durham, North mentioned research and development and said that this was a very important part of increasing our productive capacity. I agree to an extent, but I warn the research and development lobby that it is not quite as simple as that. It is not enough just to pour money into research and development. The economy must also have the ability to commercialise, to productionise and to market that technology.
One problem that Britain and many other western countries have had compared with say, Japan is that we have put a lot of money into research and development and have come up with good products, but we have not always manufactured or marketed those products properly. The Japanese, by contrast, have bought a lot of technology from other countries and concentrated on honing their production and marketing skills. It is only now—as they have got these to a very productive level —that they are beginning to pour money into research and development.
It is also worth noting that recently the British Patents Office produced a paper that showed that in Europe countries wasted £20 billion a year reinventing the wheel because they put money into R and D for products which have already been invented and for which patents are on offer.
One of the themes of Opposition Members on both the Front and the Back Benches is that we need to take a long-term view in industry and that British industry needs to be able to plan for the long term. That is an important concept which deserves examination. I believe that most hon. Members would agree that the two countries in which industry has best been able to plan for the long term in recent years are Germany and Japan. So what characterises their policies?
First, Germany and Japan have tiny state sectors; there is virtually no state industry in Japan and very little in Germany. Secondly, both countries, consistently since the war, have followed extremely sound monetary policies. I accept that there has been an aberration in German policy in the last year or two, but there are special circumstances. Since the war Germany and Japan have pursued extremely sound, rigorous monetary policies. They have almost always balanced their budgets. In Japan, public spending has been very low. I accept that in Germany public spending has been more in line with that in the rest of Europe, but the important fact there is that the Germans have increased spending only when their economy has been growing and has been able to afford that spending —not the other way round, as has so often happened in Britain.
Mr. Nellist: Will the hon. Gentleman also accept that one thing that links Germany and Japan is that they have very little in the way of standing armies and no nuclear weapons? Since Britain has spent in the last 40 years, in present-day money, something of the order of £20 billion a year on those things, Germany and Japan have each been able to invest in their manufacturing industry around £400 billion more than Britain. That is quite relevant as well.
Mr. Oppenheim: I do not want to shock the hon. Gentleman unduly, but I rather agree with the point he

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makes. Countries such as Britain and America have borne a disproportionate share of the burden of defending the west over the past 30 or 40 years. Although there are benefits to certain sectors of the economy, such as defence and aerospace, high levels of defence spending are detrimental to the overall performance of the economy. That is one reason why America has failed so dismally in commercial and consumer electronics and done so well, by contrast, in defence electronics, and why Japan has done so well in areas such as consumer electronics.
However, although I agree with the point the hon. Gentleman makes, I believe that someone had to bear the burden of defence spending over the past 30 or 40 years, and we would not be enjoying the slight improvement in the world situation now if Britain and America had not borne that burden. Although it is a factor in the success of Japan and Germany, other factors to which I am about to come have been far more important and significant.
The point I was making was that public spending in Germany has not been based on large public sector deficits. Rather, the spending has increased as the economy has grown; hence, the country could afford the public spending.
Another factor that links Germany and Japan is that both encourage saving, with very low taxes or no taxes at all on savers. On the other hand, neither country encourages over-consumption with tax breaks on consumption. The result is that in both countries there has been a large pool of available capital for industry. Industry has not been crowded out by high state spending. Those policies have also borne down on inflation and interest rates, because more capital has been available.
In other countries, by contrast, the encouragement of consumption through tax breaks, penal taxes on savers, high state spending and budget deficits have led, first, to a shortage of capital for industry, secondly, to high interest rates, thirdly, to inflation and, fourthly, because of high interest rates, often also to artificially overvalued currencies, which of course has been detrimental to industry.
Finally, and perhaps most important, Germany and Japan have had rigorous exam-oriented, vocationally geared and selective education systems, which have produced the highest attainments in basic literacy, maths, science and engineering.
These policies are far more significant than financial structures, takeovers or other factors which are often blamed for short-termism in industry in Britain and the United States. These policies have allowed industry to finance and plan for the long term.
None of these policies strikes me as being particularly socialist or even Labour. In fact, to the extent that we know what Labour policies are at the moment, they strike me as being almost the exact opposite of the policies pursued in Germany and Japan. As I understand it, Labour would raise state spending above what could be afforded and they would clobber savers with an investment income surcharge, just as they did in the 1970s, all of which would mean less capital being available to industry.
It is interesting that the right hon. and learned Member for Monklands, East (Mr. Smith) spent so much time talking about the importance of investment in industry. I agree with him, but he does not seem to have grasped the
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simple point that unless there are good levels of savings in the economy it is not possible to finance successfully that investment in industry.
The Opposition also paid lip service to the need for better education, but they would abandon and reverse the crucial education reforms which the Government are now pursuing, so industry would have no chance of matching the quality of the work force of competitors.
That is Labour's long termism. As always, rhetoric is far easier than the deed. Instead, the Opposition often offer simplistic interventionist policies, which have been tried and have failed before. We all know what happened last time Labour tried its brand of long termism: British Steel became the world's largest loss maker; British Airways was rated by its passengers below Aeroflot; British Leyland became the butt of international jokes.
Mr. Radice: The hon. Gentleman said that before.
Mr. Oppenheim: It is a good line and I am going to stick to it.
Madam Deputy Speaker (Miss Betty Boothroyd): It could be repetitive.
Mr. Oppenheim: I accept what you say, Madam Deputy Speaker.
That is where Labour's long termism led us. Interventionism and protectionism are no substitute for sound monetary policies and good education.
I know that some Labour Members are thinking that Germany and Japan have followed interventionist industrial policies, so I shall disabuse them of that misleading notion. Since the war, Germany has been one of the most liberal of the major industrial nations on trade and industry policy. For example, it has been the least rigorous in implementing the multi-fibre arrangement in Europe. Figures from the Organisation for Economic Co-operation and Development show that Japan has given the lowest subsidies to industry of any of the major industrialised nations—well below subsidies in the United States.
I know that the mythology is that Japan has prospered because of the Ministry of International Trade and Industry and trade barriers. GATT reports show that Japan has been one of the lowest offenders in these areas, and, more often than not, MITI's industrial policies have failed. In the 1950s, MITI tried to consolidate the car industry to produce a people's car on Volkswagen lines. It failed because MITI did not get the co-operation of the car industry. There are many more such examples.
Many of Japan's most successful industries have had little or no help or guidance from MITI. Photocopiers, excavators, calculators, personal computers and consumer electronics are good examples. Many of the least successful Japanese industries such as chemicals and aluminium have received much help and guidance from MITI.
Often western politicians of all parties and western business men have used the bogey of MITI and supposed trade barriers as excuses for their failure in economic policy or their failure to market competitive products in Japan. It is too easy to forget that all western countries, including the United States, have heavily subsidised and protected industries at least as much as Japan.
Another important point about the success of the Japanese economy is that what characterises Japanese industry more than anything else is the intense competition

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in the Japanese economy. As soon as a new sector comes into being, be it motor cycles, calculators or the latest example, notebook computers, 30, 40 or 50 companies pile in. They have a massive competitive battle, from which three or four incredibly strong competitors emerge. Because of that competitive honing process, when they start marketing their products on the world market they are almost unbeatable.
State-directed industrial policies are no anwer. They have failed in Britain before, and they are failing in Europe now. Decades of massive national state and EC aid to, and protection of, European computer, semi-conducter and consumer electronics industries have failed to produce world-class competitors.
Sometimes, given the way in which the hon. Member for Dunfermline, East (Mr. Brown) and the right hon. and learned Member for Monklands, East (Mr. Smith) go on, one would think that British industry had been the envy of the world until my right hon. Friend the Member for Finchley (Mrs. Thatcher) came along and single-handedly devastated it. Recent OECD figures tell a different story. They show that in the 1980s the productivity of British manufacturing industry rose by 50 per cent.—far more than in any major economy, including Japan. Britain's manufacturing output has risen by almost a quarter since 1979, at a time when, according to the Opposition, the Government where laying waste to our great manufacturing industries. Our manufacturing performance in the 1980s was well ahead of Germany, France and any other major European country.
By contrast. going back to the 1960s and 1970s, OECD figures reveal that manufacturing output fell under the Labour Government of 1974–1979, despite the professions of Labour Front-Bench spokesmen that only they care about manufacturing. In the 1960s and 1970s, our performance in manufacturing output and productivity lagged behind most of our major competitors, in complete contrast to the past decade when we have at least made up some of the lost ground.
It is true that a number of international problems loom over our economy. An international shortage of capital is about to hit the world economy. The three great capital exporters of the middle east, Germany and Japan are becoming net importers of capital—Germany because of reunification, the middle east because of reconstruction and Japan because of various reasons to do with its banking system and the monetary problems that it is experiencing.
Our policies have resulted in major improvements to the supply side, the basic efficiency of the economy, in the 1980s. No one seriously talks of reversing those policies now. Our monetary policies will ensure that we can build on that in the 1990s on the basis of sound sustainable growth. Our education policies will ensure that industry has the literate, well-educated work force that it needs to produce wealth to pay for higher living standards and better, affordable public services. Nothing in Labour's policies would help long-termism or the basic productivity of our manufacturing industry. Its monetary and spending policies would starve industry of funds. Its education policies would deprive industry of the well-educated work force that it needs. Labour has no cures for our industry —rather, it is part of the problem.
8.45 pm
Mr. Dave Nellist: Too many of the Chancellor's pronunciations in recent weeks have been in the nature of a contribution to an academic debate on how recovery or the end of a recession is defined. That is of little interest to millions of working-class people and their families, who face the continued uncertainty of unemployment. Their definition is simple: recession is when their neighhbour loses his or her job, a slump is when their own job is lost and a recovery is when the Tory Government lose their job. It is a definition with which I have much sympathy, and it has much to commend it.
By any criteria, Coventry's economy is suffering badly. I arrived in Coventry in 1971, when it was probably the richest working-class town in Britain. Sixty-seven per cent. of workers worked in factories. If Britain was the workshop of the world, Coventry was the fitting shop, the heart of manufacturing in the midlands.
On Monday, I received an answer from the Department of Employment showing that, between September 1981 and September 1989, Coventry suffered a net loss of 19,900 factory jobs. More than 29 per cent. of our manufacturing employment was wiped out in a decade. Since September 1989, the recession has arrived and deepened in our area. The west midlands continues to suffer more than the other regions. The prognosis of the regional employers' organisation, the Confederation of British Industry, is that 10 of the 11 regions will come out of recession by next February; the one that will not will be the west midlands. West Midlands Regional Forum says that the west midlands
"is one of the most pessimistic about the proximity and future strength of a recovery, sees further significant redundancies from its key manufacturing industries, shows little preparation for a recovery through increased investment, now has an unemployment rate above the EC average, is still expecting unemployment to continue increasing and employment to fall even further."
In the two years since the figures that I began with, several thousand more jobs have gone in my city. The tactics of employers have grown more outrageous as their confidence has grown, and that is certainly evident in the aftermath of the miners' strike. Coventry is paying the price today of replacing the right of workers to work with the right of managers to manage. As we saw with the redundancies that were made at GPT in recent weeks, redundancy terms have worsened. Other workers have been threatened that, if they do not accept a quick death, as in the closure of a pit last month, severance terms will be slashed.
The latest survey of the chamber of commerce, the bosses' organisation in Coventry, showed that 15 per cent. of firms in Coventry are working at full capacity. Investment in the past three months, compared with the previous three months, had fallen by 11 per cent., and orders had fallen by 55 per cent.
Twelve months ago, the chamber of commerce did a similar survey in Coventry, when it questioned 150 firms. When it conducted its survey this year, only 64 remained. Major companies in Coventry are not just shedding jobs: it is a haemorrhage. Not only is the damoclean sword of redundancies hanging by a thread over Rolls-Royce, but the sale of Parkside, the plant in my constituency, and the move to Ansty means that compulsory redundancy is rearing its ugly head.

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Courtaulds, Matix Churchill, Dunlop, Kalmar and the Co-op—all household names—are on short-time working. At Jaguar, 2,000 jobs are going, and a couple of weeks ago its ownership transferred to America. The new owner, Ford, says that that is a technical tax matter. Workers in Coventry fear that, after the ownership has gone, development and possibly production will follow.
In the last 12 months, 8,000 have been added to the unemployment figures, and a real fear of unemployment stalks my city. Having spent three years on the dole before I became a Member, I know to my personal expense that unemployment is a degrading tragedy of almost unimaginable proportions. It is also a weapon which employers use to instil fear in their workers.
Unemployment has a cost as well. It is a "price worth paying" to get inflation down—so says the Chancellor. Officially, we have 2·5 million unemployed. That is costing £21 billion this year. Each unemployed person costs £9,000 a year in dole and income support and in the tax and national insurance lost to the Treasury. That is an underestimate which does not take account of lost production, the extra burden on the health service and other indirect costs.
Let us consider the figures in my constituency, where there are 4,500 officially unemployed. That costs £40 million a year. I reckon that there are about 30,000 in work in my constituency. Everyone in work is paying over £1,350 a year, or £27 per week, to service the unemployed. If my party still had the policy which it had when I was elected in 1983, of a programme to bring about full employment during the lifetime of a Government, not only would we lift the burden off the unemployed but those in work would have an increase in living standards of £27 a week.
Many hon. Members have spoken in favour of the European Community. I was elected in 1983 with the aim of seeing our withdrawal from the Common Market within the life of that Parliament. I am still opposed to our membership of that bosses' club, but not for nationalistic reasons. It is an illusion to think that a united capitalistic market can be created which can compete and build multinationals in Europe which are the same size as multinationals in Japan or America.
In the last five years, Japan has added to its gross national product an economy the size of that of France. Sir John Harvey-Jones has predicted that, if European multinationals are to be built in Europe in the next eight years on the same scale as those in America and Japan, half the factories in Europe will have to close. In Europe, there are 300 firms making domestic products—everything from kettles through to fridges; in America there are four. In Europe there are 13 manufacturers of trains and locomotive goods; in America there are five. In Europe there are 40 firms making batteries; in America there are four and in Japan five.
We have had two massive body blows recently. In Coventry, over half our employment is dominated by 15 multinationals. If we remain in the Common Market under current terms, with a move towards a single market, I am not sure that those 15 multinationals will survive. One example is telecommunications. GEC, the British leader in the production of public telecom systems, took over Plessey two or three years ago. Then Siemens came in from
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Germany and took over 40 per cent. of the amalgamated GPT. In April 1988, Coventry had 9,552 employees in GPT. By last month, that had dropped to 4,495. Last week, the biggest private employer in my constituency, GPT, announced another 320 redundancies. When will it name the people who will lose their jobs? Seven days before Christmas: 18 December is the date when the workers of GPT will find out which of them are going down the road for the last time.
It is estimated that any public telecom manufacturer needs 12 per cent. of the world market, with investment in new switching systems, to have an adequate return. Britain has 6 per cent. of the world market in its domestic market. Even with the benefits of the single market, I do not think that GEC, with Siemens, will survive the 1990s.
There is still an hour and seven minutes left of this debate. I am doing my best to represent my constituents in what may be my last speech as a member of the Labour party. Hon. Members may not know that my hon. Friend the Member for Liverpool, Broadgreen (Mr. Fields) was expelled from the Labour party two hours ago. I intend to follow him on Saturday. I am rushing as much as I can. I will finish this speech on behalf of my constituents as a Labour Member.
My constituents face the insecurity and uncertainty of unemployment. The other body blow we had was the closure by British Coal of the pit in Keresley a couple of weeks ago. Only 13 days after the announcement of the closure of the pit 1,300 men worked their last shift. I do not think that the pit has been closed. The buildings are still on the surface. I challenged the area director of British Coal about what was being done with the land. He said that it was not being sold. I know why. British Coal has sacked 1,300 NUM members, but it is talking about driving two roadways from Dawmill, the UDM pit, down into that coalfield, which has 40 million tonnes of coal, so that, if the Tories win the general election and pits are privatised, a privatised Dawmill can come back. That is the penalty of market forces in Keresley.
When I asked British Coal to meet the leaders of the councils and the Churches, I was told that it was not interested in such fringe groups, which were low in their priorities. It is the local authorities which have to pick up the pieces when pits close. It is the social services department which has to go to pick up the pieces in villages like Keresley, where over a quarter of the jobs are going overnight.
What shall I tell my constituents when the debate is over? Is recovery around the corner? Car production fell by 27 per cent. last year. Production for the home market has fallen by 39 per cent. That was the rock on which Coventry and the midlands were built. It is no good singing, like Monty Python,
"Always look on the bright side of life."
We should not hope, like Micawber, that things will turn up. Things have to be planned if workers are to get jobs. We are not getting that planning from the Tory Government. Workers who have been laid off or sacked cannot buy goods even if factories are producing them. People are going into debt; 250,000 are now six months in debt on their mortgages, and thousands have already lost their jobs.
I doubt whether exports will prove to be our salvation. Over half our exports go to the Common Market. Italy and France are still in recession. There is talk of a double dip in America, which is operating at only 77 per cent. of

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its capacity. Germany is beset by the colossal cost of unification. There is no salvation in the capitalist system. It is a failure. I confess to plagiarism; those are not my words but the words of my right hon. Friend the Member for Islwyn (Mr. Kinnock). Unfortunately, they were said 17 years ago.
In the year since the Prime Minister got his new job, 67,500 men and 17,800 women in my area of the west midlands have lost theirs. Since the Prime Minister moved into his new house, 13,632 families in my area have lost their houses, having had them repossessed by banks and building societies. Therefore, I look forward to a majority Labour Government taking the economy by the scruff of the neck and bending it to the needs of our people—the working class people and their families.
I want a majority Labour Government to take millions of people—possibly more than 15 million—out of the ranks of poverty, if we define poverty as living on or below the margins of up to 40 per cent. above income support levels. I want a Labour Government to eradicate low pay, and I welcome my party's intransigence in the face of all the slanders from the Tories about the inadequacy of a national minimum wage—£130 a week even on half average earnings. Conservatives would not think twice about spending that on a meal for four in the Dining Room, but when it comes to curing homelessness, the Minister for Housing knows all about that. He defines the homeless as the people one steps over when one comes out of the opera at Covent Garden. One could not get one of the best seats in Covent Garden for £130, so why should folk not get that for a week's wages?
I also want a Labour Government who redistribute wealth, because the top 10 per cent. of the people in this country now own more than half the wealth. To achieve that and to carry out the necessary building programmes for the construction of hospitals and schools, it is not enough to hope for economic recovery or to place our faith in the capitalist completion of the single market. We must plan the economy and that is why my party card still has clause IV(4) on it. [Laughter.] To the laughter of Conservatives, I remain an unreconstructed socialist, and I am not at all ashamed of that.
8.59 pm
Mr. James Paice: I know that the House is looking forward to the wind-up, so I shall not detain it very long. Understandably, while there is little in the speech of the hon. Member for Coventry, South-East (Mr. Nellist) with which I agree, I very much respect the principles behind what he said. It is a pity that I cannot say that about many other members of the Opposition, who have already abdicated most of their principles.
We are discussing the Opposition's motion on the Government's handling of the economy and their suggestions to improve it. The right hon. and learned Member for Monklands, East (Mr. Smith)—I am glad that he is now in the Chamber—ridiculed the fact that my right hon. Friend the Prime Minister referred to anecdotal evidence. I am glad that we have begun to take notice of anecdotal evidence, because if we had done so two or three years ago, it would have been—indeed, it was— abundantly clear anecdotally that inflation was getting out of control long before it appeared in the figures. It was equally clear anecdotally that businesses were beginning to
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get into difficulty long before that fact showed in the figures. I welcome the move towards a recognition of evidence other than Treasury statistics.
Many of my right hon. and hon. Friends have said much this afternoon about the Labour party's proposals, which are loosely described in the motion. The Opposition Front-Bench team have ad nauseam tried to persuade us that they can increase expenditure by varying amounts —we have heard all kinds of promises—with only a minimal increase in taxation. Several of my hon. Friends referred to the 9 per cent. surcharge on savings which is being proposed. I slipped out of the Chamber for some of the debate, but I did not catch anyone referring to the other area that the Opposition have made it clear that they expect to be a source of income—the change in the past few years to a property-owning and share-owning democracy.
My right hon. Friend the Prime Minister coined the phrase "a cascade of wealth"—as the benefits of property ownership cascaded through the generations, everyone would benefit. However, the Labour party and the right hon. and learned Member for Monklands, East regard inheritance tax as a major source of increasing Government revenues, so the cascade becomes an opportunity for them to follow their basic creed of envy to spend.
This morning we heard on the "Today" programme what I can only believe was a slip of the tongue by the hon. Member for Derby, South (Mrs. Beckett). To its credit, the Labour party has as a matter of principle opposed privatisation whenever it has been discussed in the House and whatever industry was involved. It has a declared policy that it will wish to regain control of certain industries, but this morning the hon. Lady—my right hon. and learned Friend the Chief Secretary to the Treasury was also present at the interview—declared that Labour would go on spending privatisation proceeds from the deferred payments which would still be coming in if Labour came to power.
I do not believe that one can have it both ways. Labour cannot be against privatisation but happily go on spending the proceeds. However, that is the nature of the Labour party, as we have seen over and over again today. It is a party devoid of principles, which seems intent on chucking out the only members who have any principles, and we heard them amply described only a few minutes ago. This country has no truck with people who discard their principles, and it will have no truck with the Labour party.
9.3 pm
Mr. Peter Hain: In the year since the present Prime Minister got his job, 26,900 men and 5,400 women in Wales have lost their jobs. In the year since he got his new home in Downing street, 8,842 people in Wales have had their homes repossessed. In the year since the right hon. Gentleman set himself up in business as leader of the Tory party, 1,760 businesses in Wales have failed. Ministers often say that Labour is talking Wales and Britain down. That is patronising drivel. Labour is not talking Wales down; the Government are doing Wales down, and that is understood by everybody in Wales.
The Government cannot see beyond the next consumer bribe or the next tax cut. They have elevated short-termism into a science, always striving to boost consumption and never resourcing investment. Consumption may have

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stalled in the past year, but since 1979 it has risen by 40 per cent. Interestingly, at the same time, production by British companies of British consumer goods has risen by only 7·8 per cent., barely one fifth of the consumption boost. As a result, consumer debt stands at a staggering £52 billion, five times what it was in 1979, and corporate debt is an even more staggering £27 billion, much of it financing the dividend payments to shareholders which have tripled since 1979 while investment has remained virtually stagnant.
Between 1979 and 1990, the real priorities of the Tory Government are clear. Manufacturing investment in Wales rose in real terms by a pitiful 10·6 per cent., whereas the market value of United Kingdom and Irish equities increased in real terms by a massive 214 per cent.—20 times more. Surely that is eloquent testimony to the fact that market forces are not working, and that institutional shareholders and the capital markets are abjectly failing British industry. Why will not the Government boost the real economy and not just the candy-floss economy which it is so keen to promote?
The issue is seen most clearly in pension funds, which have recently been exposed by the Maxwell scandal, one of a series of scandals in British industry. Short-termism is significant in this context. A handful of pension fund managers now control assets of £400 billion—three quarters of the wealth generated across the United Kingdom each year. Those managers have helped to create and promote a climate in which high dividends have been the norm at the expense of long-term investment in British industry and at the expense of pensioners and employees, whose rights have been negated as pension funds have been looted by business tycoons.
The Government have deregulated the corporate finance structure. They have turned a blind eye to the abuse of pension funds in recent years. Their announcement that they will bring forward the 5 per cent. limit on self-investment is simply not good enough. It does not address the Maxwell problem, for example, or the problem of British Steel lifting £150 billion of the pension fund money due to its workers.
All those issues point to the fact that the Government are interested only in tomorrow and not in building for the future. That is why we need a Labour Government who have the economic policies to invest in the future, to invest in industry and to invest in the skills base which has collapsed over the past 12 years. People understand that only a Labour Government have the economic policies which will put Britain back into the first division in Europe, and which will lead to rising living standards and rising prosperity for our people.
9.8 pm
Mrs. Margaret Beckett: This has been an interesting debate with some excellent contributions from both Opposition and Conservative Members. However, the comments on the present state of the economy by Conservative Members have been overwhelmingly characterised by the enormous gap between rhetoric and reality. The rhetoric is that there is sustained success; the reality is very different.
The figures given by my hon. Friend the Member for Paisley, North (Mrs. Adams) bear repeating. Over the past
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year, 3,000 jobs have been lost every working day, 200 businesses have collapsed every working day and 300 families have had their homes repossessed every working day. We know that in every one of those groups. as the year continues, there is more to come. Manufacturing output is down more than 5 per cent. on the same period a year ago, manufacturing investment is already down 12 per cent., and the CBI predicts an overall fall of 20 per cent. over the year, retail sales are totally flat and gross domestic product is down 2·3 per cent. That is the reality that the Government have sought today to obscure with rhetoric. Faced with that, they weave, dodge and bluster. The other day, I was fascinated to note that the Chief Secretary apparently holds a special appointment as blusterer-in-chief.
What is most important is that the Government spend their time and energy not on finding ways to combat the recession, but on trying to find ways to combat the impression that they are giving and reinforcing of a Government adrift in shark-filled waters—and they are. However, the sharks that matter most are neither addressed nor affected by the Government's strategy. The sharks that really matter are our competitors, especially our partner competitors in Europe—the ones that are snapping up the export orders that Britain should be winning, the ones that are gaining the markets that Britain is relinquishing, and the ones that, whatever their problems, are still growing and still drawing further and further away from us.
During last week's Treasury questions the Government, with a fresh barrage of statistics about investment and exports, again sought to create the impression that there is no problem. On examination, almost all the new figures are based on highly-selective choices of data, not on the Government's whole record, or on bogus comparisons between incompatible figures. We can knock them down as fast as the Government can pull them up, but juggling the data to try to justify some line that Ministers will use anyway will not explain away that harsh reality.
It is less than a week—as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) reminded the House, or perhaps told Conservative Members—since the president of the Building Employers Confederation was reported as saying that he had been in the industry for 42 years and that these were the worst conditions that he had ever experienced. The conditions are shockingly depressed. How can Ministers square that with either their fountain of recalculated and re-presented figures or with the rhetoric with which they accompany them? Of late, the Chancellor has been insisting that—I quote what he said to Brian Walden—what is happening now is
"very much as I expected".
That was said in answer to a depressing litany from Mr. Walden, who said to the right hon. Gentleman that there might be
"a technical recovery, you admit that some of the figures look very bad … there are serious debt problems … you admit that the housing market is flat, you say you expect a contribution to growth from consumer spending, now Chancellor none of it sounds very upbeat does it".
That is a judgment from which the Chancellor noticeably did not dissent.
It seems that the Chancellor has perhaps been taking lessons from the Prime Minister in the art of precision. It was the Prime Minister, after all, who as a Minister in the

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Department of Social Security pledged that child benefit would continue to be paid as now—a pledge which was carried out to the ha'penny for a number of succeeding years. One could not say that his words were untrue, but it is certainly not what people thought he meant at the time. It is something to be borne in mind before getting too excited about his pledge, for example, not to privatise the national health service.
Similarly, it is certainly true that in his Budget speech in March the Chancellor said that he expected recovery to begin in the second half of the year. As my right hon. and learned Friend the Member for Monklands, East pointed out, later in the debate he said that it would be towards the middle of the year. The Chancellor now says that our present circumstances are very much what he expected, that he never expected anything else at this stage arid that they are very much what he expected all along. He cannot stretch that to be compatible with the impression that his further comments no doubt deliberately created.
Whatever the Chancellor's precise words either at the beginning or end of the Budget debate, on 25 April—not long after—the Prime Minister said that
"the United Kingdom is coming out of its economic difficulties, while other countries are still facing deepening difficulties."—[Official Report, 25 April 1991; Vol. 189, c. 1206.]
On 29 April, the Chancellor said in Washington that recovery is "around the corner". However, that is not the impression that he has been trying to create today. The Chancellor was no longer saying "in the second hai' or "towards the second half"; in April he was saying, "around the corner". The right hon. Gentleman is stretching things a little.
However, one must be charitable because that was said when there was still talk of an election in June 1991. Even when the June option had faded—no doubt with an eye on the autumn—on 19 July the Prime Minister was still saying:
"I am confident that, in the second half of this year, the economy will begin to take off". [Official Report, 19 July 1991; Vol. 195, c. 679.]
That sentence contains an active verb. I am sure that we have all noticed that take-off coming about.
By September, the pre-election hype was again well under way and, on the 16th, the Chancellor said
"Britain is coming out of recession … The statistics are highly encouraging and pointing very much in the right direction".
What a contrast between those statements and the one made to Mr. Walden a mere two months later—that the Chancellor never expected anything else but the position in which we now find ourselves.
I am trying to believe the right hon. Gentleman. I do not think that he did expect anything else, but he did his best to make the electorate expect something else. With that record, not just on recession but on recovery, it is better to look to others for their judgment on where we stand and for the real signals that we should be considering.
The Government have been saying that with the technical recovery will come the end of all our problems. Some light was inadvertently cast on that today when the Chancellor, under pressure from my right hon. and learned Friend, conceded that, technically, the recovery was indeed here. "Technically", he said, "the recovery is now ended." We all recognise, however, that the problems have not ended. Others, of course, apply a rather more
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stringent judgment. The Chancellor quoted Professor McWilliams of the Confederation of British Industry saying that output was "slowly edging up". However, the right hon. Gentleman did not quote what Professor McWilliams stated in a letter to the Financial Times only last week about real recovery. He wrote that,
"the onset of recovery does not mean the recession has ended. If you are a diver, your head may still be below water even when you are rising towards the suface … I prefer to define the recession as over when the economy has recovered to its previous level of output … the recession will not end before the second half of 1992, even using the Chancellor's own forecasts as published in the Autumn Statement."
Professor McWilliams identified the right hon. Gentleman's forecasts as more optimistic than those of other commentators.
The Government still take no responsibility for Britain's real needs and conditions. They boast—many Conservative Members have done so in this debate— about bringing down inflation over the year from 10·6 per cent. to 3·7 per cent. Hands up whoever is taking the blame for putting it up. Are there no volunteers on the Conservative Benches? After all, it was the CBI that referred to the Government's "inflationary own goals" in the year that resulted in inflation at 10·6 per cent. It was the Governor of the Bank of England who referred to "administered price rises" as a result of political decisions. I note that the Government will take the credit when things improve, but none of the blame when they worsen. The Government took all the credit when unemployment was falling. Do any of them take any of the blame for its rise today? [HON. MEMBERS: "No."] That was a truly rhetorical question—one that expected no reply.
The Government have talked about worldwide recession, undoubtedly in an attempt to find someone to blame. However, I concede that the Chancellor was more accurate than usual today. He spoke of either "recession" or "falling growth" among our competitors. He sought to give the impression, without explicitly saying so, that somehow or other somewhere in the world sinister influences had brought about our recession.
It is only right to remind the Chancellor of what Peter Morgan of the Institute of Directors said earlier this year. He said:
"this awful recession, which has caused so much grief, is a failure of government economic management."
Undoubtedly he is more than a socialist.
Let us look further at who is to blame for the recession. On the question of recovery, the London business school, which again is not hostile to the Government, has said:
"The economy will do little more in 1992 than make up for the output losses of 1991".
The Government have given up on ungrateful harsh reality, as they gave up on it in June and November when twice they chickened out of calling an election. It is increasingly evident that, having run away from an election twice, the Government are spending their time worrying about presentation rather than performance, script in lieu of substance. The Prime Minister tells The House Magazine that the Government have abolished the poll tax—yet it is alive and well and at the heart of the council tax, for which the legislation had not even been published when he spoke.
The Prime Minister told us that the Government had "got inflation licked" in the autumn when he thought that perhaps they were about to have an election. Yet in the autumn statement the Chancellor murmured quietly that inflation

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"may rise slightly early next year".—[Official Report, 6 November 1991; Vol. 198, c. 452.]
I understand that the Chancellor of the Duchy of Lancaster, the chairman of the Conservative party, told us on Sunday what the Government had achieved in negotiations on the social charter. The next day the Secretary of State for Employment was on the airwaves telling us how he was off to conduct the negotiations on the social charter, on the result of which the Chancellor of the Duchy of Lancaster had commented. I think it was McLuhan who said that the medium was the message. Under this Government. the massage is the message. The concentration is all on public relations.
There was a revealing announcement last week. It conveyed the Government's sense of priorities better than perhaps most of the things that we could say in the House. They announced that they were putting £2 million more into extra help to relieve national health service waiting lists. That is terrific; we are all delighted. It could have been £4 million if the Government had not wasted at least as much—according to their figures—on sending us all a copy of the patients charter.
When it comes to the crunch and the Government are asked what action they intend to take to promote economic recovery, the answer is always the same, as it was the same today—they will wait and see whether it happens. Any approach, on any time scale, to economic and monetary union requires us to be able to compete on equal terms with the Germans, the French and the Italians. What do the Government intend to do to bring that about? They will wait and see whether it happens.
When the Government are forced to say what they would do if they were re-elected, they tell us that they would do it all again. They want to cut income tax again. To fund those cuts, they want to cut the proportion of national income which goes on public services—again. The Government tell us that they have got the inflation rate and interest rates down. They say, "If you want to know what we will do, just look at our record." Well, let us look. The Government cut income tax, yes, but they put up national insurance contributions and value added tax twice. This year they have got inflation down nicely in time for the election. That is very welcome, but is it unprecedented? Well, no, as a matter of fact it is not. In June 1983 inflation was 3·7 per cent.; within two years of the election, in June 1985, it was 7 per cent. In June 1987, when there was an election, inflation was 4·2 per cent.; within two years, in June 1989, it was 8·3 per cent. As we know, it continued to rise.
This year the Government have got interest rates down nicely in time for the election. Is that unprecedented? No. in June 1983 interest rates were at 9·5 per cent.; within less than two years, in January 1985, they were at 14 per cent. By June 1987—and an election—the Government had reduced them to 9 per cent. again; within another two years, in October 1989, they were at 15 per cent.
Mr. Ian Taylor: Will the hon. Lady give way?
Mrs. Beckett: I do not have very much time. I shall give way to the hon. Gentleman if I have time later.
The Government make much of their record on interest rates and inflation, but under them we have had a roller-coaster ride between boom and bust. Whoopee, we
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are going round again. I do not believe that the country can afford a repetition of those policies or a third Tory recession.
Economic debates have two consistent features—yet more dubious statistics and greater strength in their advocacy—[Interruption.]
Madam Deputy Speaker: Order. One debate at a time.
Mrs. Beckett: In our motion we call on the Government to initiate targeted tax relief, to promote investment in manufacturing, to reverse the cuts that they are still making in training, to establish a new skills programme and to offer support for research and development. Those are exactly the policies being called for by the Engineering Employers Federation and the Confederation of British Industry, whose members I seem to recall the Chief Secretary describing as "a few out-of-step people with old-fashioned ideas" during the last Budget debate.
Those policies are also called for by the Machine Tool Technologies Association, in a document produced a week or so ago, which argued that
"there is a role for Government in closing this investment gap … The correct balance and level of … investment needed … will come if policy provides: a stable economic environment; more innovation and training; greater availability of funds for investment; and the appropriate incentives from the tax system."
All those are Labour party policy, for which we have consistently called.
Yet the Government Front Bench and Conservative Members consistently claim that the Labour party has no proposals. When commentinL, on the speech by my right hon. and learned Friend the Member for Monklands, East today the Chancellor said:
"If he had constructive ideas he kept them to himself. He has no policies, he never has and he never will have."
Later he said:
"There is nothing in the way of serious economic proposals."
[HON. MEMBERS: "There is nothing. new."] Indeed that was not new. The Government say that in every debate on the economy. I find that fascinating.
All over the world there are Governments who do not know that such proposals are not part of the policies for running their economy. that they are outdated and do not work, as our Government claim. All over the world there are Governments who believe that while keeping inflation and interest rates as low as possible is necessary for economic prosperity, it is by no means sufficient. All over the world Governments are carrying out precisely the policies that we advocate and call on our Government to pursue for the sake of the country, yet the Chancellor accuses us of being
"locked in their isolationist world."
All over the world there are Governments, lacking the wise counsel of the British Conservative party, who do not know that they are getting it all wrong—grievously misled as they are by the fact that they have higher growth, higher investment, are more prosperous, and have better public transport. health, training, and education than we have. That has misled them to think that what they are doing is not an economic policy. I do not care what the Conservative party call it—[Interruption.] The Chancellor is pathetic.
Nowhere else in the world are there parties or Governments who do not recognise that the policies that we have consistently advocated for years from these

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Benches are not part of a proper planning and direction for the economy. Only on the Conservative Benches are they so foolish, so "isolationist"—to use the Chancellor's word—and so locked in their own determination to listen to no one that they will not pay attention.
As the Chancellor has made crystal clear, while this wait-and-see Government are in power, our only hope of competing with those who follow, and are successful by following the policies that we advocate, is that they lower their standards to our levels. The British Government's idea of competing in Europe seems to be for Britain to crawl in at the bottom of the heap, when British people have the skills and the capacity to hold up their heads at the top.
All that the British people lack is a Government with the understanding, determination and policy to help them reach that place. When the Government are finally forced by the date to stop running away from the electorate, they will get them.
9.30 pm
The Chief Secretary to the Treasury (Mr. David Mellor): Mr. Speaker—[Interruption.] I have not even started and Labour Members are laughing. I do not know what is to become of them. They might let me get a few sentences out first. I see laughing on the Opposition Front Bench the hon. Member for Brent, South (Mr. Boateng). I remember when he was a power in the land and chaired committees at the GLC. It seems that his only function these days is to come into the Chamber twice a day, for the opening and wind-up, and to laugh and make animal noises. It is a sad deterioration in what was once a rather good career.
Mr. John Smith: That is unfair to my hon. Friend.
Mr. Mellor: I am sorry that the right hon. and learned Gentleman thinks I have been unfair to his hon. Friend, who I am sure will grin and bear it. Indeed, knowing him, he will probably jeer and bear it.
I have been puzzled by today's debate. I assumed, since the Labour party had initiated it, that Labour Members had something significant to say. So it was with some expectation that I attended to hear what new thoughts the right hon. and learned Member for Monklands, East (Mr. Smith) wished to convey. One can only say of his speech that it was environmentally friendly in that everything in it was recycled; we had heard it all before.
We have had a lot of negative criticism of the Government—what my right hon. Friend the Member for Croydon, South (Sir W. Clark) rightly called talking down Britain—[Interruption.] Labour Members may find, particularly when they see what the opinion poll in The Daily Telegraph says tomorrow, that the British people do not find comfortable the rubbishing of the efforts that millions of people throughout the country are making to come out of a recession that has afflicted many of the world's developed economies. Finding themselves increa-singly in the position of having to talk down any good news for Britain and cheering at anything they can remotely distort into bad news is not an appealing platform for Labour Members and they must be seriously concerned about that fact.
We have had today only a sorry old rehash of the usual charges based on misconceptions about what has been happening. As usual, there has been from Labour Members an exclusive focus on manufacturing rather than
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on any other part of the economy. Not that I resent that. I am not disposed to being shy about our record in manufacturing—[Interruption.]—but I wonder when they will start talking about the other 80 per cent. of the economy.
I am not ashamed of manufacturing when 22 per cent. of our national output for manufacturing is more than that in the United States or France, when our exports are at an all-time high, even during a recession, and when, for the third year running, we shall be increasing our share of world trade in manufacturing. I am not embarrassed by that record, notwithstanding the obvious difficulties that we know many businesses are facing here, just as they are in the United States, Canada, Sweden, Australia and in a number of other countries which are suffering equally from an economic downturn.
I was interested to note how much reliance the hon. Member for Derby, South (Mrs. Beckett) placed on the CBI in the somewhat selective reading to which she treated us from the recent CBI report "Competing With the World's Best." For instance, she did not quote the following passage from that report:
"most of those responsible for running British industry believe there has been a marked improvement in performance during the 1980s which has been more than a temporary phenomenon. While there is no concealing the seriousness of the current recession, most manufacturers believe that their companies are in much better shape to weather the current downturn than was the case a decade ago."
I wonder whether the hon. Lady has the same document, because the whole of it is worth reading. At the end of the document, the CBI said:
"To sum up the Group's conclusions to this point, the state of the Manufacturing Nation is better than is generally recognised. Many of Britain's manufacturers have shown that they can compete with the best in the world, there is a sound base on which to build".
Mr. Jeff Rooker: Will the Minister give way?
Mr. Mellor: The hon. Gentleman, who has not been part of this debate but has just joined us, is obviously unaware of the fact that the hon. Lady constantly referred to the CBI. I am perfectly happy to share the CBI's opinions with the House. [Interruption.] The hon. Gentleman is becoming very excitable. Had he been here for a number of hours, any excitement would have died rather quickly.
Mr. Rooker: Will the Minister give way?
Mr. Mellor: No, I shall not give way if the hon. Gentleman cannot contain himself. The hon. Gentleman squawks, but I shall give way only to hon. Members who have taken a serious interest in the debate. On a generous estimate, that might even include the right hon. and learned Member for Monklands, East.
The Opposition's portrayal of the CBI as a damsel in distress waiting to be rescued from the Government by the Labour party is absolute nonsense. The CBI is about as anxious to have a Labour Government as we would all be to have our daughters go to an all-night party at the Kennedys.
The CBI's document says:
"It is quite clear in recent years that central government should not he in the business of picking winners, or of engaging in direct intervention in the strategic direction and management of companies. Experience has shown"—

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the right hon. and learned Member for Monklands, East should focus particularly on this point—
"that Ministers and civil servants do not have the necessary skills and experience".
If anyone is in doubt about how the CBI feels about the Labour party, he or she should look at the interview given by John Banham to The Guardian on Wednesday, 30 October. He said:
"Labour means an explosion of public pay settlements without increases in productivity; it means the minimum wage (causing up to a 300,000 increase in unemployment) and other social initiatives in line with the EC social action programme; it means business diverting resources from investment to meet rising local government bills unprotected by a retail price index cap.
The other threat is devaluation, even though this is one which Labour has gone out of its way to stress is not real"—
unlike the hon. Member for Great Grimsby (Mr. Mitchell), who was all for it in today's debate.
"We're very much opposed to devaluation but there are siren voices in the Labour party talking about that, he says.
All these add up to inflation, each percentage point increase in which he says costs business £5 billion a year."
That is what the CBI thinks of the prospect of a Labour Government. It is not impressed by the 283 quangos which Labour would invent, and does not want social audits, contract compliance, work force monitoring and other such stuff. Mr. Banham has no doubt noticed what Conservative Members have noticed about the right hon. and learned Member for Monklands, East—he says nothing about inflation. The hon. Member for Derby, South mentioned inflation only to make a trivial point about marginal changes of fractions of a percentage point between just under 4 per cent. and just over 4 per cent. When she was last a Minister, inflation averaged 15·5 per cent. and peaked at 28 per cent. Therefore, I do not find that very convincing.
No doubt, when Mr. Banham mentions public sector pay, he is also aware that there has never been a strike during the Government's lifetime that was not fully supported by the Labour party. He is aware of the Labour party's proposals for the minimum wage. The only thing that independent commentators disagree about over the minimum wage is how much unemployment it will cause. It is a case of, "You pays your money and you takes your choice." Nomura Securities starts low and says it will cost 145,000 jobs, James Capel says that it will cost 166,000, the CBI says that it will cost 200,000 to 300,000, UBS Phillips and Drew says that it will cost 400,000 for stage 1, up to 50 per cent., and 1·25 million for stage 2, up to 66 per cent. Even the Fabian Society says that it will cost almost 900,000 jobs. No wonder the CBI is not struck on the minimum wage. We only have to think what the national minimum wage would cost the national health service—at least half a billion pounds. The total cost to the public sector would be about one and a half billion pounds, without any increase in the productive capacity of the economy.
Mr. Banham is not impressed by the Labour party's proposals to remove the caps from local government expenditure.
Mrs. Beckett rose—
Mr. Mellor: Oh, yes, I shall certainly give way to the hon. Lady.
Mrs. Beckett: I was not going to bother to intervene, but, as the right hon. and learned Gentleman keeps going on about Mr. Banham, I shall ask him the following question: is he aware that Mr. Banham still supports the poll tax? Would he like to say more about that?
Mr. Mellor: I was about to tell the hon. Lady something even more interesting. It is all very well the hon. Lady criticising Mr. Banham, now she knows the real nature of his views, but she was giving an entirely misleading impression to the House about what the CBI thought.
In his interview with The Guardian, Mr. Banham was referring to the fact that, although the right hon. and learned Member for Monklands, East has been extremely coy about saying what the Labour policy will be, one or two Labour spokesmen are not so coy. The hon. Member for Dagenham (Mr. Gould) still occasionally plays the part of wild, colonial boy. In a debate with the Secretary of State for the Environment he said:
"Unlike the Secretary of State, I shall be precise. There will be no provision for capping in any legislation that we introduce."—[Official Report, 6 November 1991; Vol. 198, c. 472.]
It remains to be seen quite what will happen to the British economy and British business if there is some outrageous increase in the already outrageous spending of most of the Labour councils.
The Labour party has made a great deal of investment and training, which seems to be its answer to every difficult question. If we have a flu epidemic this winter, its answer to it will no doubt be investment and training. However, the Government's record on investment is extremely good. Business investment at constant 1985 prices—comparing like with like—is £36·6 billion in 1979, £56·7 billion in 1989, £56·4 billion in 1990. Even though, as the right hon. and learned Member for Monklands, East said, there has been a falling-off in investment, it is still forecast that investment will be more than £50 billion this year. For business to be investing this year, even in a recession, almost 40 per cent. more in real terms than in 1978–79, which passes under a Labour Government for a good year, is an astonishing sign of how much investment has increased.
A former adviser to the Labour party, Mr. Gavyn Davies, said in his column in The Independent the other day—[HON. MEMBERS: "Who?"] It is no good Opposition Members asking, "Who?" They know only too well who he is, and if they do not, they should ask his wife, who works for the Leader of the Opposition. Mr. Gavyn Davies—the Opposition know who I mean now—said that business investment had settled at 14·1 per cent. of GDP in the second half of this year, which was a remarkably high level bearing in mind that we are in a recession. When we consider the figures for investment in plant and machinery, they seem even more significant. At constant 1985 prices, the investment was more than £32 billion in 1990 and less than £20 billion in 1979.
In addition, because low corporation tax has given businesses the incentive to invest where they see fit, the quality of investment has improved. The productivity of capital fell by 1·5 per cent. per year under Labour, but it has risen on average during the lifetime of this Government. It has risen more than in the United States, Japan, Germany, France or Italy where it fell during the period of this Government.
If one wants a real comparison of investment in the British economy with investment in the rest of the Group

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of Seven, in the 1970s growth of investment in the British economy was 2·3 per cent. a year while in the Group of Seven it averaged 3·1 per cent. In the 1980s, growth in the United Kingdom each year on average was 6·7 per cent. while the G7 average increase was 4·6 per cent.
Honest to goodness, I do not think that we need any lectures from the Labour party on investment. It is a bit like being lectured by miss Elizabeth Taylor on the sanctity of marriage.
Mr. John Smith: Not that one again.
Mr. Mellor: I have not used that one before as it happens. I am not sure whether anyone else has, but I have not. I shall not use it again. That is its final appearance. If only the right hon. and learned Gentleman could say the same about most of the points that he makes.
I was up in the north last week and we saw the Nissan plant—[Interruption.] No, well north of Watford, almost in the territory occupied by the hon. Member for Berwick-upon-Tweed (Mr. Beith). I was not quite brave enough to stick my nose into his constituency, but I was almost there. There is the Nissan plant at Sunderland and the Fujitsu plant at Aycliffe which has created 1,500 jobs and had £600 million worth of investment. That is the kind of thing that the Labour party should be jumping up and down about saying, "Jolly good thing too that more than 50 per cent. of inward investment in 1990 from the United States and Japan came to Britain." But at the Trades Union Congress a motion was passed saying that that investment is alien. The motion was proposed by that dreadful old Stalinist, Mr. Ken Gill. Mr. Jack Adams, the number two in the Leader of the Opposition's own union, the Transport and General Workers Union, has just been elected and takes up his post next March. He is a communist. Why worry about communism in the Soviet Union? Communism in the Soviet Union might have gone, but in the TUC it is alive and well and passing motions.
The sad thing is that, notwithstanding the outrageous nature of that motion which Mr. Gavin Laird said was sheer hypocrisy and racism, not a word of criticism of anything like that strength has been levelled by the Opposition Front Bench about it. The Opposition should not talk to us about investment when they talk in that way about major countries investing in Britain.
Then we have all the points about training. Once again, we will have much more sympathy with the Labour party's view on training when the Leader of the Opposition's union, which also sponsors the hon. Member for Sedgefield (Mr. Blair), who leads for the Labour party on these matters, stops passing motions to boycott employment training, youth training, employment action and TECs. It would be much more convincing if the Labour party could persuade the TGWU to co-operate. Then we might believe that it would do something about the country if it was ever given a chance to run it.
The Labour party has not told us a jot about what it would do. What is the right hon. and learned Member for Monklands, East so bothered about when it comes to telling us what the Labour party would do if in office on the crucial issue of economic management? Is he worried that we might pinch his ideas if he tells us what they are? The only thing that we would do is to pinch ourselves to make sure that we were not dreaming.
The right hon. and learned Gentleman is an eloquent man and, like me, has a previous incarnation at the Bar. I
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cannot help feeling that he has all the eloquence necessary to deploy his case if he sees fit, but that he takes the same attitude that we used to take at the Bar when representing a particularly dodgy client who, when one realised that his story would not stand up but that he was determined nevertheless to plead not guilty, would be advised not to give evidence on his own behalf. That is precisely the attitude that the right hon. and learned Gentleman is taking towards the Labour party's economic policy. It is all pretty blatant.
I have with me a document—it is well-thumbed, because I recite it to myself of a night, when I am bored —entitled "Meet the Challenge, Make the Change: A New Agenda for Britain." On page 8 there are some solemn words, given added solemnity by the fact that there is a facsimile signature at the bottom of them. It is in joined-up writing, which is suspicious, but it purports to be the signature of the Leader of the Opposition. The presence of that facsimile signature is obviously intended to give added value to the words set out therein:
"At the time of the next General Election, we will set out the accurate costs of our manifesto proposals in the light of the economic situation we are likely to inherit and the priorities which we consider most urgent."
What could be clearer, yet on 26 September the hon. Member for Copeland (Dr. Cunningham), who is Labour's campaigns organiser, told us that that pledge was inoperative, and that Labour is not going to do that. I will be corrected if the hon. Gentleman did not say that.
Why the change? I will give way if any member of Labour's Front Bench will tell me. Was the hon. Member for Copeland right when he said that, despite that facsimile signature being put to those solemn words, Labour do not intend to do what they say?—[HON. MEMBERS: "Answer."] We are used to Labour breaking its promises after a general election, but to do so even before the next general election campaign begins really is something else. It was worth giving up the Mozart death night concert that I planned to attend just for that.
Although the right hon. and learned Member for Monklands, East is eloquent, plainly he has lost his voice. And well he might. What does Labour party policy amount to? Its interest rates policy used to be known as Monklands law—whatever interest rates are, Labour will take I per cent. off them. The right hon. and learned Member for Monklands, East seems to have changed his mind as the evil hour of the election draws near.—[HON. MEMBERS: "Oh!"] The evil hour for him, not for me. I am looking forward to the general election.
When the right hon. and learned Gentleman was asked about interest rates on "The World at One" on 15 November, we did not get the 1 per cent. figure, but these words:
" I would have to take advice about it, and see what the situation was. I would be pushing to try to get it, but the timing of it is of course always a matter of judgment."
What is the reason for that sudden change of tune? The right hon. and learned Gentleman used to sound ever so certain that 1 per cent. off interest rates would be the answer to everything.
Perhaps it has dawned on the right hon. and learned Gentleman that the real problem for Labour is not how much they can take down interest rates, but by how much they will have to put them up because of the collapse of confidence that would be the consequence of a Labour Government being elected.

497
The hon. Member for Derby, South trailed her coat a bit. She started doing that on the "Today" programme this morning. I will come to that later. She continued that process this evening, by quoting Professor Douglas McWilliams, chief economic adviser to the Confederation of British Industry. However, she did not quote his words from The Independent on 6 September, when he warned that if Labour won the next general election,
"interest rates would probably have to rise for several months, in order to convince the currency markets that devaluation of the pound was not in prospect."
Let us have a little parlour game at this stage in the proceedings, to liven things up. Who on the Opposition Benches can answer this? What do the following groups have in common—James Capel DJB, Goldman Sachs, Midland Montague, NatWest, Nomura, and UBS Phillips and Drew? They have in common the fact that they have all warned against higher interest rates under a Labour Government. That is the prevailing view that Labour must deal with. Small wonder that Monklands law has been abolished. However, it is not only that law which has died lately. We also have to mourn the death of Beckett's law, which is that whatever other promises may be scattered to the four winds—and there have been many of them—Labour makes only two pledges. They are to increase pensions, and to increase child benefit.
On the "Today" programme the hon. Lady made an appearance, which I hope all hon. Members heard, in which she commended a motion which contains a number of expenditure commitments, not one of which is part of Beckett's law, and made it clear that this was what the Labour party was committed to. But she said that it was cost free.
The right hon. and learned Gentleman has not got quite the brass neck to say that it is cost free. He admitted on an earlier occasion that one element in it would cost £900 million. He admitted that
"Reinstating the training programme"—
these are his exact words on Radio 4—
"and bringing in the temporary work programme, we calculated in terms of the budget of somewhere about £900 million."
Then he went on to say these wonderful words, which show that, despite the fact that he may look like a bank manager, he does not always act like one:
"which isn't a great deal actually in the context of public expenditure."
That is a wonderful attitude. A billion here, a billion there; soon he will be talking real money.
Then we had the hon. Lady's celebrated passage on privatisation. Here we really do have an extraordinary instance of the left hand not knowing what the left hand is doing. The hon. Lady is now engaged in an exciting conversation with the right hon. and learned Member for Monklands, East. She is opting out at this point, but it will get more interesting if she will bear with me. She may be against privatisation but she said that she was looking forward to pocketing the proceeds in order to balance the books if her party was elected. Indeed, she sounded as if she quite relished the idea, and she ran off the names of the organisations to whose privatisation she referred, despite the fact that her party is committed to renationalising them. Furthermore, if she had read The Guardian before she got into the radio car this morning she would have seen
498
that the hon. Member for Dunfermline, East (Mr. Brown) was accusing the Government of wasting taxpayers' money subsidising the £5·5 billion sale of shares in British Telecom, the proceeds of which seem to be a key part of her policy for meeting expenditure if she is elected.
Indeed, when it comes to the question of renationalisation, the Labour party gets ever so coy. On Saturday The Times did a survey. It was excitingly headlined "Spotlight on Labour's financial wares". They wanted to ask questions about renationalisation. Apparently all the members of the shadow Cabinet were at lunch or dinner or otherwise unavailable, so a gentleman called Geoff Mulgan, senior research assistant to the hon. Member for Dunfermline, East, was put up. He could be a distant relative of Dave Spart, who knows? He was asked first about electricity renationalisation, and he said—hon. Members must listen to this:
"There will be no need for cash. We will make use of the complex web of debts and stakes in other generating companies. There will be no increase in the PSBR."
One would have thought that he had been asked a question about the Maxwell empire.
Then the going got a bit hot for Mr. Geoff Mulgan, cousin of Mr. Dave Spart; he was asked about buying back the water companies. Here he got ever so hesitant and said this:
"I can't say how we will do it. The uncertainties that exist here would make it foolish of me to be more specific."
That is the ringing manifesto on which 12 years of Tory misrule are to be brought to an end.
The only thing that is worse than that is the right hon. Gentleman's statement when producing his £2 billion package for manufacturing. When asked where the money was to come from, he said that it would come from better collection of tax revenues, the idea being that the Inland Revenue would collect the taxes as well as most Labour councils collect the rubbish. He got the idea of those £2 billion of tax revenues just waiting around for the election from the tax inspectors' union. The reality, as I understand it from the Inland Revenue, is that it is most unlikely that those proceeds would be available. If they were, it would take between 1,650 and 5,000 extra tax inspectors to collect them, and it takes four to five years to train a tax inspector. Yet that is to pay for the Labour party's manufacturing policy in its first year of government.
I end by thinking—[HON. MEMBERS: "More."]—but I think that they have had enough.
Mr. Derek Foster rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the original words stand part of the Question:—
The House divided: Ayes 204, Noes 312.

Division No. 23]

[10 pm

AYES

Adams, Mrs Irene (Paisley, N.)

Beggs, Roy

Allen, Graham

Belth, A. J.

Anderson, Donald

Bell, Stuart

Archer, Rt Hon Peter

Bellotti, David

Ashdown, Rt Hon Paddy

Benn, Rt Hon Tony

Ashley, Rt Hon Jack

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

Ashton, Joe

Benton, Joseph

Banks, Tony (Newham NW)

Bermingham, Gerald

Barnes, Harry (Derbyshire NE)

Boateng, Paul

Battle, John

Boyes, Roland

Beckett, Margaret

Bray, Dr Jeremy

499

Brown, Ron (Edinburgh Leith)

Illsley, Eric

Bruce, Malcolm (Gordon)

Ingram, Adam

Caborn, Richard

Jones, Martyn (Clwyd S W)

Callaghan, Jim

Kaufman, Rt Hon Gerald

Campbell, Menzies (Fife NE)

Kennedy, Charles

Campbell, Ron (Blyth Valley)

Kilfoyle, Peter

Campbell-Savours, D. N.

Kinnock, Rt Hon Neil

Canavan, Dennis

Kirkwood, Archy

Carlile, Alex (Mont'g)

Kumar, Dr. Ashok

Cartwright, John

Lamond, James

Clark, Dr David (S Shields)

Leadbitter, Ted

Clay, Bob

Lestor, Joan (Eccles)

Clelland. David

Lewis, Terry

Clwyd, Mrs Ann

Livingstone, Ken

Cohen, Harry

Livsey, Richard

Cook, Frank (Stockton N)

Lloyd, Tony (Stretford)

Cook, Robin (Livingston)

Lofthouse, Geoffrey

Corbett, Robin

Loyden, Eddie

Corbyn, Jeremy

McAllion, John

Cox, Tom

McAvoy, Thomas

Crowther, Stan

McCartney, Ian

Cryer, Bob

Macdonald, Calum A.

Cummings, John

McFall, John

Cunliffe, Lawrence

McKay, Allen (Barnsley West)

Cunningham, Dr John

McKelvey, William

Dalyell, Tarn

McLeish, Henry

Darling, Alistair

Maclennan, Robert

Davies, Rt Hon Denzil (Llanelli)

McMaster, Gordon

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

McNamara, Kevin

Dewar, Donald

Madden, Max

Dixon, Don

Mahon, Mrs Alice

Dobson, Frank

Marek, Dr John

Doran, Frank

Marshall, Jim (Leicester S)

Duffy, Sir A. E. P.

Martin, Michael J. (Springburn)

Dunnachie, Jimmy

Martlew, Eric

Dunwoody, Hon Mrs Gwyneth

Maxton, John

Eadie, Alexander

Meacher, Michael

Enright, Derek

Meale, Alan

Ewing, Mrs Margaret (Moray)

Michael, Alun

Fatchett, Derek

Michie, Bill (Sheffield Heeley)

Faulds, Andrew

Mitchell, Austin (G't Grimsby)

Fearn, Ronald

Moonie, Dr Lewis

Fisher, Mark

Morgan, Rhodri

Flannery, Martin

Morris, Rt Hon A. (W'shawe)

Foster, Derek

Mowlam, Marjorie

Foulkes, George

Mullin, Chris

Fraser, John

Murphy, Paul

Fyfe, Maria

Nellist, Dave

Galloway, George

Oakes, Rt Hon Gordon

Garrett, John (Norwich South)

O'Brien, William

Garrett, Ted (Wallsend)

O'Hara, Edward

George, Bruce

O'Neill, Martin

Gilbert, Rt Hon Dr John

Patchett, Terry

Godman, Dr Norman A.

Pendry, Tom

Golding, Mrs Llin

Pike, Peter L.

Gordon, Mildred

Powell, Ray (Ogmore)

Gould, Bryan

Primarolo, Dawn

Graham, Thomas

Quin, Ms Joyce

Grant, Bernie (Tottenham)

Radice, Giles

Griffiths, Nigel (Edinburgh S)

Randall, Stuart

Griffiths, Win (Bridgend)

Rees, Rt Hon Merlyn

Grocott, Bruce

Richardson, Jo

Hain, Peter

Robertson, George

Harman, Ms Harriet

Robinson, Geoffrey

Hattersley, Rt Hon Roy

Rooker, Jeff

Heal, Mrs Sylvia

Rooney, Terence

Healey, Rt Hon Denis

Ross, Ernie (Dundee W)

Henderson, Doug

Rowlands, Ted

Hinchliffe, David

Ruddock, Joan

Hoey, Kate (Vauxhall)

Salmond, Alex

Hogg, N. (C'nauld & Kilsyth)

Sedgemore, Brian

Home Robertson, John

Sheerman, Barry

Howell, Rt Hon D. (S'heath)

Sheldon, Rt Hon Robert

Howells, Geraint

Shore, Rt Hon Peter

Hoyle, Doug

Short, Clare

Hughes, John (Coventry NE)

Skinner, Dennis

Hughes, Robert (Aberdeen N)

Smith, Andrew (Oxford E)

Hughes, Roy (Newport E)

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

Hughes, Simon (Southwark)

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

Hume, John

Soley, Clive

500

Spearing, Nigel

Welsh, Andrew (Angus E)

Steinberg, Gerry

Welsh, Michael (Doncaster N)

Stott, Roger

Williams, Rt Hon Alan

Strang, Gavin

Williams, Alan W. (Carm'then)

Straw, Jack

Wilson, Brian

Taylor, Mrs Ann (Dewsbury)

Winnick, David

Thompson, Jack (Wansbeck)

Wise, Mrs Audrey

Turner, Dennis

Worthington, Tony

Vaz, Keith

Wray, Jimmy

Wallace, James

Warden, Gareth (Gower)

Tellers for the Ayes:

Wareing, Robert N.

Mr. Frank Haynes and

Watson, Mike (Glasgow, C)

Mr. Ken Eastham.

NOES

Adley, Robert

Currie, Mrs Edwina

Aitken, Jonathan

Curry, David

Alexander, Richard

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

Alison, Rt Hon Michael

Davis, David (Boothferry)

Amery, Rt Hon Julian

Day, Stephen

Amess, David

Devlin, Tim

Amos, Alan

Dickens, Geoffrey

Arbuthnot, James

Dorrell, Stephen

Arnold, Jacques (Gravesham)

Douglas-Hamilton, Lord James

Arnold, Sir Thomas

Dover, Den

Ashby, David

Dunn, Bob

Aspinwall, Jack

Durant, Sir Anthony

Atkins, Robert

Dykes, Hugh

Atkinson, David

Eggar, Tim

Baker, Nicholas (Dorset N)

Emery, Sir Peter

Baldry, Tony

Evans, David (Welwyn Hatf'd)

Batiste, Spencer

Fairbairn, Sir Nicholas

Bellingham, Henry

Fallon, Michael

Bendall, Vivian

Farr, Sir John

Bennett, Nicholas (Pembroke)

Favell, Tony

Blackburn, Dr John G.

Fenner, Dame Peggy

Blaker, Rt Hon Sir Peter

Fishburn, John Dudley

Body, Sir Richard

Fookes, Dame Janet

Bonsor, Sir Nicholas

Forman, Nigel

Boscawen, Hon Robert

Forsyth, Michael (Stirling)

Boswell, Tim

Forth, Eric

Bottomley, Peter

Fowler, Rt Hon Sir Norman

Bottomley, Mrs Virginia

Fox, Sir Marcus

Bowden, A. (Brighton K'pto'n)

Franks, Cecil

Bowden, Gerald (Dulwich)

Freeman, Roger

Bowis, John

French, Douglas

Boyson, Rt Hon Dr Sir Rhodes

Gale, Roger

Braine, Rt Hon Sir Bernard

Gardiner, Sir George

Brandon-Bravo, Martin

Garel-Jones, Tristan

Brazier, Julian

Gill, Christopher

Bright, Graham

Gilmour, Rt Hon Sir Ian

Brooke, Rt Hon Peter

Glyn, Dr Sir Alan

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

Goodhart, Sir Philip

Browne, John (Winchester)

Goodlad, Alastair

Bruce, Ian (Dorset South)

Goodson-Wickes, Dr Charles

Buck, Sir Antony

Gorst, John

Burns, Simon

Grant, Sir Anthony (CambsSW)

Burt, Alistair

Greenway, Harry (Ealing N)

Butler, Chris

Greenway, John (Ryedale)

Butterfill, John

Gregory, Conal

Carlisle, John, (Luton N)

Griffiths, Peter (Portsmouth N)

Carlisle, Kenneth (Lincoln)

Grist, Ian

Carrington, Matthew

Ground, Patrick

Carttiss, Michael

Gummer, Rt Hon John Selwyn

Cash, William

Hague, William

Channon, Rt Hon Paul

Hamilton, Rt Hon Archie

Chapman, Sydney

Hamilton, Neil (Tatton)

Chope, Christopher

Hampson, Dr Keith

Churchill, Mr

Hanley, Jeremy

Clark, Rt Hon Alan (Plymouth)

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

Clark, Dr Michael (Rochford)

Hargreaves, Ken (Hyndburn)

Clark, Rt Hon Sir William

Harris, David

Clarke, Rt Hon K. (Rushcliffe)

Haselhurst, Alan

Colvin, Michael

Hawkins, Christopher

Conway, Derek

Hayes, Jerry

Coombs, Anthony (Wyre F'rest)

Hayhoe, Rt Hon Sir Barney

Cope, Rt Hon Sir John

Hayward, Robert

Cormack, Patrick

Heath, Rt Hon Edward

Couchman, James

Heathcoat-Amory, David

Cran, James

Hicks, Mrs Maureen (Wolv' NE)

501

Hicks, Robert (Cornwall SE)

Moss, Malcolm

Higgins, Rt Hon Terence L.

Moynihan, Hon Colin

Hill, James

Neale, Sir Gerrard

Hind, Kenneth

Needham, Richard

Hordern, Sir Peter

Neubert, Sir Michael

Howard, Rt Hon Michael

Newton, Rt Hon Tony

Howarth, G. (Cannock & B'wd)

Nicholls, Patrick

Howe, Rt Hon Sir Geoffrey

Nicholson, David (Taunton)

Howell, Rt Hon David (G'dford)

Nicholson, Emma (Devon West)

Howell, Ralph (North Norfolk)

Norris, Steve

Hughes, Robert G. (Harrow W)

Onslow, Rt Hon Cranley

Hunt, Rt Hon David

Oppenheim, Phillip

Hunt, Sir John (Ravensbourne)

Page, Richard

Hunter, Andrew

Paice, James

Hurd, Rt Hon Douglas

Parkinson, Rt Hon Cecil

Irvine, Michael

Patnick, Irvine

Jack, Michael

Patten, Rt Hon Chris (Bath)

Janman, Tim

Patten, Rt Hon John

Jessel, Toby

Pattie, Rt Hon Sir Geoffrey

Johnson Smith, Sir Geoffrey

Pawsey, James

Jones, Gwilym (Cardiff N)

Peacock, Mrs Elizabeth

Jones, Robert B (Herts W)

Porter, Barry (Wirral S)

Jopling, Rt Hon Michael

Portillo, Michael

Kellett-Bowman, Dame Elaine

Powell, William (Corby)

Key, Robert

Price, Sir David

Kilfedder, James

Raffan, Keith

King, Rt Hon Tom (Bridgwater)

Raison, Rt Hon Sir Timothy

Kirkhope, Timothy

Rathbone, Tim

Knapman, Roger

Redwood, John

Knight, Greg (Derby North)

Renton, Rt Hon Tim

Knight, Dame Jill (Edgbaston)

Rhodes James, Sir Robert

Knox, David

Ridsdale, Sir Julian

Lamont, Rt Hon Norman

Roberts, Rt Hon Sir Wyn

Lang, Rt Hon Ian

Roe, Mrs Marion

Latham, Michael

Rossi, Sir Hugh

Lawrence, Ivan

Rumbold, Rt Hon Mrs Angela

Lawson, Rt Hon Nigel

Ryder, Rt Hon Richard

Lee, John (Pendle)

Sackville, Hon Tom

Leigh, Edward (Gainsbor'gh)

Sayeed, Jonathan

Lennox-Boyd, Hon Mark

Scott, Rt Hon Nicholas

Lester, Jim (Broxtowe)

Shaw, David (Dover)

Lilley, Rt Hon Peter

Shaw, Sir Giles (Pudsey)

Lloyd, Sir Ian (Havant)

Shaw, Sir Michael (Scarb')

Lloyd, Peter (Fareham)

Shelton, Sir William

Lord, Michael

Shephard, Mrs G. (Norfolk SW)

Luce, Rt Hon Sir Richard

Shepherd, Colin (Hereford)

Lyell, Rt Hon Sir Nicholas

Shepherd, Richard (Aldridge)

MacGregor, Rt Hon John

Shersby, Michael

MacKay, Andrew (E Berkshire)

Sims, Roger

Maclean, David

Skeet, Sir Trevor

McLoughlin, Patrick

Smith, Tim (Beaconsfield)

McNair-Wilson, Sir Michael

Spicer, Sir Jim (Dorset W)

McNair-Wilson, Sir Patrick

Spicer, Michael (S Worcs)

Madel, David

Squire, Robin

Major, Rt Hon John

Stanbrook, Ivor

Malins, Humfrey

Stanley, Rt Hon Sir John

Mans, Keith

Steen, Anthony

Maples, John

Stern, Michael

Marland, Paul

Stevens, Lewis

Marlow, Tony

Stewart, Allan (Eastwood)

Marshall, John (Hendon S)

Stewart, Andy (Sherwood)

Marshall, Sir Michael (Arundel)

Stewart, Rt Hon Sir Ian

Martin, David (Portsmouth S)

Sumberg, David

Mates, Michael

Summerson, Hugo

Maude, Hon Francis

Tapsell, Sir Peter

Maxwell-Hyslop, Robin

Taylor, Ian (Esher)

Mayhew, Rt Hon Sir Patrick

Taylor, Sir Teddy

Mellor, Rt Hon David

Tebbit, Rt Hon Norman

Meyer, Sir Anthony

Temple-Morris, Peter

Miller, Sir Hal

Thatcher, Rt Hon Margaret

Mills, Iain

Thompson, D. (Calder Valley)

Miscampbell, Norman

Thompson, Patrick (Norwich N)

Mitchell, Andrew (Gedling)

Thorne, Neil

Mitchell, Sir David

Thornton, Malcolm

Moate, Roger

Thurnham, Peter

Monro, Sir Hector

Townend, John (Bridlington)

Montgomery, Sir Fergus

Townsend, Cyril D. (B'heath)

Morrison, Sir Charles

Tracey, Richard

502

Tredinnick, David

Widdecombe, Ann

Trippier, David

Wilkinson, John

Twinn, Dr Ian

Wilshire, David

Vaughan, Sir Gerard

Winterton, Mrs Ann

Waldegrave, Rt Hon William

Winterton, Nicholas

Walden, George

Wolfson, Mark

Walker, Rt Hon P. (W'cester)

Wood, Timothy

Waller, Gary

Woodcock, Dr. Mike

Walters, Sir Dennis

Yeo, Tim

Wardle, Charles (Bexhill)

Young, Sir George (Acton)

Warren, Kenneth

Younger, Rt Hon George

Watts, John

Wells, Bowen

Tellers for the Noes:

Wheeler, Sir John

Mr. David Lightbown and

Whitney, Ray

Mr. John M. Taylor.

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House welcomes Mr. Chancellor of the Exchequer's Autumn Statement, which reaffirmed the Government's forecast of a modest recovery in the second half of 1991, with growth gathering pace in 1992; notes that the total output of the British economy rose in the third quarter of 1991, providing further confirmation of this forecast; and congratulates the Government on its sound and prudent economic policies, which have reduced inflation from nearly 11 per cent. to under 4 per cent., have allowed interest rates to be reduced from 15 per cent. to 10½ per cent. and have laid the foundations for sustained non-inflationary growth.

ESTIMATES
Resolved,
That this House agrees with the Report [3rd December] of the Liaison Committee.—[Mr. David Davis.]

CONSOLIDATION, &C., BILLS (JOINT COMMITTEE)
Ordered,
That Mr. Graham Allen and Mr. Frank Cook be discharged from the Select Committee on Consolidation, &c., Bills and Mr. Derek Enright and Dr. Ashok Kumar be added to the Committee.—[Mr. David Davis.]

PROCEDURE
Ordered,
That Mr. Graham Allen and Mr. Dale Campbell-Savours be discharged from the Select Committee on Procedure and Mr. Eric Illsley and Mr. Gordon McMaster be added to the Committee.—[Mr. David Davis.]

PETITION

  Beer Supply Orders
  10.15 pm
  Mr. Tim Devlin: I present a petition on behalf of 332 of my constituents who are residents of Stockton-on-Tees and who protest:
  That high rents and business rates have created high bar prices at a time when people can ill afford to pay them. Licensees are having to leave their pubs in their thousands, and more and more pubs are being closed down. The Beer Orders have allowed brewers to ride roughshod over the intention of the Monopolies and Mergers Commission to lower beer prices, allow greater competition and greater choice for customers.
  That we the undersigned, wish to protest at the current activities of the major brewers who are increasing bar prices or forcing tenants out of their businesses and homes.

  503
  Wherefore your petitioners pray that your honourable House carry out an immediate review of the Beer supply orders and give proper compensation for licensees forced out of their pubs.
  To lie upon the Table.

  GPs (Computer Costs)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. David Davis.]
  10.17 pm
  Sir Peter Emery: Computers and their use are not a normal subject for debate in the House. The subject of the computerisation of our family doctors' practices has almost never been raised, and has never been raised as an individual subject for debate. Basically, I come to praise the positive steps taken by Health Ministers over the past five years, although in a minor way I will ask for reconsideration of a wrong done to a medical practice in my constituency.
  Taking major steps further to encourage medical practices to use computers and various software packages in dealing with medical records has brought, and I hope will continue to bring, benefits to the patient, and it is the patient who matters. The accurate presentation to any doctor seeing a patient of that patient's record, the full and easy referral to past treatment and the ease of transfer of records are obvious benefits. The screening of procedures, the control of prescriptions and the identification of patient groups are further benefits for doctors and for patients.
  The Government have set aside £44 million for the period 1989–92 to aid and to stimulate the installation of computers in doctors' practices and that must be welcomed by all of us. I am worried that, certainly in the beginning, all those funds were not used. Therefore, the Government's record in general terms has been good. I urge them to continue to meet the necessary level of funding to maintain and update where necessary what has been achieved.
  However, there is one specific item in respect of which I believe—nay, I know—the Government have fallen down. What are the facts? A large and excellent doctors' practice in Axminster, which is within my constituency, with Drs. Church, Sutton, Vann, Evans, Hodges and Taylor as partners, decided to computerise the practice. The doctors examined carefully the hardware necessary to provide access for each doctor and also for the pharmaceutical dispensery. They spent time arriving at a decision on the correct software. They were not opting for a particularly expensive scheme. It was not a Rolls-Royce, but a practical working and adaptable system. Following my automobile analogy, it was a Rover system. They based their decision on a clear statement in a Department of Health approved document, entitled "Funding General Practice 1990". According to that document, no nfundholding practices such as the one to which I am referring were entitled to reimbursement of computer costs from April 1990. They were entitled to 50 per cent. of maintenance costs, 50 per cent. of purchasing, leasing or upgrading costs, and 50 per cent. of the first year of staff costs. That document—I now quote from it so that I can make certain that I am not misleading the House—states:
  "Special software packages are being developed commerci-ally and will be available before April 1991. They will:
  Enable practices to run budgets on a day-to-day basis
  Account for expenditure incurred
  Produce monthly and annual reports and statements for the FPC
  Keep track of hospital referrals
  Further guidance on software will be issued in the Spring of 1990."

  505
  There was no mention of a restriction on the cost or repayment that a practice could obtain. The Under-Secretary of State for Health acknowledged that fact in a letter to me of 31 January 1991. In the second paragraph he said:
  "During our discussions I accepted that there had possibly been some scope for misunderstanding. Even though Dr. Vann's practice has not applied to become a fund-holding practice you mentioned the GP fundholder brochure which, while mentioning the 50 per cent. maximum contribution, did not specifically mention the additional list size criteria on the same page."
  What are the facts? A large, excellent doctors' practice proceeded—how many doctors did the same?—and made a claim for the reimbursement that they expected. Having spent £25,775 on computerisation, the doctors might reasonably have expected a 50 per cent.—£12,800—reimbursement. They were amazed and "aghast" when they received only £4,830 from the family health services authority. In this instance, the Department of Health is diddling general practitioners.
  I have pressed the Minister on this matter both in correspondence and in a visit to the Department when he and his officials told me that they would reconsider it. Our correspondence culminated in a letter on 14 August, stating:
  "From 22 July 1991, family health service authorities (FHSAs) have been given management discretion to target funds in order to maximise value for money and service to patients. The limits that previously existed within the Statement of Fees and Allowances (SFA) which related reimbursements to list size have been removed."
  Hooray. I have won. However, the letter continued by referring to non-fundholding practices, which do not affect this case.
  The letter then continued:
  "With regard to Dr. Vann's request for retrospective payments"—
  "retrospective" is the Minister's word not mine because the payments were not retrospective. They were demanded when the doctors installed the system. The letter reads:
  "With regard to Dr. Vann's request for retrospective payments to be made to GPs who have been reimbursed under the previous arrangements, the object of the scheme, as has been explained in the past, is to ensure the widest possible spread of computing within a cash-limited budget."
  I emphasise the words,
  "within a cash-limited budget."
  The letter continued:
  "In the light of this, there is no provision to make further payments to those doctors who, like Dr. Vann, feel that the scheme which operated when their claim was made was less generous than the present. If Dr. Vann wishes to upgrade his system, then the reimbursement for his upgrade costs will be assessed under the revised arrangements. I am sorry that, despite the delay, I cannot be more helpful."
  The Minister's argument seems to be, "It is impossible to act because the costs have increased above the Treasury total for computerisation." Therefore, on 13 February 1991, I tabled a written question:
  "To ask the Secretary of State for Health how many general practitioners in previous years, in complying with his wishes to move to use computers, applied for a grant for the installation of a computer system that was above the figure of payment sct out in the published computer cost reimbursement schedule."
  That was accepting that the scheme, to which I did not think that reference had been made, might have been applied.
  The Minister's reply to me stated:
  506
  "No figures are held centrally either in respect of individual claims made by GPs or individual amounts reimbursed by family health services authorities".—[Official Report, 13 February 1991; Vol. 185, c. 512.]
  I found that interesting because it appears that the Minister does not know how many doctors made a claim that was above the amount of the reimbursement schedule or, if he did know, he was unwilling to tell me, so I must presume that he did not know.
  One can imagine my indignation when I finally received a copy of a letter that had been signed by Mr. Ian Fleming, one of the Minister's officials, clearly stating in annex A:
  "The scheme was introduced in April 1990 (but took into account in its first year any systems obtained by GPs since April 1989). £24 million was made available in 1990–91 (to cover the two years) but was significantly underspent".
  It was not a case of there not being any money, but simply that the Minister would not darn well apply it. I believe that that money has been carried forward, which means that funds are available today if the Minister should decide to pay the Axminster practice.
  I have been a Minister and I know that there is a difference between Ministers being in charge and Ministers who are run by their civil servants. If the practice had not done the efficient thing and had installed only part of the structure, to a value of £8,000, it would have received 50 per cent. of that £8,000. Last year and this year they could have upgraded it at a cost much greater than the initial expenditure and much less efficiently. In that case they would have obtained 50 per cent. of their total extra computerisation costs under the new scheme. The doctors are being held to account for being efficient. They are not being fairly treated by the Department.
  Therefore, I say to the Minister, "Gird your loins. Tell the office that a way must be found to pay the balance of slightly less than £10,000. Do not allow the civil service to say that there are ways in which it cannot be done. Any civil servant will find ways of not doing something." I am confident that if my hon. Friend the Minister wants to do this, he can. I expect him so to do.
  10.30 pm
  The Parliamentary Under-Secretary of State for Health (Mr. Stephen Dorrell): I am grateful for the confidence of my hon. Friend the Member for Honiton (Sir P. Emery) in my competence. I do not dispute that if I chose to instruct that the payment be made, it could be made. On that proposition I have to agree with my hon. Friend. But before I talk about whether I should use that discretion, I should like to say that, as my hon. Friend said, I have known about his concern about the Axminster practice virtually since I arrived in the Department of Health 18 months ago.
  My hon. Friend has been an effective and persuasive advocate in private and now in the House of the interests of his constituents. The arguments, as he -has presented them to me both on earlier occasions and tonight, are, indeed, seductive. However, I will seek to set them in the wider context of the Government's commitment and programme for the computerisation of general practice. I shall show why I do not think—it is not what my officials think, but what I think—that I would be right to use the discretion which he correctly said lies with me.
  I agree with my hon. Friend about the substantial benefits which computers can bring to a modern general practice. They can perform simple administrative tasks which were previously both dull and expensive. Indeed,

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  they can do so more accurately than traditional methods. Registration and administrative and financial returns are all functions which computers can carry out in a modern general practice.
  In addition, and more important, computers can keep clinical records and, therefore, be of direct clinical value to the general practitioner. They can keep records of the attendances of a patient at the surgery, the clinical condition of the patient and the prescriptions written for the patient. They can produce repeat prescriptions when the doctor so authorises. So computers are a valuable tool for a clinician in general practice, as well as being a valuable administrative tool to a partner in a practice.
  Therefore, the Government see the extension of computerisation in general practice as an important part of our commitment to the growth, modernisation, expansion and development of primary care in the NHS. That has been a consistent record of the Government since 1979. Our commitment is much wider than computers. We have shifted substantial sums of money into the extension and development of primary and community care in the NHS.
  The primary and community health care sectors of the national health service have increased their share of the health service budget from 28 per cent. in 1979 to 33 per cent. today. That represents a growth of expenditure in those sectors of roughly 80 per cent. in real terms. That money has been used to increase the number of lay staff, practice nurses and other professionals available in general practice and to improve the physical facilities in which general practice is offered. It is a substantial record of investment in the expansion of primary and community health care. Computers have an important part to play in that wider programme.
  As recently as five years ago only 10 per cent. of general practices had access to computers. On 31 March 1987 there were 942 practices in the national health service which used a computer. Four years later, on 31 March 1991, that figure had risen to 6,130, which represents 63 per cent. of all general practices within the health service. The practice that my hon. Friend mentioned is typical. Computers tend to be concentrated in larger practices. On 31 March this year 76 per cent. of all general practitioners in the NHS had access to a computer.
  That is a substantial record of success in support of a much wider strategy of developing primary care as an essential part of modern health care delivery. How was that expansion of computerisation brought about? Substantial encouragement for the computerisation process in the primary care sector was developed by the scheme which my hon. Friend the Member for Honiton criticised.
  Until I changed it earlier this year, the scheme had four essential elements: it met 50 per cent. of the system costs and 70 per cent. of the initial staff costs. However, both those were subject to a ceiling, determined by the practice list size.
  Sir Peter Emery: It was not clear.
  Mr. Dorrell: I shall come to that in a moment.
  The fourth key point was that for the first two years of the programme, between April 1989 and March 1991, we committed a budget of £24 million to the programme.
  My hon. Friend had two criticisms of the way in which the programme was put into effect. First, he is concerned
  508
  about the application of the list size criterion. He is concerned about its merits, but, perhaps more important in the context of his constituents' practice, he is concerned about whether they knew that the limitation on the payments due existed within the scheme that we were operating.
  I have told my hon. Friend in private and I am happy to tell him in public that if the doctors concerned say that when they installed the computer they did not know that the list size criterion existed, I am happy to accept that as a statement of fact. I am happy to accept that they did not know that the payment that they stood entitled to receive was limited by the list size criterion.
  However, even if Dr. Church and his partners did not know of the operation of that rule, many others in primary health care knew. The correspondence files of my hon. Friend the Member for Kettering (Mr. Freeman), my predecessor, stand witness to the fact that the existence of the list size limit was known and was the subject of substantial criticism from representative organisations within the profession.
  I answered my hon. Friend's question about how many payments were made to practices—where list size criterion limited payment—saying that I did not know the answer. That was a statement of fact because the totals were not available to me. However, I know that substantial numbers of doctors invested in computers, while complaining about the operation of that rule.
  I am absolutely confident that Dr. Church and his partners are not unique and that many other doctors are in the same position, in the sense that they made financial investments during 1989–91 and the payments that they received from the fund were limited by the operation of the list size criterion.
  Sir Peter Emery: So I am fighting for the profession.
  Mr. Dorrell: Indeed, my hon. Friend is fighting a wider battle than purely that of Dr. Church and his partners.
  My hon. Friend's second criticism of the way in which the scheme has worked is that the £24 million budget which was set aside for the two financial years—and I emphasise two years–1989–91 was underspent. The actual amount disbursed under the scheme in the two years for which it ran was £17 million, not £24 million. My hon. Friend says that cash is available which could be used at least to make some payment to doctors who had their payments limited by the list size criterion.
  I considered that point during the summer, when we were considering the rules of the scheme which should operate for the current financial year. I decided on a different approach, and I will explain that approach and why I adopted it. My hon. Friend, and the medical profession more widely, seemed to me to have made a powerful case against the rigid operation of the list size criterion. That is why, for the current financial year, it has been abolished. I recognise that that provision has limited payments to my hon. Friend's constituents, but it is no longer limiting payments to doctors because, as of April of this year, it no longer applies.
  The next facet of my approach was that I wanted to see more flexibility in the hands of local family health services authorities over the application of funds and the use of the substantial sums of money that are available to them for the development of primary health care. So for this year I made the computerisation funds part of the wider fund

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  available to FHSAs to support not merely computerisation but the extension of ancillary staff in general practice and the development of new accommodation facilities for primary health care.
  Those three elements now all come out of the same fund, with discretion in the hands of the FHSA to use the fund for any one of those three purposes, but with a clear steer that the amount for the current year should be roughly £20 million, which my hon. Friend mentioned.
  I believe that the spending levels that we are now seeing, through the new scheme that I announced in the summer, vindicate the judgment I made because the £17 million that was spent in the two years of the initial scheme represents an average spend of £8.5 million. The initial budget for the current year was £13 million, which was increased to £20 million to take account of the £7 million underspent in the first two years. So the budget fixed for the current year was £20 million and the £7 million underspent in the first two years of the scheme did not go back to the Treasury—it was not lost to computerisation—but was committed to the further development of GP computerisation.
  I inquired of my officials—those officials who are supposed to have such total control over everything I do—what the experience would be of the new scheme during the current financial year. I am pleased to tell my hon. Friend that the latest estimate we can make for the spend on computerisation this year will not be £20 million but £25 million. So there will be a £25 million spend in a single year, in the current financial year, against an average of £8.5 million in the two previous financial years.
  That will be possible because I made the scheme more flexible, so the FHSAs are allowed to use the funds that would previously have been limited to practice premises and ancillary staff to support the continued development and expansion of computerisation of primary health care.
  Sir Peter Emery: At the cost of my constituents.
  Mr. Dorrell: Not at all. It is a constant of any Minister's experience—my hon. Friend referred to his experience as a Minister—that when a new scheme is introduced, there will always be somebody who did the same thing on his own initiative in the previous year and who feels that those who benefit from the newly introduced scheme are receiving an unfair advantage over the individual who took the real risk and did it himself.
  Sir Peter Emery: My hon. Friend has been most fair, and I understand the argument that he propounds. However, will he give one undertaking? If, at the end of this year, the total funds—I reckon those to be £44 million, but that figure may not be quite accurate—are underspent, will my hon. Friend advertise for people who, from 1989 to 1991, did not receive their full allocation and allow anyone, including my constituents, to apply to help them use up any unused balance? That would be very fair.
  Mr. Dorrell: I said that my hon. Friend's arguments were always powerful, persuasive and seductive and he has just demonstrated that fact once again. Unfortunately, he double counts in quoting a figure of £44 million—
  Sir Peter Emery: Over four years.
  Mr. Dorrell: For three financial years. The budgets that we announced were £24 million and £20 million, which my hon. Friend has added to make £44 million. But he forgets that the £20 million included a £7 million carry-over from last year's underspend, so the amount is not £44 million but £37 million.
  As the spend over the three years will be more than that —last year's spend was £17 million and I expect this year's to be £25 million, making a total of £42 million—I suppose that I could give my hon. Friend the assurance that he seeks, but even if our figures were so way out that I could be caught on that commitment, when I consider the matter next May—assuming that the burden still falls to me to do so—I would have to make the same calculation as I made this year. I would have to ask whether it is right to use the measure to reward people who did something two years ago, or whether it would be better to use the money to encourage people to continue the process in the future. This summer, I concluded that the latter was better than the former and I can give my hon. Friend no assurance that I would not reach the same conclusion again.
  Sir Peter Emery: I do not accept absolutely my hon. Friend's final factor. If a balance were left over, it would be reasonable for him to try to use it to repay those who have set the trend. Those are the people from whom the doctors are seeking advice and asking, "How has this worked with you?" Therefore, I believe that the Minister should give me the assurance that I seek.
  Mr. Dorrell: As I said, the assurance would cost me nothing, because I am confident that it would not be activated.
  Sir Peter Emery: Then give it to me.
  Mr. Dorrell: Politics are partly about applying principles, as well as stitching up deals. The principle must be whether it is right to use public money to reward something that has happened anyway or to encourage something that might not happen if we do not use that public money. When faced with that choice this summer, I chose to encourage people to continue to develop computerisation in primary health care rather than simply to reward directly those who did something very valuable —there is no doubt about that, or about the fact that they did it at their own risk—some years ago.
  Question put and agreed to.
  Adjourned accordingly at thirteen minutes to Eleven o'clock.

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Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Salisbury.): The LORD CHANCELLOR on the Woolsack.

Proportional Representation
Lord Holme of Cheltenham Lord Holme of Cheltenham asked Her Majesty's Government:
Whether, now that they seek greater powers for the European Parliament, they also accept the need for a uniform electoral system based on proportional representation.
The Minister of State, Home Office (Earl Ferrers): No, my Lords.
Lord Holme of Cheltenham: My Lords, I thank the Minister for the brief but deep down satisfactory nature of his reply. Is he aware that the United Kingdom is now in a minority of one in the European Community in not using proportional representation for European elections? Is he further aware that that results in grave misrepresentation both of the wishes of the British electorate and in the balance of the European Parliament? Finally, is he aware that the European Parliament itself has already produced a preliminary report recommending the adoption of a uniform system of proportional representation for the next European election? In the light of that, does he agree that it is time that the Government adopted a more open-minded and democratic attitude to this important matter?
Earl Ferrers: My Lords, I do not believe that a democratic attitude comes into the matter. The United Kingdom may be in a minority of one but the first-past-the-post system is the one that we use in this country. We have found it to be satisfactory. It is simple, familiar and easily understood. I do not know why noble Lords on the Liberal Democrat Benches think that funny. The great attraction of the first-past-the-post system is that it is easy to understand. The whole point about proportional representation is that it is not a system; it comprises about 20 different systems, all of which produce different results.
With regard to the position of the European Community, the member countries, first, have to agree on a uniform procedure. There is no agreement yet on which system should be used and if there is an agreement on the system, we are committed only to considering it for elections to the European Parliament.
Lord Tordoff: My Lords, is the noble Earl aware that this House debated a Bill last year on this very subject?
Earl Ferrers: I dare say that it did, my Lords. So what?
The Earl of Lauderdale: My Lords, would my noble friend agree that proportional representation is in truth proportional confusion?
Earl Ferrers: My Lords, I quite agree. I can assure noble Lords that trying to understand the different methods of proportional representation is quite an exhaustive task. I remind my noble friend that the result obtained depends upon the system that is chosen.
Lord Underhill: My Lords, in view of the comments made about the difficulties of dealing with proportional representation, is the noble Earl aware that the Labour Party is at present involved in what must be the widest consultation—I repeat the widest consultation—on electoral reform that has been conducted by any political party? That is evidenced by its interim report, the Plant Report. The Government ought to examine this matter and give it very serious consideration. Does he agree that it is far better to undertake the closest deliberations and have a decision taken when the matter is discussed with the Commission rather than to make a hasty decision or adhere to piecemeal action?
Earl Ferrers: My Lords, I am glad to know that the Labour Party is having a lot of consultation about this matter. Obviously it cannot make up its mind about it. We have made up our mind about it. We prefer to stay with the system which we know.
Lord Underhill: My Lords, in view of the Minister's reply, I should point out to him and to the House that the question under consideration by the Labour Party is very wide-reaching. Obviously at this stage we are not trying to determine exactly what the system should be. We are examining the problems involved. Is the Minister aware that we are dealing with all the problems associated with possible change, which is something that the Government have not done?
Earl Ferrers: My Lords, I wish the noble Lord the best of British luck.
Lord Monson: My Lords, does the noble Earl agree that to tinker with the existing system of election to the European Parliament is useless so long as the undemocratic state of affairs prevails whereby the Republic of Ireland has three times as many MEPs per capita in Strasbourg as has the United Kingdom, while Luxembourg has 12.5 times as many MEPs per capita as has Germany? Does he further agree that it is exactly as though Scotland, instead of being merely 26 per cent. over-represented in the House of Commons with 72 Members of Parliament, had been allocated 210 Members of Parliament, at the expense mainly of the English? Is he aware that, although the Liberal Democrats may believe that this is a fair situation, and desirable from their point of view, I do not think that anyone else does so?
Earl Ferrers: My Lords, I am sure that the noble Lord's figures must be right. If so, I am sure that I concur with them, but I cannot tell him that I know that the figures he gave are correct.
Lord Jenkins of Hillhead: My Lords, would the noble Earl care to remind the House of Her Majesty's justification for having a proportional representation system in Northern Ireland but not in the rest of the United Kingdom, bearing in mind that it is not a local issue but one which affects the whole balance of the European Parliament? Will he be a little less flippant than he has been in some of his earlier answers?
Earl Ferrers: If I was flippant and upset the noble Lord, Lord Jenkins, of course I regret upsetting him. I shall give him a very serious answer to his question. The single transferable vote system was started in Northern Ireland in the 1920s. It was used for the election to the Stormont Parliament in 1921 and 1925. It was then abolished but reintroduced in the 1970s because of the sectarian nature of Northern Ireland society and political life. The divided community each voting on separate religious and political lines makes a simple majority system unsuitable there. It does not follow that the single transferable vote system would be suitable for the rest of the United Kingdom.
Lord Jenkins of Hillhead: My Lords, may I remind the noble Lord that I asked for justification and not for history?
Earl Ferrers: My Lords, I gave the noble Lord the justification. It was that the sectarian nature of Northern Ireland society and political life required that system.
Lord Mackay of Ardbrecknish: My Lords, would my noble friend care to take note of the recent results of the general election in Belgium in which, by proportional representation, there seem to be a multiplicity of parties, some from the extreme Left and extreme Right? Does he agree that that illustrates the danger not only in that country but other European countries of allowing proportional representation to represent very small minorities in the community and very often minorities at the extreme ends of the political spectrum?
Earl Ferrers: My Lords, my noble friend is absolutely right. I understand why the Liberal Democrat Party wants it, because that is the only opportunity it will get to have a slice of the action. It really ought to be prepared to understand that if the people do not vote for such a system, in a first-past-the-post system, they do not want it.
Lord Jenkins of Putney: My Lords, will the noble Earl bear in mind that almost any system would be better than the system by which your Lordships arrive in this House?
Earl Ferrers: My Lords, that is a totally different matter.
Lord Holme of Cheltenham: My Lords, does the Minister accept that it is yet another instance where it is 11:1 in the European Community, with us proudly claiming that everyone is out of step except us?
Earl Ferrers: My Lords, no, I do not agree with that. We may be the only ones to have a first-past-the-post system. However, all the others
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have different and differing systems of proportional I representation. With respect, to blanket all those systems as one system is not right.
Lord Kennet: My Lords, will the noble Earl bear in mind that before the people can make up their mind whether or not they want proportional representation, they must have it proposed to them by a party which is capable of attaining a majority under the present system?
Earl Ferrers: My Lords, I am afraid there was so much noise behind me that I did not understand the point of the noble Lord's question.
Lord Kennet: My Lords, perhaps I may ask the question again and hope for more tolerance from the noble Earl's supporters. Will he bear in mind that before the people can declare their wish on whether or not they should have proportional representation, it must be proposed to them by a party capable of finding a majority under the present system?
Earl Ferrers: My Lords, I am sure that that must be so.

London-Zurich Air Route: Pricing
3.11 p.m.
Lord Orr-Ewing Lord Orr-Ewing asked Her Majesty's Government:
Whether they will conduct an inquiry into pricing on the London to Zurich air route.
The Minister of State, Department of Transport (Lord Brabazon of Tara): My Lords, there is no provision under our bilateral arrangements with Switzerland to hold such an inquiry. We have approached the Swiss authorities to liberalise arrangements between us, but they are not prepared to move in advance of any agreements on a multilateral basis.
Lord Orr-Ewing: My Lords, is my noble friend aware that many of us who were trying to book early in October for a flight in January discovered that the price of the flight from London to Zurich had increased since last year from £112 return APEX to £179. Is that not a disproportionate rise? Lady Burton of Coventry, who sadly died in October, applied herself to this problem with great vigour and dedication in both Houses for 40 years. I hope that my noble friend will do as much to try to improve the matter. Fifty million people travel to Europe from this country every year. The situation will affect large numbers of people.
Lord Brabazon of Tara: My Lords, my noble friend is quite right about the part that the late Baroness Burton of Coventry played in trying to make some sense of our air fares. I can only agree with him.
As I said in my original Answer, we have been attempting to negotiate with the Swiss for more liberal arrangements. I wish my noble friend well in the inter-parliamentary ski races. If in the course of his visit to Switzerland he has the opportunity between ski races to make such points to his Swiss colleagues, that would be welcome.
Lord Shackleton: My Lords, I accept that there is an opportunity for individuals to contribute to the issue. However, the activity of my late friend Lady Burton was so valuable that I should have thought that the Government now realise that they have a responsibility in the matter. The noble Lord, Lord Orr-Ewing, has raised a matter of public interest to many people. Will the Minister consider making further approaches?
Lord Brabazon of Tara: My Lords, if I gave the impression that we were doing nothing, that was entirely wrong. We have approached the Swiss on several occasions to ask for more liberal arrangements which would allow for lower fares. On two separate occasions British Airways brought forward proposals to introduce low level promotional fares on the route from Switzerland. Sadly, they were vetoed by the Swiss.
Baroness Oppenheim-Barnes: My Lords, is my noble friend aware that it is not just a problem between Britain and Switzerland; it is a problem throughout Europe? We seem to have been negotiating for years with our "partners" in the EC. Will my noble friend say what role the commissioner with responsibility for competition in the EC plays in the matter?
Lord Brabazon of Tara: My Lords, we are still actively negotiating. Indeed, the third EC liberalisation package is now before the Council of Ministers. They have in principle agreed to it. We hope that by the end of next year it will be fully in place.
Lord Clinton-Davis: My Lords, is it right that the European Commission has concluded that out of 88 European fares that have come under their consideration, 40 are deemed to be excessive including 25 fares relating to British Airways flying out of 17 airports? Does the Minister believe that it is right for the Commission to seek to intervene in order to protect the interests of the consumers, or does he believe, along with British Airways,
"that the market place should be allowed to set its own prices"?
Lord Brabazon of Tara: My Lords, that is a different question. We are speaking of fares to Switzerland, which is not yet in the EC. Therefore, the role of the Commission does not come into play on that.
Lord Clinton-Davis: My Lords, with respect, other questioners have widened the issue quite properly to fares generally, as the Minister will have heard. Will the Minister indicate as a matter of principle whether he agrees with the conclusion reached by British Airways,
"that the market place should be allowed to set its own prices",
or does he agree with the Commission on the matter?
Lord Brabazon of Tara: My Lords, it was our own Civil Aviation Authority which referred those prices to the Commission.
Lord Stanley of Alderley: My Lords, does my noble friend's first Answer also apply to regional airports, in particular Manchester?
Lord Brabazon of Tara: My Lords, if we manage to achieve more liberal arrangements, they will apply to all airports.
Lord Orr-Ewing: My Lords, I cited one example; I was not narrowing the issue. The whole of Western Europe is involved. A publication that I received today states:
"The airfares charged bear no relation to the market whatsoever with a cartel operating on each route. What can possibly justify such extravagant protectionism, which dictates that it costs more to fly between neighbouring European countries than it does to fly transatlantic?"
Lord Brabazon of Tara: My Lords, my noble friend is right. That is why this Government have been at the forefront of promoting more liberal arrangements both within the EC and with other European countries and we shall continue to do so.

Kurds: Assistance Programme
3.17 p.m.
Baroness Ewart-Biggs Baroness Ewart-Biggs asked Her Majesty's Government:
What steps they are taking through the United Nations, and in conjunction with their European partners, to relieve the plight of the Kurdish people within Iraq.
Lord Cavendish of Furness: My Lords, since April the Government have spent £44 million on aid for the Iraqi people including the Kurds. Of that some £11 million was spent through the United Nations and £12.5 million through the European Community. We are giving substantial support to the United Nations' winterisation programme through a joint project with the European Community.
Baroness Ewart-Biggs: My Lords, I am grateful to the Minister for that reply. Will he give some information regarding the situation of the Kurds in northern Iraq? Will he tell us the death rate from disease and hunger among the refugees? Will he tell us the total level of UN and EC aid?
Lord Cavendish of Furness: My Lords, we continue to be extremely anxious for the Iraqi refugees and vulnerable groups throughout Iraq including the Kurds in the north and the Shia's in the south. I do not have with me any information about the death rate. However, I know that there are grounds for deep concern.
As regards expenditure, I have given the figure in respect of Britain. We provided £10 million to the Simple Truth Programme which totalled £57 million internationally.
Lord Renton: My Lords, is my noble friend aware that earlier this year our Prime Minister made the excellent suggestion that there should be a safe haven for Kurdish people? Is that still United Nations policy?

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Bearing in mind that the matter has become urgent with the arrival of winter, is it accepted that the need for helping those people is now very much greater than it has been for some time?
Lord Cavendish of Furness: My Lords, our anxiety is just as great with regard to safe havens. We recognise that the threat of winter has added to the problems of the Kurds. We are concentrating our help on food, shelter, health care and in averting tragedy in the mountains. We are helping bilaterally with food, shelter, health and water sanitation and with clothing through Kurdish humanitarian groups and UK non-government organisations. We are also supporting the United Nations High Commissioner for Refugees on his winterisation programme to provide shelter for up to 350,000 people. There have been delivered to this area of northern Iraq 1,600 truck loads of timber, corrugated iron and building tools.
Lord Mellish: My Lords, is the Minister aware that some of us believed, apparently wrongly, that we had won the war against Saddam Hussein? Now we hear a story of untold millions of pounds being paid to protect the Kurds, which is understandable, while Saddam Hussein appears to be getting away with it. Can the Minister explain why and what the Government intend to do about that?
Lord Cavendish of Furness: My Lords, the Gulf war was concerned with removing Saddam Hussein from Kuwait. Sanctions are still in place against Iraq in areas where it has not complied with United Nations resolutions.
Lord Hylton: My Lords, can the Minister confirm or deny suggestions that three-quarters of a million Kurds are still semi-homeless within Iraq; that 350,000 are refugees in Iran; that the food situation is very poor; and that the Iraqi Government continue to maintain a blockade of northern Iraq even though the blockade is not totally complete?
Lord Cavendish of Furness: My Lords, I do not know that anyone has accurate figures as figures are difficult to obtain. The picture the noble Lord paints is bleak. It gives an indication of the kind of conditions that prevail in that unhappy country.
Lord Cledwyn of Penrhos: My Lords, further to the question asked by the noble Lord, Lord Hylton, can the Minister confirm that the Kurds are being subjected to a crippling economic blockade and to military aggression by Saddam Hussein's regime? Can he confirm the extent of the blockade and military aggression and say what steps the Government are taking in concert with our allies to try to bring them to an end?
Lord Cavendish of Furness: My Lords, in the context of this Question I cannot give a detailed analysis as requested by the noble Lord the Leader of the Opposition. The Government are giving considerable aid, as I have described, and that will continue. The United Nations Security Council's third review of sanctions on 2nd October concluded that there was no
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case for relaxing sanctions. We expect the fourth review, which will be undertaken this month, to reach the same conclusions. The Iraqis have failed on a number of counts to comply with UN Security Council resolutions. That non-compliance includes obstruction of United Nations inspectors, the continuing retention of Kuwaiti detainees and other human rights violations.
Lord Bottomley: My Lords, in view of what has been said can the Minister say when the Kurdish/Iraqi problem will be discussed by the United Nations Security Council and the European Community?
Lord Cavendish of Furness: My Lords, I understand that discussions with our European partners continue. I am not aware of when the United Nations will next discuss the matter but I shall find out and write to the noble Lord.
Lord Molloy: My Lords, is the Minister aware that following the Prime Minister's most encouraging speech some months ago the Kurds naturally turned to this country for guidance and help? They have established an unofficial high commission or embassy in the London borough of Ealing and I visit them regularly. Some of the Kurdish leaders know precisely what the score is, as outlined by my noble friend Lady Ewart-Biggs, and the situation is getting worse by the day. Their representatives are only about 17 miles from this Chamber. Would it not be possible for members of our Government to see some of them in order to examine precisely what is involved?
Lord Cavendish of Furness: My Lords, we believe that we are doing as much as we can to help the plight of the Kurds. However, I am grateful for any suggestion and I shall be pleased to look into it.

Teddington Hall
3.24 p.m.
Baroness Hamwee Baroness Hamwee asked Her Majesty's Government:
How the state of Teddington Hall, a Grade II listed building, and of other historic buildings revealed in the National Audit Office report Upkeep of Historic Buildings on the Civil Estate (No. 37), relates to the claims in paragraphs 9.11 and 9.12 of This Common Inheritance (Cm. 1200) on the example set by the Government in aiming for the highest standards of conservation.
The Minister of State, Department of the Environment (Baroness Blatch): My Lords, the Government welcome the report, which demonstrates that the majority of such buildings are properly cared for and a high standard of repair is achieved. The report criticises the poor condition of only two buildings; Teddington Hall and 7–9 Babmaes Street. We have already taken steps to protect these buildings. I can assure your Lordships that the Government recognise their obligations towards our heritage and are committed to achieving the highest standards in caring for its historic buildings.
Baroness Hamwee: My Lords, I thank the Minister for that Answer. Does she agree that putting a tarpaulin roof over the building is not a means of protecting, preserving and conserving it? Does she further agree that in paragraph 9.11 of This Common Inheritance the Government are stated to have:
"the opportunity to demonstrate by example"?
The report of the National Audit Office describes Teddington Hall as being in a deplorable state with serious structural defects and extensive dry rot. The stairs are too dangerous to be used and fireplaces have been stolen. The cost of renovation is estimated to be in excess of £1 million. Does the Minister agree that if the Government—
Noble Lords: Reading!
Baroness Hamwee: Does the Minister agree that if the Government do not take their responsibilities seriously other owners will not be setting an example and, not surprisingly, will not look after their buildings? Does he agree that with regard to Teddington Hall the Government are setting a bad example?
Baroness Blatch: My Lords, the noble Baroness is absolutely right. No one can be proud of the history of Teddington Hall; neither this Government nor any previous government. However, it is important to get the situation into perspective. Only two out of 583 historic buildings on the Civil Estate were found by the National Audit Office to be in poor condition. I hope that the noble Baroness will welcome the fact that, as a result of our commitment stated in the paragraphs to which she referred, we are putting in place an action plan which will ensure that all departments care for historic buildings in a systematic way.
Baroness Birk: My Lords, is the Minister aware of the chequered history of Teddington Hall? Unfortunately that applies to many other buildings in this country. The hall was acquired by the Government as long ago as 1946 and was listed in 1981. In 1982 the PSA recommended that it should be sold or that alternative use should be found for it. In 1983 the cost of carrying out the fundamental repairs was estimated to be £130,000. Today the estimated cost is in excess of £1 million. Can we be sure that the recommendations will be taken up in these times of financial restraint? The amount of money spent on buildings such as this lags behind need and meanwhile costs rise. We are not happy about the situation.
Baroness Blatch: My Lords, I take the points made by the noble Baroness. However, she skipped over the period of time when her party was in government. I said at the outset that I am not ducking the fact that this is an extremely sad saga and that the hall has been the subject of neglect by all governments since its acquisition in 1946. We have now put in place a systematic method for all departments to look after historic buildings. However, it is important to keep the matter in perspective; only two out of 583 buildings were the subject of criticism in the report. That is a good record.
Lord Ross of Newport: My Lords, will the Minister tell the House what is happening about Heveningham Hall in Suffolk? It appears also to be on the danger list, although I understand that the Arab gentleman who now owns it is supposed to be carrying out repairs.
Baroness Blatch: My Lords, the property is far from being on the danger list, but it is not the subject of this Question.

Business
3.28 p.m.
Lord Hesketh: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lord Cavendish will, with the leave of the House, repeat in the form of a Statement an Answer to a Private Notice Question in another place on lost diplomatic bags in Wandsworth Prison.
It may be for the convenience of the House to know that the Committee stage of the Local Government Bill will be adjourned at about 7 p.m. for about one hour and that during this adjournment the Waltham Forest Housing Action Trust (Area and Constitution) Order 1991 and the Criminal Justice Act 1988 (Designated Countries and Territories) Order 1991 will be taken.
It may also be for the convenience of the House to know that, subject to the progress of business, the House will rise for the Christmas Recess on Thursday 19th December and return on Thursday 9th January. The House will sit at 11 a.m. on Thursday 19th December before retiring to celebrate the Christmas period.

Deputy Chairmen of Committees
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That as proposed by the Committee of Selection the following Lords be appointed as the panel of Lords to act as Deputy Chairmen of Committees for this Session—

L. Airedale,

L. Alport,

L. Ampthill,

L. Aylestone,

L. Boston of Faversham,

L. Cocks of Hartcliffe,

B. Cox,

V. Davidson,

L. Elliott of Morpeth,

L. Graham of Edmonton,

L. Grantchester,

L. Hayter,

L. Hesketh,

E. Listowel,

B. Llewelyn-Davies of Hastoe,

B. Lockwood,

L. Murton of Lindisfarne,

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V. Oxfuird,

L. Skelmersdale,

L. Strabolgi.—(The Chairman of Committees.)

On Question, Motion agreed to.

Deputy Chairmen of Committees

  Personal Bills: Select Committee
  The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
  Moved, That a Select Committee be appointed to consider personal Bills and that as proposed by the Committee of Selection the following Lords together with the Chairman of Committees be named of the Committee—

  L. Airedale,

  B. David,

  V. Oxfuird,

  L. Templeman,

  L. Thomas of Gwydir,

  L. Wilberforce.—(The Chairman of Committees.)

  On Question, Motion agreed to.

  Standing Orders (Private Bills): Select Committee
  The Chairman of Committees: My Lords, I beg to move the third Motion standing in my name on the Order Paper.
  Moved, That a Select Committee on the Standing Orders relating to private Bills be appointed and that as proposed by the Committee of Selection the following Lords together with the Chairman of Committees be named of the Committee—

  E. Grey,

  L. Jacques,

  L. Mowbray and Stourton,

  L. Renton,

  L. Strabolgi,

  L. Thurlow,

  L. Wade of Chorlton.—(The Chairman of Committees.)

  On Question, Motion agreed to.

Hybrid Instruments: Select Committee
The Chairman of Committees: My Lords, I beg to move the fourth Motion standing in my name on the Order Paper.
Moved, That a Select Committee be appointed to consider hybrid instruments and that as proposed by the Committee of Selection the following Lords together with the Chairman of Committees be named of the Committee—

V. Dilhorne,

L. Murton of Lindisfarne,

L. Prys-Davies,

L. Thurlow,

L. Wade of Chorlton.—(The Chairman of Committees.)

On Question, Motion agreed to.

Local Government Bill [H.L.]
3.32 p.m.
Baroness Blatch: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Baroness Blatch.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Chairman of Committees in the Chair.]
Clause 13 [Duty to conduct reviews and make recommendations]:
[Amendment No. 141 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 142:
Page 11, line 18, leave out ("and").
The noble Baroness said: In speaking to this amendment, I shall speak also to the other amendments grouped with it. They are intended to allow the Local Government Commission to examine the whole of the country and not just non-metropolitan areas.
For the work of the commission to be fully valid, its work should not be partial. I use that term with regard to the extent of the work and not its attitude towards it. When we debated earlier clauses, we discussed questions of community and historic identity. Those matters should be regarded throughout the country. I am not dictating a recipe for change but I believe that we should not exclude the people of our great cities from participating in that process.
The greatest city is London. I am a councillor of a London borough. I chair a London-wide body and I have been a member of other London-wide bodies. For the purposes of this discussion what is most important to me is that I live in London.
I shall not go over the mistakes of the past. I hope that we can all avoid the knee-jerk reactions which some of us have to the question of London government. I hope that we shall not take with us our baggage of prejudices and our anxiety about what London would be if it were governed by a party of a particular political complexion. Today I ask the Committee to look forward to see how best we can serve our capital and why.
In 1988 the London-wide committee which I chair—the London Planning Advisory Committee—agreed on what it termed a fourfold vision for the future of London. It regarded it as a civilised city offering a high quality of environment for all Londoners; or that should be our aim. We should aim for London to be a world centre of international trade and business, a city of opportunities for all and a city of stable and secure residential neighbourhoods capable of sustained community development. I give that list in no particular order because all those matters are interdependent on one another. That committee comprised representatives from all the London boroughs. It had no inbuilt political majority but had a balanced committee. That vision of London was agreed on a consensual basis by all parties.
The issue of London has risen up the public agenda faster than almost any other issue. For that reason the

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London Planning Advisory Committee commissioned the World City Project whose brief was to discover what is needed to sustain London's future status as a world city and what can be learned from comparisons with its rivals; for example, New York, Tokyo, Paris, Frankfurt and possibly Berlin, because of its situation where it may be able to take advantage of the greater movement and communication between East and West.
The co-sponsors—and this is important because it shows the importance which all those organisations attach to the project—were the Corporation of London, the City of Westminster, the London Arts Board, the London Docklands Development Corporation and London Transport.
The Committee may be interested to know of some of the comments given by people interviewed on other world cities. New York was described as:
"emerging as a central brain of the global system".
Paris, Ile-de-France, was described as:
"maintaining a position at the forefront of the new world".
Tokyo was described as:
"contribution to peace and development in the world",
and of Frankfurt it was said:
"the hub of Europe … Europe's 'most American' City".
The conclusions of that report were considered at a conference only last week of what may be described loosely as movers and shakers on the London scene. They widely endorsed the conclusions of the consultants engaged by the London committee. Briefly, its conclusions were that London's key priority is easier and safer movement around London. That will come as no surprise to anyone who has to move around and within London. There is a need for improvements to public transport and, in particular, secure funding. An environmental audit is needed and innovation and enterprise to help with regeneration.
London has special potential and special problems. One of the major keys to unlocking potential is to improve education and training to enable its residents to contribute more to the workings of London.
London has a particular potential in the cultural sector. That is interesting. Arts, culture and the whole entertainment industry are the soul of London and an area which is growing in innovation leading to increased employment. It is the industry which has created the greatest increase in employment over the past decade or so. However, we should not lose sight of the fact that our arts and cultural heritage are part of the whole heritage of London and the country.
Again, the Committee will not be surprised that there is an urgent need to find an answer to providing affordable housing for essential workers and homeless people in the capital.
To do all that, London must project and promote itself, not just to rekindle the belief of Londoners in our capital city but to sell itself to the rest of the world. That is what needs to be done. The consultants, many of whom have great expertise in London problems, concluded that London is a world city and can remain a pre-eminent world city, but its status is at risk. That is not because of any inherent or irredeemable disadvantage but it arises simply by default.
How are we to put that right? There is a wide consensus that something needs to be done. At present
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we have the boroughs—a plethora of joint arrangements which have no agreed context, no agreed priorities and no common objectives, let alone a vision of where they should be going.
Amendment No. 178, which is grouped with this amendment, refers—and I was careful to refer to it—to strategic functions for a London-wide government. Those functions should be functions which may be performed now by central government. We on these Benches believe, and I know that others believe it too, that government should be delivered at the most local level possible.
London has a government; it has central government. But it is not serving the capital well. To give one example which I know is dear to the hearts of many Members of the Committee, the London-wide arrangements for grants to voluntary organisations, to the arts, affecting many people in need, have simply fallen apart.
London needs its own government. It needs more than just a voice; it needs a democratically elected representative and accountable government. Of course there are other models for a voice for London. A Minister could be appointed as part of the Westminster/Whitehall machine, although I doubt that he would win any battles with the Treasury on behalf of London and would probably only be a target for brickbats—an unenviable position with no resources to do the job.
London could have a group selected by the Government—a group of experts whose expertise could be harnessed. But would the decisions of a quango have real validity? We could have an elected mayor with an executive office. But I believe that a mayor would be elected primarily as an expression of confidence or otherwise in the government of the day. A mayor would be concerned to build his image and status; there would be an executive office; the work of the boroughs would be duplicated and that would be wasteful. Above all, the model of a mayor running the capital city is entirely alien to the culture of this country.
I ask the Committee to seriously consider the amendments in this group which calls for the commission to consider the question of government for London. I do not advocate any previous model. I feel that from these Benches I am able to say that we come without prejudice to the question. However, I conclude with the words of Lord Latham, who was the chairman of the London County Council in the dark days of 1943. He said,
"The fate of London, one of the greatest cities the world has ever known, will be one of the signs by which posterity will judge us. There is a long road to travel before London can become the city she ought to be. Therefore let us start now".
Lord Morris: There is clearly a misunderstanding in regard to Amendment No. 142. Although the noble Baroness, Lady Hamwee, may have read the long title of the Bill with care, she did not read the Explanatory and Financial Memorandum. That states that this part of the Bill is specifically designed for the Local Government Commission to take on the work of the Local Government Boundary Commission for England and to make orders changing the structure of

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local government in the non-metropolitan counties of the United Kingdom. The amendment would appear to be an attempt to look at the idea of recreating another GLC, God help us!
Baroness Hamwee: Perhaps I can deal with that point. I hoped to make it entirely clear that what I was not proposing was another GLC. The amendments were considered by the Public Bill Office before they came here. I am advised that they are within the scope of the Bill. The word "and" is the word which allows a further subsection to be attached to a specific section which is necessary to introduce the subject of a government for metropolitan areas including London. I was speaking not only to Amendment No. 142 but also to Amendment No. 178.
3.45 p.m.
Lord Boyd-Carpenter: The noble Baroness tried to duck the question put by my noble friend as to whether the real purpose of the amendment is to suggest the reconstitution of the GLC or something like it. In any event, the argument that a central authority is required for London seems to imply the creation of another GLC or of something similar. More important, it appears to accept that there is something unsatisfactory in the present situation. Frankly, I do not agree.
The present system under which the London boroughs have been freed of top-tier administration is working perfectly adequately and results in considerably less public expenditure than the continuation of a two-tier set up. The question of whether we have single-tier or two-tier systems for local government runs right through the Bill.
I do not propose to weary the Committee by going into the merits of that in general, though it is a subject on which I hold fairly strong views. However, what the noble Baroness should do—which she has manifestly not done—if she wants her amendment to succeed, is to suggest that there is something wrong with the present system. That may demonstrate that it is necessary to impose on the ratepayers of London—local tax payers, community charge payers or whatever one likes to call them—all the additional costs of a new authority with a new and massive bureaucracy. That would certainly result in increasing the cost of local government in London. That being so, I suggest that the onus is on those who seek to support the proposal to demonstrate that it is needed.
I heard nothing in the speech of the noble Baroness which to my mind carried any conviction on that point. Even the ceremonial aspect of London is already so superbly dealt with by the City of London and the Lord Mayor that there seems to be no reason to set up another counter authority for the purpose of providing a focus of opinion. The City of London and the Lord Mayor function satisfactorily and at minimum cost to the residents. Therefore to put on the commission, as is proposed, the duty of trying to evolve a new form of central authority for London, depriving London of the advantage of what seems to
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be a unitary system of local government, is a misconceived idea. I hope that when the Committee considers the point, it will be rejected.
There was a moment when the noble Baroness seemed to be near to saying, "Something must be done. This is something, so let us do it". I suggest that it is a nonsense and that we should leave it alone.
Lord McIntosh of Haringey: As usual the noble Lord, Lord Boyd-Carpenter, is irresistible. He makes so many misstatements and mis-interpretations of fact that, however much I wished to wait until the Minister replied before speaking, it is impossible not to intervene.
The noble Lord, Lord Jenkins of Hillhead, has tabled a Motion for debate next Wednesday in which he seeks to review the legislative performance of the Government in the last Parliament. I imagine that a considerable part of the thrust of that will be "The Grand Old Duke of York" performance of the poll tax and the council tax. If he were to extend the scope of the Motion a little, we may be able to deal with what inevitably will be the same "Grand Old Duke of York" performance—the abolition of the Greater London Council and its replacement by any government of any political complexion; a proper city government for London. Indeed, the present chairman of the Conservative Party unwisely trailed that possibility even as Conservative Party policy. He was slapped down fairly rapidly.
The noble Lord, Lord Boyd-Carpenter, suggests that there is no reason to suppose that there is a need for city government in London. I was not much of a supporter of many aspects of the Greater London Council. Indeed, when I served on it it had 20,000 employees, of whom 10,000 were firemen. It was difficult to see what services were provided by most of the others. I certainly do not advocate a return to the Greater London Council as it was then constituted. But even I did not realise how rapidly London would decline in the absence of a central authority.
Let us look at the facts. Our public transport is the most expensive in Europe. Our average traffic speeds are 10 miles an hour, which is the same as they were at the beginning of the century. Traffic congestion in London is costing the London economy billions of pounds every year. These are not Labour Party estimates; these are the estimates of the CBI, the business community, the London Chamber of Commerce and industry. The decline in house building is such that at the present rate it would take 90 years to meet the present housing needs of London, and that is regardless of the other houses which would reach the end of their useful life during that period. At the same time as we have a desperate housing shortage we have 20 million square feet of office space vacant in London. We have an unemployment rate in London which has increased by 50 per cent. during the past year and a crime rate which has increased by 15 per cent. over the same period.
The noble Baroness, Lady Hamwee, has made effective reference to many other aspects in which London is falling behind other cities both in Europe and in the world generally. I entirely agree with her, but in particular about the crisis which exists for the

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arts in London as the result of the abolition of the city authority. I part company from her to some extent when she speaks about a strategic authority. It is always very difficult to divorce strategy from tactics just as it is difficult in business to divorce policy from administration. I am not sure that a strategic authority would not in fact result in a duplication of effort. I am certain, however, that there are major city-wide executive functions which are now being carried out by central government or by nobody. They should be carried out by a city government for London. That is the reason why I support and have also tabled many amendments to which the noble Baroness has spoken.
Lord Mancroft: The arguments put forward by the noble Lord, Lord McIntosh, are very persuasive. He has great knowledge of local government with which to back them up. As he said when he began to speak, the arguments of my noble friend Lord Boyd-Carpenter are equally persuasive—to me they are more persuasive.
Lord McIntosh of Haringey: I did not say that the noble Lord's arguments were persuasive. I said that the temptation to rise after the noble Lord, Lord Boyd-Carpenter, had spoken was irresistible. There is a difference.
Lord Mancroft: I stand corrected. That is slightly different. My temptation to rise to speak after the noble Lord, Lord McIntosh, was equally strong. The noble Lord has produced very interesting but expected arguments for a new tier of local government. He has put forward reasons for it which are similar or the same as those of the noble Baroness. He referred to the deterioration of London in various areas. I do not believe that any noble Lord or anyone who lives in London would disagree that in certain areas city life is bound to deteriorate. I hope that in other areas it may have improved, and those are areas at which we can look.
We must bear in mind that all things are relative. The noble Baroness quoted New York, Tokyo and Paris. Heaven forbid that London should ever get anywhere near the situation which New York has reached now. New York may be the centre of the western world, and I love it dearly as a city, but it is a concrete shambles. The streets of fashionable New York are potted; the traffic does not move; the crime rate is such that in the worst part of the worst city in Britain we cannot even dream about such a crime rate. New York is run by a mayor with a massive bureaucracy.
The noble Baroness discarded mayors and she was right to do so. I wish that she had discarded New York as an example. She spoke about Tokyo. It is true that it does not have the same housing problems as London. It does not have so many old houses. Regardless of their wealth, the population of Tokyo lives in shoe-boxes such as Londoners would not live in. Tokyo traffic is stationary; the long-distance trains may be very remarkable when they move but they do not move very often. The inhabitants of Tokyo loathe the city and spend a great deal of time telling everyone how much they loathe it.
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Paris is also a wonderful city, but even with the advantage of Baron Haussmann's marvellous boulevards, the traffic there does not move very fast. The likelihood of being stabbed on the Paris Metro is goodness knows much greater than is the possibility of being mugged or threatened on the London Underground. I do not believe that London is perfect, but I would not like it ever to become like the cities which the noble Baroness gave as examples of well run cities. All cities have their problems now. It is true that today we are looking for ways of possibly solving the problems.
One of the possible solutions is to have a mayor. I do not believe that that method works; there is no evidence that it works particularly well. I believe that it was the noble Baroness who said that that system was alien to our way of life. I do not believe that the mayoral system would work here. I suppose that there is a case for considering bringing back another tier of government, another bunch of expensive bureaucrats. They will be another lot to be elected and another group of people to fill our newspaper columns and television screens with what they are going to do.
We have had that kind of system twice before but it did not make very much difference. We have very good elected local government in London. Its members may not always work together as well as they might, but nobody in this world ever does. Local government may not be perfect, but nothing ever is. The question that must be asked is whether we can make local government better or do we need to change it. There is no evidence to suggest that we cannot make it better whereas there is a considerable amount of evidence to suggest that we should not seek to change it in particular to go backwards. Although I respect the motives behind the noble Baroness's amendments and the way in which the noble Lord, McIntosh, put forward his argument, I do not believe for one second that he made them strong enough. There is no real reason at all for an extra tier of government. Therefore, I hope that the Committee will reject the amendments.
Lord Ross of Newport: Before the noble Baroness replies, I hope that she will not return to the Secretary of State and report to him that there is total alienation to the idea of a directly elected mayor for London or a directly elected chief executive system of authority throughout Britain. I happen to be in favour of it. At one stage not very long ago the Secretary of State was reputed to be rather in favour of the idea himself.
My children live in London and I very often stay with them. I believe that London is going the way of New York. The kind of situation which, I am sorry to say, is now developing in our capital city is where people break into your house at half past nine at night, and where your children look out of the window the next morning and wonder whether the car will still be there or elsewhere or whether it will have wheels on it. I am not blaming the police because when my daughter saw a leg coming through a ground-floor window two days ago the police were there in three minutes flat. That is very good indeed and much to be commended. That kind of activity is taking place in our suburbs.

339
No one can be satisfied with the Underground system as it is at present. It is a disgrace. I was brought up in North London. The Northern Line trains used to run every two or three minutes but these days they run about every quarter of an hour and one is lucky to get on them. The downside escalator at Euston Station has been out of use for over six months and no one seems to be doing anything about it. When the mayor of Paris was reinstated about 10 years ago (I believe that the previous one lost his head) things looked up in Paris. When anyone complained about the dirty streets the mayor immediately took on about 700 cleaners and cleaned up the city. There has been a remarkable improvement in Paris since it has had a directly elected mayor.
I am simply asking that the suggestions made are not simply thrown out of court. It is interesting because Dame Shirley Porter, who until recently led Westminster City Council and who is now the mayor, has been saying similar things herself. She certainly believes that there should be some kind of overall authority for London. I believe that many people in local government believe the same. Bridges across the Thames are shut without any co-ordination whatever. Previously there was at least some reasoning for that. Everyone knew roughly what was going to happen because of advance warning, but now we do not know. I do not want to set up a great bureaucratic machine, but I do not believe that rationalising London Transport, which was done by Mr. Ridley, has resulted in any success at all. There are institutions like the arts, transport and planning which require an overall look. Please do not throw these provisions out of court.
4 p.m.
Baroness Blatch: I have to deal with the amendments which appear on the Marshalled List and not with people's interpretations of what they believe is on the Marshalled List. I have listened very carefully to the introduction to this amendment and I am left in no doubt that what the noble Baroness, Lady Hamwee, was suggesting was government. The difference between us on this matter arises from the solutions to the problems—there has been much analysis of what they are on the part of noble Lords opposite—being more money and more government. We believe that there are other solutions to the problems. Simply more government in London will do nothing about improving culture or improving transport. When we had London government we had unacceptably low fares and an unacceptably high level of subsidy which fell on people to pay. Congestion will not change if there is London government, and housing will not be improved if there is more London government.
I did not understand the reference to law and order because there is a London-wide police authority. Where London is dirty has a great deal to do with London boroughs not doing their jobs properly. As for references to Tokyo, air pollution there is quite dreadful; and with regard to Paris, I say to the noble
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Lord, Lord Ross, that traffic is still just as bad in Paris and often does not move. I can testify to that from my own recent experience.
London government should be closer to the people. We have made it clear that we have no intention of imposing an additional layer of bureaucracy on Londoners, or elsewhere, because we believe that this would create and not solve problems. I am very grateful for the interventions of my noble friends Lord Boyd-Carpenter, Lord Morris and Lord Mancroft.
The unitary system of local government in London, as said by my noble friend Lord Boyd-Carpenter, and the system in metropolitan areas has proved to be a great improvement on the previous two-tier system. The benefits of improved accountability and streamlined bureaucracy are considerable. Recent research by the London Boroughs Association showed a £1.3 billion saving so far for Londoners—and for taxpayers too—as a result of the abolition of the GLC. There is no reason to believe that anyone wants to pick up that price tag again.
Where a strategic overview is needed suitable arrangements are in place. There is a distinction between a voice for London and government for London. Perhaps more thought should be given to a voice for London. We are committed to a move to unitary authorities in those areas which do not already enjoy the benefits of increased accountability and streamlined bureaucracy for local people which a single tier of local government will bring.
With regard to the voice for London, perhaps I may say in passing that we have two splendid Lord Mayors of London—the Lord Mayor of Westminster and the Lord Mayor of the City. It is my view that they are doing a magnificent job. I should also like to say—and perhaps this is a point that the noble Baroness, Lady Hamwee, will take on board—that it would help if the London boroughs could co-operate more fully than they do now. Certainly one association would be preferable to two.
I do not intend to go into all the other detail about the functions for London. I believe the arrangements and mechanisms are in place to deliver good government for London as it is at the moment. I hope that these amendments will be withdrawn.
Baroness Hamwee: I thank noble Lords for contributing to what I think is one of the most important debates that we shall have this afternoon.
Several noble Lords have commented that London is working perfectly well and that there is nothing the matter with the system. I say to that: go out and respectfully ask the people on the streets and look at any newspaper. At least once a week national newspapers appear to have articles about the problems in London, and it certainly features high on the list of subject matter of any of the London press.
We are told that more government means more bureaucracy. We on these Benches believe that government is about service, not about bureaucracy, and I would not waste one sentence on advocating more bureaucracy. I advocate better service.
The Minister has asked me about the co-operation of the London boroughs. I take that point on board entirely, but however well they co-operate as different

341
entities it is not the same as forming one strategic authority sorting out its own priorities and working together. The boroughs can co-operate. But for each of those boroughs that co-operation is perhaps the second or third thing on its list of tasks. Their first priorities are, quite rightly, to their own areas.
We are told that we have two splendid Lord Mayors. I do not dispute that. I shared a platform with them on Friday and I felt that what I had around my neck was quite inadequate in the circumstances! But I do not think that they are the solution to the problem.
I end by appealing to the Committee's loyalty to our capital city and to the intellectual rather than emotional argument that the health of London is vital to the economic health of the country. We should take good care of the health of London. In looking at its health, we should seriously consider allowing the new commission to look at the possibilities and the options for proper government for London. I feel that this is so important an issue that I wish to divide the Committee.
4.5 p.m.
On Question, Whether the said amendment (No. 142) shall be agreed to?
Their Lordships divided: Contents, 86; Not-Contents, 145.

Division No. 1

CONTENTS

Addington, L.

Hunt, L.

Alport, L.

Jeger, B.

Aylestone, L.

Jenkins of Hillhead, L.

Beaumont of Whitley, L.

Jenkins of Putney, L.

Birk, B.

John-Mackie, L.

Blackstone, B.

Judd, L.

Blease, L.

Kirkhill, L.

Bonham-Carter, L.

Kirkwood, L.

Bottomley, L.

Leatherland, L.

Bruce of Donington, L.

Listowel, E.

Buckmaster, V.

Llewelyn-Davies of Hastoe, B.

Campbell of Eskan, L.

Longford, E.

Carmichael of Kelvingrove, L.

Lovell-Davis, L.

Cledwyn of Penrhos, L.

Macaulay of Bragar, L.

Clinton-Davis, L.

McIntosh of Haringey, L.

Cocks of Hartcliffe, L.

Mallalieu, B.

David, B.

Masham of Ilton, B.

Dean of Beswick, L.

Mason of Barnsley, L.

Desai, L.

Mayhew, L.

Diamond, L.

Mishcon, L.

Donoughue, L.

Molloy, L.

Ewart-Biggs, B.

Morris of Castle Morris, L.

Falkender, B.

Morris of Kenwood, L.

Falkland, V.

Mulley, L.

Feversham, L.

Nicol, B.

Fitt, L.

Ogmore, L.

Foot, L.

Prys-Davies, L.

Gallacher, L.

Richard, L.

Gladwyn, L.

Ross of Newport, L.

Graham of Edmonton, L. [Teller.]

Russell, E.

Sainsbury, L.

Hampton, L.

Seear, B.

Hamwee, B.

Serota, B.

Hanworth, V.

Shackleton, L.

Harris of Greenwich, L.

Soper, L.

Hilton of Eggardon, B.

Stallard, L.

Hirshfield, L.

Stoddart of Swindon, L.

Hollis of Heigham, B.

Strabolgi, L.

Holme of Cheltenham, L.

Taylor of Blackburn, L.

Hooson, L.

Thomson of Monifieth, L.

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Tordoff, L. [Teller.]

Williams of Elvel, L.

Underhill, L.

Willis, L.

Wallace of Coslany, L.

Winchilsea and Nottingham, E.

White, B.

NOT-CONTENTS

Abinger, L.

Lauderdale, E.

Aldington, L.

Lloyd of Hampstead, L.

Alexander of Tunis, E.

Long, V.

Allenby of Megiddo, V.

Lyell, L.

Ampthill, L.

Lytton, E.

Arran, E.

Mackay of Ardbrecknish, L.

Astor, V.

Mackay of Clashfern, L.

Balfour, E.

Macleod of Borve, B.

Bathurst, E.

Mancroft, L.

Bauer, L.

Melville, V.

Belhaven and Stenton, L.

Merrivale, L.

Beloff, L.

Mersey, V.

Bessborough, E.

Monk Bretton, L.

Birdwood, L.

Monteagle of Brandon, L.

Blatch, B.

Morris, L.

Blyth, L.

Mottistone, L.

Boardman, L.

Mowbray and Stourton, L.

Borthwick, L.

Moyne, L.

Boyd-Carpenter, L.

Munster, E.

Brabazon of Tara, L.

Murton of Lindisfarne, L.

Braybrooke, L.

Nelson, E.

Bridgeman, V.

Newall, L.

Brigstocke, B.

Norfolk, D.

Brougham and Vaux, L.

Norrie, L.

Butterworth, L.

O'Cathain, B.

Caldecote, V.

Oppenheim-Barnes, B.

Campbell of Alloway, L.

Orkney, E.

Campbell of Croy, L.

Orr-Ewing, L.

Carnarvon, E.

Oxfuird, V.

Carnegy of Lour, B.

Park of Monmouth, B.

Carnock, L.

Pender, L.

Cavendish of Furness, L.

Peyton of Yeovil, L.

Charteris of Amisfield, L.

Platt of Writtle, B.

Cheshire of Woodhall, L.

Plumb, L.

Cockfield, L.

Porritt, L.

Coleraine, L.

Prior, L.

Congleton, L.

Rankeillour, L.

Cork and Orrery, E.

Reay, L.

Cottesloe, L.

Renton, L.

Craigavon, V.

Ryder of Warsaw, B.

Cross, V.

St. Davids, V.

Cumberlege, B.

Sanderson of Bowden, L.

Dacre of Glanton, L.

Sandford, L.

Davidson, V. [Teller.]

Selsdon, L.

Denham, L.

Shannon, E.

Denton of Wakefield, B.

Shaughnessy, L.

Dormer, L.

Shrewsbury, E.

Downshire, M.

Simon of Glaisdale, L.

Dudley, B.

Skelmersdale, L.

Elliot of Harwood, B.

Soulsby of Swaffham Prior, L.

Elliott of Morpeth, L.

Stanley of Alderley, L.

Ferrers, E.

Strange, B.

Flather, B.

Strathcarron, L.

Fortescue, E.

Strathclyde, L.

Fraser of Carmyllie, L.

Strathmore and Kinghorne, E.

Fraser of Kilmorack, L.

Swansea, L.

Gainford, L.

Terrington, L.

Gainsborough, E.

Teviot, L.

Geddes, L.

Thomas of Gwydir, L.

Gridley, L.

Thurlow, L.

Grimthorpe, L.

Trumpington, B.

Hailsham of Saint Marylebone, L.

Tryon, L.

Harmsworth, L.

Ullswater, V.

Henley, L.

Vaux of Harrowden, L.

Hesketh, L. [Teller.]

Vivian, L.

Hives, L.

Waddington, L.

Howe, E.

Wade of Chorlton, L.

Hylton-Foster, B.

Walpole, L.

Jeffreys, L.

Wharton, B.

Kimball, L.

Wilberforce, L.

Kinnaird, L.

Wise, L.

Knollys, V.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
4.14 p.m.
Earl Howe: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Diplomatic Bags Incident: Investigation
Lord Cavendish of Furness: My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer which has been given by my honourable friend the Parliamentary Under-Secretary of State to a Private Notice Question in another place on diplomatic bags. The Answer is as follows:
"We learnt some days ago that bags containing Canadian diplomatic mail had been discovered by staff at Wandsworth Prison. Diplomatic bags are routinely sent to Wandsworth Prison for laundering. On this occasion the bags in question had been inadvertently included in such a consignment sent to Wandsworth. Steps were immediately taken to recover the diplomatic mail and to investigate the incident".
My Lords, that concludes the Answer.
4.15 p.m.
Lord Williams of Elvel: My Lords, the House will be extremely grateful to the noble Lord, Lord Cavendish, for repeating the Answer to a Private Notice Question in another place. I must say that it is the most extraordinary Statement that I have heard in this House, having dealt with many in my time.
Can the noble Lord tell the House whether the bags in question belong to the Foreign Office or to the Canadian High Commission? If they belong to the Foreign Office, is it common practice to send these diplomatic bags for laundering, to use the noble Lord's expression, at Wandsworth Prison? What other Foreign Office dirty linen is sent to Wandsworth Prison for laundering? How long was the matter undetected? What representations have been made by the Canadian High Commission to the Foreign Office? Was any of the confidential material copied; and if so, by whom and with what motive? What is the state of the investigation which I understand is taking place? Will further Statements be issued? Finally, will the noble Lord kindly tell the House whether it is sensible that Foreign Office material, whether bags, dirty linen or anything else, should be sent to Wandsworth Prison for dry cleaning?
Lord Bonham-Carter: My Lords, I associate myself with the gratitude expressed by the noble Lord, Lord Williams, for this very interesting Statement. Can the noble Lord confirm that these documents were sent to Wandsworth Prison with the full collaboration of the North Staffordshire Police and the Home Secretary?
Lord Cavendish of Furness: My Lords, I thank the noble Lord, Lord Williams of Elvel, for his acknowledgement of what he described as an extraordinary Statement. I thank, too, the noble Lord, Lord Bonham-Carter. I can confirm that the bags
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belonged to Canada and not to the Foreign Office. We handle them on Canada's behalf. I believe that the incident occurred about 10 days ago. It was only revealed as material came to light, because the bags were opened in Wandsworth. We have no knowledge of the information being copied. An investigation has taken place but no report has been published as yet. I cannot tell the noble Lord whether it is the kind of report that is normally published.
We regularly handle diplomatic bags on behalf of the Canadians and others. The bags were delivered from the Canadian High Commission inside a larger white bag which also contained bags for laundering. This consignment was added to other bags awaiting delivery to Wandsworth for laundering. Steps have been taken to prevent repetition of this incident. For instance, bags in the outward bag office are now turned inside out. In reply to the noble Lord, Lord Bonham-Carter, so far as I know there was no involvement by the local constabulary.
4.19 p.m.
Lord Peyton of Yeovil: My Lords, can my noble friend say what on earth people put into diplomatic bags that requires their regular laundering?
Lord Cavendish of Furness: My Lords, I do not think mail of any kind—and certainly not diplomatic mail—has any immunity from dirtying the vessel that carries it. Therefore, I imagine that it is good practice to keep diplomatic bags clean, as it is with other items.
Lord Stallard: My Lords, can the Minister say who opened the bag at Wandsworth? Further, is there a security precaution that is normally taken? It does not take too much imagination to realise that all kinds of things could have been going there for a long time in diplomatic bags. Is security so lax? Although it may seem very funny, there is a serious side to the matter if there is a security problem at Wandsworth. I repeat, who opens the bags and who is in control of the operation?
Lord Cavendish of Furness: My Lords, this was a matter of human error. The responsibility for seeing that the bags do not contain any material rests with the Foreign Office. We believe that prison officers open the bags at Wandsworth. I agree with the noble Lord that it is a serious matter. I should also say, in reply to the question put to me by the noble Lord, Lord Williams of Elvel, that we have been in touch with the Canadians throughout this episode and indeed have apologised to them.
Lord Mason of Barnsley: My Lords, can the Minister explain who was in charge of this laundered bag? Further, what is the noble Lord's definition of "laundering"? What does laundering articles in diplomatic bags mean?
Lord Cavendish of Furness: My Lords, the object of the exercise is not to launder the contents of the diplomatic bag; it is to render clean the bag.
Lord Mayhew: My Lords, if the Government wish to publicise the diplomatic mail of other countries, might they not do better in future to leave such bags in an open prison?
Lord Cavendish of Furness: My Lords, I note the suggession made by the noble Lord, Lord Mayhew.

Local Government Bill [H.L.]
4.22 p.m.
House again in Committee on Clause 13.
Baroness Young Baroness Young moved Amendment No. 143:
Page 11, line 19, leave out ("as respects each of those areas either") and insert ("by 31 December 1994").
The noble Baroness said: In moving this amendment I shall, for the convenience of the Committee, speak also to Amendment No. 210. The purpose; of the amendment is clear: it is to ensure that the Local Government Commission makes recommendations about the whole of England by the end of 1994. I warmly welcome the Bill and believe that Part II, providing for the establishment of the Local Government Commission, is particularly important. I am sure that, in a very complex and difficult situation, it is highly desirable that authorities should be able to put their views to the commission and that all points of view should be heard before a decision is reached.
However, it means that while the commission is undertaking its work there will be a considerable period of uncertainty when no one will know what is going to happen. That is particularly serious for the staff. My attention was drawn only last week to a chief executive who is contemplating early retirement if there is to be another change in his authority. I do not have the slightest doubt that that kind of situation is replicated throughout the country. Whatever else we may or nay not agree about, I believe that everyone accepts that a prolonged period of uncertainty is bad for any organisation. It is an unhappy situation for the individuals involved, and it certainly does not create good local government.
It is possible that 1994 is too soon or that it is the wrong date. This is a probing amendment. It would be most helpful to the Committee if my noble friend was able to give some kind of indication of what the Government think the timetable will be and how they propose to manage the intervening period. I am bound to say to my noble friend that we do not want a longer length of time than is absolutely necessary for the reasons that I have already given.
Perhaps I may speak briefly to Amendment No. 210 which, in a sense, is linked to the amendment before the Committee. Amendment No. 143 proposes that the Local Government Commission should report by 1994 and Amendment No. 210 gives the Secretary of State a maximum of a further two years to decide on implementation. I shall not repeat all the arguments that I put forward in relation to Amendment No. 143 because the same applies to the implementation. It is really setting a timetable. The amendment is modest; it is nevertheless important. I hope that my noble friend the Minister will consider the proposal seriously.
The Deputy Chairman of Committees (The Viscount of Oxfuird): Before proposing this amendment, I must advise Members of the Committee that if Amendment No. 143 is agreed to I shall not be able to call Amendment No. 144 due to pre-emption.
Baroness Hollis of Heigham: I should very much like to second the remarks so effectively made by the noble Baroness, Lady Young, in regard to Amendments Nos. 143 and 210. I do not think that there is very much between us on the matter. I believe that we all agree that the Local Government Commission has a large task to carry out and that it is essential that it should complete it as quickly as it can, consistent with the need to take careful account of local community views.
We are concerned that an elongated timetable may produce the fear of incremental change. The fact that some parts of the country are not included in the review, the possibility of becoming entangled in boundary problems and concern that there may not be sufficient members of the commission are all factors that could generate uncertainty and leave local people, voluntary organisations and, above all, as the noble Baroness, Lady Young, rightly said, staff, unclear and unsure of where their future lies.
Nationally, there will be serious problems in forecasting grant settlement and budget planning as well as the fact that staff will be unable to plan their futures. It will also be more difficult—this may sound a little ironic coming from this side of the Committee—for private contractors who have CCT contracts with local authorities. Their future will similarly be somewhat uncertain. That point was brought home most forcefully in the Audit Commission's response, at paragraphs 4 and 5, to the consultation paper this summer. It said:
"Further costs will be incurred as a result of the particular character of the recommendations in the consultative paper. These costs will apply at least in part, even if no re-adjustment in structure is forthcoming. Principally, they are the costs of uncertainty. In 1974 legislation clearly determined the parameters of reorganisation, eliminating many alternative structures. In 1991 no particular model is specified, and all current units of local government can (and probably will) lay claim to continuity, and an extended role under the new regime. Current councils must compete for their legitimacy and future … the Commission therefore welcomes the Secretary of State's statement to the effect that the Commission should complete its work quickly".
It is for those reasons that I am happy to support the amendment. I hope that we shall have a speedy, though realistic, timetable. I was reassured to hear that the chairman-elect, Mr. John Banham, hopes to complete it within five years. Even that may be too extensive. The amendment would ensure that all parties know and share a common timetable. We should like it to be three years but, as the noble Baroness, Lady Young, said, the Minister may indicate that that is unreasonable and impracticable.
However, it would help if we had some indication on the matter which would help the report to come through. There is also the proposal for the additional two years for the Secretary of State. It would be most helpful if the Minister could suggest whether she is minded to encourage the Local Government

347
Commission to publish its proposed timetable of work. That would alleviate uncertainty. With those comments, I repeat that I support the amendment.
Baroness Hamwee: I support the amendment. I do not wish to detain the Committee by repeating what has been said. The noble Baroness, Lady Young, reminded us most effectively that we are not dealing with some abstract arrangement but with something that affects people's lives. Therefore, it is clearly essential that we have not just a realistic timetable but one in which people have faith and one which will be stuck to and worked to on a reasonable basis.
4.30 p.m.
Lord Boyd-Carpenter: I share the view expressed by the three noble Baronesses from the different parties, that the more quickly the commission can start operations and produce its results, the better. I am bound to say that I feel that they were a little optimistic in believing that the job could be done by 31st December 1994. After all, the Bill will not become an Act until we are into 1992. It has to go through another place, and another place may wish to discuss it in some detail, as the Committee does. So it will not be law until well into 1992.
Given the enormous area of work which the commission will have to cover, it would he imposing upon it a difficult task to expect it to finish by 31st December 1994. Although one wants it to proceed as quickly as possible, it would be a mistake to hustle it. We hope that it will produce new constitutional arrangements for a large part of our local government system, and a system which will last because no one wants to be continually amending our system. We want it to be a worthy system which will operate for a good many years. I express a doubt—I shall be interested to hear what my noble friend the Minister says—as to whether the task can be done reasonably within the time proposed. That is an important point.
In considering the matter, it would help me if my noble friend would say, given the proposed strength of the commission, how many areas at a time it is expected that the commission will be tackling. As I understand it, it will tackle a number of areas simultaneously, especially on the great question of unitary or two-tier local government. That will obviously have a considerable bearing on when the whole job will be completed.
Baroness Faithfull: I support what my noble friends Lady Young and Lord Boyd-Carpenter have said. It is also important that there should be consultation at all levels with as many people as possible. There was not enough consultation with the people involved with local authorities, especially those under scrutiny, before the last reorganisation. That consultation takes time. If the reorganisation is to be successful, it must be successful for those who will work with and under local government. While I agree that we do not want to take too long over this, I hope that enough time will be given for consultation.
Baroness Blatch: The amendments would fundamentally alter the approach to reviewing the structure of local government for England for which the Bill provides.
I can appreciate that Members of the Committee wish the Local Government Commission to complete its reviews of local government structure as quickly as possible. I agree that a prolonged period of uncertainty is not desirable and we share the aim of arriving at the right answers and putting them into effect as quickly as possible.
We have made it clear that we believe that by reviewing the shire counties area by area, the commission will be able to find the best local solutions and we shall be able to move quickly in those areas where the need for change is established.
There is no question of setting a deadline in the Bill for the commission to carry out all its work or for my right honourable friend the Secretary of State to give effect to its recommendations by order. That would be unreasonable given the scale of the task. Even when its initial review of structure is complete, the commission will have a continuing role in relation to boundary and electoral changes. I cannot accept the amendments.
Perhaps I can respond to some of the points that have been made. On the programme, many of the responses to our consultation paper The Structure of Local Government in England commented upon our priorities for review. We are still considering what would be the most balanced and manageable programme for the commission.
My noble friends Lord Boyd-Carpenter and Lady Faithfull said that we must allow time for the job to be done properly. That point has been taken account of. From the Second Reading debate and what has been said today, I am seized of the fact that the more quickly this is done the better, but the balance has to be struck between that and having the job done correctly. I cannot say how long the commission will need to do its work. We do not wish to inhibit it from moving quickly where issues and resulting solutions are relatively straightforward, or from taking more time when it is appropriate.
I take the point about proper consultation made by my noble friend Lady Faithfull. We have set up the mechanisms for there to be proper consultation. We must give the Local Government Commission time to do that.
I was asked the direct question by the noble Baroness, Lady Hollis, about whether the Local Government Commission would publish a timetable. It will be the Secretary of State who will determine the programmes of work. So far as I am aware, although it is subject to the guidance which is out for consultation, the Secretary of State will not be time-limiting the exercise. It will be for the Local Government Commission to take the time appropriate to complete the programme.
From all we know of Mr. Banham, I believe that he will expedite where it is appropriate to do so, although we hope that he will not cut corners merely to meet what might turn out to be an artificial deadline.
Baroness Hollis of Heigham: I thank the Minister for giving way. Will she enlarge on that point? Is she

349
saying that the Secretary of State will publish the programme of work—the areas in due order—to which the Local Government Commission will turn its attention, so that areas which are not due to be considered for three or four years can carry on with their local government duties?
Baroness Blatch: I cannot give a specific answer to that question now. It will he the Secretary of State who will prescribe the programme of work. At the moment I cannot say whether the whole programme will be established at the outset or whether it will be just the first one or two tranches of work. I am afraid that the noble Baroness must await that decision. Consultation resulting from the draft guidance may well give some indication and may influence the Secretary of State in those matters.
My noble friend Lord Boyd-Carpenter was also interested in whether one, two or even three areas would be dealt with at a time. I am afraid that I have to leave that question on the Table with the question from the noble Baroness, Lady Hollis. The noble Baroness was also rightly interested in the transitional arrangements for matters such as budgets and contracts that had been entered into by local authorities. If one reads the guidance, one will see that the transitional arrangements will have to be properly addressed when the recommendation comes to the Secretary of State and, indeed, before Parliament. The recommendation will have to be comprehensive. It must not merely say that the authority can be a unitary authority. It must address a whole range of issues, including strategic matters, the proper functions of a local authority and the effective delivery of services. It will of course include the practical transitional arrangements necessary to achieve that.
I promise to take back all the messages that I have received as a result of discussing the amendment, and I hope that my noble friend will not press it.
Baroness Young: I thank all those Members of the Committee who have taken part in this short debate, especially the noble Baronesses, Lady Hollis and Lady Hamwee. My noble friend the Minister will recognise that there is great practical interest in all parts of the Committee as to how this matter will work out. We are all agreed that it is proper, and a good plan, to have a boundary commission.
I very much take the point of my noble friend Lady Faithful] about consultation. As I said to the Minister at the beginning, this is not a matter that I wish to press; it is a probing amendment. I was particularly pleased to hear her say that she would take back these points.
A number of detailed questions have arisen which need to be examined. To give one example, my noble friend spoke about the transitional arrangements and the point was raised by the noble Baroness, Lady Hollis. The uncertainty begins from now and that is the point. We shall have the period while the Bill goes through Parliament, the period before it becomes law; we shall then have the period of the boundary commission and then the period after the decision has been taken, before the new authority comes into
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being. Throughout that time, there will be uncertainty not only for individuals but in respect of the work and all the other arrangements that have to be made.
It may well be that the point of my noble friend Lord Boyd-Carpenter about dealing with more than one area at a time should be examined. Also, perhaps we ought to consider whether to have more commissioners so that the matter can proceed more quickly. There are a number of alternatives. I hope that my noble friend will take back these points and consider them. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Young Baroness Young had given notice of her intention to move Amendment No. 144:
Page 11, line 20, after ("areas") insert ("or classes of local authorities").
The noble Baroness said: I understand that this amendment has already been spoken to, therefore I shall not move it.
[Amendment No. 144 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 145:
Page 11, line 21, after ("boundary") insert ("(with the consent of the authorities affected by the changes)").
The noble Baroness said: I wish to speak to Amendment No. 145 and, with the consent of the noble Baroness, Lady Cumberlege, also to Amendment No. 147. Both amendments relate to boundary questions and therefore this may be for the convenience of the Minister. The amendments seek to support the sensible and straightforward draft guidance in the consultative document.
Baroness Blatch: If the noble Baroness will permit me to intervene, this is the first that I have heard that these amendments are linked. They are not linked on the Marshalled List, nor in the groupings. My information was that Amendment No. 145 was to be taken separately.
4.45 p.m.
Baroness Hollis of Heigham: I am happy to take my amendment separately if that is what the Minister prefers. I was simply trying, in response to her concern, to group the amendments in order to proceed more swiftly. Very well, I shall just deal with Amendment No. 145.
It is clear that the commission will need to consider boundaries in the broadest sense. Some of us hope to argue later that it may wish on the one hand to reflect regional considerations and, on the other, not to create new authorities which may transgress boundaries which have clear historical identities. In moving the amendment, I wish to make three points. First, unless there is clear local support for boundary change, it is a long, acrimonious, wrangling disputatious process because it affects not only the character and identity of an authority but also more prosaic considerations like standard spending assessments, UBR and the tax base. Because it is acrimonious and wrangling, in that situation, the work of the Local Government Commission might be bogged down.

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A second, perhaps obvious point but nonetheless worth making is that work with boundaries at this stage not only creates unnecessary uncertainty and upheaval, but clearly has an almost domino effect on all the adjacent authorities. This, too, will multiply the confusion and complexity which will face local government during a difficult period for voluntary groups as well as staff.
Thirdly, with the concept of enabling authorities, there is no need in any case to adjust boundaries simply to make larger authorities. Putting two sparsely populated district councils together, for example, may double the width but it does not necessarily double the quality. That argument has long gone.
The amendment seeks to suggest that where there is local support for an obvious, sensible change, the Local Government Commission has flexibility to support it during the course of its work. But without that consent we hope that any such boundary changes—the more difficult and contentious ones—will be deferred until after the Local Government Commission has completed its first tranche of work so that we do not delay its recommendations. I beg to move.
Baroness Hamwee: I wish to speak against the amendment. While I understand the concern voiced by the noble Baroness, Lady Hollis, I wish to put two points to the Committee. First, to suggest that the primary requirement is the consent of the authorities affected by the changes goes somewhat against the discussions that we have had over the past few hours. I do not suggest that the majority of authorities wish to go against their own communities, but on the other hand it must be accepted that there will be a certain amount of status that is felt to be at risk. There will be people who feel that they are likely to be knocked off their own local perches. To leave a veto in the hands of the authorities is not the way in which members on all sides of the Committee have been tending to approach the issue.
Secondly, it seems to me that if the question of boundary changes is left until the second stage, it may never take place. Having gone through the agonies of the review—admitting that there are provisions for the rolling review which will continue in the later phases—it must be likely that people will find it difficult to face up to the question of boundaries, having gone through the whole issue of structure as an initial exercise.
Thus, while I understand some of the concerns that underlie the amendment, I feel that we, from these Benches, could not support the amendment.
Earl Howe: The amendment would require the commission to obtain the consent of those local authorities affected by its recommendations for boundary changes. I cannot help feeling that as regards the principle of the amendment at least we have been over this course in an earlier debate. The noble Baroness, Lady Hamwee, has reminded us of
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our conclusions when the word "veto" was mentioned. It effectively gives local authorities a veto on any proposals which the commission may choose to make.
Clause 15 sets out the procedures which the commission must follow when conducting its reviews, and allows ample opportunity for those with an interest in the review to make representations to it. Under this clause, all authorities affected by proposals to alter their boundaries will have ample opportunities to put their views to the commission, which is, of course, under a duty to take such views into account when drawing up its recommendations. The commission's priority is to ensure that its recommendations for change reflect the interests and identities of local communities and secure effective and convenient local government. To do this it must rely on its own discretion in taking account of local interests.
Were all those authorities affected by the proposals to change a local government boundary required to give their consent to such an alteration it could be very difficult to implement any boundary changes. The noble Baroness, Lady Hollis, mentioned that there had to be local support or else it was likely to be a long and acrimonious process. However, the process could be acrimonious and run ad infinitum if consent were required at the end of it.
There is another point here. In seeking the consent of the local authorities involved, one is inevitably preferring the views of those local authorities over and above the views of the wider public. We all agreed in this Committee the day before yesterday that it is very much the people's views that will weigh in the commission's recommendations. With that, I hope very much that the noble Baroness will be able to withdraw the amendment.
Baroness Hollis of Heigham: Perhaps it was my fault arising from the way in which I moved the amendment, but there may be a misunderstanding about its nature. The amendment does not seek to say that there may never be any boundary changes without the full consent of all parties concerned. It says that while the Local Government Commission is carrying out its tranche of work, in that process there will be no boundary changes unless there is the consent of all parties concerned. It seems to me that that expands, enlarges and reflects the spirit of paragraph 15 of the guidance to the Local Government Commission which states:
"Although some boundary changes may need to be considered during the course of the review, detailed boundary changes will normally be considered in due course after structural change has taken place".
That is the view of this side of the Chamber. However, if in the course of that process there are some boundary changes which appear to be desirable and are welcomed on all sides, it would be appropriate to introduce such changes during the course of the Local Government Commission's work. That process should not necessarily be deferred until the commission's work has been completed.
It is invidious to give an example as it may not be a popular one. However, I know two urban district councils in East Anglia—I prefer not to name them—that may wish to put forward a proposal in the

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future to merge. It is obviously useful for the Local Government Commission to take that point on board during the course of its work and its considerations, but only if that is done with the consent of all parties concerned. If such a course of action is contentious, it is clearly right—Amendment No. 147 argues this—that it should be deferred rather than be allowed to delay the work of the Local Government Commission still further. That is the point of the amendment. It is a much more modest amendment than either the noble Baroness, Lady Hamwee, or the Minister seemed to suggest. Nonetheless under the circumstances I am willing to withdraw the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 146 had been withdrawn from the Marshalled List.]
Baroness Cumberlege Baroness Cumberlege moved Amendment No. 147:
Page 11, line 23, at end insert ("or
(iii) that he should defer any boundary or electoral changes until after a structural review has been completed.").
The noble Baroness said: This amendment is designed to speed up a process of bringing about change—it is rather similar to the previous amendment that we discussed—especially when that change is considered desirable. However, this amendment is not as prescriptive as the amendment moved by my noble friend Lady Young.
Clause 13(1) (b) of the Bill gives the Local Government Commission two options to recommend to the Secretary of State: first, that he can make structural, boundary or electoral changes or, secondly, that he can make no changes at all. This amendment seeks to give the Secretary of State a third option of greater flexibility; namely, that he should defer any boundary or electoral changes in any area until after a structural review has been completed.
On Second Reading I urged that the newly-formed Local Government Commission should work at a spanking, pace. I am heartened by the Minister's words in response to the amendment moved by my noble friend Lady Young. Uncertainty is no one's friend and if changes are to be made, they should be carried through with speed and decision. That view seemed to receive some support from all sides of the Chamber. In the meantime I have been able to discuss the question of speed Of change with local government officers and the majority seem to agree that uncertainty has disadvantages. As has already been mentioned, there is the difficulty of retaining but also of recruiting quality staff. However, other local government officers see sufficient scope in this Bill for delaying decisions on the Future structure of their patches almost indefinitely. That would be a recipe for confusion and uncertainty and would be a poor basis for negotiations between local authorities and health authorities as we are about to launch into making the community care legislation a reality.
In some areas I know that there will be no reason for altering the status quo, but that decision, too, needs to be taken. Just as no housewife makes a long-term commitment to a piece of fish without first looking at the sell-by date, so no health authority will
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waste its time in negotiating a complicated community care package with a local authority that is about to be disbanded.
This amendment is designed to ensure that where a case is made for structural change, boundary squabbles should not be used as a justification for doing nothing. The Secretary of State would be advised to proceed at once with the change to a unitary authority if that is the local wish, and subsequent boundary changes would follow. As the noble Baroness, Lady Hollis of Heigham, has already commented on this matter, I do not need to remind the Committee how contentious boundaries can be, both in determining the political complexion of an authority and in determining the salary of its chief officers.
I am pleased to have support from the noble Baronesses, Lady Hollis and Lady Stedman, in determining the ground rules. I hope that my noble friend the Minister will use her considerable influence in persuading the Secretary of State and the commission that speed is of the essence. I also hope that the Secretary of State, on the advice of the commission, will not be deflected from making changes by albeit hard fought but minor boundary disputes. I beg to move.
Baroness Blatch: I wish to start by again giving my noble friend an absolute assurance that all the messages that emanate from these debates will be reported to my right honourable friend the Secretary of State. The point about speed and uncertainty is well taken. However, that point does not relate to this specific amendment.
There is nothing in the Bill to prevent the Local Government Commission making recommendations about the pace of implementation. Therefore there is flexibility in the Bill to cover my noble friend's concerns. In the draft of our guidance to the Local Government Commission, which we issued for consultation to the local authority associations and others on 25th November, we set out our views about the relationship between reviews of boundaries and structure.
The draft guidance states that in undertaking its reviews of local government structure, the commission will obviously need to consider the boundaries of local government areas in broad terms. Although some boundary changes may need to be considered during the course of a review of structure, detailed boundary changes will normally be considered in due course after structural changes. I believe that is what my noble friend is asking for.
In some cases reviews of structure may take place and reviews of electoral arrangements may not be necessary immediately. In other cases electoral arrangements may need to be reviewed at the same time as structure. I believe that my noble friend fears particularly that a perfectly acceptable— and one hopes sensible—recommendation must not be held up by what may well be a minor boundary or electoral change. I must reassure her that the Bill has sufficient flexibility to avoid that situation.
Baroness Cumberlege: I am grateful to my noble friend for those assurances and for re-emphasising the guidance that has been sent out. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 148 not moved.]
5 p.m.
The Earl of Lytton The Earl of Lytton moved Amendment No. 149:
Page 11, line 23, at end insert:
("( ) make recommendations in respect of changes ancillary to or consequential upon its other recommendations.").
The noble Earl said: This amendment is intended to clarify the remit of the Local Government Commission, and more particularly to clarify the Government's view on that matter and certain allied matters. I am paddling my own canoe on this amendment. That probably explains why no other Member of the Committee has added his name to it. The amendment certainly does not concern the government of the Greater London area. I shall put the Minister's mind at rest on that matter straightaway.
Part I of the Bill concerns the proper delivery of services. That matter has been referred to throughout the debates in Committee. In Part I the delivery of services is concerned primarily with financial performance, the provision of statistical information and the efficiency of delivery. The latter is principally brought about through compulsory competitive tendering.
Within the parameters of structural boundary or electoral changes, some wide powers are conferred on the commission in paragraph 4 of Schedule 2 and under the provisions of Clause 13(5) (b). Indeed, it appears that the commission has the power to do almost anything in that regard. However, the same wide powers do not seem to be applied to those matters that the commission can consider within its remit. The total absence in Part II of specific references to regulators in the context of new local government structures is, I believe, a fairly serious omission.
Throughout the debate reference has consistently been made to local government functions. I therefore make no apology for raising the question of functions in detail. I consider it to be an intrinsic part of the consideration of any new measures that may result from this Bill or the commission's work. I am greatly reinforced in my view by the comments of other Members of the Committee. I find it remarkable that the word "function" is not even mentioned as a consideration for the Local Government Commission under Part II of the Bill although it is a subject referred to in the draft guidance. I question how one can consider structure without giving consideration to the functions that have to be performed and, together with those functions, the efficiency and standards of local government administration. As we have heard, the end product is standards of delivery. Everything else flows from that.
The amendment is not the one that I should have liked to have tabled. It had been my intention to seek an amendment to Clause 13(1) (b) by referring to,
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among other things, functional and other changes, including those relating to efficient administration, standards of conduct and the protection of the public interest in the discharge of local government functions. Unfortunately, I felt that it was unwise to table such an amendment having been advised that it was outside the scope of the Bill. I felt the need to heed that advice although my own conviction and what seems to me a commonsense approach to the legislation dictate otherwise.
My main concern is that the Bill should result in workable legislation, that the operation of the Local Government Commission should not be unduly fettered and that this Committee should be free to discuss all matters of relevance to the Bill, including the extent of the commission's operational parameters. It is imperative that, however narrow the commission's brief in terms of its main recommendations to the Secretary of State, it should have the widest remit in terms of its investigation and reasoning. It should also be able to identify associated matters of relevance and issue recommendations in relation to them.
As the draft guidelines in relation to the commission refer at page 3 to functions and as the entire Bill is about the delivery of services, it is not unreasonable to invite the Minister to say why standards of conduct, avoidance of conflict of interest, the protection of the public interest and the promotion of best practice in local government affairs are considered outside the scope of the Bill. I feel that such considerations are highly relevant in the context of the new, enhanced, all-purpose and possibly unitary authority. I have in my mind's eye the prospect of consolidating in one authority all planning, land acquisition, housing, highways, police and other roles. The extent to which those are amalgamated under one body or are separate remains to be determined. However, it seems to me that we are looking at a different unit for the delivery of those various services. It is vitally important that high standards of conduct, quite apart from financial probity and economic efficiency, are considered. I believe that the Local Government Commission is the right body to do so and that the Bill is the right context in which to raise such issues.
If, however relevant those matters may be, they are considered outside the scope of the Bill I should like to invite the Minister to say what the Government propose to do about them. I respectfully venture to suggest that their absence means that the Bill lacks an important component. I wish particularly to know whether I am to take it that in regard to local government functions the commission will rely solely on central government guidelines and will have little discretion of its own in the matter. That is a question I invite the Minister to answer.
I do not believe that there is any fundamental disagreement between me and anyone else, and certainly not between me and the Minister, on the objectives of good local administration. However, I am not happy that the Local Government

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Commission is being given a fair chance to produce an optimum solution as opposed to one created within the ring fence established by ministerial guidelines.
If accepted, the amendment would be a very small step in improving the scope of the Local Government Commission in terms of the recommendations which it would be able to produce. It does not bind the Minister any more than the Minister is bound by the Bill unamended. However, if we are to procure full investigation and comprehensive recommendations which will lead to the improved delivery of local government services about which we have heard so much in its very widest sense, an amendment such as this is necessary.
I should like to see regulators similar to those in privatised industries set up for local government, but that is probably a matter which I cannot take further at this juncture. I should like that to be considered by the commission. It may well be that it is not appropriate for the commission's role to be extended that far. However, it is important that the commission should be free to consider all matters relevant to its main recommendations and to be able to make further recommendations to the Secretary of State on those particular points which, in the view of the commission, are of particular relevance to its core recommendations.
The amendment is probably badly drafted and no doubt can be criticised on that ground. My purpose in moving it is to elicit the Minister's considered response. I beg to move.
Lord Boyd-Carpenter: In his amendment and in his speech the noble Earl, Lord Lytton, has raised a matter of some importance. The Committee is indebted to him for raising it. My only doubt—and no doubt the Minister can deal with the point—is whether the amendment is necessary. Can the Minister tell the Committee whether, without the amendment, the commission would be able to take those matters into account?
Lord Morris: I rise not only to support the noble Earl, Lord Lytton, but also to congratulate him on the clear and logical way in which he developed his argument. He stated that he had been advised that alternative amendments were outside the scope of the Bill. On a narrow interpretation, that is correct because the second part of the Long Title clearly states that the Purpose of the Bill is,
"to make new provision in relation to local government in England for effecting structural, boundary and electoral changes".
There is no mention of functions. The means by which the Bill puts that purpose into effect is solely through the creation of a Local Government Commission to look into those matters.
The fundamental point which the noble Earl has raised is clearly illustrated by a simple question, which I ask my noble friend to be good enough to answer. Does function flow from structure, or does structure flow from function? If function flows from structure—and I should be astonished if he believed that—that is the end of the matter. However, if structure flows
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from function there is no question about it; it would be impossible for the commission to look intelligently into structure.
That answers the question of my noble friend Lord Boyd-Carpenter regarding necessity. In my view it is necessary. That is why I strongly support the noble Earl, Lord Lytton. The commission must be given power to look at function because it cannot consider structure without looking at the function of local government.
Lord Feversham: I will possibly get into the canoe with the noble Earl, Lord Lytton, at the end of the debate on this amendment. No doubt he will he comforted to know that even the noble Lord, Lord Boyd-Carpenter, is at this stage half-in and half-out of that canoe. A whole raft of amendments to be discussed later will also deal with the question of functions. It has been raised both at Second Reading and in the present amendment, and it will come up again. I think it is almost certain that at some stage during today's proceedings we will need to have a vote about functions. I am not entirely sure at this stage whether or not I will support the amendment. I do not know how far the noble Earl is prepared to go. But I shall be very interested indeed to hear what the noble Earl the Minister has to say in reply to the amendment.
Earl Howe: I listened very carefully to the remarks of the noble Earl, Lord Lytton. I am sure that noble Lords on all sides of the Committee share his very real concerns. He has made some extremely important points, and I thank him for that. His main worry is that the remit of the Local Government Commission will not be wide enough to take into account his concerns. I hope that what I say will to some extent reassure him at least on that point.
The Committee will be aware of the consultation paper on internal management which we discussed on Monday. I think that is relevant to the issues raised by the noble Earl. We have said in the document that we would wish to consider carefully the impact of any changes in order to ensure there were adequate safeguards against the possibility of abuse. I have already given an undertaking that the Government will come forward as soon as possible with the conclusions of the review of internal management.
There are some councils who, while acting within the law, nevertheless fail in the duty to provide adequate cost-effective services. Your Lordships will no doubt have seen copies of the draft guidance for the commission which we have issued for consultation. In paragraph 14 it is said that the commission should assume that, apart from specific statutory duties laid upon it, an authority will operate in the most cost-effective way. That does not mean that the Local Government Commission will not look at the functions of authorities in the areas under review. That is an integral part of its consideration of structure.
Clause 13(5) will require the commission to have regard to effective and convenient local government. However, I should make clear that that is only in the sense that the structural changes they recommend

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must be with that factor in mind. The two are linked. It would not be right for the commission to reach a judgment about who are the efficient councils. That is a political judgment which I suggest needs to be exercised by the electorate through the ballot box.
Your Lordships have already considered Clauses 1 to 7 of the Bill. They introduce important changes in the information available to the electorate about the performance of their councils. Voters will be in a much better position to make judgments about the standards achieved by their councils.
I have to say I think the measures to safeguard the public interest need to be looked at on a national and not local basis. The Government will take whatever steps are necessary to ensure a continuation of the high standards we expect of our councils. Those issues are not appropriate for the local government commission. I particularly have in mind the noble Earl's remarks about financial probity. I hope that what I have said has gone some way to reassure him and other noble Lords. I hope he will agree that the amendment can be withdrawn.
The Earl of Lytton: I should like to thank the noble Earl for his reply, and also to thank other noble Lords who have spoken so eloquently and far more compellingly than I have in support of the amendment.
I pick up a couple of points made by the Minister. First, the discussion documents dealing with local authority internal matters seem to me to be the product of Part I of the Bill but not to have a mirror image in Part II. The commission's view of the way in which the functions will be discharged in the light of its recommendations is at the heart of my point; in other words, it is not just about financial reporting back but about checks and balances in the broadest sense of local government administration.
Secondly, the noble Earl made a number of points about the standards of conduct not being a matter for the commission. I have to accept that in the context of the Bill that is probably so. I am sorry to have to admit it, and I am even more sorry that the Minister has not made any suggestion as to when that area, about which I feel very strongly, may be dealt with in due course. I do not believe that it is being dealt with in legislation currently before Parliament, let alone in this House.
In moving the amendment, it was not my intention to do more than elicit a response from the Minister. I am not entirely happy about it, and I should like to reserve the right to come back to it at a later stage of the Bill. For the time being, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 149A to 151 not moved.]
5.15 p.m.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 152:
Page 12, line 5, at end insert:
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("( ) to establish local authorities which are of a sufficient size to provide a secure basis to administer the full range of services at present provided by county and district councils.").
The noble Lord said: In moving Amendment No. 152 it may be for the convenience of the Committee if I also discuss Amendment No. 153. I think I should remind the Committee that I advise NALGO although I am not at all sure they would approve of what I am about to say. I say straight away that I do not in any way depart from my view that local government units should be of a size compatible with the need to ensure that they are as close as possible to those who are being governed. The electorate must know who is governing them and from where they are being governed. Preferably, that should occur locally so they can get at their governors when they do not like what their governors are doing to them. It is most important that we have units which are recognised by the electorate as convenient to themselves, not to local government administrators. Indeed, I believe they must be small enough to be susceptible to the views of local people yet large enough to be able to administer the widest possible range of services. Generally speaking, that can be achieved by basing the new authorities on any existing districts.
Clearly, the present two-tier system is generally unsatisfactory; but in my view it must not be replaced by a mass of small local authorities, many of which will be unable to administer the whole range of services that are at present run by district and county councils. It is essential that the new local government units are all-purpose authorities and that they do not have to set up a multiplicity of joint authority arrangements—although, in my experience, in many areas joint authority arrangements have operated very satisfactorily indeed. Nevertheless, joint authorities tend to reduce rather than increase democratic accountability.
I had the honour to serve on the Association of Municipal Corporations (when it existed) as a member of the Reorganisation of Local Government Sub-Committee. It proposed a form of local government which would have been ideal had it been put into place in 1974 rather than that reorganisation which was in fact carried out. Its proposals were for all-purpose authorities of a size convenient for the area to be administered. They did not all have to be of a standard size. There was not a minimum or maximum size. The units were to be convenient for the people who were being governed. Also, although this is not suggested in this Bill, it proposed that there should be provincial councils responsible for some of the great services but which nevertheless could, in many small most-purpose authorities, administer some of the services for the smaller local authorities, albeit perhaps on a temporary basis. That would have been an excellent arrangement and I am sorry that it was not put into operation.
Clearly, that kind of arrangement does not figure in the Government's thinking at the present time. It seems to me that if the commission is given no guidance, we could end up with another hotch-potch reorganisation which would further erode the reputation and importance of local government.
Bearing in mind especially the further education Bill which is before the Chamber at the present time, there is in fact a real fear that the Government's hidden agenda is to remove all the large and important services from the control of local government. For example, many people believe that the control of primary and secondary education will be removed from local government and put under a national schools council, or that trunk roads might be removed from local government and given to a trunk roads authority. It may very well be considered that even the social services may be better administered directly by the Department of Social Security or indirectly through a social services commission.
The noble Baroness will say that that is nonsense, but bearing in mind the Government's record so far, people have fears about the removal of those services. I hope that I shall receive an assurance from her that the Government do not have that in mind. I am sure she will say that those fears are far-fetched, but the fact is that since 1979 a succession of Conservative Governments have shown that they are bureaucratic centralists, by removing large tranches of power, including power over money raising policies, from the local authorities. We must be sure that any reforms do not fail and give central government the further excuse to remove services from democratic local control and pass them to faceless bureaucrats who are not answerable in any way to the electorate.
I turn briefly to Amendment No. 153. In my view the new local authorities must be financially strong and have a taxing base which is sound, progressive, sustainable and under the control of the local authorities themselves. I have already spoken about fears that the Government intend to remove from local government the great services such as education, roads and social services. One of the excuses could be that at present central government finance 85 per cent. of local government expenditure. That has occurred because the Government removed that form of finance from local government through the combined business rate. That removal undermined to a large extent its independent financial base.
For that reason, I believe that it is right to demand the return of the business rate to local authorities for them to administer and have as their own form of finance. After all, it always was theirs. The Government have removed it and, by heaven, particularly in the south of England local businesses are sorry that it has been removed. It is quite true that local businesses pressed for the combined business rate to be taken away from local authorities. They did not realise the mistake they were making. They certainly recognise it now. Many of them are saying, "For heaven's sake, let us return the business rate once again to local government".
In my view—I speak for myself and not for my colleagues on the Front Bench—there are other new areas of local government finance which should be considered. For example, there is nothing wrong with a sales tax and it is possible to introduce it. Frankly, the arguments against a sales tax can be overcome. Or, for example, why should not local government have a share of VAT and Excise revenues from the sale of
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petrol and diesel oil in its area. Those would give local government a strong financial base of its own. Since I believe very much in local government, I support these arrangements.
When we return after the Christmas Recess, the Chamber will consider the Local Government Finance Bill. The Bill restricts local government finance raising powers to a narrow undynamic base which will make new and small units of local government difficult to sustain. I should find that reprehensible since, although on the one hand it is the Government's declared aim to create smaller and more accountable units of local government, on the other hand their policy is to refuse a proper basis of independent finance which will make that possible and at the same time give local government the independence which is so vital to a truly vibrant local government system.
I hope that I may receive some views on what I have just said. I shall welcome very much the Minister's comments. I beg to move.
5.30 p.m.
Baroness Hollis of Heigham: My Lords, I certainly do not wish to oppose these amendments, particularly Amendment No. 152. I am certainly heartened and entirely support the remarks made by my noble friend Lord Stoddart about his wish to see unitary government based on the existing districts with a sound, strong independent basis of finance. However, I should like to register a slight unease about the repeated phrase "of sufficient size". The issue of size threads through both the amendments, and I hope that my noble friend can reassure us when he comes to wind up.
I want to make a couple of points about size. It is partly one of those concerns which will arise in many other amendments, whether we discuss joint authorities or lead authorities and the like. It may be appropriate to say something at this point.
First, I wish to emphasise yet again—as some of us tried to do at Second Reading—that there is no evidence that efficiency and cost-effectiveness increase with size. The Audit Commission has made that entirely clear. I am delighted to have the support of the Minister.
I am sure that the Minister is aware of the response of the Audit Commission to the consultation paper. Paragraph 3 states:
"It is worth noting … that Commission studies have rarely found economies of scale to be the systematic or decisive influence on relative performance levels".
Qualities of effectiveness and value for money are found in small and large authorities—Labour, Conservative, Liberal, balanced and hung authorities. I tried to do some research on education in the 1970s. I found that effectiveness related to the political will and competence of members and officers to provide a quality effective service. That political will was often found in cities, not because of their size but because of the commitment to and interest in the education service.
Secondly, as we tried to argue at Second Reading, size does not necessarily produce increased effectiveness or increased economy. It may do the reverse. It may produce diseconomies of distance and of scale.

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The travelling, co-ordinating and liaising that is needed in more sparsely populated, rural areas involve a very real cost. By definition it costs more to produce fewer services. The larger the rural area, the more it costs to provide less as the landscape stretches. To bring in additional populations means that one has to provide more expensive services without the population base to sustain them. The response to that is clearly rectification through rate support grant, local committees and—perhaps I may depart from the views of my noble friend Lord Stoddart—joint and lead arrangements. Those are flexible and constructive ways forward.
The Association of County Councils funded the Coopers & Lybrand report on the enabling authority. That report, funded for the ACC, conceded that case entirely. Only in purchasing was there any clear evidence of the virtues of size and numbers. Purchasing is indeed one area through which one can respond to economy by consortia arrangements.
Perhaps I may quote from the report. It states:
"Within larger unitary authorities, it will be necessary specifically to secure effective local input to ensure that local needs and preferences were identified".
The Coopers & Lybrand report for the ACC refers to parallel, political, decision-making structures and area committees. In other words, in larger unitary authorities the report concedes that one has to re-invent a lower second tier but that the second tier would relate to district administration and not to district accountability.
Thirdly—I hope that this is a view shared by the Minister —the concept of the enabling authority should take the issue of size off the political agenda. Discussion on size was the language of the late 1960s and early 1970s. The concept of an enabling authority allows us to dispense with such phrases as "of sufficient size". That issue is less salient. We do not advocate 500 or 700 small authorities. However, I suggest that the best way to improve value for money services is to ensure active scrutiny by the local taxpayer. That is best done when the authorities are "get-attable". My fear is that such phrases as "of sufficient size" may lead to larger authorities, with no guarantee of improved or effective services. On the contrary, there may be diseconomies of distance and scale. They may become remote. There may be a lack of the control that local electors should have over the representatives.
While many of us wish to support the noble Lord in his anxiety about a strong and independent base for local government finance, and a strong, independent local government as a source of services, we should not relate that desire simply to size.
Lord Skelmersdale: It will come as no surprise to those noble Lords who followed the Second Reading debate that I support the general thrust of the noble Lord's amendment. However, I do not agree with all the examples of potential chaos with which he followed up his original arguments. For example, I should not have thought that opted out schools or
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self-governing hospitals were the result of policy of a government who believe in attracting more power into their hands.
Having said that, we all know that all change is unsettling while it occurs. The noble Lord and the noble Baroness have given examples of the fears of existing local authorities during this period of uncertainty. I hope that my noble friend Lady Blatch will take this opportunity to assure us that services will not be touched by the Bill. In other words, any service that local authorities already provide will be kept until or unless there is another Bill to change them. We all know that local authority services have grown piecemeal over the years.
It is a constant complaint from the Benches opposite that this Government have loaded more on to local authorities without providing the finance. Whether or not that is true, all governments put more work on to the usually very capable shoulders of local authorities. However, they do so usually through a Bill for that specific purpose, whether the service involves waste management, police, fire or whatever. I hope my noble friend will tell us that that will continue.
In the authorities' role as enabling authorities, will they be able to buy in services? They can buy in services, as in social services, for example, from the private sector, from waste management firms and so on. But will the authorities be able to buy in services from each other? With the situation such as pertains in Rutland and Leicester, it might be sensible for the smaller county council to provide the social services for Rutland. I believe that many people will be interested to know whether that will be permitted under the regime that the Government anticipate.
Lord Peyton of Yeovil: I agree with almost every word spoken by the noble Baroness, Lady Hollis. I should like to go a little further. I do not like the amendment. I do not find acceptable the idea of introducing such a phrase as "of sufficient size". The Government have been wise—I do not always say that —in adopting a listening posture by setting up the commission. I hope that they will put as few fetters as possible on the commission in the exercise of the discretion that it is being given.
It is somewhat embarrassing for me to recall it, but an earlier Conservative Government made a mess of affairs in Somerset and Avon. What can be done to put that right is not for me to say. However, it is an added reason behind my plea that the Government should give the commission absolute freedom with the minimum of fetters. There should simply be a requirement for the commission to listen before it makes up its mind. I hope that my noble friend will advise the Committee to reject the amendment.
Baroness Blatch: On what I had considered a relatively simple amendment, the discussion has ranged far and wide. Perhaps I may rise to the bait of the noble Lord, Lord Stoddart. He is about two months ahead in his discussions about finance. I am pleased to record in this debate some of the things that he said. In advocating no limits on local government spending—which of course is the party policy—the

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noble Lord referred to a licence to raise funds from petrol or any other local commodity. Perhaps I may suggest that licence to raise funds with absolutely no limits would also he licence to spend.
The noble Lord spoke about transferring business rates from national to local level. I believe that he confused valuation with the system that now exists. The business community can now rest assured that increases year on year which are not related to valuation will not be greater than the rate of inflation. That provision is positively enshrined in law.
If business communities are to be revalued from time to time —I have no doubt that that intention will he contained in the Opposition's Manifesto—the noble Lord is advocating the return of business rates to the mercy and vagaries of local authorities. When that was the case we recorded horrendous increases in rates to business and commerce. If it is not coupled with a licence on the spending limit the proposition for business is not good.
I suggest that the noble Lord, Lord Stoddart, was rather fanciful in his imagination about what we were likely to do with social services, education and other services. His imagination worked overtime and he appeared to go over the top in his assumption. The noble Lord specifically mentioned primary and secondary schools. The one thing that we have done is to push down the control of those schools to where it properly belongs; that is to parents, teachers and governors. I was a member of a county council and vice-chairman of an education authority. As a councillor I attended many meetings, read my papers and was on top of all the agenda items. I believe and shall continue to say that schools are better schools if they are staffed well, have good head teachers, responsive parents and children who are prepared to learn. That is what makes a good school and not the local education authority. I say that only as a counter to what was said by the noble Lord, Lord Stoddart. I make no suggestion as regards the structure of local government because education will remain a responsibility for local authorities.
The commission's terms of reference in the clause are brief. The issues are dealt with in the guidance to the commission which is intended to expand them. The noble Lord, Lord Stoddart, was right in saying that if there is not detailed guidance there will he real problems. I promise him that there will be guidance and that it will address many of the points of anxiety raised by Members of the Committee in the debate. The guidance states that the commission should seek to recommend the structure of local government which enables individual unitary authorities to have responsibility for all local government functions unless there are clear reasons for different arrangements. The significance of establishing local authorities which match communities will be lost if those authorities do not have such direct responsibility. Similarly, the guidance also states that the commission should take into account the need for authorities to have an adequate tax and grant base, such that they have financial stability.
I agree with my noble friend Lord Peyton about minimum size. The Government have made clear the
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fact that it would not be appropriate to proscribe size limits for unitary authorities as that would limit the commission's ability to recommend the best local government structure for each area. The move to enabling authorities calls into question the idea that there is a right size of authority for effective service delivery. I agreed with all the points made by the noble Baroness, Lady Hollis.
I must point out to my noble friend Lord Skelmersdale that the Bill has nothing to do with taking functions away from local government. That issue was raised by several Members of the Committee. I assure my noble friend that, as is now the case, unitary authorities will be able to draw on each other for services on an agency basis.
The Bill sets up a Local Government Commission which has some detailed guidance referring to all the issues that worry noble Lords. For instance, it ensures that strategic functions arc not lost and that individual services are not lost in terms of determining structure for delivering efficient and effective services. The last thing that we wish to do is to tie the hands of the Local Government Commission before it even sets out on that task. It is important to get local government as close to people as possible and to ensure that the unit of authority makes sense as set out in the guidance. I hope that the noble Lord will not press the amendment.
5.45 p.m.
Lord Stoddart of Swindon: I am obliged to all Members of the Committee who have taken part in the debate. The Minister said that the debate had run wider than she had expected. That was exactly my intention in tabling the amendments. They were framed in such a way as to obtain the best possible reaction to their proposals. Indeed, I have received that reaction. The debate has been most useful not only to me but to others.
I agree with my noble friend Lady Hollis that efficiency does not necessarily depend on size. We need effectiveness which can be better achieved by smaller rather than larger units. It is achieved also by good political direction and excellent administration. After all, the authority which I had the honour to serve for 18 years and to lead for seven of those years was 125,000 strong. I thought that was a most convenient size and we ran an excellent education service. Later the Department of Education wrongly said that councils such as Reading could not possibly run a decent education authority because it did not have a population of 500,000. I thought that was absurd. Unfortunately, it led to the 1974 reorganisation which we all know was a failure.
Throughout time local authorities, large or small, have been the real experimenters. Central government have not brought new ideas into education and other services; the local authorities have done so. Therefore, I am happy to agree with my noble friend that large is not necessarily beautiful. I hope that at Maastricht next week the Prime Minister will take the same view. I got that in, did I not?
Baroness Hollis of Heigham: Yes, skilfully!
Lord Stoddart of Swindon: I am also glad that my noble friend Lady Hollis is not advocating 500 small local authorities because that would be just as bad. I am pleased to have her assurance that that is Labour Party policy. I was also glad to have the support of the noble Lord, Lord Skelmersdale, for the retention of existing services, because that is important. The noble Lord, Lord Peyton, did not like the amendment because it referred to "a sufficient size". I hope that I have reassured the noble Lord that we are not that far apart, irrespective of the wording of the amendment.
The Minister gave some valuable reassurances, in particular about services. I was encouraged by her assurance that the structure will not only reflect the need for authorities to administer and reflect the people in the local area and the local area itself but will also have a satisfactory financial base. The Institute of Directors is in favour of returning the combined business rate to the administration of local authorities. I am sorry that the Minister considered that most local authorities up and down the country did not always discharge their duty in a responsible and proper manner. In my view, they did. If local government is to be responsible, if it is to be treated as responsible, there is no reason—
Baroness Blatch: Does the noble Lord believe that the business community would like to go back to being rated by local authorities and forfeit the protection in law that it should not receive a rate increase greater than the rate of inflation? Would it forfeit that protection?
Lord Stoddart of Swindon: I do not know. I only tell the Minister what has been said. Many employers' institutions would prefer to return to the system of local authority rating. I believe that they are right in that. Obviously there must be regular revaluations. There always have been and there will be in future. They have no greater guarantee that central government will not change their policy. It may be enshrined in law at present but our constitution is such that one Parliament cannot bind its successors. Therefore, there is no greater guarantee of protection under central government control than there is under the control of local government, which would administer the local rates in accordance with the needs of that area, including the needs of business. That is one of the problems of the combined business rate: it cannot allow a local authority to take into account the needs of businesses in local authority areas.
However, I have no doubt that we can have a much longer argument on this subject at some future date. I am grateful for the discussion which has taken place on the amendments. Having heard from my noble friends, other Members of the Committee and the Minister, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 153 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 154:
Page 12, line 5, at end insert:
("(c) to promote accountable, responsive and accessible local government;").
The noble Baroness said: In this amendment I shall refer to the other amendments grouped with it. I hope
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that Members of the Committee will believe that Amendment No. 154 encompasses the spirit as well as some of the words of Amendments Nos. 156 and 161.
The amendment aims to provide that in recommending changes, the commission should have regard to the need to promote accountable, responsive and accessible local government.
I considered the words "effective and convenient" in paragraph (b) for some time before deciding that they do not go far enough. They suggest a top-down approach whereas many Members of the Committee have effectively described the bottom-up approach of good local government, reflecting its responsiveness to its own local community.
It is important that people believe that they have access to their representatives and above all that they understand the structure, the methods and arrangements in place locally. It is only if they understand that they can begin to be a part of the process. I should like to refer to a recent study commissioned by the Joseph Rowntree Trust on attitudes to local government—a report of a survey of electors. It said that there was general support for the role of local councils and local democracy. People support the idea of local government running most services and are opposed to central government control of local councils. Most people continue to believe in the benefits of local elections and feel more able to influence local affairs than those at central government level.
That is important because it is saying that local councils are able to speak more intelligibly and comprehensively to local electors than is sometimes achieved by others.
The report continues in its conclusions that there has been something of a polarisation of opinion over the past five years suggesting that attitudes to local autonomy may have been affected by increasing party politicisation of issues affecting local government. That also spells out a message that the course which local government is taking is rather worrying. I do not suggest that local government should not have regard to party political affiliations, but for many of us those are not the primary considerations: our own local loyalties, and not party loyalties, come first.
The report states that the other worry for local government is that people have become more cynical about local elections over the past 25 years. While most people still believe in their value, they are more inclined to believe that councillors forget their election promises or that local elections do not affect the way people live.
We should take very much to heart the conclusions of that report when considering what the commission should have in mind.
Perhaps I may report a short anecdote which I have already discussed with the Minister. I know that she shared my attitude to what happened. I was working at home one morning last week with my word processor and fax switched on, looking at the amendments to the Bill. My telephone rang. It was the bank manager of the bank with which my firm banks. I say that because he is not a person who has a great deal of time on his hands but obviously he thought it important to make the 'phone call. He lives in my

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ward. He said, "Sally, can you help me? Who should I contact? There are a couple of very important street lights which are not working". That brought me right down to earth and gave me the right context for what we are considering today.
I am sure that other Members of the Committee also believe that we should keep our feet on the ground. We should be doing what matters to the people who are being served.
While I am speaking to this amendment, mention briefly Amendment No. 164 which refers to reflecting the overall objective of replacing two principal tiers with a single tier. I am rather sorry that that amendment is grouped with the other amendments because I am not sure that it is on the same subject. That amendment makes me wonder about consultation and hearing what we are told rather than making assumptions as to where we should start. It also raises the question referred to already by the noble Lord, Lord Morris, as to the place of functions in the process. However, I should not wish the commission to begin its work with any kind of notional blueprint.
I am sure that I have not covered all the ground which will be covered by the movers of Amendments Nos. 156 and 161. However, we are moving in very much the same direction. I hope that having heard comments on the group of amendments, the Minister will be able to assure us that the words in the Bill mean what vie want them to mean. We must spell them out clearly. I beg to move.
Baroness Young: It may be for the convenience of the Committee if I speak to Amendments Nos. 156 and 161. Amendment No. 156 is in the name of my noble friend Lady Oppenheim-Barnes who cannot be here this evening. I listened with great interest to what the noble Baroness, Lady Hamwee, said. I agree with almost everything that she said. Amendments Nos. 156 and 201 almost cover the same point. I do not wish to take up the time of the Committee by repeating the many arguments. However, I wish to make two points.
In the Citizen's Charter, which we shall no doubt debate on various occasions, the Government have rightly stressed the need to make local government more accountable both to citizens and consumers. The principle of accountability is one of the utmost importance.
The noble Baroness, Lady Hamwee, mentioned the Joseph Rowntree Report. Research carried out recently by MORI showed that there is now considerable confusion in the mind of the public regarding which tier of local government is responsible for which service. For example, an average of 55 per cent. of residents believe that refuse collections are a county council responsibility and 52 per cent. believe that education is carried out by district councils. That illustrates the point.
The Government appear to show interest in the matter. Paragraph 5 of the guidance to the Local Government Commission states:
"Unitary authorities are not only most able to reflect community interests, but also offer the benefit of clarifying accountability and responsibility".
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My second point is that the London boroughs have clearly demonstrated that the link between a local authority and, in this case, the community charge—although it will apply just as much to a council tax or rating system—is much clearer when a single authority is accountable for all services. Therefore, the amendments which draw attention to the significance of accountability are important not only to avoid confusion of functions but also to make clear the link between costs and services. It may be that my noble friend feels that enough has been said in the guidelines. I shall listen with interest to her reply.
As regards Amendment No. 64, I share the doubts expressed by the noble Baroness, Lady Hamwee. It may be correct that the two principal tiers of local government in any non-metropolitan area can be replaced by a single tier. However, that is a matter for the Local Government Commission and not a Committee of this House. Therefore I do not support it. My amendments are probing amendments, and I look forward to hearing my noble friend's response.
6 p.m.
Baroness Hollis of Heigham: I support Amendments Nos. 154, 156 and 161 and speak also to Amendment No. 164 that stands in my name. I hope I may be forgiven for first posing the question of what the purpose of local government is. There can surely be little disagreement between us that it is partly about extending democratic rights and the pluralism of power and partly about building citizenship and participation in the exercise of power and making that power accountable and transparent. It is therefore about democratic rights. It is also about services—the fiscal infrastructure, the social wage, or the generation of wealth. And it is also about communities. At the heart of local government is the assumption that, for example, a southern historic cathedral city is different from a declining manufacturing town, a rural sea coast district or an inner London borough. Local government is about that difference and the need to respond to diversity of needs.
I hope to persuade the Committee that all three of those functions of local government—the building up of democratic rights and citizenship and the sharing of power, the provision of value for money services and the definition of a community in its distinctive needs and aspirations—are best met in unitary authorities and can only be met by local authorities; that is, district councils which are closer to the people they serve. That is why Amendment No. 164 is within the spirit of the preceding amendments.
Why should that be? Let us ask the people. Both the noble Baronesses, Lady Hamwee and Lady Young, quoted the Rowntree Report which found that 80 per cent. of the people who lived in single tier authority areas knew what the local government did while barely 40 per cent. of those in two tier structures had similar knowledge. The Rowntree Report argued that without that knowledge, democratic local government was not in a healthy state.
As between districts and counties, people identified district councils as their natural local authorities. From that the Rowntree Report—an independent

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report—drew the conclusion that the local tier of local government should be the basis of a unitary local government system.
Portsmouth, until recently Conservative controlled, now hung but always well led, asked MORI to run a similar poll two months ago and found the same response. Nearly 80 per cent. of the population wanted a single tier authority; and 83 per cent. wanted it to be Portsmouth rather than Hampshire. The reasons were that it delivered better services, offered greater financial effectiveness and, crucially, was "get-at-able". Indeed, after 15 years, large numbers of Portsmouth people still thought the city council was running social and library services even though in 1974 they passed to Hampshire.
More people vote in district rather than council elections; more than three times as many know the names of district councillors rather than county councillors; many find their county councils remote; and most want services delivered by a town hall. That is why, if one follows the thrust of the guidance to the Local Government Commission, which I support, the presumption should be in favour of unitary authorities. Only if there are positive reasons for not going along that line should one depart. The issue should be linked, I suggest, to accessibility, accountability and responsiveness. All the research evidence illustrates that a new structure of local government must be single tier if it is to be efficient and effective, and local if it is to be accountable, accessible and responsive.
The research findings and the fact that all the county councils of which I am aware have had to develop sub-county structures to deliver local services illustrate that such councils are too large for personal services and too small for strategic planning services. If that is the case, if we want local government to be accessible and responsive to local people, and if we believe in single tier authorities, then the presumption must be in favour of district councils being the main body of local government authorities that result from the Local Government Commission.
Lord Boyd-Carpenter: Some experience of legislation has left me profoundly cynical as to whether putting high-minded and well-intentioned amendments into statutes has any practical effect. There are a number of examples which bear out the desirability of treating that thought with reserve.
Having said that, I find the intentions, particularly those of Amendments Nos. 161 and 164, on the whole sensible. One of the great improvements one hopes will arise out of the Bill is the abolition of two-tiered local government wherever it can possibly be abolished and its replacement by a unitary system.
On Second Reading I mentioned an experience from my home in Hampshire. We are in a remote country district and pay substantial local taxes to the borough of Basingstoke, a considerable number of miles away. The borough of Basingstoke levies those taxes upon us with the classic statement that five-sixths of the amount is not for its services but is demanded on behalf of Hampshire County Council located at Winchester at the other end of the county.
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That kind of system makes local government seem remote from the ordinary citizen. It has the further disadvantage that those councillors who decide local authority expenditure do so in the happy knowledge that they will not have to answer personally and directly for levying the necessary funds.
Therefore, there is almost every argument in favour of going, wherever it is physically possible, into a unitary system. My understanding of what was said at Second Reading and what has been said by Ministers since, is that it is the intention that one of the major effects of this measure will be the abolition very widely of the two-tier system and its replacement by a unitary one. Therefore, although I will be very happy to see those well-intentioned observations to that effect and which are embodied in the amendments, put into the Bill, I do not know whether there is very much practical importance to be attached to that. At any rate, I believe that abolition will happen, but I should be grateful if the Minister would tell me so.
Baroness Blatch: I will not be drawn, and I do not want to be drawn, down the road of pre-empting the work of the Local Government Commission. I would be sad if the Committee did that by tying the hands of the commission. We have made it very clear that throughout this exercise there is a presumption in favour of unitary authorities. The noble Baroness pressed me to confirm that if two-tier authorities are to remain anywhere the country it must be for positive reasons and not simply to leave well alone. All kinds of things have to be considered in the balance: the cost of transition, the cost benefits of setting up the new structure and matters of that kind.
These amendments are really about effective and accountable local government. I can say with some confidence that almost everything that the noble Baroness, Lady Hamwee, has asked of the amendments and also my noble friend Lady Young is already either somewhere on the face of the Bill or in guidance to which the Local Government Commission will be directed to have regard. All these matters are there in different forms.
My noble friend Lady Young referred to the appropriate passage in the guidance which I believe addresses some of the concerns of the noble Baroness, Lady Hamwee. I am absolutely convinced that if the Local Government Commission follows the guidance both procedurally, which it will have to do, and in the way in which it works, we shall get effective local government. Local government will he closer to the people and it will make sense to them.
We believe that the commission's term of reference will achieve the objectives which the amendments have in mind. Clause 13 of the Bill requires the Local Government Commission to have regard to the need to reflect the identities and interests of local communities as well as the need to secure effective and convenient local government in carrying out its reviews. A unitary structure of local government will certainly be more easily understood than the present two-tier structure where many local people do not know which council is responsible for particular services. That has been well illustrated by a number of speakers.

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The recent survey Attitudes to Local Government published by the Joseph Rowntree Foundation and referred to by a number of noble Lords, indicated that people living in single-tier local authorities knew more about their local authority's responsibilities than those living in areas with two tiers. Other surveys have confirmed and strengthened that message. Unitary authorities based on local communities will be stronger local authorities, more accountable to their electorates, better able to respond to local needs and more accessible to local people. All those factors were requested by the noble Baroness, Lady Hamwee. I urge the Committee to accept my assurance that the commission will certainly be looking for accountable, responsible and accessible local government, and these amendments are therefore not necessary.
The purpose of Amendment No. 164 seems to be to test out the Government's commitment to the idea of unitary authorities and it may be helpful if once more I set this on the record. As our draft guidance to the Local Government Commission sets out clearly, we believe that local authorities should be based on communities. Clause 13 requires the Local Government Commission to have regard to the need to reflect the identities and interests of local communities. We believe that the Local Government Commission's assessment of communities will suggest that unitary authorities could be the most beneficial structure for local government in most areas. Unitary author ties are not only most able to reflect community interests, but also offer the benefit of clarifying accountability and responsibility. The draft guidance therefore specifies that the commission should look for structures consisting of unitary authorities, unless, as I said before, there are clear reasons for different arrangements.
The guidance adds, however, that in some areas the commission may wish to recommend the retention of the existing two-tier structure. We are anxious above all that the local government structure should reflect local communities. We do not believe it would be right to rule out, as the amendment suggests, that in some cases a two-tier structure may be appropriate. With those assurances I hope that all noble Lords will withdraw their amendments.
6.15 p.m.
Lord Wade of Chorlton: Perhaps I may add something to the debate. I am concerned that everyone seems to accept that county councils do not play any role in these matters at all and that it is time that they went. I am concerned with the implication that we shall end up with a great many small local authorities to deal with the specific issues which are part of the daily concerns of the people involved and that the next level is either central or regional government. It seems that we shall end up with many of the very important decisions and strategic matters which concern local people being decided by people a long way from the problem.
I do not accept the amendments that suggest that we should go speedily for unitary authorities which, even listening to the noble Baroness opposite, should not be very large. There will be many instances
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throughout the rural areas where we shall end up with a two-tier system, or where if there is a unitary system it will be quite a large one and not a small local authority. I can see very considerable difficulties with local communities which are run very much in their own local interests. The wider decisions will he taken by people a long way away; regional government would include the views of the party opposite and the national government. Both those situations frighten me.
At present there are plenty of examples which indicate that the Government cannot make proper decisions on a regional basis because they are out of touch. They invariably make wrong decisions. Similarly, we do not want wider decisions made by very local people who are not influenced by what is best for the area because they are concerned about their own particular views which can be against the mass of interest. It is important that if we go for unitary authorities they should be of such a size and balance to enable them to take proper views within that context. We do not want to end up with a great many little councils involved with very local issues, but leaving to a national government the main issues which will affect so many people.
Baroness Blatch: Perhaps I may quickly respond. My noble friend illustrates very well that we should not be pre-empting or prescribing the work of the commission. Those cases are properly put to the commission as and when it is appropriate. We have not prescribed size or referred to sufficient size. It will be important that any recommendation that comes forward from the Local Government Commission is made in such a way that it is capable of effective delivery of services with a good tax and financial base and that it makes sense to local people. We shall have to put our cases to the Local Government Commission when it does its work.
Lord Burton: After many years on local government I have found that there seems to be a general deterioration in the standard of councillor. I believe that a great deal of the cause is attributable to the enormous amount of time-wasting which now takes place on councils. There is playing to the media and far too much party politics. I was delighted to hear those sentiments coming from the Liberal Benches. On my council we have a non-aligned group in order to try to deal with the socialist group which seems to spend a great deal of our time playing politics instead of getting on with our local government.
One hears about decisions made by democratically elected representatives. All too often the electorate does not get much choice of candidate. I believe the reason for that is that unless one is retired there can be very few working people who can find the time to sit through hours of discussion. I am finding exactly the same situation myself after many years. I am getting very bored with sitting on our council. Anyone who is prepared to serve the community should not have to sit through hours of unnecessary talk. It is also a terrible waste of the officials' time. Any legislation, particularly about the size of the authorities, must

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take account of how much voluntary time can be expected of the administrators of the authorities and, as the amendment says,
"promote accountable, responsive and accessible local government"
such as ensuring that the street lights are working.
Baroness Hamwee: I thank noble Lords for their comments on this amendment and the other amendments grouped with it. In the first instance I shall take up the point which has just been made about the place of politics in local government. I do not suggest that politics has no place. Perhaps the reputation that has been created is because of the antics of a few, rather than the good work of many.
I believe that my words "accountable, responsive" —and I believe the Minister used the word "responsible" which I think was a slip of the tongue, it should have been "responsive"—and "accessible" are no different in type from "effective" and "convenient". I thought about them long and hard. I take the point made by the noble Lord, Lord Boyd-Carpenter. I would not suggest that extra words should be written in just for the sake of it. I think they are words that have a meaning in this context.
I shall pick up a point made by the noble Lord, Lord Wade, and the dilemma between strategic considerations and local considerations. That is a dilemma which exercises me and other noble Lords very much. It is something to which we shall be returning later this evening. In agreeing that it is a matter for the Local Government Commission to consider the end result of this work, this place is probably the most remote and least appropriate to prescribe what that result should be.
I have listened with great interest to the words of all noble Lords and particularly those of the Minister. I do not wish to press the amendment at this time. I should like to consider what she has said. It may be something to which we shall return. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Norrie Lord Norrie moved Amendment No. 155:
Page 12, line 5, at end insert:
("(c) to secure consistent arrangements in and between National Parks.").
The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 236. I speak as a recently appointed vice-president of the Council for National Parks, so I do declare an interest in achieving a satisfactory outcome on their behalf.
It goes without saying that our national parks encompass expanses of the most beautiful countryside in England and Wales and are enjoyed by about 100 million visitors each year. They are also places where people live and work, and both nationally and internationally they have become important as test beds for sustainable development in which priority is given to caring for the environment.
Of conservation assets, Ministers have frequently referred to national parks as the jewels in our crown. The proposal to reform local government risks inadvertently damaging those jewels, and that is a very deep worry.
The future of local government is inextricably linked with the future of national parks. Yet this Bill makes no provision for dealing with them. It is important to remember that the structure of national parks administration is set out in the Local Government Act 1972. That is an Act for which this Bill has major implications.
Our national parks are administered by national park authorities whose responsibilities include planning functions. Two-thirds of the membership of a national park committee, or board, are drawn from the membership of those county councils and district councils whose boundaries extend into or fall within a park. Over the past 40 years the park authorities have been severely disadvantaged by reluctance to delegate to them adequate local government functions. Arrangements have varied enormously from authority to authority resulting in confusion and inefficiency.
Recently there has been great progress. The Government have made clear their commitment to national parks in their support for the general thrust of the Report of the National Parks Review. This was undertaken by a highly respected panel set up under the aegis of the Countryside Commission.
The announcement in September that the Government intend that each national park should be administered by an independent authority is particularly welcome. Currently only the Peak District and the Lake District are administered in this way. As my right honourable friend the Minister for the Environment and Countryside said in a press release issued by the Department of the Environment on 20th September:
"This Government's acceptance of the Countryside Commission's and Countryside Council for Wales's recommendations for independent status for all the parks is a strong public indication of our commitment to their protection and the importance with which we regard them".
The many voluntary organisations which are involved in the Council for National Parks consider the establishment of independent authorities to be the most important change that can be introduced to make the parks more effective in meeting the expectations that society places upon them. That is why my Amendment No. 155 is so important, because it would ensure that the parks are not adversely affected by changes to local government structure, and that the Government's intention to establish independent authorities can be fulfilled.
I am very much afraid that as the Bill stands it risks, unintentionally, causing the national parks to be caught up in the area by area deliberations of the Local Government Commission. My noble friend is well aware that this is why I believe that the Government should introduce legislation in this Bill giving effect to their intention that each national park should have board rather than committee status. Much uncertainty and disruption could be avoided if this were done before the Local Government Commission sets about its business.
I hope that in responding to these amendments, my noble friend can reassure me of the Government's good intentions for national parks. In particular, I

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hope the Minister will give very serious consideration to the merits of providing for independent authorities in national parks in this Bill. I beg to move.
Lord Hunt: I am very happy to say a few words, having put my name down in support of the amendment of the noble Lord, Lord Norrie, by way of emphasising and putting a slightly different slant on what he so clearly said.
I too am most anxious that the opportunity provided by this Bill should not be missed to remove an anomaly, and in terms of the amendment, an inconsistency, which has persisted ever since the national parks or the Broads were created at different times during the 1950s by which two of the parks —the Lake District and the Peak District—are run and administered by boards having full planning powers and being independent of the local authorities in whose territory they lie on the one hand, and on the other the remaining eight parks being run by committees of the county council.
During my six years as the first president of the Council for National Parks—I may say that I am so delighted that the noble Lord, Lord Norrie, is now the vice-president—I was constantly struck by the contrast between the powers and effectiveness of the two boards on the one hand, and the committees on the other. I received a letter from a former chief officer of one of those boards—the Peak Board—who was in post for 16½ years which bears on this point and makes it very well. I shall read a brief extract from what that former chief officer said:
"It became very clear in my time there that the achievements of the hoard were only made possible … because of [its i independent status] … in particular in pioneering new ways to reconcile conservation, recreation and a concern for local livelihood".
He went on to say:
"The county committees … had much greater difficulties with remote county [councils] which often did not seem to understand the National Park task or to give it sufficient support".
In that connection it is quite interesting that the Countryside Commission, in a submission to the Department of the Environment and to the Welsh Secretary about reform of local government in England and Wales, which resulted in the 1972 Act way back in 1971, concluded that for all-round performance the Peak District is in a class by itself with the other national board, the Lake District, closely behind. That comes close to saying that, as a result of those contrasting management systems, there are two classes of national park; a first class park in two cases, the remainder being second class parks. That was far from the intention of the National Parks and Access to the Countryside Act 1949. All were supposed to be equal in value, and indeed they should be.
I have two points to make about the Bill. As it stands, it would appear to require the Local Government Commission for England to review structural and boundary arrangements and make recommendations for changes without taking account of' the existing boundaries and the existing management systems of the national parks. As it stands, the commission is enjoined in Clause 13(5),
"to reflect the identities and interests of local communities",
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without regard to the national identities and national interests, which are such a fundamental feature of the national parks, as defined by the 1949 Act. I therefore hope that the Minister will either accept the amendment or, as I understand this to be really a probing amendment, to agree to consider bringing forward a government amendment at Report Stage to upgrade the status and secure the boundaries of the national parks.
6.30 p.m.
Baroness Nicol: We too support the purpose of the amendment. The Labour Party strongly supports the concept of national parks, which were established, as the noble Lord, Lord Hunt, said, under our National Parks and Access to the Countryside Act 1949, though at that time the full potential of their ideal was not realised because of the change of government in 1951. Since then, however, there have been great changes in the national parks.
There has been a greater realisation of the need to protect the diversity of our eco—systems. There have been enormous changes in agriculture, particularly its intensification. The postwar growth in prosperity made mass car ownership possible, fuelled demand for second homes and put new pressures on the countryside. We are concerned that much unnecessary damage has been done to conservation over the past decade and we are determined to put it right where possible. We are committed to putting into effect the proposals of the Common Land Forum and to increasing protection for national parks. We wish to consult on the creation of new parks, which we hope will include the New Forest. However, I re-emphasise the view we put forward in our environmental policy statement An Earthly Chance that although some sites such as national parks and areas of natural beauty are special and deserve extra protection, this can never be a substitute for careful management and conservation of the whole countryside. But having said that, we give broad support to the call of the National Parks Review Panel for independent park authorities. We accept that each park should have its own authority whose sole purpose is the protection of the park. The illustrations given by the noble Lord, Lord Hunt, show clearly the difference of achievement when the authority is independent and is concentrating solely on the park.
However, we would wish to ensure that a good proportion of the members of the new authority have some form of electoral legitimacy. At the moment there is strong local authority representation. We think something of that kind must continue. We should also like to see the users of national parks represented on the authority as well as the various types of expertise which will of course be needed. We are convinced that to establish a suitable membership for the new authorities consultation will be needed. The new authorities will need to embrace regional as well as local interests since the parks are, as others have said, a regional resource. It will require careful and thorough examination to get it right and to see that potential clashes with strategic management are avoided.

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The amendment is necessary because piecemeal changes to the present system could cause chaos in those parks which at present do not enjoy an independent authority. The noble Lord, Lord Norrie, mentioned the Peaks and the Lakes, but we also have the Broads, which has its own special independent authority. I am sure that my noble friend Lady Hollis can vouch for that as she has been closely involved with the Broads and is aware of the great success that has come from that arrangement. Without the amendment the remaining eight parks would face a period of administrative muddle which could be very damaging. We were unable to find out earlier today how long the noble Baroness envisages this whole process taking. But if it were stretched over a long period, one does not need very much imagination to see what a disastrous effect it could have on those parks that are presently an amalgamation of various authorities.
In their 1987 manifesto the Conservatives promised to implement the proposals of the Common Land Forum and to legislate to protect national parks. Neither of those promises has so far been fulfilled. This amendment offers a last ditch chance to redeem at least one of them. I hope that the Government will seize it.
Lord Moran: I was glad to put my name to the amendment. It is an open and shut case. It would be illogical and silly for the Local Government Commission to come up with different arrangements for national parks in different parts of England and Wales. That is why the first amendment calls for consistency. If we have consistency we should obviously follow the best practice.
This has been looked at carefully by the National Parks Review Panel under the chairmanship of Professor Ron Edwards. The case for and against independent status for national parks is discussed fully at pages 97 to 100 of its report. The review panel came down firmly in favour of independent status for national parks, a status enjoyed already, as the noble Lord, Lord Hunt, pointed out, by the Peak District and Lake District national parks and also by the Broads Authority. If that is the best practice, it is sensible to carry it out.
We were greatly encouraged that Ministers announced on 20th September that they favour the appointment of independent authorities in national parks. It would seem sensible therefore to include a clause in the Bill to give effect to that proposal and so prevent national parks being damaged in a long and messy process of reorganisation. I hope very much that the Minister will be able to say whether the Government agree.
Baroness White: I strongly support the proposals put forward by the noble Lord, Lord Norrie, and those who have spoken. I do so particularly because of my Welsh connections. Three of the national parks in the United Kingdom—or, at least, in England and Wales, as Scotland does not have them—are in the
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Principality. We are undergoing a quite different exercise in local government reorganisation, to which I may refer later on in regard to another amendment.
It would be most undesirable if there were not consistency between the administrative arrangements for the three parks in Wales and the others in England —the eight parks, the Broads, and the New Forest, should that come about. It would be extremely confusing for all concerned and it would be highly undesirable in itself. The conclusions of the review body were clear and logical in the matter. I hope that we shall receive an assurance from the Minister that not only the recommendations of the review body but also the pledges given by Ministers of the Department of the Environment and of the Welsh Office, that such arrangements will be made and will be honoured for the national parks both in England and in Wales, have been taken on hoard by those who are organising the English local government pattern under the Bill.
I am glad that the noble Lord, Lord Norrie—on this occasion at least, he is a noble friend—and my other noble friends on both sides of the Committee are all at one on this issue. It would be perfectly absurd if we did not receive an assurance today that the pledges given by the Department of the Environment and the Welsh Office will be honoured in the procedure which the Minister is advocating to the Committee.
Baroness Blatch: Perhaps I may say, first, that I am sure the Committee recognises the work carried out by my noble friend Lord Norrie; that is, not just his work in countryside matters generally but especially his work for national parks. I agree with all speakers in the debate thus far that they are indeed very special areas of land which require special status. The noble Lord, Lord Hunt, was right to remind the Committee of the two parks run by the boards independently and the eight that are committees of the county council as a result of the 1949 Act. I can tell the noble Lord, and repeat the assurance and commitment which has already been given, that they shall have independent status and shall be separate authorities. However, that commitment was made in advance of the full review and all the impact of the review being considered in its detail. When these parks are established, it is important to set them up in a comprehensive way so that the detail can be properly addressed at the time.
I can also tell my noble friend Lord Norrie, the noble Lords, Lord Hunt and Lord Moran and the noble Baronesses, Lady Nicol and Lady White, that the work of the Local Government Commission will not do anything other than recognise the independent status of the parks; in other words, the department has said straight off that the parks shall be independent. Therefore, in any review which takes place in an area where there is a national park, it will have to be taken as read by the commission—and this is one area where prescription will apply—that that particular area of the national park will indeed be an independent authority as and when the Government put the legislation before Parliament.
I understand the wish for the early establishment of such independent authorities. Following the submission of the National Parks Review Panel Report, we have already announced our intention to establish

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independent authorities for all the national parks in England and Wales. I hope that Members of the Committee will agree that it would be desirable to look at the establishment of independent authorities in conjunction with the rest of the review report. It is my appeal to all Members of the Committee who have spoken in the debate to accept that to put something quick in here which is not properly thought out as regards the detail of the review, would not be the most sensible way forward. But the guarantee of independence is indeed made.
The Government hope to publish their full response by the end of this year which, as we all know, is looming very shortly. Members of the Committee will appreciate that there are likely to be other matters which may require legislation. We would prefer a comprehensive approach to securing the future of the parks.
I hope that in the light of what I have said my noble friend will accept the assurances and that he will feel able to withdraw the amendment.
6.45 p.m.
Baroness White: Can the Minister turn her mind to the possible difference in time-scale between arrangements in England and Wales? It would be most unfortunate if we did not have consistency in the park arrangements. I say that because Wales is on a different time-scale altogether with its local government reorganisation, compared with what I understand is likely to be the English time-scale. I very much hope that the Government will recognise that, if they a re going to have these very desirable arrangements in the national parks, the two sets of parks should, so to speak, keep in step.
Baroness Blatch: I take note of the point made by the noble Baroness. However, a criticism frequently levelled at the Government is that they do not think legislation through. In this situation, I have to stress that I have given an assurance that the Government's response will be published shortly. It will be important for people to read that response. I am also conscious of the point that the noble Baroness made about timing, with the emphasis that the parks should be treated the same. Independence will be independence for all of them.
Lord Norrie: I should like to thank my noble friend the Minister for her full and helpful reply. As both she and I know, the Government's response to the National Parks Review Panel Report is eagerly awaited. I am sure that she will still understand my belief that this Bill is the ideal vehicle for establishing once-and-for-all independent national parks authorities. Once the Government's response is published, which my noble friend said will be at the end of the year, we can return to this question for further debate, be it in this Chamber or in another place. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 156 not moved.]
Lord Norrie Lord Norrie moved Amendment No. 157:
Page 12, line 5, at end insert:
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("(c) to safeguard the special requirements of the planning system in accordance with Part II of the Town and Country Planning Act 1990, including the preparation of separate Structure and Local Plans.").
The noble Lord said: In moving this amendment I shall, with the leave of the Committee, speak also to Amendment No. 158. These amendments seek to ensure that the Local Government Commission will be required to pay special attention to certain local government functions when considering structural changes. I welcome the importance attached to the interests of local communities in Clause 13. but I believe that there is a danger of underplaying the importance of local government functions.
Amendment No. 157 concerns land use planning. That is arguably the most important environmental function performed by local authorities. During the Second Reading debate I described what I saw as the vital role of the two-tier planning system. The two-tier system is able to reconcile effective and accountable strategic planning at county level, with detailed local planning and development control by the districts. I was delighted when the Government recently confirmed their support for two-tier planning in the Planning and Compensation Act 1991.
I was particularly heartened by the comments made by my noble friend Lady Blatch towards the end of our consideration of that Act. She said:
"The planning system and the measures in the [Planning and Compensation] Bill will remain central in the Government's thinking as they work towards local government reform".
On Second Reading I asked my noble friend how the Government would ensure that the two-tier planning system was safeguarded during the reform of local government. These amendments seek to probe further on that crucial question. Therefore, Amendment No. 157 would require the Local Government Commission to have regard to the special requirements of the planning system.
Amendment No. 158 is related to the former but is more general. Its purpose is to draw attention to all the strategic services carried out by local authorities. I was very encouraged by the support expressed during Second Reading for the strategic role performed by local government, especially at county level.
For me, these amendments highlight an area where the Bill is seriously lacking. I fear the effect of local government reform which results in the creation of small unitary authorities. Small unitary authorities, based on existing districts, will be incapable of performing strategic planning and other strategic services. I do not believe that we can expect these functions to be performed effectively under joint arrangements. The comments made during Second Reading by my noble friend Lady Cumberlege and the noble Baroness, Lady Hamwee, which I understand are based on considerable experience, confirmed my fears in this regard. I shall return to the inadequacies of joint authorities when we consider Clause 21.
My honourable friend the Minister for Housing and Planning, in a recent speech to the Association of County Councils, said:
"We are committed to local government. But we are committed to efficient and effective local government. And to achieve that there must be more strategic thinking".
He went on to say:
"Before any unitary authorities are established, it will have to be shown that issues of strategic planning, as well as local planning and development control, are satisfactorily covered".
But there is nothing on the face of the Bill to ensure that that is the case. Unless the commission is required to have regard to strategic concerns, there is a real danger that the review of local government will underplay those important considerations. The amendments seek to ensure that strategic concerns, especially strategic planning, are properly addressed by the commission. I hope that the Government will respond positively to the amendments. I beg to move.
Baroness Cumberlege: I second Amendment No. 158 moved by my noble friend Lord Norrie. In doing so, I should like to stress a view that was put forward on Second Reading and again during the course of today's debate. There is a consistent worry that in the Bill there is a lack of clear guidelines for making strategic plans and for implementing strategic decisions. The CPRE, the Association of County Councils, the Institute of Trading Standards Administration, the RSPB and others have expressed to me their real and valid concerns. The ACC cites 20 different services which have a strategic dimension. The RSPB cites the problem of competing neighbouring authorities, all wishing to develop their section of waterfront, thus destroying the habitat and altering the character of the whole estuary, with no one looking after the wider interest and holding the ring.
I could give many other examples, but I shall resist the temptation. I shall give just one. I know that no one wins elections by voting for a municipal tip. Local emotions run high, but in the wider public interest a tip has to be sited somewhere. To break the impasse there needs to be a wider strategic view distanced from the hurly-burly of the local areas involved.
It is important that clear guidelines should he incorporated in the Bill. During the debate, many Members of the Committee have stressed that there is an issue regarding the intimacy of local government; that it should be local and reflect local communities. Some of us fear that by ignoring the strategic dimension more and more will be done in Whitehall, and that local dimension will be eroded.
My noble friend the Minister has already stressed that the purpose of the Bill is not to diminish the role of local government, and many of us will rejoice in that. Of course I accept her assurance, but I fear that as more and more power devolves to Brussels there is a temptation for the Civil Service to do more, when our intention should be to decentralise to where people understand local needs and issues and are accountable to their electorate.
The amendment is designed to concentrate the mind of the Secretary of State to devise a sensible scheme for making strategic decisions on issues larger than can be covered by the proposed unitary authorities. I strongly support my noble friend on this amendment.
Baroness Hollis of Heigham: I shall speak to Amendment No. 157. No one in the Chamber can
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doubt the need for a strategic framework for local decision making, especially, as the noble Lord, Lord Norrie, said, in terms of major land use policy, transportation and toxic waste. The difference between us may be the appropriate framework in which that strategic planning and decision making can occur. There is nothing strategic about county councils. They are not relevant to many environmental issues. For example, the Broads were cited by my noble friend Lady Nicol just now. They straddle Norfolk and Suffolk.
The region is a far more rational basis—this point will be explored on a later amendment—for true strategic guidance. It is within that context that we should be thinking—I hope with regional assemblies in due course—about the discussion of strategic decisions. I am sure that it is a more appropriate forum for co-ordinating the work of local government with English Nature, English Heritage, the national parks, and the water authorities which have a major implication for recreational facilities. They are all more comfortably calibrated with local government at regional level than they would be with county councils.
Below regions, it is of course unitary districts that matter for development plans and development control. The 1991 Act which occupied this place recently, accepted the primacy of district local plans. I believe that I am right in saying that the Government's original planning policy guidance proposed that county structure plans should become non-statutory guidance, and retained the separate identity of statutory guidance partly because we were aware that local government reform was on the agenda. The Government, wisely, did not want to pre-empt the final recommendations.
It is district local plans, not county structure plans, which contain the detailed landscape policies which are site-specific. Above districts, there are clusters of districts in joint arrangements which are now producing effective local co-ordinating policies, whether they be green belt policies, managing the bids of superstores in out-of-town developments, or countryside management projects along river valleys and the like. In other words, the bases of planning now are the building blocks of districts. Two or three districts may unite over certain green issues; four of them may come together for a tourism strategy; a dozen of them may be involved in a major transportation development; but in all those, the county councils as such are marginal—too large for detailed planning; too small for strategic planning.
If we were to accept Amendment No. 157, my understanding is that it would unacceptably narrow the scope of the Local Government Commission because it would mean that we would have to keep county councils for one function only—structure plans—or alternatively we would have to go for statutory joint arrangements, in which case a county council is not necessarily an appropriate body. Neither of those options provide a particularly fruitful way forward. I hope that the Committee will reject the formality of the amendment; that is, that we look to

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the counties for strategic planning. We should think instead to where the strategic issue should now truly be explored, which is at regional level.
Lord Wade of Chorlton: I support those who say that the commission should have a responsibility to be aware of the strategic implications of the structures it creates,. I do not accept that strategic matters need to be looked at at a higher level—by a regional authority or at national level. It is national level which worries me the most. Even if decisions were made at regional level, and I do not agree with them being made there, at least the local authorities, whether they be unitary or any other size, should be aware of the strategic plans of which they are part.
I am worried that if the authorities are set up merely to look at a range of local issues, which are their main responsibility, and it is left to some other outside authority to decide on strategic issues with which they are involved, the local people will not consider the strategic issues and the wider issues in which they will all he involved. What is important is that even if there is a system whereby government have to be involved in strategic decisions, at least the local people should have a view of them and have a forum in which they can express that view. The final strategic authority that makes the decision should know their views.
I agree with my noble friend Lady Cumberlege that there is great anxiety that if nothing is included about the strategic responsibilities of the structures that the commission creates, it will be left to national government to take the important decisions, and they are the last people to decide what any local area or community wants. The commission's responsibilities should include a need for them to be aware of and create structures that have that strategic responsibility.
Baroness Hamwee: I have considerable sympathy with the anxieties expressed by the noble Lord, Lord Norrie, and the noble Baroness, Lady Cumberlege, but this is not the place to express them. Subsection (5) deals with specific considerations of a different kind to which the Local Government Commission is to have regard. I have already expressed my wish to extend those in a different way and I do not believe that it would be right to be as prescriptive as the amendment suggests The wording in subsection (5),
"having regard to the need … to secure effective and convenient local government",
covers and puts firmly into the arena of the Local Government Commission the considerations of the strategic services referred to in the amendment. I do not by any measure underestimate the importance of strategic services, but this is not the right place to provide for them.
7 p.m.
Baroness Blatch: The Government fully appreciate the importance of the planning system and the role which local government plays on environmental issues. We have made it clear that before any unitary authorities are established, it will have to be shown
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that the issues of strategic and local planning, and of other services, including those which protect the environment, are satisfactorily covered.
I am sure that the noble Lord has been reassured by the draft guidance to the Local Government Commission, which we have issued to the local authority associations and others for consultation. The guidance says that the commission should have regard to the need to establish authorities which cover areas such that they can carry out all their functions effectively, and do so in ways which reflect community interests. The guidance goes on to say that the commission should look for a structure to achieve the most effective exercise of functions and delivery of services consistent with community interests.
As has just been mentioned by the noble Baroness, Lady Hamwee, it should consider convenience to local people and, in the case of strategic functions, the wider public interest. I know that that is an issue which concerns my noble friends Lord Wade and Lady Cumberlege.
The draft guidance also sets out more detailed advice specific to land use planning and environmental issues. We must keep repeating the status of guidance. It will be for the Secretary of State to instruct the commission to have regard to the guidance. In other words, it will be no good coming forward to Parliament with a recommendation for some structural change which has not addressed the whole issue of strategic and planning issues.
The importance of the planning system as a framework for ensuring that decisions about development take full account of the impact on the environment is emphasised. The guidance says that the commission should consider the need for better environmental protection in looking at proposals for change to local government structure.
Our commitment to ensuring proper arrangements for these important local government functions which are the subject of these amendments is clear. We have also made it clear that it would be inappropriate to prescribe arrangements for particular functions in advance of the commission's work. This would inevitably limit the commission's ability to recommend the best local government structure for each area.
The first of the noble Lord's amendments is therefore not acceptable on these grounds, and I hope he will not press it.
However, we do not wish to weaken the provision of strategic functions. We have made it clear that before any unitary authorities are established, it will have to be shown that strategic functions are satisfactorily covered. The draft guidance to the Local Government Commission states that the commission should be satisfied that functions for which a transfer of responsibility would take place can be performed in a way which is cost effective, more responsive to consumer needs and conforms with the statute and national policy requirements. It should consider convenience to local people; and, in the case of strategic functions, the wider public interest.
On the second amendment, I have spoken about the need to avoid prescribing arrangements for particular

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functions in advance of the commission's work. Equally, we do not want particular arrangements to be ruled out. In some areas, it may be appropriate for planning responsibilities to be exercised by unitary authorities through the preparation of unitary development plans, like those currently prepared by London boroughs and the metropolitan district council. We are considering the drafting of Part II of the Bill in light of this need to keep options open.
Finally, I must repeat that in order to allay fears, strategic functions—for example, land-use planning, environmental considerations, environmental obligations, community care arrangements and the like—will not be lost or in any way diminished as a result of the Bill. I hope these amendments can be withdrawn.
Lord Norrie: I am grateful to the Minister for giving me such a full explanation. As a result, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 158 not moved.]
Viscount Astor: I beg to move that the House be now resumed. In moving this Motion, I suggest that the Committee stage begin again at five minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Waltham Forest Housing Action Trust (Area and Constitution) Order 1991
7.5 p.m.
Viscount Astor Viscount Astor rose to move that the draft order laid before the House on 21st October be approved [1st Report from the Joint Committee].
The noble Viscount said: My Lords, this is the second order designating a housing action trust. The House approved the order for the North Hull housing action trust in July. At that time, the ballot for the proposed housing action trust in Waltham Forest was about to start. The proposal was overwhelmingly approved and I am therefore delighted to be able to commend this order to the House.
The draft order relates to four estates in the London Borough of Waltham Forest: Boundary Road, Cathall Road, Chingford Hall and Oliver Close. All four illustrate the problems of the system-built housing constructed in the 1960s and 1970s. There are major design and structural problems with the buildings themselves, which consist of tower blocks, with extensive podium areas on two of the estates, and all are large panel concrete constructions. There are also major social and economic problems: high rates of unemployment, substantial numbers of tenants on housing benefit and/or income support and problems of crime and fear of crime. There is certainly also scope to improve the housing management.
A great deal of work has already been done to consider the best way of tackling the physical problems of the estates. The London Borough of Waltham Forest has studied alternative options to
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refurbish the estates or to demolish and rebuild them with low rise housing on a traditional street pattern. It is quite clear there is no "do nothing" option. In a major consultation exercise in 1988, the council succeeded in contacting more than 80 per cent. of the tenants, over 90 per cent. of whom supported complete redevelopment.
Following discussions with the then Minister with responsibility for housing, the council and the tenants agreed to consider the possibility of a housing action trust. The necessary feasibility studies were undertaken in 1990, together with extensive consultation with representatives of the tenants.
When I commended the Hull order to the House, I said:
"The essence of the HAT is a good working relationship between all interested parties". [Official Report, 10/7/91; col. 1461.]
I emphasised the key role of the tenants, who have to be willing to vote for the HAT to enable it to go ahead. That depends on a full process of consultation before the ballot and of participation afterwards in the work of the HAT.
I am pleased to be able to report to the House that all this has been fully reflected in Waltham Forest both before and since the ballot. My department and the chairman of the shadow HAT, John Chumrow, have worked closely with the tenants' steering groups for each estate and the joint steering group at which tenants from all four estates come together. This partnership led to production of a tenants' expectations document, setting out what tenants would wish to see a HAT do and how they would wish it to work. This document, happily christened TED, was signed by my honourable friend the Minister, Sir George Young, the shadow chairman and the tenants in April.
This was the basis for the ballot, which took place in July. On a 75 per cent. turnout on the four estates, there was an 81 per cent. vote overall in favour of the HAT, ranging from 69 per cent. in favour on Boundary Road to 84 per cent. on Cathall Road.
I know that the chairman of the HAT is keen to maintain this close working relationship with the steering groups as well as with individual tenants. Since the ballot, constructive discussions have continued and tenants have attended shadow board meetings.
A shadow board of six members has been appointed, with John Chumrow as chairman, and five other members with experience of housing, management and consultancy. The Minister announced yesterday in another place his intention to appoint Councillor David Shepherd, the council's nominee, in the near future.
The Government have also agreed that the remaining four members should be residents, one from each estate. Ballots are currently taking place to select nominees for my right honourable friend, the Secretary of State to consider. I hope the full hoard will be appointed before Christmas with the all important inclusion of the four residents.
This is a major investment by the Government in redeveloping rundown estates. We will be spending £170 million over eight years in the Waltham Forest

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HAT. The Government's HAT programme is fast gathering speed. We already have Hull and Waltham Forest will be the second HAT. Discussions are in hand with Liverpool, Tower Hamlets and Brent. My honourable friend the Minister will soon make a statement in another place on the programme as a whole. The designation of the Waltham Forest HAT is a key step in that programme, and I commend the draft order to the House. I beg to move.
Moved, That the draft order laid before the House on 21st October be approved [1st Report from the Joint Committee].—(Viscount Astor.)
Lord Dean of Beswick: My Lords, I do not for one moment intend to oppose the order that is before us. I am grateful for the Minister's detailed explanation of the events that have occurred so far. However, the tenants that are now having to opt for HATs are rather like a person who enters a restaurant and finds there i; only one item on the menu. Therefore he is obliged to choose that item; there is no alternative.
The Minister referred to system-built houses. I believe I was the first Member in another place to initiate a debate on system-built houses and the disasters they had turned out to be. For my sins I was the person who coined the term "forts" in relation to the system-built dwellings in Manchester. Successive governments, both Labour and Conservative, had caused those dwellings to be built. Those developments were purely concrete jungles.
It would be easy for me just to say that I accept this order and then sit down. However, I believe I should comment further on these appalling developments. A long time ago local authorities should have been given the financial means to tackle these developments. It is not insignificant that the first time a local authority was allocated funds to tackle these developments occurred not as a result of my debate in the House of Commons but after a plea was made by a Conservative Member of another place. Unfortunately he is no longer with us. Certain financial arrangements were made by the Government on that occasion as a result of that plea.
During the debate on system-built dwellings in another place, I obtained the full support of a Member who was then on the Back-Benches. I obtained the support of Mr. Christopher Patten who is the present chairman of the Conservative Party. Mr. Patten pleaded for another kind of system-built dwelling to be incluied in any grants that were to be allocated.
At that time tenants had already started to buy some of the system-built dwellings. Some of my then constituents in the Leeds West constituency had bought those dwellings but found at a later stage they could not sell them. One block of dwellings was known as the Smith houses and another block was known as the area houses. I do not have the entire list with me at the moment. The Government introduced a system under which a maximum grant of about £9,000 was allowed to any tenant who had bought a particular type of system-built dwelling, to enable him to carry out the extensive remedial treatment that such a dwelling required.
In another place I referred to the unfairness of that system. I believe this matter has also been mentioned
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in your Lordships' House. I said it was unfair that council house tenants who remained tenants in system-built houses did not have access to the grant. Local authorities such as Leeds or Manchester that wished to improve the system-built dwellings still under their control had to bear the full cost of that through the housing revenue account. That meant such local authorities would have to use the rents paid by council house tenants to pursue such a course of action.
The Minister said this is the second HAT and that the programme is fast gathering speed. That is like saying I can run as fast as an Olympic sprinter. The Waltham Forest HAT is only the second HAT to be established over a long period. There is no indication of a rush of HAT programmes. Some people are deciding to choose that option because it is the only option on the table. The Minister said that over £100 million will be spent over a given period on this measure. Dare I suggest that if local authorities with system-built housing developments had been allowed access to finance on that scale, we would not have needed HATs in the first place?
I have tried to trace a little of the history of system-built dwellings. When I go to the station in Manchester I pass a development that is known as Fort Ardwick. There is also a development known as Fort Beswick. Those two developments between them constitute 2,000 units of accommodation, but they are totally empty. Nevertheless, they are still a burden on the other council house tenants in Manchester who have not received a penny from this Government to recompense them for the blunders that successive governments have made with the housing subsidy structure.
The right honourable Member for Morley and South Leeds, Mr. Merlyn Rees, had a system-built development known as Hunslet Grange in his constituency. That has now been demolished, but I understand it is still a burden on the housing revenue account in Leeds. It is a burden to the tune of over three-quarters of a million pounds per year. That sum will have to be paid until the 60 year loan period has passed. I do not have exact figures but I believe that Manchester is presently having to find £3 to £4 million a year—funded by its present council house tenants—to cover expenses on its system-built dwellings. Every city has these developments. Sheffield, Liverpool and every other major city has this type of dwelling which should never have been built. These developments are empty and in some cases have been demolished.
The Government have once again produced a programme that I would term an acceptable gimmick. People are grabbing at that gimmick because there is nothing else on the menu. I have spoken for a little longer than Lexpected to do. However, I was involved in this matter from its beginning. From the very beginning I was opposed to system-built dwellings. I have been proved right. All we in Manchester asked for was the finance to refurbish these dwellings. The Government have taken this action rather late in the day.

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I welcome the fact that some people are opting for HATs because it is obvious from the Autumn Statement on finance and the Secretary of State for Scotland's Statement in the other place yesterday that there will be no extra money for housing in Scotland. I believe that the same problem must to some extent exist in Scotland.
Having put on the record why I believe that this situation could have been avoided, I accept the proposals which the Government have put forward today because there is nothing else on the table. If the Government wanted people in local authority housing to be treated properly, instead of going through all the nonsense of HATs, they could have solved the problem more quickly by allowing authorities which have run-down accommodation with poor facilities the finance to get on with the job of bringing that accommodation up to acceptable standards. If they had done that this exercise involving HATs would have been unnecessary.
Having said that I have no desire to oppose the order the Minister has placed before the House.
Viscount Astor: My Lords, I welcome the noble Lord's support for the order. I fully understand his anxieties about housing. In no way do the Government disagree with much of what he has said. That is why we are taking this action.
It was a little unfair of the noble Lord, Lord Dean, to say that housing action trusts are a gimmick. Spending £170 million over eight years is not a gimmick. It is the result of genuine concern.
Lord Dean of Beswick: My Lords, my point is not that that is a gimmick; denying local authorities access to money to deal with the problem before HATs became necessary is what I regard as a gimmick.
Viscount Astor: My Lords, I apologise if I misunderstood the noble Lord. It is important to note that housing action trusts are not concerned solely with the expenditure of public money. They represent a fresh approach to the development and management of very difficult estates, which involves partnership with tenants and all those concerned.
We invited local authorities to put proposals to the department on HATs at the end of September and we are considering other proposals. It is important to note that our policy towards these very difficult estates is not just a question of money; it is a question of a fresh approach. That is what we intend with the HATs.
On Question, Motion agreed to.

Criminal Justice Act 1988 (Designated Countries and Territories) Order 1991
7.23 p.m.
Viscount Astor Viscount Astor rose to move that the draft order laid before the House on 25th November be approved [4th Report from the Joint Committee].
The noble Viscount said: My Lords, this order is brought forward in the furtherance of an objective
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which I believe has the support of us all. I shall not therefore detain your Lordships with lengthy explanations. In short, the order enables us to advance into a new area of international judicial co-operation against serious crime. It does so by enabling us for the first time to comply with requests from other countries to freeze or confiscate the proceeds of offences other than drug trafficking.
Thus we shall be able to immobilise funds which are suspected to be the proceeds of, for example, international fraud or of extortion while their origins are investigated. Once a confiscation order has been issued by a court of a designated country we shall be able to act on behalf of that country to remove those funds from circulation and to prevent their reinvestment into crime.
The order is closely modelled upon a number of Orders in Council which were approved by this House earlier this year, the last, under the Drug Trafficking Offences Act 1986, concerning the enforcement of confiscation orders in respect of drug trafficking proceeds. By those earlier Orders in Council we have already designated a number of countries with which we have negotiated a drug asset confiscation agreement. The present Order in Council performs a similar function in relation to three countries—Italy, Nigeria and Sweden—with which we have concluded broader confiscation agreements in relation to the proceeds of all serious crime. As such it will enable us to implement our agreements with those countries.
In addition the order is one of the pieces of subsidiary legislation which must be put in place before we are able to ratify the 1990 Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime.
The order has been considered by the Joint Committee on Statutory Instruments. I therefore beg to move that it be approved.
Moved, That the draft order laid before the House on 25th November be approved [4th Report from the Joint Committee].—(Viscount Astor.)
Lord Richard: My Lords, perhaps I may start with a mild complaint. I understand that the order was considered only this morning by the Standing Committee on Statutory Instruments in another place. It seems a little rushed to have it considered in one House in the morning and in the other House in the evening. Having said that, it is a mild complaint which the noble Viscount, Lord Long, with his customary enthusiasm for the procedures of the House, will no doubt wish to take on board and register with the Government.
As I understand it, Part VI of the Criminal Justice Act 1988 enables the courts to order the confiscation of the proceeds of certain offences of which a defendant has been convicted and from which the defendant has gained at least £10,000 from his activities. The offences concerned are indictable offences, and some others, but, as the noble Viscount said, not drug trafficking offences which are dealt with under legislation. Section 96 of the 1988 Act is concerned with arrangements which may be made to

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allow confiscation orders made in countries outside the United Kingdom to be enforced here. The order is made under that Act.
The draft order is concerned with setting up arrangements for the enforcement in the United Kingdom of confiscation orders made by courts in certain designated countries. As the noble Viscount said, the three which are listed in Schedule 1 to the draft order are Italy, Nigeria and Sweden. That is a development of which we approve. It is important that such arrangements are made so that where defendants have been convicted in foreign jurisdictions there is a chance of confiscating property in others. I support the Motion.
Viscount Astor: My Lords, I am grateful to the noble Lord, Lord Richard, for his support for the order. Perhaps I may answer his first point. The order was originally put down last month and then withdrawn because there was discovered to be a very minor technical defect in the drafting. I imagine that that is why the rather strange timetable was adopted.
On Question, Motion agreed to.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 8.5 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.28 to 8.5 p.m.]

Local Government Bill [H.L.]
House again in Committee on Clause 13.
Lord Teviot Lord Teviot moved Amendment No. 159:
Page 12, line 5, at end insert:
("(c) to ensure the cost-effective exercise of local authority functions and planning and delivery of local authority services.").
The noble Lord said: In moving Amendment No. 159, I wish to discuss also Amendment No. 166 which is ancillary to it.
Baroness Blatch: Perhaps the noble Lord will allow me to intervene. I understood that Amendment No. 159 was grouped with Amendments Nos. 174 and 193.
Lord Teviot: My noble friend is quite right. I apologise. Amendment No. 174 is in the names of my noble friends Lord Norrie and Lady Cumberlege. Amendment No. 193 is in the name of my noble friend Lord Wade. I am delighted to take those amendments. We have talked to each other, and the summing up will be brief.
As I made clear at Second Reading, my interest in the Bill centres on two specific categories of service to the public: public transport and record offices. In her reply at the conclusion of that debate, my noble friend the Minister acknowledged the importance of strategic planning and the value and expertise of specialist local government services. However, I know that other noble Lords believe as I do that Clause 13 as drafted does not adequately reflect that importance. Other noble Lords have expressed concerns similar to mine in the context of local authorities as a whole
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other specific services. The provisions are all right as far as they go but that is not very far. Subsection (5) (a) is designed,
"to reflect the identities and interests of local communities"
and is clearly essential. Likewise, subsection (5) (b) is designed,
"to secure effective and convenient local government".
It would be hard to object to that. However, the wording is extremely vague and general and needs to be made stronger and more explicit so as to point clearly to the need for authorities to do vital things: first, to think strategically; and secondly, to secure the cost-effective delivery of specialist services.
My first concern is transport. There is now consensus—almost all shades of opinion, political and otherwise are agreed—that a new approach to transport policy is needed. It is generally accepted that we cannot provide enough road space for everyone who would like to travel by car. Wherever practical, we have to encourage people to change back to other forms of locomotion such as walking, bicycling and especially travelling by bus. That encouragement has to he provided by a whole range of measures, some at the disposal of central government but others essentially of a local character to do with traffic and parking management, land use planning and the promotion and co-ordination of public transport services. A piecemeal approach will be doomed to failure. Local measures will have to be carried out as part of a single coherent plan for the entire area in which people live, work, shop and find their recreation. To prepare such a plan there must be an authority which covers the whole of that area.
My other concern is about the archive service which in the shire areas is at present provided almost exclusively by county record offices. As I said at Second Reading, the service is used by more than 300,000 people each year for purposes of academic research, leisure interests and legal and administrative inquiries. To provide that specialised service one needs teams of highly skilled specialists which cannot be divided into smaller units without threatening their viability.
Clause 14(5) and Clause 21 provide for the creation of joint authorities and I propose to return to that subject later in the context of my Amendment No. 223. However, experience and common sense suggest that joint authorities should only be used as a last resort. As regards transport planning, coherent strategies of the kind that we now need will not be produced by disparate gatherings of representatives, each having his or her loyalty not to the whole but to the narrow advantage of his or her local unitary patch. Let us suppose that a town achieved unitary status separate from its hinterland. Such rivalries between the town and the adjoining authorities would defeat any attempt at co-ordinated policy making.
I return to the question of archives. In the archive services the experience of metropolitan areas in the wake of the abolition of the metropolitan county councils in 1985 gives a clear warning that joint authorities do not automatically give sufficient safeguards. There is little positive evidence overall to suggest that the difficulties of maintaining a

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comprehensive service, held together only by the voluntary involvement of districts, have been balanced by positive advance and achievement.
That all points clearly to the conclusion that wherever possible unitary authorities should be large enough to discharge on their own the two functions that I mentioned. These two amendments would therefore add two new paragraphs to the provisions of Clause 13. The first one would insert a third paragraph (c) in subsection (5) requiring the Local Government Commission to have regard additionally to a third characteristic of any new local government structure; namely, that it would:
"ensure the cost-effective exercise of local authority functions and planning and delivery of local authority services".
The second insertion would be a new subsection (7) expressly requiring the Secretary of State to take account of the criteria set out in Clause 13(5) when preparing directions and guidance for the commission under subsection (6). I beg to move.
8.15 p.m.
Lord Norrie: Amendment No. 159 has the same purpose as my Amendment No. 174. My amendment seeks to ensure that recommendations for local government reform are accompanied by supporting evidence. I find it disturbing that the Bill as currently drafted does not provide for the commission to demonstrate its case when making recommendations for structural reform. If the review of local government is to enjoy widespread public acceptance, I believe that the Bill should contain clear requirements for the objective and careful examination and presentation of evidence. That will be vital if the process is to be open and seen to be open to public scrutiny and influence.
There appears to be widespread agreement that any changes to local government structure should be fully justified in terms of cost effectiveness. I believe that it will not always be possible to justify the upheaval and costs involved in structural reform. That is why I support Clause 13 of the Bill which allows for the commission to recommend no change.
The comments of my noble friend the Minister during Second Reading led me to believe that the Government would support my view. Perhaps I may remind the Committee that she said:
"There must be proper justification for the inevitable upheaval and costs involved in reorganisation. Any change to structure should be both worthwhile and cost-effective".—[Official Report, 18/11/91: co1.714.]
However, I was disturbed by the statement made by my noble friend the Minister during the debate on Tuesday evening which suggested that the Government were approaching this matter in a different way. She said that there was now a presumption in favour of change and that the onus lay on the existing two-tier structure to provide clear reasons why reform was not necessary.
I believe that that exposes some confusion in the Government's approach. I wonder whether the Minister could clarify exactly the Government's position and say why it appears now to be biased in
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favour of change despite the costs? I still believe that it should be the other way round. The commission should be required to demonstrate the case for change where appropriate and provide evidence to support it.
I note that in the draft Guidance to the Local Government Commission, recently issued by the Government for consultation, it is stated that:
"Change to the structure of local government should be worthwhile and cost-effective".
I also note that the Government intend to issue specific guidance on how to assess costs and benefits.
However, this issue is so significant that I believe it would be wrong if the Local Government Commission were not under a statutory obligation to demonstrate the case for change. Certainly I should welcome detailed advice in the form of special guidance on how a proper assessment of costs and benefits might be achieved. But I do not think that it will be enough to assist the Local Government Commission and ensure that it approaches its task in a thorough and consistent manner.
I have another concern in relation to measuring the costs of change. The financial implications for local government reform are clearly important; but there are other kinds of costs which are not easily assessed in terms of monetary measures and I would include environmental costs in that category. I fear there is a risk that by concentrating on financial considerations we may ignore less quantifiable costs such as costs to the environment or in terms of quality of life. For that reason I have chosen in my amendment to refer to disbenefits rather than costs.
It would be unacceptable if, in making proposals for local government reform, questions of environmental quality and the wise use of our land resources were not taken into account by the commission. I should not like to see these matters treated less seriously by the commission just because they are more difficult to assess. My amendment would place a statutory duty on the commission to demonstrate the case for change, taking into account all relevant considerations including environmental protection. I believe that the amendment points up a serious shortcoming of the Bill as it is drafted at the moment. I urge my noble friend to consider it very carefully.
Lord Wade of Chorlton: I should like to support my two noble friends in their two amendments and to draw the Committee's attention to my amendment, Amendment No. 193, which is grouped with them. My amendment seeks to draw attention to the fact that the Local Government Commission cannot put forward any recommendations for structural change unless it has considered the transitional long-term financial implications of that change, and ensured that it has been calculated effectively. The commission must also be of the opinion that any additional cost is fully justified.
My noble friend Lord Norrie referred to the comments made to my noble friend the Minister during the Second Reading of the Bill. At the last reorganisation in 1974, at present day prices some £280 million was the cost of extra payments to staff, new buildings and so on. The total cost of local government just before reorganisation in 1973 stood

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at about £9 billion and two years later it ran at £15 billion. So there is the cost to the people who pay the bills—they are not those in this Chamber or in government but the people out there; they are the people who have to pay for it all. They were confronted with extra costs of at least £3 billion as a result of the last reorganisation. The cost of local government now runs at some £40 billion per annum. Again, it is the people out there who have to pay for it all. I do not speak on behalf of the people in local government or in government or of Members of the Chamber or the other place; I speak on behalf of the people who ultimately have to pay the bill. I do not propose that no extra costs should be involved; I propose that the commission considers carefully the costs of any changes that it puts forward and justifies any increased costs that may be incurred as a result of its recommendations.
The Government have previously indicated their great worry about the ultimate costs of legislation and the changes that they propose. However, it surprises me that in this Bill they have not referred to the costs that may be involved. I believe that it is a very serious issue. We have a responsibility to all those who ultimately have to pay the bills to keep the cost to an absolute minimum. We have a responsibility to show independently that any costs to those persons are fully justified and that they receive full benefits.
It is an important issue. I expect the Minister to indicate clearly that it is the Government's intention to draw to the commission's attention that it must take those serious matters into account. If it is not possible for the Minister to do so, we may have to refer strangly to the matter at Report stage or other stages of the Bill. I hope that the Minister will give us the reassurance that we seek: that the requirement to consider costs will clearly be written into the Bill.
Earl Howe: Perhaps I may turn first to Amendment No. 159 and address my noble friend's anxieties about cost effectiveness and the strategic issues that he raised on transport and archives. The statutory terms of reference of the commission already include a requirement to have regard to the need to secure effective and convenient local government. The terms of reference of the commission are briefly stated in the Bill. But we have set out in more detail the policy which we propose that the commission should follow in the paper on our draft guidance to the commission which we have issued to the local authority associations and other organisations for comment.
In the draft guidance we have made very clear the importance which the commission should attach to cost-effectiveness in the delivery of functions and planning and delivery of local authority services. The guidance states that the commission should have regard to the need to establish local authority areas such that the authorities can carry out their functions effectively. The guidance also says that the commission should look for a structure to achieve the most cost-effective exercise of functions and delivery of services consistent with community identities. It should consider convenience to local people, and, in the case of strategic functions, the wider public interest.
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The guidance adds that in making its recommendations, the commission should be satisfied that functions for which a transfer of responsibility would take place can be performed in a way which is cost effective, more responsive to consumer needs and conforms with statute and national policy requirements. I do not think that one can be clearer than that.
However, it may be helpful to my noble friend if I read a short extract from the draft guidance under the section headed "Highways". It states:
"Planning for building and improvement of major roads needs to be coordinated for an area large enough to enable a proper balance to be struck between the interests of those in the immediate locality and wider interests. An authority which is large enough to deliver most local services may not be large enough to take this broader view, and the option of joint arrangements for some or all of highway functions may need to be carefully considered".
On the question of archives, where county councils remain, the existing arrangements for archives can most certainly continue. Where they cease to exist, a number of options for archives can be considered. It is unusual, but not without precedent, for archive powers to be given to district councils under present arrangements. Therefore one option would be to extend archive powers to all unitary authorities.
I recognise that it may well be unsatisfactory for the archives to be split but it would be possible for the successor authorities to come to an agreement about voluntary joint arrangements. In the absence of an agreement, it would also be possible for the Secretary of State to impose statutory joint arrangements. A further option would be to designate one authority in an area as solely responsible for archives.
I assure noble Lords that those who are interested in the archives service will have ample opportunity to make representations both to the Local Government Commission and to the Secretary of State before decisions are taken about the restructuring of local government in any area. When considering recommendations of the Local Government Commission which might involve county councils ceasing to exist, the Secretary of State will naturally have regard to the future of the archive service among other things.
The other two amendments that we are considering seek to prevent the Local Government Commission from recommending changes to local government structure unless it can prove that the benefits of any proposed changes outweigh the disadvantages. We have always made it clear that the costs as well as the benefits of change will be a key factor in decisions about changing local government structure. I can reassure the Committee that the commission will certainly not recommend change to local government structure without a proper justification for the costs and upheaval involved. By costs, I refer not only to the transitional costs but the recurring costs of change. There is a presumption in favour of change to unitary authorities. However, that change must be justified by the commission. It must not be change for change's sake.
It may be helpful to Members of the Committee to know that the department has commissioned a firm of consultants, CSL Group Limited, to advise on this issue. It has been asked to advise on two questions: first, it was asked to advise on the appropriate costs

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and benefits to be taken into account in assessing a structural change; and, secondly, it was asked to recommend a methodology for assessing those costs and benefits. It is expected to produce its report shortly. It is intended that the report should be used as a basis for providing guidance to the commission on those issues. We intend to consult the local authority associations on such guidance in due course.
I believe that in the end we must trust the Local Government Commission to be an effective guardian of local government. If I detect a hesitation in that regard on the part of my noble friends, I hope that what I have said will reassure them sufficiently to enable them to withdraw the amendments.
Lord Desai: I am interested to know that the Government have asked a group of consultants to advise on the issue. A formidable problem is posed by the amendments. The spirit of the amendments is entirely correct: that as we propose changes we must be careful that they are cost effective. That is a good general principle. However, I worry about the requirements of the amendment referred to by the noble Lord, Lord Wade of Chorlton, and other noble Lords, on the transitional and long-term financial implications of the change. I speak as an academic. It may be impossible to know the long-term financial implications of a change until long after that change has been made. Let us take our minds away from local government. Let us consider the costs and benefits of having joined the European Community. Twenty years later we still do not know whether or not the long-term costs and benefits of that change justify it.
I understand a demand for prudence. One ought not to undertake vast changes which are costly and which cause many problems. I refer to the reforms of the 1970s.
Lord Wade of Chorlton: I appreciate what the noble Lord says. However, it is not unusual in business for people to make long-term plans. The implications of their decisions may run for 10 years. Many people in various aspects of business have to make those long-term decisions. The implications of those decisions may be affected not only by the actions of governments but also, as the noble Lord so rightly says, by the European Commission. I do not think that it would be unreasonable to ask an organisation with the resources of the commission which will be considering the long-term impact of local government to look well ahead.
8.30 p.m.
Lord Desai: I can see the desire for prudence and forethought behind this clutch of amendments. However, being somewhat new to the game I am not sure how much they bind the commission to do things that it cannot be expected to do, even with the best of knowledge. I still am not sure whether we should saddle the commission with such provisions, or perhaps at a later stage review what it has done. The nature of the problem makes it difficult to predict the changes. The changes in local government structure in the 1970s were, with the best of intentions,
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enormously expensive. No one could have foreseen that inflation would double within two years of the proposed changes.
The commission should be allowed to do certain things, bearing in mind those considerations, but it should not be compelled to provide, as is set out in the amendment tabled by the noble Lord, Lord Norrie:
"clear and demonstrable evidence that the benefits of such change outweigh the disbenefits".
I am not sure of any economics that can comply with that proposal. We pretend that they do but we could not send the matter to a court of law as proof.
Lord Teviot: This has been an interesting debate. The noble Lord, Lord Desai, made academic and erudite points, although I do not say that I absolutely agree with him. My noble friend Lord Howe referred to highway services. I was talking about public transport services but I shall read carefully what he said. His comments about the archives sound more encouraging. Again I shall consider what he said.
My noble friend Lord Wade said that this group of amendments relates to costs. He raised the valid point that in 1974 the costs to the Labour Government rose from £9 billion to £14 billion. I was a member of this Chamber at that time and I remember that it sat for hours discussing the Bill relating to reorganisation. The intention of that reorganisation was to slash costs by putting the small authorities together. It is appalling but costs rise when there is reorganisation. It also happened in 1971 as a result of decimalisation because every shopkeeper put up his prices. The whole thing was frightful! Because of the late hour I shall thank Members of the Committee who have taken part in the debate and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 160 had been withdrawn from the Marshalled List.]
[Amendments Nos. 161 and 162 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 163:
Page 12, line 5, at end insert:
("(c) to provide for the consideration of strategic issues at regional level.").
The noble Baroness said: The amendment is tabled not to create regional assemblies but to ensure that when those regional assemblies are created the work done by the Local Government Commission will not have to be unpicked because no consideration was given to the regional and strategic dimension. The Audit Commission notes precisely that. Perhaps I may go back a stage and ask, what do we mean by a region? I remember listening to a debate on the arts in this House. A Peer from London who was well informed about the arts talked about the need to maintain the great metropolitan flagships, such as the opera houses, in contrast with those in the provinces. That sounded as though the rest of England was a hinterland of home counties to Greater London and that there was an undifferentiated twilight world out there. The suggestion rather appalled me. Obviously, regions are where the natural features of geography interlock with patterns of culture, identity and settlement in order to create a regional distinctiveness. Obviously, some

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areas are more marked than others; for instance, the South West, East Anglia, the North, Scotland and Wales. However, regional identity exists in most parts of the country. I firmly believe that within the next decade or so we shall see regional assemblies.
Why is that, and why should the Local Government Commission bear that in mind in terms of its structural review? There are four broad reasons. The first is to reverse the unhealthy centralisation of the past 13 years. A regional tier of government would allow us to bring down functions from central government; that is, DTI functions, regional grants, employment training, many transport functions and regional development. Those functions are already run at government level. We are not here to invent regional government but to democratise the regional government that already exists.
Secondly, such a body would take sideways the functions of many quangos. The last count I made in East Anglia showed that there were 26 such quangos spending public money but accountable to no one. They dealt with tourism, sports, the arts, water and the aspects of health. I wish to emphasise that we are not talking about inventing regional government—we have it at DoE level and at quango level—but we are looking for a devolved tier of central government.
Thirdly, I suggest that a few functions would appropriately come up from the county councils. I am sorry that the noble Lord, Lord Norrie, is not in the Chamber. That refers back to an earlier debate about the need to maintain a strategic dimension in, for instance, planning and transportation. They are the kind of functions that the old economic planning councils carried out until they were abolished in the name of economy. However, they had promptly to be re-invented by local government and as we all gave ourselves attendance allowances the costs rose immediately. As a result we have SCEALA in East Anglia, SERPLAN in the South East, the Northern Region Councils Association, the Yorkshire and Humberside Regional Association and so forth.
Why are such bodies necessary? One has only to look at some of the issues that have been concerning planning. DoE and your Lordships' House during the past year. We have considered issues such as the impact of the M.25, the planning of the Channel Tunnel, the east Thames corridor proposals of the Secretary of State, the effects of the East Coast Motorway, and the management of national parks and green belts. English Nature, English Heritage and the national parks would more effectively be co-ordinated with a regional structure of government than they can be at the moment.
In addition, another function might relate to the police. Already 21 shire counties are in joint regional bodies. We may wish to integrate employment training initiatives with further and higher education on a regional basis. I repeat, regions are not meant to be super county councils; they are meant to be a decentralised tier of local government democratising central government and the quangos that we already have at regional level. It is the case that for strategic purposes county councils are too small. I hope that the
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examples I have given of strategic planning and economic development will persuade Members of the Committee.
There is a fourth reason. Why attach it now to this report when we are asking the Local Government Commission to take on board a range of considerations in developing the future of local government structure? It is because we are moving into Europe and into a Europe of regions. In the past decade almost every European country has devolved powers from the centre down to regional governments and regional structures; for instance, in Scandinavia, Italy, Portugal, Spain and even France. Those regions are the building blocks of the new Europe. Much EC money is going not to national or to federal governments but direct to regional governments. Without such regional bodies Britain is disadvantaged. The Audit Commission stated at paragraph 8 of its response to the Government's consultation paper:
"There are signs that the absence of fora in which local authorities can come together to represent the interests of their broader regions is beginning to disadvantage United Kingdom local government in its representations to the European Commission in the use of structural funds. It is argued by many in Brussels that the EC will increasingly deal directly with regional authorities and member states on regional policy in particular. In most member states regional governments are growing in importance and seeking to strengthen their own links with European institutions".
The Audit Commission also states that it notes the absence of any discussion of the regional or European dimension and that is an absence that it regrets.
It is worth reminding ourselves that 40 per cent. of Europe's declining regions are in Britain and that one-third of our population lives there. Only in the South East is the European average for GDP exceeded and even then only on a par with West Germany's lowest performing region.
Without regional assemblies and, therefore, without a Local Government Commission considering the regional strategic issue, we cannot properly influence European regional policies. Instead, Britain is funding the regional development initiatives of other countries because we do not have effective regions of our own. That is a redistribution of wealth for which I do not care.
This amendment does not propose regional assemblies. It asks that the regional dimension be considered by the Local Government Commission so that future regional structures are not precluded or alternatively that the work of the Local Government Commission is not, in future, unpicked. I beg to move.
Baroness Hamwee: I support the amendment. Members of the Committee will expect me to support it since it has been the policy of my party to support regional government—it is what people in the regions seem to want—for as long as I have been a member of it.
We shall certainly wish to see powers brought down from Whitehall to the regions. There is no suggestion in the report that powers should be taken up from local authorities. Again, it is a question of government at the most local level possible but with a consideration for regional issues.
8.45 p.m.
Baroness White: I had hoped that I should be listening to my noble friend Lord Brooks of Tremorfa, who has had considerable experience of local government in the Principality and has been a leading member of the South Glamorgan County Council for many years. Unfortunately a few hours ago I was informed that he is not able to be here this evening so I feel that I must say something about the situation in Wales.
I am fully conscious that the Bill before us refers only to England. However, it is important that Members on all sides of the Committee should recognise that in Wales we are currently undergoing a process which may lead to a drastic revision of local government. That is being done without the benefit of statute; in other words, we have no Bill to discuss. Therefore, it appears to me not improper to ask Members of the Committee to consider some of the problems in Wales.
There has been considerable anxiety that while England is to have a Local Government Commission, there is no such arrangement for the Principality. I have here a lengthy list with which I shall not weary the Committee of public bodies of one sort or another, voluntary or statutory, in Wales which are on record as either regretting that there is no Local Government Commission or demanding that there should be one. I suppose that NALGO might have been expected to make such a demand but I have here quotations from the County Surveyors Society, the Chief Fire Officers' Association, the Institution of Civil Engineers, the National Trust, the Association of Chief Officers of Probation, the Town and Country Planning Association—I refer to branches in the Principality—the County Planning Officers Association, the Assistant Masters and Mistresses Association, the National Association of School Masters/Union of Women Teachers, the Society of Education Officers and so on. They are all concerned that while there is a considerable opportunity for putting in written representations to the Secretary of State for Wales, there is no comparable independent body to examine matters and to assist the Welsh Office to reach conclusions.
Having listened to the debate today and having either listened to or read the debates earlier in the week, I am not sure that the initial indignation in the Principality is entirely justified. I am not convinced that we should wish to be associated with the sort of travelling circus which has been described by the Minister. Nor should we wish to endure between three and five years of uncertainty before knowing what is to be the definitive pattern. I am less enthusiastic about having a separate commission for Wales having listened to what is proposed for our big neighbour.
However, the fact remains that many of us are anxious about the pattern of single tier authorities. A good deal of argument is taking place between the districts on the one hand and the counties on the other. I do not wish to enter into that. It would not be germane to our discussions this evening. However, many of us are seriously anxious about the matter touched upon in my noble friend's amendment. As far
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as I am aware, there have been only the most casual references by the Welsh Office to the strategic issues which should not necessarily be the sole responsibility of whatever is the final pattern of subsidiary authorities, county or district, single tier or two tier. There are strategic issues and it is important that we should know how it is proposed to handle them.
At present, so far as I have been able to discover, there is no substantive suggestion as to what body or in what manner strategic issues should be handled. My own view is that it will not be satisfactory if the Welsh Office is the only strategic planning instrument in the Principality. We need something more public. The Welsh Office may believe that it can deal with all the strategic issues. It follows that to some extent those matters will be dealt with behind closed doors. The Minister is now shaking her head. If she knows more about it than most of us do, we should be delighted if she would enlighten us as to what the Welsh Office is thinking at the strategic level, which has been the subject of discussion on various amendments this evening. That should not just be the purview of the Welsh Office in Cardiff. It should be open to more open discussion, information and consideration.
I do not wish to weary the Committee further with our Welsh problems. However, it is only right that Wales should be discussed when considering the new pattern. After all, we have a fairly close neighbour with whom we have shared a pattern of local government for quite a long time. If our local government is to be dealt with on a different basis from the pattern in England, then there should be more than a collection of individual or corporate opinions. As we are not having any legislation of our own, it is only right that we should use this opportunity to find out anything we can from informed government circles.
Lord Skelmersdale: I find it difficult to listen to arguments from the same people on the one hand for unitary authorities and on the other for a new local government tier in terms of the regions. That may not be what the noble Baroness, Lady Hollis, is seeking, but I know that it is the policy of her neighbours to her right.
Baroness Hamwee: I am not sure if the noble Lord is suggesting that it is the policy of the Liberal Democrats that there should be unitary authorities and nothing but unitary authorities. I hope that I made it clear earlier that we believe that the solutions should come from the local communities. That may mean unitary authorities, but it may mean not only unitary authorities.
Lord Skelmersdale: I take the point, but that does not alter the fact that one of the interesting points to come out of the earlier discussion in the debate was that the new authorities, whatever they should be, will take on the existing functions of local government. As I understand it, the proposed new tier will be for new functions devolved from Whitehall. If so, this is not the Bill to deal with that.
Earl Howe: Amendment No. 163 extends the commission's terms of reference to require it to have

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regard to the need to provide for the consideration of strategic issues at regional level. To a considerable extent I covered the wider point of principle when I replied to my noble friend Lord Teviot.
The Local Government Commission's role is to make recommendations for changes to local government structure, boundaries and electoral arrangements. The Government's position on regional local government is clear. We have no plans to establish a regional tier of local government. Nor do we believe that there is any evidence that people want it. That applies also to Wales. We want to simplify and streamline the arrangements; we do not want to create an extra layer of bureaucracy which would be a waste of taxpayers' money.
The noble Baroness, Lady Hollis, spoke of devolved central government. Arrangements already exist for considering strategic issues at regional level. Many central government functions are administered regionally through government departments' regional offices. In the South-East and East Anglia my right honourable friend the Secretary of State issues regional planning guidance prepared in consultation with local authorities. That provides the regional context for land use and development planning. Progress is now being made towards establishing regional planning guidance in all regions.
Turning to the points made by the noble Baroness, Lady White, my right honourable friend the Secretary of State for Wales prepared a blueprint for Wales—as she rightly said —which contains a range of options for local government in Wales. That was prepared after the widest possible consultation. Although that range of options does not include regional government, it provides for no loss of existing functions and in particular for the strategic functions of local government. At this stage it would be inappropriate for me to go any further on that matter.
The noble Baroness, Lady Hollis, mentioned SCEALA and SERPLAN. I know that my noble friend the Minister served on SCEALA for some time, as did the noble Baroness. Those are regional informal bodies which come together to discuss strategic matters. SCEALA is the Standing Conference for East Anglian Local Authorities and SERPLAN covers London and the South-East. Others exist which cover regional areas and they work extremely well. There is no reason for those informal co-operative arrangements not to continue. The difference between us is that the noble Baroness would give those bodies statutory status whereas we believe that informal arrangements work just as well if not better.
I should like to repeat what my noble friend the Minister said a little earlier in the debate. We do not want to weaken the provision of strategic functions. We made it clear that before any unitary authorities are established it will have to be shown that strategic functions are satisfactorily covered. Draft guidance to the Local Government Commission says that,
"The Commission should be satisfied that functions for which a transfer of responsibility would take place can be performed in a way which is cost-effective, more responsive to consumer needs and conforms with statute and national policy requirements".
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It should consider convenience to local people and in the case of strategic functions, the wider public interest. The commission will be directed to have regard to the guidance and there is therefore no possibility that strategic functions will not be properly provided for.
That means that the commission will concern itself with effective delivery of all local government functions including the strategic functions. It may be worthwhile for me to read out a sample of the draft guidance on the subject of land use planning. It says:
"In exercising their development plan and development control functions, local authorities are acting in the interests not solely of the community they serve directly, but of the wider public. Development plans … need to be prepared for an area large enough to enable the authority or authorities concerned to take a broad and objective view on the distribution and location of development and areas of restraint".
That is clear and I hope reassuring. It is not appropriate for the Local Government Commission to have a role in considering regional arrangements for strategic issues. I hope that the noble Baroness will understand why we feel that that is so and not press her amendment.
Baroness Hamwee: Perhaps the noble Earl will give way. I speak as someone who serves on SERPLAN and was chairman of the members' policy group for a short while. In my view and that of many of my colleagues—I intend no disrespect to the noble Earl, Lord Caernarvon, who serves as chairman—SERPLAN is not a satisfactory means of regional planning. The Minister explained that we have regional planning by central government through the regional offices of the Department of the Environment. It is precisely that to which we are objecting. I hope that the noble Baroness, if she feels that she cannot take the matter further tonight, will feel that it is something to which we can return at a later stage.
Baroness Hollis of Heigham: I thank all the Members of the Committee and especially the noble Baroness, Lady Hamwee, for their contributions. At this stage Amendment No. 163 was meant to be a probing amendment. However, we must recognise that it concerns a major issue identified as such by the Audit Commission. It should be considered and has not been considered in the consultative paper.
The gap of understanding between us was reflected in the Minister's response when he said that he did not support and did not believe that there was public support for what he described as, "regional local government". I obviously failed to clarify the points that I tried to make when introducing the amendment. On this side we were at pains to emphasise that it is not meant to be regional local government—a super county council. There perhaps may and should be a few issues such as strategic planning that will need to come up from county councils or be dealt with by county councils coming together to form informal regional bodies. For example, the debate on the link from the Channel Tunnel into the heart of London is one such issue where a regional forum is needed. I am sure that the noble Baroness, Lady Hamwee, is right

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that such informal bodies trying to work to regional strategic guidance do not give us effective democratic leverage over regional planning decisions.
The major functions that we are seeking are decentralised functions from central government and the sideways functions of quangos. There is no doubt that at the moment we are being marginalised, centralised and impoverished in this country at regional level all at the same time. We are badly ill-equipped and singularly unpoised to enter a Europe of regions. For all those reasons—to decentralise power from Westminster, to bring power from quangos into democratic accountability and to produce a forum with accountability in order to debate strategic issues (green issues, transportation, planning and the like)—we will need regions. Above all we will need them because we are entering Europe.
As I said, this is a probing amendment and I shall withdraw it. But we must return to it. If the Local Government Commission so narrows its perspective in its terms of reference that it fails to take such considerations on board, then in good faith I fear that many of us in the future, in some body or another, will be seeking to unpick its work and reconstruct some of the principles of local government and central government.
I beg leave to withdraw the amendment but with the Committee's permission I shall return to it at a later stage.
Amendment, by leave, withdrawn.
[Amendments Nos. 164 to 167 not moved.]
Clause 13 agreed to.
Clause 14 [Changes that may be recommended]:
[Amendments Nos. 168 to 170 not moved.]
9 p.m.
Lord Norrie Lord Norrie moved Amendment No. 171:
Page 12, line 14, at end insert ("or the reallocation of functions between the two principal tiers of local government.").
The noble Lord said: This amendment seeks to widen the definition of structural change provided by the Bill. At present Clause 14 only allows for the abolition of one tier or the other. I believe that that is too inflexible. My amendment would make it possible for the Local Government Commission to consider the range of functions of local authorities and, if it can be shown to be in the interests of more effective local government, recommend that responsibility for certain of these functions be transferred from one tier to the other, while retaining two tiers.
As I said at Second Reading, I am not convinced that the case for wholesale reform of local government has been made across the country. I therefore welcome the fact that the commission can recommend no change to local government structure if existing arrangements are found to be working well. Despite that, I accept that there may be instances where a degree of structural change may be right. However, I do not believe that that will necessarily always involve the replacement of two tiers of local government with a single tier.
There are superficial attractions in going for a simple unitary structure, but I believe that that may overlook some of the more subtle changes that could be made. My amendment provides for this more subtle approach. It allows for the retention of a two-tier structure where it has been shown to have advantages in relation to certain services, but would allow for the redistribution of responsibility for the other services between the tiers. For example, some of our historic cities may be large enough to carry responsibility for more local services than is currently the case. As county boroughs before reorganisation in 1974, many were responsible for a wide range of services. Today the case for integrating housing and social services into one authority at the level of the cities may be particularly strong. But I do not believe that strategic services, particularly strategic planning for development, transport and protection of the environment, can be effectively carried out by the cities alone.
Indeed, before the 1974 reorganisation the inability of any one authority to take an overview for the purposes of strategic planning was identified as one of the major faults of the old county councils and the county borough system. As a result, if some of the cities were to regain a status similar to the old county boroughs, I believe that it would generally be right for strategic planning services to remain the responsibility of the county councils. I believe that that possibility is still being explored in some areas.
My amendment would make it possible for the commission to consider the redistribution of functions along these lines as a form of structural change. This might well be the most appropriate and beneficial change where the current two-tier system appears to be working well for strategic services. I would not like the Local Government Commission to be precluded from recommending more subtle changes such as this simply because the Bill does not provide for it. I urge my noble friend to consider the possibility that I have outlined very carefully. I beg to move.
Baroness Hamwee: I support the thrust of the noble Lord's amendment and speak in particular to Amendment No. 173 which is grouped with it. I tabled that amendment because I felt that it was important to address at this stage, though not at huge length, how far functions should underpin structure. That was a point which was touched on earlier this afternoon by the noble Lord, Lord Morris, who indicated that he felt that it was something that we had to get our brains around.
I am aware of the view that functions should be disregarded and that decisions should be based on the community as it is defined and analysed by the commission and that we should first look at what the community is and not at what are the functions that are to be carried out. I believe that both community and functions need to be considered. I believe that the community is probably paramount. As local government becomes more of an enabler and less of a direct provider, in a way it is easier to disregard functions. For example things like economies of scale and arrangements for buying-in of services can be

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dealt with fairly conveniently by authorities grouping themselves together through voluntary joint arrangements—and I stress "voluntary".
I recognise that with developments such as the local management of schools and new ways in which old people's homes are dealt with—I am not attempting to embark on a debate as to the merits or demerits of some of these services—some of them can be contracted out. On these Benches we do not have a philosophical refusal to contract out; we just object to it being compulsory. We would not want to see contracting out dictating the structure of local government.
The underlying question is how the service is best delivered. Inevitably we return to points made earlier today. Some services are undoubtedly strategic: they are large-scale. I refer to planning, transportation, the police and fire services and waste disposal. I do not believe that at this time of night it is appropriate to explain why those are strategic services. One either understands that they are or one does not. Perhaps we can have a word afterwards. It would take a very long time to start from the beginning.
We also have to face up to the difficulties of sometimes having to take decisions at a very local level. The noble Baroness, Lady Cumberlege, referred to that. Her example was a municipal tip. The example that I intended to give concerned who would take a decision about a gypsy site, which is the same kind of problem. Those are important matters on which decisions have to be taken. However, they are decisions from which local councillors tend to run away because they cannot look to the broader horizon. In this amendment I am not making an argument for an overloaded top tier. I am not necessarily making an argument for the counties, because I believe—though it appears that others do not—that regional government may fulfil the functions. Equally, functions may be best discharged at parish level. By asking that the commission addresses itself to functions, I am not putting forward a particular design, I am simply asking that question—to look at functions along with community interests and identities.
I come back to asking that the commission looks at what is appropriately done and at which level. I support this raft of amendments.
Baroness Hollis of Heigham: We on this side of the House support these amendments. We are firmly committed to the view that unitary authorities, based wherever possible on existing district councils, are the right way forward. However, where that may not prove to be the right way forward, we think that the Local Government Commission should have the ability to recommend a revision of the allocation of functions. Social services and housing is one, but there may also be others. Youth and community work is another natural pairing. It would be useful to be able to employ the reserve power. For the reason that this would give us extra flexibility and the capacity to deal with individual circumstances of particular areas on a local basis, we support the amendments.
Lord Feversham: I see that in this group of amendments we have Amendment No. 216, which is in my name and that of the noble Lord, Lord McIntosh, which broadly shares the thrust of the amendment of the noble Lord, Lord Norrie, to try and enable the commission to deal with functions and reallocate functions. I agree with almost everything he and the noble Baroness, Lady Hamwee, said.
I do not want to spend a great deal of time talking about Amendment No. 216 with this grouping. The amendment is in support of Amendment No. 192 to which I shall be drawing the Committee's attention later when I may go to town a little more. That is also concerned with the question of functions. The business of functions was raised earlier by the noble Earl, Lord Lytton, and I suspect we shall all get the same answer to this raft of amendments in the grouping; they will be dealt with, and it is the best way to deal with them under the guidance of the Local Government Commission for England which the Minister's department has produced.
Baroness Blatch: Amendments Nos. 171, 173 and 185 provide a useful opportunity for me to clarify the powers of the commission. Noble Lords have made it clear that they want to see the new commission able to make recommendations about changes to the functions of local government.
I can reassure the noble Lords that such recommendations are a key part of the role which we shall be asking the commission to play, It will be central to the commission's work to look at the functions carried out by local authorities in the areas which it reviews, and to make recommendations about how they should be discharged where it recommends unitary authorities.
That again very specifically answers a question which was raised by the noble Lord, Lord Morris, about whether it is function-led or structure-led. It is important to look at functions and then determine which is the best shape of authority; and if we are going for unitary authorities, how they can best be met by a particular authority.
It is very interesting how many district councils and county councils across the country, possibly for the first time for a very long time, are now looking at their parish councils with a rather different eye. There is some very healthy debate going on now between tiers of local government.
In the draft guidance to the commission which we issued for consultation last week, we set out the broad policy considerations to which the commission should have regard in looking at the structure of local government in each area it reviews. The draft also contains some advice on the general issues to be taken into account when the commission is considering effective, efficient and convenient performance of specific functions.
However, the amendment tabled by the noble Lords would also have the effect of making it possible for the commission to recommend that there should be changes to the functions of local authorities as between the tiers. We do not wish to see the commission recommending piecemeal changes to the

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functions of local government. This would blur accountability and create confusion in the public awareness of each tier's responsibilities.
In speaking to her amendments, the noble Baroness said—I think I am quoting her correctly—that as local authorities become enablers, they will possibly lose sight of functions. I do not agree with her. Instead of concentrating on—
Baroness Hamwee: Perhaps I can shorten this by saying that as the local authorities become enablers, they are able to take advantage of voluntary joint arrangements with economies of scale in the buying-in of services. I am going in the direction that the Minister would want me to go at this point.
Baroness Blatch: That is a relief! I was saying that I think it actually frees energies. Instead of concentrating energies on being direct providers, they can actually use that energy in identifying client groups, assessing need, determining priorities and then securing provision in a range of ways—making contracts with voluntary sector, private sector and occasionally providing it themselves.
Amendments Nos. 185 and 186 taken together seek to give the commission the power to recommend the establishment of new authorities for any counties or districts, not just new areas created by boundary changes recommended by the commission. Amendment No. 214 would extend the definition of the areas for which the Secretary of State may establish new authorities to include any area, not just counties or districts. This would allow the establishment of a local authority for a region or Greater London, on which we have already had an interesting debate and on which the Committee knows the views of the Government.
We are committed to a move to unitary authorities in those areas which do not already enjoy the benefits of clearer accountability and streamlined bureaucracy which a single tier of local government brings.
We do not want to create further confusion as to which council does what. I urge the Committee to reject the amendment.
Lord Norrie: I am grateful to the Minister for her lengthy reply. So far as concerns Amendment No. 171, I would not want the Local Government Commission to be prevented by a lack of flexibility in the Bill from recommending what is in the best interests of local government. I shall consider how best to pursue the matter and may well wish to return to it at a later date.
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 172 to 179 not moved.]
9.15 p.m.
Baroness Hamwee Baroness Hamwee moved Amendment No. 179A:
Page 12, line 42, at beginning insert ("above or").
The noble Baroness said: The effect of this amendment, so I am assured by the Public Bill Office which altered my words and I am sure has improved them, is to enable the Local Government Commission
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in its consideration of potential boundary changes to recommend the extension of boundaries beyond the current seaward limit.
I am asking the Committee to spend a moment on this amendment because of environmental and ecological considerations which I am sure will find favour with many Members of the Committee. The Local Government Act 1972 specifies that boundaries end at the low-water mark. In most cases local authority functions end at the median low-water mark. That means that there is an artificial split in some functions between the sea and the land—physical planning and land use planning. I understand that there are at least 33 different agencies with responsibilities and powers relating to the coastal zone.
One specific problem area which this matter has shown up is coastal marine nature conservation. The Nature Conservancy Council and its successor bodies have a duty to identify and designate sites of special scientific interest, but these can be designated only within local government areas—that is usually the median low-water mark. Coastal areas of scientific and environmental importance which lie outside local authority boundaries remain unprotected. Currently, the Government, by practice, require areas to be designated as SSSIs before they can be declared special protection areas. That is for the purpose of protecting sensitive species of birds. SSSI designation can only take place up to the seaward boundary of local authorities. Birds remain unprotected as a result of this confusion. I hope that I am not confusing the Committee further by the way I have explained the problem. Under the current arrangements there is a risk that as a country we shall fail to meet international conservation obligations quite apart from meeting moral, ethical and environmental ones.
I appreciate that this is a somewhat technical matter and I should be very happy after the debate to pass my notes to the Minister. I would not expect a detailed reply off-the-cuff on something of this kind, though having heard how she has dealt with other technical matters perhaps it would not entirely surprise me. I ask the Committee seriously to consider the environmental considerations that apply when we are considering just where a local authority boundary ends when it is at the coast. I beg to move.
Lord Mancroft: On the detail of the environmental point, am I not right in supposing that any birds, wildlife or plantlife are protected by the wildlife legislation regardless of whether they are within or without local government boundaries? I do not understand quite how that would make a difference.
Baroness Hamwee: It also surprised me. However, it appears that before SSSIs can be designated one has to refer to what the local authority boundaries are. It is a problem within that area. It seems that the definitions are not quite in synchronisation.
Baroness Blatch: If I am lucky enough to convince the noble Baroness, I promise Members of the Committee that it will not be because of my prowess in these matters. Clause 14 specifically mentions the

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area below the high-water mark to avoid doubt. I believe the very fact that it is there to avoid doubt has probably caused the confusion. The area of a local authority already covers the area above the high-water mark. The clause specifies that the local authority area extends below the high-water mark for the avoidance of doubt.
Clause 14 provides for the Local Government Commission to recommend changes to the boundaries of local government areas. Subsection (3) makes it clear that the commission may recommend changes to areas, including the area which lies below the high-water mark of medium tides which, as the noble Baroness said, is an average over the year.
It is common law tradition that counties extend to the high-water mark, but boundary orders and local Acts may provide for them to extend beyond that point. I am also advised that the seashore between high-water mark and low-water mark prima facie belongs to the Crown.
The amendment seeks to specify that a local authority's area includes the area above the high-water mark. We believe that that is unnecessary as there can be no doubt that the area of a local authority includes the area above the high-water mark. In the light of that unbelievably clear explanation, I hope that the noble Baroness will feel able to withdraw the amendment.
Baroness White: Before the noble Baroness does so, can we have an assurance from the Minister that, as regards Clause 14(3) (a), we are prohibited in Wales from extending any of our local government areas into England?
Baroness Blatch: Game, set and match on that one. I have taken note of the noble Baroness's question and shall write to her on the matter.
Baroness Hamwee: I thank the Minister for her reply. In expressing my gratitude, I must also say that I am sure her words will be read with interest by those who know far more about the subject than I do. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No. 180:
Page 13, line 15, leave out ("or without").
The noble Baroness said: The amendment now before the Committee is the first of a number which refer to parishes. It would allow the redistribution of a parish area among other parishes but would preclude the loss of parish functions. That is, I believe, the best way of expressing its intent. I hope that the Minister will be able to explain why a parish should be abolished without it being distributed among other parishes.
I know that other Members of the Committee wish to speak tonight about the value of parishes, as was the case on Second Reading. Therefore, it would perhaps be appropriate for me to allow them to speak for themselves. I do not wish to pre-empt what they have to say. However, I wish to associate my noble friends on these Benches with my expression of gratitude and admiration for the work carried out by our parish councillors. I should also like to endorse
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the wish for more parishes, more parish councils and more work done at the very lowest level with the best contact among councillors, residents and other interested people. I beg to move.
Lord Feversham: I thought for a moment that it was my great good fortune that the noble Baroness, Lady Hamwee, had lost her notes, and I was going to be able to spring up and do the whole thing with my Amendment No. 181; hut, no, alas! she found her notes and was soon into her stride, and so I am left with not a great deal to say.
Amendment No. 181 seeks to deal with what we believe is an omission from the Bill. Amendment No.180 seeks to ensure that where parishes are abolished the areas must be distributed among other parishes. I am happy to support that amendment, especially after dinner and out of gallantry because the noble Baroness lost her notes, and for a variety of other reasons. However, I suspect that that amendment may be wishful thinking and it may be difficult to achieve the results for which she hopes, whereas I hope that the Minister will feel that Amendment No. 181 is workable and should be incorporated into the Bill.
The amendment does not seek to alter the existing thrust of the Bill or in any way to challenge the intentions which are enshrined in it. Amendment No.181 relates to a possibility for which the Bill should cater and does not at present. Clause 14(3) (g) provides for an abolished parish to have its area distributed among other parishes or for there to be no such distribution, which means that the area becomes unparished. There is a third possible permutation for which Amendment No. 181 provides: that some areas of the parish are distributed among other parishes and some become unparished. I hope that the Committee is still following me at this late hour. That might be appropriate where the parish had included an area contiguous to an existing unparished area and areas fit to be attached to neighbouring parishes. I commend the amendment to the Committee in the belief that it removes from the Bill any element of doubt as to how the matter could be most usefully dealt with by the commission.
I see that the amendment is grouped with other amendments, to which the movers will probably want to speak. Two of them are in the name of the noble Lord, Lord McIntosh, and are to do with neighbourhoods. While I am on my feet I will, as it were, offer him my support in advance, because I feel sure that we should have parish councils wherever we possibly can have them. I am less clear about whether they should be called neighbourhood councils. We have parishes, local councils, and various bodies with all kinds of confusing nomenclature. They are basically what we used to think of as parish councils. I am not sure whether we should also have neighbourhood councils. The general principle that we should have neighbourhood councils, local councils, parish councils or what we will, wherever we can have them, is a good one.
I see that the amendment is also grouped with an amendment tabled by the noble Baroness, Lady Hamwee, which I do not think she mentioned, and which is to do with charter trustees. At this late hour,

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with the grey matter getting greyer as it does after eight or nine hours under the Chamber's lighting system, I have difficulty understanding that amendment. The noble Baroness might like to explain it to us at some point.
Lord McIntosh of Haringey: It might be helpful if I spoke briefly to Amendments Nos. 182 and 191 which are in my name. First, I give my support to the amendments which have already been spoken to. I also welcome the provision under subsection (3) (f) of the clause which provides for
"the constitution of a new parish by—
(i) the establishment as a parish of any area which is not a parish or part of one".
We in the Association for Neighbourhood Councils have for many years been arguing that the lack of the possibility of attaining parish status, uniquely in the cities of England, was an injustice that should be remedied. The earlier local government legislation provided for the possibility of a parish review directed by the boundary commission but it has been notoriously unsuccessful. Few parishes have been created by that means which was long drawn out and liable to he misinterpreted by the district councils which had to approve before an application was made to the boundary commission. So we have always urged that the right which rural areas in England have through parish councils and which Scotland and Wales have through community councils, should be extended to the cities of England.
Some years ago I introduced a Bill called the Urban Parishes Bill. It passed its stages in this House and it would have achieved that objective. At the outset it attracted ferocious opposition from the Government, but as the argument proceeded the opposition somewhat diminished. I am pleased to see that the Bill as drafted now includes provision for new areas to be parished.
I agree with the noble Lord, Lord Feversham, that the difference between parishes and neighbourhoods is not all that important, but it seems more natural in cities and towns to talk of neighbourhoods. That is the word people use. I used the word "parish" in the Urban Parishes Bill because that is what was open to me. That is what the Government have done and I suppose we can live with it. It is a little unrealistic in inner city areas to talk of parishes—I will give way to the noble Lord in a moment—just as I have always thought it strange that the Church of England had rural deans operating in the centres of our cities.
Lord Feversham: I hope the noble Lord will not drag the Church of England into this debate or we shall he here all night. It does not matter whether we call them "neighbourhoods" or "parishes". I am happy to call them all "neighbourhoods". It is a little American, perhaps, but they should all eventually be called by the same name.
9.30 p.m.
Lord McIntosh of Haringey: I think that in the end we are in agreement. I was not going to move Amendments Nos. 182 and 191. I am confirmed by the agreement between us and with the drafting of the Bill in my intention not to move those amendments.
Baroness Blatch: Under Clause 14 the new commission will have the power to recommend the abolition of a parish with or without its area being distributed among other parishes. This mirrors a power which the Local Government Boundary Commission has at present.
The Bill as drafted gives the commission flexibility to look at the arrangements for parishes and make recommendations that parishes should be abolished with or without their areas being distributed among other parishes. There may be cases, following a review of parishes, where it is sensible for a parish to be abolished without part of its area being redistributed among other parishes. The commission could only recommend this after a review during which local people and other interested parties would have the opportunity to put forward their views. There is nothing sinister about this provision; it is merely intended to give the commission flexibility.
Lord McIntosh of Haringey: Perhaps the Minister will excuse me, but what she has just said is in conflict with what the Bill says. She said that it was possible to imagine a situation where a parish was abolished without the redistribution of "part of its area". That is exactly what is missing from the Bill and why these two amendments have been moved.
Baroness Blatch: I am going back over what I said to the noble Lord so that I can confirm what I am advised by those who know about these matters. There may be cases, following a review of parishes, where it is sensible for a parish to be abolished without part of its area being redistributed.
Lord McIntosh of Haringey: That is the critical point: "part of its area". That is the phrase missing from the Bill and it is why the Minister's speech is in conflict with the wording of the Bill.
Baroness Blatch: If there is a technical hitch in my response to the noble Lord, then of course I shall put it right at Report stage.
Amendment No. 218 would mean that the Secretary of State would be required to confer parish status on any area for which charter trustees had previously been constituted. No one has specifically mentioned charter trustees, but I take "neighbourhood councils", "charter trustees" and "parishes" in the same group of amendments. Under the provisions of Clause 17, where charter trustees have been constituted under the Local Government Act 1972 for an area which is altered under this clause, the Secretary of State may make such provisions as to charter trustees as he thinks appropriate.
The charter trustees for a town are the bodies that are the guardians of the charter and civic regalia for the town. This amendment would remove the discretion of the Secretary of State under Clause 17 to

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make provision as he sees appropriate for charter trustees. His discretion under the Bill as drafted is wide enough to cover the creation of parishes for these areas. At this stage we cannot anticipate the views of local people living in areas which have charter trustees. There will he plenty of opportunity for local people to make their views known when the commission carries out the reviews.
In some areas local people may want to tell the commission that they would like a parish council. In other areas people may favour different arrangements. We should expect the commission to take account of those views in its recommendations to the Secretary of State about what should happen in each area it reviews. We do not want to rule out options at this stage. Having said that, I wish to reassure the Committee—as in debate on earlier amendments—that we recognise the importance that people attach to parishes. I join with the noble Baroness, Lady Hamwee, in paying tribute to the work done by parish councils.
Our consultation paper on local government structure earlier this year generated a good deal of interest in the role of parish councils. We have received the results of the survey carried out by the University of Aston on the role of local councils. Aston University is preparing a final report which we shall publish in the new year. We believe that parishes merit further consideration—I have said this a number of times—in their own right. We shall consider whether to produce a further consultation paper on their role and functions.
I understand that both district and county councils are looking carefully at the role that parishes might play in a new world of unitary authorities. Any proposals that we may have for the future role of parish councils will need to be discussed with local goverment representatives. Our discussions will be informed by the results of the hive of activity that is taking place at the moment in that field.
Amendments Nos. 182 and 191 concern neighbourhood councils. "Neighbourhood" is a vague term and is not defined in statute. We are aware that many local authorities have taken steps to decentralise the management of services and to provide for local community input into their work. In some areas this has involved the formal division of their areas into neighbourhoods. In other areas authorities have created area offices for local service delivery. The Government welcome moves towards breaking up centralised distant bureaucracies and making services more accessible and more responsive to local people. However, arrangements of this kind are not statutory and are a matter for local consideration.
It is important to emphasise that it is often the informality of such neighbourhood support groups that makes them so effective as they are unfettered by rules, regulations and officialdom. In my capacity as a Minister responsible for inner city issues, I meet these informal groups. They work exceedingly well. However, I believe that if they were made into formal bodies, they would lose their special qualities.
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On the matter of split parishes, some areas are allocated by enlarging neighbourhood or neighbouring parishes so that one part of an area is left out and the other part becomes an element of another neighbouring area. I apologise that that explanation was not quite as clear as my wonderful speech on water. I hope, however, that noble Lords will feel able to withdraw their amendments.
Baroness Hamwee: I thank the Minister for that reply. Although I cannot claim to have followed all the detail of the reply, it appeared that the thrust of the argument was that the commission will take proper account of the wishes of local people. I was particularly grateful for the Minister's comments on charter trustees. I was concerned that charter trustees, while fulfilling an interesting and important historical function, do not have powers. I am interested in the overlap, or the non-overlap, between the roles of charter trustees and parish councils. All of us who are concerned about this matter will study the Minister's comments with some care.
I am sorry that the noble Lord, Lord McIntosh, did not pursue the question of neighbourhood councils. He said some kind and extremely well deserved words the other day about the work done in the Liberal Democrat-run borough of Tower Hamlets. It is very well run. I have said before and am glad to take the opportunity to say again that the innovative work of the borough deserves recognition. I appreciate that following the vote this afternoon London is likely to remain without neighbourhoods elsewhere unless others among us are able to be as innovative.
Lord McIntosh of Haringey: I hope that the noble Baroness will forgive me. In praising Tower Hamlets I distinguish between the devolution to neighbourhood, which has occurred in Tower Hamlets, and the establishment of neighbourhood councils, which, despite the Minister's words, I support. The reason I do not propose to move Amendments Nos. 182 and 191 is not because of any lack of conviction in neighbourhood councils but because, on re-reading the Bill, I am satisfied that paragraph (f) provides for the establishment of parishes where they do not exist. So far as I understand it there is no restriction as to where they can be established. They can also be established in urban areas of England. I should be glad to have that confirmed in Hansard.
Baroness Blatch: That is right.
Baroness Hamwee: That is extremely helpful. With some difficulty we have all got back on to the same track and are seeking the same objective. I thank the Minister and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Feversham Lord Feversham had given notice of his intention to move Amendment No. 181:
Page 13, line 16, after ("area") insert ("or part or parts of its area").
The noble Lord said: The amendment follows on from the previous amendment. I should like to say that in view of what the Minister said I shall not move the amendment, although I do not believe that she answered the question.
Lord McIntosh of Haringey: The Minister said that she would return to the matter at Report stage.
Lord Feversham: The noble Baroness did not answer the question today. If she looks at the matter before Report stage she may find that Amendment No. 181 would improve the Bill and insert something that should be there.
[Amendment No. 181 not moved.]
[Amendments Nos. 182 to 186 not moved.]
The Deputy Chairman of Committees (Lord Ampthill): If Amendment No. 187 is agreed to I cannot call Amendments Nos. 188 and 189.
Baroness Hamwee Baroness Hamwee moved Amendment No. 187:
Page 14, line 1, leave out paragraph (c).
The noble Baroness said: In moving amendment No. 187 I should like to speak also to Amendments Nos. 221 and 222. The amendments are all concerned with joint authorities. In the debate on Second Reading I spoke about the difficulties experienced with joint authorities. I do not wish to detain the Committee, but that does not mean that the anxiety which I voiced at that stage is any the less now.
Perhaps I may refer briefly to the anxieties which many of us feel about statutory joint authorities and in doing so say that I am aware that voluntary joint arrangements can work well. I welcome the reference in paragraph 11 of the draft guidance for the commission that joint authorities will be very much the exception. Nevertheless, it is appropriate to spend a moment explaining why they should be so much the exception in the hope of reinforcing the intention that such exceptions will be very rare indeed.
Joint arrangements are unaccountable. Representatives are indirectly elected. The authorities are not well understood by the public, nor by councillors unless they serve on them. They are complex, frequently creating an additional layer of bureaucracy in a more unsatisfactory way than that term normally indicates. They involve work put in by officers of other authorities who are members of the joint authority, often self-selected, with the time or inclination to fulfil a particular job. It is very much an ad hoc affair.
Despite the rather amorphous description I may have given, the arrangements are inflexible. They are generally difficult to construct and require a good deal of negotiation unless the Secretary of State simply imposes them without there being an opportunity for authorities to talk to one another. They are also difficult to change. We have experienced this in London. We have had tedious discussions about how research arrangements should be dealt with and what should and should not go into the Section 188 scheme. That is not a satisfactory way to provide a service which, after all, is what we should all be talking about.
My greatest criticism of joint authorities is that the indirectly elected members quite naturally do not regard the job as their first priority. They attend the joint authority because they happen to be the people who have the time to go there at the time meetings are held. There is little consistency in the membership. There are difficulties creating relations between
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members, and it is upon good relations that so much of life functions. Unless the members can create group dynamics which are conducive to the business moving forward, all that happens is that they will talk at one another across a council chamber or wherever without reaching a conclusion. Members look to their own areas and regard their own patches as their first interest and priority. They tend to express very local views and find it difficult to look at what is strategic. I am afraid that here we come back to the question of how to deal with strategic matters. It is understandable that members in that situation should have such a problem. They are probably dealing with one service and have not worked through the exercise of prioritising where spending should take place—all those issues which help members of a council to work out just what their objectives are. They turn up to do a job, may not do it very well and then go home again. That is the sum total of the contact until the next meeting.
In describing that rather unhappy situation—which I have to say is my personal experience—I hope the Committee will agree that the scope for joint authorities should be so strictly limited as to be non-existent or, if we are to be left with it, that the Government can take on board the concerns I have expressed. I beg to move.
9.45 p.m.
Baroness Hollis of Heigham: I should like to speak to Amendments Nos. 187 and 188 and also to Amendment No. 189 standing in my name. As a result, I will to some extent move between joint arrangements and the issue of lead authorities because they are not very distinct. From my experience, joint arrangements can be a sensible and straightforward way of organising those fused functions where the natural constituency for services is not a district, a county or region. Lead authorities would permit the same sort of flexibility. I give some examples. In the case of tourism, sport and the arts, it may involve several districts working together. Nottingham has joint arrangements with the county for major concert series. Plymouth has joint arrangements with the county for the country park of Mount Edgcumbe.
On my own patch Norwich works with Norfolk for its museum services and for its theatre and the like. Equally, this may apply to tourism. There are examples of Brighton working in a joint arrangement with Hove, or Hull with Beverley and Holderness for tourism promotion authorities. It works with sports and the arts. Also at a different level it works with police forces where some 21 shire counties currently form joint arrangements. It may also work at a regional or sub-regional level: for example, on issues of airports.
From all our experience and from all those examples, we have taken a very positive note. Similarly with lead authorities. By definition, most of our experience with lead authorities now dates back to pre-1974. However, before 1974 either the county or a county borough could be the lead authority in preparing a structure plan. It worked very well. Before 1974 there were joint arrangements with lead

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authorities for transport undertakings and many of them survived for some years thereafter. Before 1974 virtually every county borough had an FE college into which the adjacent county council or accepted educational districts bought places. It worked very well. Many authorities had joint arrangements or lead authority arrangements for water undertakings, computer facilities or purchasing. In other words, there is a lot of experience drawn both from before 1974 when there were lead authorities and since 1974 when there have been joint arrangements including social services, housing and like—I shall not tire the Committee with listing them—to show that they work satisfactorily.
I take issue to some degree with the comments made by the noble Baroness, Lady Hamwee, in that I do not believe that there is much evidence that they seriously impede accountability or increase cost. The real challenge to accountability in local government at the moment does not come from the scattered array of joint arrangements which are a flexible and convenient way of bringing authorities together in a common cause; it comes very much more from the fact that local authorities have very limited control over their own expenditure, for reasons that the Committee will not wish me to go into tonight.
The second source of confusion over accountability comes from the two-tier structure itself and very seldom from joint arrangements. If we are not to have joint arrangements, I suggest that we end up locked into the issue of size; that is to say, the authority has to be able to provide all services, which involves becoming larger and larger in size. There was quite a lot of research done by INLOGOV in the late 1980s which identified those threads of concern which generate problems with joint authorities.
Difficulties arise with joint arrangements first where they are between senior and junior partners, for example between counties and districts, and where the senior authority expects to determine the agenda. Those arrangements tend to be less satisfactory. Secondly, they are less satisfactory where they are compulsorily imposed by central government, as with some inner city partnerships. Those too have a fairly chequered history. Neither do they work well where they are essentially competitive. For example, over the location of manufacturing industry or shopping developments and the like; or alternatively where there are conflicting views about the level of service to be provided.
I agree with the noble Baroness, Lady Hamwee, that when; joint arrangements or lead authority arrangements are negotiated from the bottom up between willing partners of equal commitment and standing, they are mutually advantageous and offer a flexible and useful response to issues and problems where the geographical base does not fit neatly districts, counties or regions. For that reason, I support voluntary joint arrangements.
As I speak to Amendment No. 189, and I know that I have the support of the noble Baroness, Lady Young, I also support the proposal for lead authorities, which again before 1974 for the most part
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had a very successful track history and which seem to me again to embody the concept of an enabling authority.
Lord Norrie: I shall speak to Amendment No. 190 although Amendment No. 221 is also in my name. Amendment No. 190 seeks to redress an imbalance in the Bill and to increase its flexibility in relation to structural changes. I detect a slight but significant bias in the Bill as currently drafted. The Bill, unacceptably I believe, favours the creation of small unitary authorities. Both Clauses 14 and 21 make provision for joint arrangements as a possible outcome of local government reform. Joint arrangements will only be necessary where structural reform results in the creation of small unitary authorities which are capable of effectively performing the strategic functions.
My amendment seeks to make special provision for the delegation downwards of responsibility for certain functions. That may be necessary if, as a result of the review, the commission recommends that unitary authorities are created which are large enough to carry out strategic functions effectively. In such circumstances the need for joint arrangements will be avoided but special measures may be necessary to assure the continuing responsiveness of the unitary authorities to local concerns.
I have in mind, for example, responsibility for development control. That involves day to day decisions on individual planning applications which are currently largely the responsibility of districts. Delegation downwards could result in the creation of area committees to perform local planning functions so that the best features of existing planning arrangements can be protected. I recognise that many local authorities delegate powers under existing legislation. I do not believe that that detracts from the force of my argument.
My amendment is based on an understanding that special provision may be necessary over and above that which is contained in existing legislation to ensure appropriate delegation. I do not believe that that is best left entirely to the discretion of the newly established unitary authorities. As currently drafted, I believe that the Bill unduly prejudices the deliberations of the Local Government Commission in favour of small unitary authorities by making special provision for joint arrangements. Those authorities will be incapable of performing strategic functions.
The Bill contains no provision for the converse situation; that is, strong unitary authorities large enough for strategic purposes but with a need for delegation to maintain local responsiveness. That is why I believe that the Bill is unbalanced. My amendment aims to rectify that. I urge my noble friend carefully to consider the anxieties that I have outlined.
Before I turn to Amendment No. 221, perhaps I may ask the noble Lords, Lord Feversham and Lord McIntosh, whether they wish first to speak to Amendment No. 192.
Lord McIntosh of Haringey: Amendment No. 192 will not be moved.
Lord Norrie: Amendment No. 221 enables the Secretary of State to exclude certain local government functions from the Bill's provisions for joint authorities. Clause 21 is one of the least satisfactory clauses in the Bill. It might almost be taken as an admission by the Government that local government reform might ultimately be unsuccessful in that it would create bodies incapable of coping adequately with the full range of local government services without recourse to joint arrangements.
During the Second Reading debate we heard from a number of noble Lords experienced in the workings of joint authorities. The overwhelming message that I received was that joint authorities were bad news. I share that view. Joint authorities pose problems on a number of fronts. All the evidence suggests that joint authorities dilute accountability. They hinder public understanding. A survey carried out in 1987 by MORI showed that people were more confused by the new joint arrangements after the abolition of the metropolitan counties than they had been before about the previous two-tier system.
There is also a serious question mark over the effectiveness and efficiency of the joint arrangements. They do not appear to be effective as decision-making bodies, in particular on strategic and regulatory matters such as land use planning. I am anxious lest with regard to such functions as strategic planning they are likely to be even more ineffectual.
Rather than questioning whether the clause shall stand part of the Bill—an option to which I gave considerable thought—my amendment is modest and seeks simply to exclude those functions where I believe that it is clear that joint arrangements are likely to fail. I do not believe that joint authorities for strategic planning are likely to work. I do not believe that it would be possible for them to enforce the degree of control over the decisions of individual participating authorities which is necessary to ensure effective strategic planning for development and the protection of the environment. Nor do I consider that the ability of the Secretary of State to intervene to impose joint arrangements, for which the clause provides, will help.
I see the provision as a recognition of the serious difficulties there are in making joint arrangements work properly. I believe that it indicates ambivalence in the Government's own attitude towards joint authorities. It appears that the Government recognise the inadequacies of the joint authorities. For instance, the draft guidance for the Local Government Commission notes that statutory joint authorities detract from accountability and the Government intend them to be the exception.
I also suggest that if the Government ultimately expect there to be a predominantly unitary system of local government, joint authorities should not be a feature of it. Joint authorities destroy the argument for unitary local government by introducing two-tier local government in a different and I believe vastly inferior form. If change can be justified, the objective should be to establish unitary authorities which are large enough to carry out strategic functions effectively. That removes the need for joint arrangements. I believe that in the Bill there are a
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number of inconsistencies in the Government's approach to these questions. They must be ironed out if the review of local government is to get off to a promising start.
The clause and its implications deserve serious consideration. My amendment seeks to probe the Government further on the question of joint authorities. I should like to know, under the circumstances, for which functions the Government believe that joint authorities will work. Will the Minister provide me with an example of the kind of exception referred to in the draft guidance? Will she also tell me how the Bill will otherwise prevent strategic planning being undertaken by joint authorities? I urge my noble friend to consider the amendment seriously. I believe that it highlights a part of the Government's approach to local government reform which needs further thought. I beg to move.
10 p.m.
Baroness Cumberlege: I support my noble friend's Amendment No. 221. Earlier in the Committee's debate the noble Baroness, Lady Hollis, argued with skill and waxed lyrically about joint boards, joint committees, agency arrangements and these authorities. That was a world that I did not recognise. However, during the current debate the noble Baroness introduced some reservations which I did recognise. We are now back to the real world.
I have connections with three county councils and their numerous districts and with several London boroughs. I have to say that it is not all sweetness and light. I do not agree with the noble Baroness, Lady Hollis, that all police forces in the shires are efficiently and effectively run. I believe that good management requires clear lines of accountability. Where they do not exist officials have an easy opportunity to fill a vacuum left by those councillors who, as the noble Baroness, Lady Hamwee, eloquently said, have no real responsibility for those organisations.
I was interested to hear the noble Baroness, Lady Hollis, mention the work produced by the Institute of Local Government Studies published last year. I have read the study and I believe that the authors who researched carefully and closely argued the case and came to the unequivocal conclusion that joint boards are not accountable—
Baroness Hollis of Heigham: I thank the noble Baroness for giving way. I wish to make it clear that at no stage was I defending joint boards. Throughout I was talking about voluntary joint arrangements; that was the distinction that I was making. I hoped that I had made it clear that where they were compulsory and they were boards they had a track record of being less successful. The examples that I gave were nothing to do with planning, nor were they boards, nor were they compulsory. They were voluntary and district-based for the most part.
Baroness Cumberlege: Will the noble Baroness tell me whether she mentioned the police force? I understood that she had.
Baroness Hollis of Heigham: In respect of the debate on the regions, I said that there were 21 shire counties which currently had joint police forces. I believe that that is an argument for going for a regional tier of government.
Baroness Cumberlege: I now understand the point. However, I had understood the noble Baroness to say that joint police forces worked well. I am saying that there are questions about that.
In my experience, which I share with the noble Baroness, Lady Hamwee, joint arrangements lack direction and clarity. They add to bureaucratic complexity, provide the potential for deadlock and are a potential arena for conflict. In my view they have very little to recommend them and they suffer from some severe disadvantages.
I am worried in particular that in the Government's guidance to the commission there is a suggestion that an essential service such as the fire brigade should be managed, financed and run by joint boards. In particular I ask the Minister to reconsider and clarify that guidance because I believe that, as it stands, it could put the public in jeopardy when they are at their most vulnerable. I support the amendment.
Baroness Hamwee: I believe it will be for the convenience of the Committee if I speak to Amendment No. 222. It aims to delete the provision which would allow a joint authority to be instituted as a body corporate and requires that it should be fully representative of the authorities of the areas which comprise it.
I was rather surprised to see that a joint authority may be turned into some kind of quango. To have only an indirectly elected joint authority is bad enough, but to create a corporate body seems to be the worst of every world: one loses all contact with local people; there is no democratic accountability. It is perhaps rather late in the evening to indulge in flights of fancy about bodies corporate making a mess of what they are doing and going into liquidation. However, that seems to be a possibility, at least in view of what is on the face of the Bill. One hopes that that will never occur because provisions for their creation will preclude that, although those who were involved with some strategic functions like the organisation of the Channel Tunnel rail link might have been glad of that kind of option.
My Amendment No. 222 is serious. In my view it is essential that joint authorities are fully representative so that they speak for their own communities and councils. They cover the whole area both geographically and in a community sense. They cover the area comprehensively. I believe that it is quite distasteful for a Bill dealing with the future of local government to contain a suggestion that a body representing local government shall not be representative of it.
Lord Feversham: Amendment No. 192 supports and is similar to Amendment No. 190 in the name of the noble Lord, Lord Norrie. It focuses rather more on local councils. Due to the lateness of the hour I do not intend to make a speech about that. I believe that we shall be happy to withdraw the amendment in view
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of what the noble Baroness has already said with regard to functions and all that being dealt with in the guidance notes.
Once again we are dealing with a whole raft of amendments concerned with functions. Members on all sides of the Committee are unhappy that that is not dealt with in the Bill. The Minister keeps saying that she would rather deal with that matter in the guidance. However, it seems to me that Members of the Committee on all sides are rather unhappy about that. They are all being extremely obliging and withdrawing their amendments. However, I believe at some point —perhaps at a later stage of the Bill—there must be a Division on this matter. People are not happy with the idea that it should be dealt with in the notes of guidance. They believe that the word "functions" must appear more forcefully in the Bill.
Baroness Blatch: I take the last point first. The Secretary of State will instruct the commission to heed and have regard to the guidance. It cannot be clearer than that. It is not enough to single out one aspect. It is important to address all functions of local authorities which includes strategic functions. Very often, as the noble Baroness, Lady Hamwee, said, the definition of "strategic functions" is not clear cut. Often something can be made strategic because it cuts across one boundary or another. In the strict sense of the word "strategic" that is not strategic.
The Committee can be assured—I have said it so many times that I shall be called to account when the recommendations come before Parliament—that the strategic functions of local authorities will not be ignored by the commission. Indeed, it dare not do so after all that has been said.
This is a large group of amendments and they are all different. Amendment No. 188 seeks to alter the commission's duty under Clause 13(5) (c) so that it may make recommendations about the extent to which a structural or boundary change may require (rather than requires) that joint arrangements between authorities should be made. The amendment would have no practical effect, as it would be open to the commission to recommend that no joint arrangements should be made under the Bill as drafted.
The noble Baroness may welcome some clarification of the Government's views on the role of unitary authorities. In our draft guidance to the Local Government Commission we made it clear that the commission should seek to recommend a local government structure which enables individual authorities to be responsible for all local government functions. That is because the significance of establishing local authorities which match communities will be lost if those authorities do not have such direct responsibility. We recognise that law and order services are a special case for which there should be a presumption in favour of combining areas.
That is not to say that we can rule out joint arrangements for all other local government functions whatever the circumstances. The Bill as drafted leaves it to the commission to make recommendations about whether such arrangements are required or not. I am sure the Committee will agree that the commission will

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be in an excellent position to make such recommendations and it would be unwise to remove its duty to do so, as is sought by Amendment No. 187.
A single-tier structure does not preclude voluntary arrangements between authorities to share expertise or resources if that is sensible and efficient in practice. Two authorities may each retain statutory responsibility for a service in their area, but one may draw on the other on an agency basis to achieve the most flexible and cost-effective results. We are well aware that statutory joint arrangements detract from accountability and have said that we intend them to be very much the exception.
The guidance gives the strongest possible lead to the Local Government Commission to presume in favour of unitary authorities but not in every circumstance to rule out joint authorities. It is right to say that we believe that that should not be a first resort. The Government are not ambivalent about the matter.
With regard to Amendment No. 189, under Clause 14 recommendations from the Local Government Commission may cover the extent to which a structural or boundary change requires that joint arrangements should be made in relation to functions affected by the change. The term "joint arrangements" in the clause covers any sort of joint arrangements and certainly could include arrangements for a function to be discharged through a lead authority. I know the noble Baroness, Lady Hollis, felt some anxiety on that point.
I do not believe that Amendments Nos. 190 and 192 are necessary. The Bill as drafted carries no implications about the size of authorities. Our draft guidance to the Local Government Commission covers the need for the commission to look for a structure to achieve the most effective exercise of functions and delivery of services consistent with community identities. We are aware that many local authorities make use of Section 101 of the Local Government Act 1972 to delegate their functions to other authorities. Section 101 covers delegation to any local authority including parish councils—a point made by the noble Lord, Lord Feversham. We also know that several local authorities are already looking at possibilities for delegating functions below the level of unitary authorities, and we welcome that approach if it means bringing local government closer to the people. There is already plenty of scope for delegation by local authorities to any other local authority. Such delegation arrangements may be matters on which the commission may comment, but we feel that they are best left to local discretion and decision by the authorities concerned.
With regard to Amendment No. 221 we cannot rule out joint arrangements for local government functions, whatever the circumstances. The power in Clause 21 to establish by order joint authorities to carry out specific functions will be available to the Secretary of State only in strictly defined circumstances. Those are when the Secretary of State considers, in the light of the Local Government Commission's recommendations, that functions should be carried
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out jointly by more than one local authority and where voluntary joint arrangements by the authorities concerned are not put in place or are unsatisfactory.
Any joint authority established under this clause will continue to exercise the function for which it was responsible only until the authorities concerned have made satisfactory joint arrangements for themselves. The noble Baroness, Lady Hamwee, said that she was disappointed that joint authorities are corporate bodies. I suggest to her that all local authorities are corporate bodies. That is simply their legal status and has no effect on their membership.
Amendment No. 222 seeks to require any joint authority established by order under this clause to be fully representative of the authorities for whose areas it is established and to rule out the option of any joint authority having the status of a corporate body. I can assure the noble Baroness that whether or not a joint authority was a body corporate would have no effect on its membership which, by definition, would be fully representative of the authorities for whose areas it was established.
I believe that my noble friend Lord Norrie posed a question about the circumstance when a joint board is a preferable option. I suggest to him that the benefits and disbenefits for an area are weighed up after the review has taken place. It may well be that a unitary authority with joint arrangements with another or even other local authorities has the advantage over a much larger local authority. That must be an option left open for the Local Government Commission.
There was a direct question from my noble friend Lady Cumberlege concerning fire authorities about which she was worried. Most fire authorities are single county council area fire authorities. It is conceivable that where the units of local government are smaller than the county councils, it makes sense to leave the fire authority intact at county council level. That will become a joint statutory authority. I do not believe that that would put any community in danger because there are well established and well practised arrangements at this moment. I hope that these amendments can be withdrawn.
10.15 p.m.
Baroness Hamwee: I thank the Minister for that very helpful reply. I am most assured about a body corporate. I had wondered whether it may be one that was somehow unusual. I have no quarrel with voluntary joint arrangements. It is perfectly right that they should be allowed for. I am sorry that the noble Baroness, Lady Hollis, is not here, so perhaps I may discuss it with her afterwards. I have some doubts as to whether it would be right to provide in detail for lead authority arrangements. If joint authorities are to have any chance of working well then the members themselves must sort out how they are led and whether they should be a lead authority.
I shall remind myself again by reading what the Minister has said on all these matters. I retain my anxieties and I suggest that it is natural that I should do so because of the background knowledge that I have of such arrangements not working well. I take heart from the noble Baroness's confirmation—we

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have already seen the draft guidance—that these authorities will be very much the exception. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 188 to 192 not moved.]
Clause 14 agreed to.
[Amendment No. 193 not moved.]
The Deputy Chairman of Committees: Amendment No. 194 was spoken to with Amendment No. 165.
Lord McIntosh of Haringey: No. We did not move Amendment No. 165—bad luck!
Clause 15 [Procedure on a review]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 194
Page 14, line 25, leave out from ("shall") to the end of line 32 and insert ("ensure—

(a) (hat adequate publicity is given to the direction requiring the review to be conducted and to any other directions under this Part which are relevant to the review;

(b) that all persons who may be expected to wish to make representations in relation to the review are made aware that they are entitled to do so;

(c) that all such persons are given an adequate opportunity for making such representations and are in Formed of the period within which such representations may be made."').

The noble Lord said: In moving Amendment No. 194, I should like to speak also, with the permission of the movers of these amendments, to Amendments Nos. 200, 202, 205, 206, 211, 212 and 213. The thrust of all these amendments is the same. It is that we should improve the conditions under which the Local Government Commission consults and gives publicity to its proceedings and its decisions.
As Clause 15 stands—and I refer to Amendment No. 194—the Local Government Commission is required to take such steps as it considers sufficient to secure that persons who may be interested in the review are informed of the direction, informed of any other directions which are relevant—in other words, just informed of the fact that the Secretary of State has told the Local Government Commission to do something—and informed of the period within which representations may be made. That is a very limited view of consultation and publicity.
Amendment No. 194 starts by making it clear that there should be adequate publicity given to the direction and other directions (and that is already covered by the Bill) that persons who may be expected to wish to make representations are made aware that they are entitled to do so (that is not provided in the Bill), and that all such persons are given an adequate opportunity for making representations and are informed of the period. So it is not just telling them about the period, but making sure that the period is long enough.
Amendment No. 200 refers to the need for the draft recommendations of the Local Government Commission to be advertised and the conditions under which they should be made available for inspection. Amendment No. 202, which is in the name of the noble Lord, Lord Feversham, and myself, provides that the commission should supply a copy of the document if they are asked to do so.
Amendment No. 205 is in Clause 16. It is in the name of the noble Baroness, Lady Young, and others. Clause 16 is about the need for consultation between the Local Government Commission and the Audit Commission. The amendment provides that the commission shall consult relevant bodies and other persons before giving opinions about bodies likely to be affected by changes and shall notify those bodies of intention to give those opinions. So it is extending open government to the role of the Audit Commission in the Local Government Commission review procedure.
Amendment No. 206 in the name of the noble Baroness, Lady Hamwee, and myself, provides in effect that the Local Government Commission shall publish its opinions, because that is not provided for in the Bill as drafted. It may seem draconian to say that it should publish within seven days, but it is no different from the publication of a judicial opinion. Judges are expected, when they produce an opinion, to explain it straightaway, except in very exceptional circumstances. There is no reason why, when they produce an opinion they should not publish it pretty well straightaway—that is, within seven days.
In turning to Clause 17, which is about the implementation of the review, Amendment No. 211, in the name of myself and the noble Baroness, Lady Hamwee, provides that there should be an opportunity for comment after the recommendations have been published. At the moment, it looks as if the consultation period ends before the recommendations are made public with the result that there is no interchange, no communication, between the public and the Local Government Commission on its recommendations. That seems to us to be unduly restrictive.
Amendment No. 212, in my name and that of my noble friend Lady Hollis, provides that where there are modifications proposed by the Secretary of State to the recommendations of the Local Government Commission that that should also be subject to publicity.
Finally, Amendment No. 213, if the noble Lord, Lord Norrie, will allow me to refer to it with approval, provides that there should be 12 weeks before the order is actually made. I am sorry to have taken so long in introducing these amendments. They all have the same thrust: that the publicity and consultation arrangements for the work of the Local Government Commission are quite inadequate, and need to be extended in the ways proposed in these amendments. I beg to move.
The Deputy Chairman of Committees: My apologies to the noble Lord for my failure to understand. I did not have the pleasure of hearing him say that Amendment No. 165 was not to be moved. I should remind the Committee that if Amendment No. 194 is agreed to, I cannot call Amendment No. 195.
Lord Norrie: I shall speak briefly to Amendment No. 213, which stands in my name and that of the noble Lord, Lord Stoddart of Swindon. The amendment seeks to extend the period of time before the Secretary of State can issue an order after receiving

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the recommendations of the Local Government Commission. It extends the period from six to 12 weeks. It is a straightforward amendment but one of considerable importance.
I cannot see how a period of six weeks can be considered sufficient time to allow interested parties to make effective representations to the Secretary of State on the final recommendations of the Local Government Commission, or for the Secretary of State properly to consider them. Six weeks is even less time than local authorities are allowed to take in deciding most minor planning applications. It is important that interested parties have an opportunity to make representations to the Secretary of State on such an important matter and for their views to be taken seriously.
Clearly, in the first instance it is necessary that the Local Government Commission's recommendations are published for all to consider. Interested parties should be entitled to comment on the recommendations to the Secretary of State. I take that to be the intention of the part of Clause 17 which allows the Secretary of State to make modifications to the commission's recommendations. If that is not the intention, I should like to know on what basis the Secretary of State will be able to make such modifications. I would also expect there to be further consultation on modifications if they are proposed. I therefore support Amendment No. 212, to which the noble Lord, Lord McIntosh, spoke in moving Amendment No. 164.
If reform of local government is to endure, it will need to command widespread public support. One way to secure that support is to make sure that all have an ability to comment on and influence the final recommendations. In many instances that should also result in better and more durable decisions.
I see no merit in skimping on opportunities for consultation, especially if it is a matter of a few weeks. Measured against the fundamental and long-term implications of local government reform, I believe that a few extra weeks is a worthwhile price to pay if the result is to be a more successful outcome.
Baroness Hamwee: I support these amendments. I think I am right in saying that the reason that the Deputy Chairman did not hear the noble Lord, Lord McIntosh, say that Amendment No. 165 was not moved was that the noble Lord was not here.
I should like to speak briefly to Amendment No. 206 regarding the publication of an Audit Commission opinion which is provided to the commission. Such an opinion will be an important piece of information on which the Secretary of State, in turn, will make his eventual decision and as such should be firmly on the public record. In a way, and perhaps even more importantly, publication of the opinion will allow interested parties to react to it. The publication itself will allow for further debate and for cross-fertilisation of ideas. With that particularly in mind I urge the Committee to take account of the thinking behind the amendment. I support this whole raft of amendments.
Lord Feversham: I rise to support the general thrust of the amendments if only to ensure that all quarters of the Committee are seen to support the thrust of the amendments. Now we have someone from the Cross Benches doing it as well.
Baroness Blatch: I am all for even-handedness—at this hour of the night anyway. Clause 15(1) requires the commission to take such steps as it considers sufficient to inform interested parties of the direction to carry out the review; of any other directions under this part which are relevant; and of the period within which representations about the review may be made to the commission.
As to Amendment No. 194, we certainly intend that the Local Government Commission should publicise its reviews widely. Under Clause 15, the commission will have the duty to take all the steps it considers necessary to ensure that those with an interest in a review—local people and organisations—are aware of it and have the opportunity to make representations. There are many different ways in which the commission should be able to make information about its activities and procedures available, including local newspapers, radio and television. It would not, however, be practical to lay a statutory duty on the commission to require it to ensure that each individual person and organisation who may wish to make representations about a review are aware of the opportunity to do so. That would be an impossible task.
I therefore urge any noble Lord who supports that view, and the noble Baroness, to accept my assurance that we certainly intend that the commission should do its utmost to publicise its reviews widely. I hope that the amendment will be withdrawn. From a personal point of view, I believe that it is inconceivable that, when the Local Government Commission gets going, people in an area will not be aware of its activities.
I turn now to Amendment No. 205. Such measures seem to us unnecessary and time consuming. The Audit Commission is an independent body, in possession of much relevant expertise and experience to enable it to provide the Local Government Commission with an objective opinion on the economy, efficiency and effectiveness of the commission's proposed arrangements for service delivery. Our aim is to ensure that, whenever the commission requires it, it should have access to such objective advice. But we see no need to subject the Audit Commission to these requirements which would undoubtedly slow down its work.
The Local Government Commission's reviews will look at the country area by area and all local authorities affected will have plenty of opportunities to put forward their views. We therefore do not see a need for the measures in the amendment. I urge that this amendment be withdrawn.
The Audit Commission will not be the only organisation from whom the Local Government Commission seeks an opinion, advice or information about its proposals for structural change. To place a requirement on the commission, as under Amendment No. 206, to publish the opinion it receives from the

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Audit Commission would take that opinion out of the context of all the other considerations which the Local Government Commission must take into account when drawing up recommendations. The new commission must have discretion to consider all the information it receives, and by doing so arrive at its final recommendations for restructuring local government in an area. An opinion from the Audit Commission is only one component in the process. Under Clause 15, the commission will be required to make available for inspection its recommendations to the Secretary of State. There is no need for it to publish the opinion of the Audit Commission separately. I therefore urge the noble Lord and the noble Baroness not to press this amendment.
Under the procedures set out in this clause, copies of the commission's recommendations are to be made available for inspection in the offices of all district and county councils in the area affected by the review. Clause 15 requires the commission to take steps to ensure that interested parties are aware of the availability of its recommendations. The commission will certainly want to make good use of publicity for that purpose.
The intended effect of Amendment No. 202 is unclear to me, even after listening to its presentation. I am not sure whether the noble Lord intends that principal authorities, or the commission itself, will make copies of the draft recommendations available to those local authorities which ask for them in writing. Principal authorities in an area under review will already have copies of the draft recommendations which they will keep available for public inspection. So I assume that the reference to local authorities is a reference to parish councils.
10.30 p.m.
Lord McIntosh of Haringey: The Minister is quite right in that respect.
Baroness Blatch: In that case, it seems to me that it would be extremely sensible for the commission to make copies of its draft regulations available on request to any interested person. Of course, that would include any parish council which was likely to be affected. We shall cover that point in the draft guidance on the procedures which the commission should follow in carrying out its reviews. My right honourable friend intends to direct the commission to have regard to this guidance under Clause 15(7). We shall invite views on the contents of that guidance.
I shall deal now with Amendments Nos. 211 and 212. We have taken great care to build substantial opportunities for public comment into the commission's procedure for carrying out reviews. The commission will be required to make copies of its final recommendations available for public inspection and will be required to take such steps as it considers sufficient to secure that persons who may be interested in the recommendations are informed of them and the period within which they may be inspected. Further, the Secretary of State will be required to wait for six
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weeks after receiving the commission's final recommendations before making an order implementing them, to allow time for further representations to be made.
Any modifications to the commission's recommendations would take account of views expressed about the recommendations. If the Secretary of State considered the commission's recommendations needed to be modified substantially, he could direct the commission to conduct a further review, and to make revised recommendations. The commission would of course be required to publish those revised recommendations and make them available for public comment following the procedures set out in Clause 15.
On Amendment No. 213, we believe that a six-week period between submission of the commission's report and recommendations and their implementation by order of the Secretary of State is an adequate time for people to put forward further views, given that they have had ample opportunity during the course of the review.
Those with an interest in a review carried out by the commission will be aware of the recommendations that it submits to the Secretary of State, as Clause 15 requires the commission to publish its recommendations for change, and to publicise where they may be inspected. Interested parties will therefore already be familiar with the issues raised by the commission's recommendations.
There is much to be said for the implementation of the commission's recommendations to follow as quickly as possible. Once a recommendation has been made, it seems to us that it be would be best for all concerned to make any changes recommended by the commission as swiftly as possible.
I must emphasise to my noble friend Lord Norrie that six weeks is the minimum period. The Secretary of State cannot act within six weeks. He can take much longer, but he must wait for at least six weeks. Therefore I ask my noble friend not to press his amendment.
The procedures set out in Clause 15 which the Local Government Commission will be required to follow are more than adequate to ensure a high level of public awareness of each stage of the commission's reviews and ample opportunity for public comment upon the recommendations. I believe that I have addressed the points made by all Members of the Committee, and I hope that with the assurances I have given they will not press the amendments.
Baroness Hamwee: Perhaps I may ask the Minister one further question about the publication of the Audit Commission's opinion. Why is it necessary to refer in Clause 16 to the Audit Commission being under an obligation to provide an opinion? If the Minister cannot answer that question now, perhaps we may have a word about it later. If there were no statutory obligation would the Audit Commission have no duty to provide an opinion? That seems to be an interesting position.
Baroness Blatch: There is no mystery about it. If the Local Government Commission is doing its work it

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will from time to time require information, advice or an opinion from the Audit Commission. Rather than pass the legislation and then have a period of time during which, for one reason or another, the Audit Commission decides that it will not co-operate, first, it is important to ensure that co-operation is secured within the Bill, so that we do not have to rush back to Parliament with modifying legislation; and, secondly, the opinion might be a minor matter. The work of the Local Government Commission will be based on advice it takes from wherever, including the Audit Commission. The most important thing is that that information and the results of the advice are in the public arena, and of course they will be.
Baroness Hamwee: I am obliged to the Minister.
Lord McIntosh of Haringey: That is the only bit of the Minister's reply with which I am totally dissatisfied. I remind her that under the Act establishing the Audit Commission, the Secretary of State may issue such directions on the conduct of its functions as he thinks fit. The Audit Commission shall give effect to those directions; and so, if the Secretary of State wants to direct the Audit Commission to respond to the requests of the Local Government Commission, he can do so. That does not need to be on the face of this Bill.
There is a difference between the Audit Commission's position and all the other people who will be consulted. The Audit Commission is a statutory body. Under the terms of the Bill it can and will be required to respond. I should have thought that its professional opinion on how workable the Local Government Commission's proposals are is a central part of public debate on that issue. There is a distinction to be drawn between the Audit Commission and all the other consultees. I am not suggesting that the noble Baroness would wish to press her amendment to a Division, but she would be entitled to do so having regard to the quality of the answer given.
The other answers were very meaty and they deserve further consideration. Some appear to me to be quite hopeful. I shall certainly wish to consider them between now and another stage. I beg leave to withdraw Amendment No. 194.
Amendment, by leave, withdrawn.
Lord Feversham Lord Feversham moved Amendment No. 195:
Page 14, line 26, after ("that") insert ("bodies which may be affected by, or").
The noble Lord said: This amendment concerns consultation, as does the second group of amendments, with the exception of Amendment No. 219 which does not concern it. In introducing this amendment, I should say that, as Members of the Committee may know, I am President of the National Association of Local Councils. Perhaps I should have declared that interest before. I shall be continually pressing for the Local Government Commission and for any legislation which comes forward as a result of the commission's recommendations, to enhance the basic parish role of articulating views of parishes and
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towns and, if the chance arises, of neighbourhoods on which other public bodies can take decisions affecting the parish.
Experience has demonstrated that without some statutory backing, as exists in the case of development control, parish councils are not always able to articulate at the right time the views of their area. This is usually because there is no settled, regular procedure for supplying them with information and receiving their views.
Therefore we are forced to move into what I can only describe as the funeral parlour of legislation in that most of these amendments are concerned with introducing the word "bodies" into the Bill. It is a situation where persons may not wander about in the Bill unless they are accompanied by bodies! The amendments seek to create this proper funereal atmosphere.
It is to ensure that at each stage of its procedures for review the commission is required to take appropriate steps to inform both the local authorities and the public of the area. What is necessary to inform, for example, every parish council—which many people recognise as the body—will be different from what is appropriate to inform the public—which is the persons. The commission should be under a specific duty, we feel, to consider what it should do in both categories of notification.
Amendment No. 219 is somewhat different, as it is not concerned with duties to be performed but with making arrangements, to prevent any doubt that suitable arrangements can be agreed, not only by existing bodies changed by orders, but by any new bodies. Experience has shown that it is often the new bodies, after they have begun to operate, which need to make agreements of this type. I am not quite sure why it has been included in this grouping of amendments. That is a mystery known only to the gremlins who draw up such things. However, I am happy to speak to it now, with the rest, in a spirit of goodwill and to give the Minister the opportunity to respond to it.
On the other hand, Amendment No. 235, which also stands in the name of myself and the noble Lord, Lord McIntosh, has a similar target with regard to consultation. What I have already said attaches to it, but it is not in the funereal mode of the other amendments. It is more specifically to deal with the need to consult parishes. It gives the Secretary of State greater control over the matter.
I have not dealt with Amendment No. 196. The group must have been put together because my name was on all the amendments and in the last attack of the gremlins Amendment No. 196 was slipped in. As ever, it brings in the noble Lord, Lord McIntosh. The noble Baroness, Lady Hamwee, manages to get in on it also. I shall leave either of those to talk to Amendment No. 196. I beg to move.
Lord McIntosh of Haringey: I support the amendment.
Baroness Hamwee: As indeed do I.
Baroness Blatch: The purpose of Amendments Nos. 195, 195 and 235 is to ensure that bodies (including parish councils) which may be affected by the commission's review of an area and its recommendations have access to the same information as,
"persons who may be interested".
I can assure the noble Lord, Lord Feversham, that the term,
"persons who may be interested",
in the Bill already covers any corporate or unincorporated bodies or organisations which may be affected by a review by the Local Government Commission. The Interpretation Act defines "person" as including a body of persons corporate or incorporate. I hope that, in the light of that clarification, the noble Lord will not press this amendment.
As regards Amendment No. 201, I assure the Committee that the commission is already required to take such steps as it considers sufficient to ensure that persons who may be interested in its recommendations are informed of them, and the period within which they may be inspected. The term "persons" in the Bill already covers any corporate or incorporate bodies or organisations which may be affected by a review by the Local Government Commission. As I have already said, the Interpretation Act defines "person" as including a body of persons corporate or incorporate.
Amendment No. 235 is unnecessary, as parish councils within the area which the commission was reviewing would be included in the persons the commission is required to consult under the procedures set out in Clause 15. Parish councils are persons interested in the review. We have already set out in previous debates the procedures which the commission would have to go through under Clause 15. I hope that, in the light of the assurance that it is unnecessary, the noble Lords will agree to withdraw the amendment.
I understand that the next amendment has been withdrawn. I may be being presumptuous in expecting it to be withdrawn.
10.45 p.m.
Lord McIntosh of Haringey: We cannot withdraw amendments until we reach them.
Baroness Blatch: I think someone has suggested to me the amendment may well be withdrawn.
Lord Feversham: In view of the Minister's full explanation of the definition of "persons", I shall be happy to withdraw the amendment. However, I am sad that that may signal the death knell of these delightful funereal wordings, in that in future Bills bodies will have to be accompanied by persons. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 196 to 202 not moved.]
Clause 15 agreed to.
Clause 16 [Consultation with the Audit Commission]:
Lord Shelmersdale Lord Shelmersdale moved Amendment No. 203:
Page 15, line 39, leave out from ("shall") to ("with") in line 40 and insert ("provide the Local Government Commission").
The noble Lord said: In moving Amendment No. 203, I wish to speak also to Amendments Nos. 204, 207 and 208. I believe that grouping has now been requested by the Committee. On Second Reading several noble Lords referred to the cost of change. That there will be such cost has been amply proved by the situation pertaining in and after 1974—the previous occasion there was a major re-organisation of local government. My noble friend Lord Teviot referred to this matter on an earlier amendment. This cost implication has been recognised by the Government, in part at least. That recognition is revealed at the beginning of Clause 16 which starts:
"The Audit Commission shall if so required by the Local Government Commission, provide it with a written opinion as to the … economy, efficiency and effectiveness "
of its proposals.
Since I tabled this amendment two things have happened. First, the Government have selected the first controller of the Audit Commission, John Banham, as presumptive chairman of the Local Government Commission. I believe it was he who gave the Audit Commission its strong start and gave it the respect it holds to this day. His appointment gives me considerable hope. My noble friend Lady Blatch said in winding up the Second Reading debate that one of the requirements of the Local Government Commission is that it must have regard to the cost effectiveness of any changes. However, I believe that will only happen in part. The problem is that Clause 16(1)—to which my Amendment No. 203 refers— states that only if the Audit Commission is approached by the Local Government Commission must it provide a written opinion as to the likely impact of any proposed structural changes on the economy and efficiency of a proposal. This is too important a matter to leave to chance.
In answer to the last but one group of amendments my noble friend said that in some cases the opinions of the Audit Commission would be of a "minor nature". Perhaps in her response she will be able to spell that out.
Be that as it may, the Audit Commission is the expert in this field where public bodies are concerned and I believe that it must always be consulted. I greatly fear that otherwise in some parts of the country the inherent costs will rise exorbitantly, to the detriment of both the taxpayer and the charge payer. That happened in 1974 and is bound to happen again.
The Audit Commission is not, and never has been, expert in environmental matters. Therefore, I shall be very interested to hear what my noble friend Lord Norrie has to say on Amendment No. 204.
I am not alone in my view of the automatic involvement of the Audit Commission. Since putting down the amendment the Association of County Councils has lent its support. I shall await the Government's response with interest. If they think on the same lines as the association and myself then I believe that Amendment No. 208 should come into play.
In my self-imposed role of the watcher of expenditure, I cannot see the point of one commission invoicing another for a service which the former has to perform. Two sets of accountants, and possibly lawyers, would have to be involved in transferring money from one public body to another. It would, I suggest, be far better and cheaper for the Government to increase the grant in aid of the Audit Commission so that it can afford its new role.
The gremlins have also been at this grouping, and so I shall reserve judgment on Amendment No. 207 until it is explained. In the meantime, I beg to move.
Lord Norrie: In support of my noble friend Lord Skelmersdale's amendment, Amendment No. 203, it concerns me that we do not know how the Local Government Commission will decide whether to require the services of the Audit Commission. Would that be on the basis of the degree of opposition to its proposals or would it be limited by budgetary constraints? Those are serious questions to which I hope the Government will respond.
Turning now to my own amendment, Amendment No. 204, which concerns the scope of the Audit Commission's assessment, in view of the important environmental functions performed by local authorities, I believe that the commission's assessment should cover the environmental implications of the proposed changes as well as the implications for economy and efficiency. That will not be easy.
In speaking to Amendment No. 174 I mentioned the difficult matter of measuring environmental costs. Those are less quantifiable than financial considerations and cannot satisfactorily be measured on a monetary scale. The Audit Commission is undoubtedly expert in the consideration of financial matters and questions of efficiency. It is important that it shares its experience and knowledge in respect of environmental assessment. Without a requirement for the Audit Commission specifically to examine environmental implications, I cannot see how a comprehensive assessment of proposed changes can be achieved.
The Government are proud of their environmental record and I am sure that the prospect of local government reform tarnishing their achievements in that respect will not be one that they will wish to risk. I therefore hope that the Minister can assure me that the commission will be required to assess the environmental implications of proposals for structural change.
Earl Howe: Amendments Nos. 203 and 208 both deal with the role of the Audit Commission in the reviews undertaken by the Local Government Commission.
Amendment No. 203 would make it mandatory for the Audit Commission to provide the Local Government Commission with advice on the likely impact of changes to local government structure on economy, efficiency and effectiveness in the provision of service arrangements. The Bill places a requirement on the Audit Commission to provide such advice only if the Local Government Commission requests it. We believe that to be the right approach.
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It will be for the Local Government Commission to consider the most effective and convenient structure of local government for an area, and it will be assisted in that task by the guidance which my right honourable friend the Secretary of State for the Environment will issue to it. That guidance makes it clear that the commission should be satisfied that functions for which a transfer of responsibility would take place can be performed in a way which is cost effective.
The Local Government Commission will have to look carefully at the cost-effectiveness of service arrangements in drawing up its recommendations for structural change and it will obviously wish to draw on the valuable experience and expertise of the Audit Commission in doing so. My noble friend Lord Skelmersdale remarked that it was too important a matter to leave to chance. I do not think chance comes into it. If the Secretary of State thinks that the Local Government Commission has not arrived at its conclusions on the basis of the fullest possible balance of information it may be deemed to be in breach of its obligations. That is why I believe the discretion to seek advice should remain in the hands of the Local Government Commission.
Amendment No. 208 seeks to remove the provision under which the Audit Commission is required to charge the Local Government Commission the full cost of providing this advice. The Audit Commission charges the full cost of the advice it provides to all the public bodies who seek it. Subsection (3) of the clause is needed to ensure that the Audit Commission is able to recover its costs from the Local Government Commission. The Audit Commission has a statutory duty under the Local Government Finance Act 1982 to balance its books. If the power in subsection (3) of the clause were removed the Audit Commission would need to increase the fees it charged other bodies to cover the loss of income incurred in providing the Local Government Commission with the information it requested. That would be unfair. We prefer the Local Government Commission's relationship with the Audit Commission to be on a basis similar to its relationships with other public bodies.
Turning to Amendment No. 204 in the name of my noble friend Lord Norrie, I hope that it will not be thought from our debates so far that the Local Government Commission will have no access to advice on environmental issues. We shall be issuing guidance to the Local Government Commission about organisations it should consult in conducting its reviews. I can say that that will include suitable environmental organisations. It is worth repeating one additional point. The Bill does not in any way invalidate or weaken the impact of any previous legislation requiring local authorities to perform their statutory environmental functions. Those obligations do not disappear with the Bill, and it is not a bad idea to keep that thought at the back of our minds throughout these debates.
Technical advice on environmental issues is outside the scope of the Audit Commission's current functions laid down by legislation which relate essentially to the audit process and the promotion of value for money. Under the Bill the Audit Commission will lay down

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the way in which performance standards are reported and published. We do not believe it would be an appropriate body to offer views on environmental performance as its undoubted expertise is not relevant to that concern.
I hope I have made clear that the arrangements we have made for the Audit Commission to give advice to the Local Government Commission and for it to obtain advice on environmental issues are appropriate and that my noble friend will withdraw the amendment.
Lord Skelmersdale: I am grateful to my noble friend for that answer. I have to say that without reading carefully what he has said I am unsure whether my noble friend Lord Norrie has had an answer to his question as to what will motivate the Local Government Commission to ask for advice in the first place. Subject to discovering that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 204 to 208 not moved.]
Clause 16 agreed to.
[Amendment No. 209 not moved.]
Clause 17 [Implementation of recommendations by order]:
[Amendments Nos. 210 to 214 not moved.]
Lord Desai Lord Desai moved Amendment No. 215:
Page 16, line 40, at end insert:
("( ) the power of the staff commission established under section 23 to issue advice and guidance to the relevant authorities with respect to all matters within its remit including the transfer of officers, their continuity of employment, compensation for loss of office, and provisions for early retirement.").
The noble Lord said: I apologise for the absence of my noble friend Lord Stoddart of Swindon, and on his behalf would like to move this amendment and speak to Amendments Nos. 224 and 225, which are all about the same kind of question. At this late hour I do not wish to detain the Committee for too long.
The purpose of the amendment is more or less to revive the practice adopted in the Local Government Act 1972 whereby the staff commission as then appointed facilitated in as peaceful and secure a manner as possible the transfer of staff of local authorities affected by structural reform. The simple purpose of these amendments is to make quite sure that the morale in local authorities stays high, that we retain such skills as have been built up at one level and that when that level has been abolished, staff can have time to be redeployed at other levels. I do not wish to speak any further, but if anybody wishes to raise any questions. I should be happy to answer them.
Baroness Blatch: I am in a difficulty in that, uncharacteristically, this amendment was not spoken to very fully. If the noble Lord, Lord Stoddart, had been in the Chamber, no doubt he would have done so. However, in order to put on the record our response to these very important amendments, I shall give a full answer.
The duties of any such commissions would be threefold. First, they would be required to consider the arrangements for the recruitment or transfer of staff by relevant authorities affected by orders under
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Part II of the Bill. Secondly, they must consider any staffing issues referred to them by the Secretary of State. Thirdly, they should advise the Secretary of State on the steps necessary to safeguard the interests of the staff. The clause also provides for the Secretary of State to be able to issue directions to any relevant authority affected by an order under this part of the Bill about the implementation of any advice given by a staff commission.
Amendment No. 215 would add a new item to the list of matters that a Clause 17 order may cover. But it does not seem to add anything of significance to what the Bill already contains. Where staff commissions are established, they will have the power to issue advice and guidance to relevant authorities about all staffing matters, including those listed in the proposed amendment. Therefore there is no need for the Clause 17 orders to refer to these matters.
I turn now to Amendment No. 224. Subsection (2) of this proposed new clause would require all the staff in a local authority which ceases to exist as a result of any structural changes to be found jobs in other local authorities. It will not surprise the Committee to hear that this would be completely unacceptable to the Government. One of the reasons for examining the structure of local government is to consider the case for removing the costly duplication that exists in some areas.
The Committee is well aware of the considerable savings that accrued to the people of London and the metropolitan counties as a result of the removal of an unnecessary and, I believe, wasteful tier of government. The savings that were achieved have convinced the Government that the case for moving to unitary authorities in other areas should also be considered. I have already said in relation to an earlier amendment that the case for change must be properly assessed. But if there were to be no staff savings, because staff had to be transferred to another local authority whether or not there was a job for them to do, a substantial part of the potential savings would be lost and almost certainly the case for change with it.
With regard to the matters covered in subsections (1) and (3) of the proposed new clause, the Committee will be aware that there is already provision in Clause 26(5) for the Secretary of State to make orders or regulations for the transfer of staff, compensation for loss of office, pensions and other staffing matters. It would not be right for me to make any categoric statements about the way in which staffing matters will be dealt with in relation to any structural changes that occur.
The Committee will appreciate that there is a wide range of changes that could take place. Nevertheless, it would not be right to go as far as the proposed new clause in requiring that the staffs terms and conditions of employment are no less favourable after the transfer. That would be impractical. Although no doubt many staff will transfer from an authority which ceases to exist to another authority, it would not be possible to guarantee that their jobs will be precisely the same or that the same terms and conditions of employment should apply. To give such a guarantee might also jeopardise the potential savings to be

443
obtained from the changes. Many staff will be recruited by newly established authorities, but in my view it will be essential for those authorities to be free to determine the salary and conditions of service of staff recruited by them, as are local authorities at present.
The final amendment in this group would require the establishment of one or more staff commissions not more than one month after this Bill receives Royal Assent. I am in no doubt that staff commissions have been useful in past reorganisations of local government. However, the practice in the past has been for major reorganisations to be put into effect on a single day. This has inevitably caused considerable upheaval, and the task of the staff commission has been to try to lessen the impact so far as concerns the interests of the staff.
The reorganisation of local government that is being undertaken on this occasion is rather different. The proposed Local Government Commission will be asked to undertake a review of local government in England area by area. We do not of course know what the commission's recommendations will be or how extensive a reorganisation of local government will eventually result from this review. Where the Secretary of State decides to make orders following recommendations from the commission, these changes will be implemented in stages.
I recognise that, had the noble Lord, Lord Stoddart, been in his place, he would have said that he is concerned about the possible uncertainty that this procedure might involve for the staff of local authorities. But I believe that the procedure that the Government are proposing will actually reduce the amount of uncertainty that the staff will have to put up with. One of the objectives of the Government's approach is to enable changes to be implemented more quickly in each area after the commission has completed its review. Any uncertainty will thus be confined to the period from the time the commission begins a review to the time that any proposed changes are implemented. If all changes were to be implemented in one go, the period between the commencement of the review and the implementation of all changes throughout the country would, of course, be much longer.
The need for a staff commission will, in the Government's view, depend on the scale of the changes proposed in any one area. In some areas, the changes proposed may be quite minor and I believe that it would be quite wrong to set up a staff commission to deal with relatively minor problems that can quite easily be sorted out by the local authorities involved in the reorganisation. Where, however, more major structural changes are proposed, the Government accept that there may well be a need for one or more staff commissions to be established. I can certainly assure the Committee that where a case for the establishment of staff commissions is made we shall not hesitate to use the powers in the Bill. What we argue against is automatic establishment of staff commissions simply for their own sake.
Lord Desai: I am grateful to the noble Baroness for her detailed answer. I apologise for not having been detailed in my presentation.
Two points must be made. In the local government reforms of 1963 and 1972 arrangements for staff transfer and redeployment seem to have been much more helpful and reassuring to the local authority staff than in the 1983 local government reforms. I believe that the Minister defines savings in a narrow way. There is no doubt that if many people are made redundant and not rehired there are savings. However, in the long run there is loss of significant skills which have been built up over a number of years. It is a waste for someone skilled in one area to work where those skills are not used properly. I have no doubt that if reforms were to take place in a staggered fashion between local authorities, uncertainty would be reduced. However, once a Local Government Commission is announced, many local authorities would believe that change was upon them. They would like the reassurance that the transfer would be as smooth as possible.
Baroness Blatch: One point must go on the record. Whatever view I take about savings, is it not a simplistic view to believe that we keep every single member of local authorities on the pay roll for all time, with full protection when there are no jobs for them? That must be bad economics by anyone's judgment.
Lord Desai: I thank the noble Baroness for her answer. I believe that if jobs were found for those people somewhere in the local authorities we might conserve skills rather than waste them. However, I take her point. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 216 not moved.]
Baroness Hamwee Baroness Hamwee had given notice of her intention to move Amendment No. 217:
Page 16, line 40, at end insert:
("( ) In elections held pursuant to an order under this section each vote shall be a single transferable vote pursuant to the method prescribed by Schedule 1 to the European Assembly Elections Act 1978 as applying to Northern Ireland.").
The noble Baroness said: I shall not move the amendment, but I must put on record the fact that Members on these Benches firmly believe that local government cannot be effective or properly accountable without a system of fair votes. Earlier today we debated the question of proportional representation, if in the circumstances that is the right term. Given that Members of the Committee on all sides have staked out their positions it might be fruitless to pursue the matter very far on the same day. I am sure that all Members of the Committee will agree that a system which produces in one authority—that is mine—48 councillors out of 52 who are Liberal Democrats and only four Conservatives, and to which no Labour councillor has been elected since 1974, cannot be a fair system.
[Amendment No. 217 not moved.]
[Amendment No. 218 not moved.]
Clause 17 agreed to.
Clauses 18 and 19 agreed to.
Clause 20 [Agreements as to incidental matters]:
[Amendment No. 219 not moved.]
Clause 20 agreed to.
Clause 21[Joint authorities]:
[Amendment No. 220 had been withdrawn from the Marshalled List.]
[Amendments Nos. 221 and 222 not moved.]
Clause 21 agreed to.
Clause 22 [Residuary bodies]:
Lord Teviot Lord Teviot moved Amendment No. 223:
Page 20, line 38. at end insert:
("( ) Notwithstanding subsection (1) above, where an order under section 17 above creates an authority smaller than the predecessor authority the Secretary of State shall appoint a residuary body to take over the functions, property, rights and liabilities of the predecessor authority's archive service.").
The noble Lord said: The purpose of this amendment is to safeguard the provision of archive services at their present efficient size; that is mainly at county level. It seeks to ensure that where a unitary authority is created which is smaller than its predecessor authority a residuary body as provided for in Clause 22 of the Bill be appointed by the Secretary of State to take over the functions, property, rights and liabilities of the predecessor authority archive service.
There are a number of issues which are of particular importance in this context. First, and most importantly, the costs of the service need to be considered. Excellent archive services run by county councils have safeguarded the future of an important part of our heritage and provided an important range of services to their community charge payers at very low cost; that is a cost of 50 pence per head of the population. If such services are broken down into a number of smaller units it is almost inevitable that expenditure will have to rise steeply to provide a comparable quality of service. This would fail the Secretary of State's own criteria that any change must be cost effective.
As I also mentioned earlier this evening, the experience of the abolition of the metropolitan counties in 1985 has shown that it is difficult to provide cost-effective archive services in small units. It is so difficult that in some areas there is still virtually no provision made for the rescue and preservation of archives. In others, where voluntary joint services have been arranged, the archivist is forced to spend much of his or her time persuading participating councils to sustain their contributions to voluntary arrangements, rather than getting on with the effective management of the record service. In the light of that experience I support a residual body.
Secondly, the nature of the archive collections themselves dictates that record offices need to be retained at a county level. This Local Government Bill looks forward to the future, and so it should. But one cannot, in one's enthusiasm for a better future, overcome the fact that archives, by their very nature, relate to the past. Many collections were created by the ancient county administrations themselves. They cannot and should not be arbitrarily split up in the
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interests of future neatness. We must respect their integrity. Indeed, whatever the outcome of the peregrinations of the Local Government Commission for England, provision must be made for the preservation and management of archives and records of the authorities or they will become extinct.
Archive services operate effectively and efficiently at county level to rescue and preserve our local, written heritage. Archives do not just appear. They are important records of anything that anyone ever created. If people do not produce records, things become sloppy. Therefore I ask the Committee to support the amendment which seeks to protect that important part of our common heritage. I beg to move.
Baroness Hollis of Heigham: I thought that we discussed earlier the substance of this issue. I was rather surprised to hear the noble Lord move his amendment. The Minister replied that in some cases it may continue to be a county responsibility, where counties exist; nevertheless, it is a feasible service for joint or lead authority arrangements. As a historian, I find that entirely satisfactory.
11.15 p.m.
Baroness Blatch: I was going to say much the same. In speaking to Amendment No. 159 my noble friend referred in detail to archives. I assure my noble friend that those interested in the archive service will have ample opportunity to make representations both to the Local Government Commission and the Secretary of State before decisions are taken about the restructuring of local government in an area. When considering the recommendations of the Local Government Commission, which may involve county councils ceasing to exist, the Secretary of State will have regard to the future of the archive service, among other things. I have no doubt that it will be possible for satisfactory arrangements to be made for archives to fit in with any reorganisation which flows from the forthcoming review. Archives are an important service and I assure my noble friend that his comments are well noted. I hope that he will not press the amendment.
Lord Teviot: I have no intention of pressing the amendment. I have referred again to this subject in the light of a previous bad experience and I wish the matter to be on the record. I wish to look at it carefully. We must examine the whole concept of archives management. It has not been dealt with by legislation since 1962. However, I do not apologise for moving the amendment. I am grateful for all the comments made and I beg leave to withdraw the amendment.|
Amendment, by leave, withdrawn.
Clause 22 agreed to.
[Amendment No. 224 not moved.]
Clause 23 [Staff commissions]:
[Amendment No. 225 not moved.]
Clause 23 agreed to.
Clause 24 [Abolition of the Local Government Boundary Commission for England]:
[Amendments Nos. 226 and 227 not moved.]
Clause 24 agreed to.
Clause 25 agreed to.
Clause 26 [Orders, regulations and directions under Part II]:
[Amendment No. 228 not moved.]
Lord Simon of Glaisdale Lord Simon of Glaisdale moved Amendment No. 229:
Page 22, line 26, leave out first ("only") and insert ("any").
The noble and learned Lord said: In moving this amendment, I shall speak also to all the amendments up to Amendment No. 234. This clause concerns the important matter of parliamentary control of regulations. As I read the clause, it produces a result so startling that I am prepared to hear that I have misread it.
Subsection (1) provides, with three exceptions, that all the regulations shall be subject only to the negative resolution procedure. It is not in question at the moment whether that is adequate in all the circumstances. In recent years there have been persistent attempts to downgrade the degree of parliamentary control of regulations, and in disregard of the recommendations of the Joint Select Committee of 1972–73. As I say, that is not in question at the moment.
What is in question is how the three exceptions are dealt with. Paragraph (a), "structural change" and paragraph (b), "joint authority" are dealt with in subsection (2) and made the subject of the affirmative resolution procedure. But paragraph (c) is not dealt with at all in subsection (2). In other words, what has happened is that it has been taken out of subsection (1) and not dealt with in subsection (2) so there is no parliamentary control about such important matters as electoral changes and parishes.
So far as I know the only exception to any form of parliamentary control is where the regulation is purely procedural and allows a Minister to bring certain provisions of an Act into law because he can be trusted to do that at the earliest opportunity convenient to him. It cannot be right that those kinds of provision are subject to no parliamentary control at all.
In effect my amendment makes paragraph (c), as well as paragraphs (a) and (b), subject to the affirmative resolution procedure. From what the noble Baroness said to me, I gather that she is not altogether satisfied about the earlier part of my amendment, and it may well require examination by parliamentary counsel. However, I should like her assurance either that I have misread the provision or that paragraph (c) will be brought under parliamentary control, as I favour, by the affirmative resolution procedure. I beg to move.
Baroness Blatch: The noble and learned Lord has been very patient and I hope that I shall be able to allay his fears. The Bill proposes that the new Local Government Commission would, as well as having powers to recommend structural change, take over the functions of the existing Local Government Boundary Commission to review local government boundaries, parishes and electoral arrangements. The Bill proposes no change to the role of Parliament in relation to those reviews.
448
We have found that the system in place under the 1972 Act has worked well. Under that Act, orders which make boundary changes affecting principal authorities are subject to negative resolution in both Houses. Orders relating solely to parish or electoral arrangements are not subject to parliamentary approval. The volume of work on those issues and the minor and local nature of most of them make them inappropriate for parliamentary consideration. My right honourable friends the Secretary of State for the Environment and the Home Secretary consult widely before making orders.
In addition, the Bill provides that where parish and electoral changes arise in the context of structural changes, the full set of issues will come before Parliament for affirmative resolution. The order which sets up the new structure will include any parish and electoral changes which are part of the new structural arrangements and Parliament will have an opportunity to give its opinion on all the proposals in the order.
The second effect of the amendments would be to cause confusion about whether the orders were to be subject to the hybrid instruments procedures. The last part of subsection (2)—
Lord Simon of Glaisdale: I hope that the noble Baroness will forgive me. I have not yet moved the amendment dealing with the hybrid procedure.
Baroness Blatch: I hope that the noble and learned Lord will forgive me. I shall save my remarks for the next amendment. I am not sure whether the noble and learned Lord is satisfied with my explanation as regards the first part of his amendments.
Lord Mclntosh of Haringey: Before the noble and learned Lord replies I wonder whether the Minister can tell me what is meant by electoral changes? Can she also tell me what is the difference between an order, as she described it, under the 1972 Act and a statutory instrument as is required here?
Baroness Blatch: As I understand it the Secretaries of State have powers to make very minor changes to boundaries, for example, which can be done by order.
Lord Mclntosh of Haringey: Does the Minister mean ward boundaries which do not affect the boundaries of authorities?
Baroness Blatch: In considering warding arrangements, councillor numbers and timing of elections, the commission should take into account the views expressed locally, the practice hitherto and the authorities concerned. If the changes are not concerned with structural changes—the work of the commission—they will be subject to order. If they result from any work done by the Local Government Commission and are real structural changes, they will come before the House under the affirmative resolution procedure.
Lord Simon of Glaisdale: I yield to none of your Lordships in my admiration for the way in which the noble Baroness has conducted this Bill. However, since she asked me straight whether I was satisfied with her answer so far, I am bound to say no. There

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has been no convincing reason given as to why such important matters as those set out in paragraph (c) should be taken away from the cognizance of Parliament. It would be absurd to divide the Committee on the matter at this hour although it is of constitutional importance. I do not doubt that the noble Lord the Government Chief Whip has his majority under his belt. Disraeli said that a majority is the best repartee. Similarly, I doubt very much whether the noble Lord, Lord Graham of Edmonton, has any troops collected on the reverse slope.
In withdrawing the amendment I should not be thought to be satisfied with the answer that has been given. I shall return to the matter at a later stage. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 230 to 233 not moved.]
Lord Simon of Glaisdale Lord Simon of Glaisdale moved Amendment No. 234:
Page 22, line 30, leave out from ("Parliament") to end of line 34.
The noble and learned Lord said: This amendment removes the last three words in line 30 to the end of the subsection. Those words oust the hybrid Bill and regulation procedure from parliamentary procedure so far as this clause relates. We are all familiar with the difference between public and private Bills and there is no need to go into that now. There is the hybrid Bill and the hybrid regulation. That is a Bill or regulation which is in the public Bill area but nevertheless affects private rights. Whether it is hybrid, in other words affecting private rights, is decided by the independent examiners. If they rule that it is hybrid, it then goes to the Hybrid Bills Committee, which your Lordships appointed earlier today. Then the Minister in charge of the Bill has to justify the invasion of private rights just in the same way as the promoter of a Private Bill has to justify it. It seems quite extraordinary, I must say, even in this era of the surge of bureaucracy, to find this age-old procedure of Parliament, devised to protect private rights and interests, ousted in this way. These provisions should be removed. I beg to move.
Baroness Seear: I very strongly support the noble and learned Lord. We on these Benches are extremely grateful to him for watching these matters with such keen interest. The Government are constantly eroding the control of Parliament and we on these Benches join with the noble and learned Lord to oppose the Government's action in this regard on every possible occasion.
11.30 p.m.
Baroness Blatch: The noble and learned Lord has some doughty support from the noble Baroness, Lady Seear, and I shall have to be on my mettle when I respond to this particular amendment. Perhaps I may say that it is my judgment that the second effect of this group of amendments tabled by the noble and learned Lord, Lord Simon of Glaisdale, would be to cause confusion about whether the orders were to be subject to the hybrid instrument procedures. The last part of subsection (2) is for the avoidance of doubt; but by removing these words, uncertainty would be created
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about whether or not these procedures were to apply. The Government believe that there is no need for the hybrid instruments procedures to apply to orders made under this Bill. Where the new commission recommends structural changes, it will only be after extensive consultation with interested parties as required by Clause 15. Interested parties will be able to make representations to the commission at the start of a review and after the commission has published draft recommendations.
We have already had a debate on Clause 17 (2) which would require the Secretary of State to wait for a minimum of six weeks after receiving a report from the commission and before making an order to implement recommendations in the report. There will be ample time for interested parties to make representations both to the commission and to the Secretary of State before an order is made. Therefore we see no need for the hybrid instruments procedure to be used to enable yet further representations to be made.
There is one other point I should like to emphasise, and that is a point I made to my noble friend Lord Norrie when he sought to extend the six weeks' period. Six weeks is a minimum. The Secretary of State could take longer than six weeks before putting the orders before Parliament. If that reply is not satisfactory we could spend some useful time between now and Report stage talking about both this part of the amendment and the previous amendments, too.
Lord Simon of Glaisdale: I am very grateful to the noble Baroness for that last observation. I should very happily discuss all this group of amendments. I only need to say at this stage that confusion is avoided if an age-old parliamentary practice, which was designed to protect private rights, is swept away. There is no possibility of confusion, if the hybrid Bill regulations procedure stands, for the Examiners to rule categorically whether it is hybrid. If it is hybrid, it goes to the Hybrid Bills Committee. There is no possibility of confusion. However, it would be wrong at the start to pursue the matter in view of what the noble Baroness has said, which I gladly accept.
I hope I may be excused if I add these remarks from the Cross-Benches as this is the last amendment to be considered. We have very much appreciated the way the Bill has been debated, particularly by the noble Lords on whom the main burden of scrutiny has fallen and most of all by the noble Baroness in charge of the Bill. We have much appreciated the noble Earl's interventions, but a quite extraordinary burden has fallen on the noble Baroness. No doubt later we shall have a more ample opportunity to express our gratitude but in the interim perhaps we may be allowed to say something tonight.
Amendment, by leave, withdrawn.
Clause 26 agreed to.
Clause 27 agreed to.
[Amendment No. 235 not moved.]
Schedule 3 agreed to.
Clause 28 [Interpretation]:
[Amendment No. 236 not moved.]
Clause 28 agreed to.
Clause 29 agreed to.
Schedule 4 [Repeals]:
[Amendment No. 237 not moved.]
Schedule 4 agreed to.
Clause 30 agreed to.
House resumed: Bill reported with an amendment.
House adjourned at twenty-two minutes before midnight.

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