Sitting of 7 May 1992

Preamble
The House met at half-past Two o'clock

PRAYERS
[MADAM SPEAKER in the Chair]
2.35 pm
Mr. Dennis Skinner: On a point of order, Madam Speaker. Will you confirm that on Thursdays, when there is business in the House the following week, it is usual for a statement to be made and for questions to be asked about that business? Is it correct that on this occasion there is to be neither a statement nor an opportunity for Back Benchers to call the Government to account through questions? Through your offices, can we establish who is responsible for the failure to have a business statement and questions? Are the Government, with their tiny majority, refusing, or have the usual channels made some other arrangements, which I do not find satisfactory? Will you confirm that business questions should be a matter for the entire House of Commons and not just the two Front Benches? Back Benchers in particular want to raise matters that are important to their constituencies and elsewhere and which concern the business for the following week.
Madam Speaker: This is a bit of an unusual week, even for me. As the hon. Gentleman understands, this is a matter for the Government business managers, not for the Chair. It is outside the authority of the Chair.
Mr. Skinner: But it is not usual?
Madam Speaker: Order.

BILLS PRESENTED
  BRITISH COAL AND BRITISH RAIL (TRANSFER PROPOSALS)
  Mr. Secretary Heseltine, supported by Mr. Chancellor of the Exchequer, Mr. Secretary MacGregor, Mr. Secretary Howard, Mr. Secretary Hunt, Mr. Secretary Lang, Mrs. Secretary Shephard, Mr. Tim Eggar and Mr. Roger Freeman, presented a Bill to confer powers on the British Coal Corporation and the British Railways Board to act in relation to proposals for the transfer of any of their functions, property, rights or liabilities to any other body or person; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 1.]
  EUROPEAN COMMUNITIES (AMENDMENT)
  Mr. Secretary Hurd, supported by The Prime Minister, Mr. Chancellor of the Exchequer, Mr. Secretary Clarke, Mr. Secretary Heseltine, Mr. Secretary MacGregor, Mr. Tony Newton, Mr. John Gummer, Mr. Secretary Howard, Mrs. Secretary Shephard and Mr. Tristan Garel-Jones, presented a Bill to make provision consequential on the Treaty on European Union signed at Maastricht on 7th February 1992: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 2.]
  NON-DOMESTIC RATING
  Mr. Secretary Howard, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Heseltine, Mr. Secretary Hunt, Mr. John Redwood and Mr. Robin Squire, presented a Bill to make further provision with respect to non-domestic rating for the period beginning with 11th March 1992 and ending with 31st March 1995; and for connected purposes: And the same was read the First time; and ordered to he read a Second time tomorrow and to be printed [Bill 3.]

  BUSINESS OF THE HOUSE
  Ordered,
  That—

  (1) Standing Order No. 13 (Arrangement of public business) shall have effect for this Session with the following modifications namely:

  In paragraph (4) the word "thirteen" shall be substituted for the word "ten" in line 44; in paragraph (5) the word "eighth" shall be substituted for the word "seventh" in line 46; and in paragraph (8) the word "two" shall be substituted for the word "four" in line 67;

  (2) Private Members' Bill shall have precedence over Government business on 11th December, 15th, 22nd and 29th January, 5th, 12th and 19th February, 26th March, 23rd and 30th April, 7th and 14th May and 2nd July;

  (3) Private Members' Notices of Motions shall have precedence over Government business on 19th and 26th June, 3rd and 10th July, 13th 20th and 27th November, 4th December, 26th February and 12th March, and ballots for these Notices shall be held after Questions on 3rd, 10th, 17th and 24th June, 28th October, 4th, 11th and 18th November and 10th and 24th February;

  (4) On Monday 15th February and Monday 17th May, Private Members' Notices of Motions shall have precedence over Government business until Seven o'clock and ballots for these Notices shall be held after Questions on Thursday 28th January and Thursday 29th April; and

  (5) No Notice of Motion shall be handed in for any of the days on which Private Members' Notices have precedence under this Order in anticipation of the ballot for that day.—[Mr. Newton.]

Orders of the Day

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

Public Expenditure
2.37 pm
The Chief Secretary to the Treasury (Mr. Michael Portillo): I wish to add my welcome to you, Madam Speaker, on taking up your post in the Chair. When you were elected there was a great deal of discussion about the loneliness of your position and the fact that you can have no friends. As the new Chief Secretary, I feel the strongest empathy for your position. I no longer have any friends. I have already found that colleagues who used to greet me cheerfully in the Corridors now pass by disdainfully on the other side. My ministerial colleagues are firmly pledged to support me in the most rigorous control of public spending and have given me their most firm and unwavering support, but always with the caveat, "Not in my Department, thank you." I believe that that is known appropriately as "NIMDism".
It is unusual during the debate on the Address to have a debate on public expenditure separate from the main debate on the economy, but public spending is an important subject, and I am delighted that it has been chosen. However, I am surprised that it is the Labour party which has chosen that subject. If there is one point on which we can agree, it is that economic policy was the issue on which the Labour party lost the general election. Its decision that economic policy should be the subject of the first debate is brave indeed. That is known as leading with one's chin, and it provides an early opportunity for the architects of Labour's defeat—the right hon. and learned Member for Monklands, East (Mr. Smith) and the hon. Member for Derby, South (Mrs. Beckett)—to remind us how their designer socialism turned out to be the blueprint for losing a record fourth election on the trot.
It is astonishing to sentient beings such as you, Madam Speaker, and myself, that now, with their edifice so evidently collapsed, those same architects are now referred to—apparently with no sense of irony—as the "dream ticket". Labour Members representing Scotland—those who survived the Tory onslaught there—will recall the Tay bridge disaster. William McGonagall—a fine poet with whom you, Madam Speaker, will be familiar—tells us that the
"Beautiful Railway Bridge of the Silv'ry Tay"
collapsed with the loss of 90 lives
"On the last Sabbath day of 1879,
Which will be remember'd for a very long time."
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The architects of the Tay bridge never worked again —yet the designers of Labour's disaster are apparently to be commissioned to prepare the next set of drawings, with dispatch and without much of a competition. How can the Labour party contemplate forgiving the master craftsmen of its defeat? How can it entrust the future to such proven incompetents? The clue is to be found in the term "dream ticket". Shakespeare understood dream tickets. How prophetically he spoke of the need for modern electorates to forgive incompetent shadow Ministers. In "A Midsummer Night's Dream" he gave them the perfect apology:
"If we shadows have offended,
Think but this, and all is mended,
That you have but slumber'd here,
While these visions did appear."
That, indeed, is the dream ticket.
Although I am delighted to be given the opportunity to debate public spending, could it be that the Labour party has chosen that topic to enable each candidate for its leadership and deputy leadership to perform in the House? This will be a sort of beauty parade—if one can describe in such terms an event involving the hon. Member for Kingston upon Hull, East (Mr. Prescott).
Mr. Campbell-Savours: Will the Minister give way?
Mr. Portillo: I shall, even though this is by way of a maiden speech.
Mr. Campbell-Savours: Congratulations.
The Minister is pressing to know why we have chosen a debate on economic affairs. I have here a leaflet—I see that the Minister is being briefed about it by the Chancellor of the Exchequer. Perhaps he will tell us more about this document, which I believe was circulated as an eve-of-poll leaflet in the constituency of the hon. Member for Hendon, South (Mr. Marshall). It describes a tax demand from the Labour party, called "Labour's Tax Bombshell", which is followed by a tax table which was replicated in the tabloid newspapers.
Will the Minister admit today that that tax table is a lie? It was a campaign lie; it was not based on the truth. Those tax tables were never at the heart of Labour policy, and were never used by the shadow Chancellor. They were not produced at our press conference or in the shadow Budget. They were a lie, yet they contributed to the election of a Conservative Government. Will the Minister disown that leaflet today? [Interruption.]
Madam Speaker: Order.
Mr. Portillo: In my wildest dreams, I did not expect to draw so much blood so early in the debate. The hon. Member for Workington (Mr. Campbell-Savours) now tells us that the tax proposals were not central to the Labour party's policies. What an extraordinary thing! I suppose that that is a vote for the hon. Member for Dagenham (Mr. Gould), if not for the hon. Member for Brent, East (Mr. Livingstone).
I will answer the point raised by the hon. Member for Workington. We costed Labour's programme—the programme that the Labour party gave us. Why did we have to cost it? The reason was that the Labour party refused to cost it. If the Labour party had costed it, we might have been able to think about its figures. In the absence, we provided our own, based on Labour's programme.
Mr. Campbell-Savours rose—
Madam Speaker: Order. The hon. Gentleman has had an intervention. I hope that he will bide his time for moment.
Mr. Portillo: I was drawn to mention the hon. Member for Brent, East. I am sorry that the hon. Gentleman has been excluded from the beauty parade. He has been banned even from reaching the catwalk. That is a great pity in view of his undoubted talent for spotting an election-losing policy at 40 paces. He warned the Labour party time and time again that its policies on taxation matters would lead it to disaster, but like the court fools who were licensed by great monarchs to tell the truth, but not to do it too often or too loudly, the hon. Gentleman told the truth too often and too loudly, and he has been sent packing from Labour's court. He knows why the election was lost, and he knows why it was won.
Our victory underlined the British people's confidence in this Government's capacity to manage the economy. It was an endorsement of our reliability under the pressure of a difficult international environment, with growth in the Group of Seven countries during 1991 at its lowest in a decade, and with the United States, Canada and Germany all having experienced recessions. The key factor in our victory was the voters' fundamental confidence in the Government's control of public finances.
Mr. John Marshall: On a point of order, Madam Speaker.
Madam Speaker: Is the hon. Gentleman rising on a point of order?
Mr. Marshall: Yes. The hon. Member for Workington (Mr. —Campbell-Savours) insists on calling— [Interruption.]
Madam Speaker: Order. Is the hon. Member for Hendon, South rising on a point of order?
Mr. Marshall: Yes, I am.
Madam Speaker: Let me hear it.
Mr. Marshall: The hon. Member for Workington says that I won my election on a lie. I did not, and I think that he should withdraw that statement.
Madam Speaker: That is not a point of order for the Chair. I hope that we shall have a most robust and interesting debate, and I hope that it will not be too personalised.
Mr. Portillo: Voters in the election were clearly concerned about how much they would be asked to pay in taxes, on what the money would be spent and what quality of services that money would buy. This party believes that what the Government take from those who earn to spend on their behalf should be as little as possible and should be spent as well as possible. That clarity of vision gave voters a stark choice.
Which party could the voters trust, and which party would lead them out of the recession? Was it to be the party whose solution to the recession was a £7 billion tax increase? Was it to be the party that, faced with a recession in the mid-1970s, recklessly carried on spending? Was it the party that, having increased public spending in the 1970s as a proportion of gross domestic product by some six percentage points in just two years, was forced to raise
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tax rates to 98p in the pound? Was it the party that, despite that massive increase in taxation, still could not balance the books so that the public sector borrowing requirement peaked at 9= per cent. of GDP—in today's money, almost £60 billion? Was it the party that borrowed and borrowed, and went on borrowing until its credit ran dry and it had to crawl to the International Monetary Fund?
The answer to those almost rhetorical questions is no. Instead, the voters put their trust in a party that had shown over the period of its government that it could reduce public borrowing, end the inexorable rise in public expenditure's share of national income and bring about a massive reduction in personal taxation.
Mr. Dennis Skinner: On borrowing, the Chief Secretary will know that there was an estimate of roughly a £28 billion public sector borrowing requirement. There is also another suggestion in the hidden agenda that the likely outturn is well over £35 billion. What I want to know from the Chief Secretary, who is trying to lecture the Labour party about borrowing, is when he, in the medium term or otherwise, along with the Chancellor of the Exchequer, will be able to balance the books. We have a right to that answer now. We did not have it in the general election. Tell us now.
Mr. Portillo: On the first point, I have no reason to change our forecast of a £28 billion PSBR for this year. The rest of my speech deals with the broader point, and I hope that the hon. Gentleman will bear with me.
The tax reforms introduced by the Government since 1979 are the envy of Europe. We have cut the basic rate of income tax from 33p to 25p, and the top rate from 83p to 40p. We have introduced a new starting income tax rate of 20p, we have raised basic tax allowances by 27 per cent. in real terms, we have cut the corporation tax rate from 52 per cent. to 33 per cent., which is now a level lower than in any EC or G7 country, and we have reduced the small companies' rate of corporation tax from 42 per cent. to 25 per cent.—a remarkable record.
Despite that reduction, we have been able to increase public spending in priority areas, in particular to ensure that it reaches those people who depend necessarily on the taxpayer. I said just now "despite that reduction in taxation", but in fact it is largely because of that reduction. Opposition Members will not understand that paradox. They are not good at understanding paradoxes; they are good only at creating them—inadvertently. But the lesson of the past 13 years is that, if we reward enterprise and if we give people access to wealth creation, we get more wealth creation. It is as simple as that.
Lower tax rates and a smaller role for the state foster a n environment in which business can flourish, industry can prosper and the economy can grow. It is that growth which can enable and which will enable the Government lo increase public expenditure in key areas, cut direct taxes and reduce borrowing.
Mr. Bruce Grocott: Before the Chief Secretary goes entirely into fantasy, when he is talking about the economy growing, will he remind us how the economy grew in the past 12 months?
Mr. Portillo: The hon. Member knows that we have not had growth in the past 12 months, but his scepticism and cynicism are answered by this point. Labour Members also could not understand this point. They could not believe

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that we would be able to reduce public borrowing from the level at which it had been left to us by the Labour party. They did not understand that we could cut public spending as a proportion of GDP and could reduce taxation. We did all those things during our period in government, and we shall do them again. That is what we did in the 1980s, and that is what we will do in the 1990s.
It is by a determined policy of rolling back the reach and the scope of the state that the Government have created the conditions for a massive increase in wealth creation, with benefits not just for a privileged few but for all, spread widely through our community. Individuals are now free to buy their own council houses. They are free to leave the state earnings-related pension scheme. They are free to take out personal pensions. More than 4.5 million people so far have done just that.
It is now easier to set up and participate in employee share schemes, while the introduction of personal equity plans has reduced the bias against direct share ownership by the people. The return of state businesses to the private sector has not only given employees in those businesses a stake in the businesses in which they work, but has contributed to wider share ownership among the public at large. Those policies are the ones that we pursued successfully in the past decade. They are again at the core of the new Parliament, as the Queen's Speech makes clear.
We had to hear a great deal during the election campaign about how we were not spending enough on this programme or on that other pet project of the Opposition. No doubt, undaunted by the electorate's judgment at the election, the hon. Member for Derby, South will repeat the same things this fine spring afternoon.
You will not be surprised to hear from me, Madam Speaker, that I do not believe that one can judge the standard of services by the amount of taxpayers' money that we put into them. As Mandy Rice-Davies might have said, a Chief Secretary would say that, wouldn't he? But even if we use that outdated measure favoured by Labour Governments in the 1960s and 1970s and still favoured by the hon. Member for Derby, South today, it is clear that we have delivered large increases in resources to priority areas and that we were able to do that while cutting direct taxes and cutting public borrowing.
Since 1978–79, spending on the health service in England has increased by more than 54 per cent. Spending on law and order has doubled. Capital spending per pupil in the nation's schools fell by 60 per cent. under Labour. Since 1978–79, when, you will recall, Madam Speaker, we came to power, it has risen by 13 per cent.
Central Government investment spending on health and social services fell by 26 per cent. under Labour, but it has risen by 53 per cent. under this Government. Investment in vital infrastructure such as national roads and transport fell by almost 40 per cent. under the Labour Government, and is up by 63 per cent. under this Government. There have been substantial increases in the investment in British Rail and London Transport. Investment by those two this year is set to be more than £2.5 billion.
The reason why I have drawn your attention to these highly significant statistics, Madam Speaker, is to demonstrate that the Chief Secretary is not necessarily against public spending. I am against excessive public
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spending, poor value for money and public spending on the wrong things. In fairness to my colleagues, I should say that that has generally given Chief Secretaries plenty of scope, as my distinguished predecessor found when he had the job.
The essence of good government is to decide from time to time what our priorities are and to ensure that the money is available for those priorities and for those people most in need. That requires the Government to keep the firmest grip over the total of public spending. Aneurin Bevan once said that the language of priorities was the religion of socialism. But today the language of priorities is the monopoly of Conservatism.
Mr. Nigel Spearing: I am grateful to the Minister for giving way to answer a question which he is uniquely fitted to answer. In determining the right level of expenditure for local government, his Government adopted standard spending assessments. Does he agree that more than 50 councils—both Conservative and Labour-controlled—received less money for their services than even the Government designated because of the shortfall in their SSA for capital charges of interest? For instance, Newham had £10 million less than it should have had because £18 million was allocated by the Government for interest charges, but it had to pay £28 million of interest. All those councils had to top-slice services. Was that deliberate or was it a mistake?
Mr. Portillo: I am grateful to the hon. Gentleman for raising the point about interest. It simply shows that a policy of borrowing does not come freely. The Government do not reward local authorities for the level of borrowing that they undertake. The Government compensate for what we believe to be an appropriate level of borrowing. That is why authorities which borrow excessively will have to bear the cost themselves. It is absolutely right that they should do so.
Value for money must play its part. When my right hon. Friend the Prime Minister was Chief Secretary to the Treasury, he summarised the need to focus on efficiency when he said:
"Value for money is not an arcane fetish of Treasury Ministers … It is an absolute obligation that public sector managers owe to the taxpayer."
Value for money has been central to our reforms, in particular in health and education.
Figures for the first six months of our national health service reforms suggest that an extra 250,000 patients have been treated this year. Since 1978–79, there are 16,000 more doctors and dentists and 51,000 more nurses and midwives. In higher education, the number of students has risen from one in eight in 1979 to one in four in the coming year. Efficiency scrutinies, market testing and compulsory competitive tendering are saving us hundreds of millions of pounds a year in central Government, local government and the national health service.
The Queen's Speech underlines the priority that the Government attach to improving the quality of public services. The citizens charter, under the excellent stewardship of my right hon. Friend the Chancellor of the Duchy of Lancaster, will be at the centre of decision-making and steps will be taken to apply its principles throughout the public services, promoting the challenge of competition and putting the customer first.
At the heart of the citizens charter is the principle that what the state does it must do well. The charter

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programme is about finding better ways of converting the money that can be afforded into even better services. That will be a central component of public expenditure policy in the years ahead. However, the citizens charter is designed to complement rather than substitute for the Government's other fiscal policy objectives. Those objectives are unchanged, as the Queen's Speech makes clear.
Our determination to control public spending and conduct the business of Government prudently does not simply arise from our desire for efficient government and sound economic policy. Vital though those both are, there is, for us, a profound question of principle. Unlike the Opposition, we do not believe in the inexorable growth of the reach and size of the state. Nor do we believe that the state can and should try to solve all our problems.
Unlike the Opposition, we believe in rolling back the state and returning to the individual as much autonomy over his or her life as possible. For that reason, it is vital to keep the firmest control of that proportion of the national wealth that is taken from the people in taxation and spent on their behalf.
The Queen's Speech commits us to reducing the share of national income taken by the state, as it commits us to balancing the budget over the medium term. We shall set policy in the medium term to ensure that the United Kingdom meets the convergence criteria set out in the Maastricht treaty, and we shall reduce taxes when it is prudent to do so.
I do not claim that attaining those objectives will be easy, but attain them we must. Otherwise, we shall leave future generations with an unacceptable legacy. A sustained rise in borrowing would obviously imply higher debt interest payments in years to come.
The right hon. and learned Member for Monklands, East has stuck doggedly to his shadow Budget against criticism from far and wide—nay, from as far afield as Dagenham. The hon. Member for Derby, South has recently told us of her continued belief in clause 4, her attachment to the trade unions, her affiliation to CND and her lingering fondness for the right hon. Member for Chesterfield (Mr. Benn) and, indeed, for Mr. Arthur Scargill. The hon. Lady believes that a combination of leader and deputy leader of her party can form what she calls a "creative partnership".
That creative partnership on offer today is between the economic policies that lost Labour the 1992 election and the broader policies that lost Labour the elections of 1983 and 1987. That may be described as a dream. It is certainly the Labour party sleepwalking into the future. If it is a dream ticket, it is a dream come true not for the Labour party but for the Conservative party.
While the Labour party dreams, we shall work. Our policy remains to balance the budget over the medium term and to reduce taxation when it is prudent to do so. The policy is tough and is beyond the comprehension of an Opposition who do not understand how the economy works, nor the need to make choices. But it is a less daunting task than we faced in the 1980s, when we inherited high rates of taxation and a deficit in excess of today's. During the 1980s, we cut those taxes and we eliminated that deficit. Last month, we were re-elected because the British people know that the policies that succeeded in the 1980s will succeed again in the 1990s.
3.5 pm
Mrs. Margaret Beckett: May I join in the congratulations to you, Madam Speaker? I am delighted to see you in your place.
I also congratulate the Chief Secretary to the Treasury on his promotion to the Cabinet. I am not entirely surely whether I should congratulate him on the specific post that he occupies, for two reasons. The first is the underlying situation that he has inherited—the state of the public finances, about which I propose to say a little more than he did. The second reason is the framework within which the right hon. Gentleman is expected to resolve those problems, about which I shall again say a little more than he did.
In case the right hon. Gentleman thought that a change of personnel might deflect our approach to the Government's policy, it is only fair to warn him that that is not so. The present Prime Minister, when he was Chancellor, speedily dissociated himself from targets set by his predecessor. When asked about the phrase that inflation should be the judge and jury of performance, he said, "I never said that." That was a wise precaution, as his policies were just about to shove inflation to almost 11 per cent. It may be that one reason for the present Chief Secretary's appointment is that he will be able to make a similar claim, and state, "I did not say that," about a number of matters that his predecessor has recently said.
The policy stance that the right hon. Gentleman must defend and implement on this occasion was explicitly stated and reinforced not only by his predecessor, the dear departed Chief Secretary to the Treasury, now the Secretary of State for National Heritage, but by the Chancellor and the Prime Minister that the present Chief Secretary to the Treasury still serves. I was delighted to hear the present Chief Secretary reiterate his position today.
The other possibility that we must entertain is that it is partly the Chief Secretary's own record that commends itself to the Prime Minister as thoroughly as it alarms me. The right hon. Gentleman came into government at the Department of Social Security, where he showed considerable competence and absolutely no conscience about presiding over a steady stream of cuts in the standards of living of the poorest people in our society. Those cuts were inflicted at the behest of the then Chief Secretary, now our caring Prime Minister. The right hon. Gentleman had a brief spell of relaxation at the Department of Transport and then resurfaced as the handler of the poll tax, which I understand he still defends.
I listened with fascination today when the right hon. Gentleman spoke about his views as Chief Secretary. He said—I hope that I repeat him correctly—that he was not against public spending, but against excessive public spending where it is poor value for money and spending on wrong things. I cannot think of a worse characteristic for a Chief Secretary than to champion the poll tax, as it suggests that he is willing—apart from anything else—to see billions of pounds of public money wasted on ideological folly. We look forward, not only with interest but with some trepidation, to the right hon. Gentleman's approach to the problems that he inherits.
In this first day of debate on the Queen's Speech, it seems right to examine the position of public expenditure due to the claims that the Government made during the election which, as the Chief Secretary fairly said, were at

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the heart of their statements about their record, the promises that they made for the future and the basis on which they were re-elected. The light that the Queen's Speech casts on those promises is also worth examining in this debate.
The first of the right hon. Gentleman's problems is the recession-worsened state of public finances, both the overall picture, and the waste, mismanagement and misdirection that that picture conceals. Let us briefly dispose of the myth of world recession, which, back in 1990 to 1991, was supposed to have ambushed an innocent Government from behind. It was, to be blunt, a load of baloney. Britain's recession was begat in Downing street and fed and nurtured in all those Whitehall Departments where Ministers insisted on price increases for electricity, for water, for rents, for fares—until, as inflation headed inexorably upwards, so too did interest rates: to 15 per cent., where they stayed and stayed and stayed, seeing off in the process thousands of our fellow citizens, who lost their businesses and homes as a result.
Sadly for our national interest, the fate of the boy who kept crying wolf has overtaken the Government—a wolf in the shape if not of a world recession, then certainly of serious problems in many of the world's economies. That is likely to cause increased problems for the Government, who hoped that someone else's growth might have helped to pull us forward out of our home-grown recession. As it is, we are in somewhat uncharted waters. After the elections of 1983 and 1987, the Government let inflation and interest rates rip and erode the promises that they had made on public spending. Inflation doubled within two years of each of those elections as public spending was cut or promises were not fulfilled; then interest rates rose to squeeze out inflation.
Membership of the exchange rate mechanism and the path of convergence to monetary union will make this course much more difficult to follow n this occasion, yet the Government must deal with the borrowing requirement of £28 billion which they predict for this year—and rising—against the background of a continued balance of payments deficit, which, without precedent, has persisted even in the course of the worst recession since the 1930s. Both the borrowing requirement and the balance of payments deficit are the consequence of underlying weakness in our economy, and that weakness, like the recession itself, is a product of this Government's mismanagement of the economy.
In both the recessions that the Government have induced, we have lost manufacturing capacity—20 per cent. of it in the first one alone. So we can no longer satisfy the demand for goods at home by the sale of goods produced at home—hence our balance of payments problems. And the startling and abrupt turnround in our public finances—from surplus quickly to balance and then in a year to a £14 billion deficit and a predicted doubling to a £28 billion deficit this year—is a result not of Government response to the recession, for which a case could perhaps be made, but almost wholly of the impact of the recession.
I noticed, incidentally, that the Chief Secretary referred to the borrowing requirement of today as if it were better than the borrowing requirement of the last Labour Government. [HoN. MEMBERS: "It is."] Conservative
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Members, not unusually, are wrong. If we take borrowing requirements excluding privatisation receipts, the fair basis of comparison—(Interruption.] That is the only sound basis of comparison, as the former Prime Minister who talked about selling off the family silver reminded the Conservative party. On this comparable basis, the borrowing requirement in 1978–79 was 5.4 per cent. of GDP. Next year, 1992–93, it is set to be 5.8 per cent. of GDP. So much for the prudence of the Conservative party.
Mr. Tim Smith: The hon. Lady has been a little selective in her use of statistics. Perhaps she will remind us of the figures for public sector borrowing in 1975–76. Were they not 9 per cent. of GDP then, and would not that be £60 billion at today's prices?
Mrs. Beckett: The hon. Gentleman is referring to the centre of the lifespan of the last Labour Government, and I cannot recall whether his figure is right for 1975–76 or for the following year—[Interruption.] There is no need for Conservative Members to get so excited. I am making a minor point, and I cannot remember the year to which the figures apply. Unlike Conservative Members, I believe in using accurate statistics. I cannot recall from memory whether the hon. Gentleman's figure refers to 1975–76 or to 1976–77. That is the only point I am making, but I shall return to the hon. Gentleman's observation, such as it was, later.
I remind the hon. Member for Beaconsfield (Mr. Smith) that the last Labour Government left a borrowing requirement lower than the one that they inherited from the previous Conservative Government under the premiership of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), and in the course of the lifetime of that Labour Government they were hit by a fivefold increase in the price of oil. Nothing comparable has happened to this Government. The only problems that they have had were created by their own incompetence, as the hon. Gentleman is aware, and they still have a bigger borrowing requirement than the one that we left, which was smaller than the one that we inherited.
Mr. John Marshall: Will the hon. Lady confirm that, over the lifetime of the last Labour Government, the average public sector borrowing requirement was 6–5 per cent. of GDP, which is higher than that proposed for the current year?
Mrs. Beckett: We inherited the consequences of the Barber boom. The hon. Gentleman should read the speeches by Sir Geoffrey Howe and by Mrs. Thatcher, both of whom are no longer Members. They both acknowledged that we inherited the inflationary and other consequences of the Barber boom. Perhaps the hon. Gentleman is not well enough informed.
As I have said, we left a lower borrowing requirement than the one that we inherited. We were hit by a recession caused not by our actions but by world economic conditions. The Government have a higher borrowing requirement than the one that they inherited from us.
The impact of the recession is felt in reduced tax receipts from every source—income tax, corporation tax and indirect taxes—and in increased expenditure on support, whether for the unemployed or for the other consequences of recession such as increased deficits and the decreased activity of organisations such as British Rail. The latest figures suggest that every unemployed person

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costs about £8,500 in lost Exchequer revenues as well as direct costs. As unemployment is 1.5 million higher than the figure that we left in 1979, that cost alone is about £14 billion. It appears that, far from seeking to alleviate, to counter, the impact of the recession, the Government are merely absorbing its impact, which is all the greater because of their past incompetence.
The Chief Secretary spoke about the overall path of the economy under the Government's stewardship. There, the picture is even more alarming. The figures for the Government's programme contain a cumulative total of unrepeatable revenues of some £205 billion in 1991–92 figures. The Government received £109 billion of revenue from North sea oil and gas, £52 billion in privatisation receipts, £31 billion from council house sales, £8 billion from other local government sales and £5 billion from other central Government sales.
None of those asset sales can be repeated, and they have all helped to make the Government's public expenditure programme rather better than it might otherwise have been. Those huge sums have made up for losses due to our appalling growth record, which has averaged 1.7 per cent. over the Government's years in office compared with the historic trend rate of growth of 2.5 per cent., and that has cost us about £50 billion in lost output over those years.
Before and during the election, the Government claimed that they had delivered increased public expenditure, reduced taxes and a balanced budget. The Chief Secretary claimed that again in his speech. He also repeated the Government's claim that they would do all that again if they were re-elected. As I have said, during the Government's term of office, growth increased by an average of 1.7 per cent. a year. The exclusion of privatisation receipts, which is the only way to measure how the Government have used the resources available to them, shows that public expenditure has grown by an average of 1.3 per cent. per year. There has been a steady squeeze on public sector funds, and the Gracious Speech and the speech by the Chief Secretary confirm that that squeeze will be continued. The Government have expressed the intention to spend less than the country can afford.
Mr. Ian Taylor: The hon. Lady's lack of credibility on public expenditure is not only that she would have given up all the benefits to the Exchequer from further privatisation proceeds, but that she would also have given up the access to private capital that those companies now have to spend. For example, in the water industry that figure is £30 billion, which is equivalent to the whole of the public sector borrowing requirement. What would the hon. Lady have done about that, having closed off the access to private capital?
Mrs. Beckett: The hon. Gentleman talks about our giving up all the benefits of privatisation revenues. I am sure that at least he is well aware that some privatisation revenues are still due to come in. They will come in and accrue to—
Mr. Taylor: There was a £9 billion hole in the Labour party Budget.
Mrs. Beckett: I assure the hon. Gentleman that he should not go by the figures that have been invented, as the Chief Secretary fairly admitted today, by the Conservative party. Apart from the fact that it is not true that we did not
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continue to receive some revenues from the privatisations that had already been undertaken, the right hon. Gentleman talked about access to private capital. If he had spent any time studying what the Labour party said as opposed to that which was said by the Conservative party, he would be well aware of our intention to mobilise private capital to help to implement many of the projects that we believed, and still believe, would be worth while.
The consequence of the policy of squeezing public expenditure to less than the country could afford can be seen in the autumn statement in supplement table 8.3. The table shows clearly—the Chief Secretary referred to the levels of asset sales and of investment in the public sect or —that, even if we take into account all asset sales, public sector investment in 1991–92 was lower in real terms than in 1978–79. That is despite the fact that even slow growth has given us an economy that is 22.6 per cent. larger.
That is the record of which the right hon. Gentleman boasted. The consequences are evident from figures such as those that are set out in the autumn statement and from the state of housing, schools, hospitals and transport. Nothing in what the Chief Secretary said this afternoon shows how this can be remedied and services improved, when the Gracious Speech and his speech suggest that the squeeze will continue.
The Government's response so far has been to mount diversions—for example, to promote opt-out schools and hospitals. They have introduced changes in organisation instead of increased funds, but in their earlier stages accompanied by the increased funds that the Government said were not needed for the sector overall to ease the path of the changes. How can that increased funding go on being provided when more and more schools and hospitals opt out and when public spending is to continue being squeezed? It is being squeezed not because the funds are necessary for some other reason but, as the Chancellor of the Exchequer told the Select Committee when he was Chief Secretary, to allow room for further cuts in taxes.
I know that the Secretary of State for Social Security is due to reply on behalf of the Government this evening, and I congratulate the right hon. Gentleman on his new post. Billions of pounds of his budget have been wasted in a programme to which the Chief Secretary referred. It is designed to persuade people to take the risk of taking out personal pensions, to accept the risk of taking all the responsibility for their own retirement income on their own shoulders. Apart from the enormous risk, there is less value for money for the individual because of the higher charges and costs that have to be paid.
In addition, as the Audit Commission has stated, there is great cost to the Exchequer. That cost arises to some degree because at present there is still a fallback or a bolthole, and that is returning to the state scheme. I hope that the right hon. Member for St. Albans (Mr. Lilley), in his new capacity of Secretary of State for Social Security, will give the assurance sought on so many occasions from his predecessor, which is that the bolthole will not be closed. I hope also that the right hon. Gentleman will say that those who are tempted by Government propaganda and Government bribes to take out what the Government call a "pension of their own" will not be left high and dry on their own without the fallback of the Government scheme when that becomes in their personal interest.
One of the effects of the squeeze on public finances has been the greater and greater squeeze on the poor. I refer to some of the missing millions who are not mentioned in the

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Queen's Speech and whose numbers will be greatly swelled in the decades ahead unless the Secretary of State for Social Security gives the assurance that I have sought. Millions of unemployed people saw their income cut by the social security changes of 1988. Their freedom, choice and opportunity—all words that are used in the Gracious Speech and in the Prime Minister's description of it—are still being reduced under a Government who claim that freedom of choice is their philosophy.
Millions of the homeless and millions of those who are carers are likely to find their task more difficult under the Government's public spending programme. So, too, are the rising numbers of 16 to 18-year-olds and women who are seeking a place in the labour market. Inadequate public services will make their task more difficult.
The social security system over which the right hon. Gentleman will preside does not reduce dependence; it fossilises it. It is geared still to a society of 40 years ago of a man in full-time employment with the same firm for more than 40 years, with a dependant non-working wife and children with easy access to jobs and training. That is the pattern that our social insurance scheme reflects, and it fits neither the work pattern nor the family pattern of today. With the Government's desperation to cut costs at all costs, the present scheme traps those whom it should sustain with dignity when there is no choice or support towards reduced dependence when choice appears.
Conservative Members are often heard to suggest that there are individual alternatives to a social insurance scheme, which pool costs and which offer cover to all. I shall remind them of a case that received only a small amount of publicity just before the general election, when a young woman took the advice of Conservative Members. Fearing that she might lose her job, which was only a temporary contract, she took out private insurance to sustain her mortgage for at least a year while she found a suitable job with pay rates that would enable her to keep her home. She wrote of her shock on discovering that unemployment benefit regulations, changed by the Government, meant that benefit depended on her willingness to take any job after three months, no matter what the financial consequences. That condemned her to lose her home, because the rates of pay she was required to accept would not enable her to meet her mortgage bills.
That woman took the advice of Conservative Members. She did precisely what they had urged on those faced with the danger of repossession. What they offered in advice with one hand, they took away with the other through small-minded social security cuts. They did that because they said that it was not work that was lacking for the unemployed, but the incentive to take any work—no matter how damaging to long-term unemployment prospects or immediate personal circumstances. So much for choice. The effect on that woman's life and the lives of many others in similar circumstances is a consequence of the Government's ideological dislike of any social insurance scheme, combined with the cost pressures imposed by their economic incompetence.
When we consider any aspect of the Government's expenditure plans, we must feel considerable doubt about their promise to improve public services. Their commitments show promised increases of £19 billion in general Government expenditure over the years of the public
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expenditure plan. They show too—again the Chief Secretary mentioned it today—a reduction in the public sector borrowing requirement, over the years of the plan, to £6 billion by 1996. That requires a turnround of a further £22 billion, so that, just in the years of the plan, total resources of almost £42 billion at 1992–93 prices will be required, without allowing room for any tax cuts.
The revenue projections for the years of the plan suggest available increases of just £21 billion. The hon. Member for Esher (Mr. Taylor) asked me about a potential hole in the Labour party's plans. Perhaps he would care to say something about the hole in the Government's published plans—£20 billion at the very least.
Sir Thomas Arnold rose—
Mrs. Beckett: This is a courageous man.
Sir Thomas Arnold: The hon. Lady was a Minister in the last Labour Government. Does she believe that we should be spending our way out of recession?
Mrs. Beckett: According to the Government, they are spending their way out of recession, although I would argue that they are simply relying on the impact of recession on public finances. As the hon. Gentleman may recall, we have proposed a recovery package to help this country out of recession. We have proposed measures, which I shall discuss later, for health and education, which we believe would help to alleviate the impact of the recession. That, however, is not the policy of the hon. Gentleman's Government.
I repeat that the Government's projections suggest that they have a hole in their budget of £20 billion. In fact, measured against the claims that they make for policy, the hole is larger than £20 billion, because, as the former Chief Secretary helpfully explained to the Treasury and Civil Service Select Committee, on the Government's own definition balancing the budget does not mean merely removing the borrowing requirement. He made it plain that the Government would require to do more than that if they were to justify their claim to balance the budget. In his evidence to the Select Committee on 25 November 1991, he said:
"The fact is that nothing has been done in this public expenditure round"—
the one that we are discussing now—
"which makes it impossible to return to a balance, indeed throw up a surplus, at the height of the next cycle."
He went on further in his evidence to make it plain that it was the Government's intention, and part of their definition of balancing the budget, to build up a surplus. Therefore, on their own definition, the Government have more than £20 billion to find if they are to balance the budget.
Mr. Campbell-Savours: They might want to privatise the House of Commons.
Mrs. Beckett: I do not think that anyone would pay much for that.
The third clear objective was restated in the Queen's Speech—further cuts in taxes. It is a myth that in the past cuts in income tax resulted in a lower tax charge for the majority of families. I was interested to hear the Chief Secretary repeating again today the argument put from the Conservative Benches which, taken to its logical conclusion, would imply that, if we did not charge any

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income tax at all, our revenues would be at an all-time peak. However, I do not think that the Government push the argument that far.
The Chief Secretary referred to the Opposition's lack of understanding, as he put it in his courteous way—that we did not know that reducing tax rates resulted in increased revenues. Perhaps I should gently point out to the Chief Secretary that a substantial body of evidence suggests that, far from it being reduced tax rates that produce the increased revenues, it is the enormous increases that people on the topmost salaries have paid themselves over the years, so that, even with a reduced tax take, they are paying larger contributions. That has also been sustained during the recession.
But for ordinary families, for the majority of families, the cuts in income tax under the Government were almost balanced by increases in national insurance contributions, and were wiped out totally by increases in other taxes—increases in the rate of VAT, the 13 new areas of spending to which VAT was applied and the poll tax, to which I have already referred.
But that, we know, is all behind us. During and before the election campaign, a change of policy was clearly identified. During and before the election, the then Chief Secretary, the Chancellor and the Prime Minister himself were as clear as crystal on the point, and it is important to put it on the record in the House. I remind the House what they promised. They promised no increase in VAT rates, no spread of VAT to areas where it is not now charged and no other new taxes or charges. We mentioned the possibility of school fees or tutorial fees for students, fees for visits to the general practitioner, means-testing of the basic state pension or child benefit. All were denied in terms by the representatives of the Conservative party. They were explicit that none of those developments would occur.
The former Chief Secretary and the Chancellor told us clearly that there was no need at all for any such measures. They said that their figures were all in the public domain —all in the autumn statement—that they all stood up to scrutiny and that their promises would all be delivered.
The Labour party made a number of proposals for tax and spending changes. Those which arise from our tax changes are clearly beyond the reach of what the Government can offer. We offered the restoration of the cuts in the training budget still being undertaken in a recession; a new scheme for the unemployed and for skills training, particularly for women; support through the tax system for manufacturing industry and for research and development for which industry is calling; and the phased release of capital receipts for local authorities, not just to stimulate construction but to provide homes and to save money on bed and breakfast costs.
The Labour party called for a fresh look at the possibility of leasing rolling stock so that British Rail can provide decent trains as well as an improved service and so that Britain's manufacturing industry can survive and prosper. We offered new resources for health and education services. Those were all dependent on our tax plans, and were all a stimulus to counter the recession.
Some of the changes that we proposed are still within the Government's grasp. The money for more city technology colleges could still go to fund nursery places, which would give a better start to far more children and the chance of greater independence to many women.
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The subsidies for private health insurance could still be switched to help cancer victims. The poll tax could still be abolished. So could the 20 per cent. contribution, and student loans. All that would save money, and I commend those actions to the Chief Secretary.
As the Government may be looking to make savings apart from the overall figures that I gave, the Chief Secretary may recall an article in The Guardian, later backed by independent commentators, suggesting a deficit on current spending for the first time since records began. For that reason alone, the Chief Secretary should forget all the nonsense that the Conservatives churned out during the general election campaign, to the effect that Labour had nothing to offer, and look again at the many sensible proposals that we made for redirecting the public expenditure programme.
There is no doubt that at the heart of the Government's re-election campaign were three clear and simple pledges, which the Chief Secretary repeated today, and which are contained in the Gracious Speech. As to the promise to maintain and to improve public services, the autumn statement, judging from the words of the former Chief Secretary, is the nearest thing to be written on tablets of stone since Moses came down from Mount Sinai. We are assured that there will be no cuts in the public spending programme that was put before the electorate during the general election, and that what was offered will not be eroded—as was the case after the last general election.
The other two promises were to balance the budget—not just reduce borrowing but provide new services—and to make cuts in income tax while not increasing other taxes or inventing new taxes.
In the election campaign, the Conservatives said that they could do it all. The autumn statement supplement offered the Government's credentials and bona fides. That was the platform on which they fought the election, and on which victory was secured.
The Chief Secretary accused us today of leading with our chins in this debate, and said that the autumn statement and the figures that it contains, along with the election result, were an endorsement of the Government's reliability. There is no doubt that the public accepted the Government's assurances that they could deliver better public services, a balanced budget, tax cuts, and no increased or new taxes. The Conservatives are not the first people in recent years to promise all those things to an electorate. Now they must deliver.
3.37 pm
Mr. Tim Smith: I congratulate my right hon. Friend the Chief Secretary to the Treasury on his appointment. It is notable that that post was established by Harold Wilson as recently as 1964, reflecting the growth in public spending since the war. In 1964, public spending accounted for 35 per cent. of gross domestic product. That is the target at which we should aim.
I was pleased to hear my right hon. Friend's remarks about the importance of containing public expenditure and of obtaining value for money. I wish him well in the forthcoming public spending round, which we all know will not be an easy one. I congratulate also my hon. Friends the Financial Secretary and the Economic Secretary on their appointments. They both bring special

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expertise to the Treasury. We now have in place an extremely competent Treasury team. I wish all of them well in managing the economy over the next few years.
We on the Conservative Benches attach great important to that aspect, as do the electorate—as was seen in the result of the recent general election. The Government's competence to manage the economy was the principal factor that led people to vote Conservative in such large numbers on 9 April. Listening to the hon. Member for Derby, South (Mrs. Beckett), I was struck by how few lessons she appears to have learnt from the election result. I wonder whether she actually listened to what anyone said to her during the election campaign.
Is it not extraordinary that the Labour party should try to lecture us on the importance of fiscal rectitude? Of course we all understand the importance of containing the public sector borrowing requirement; of course we all think that £28 billion, or £32 billion, is too high a figure for next year—although it can be justified at a time of deep recession. It is preposterous, however, that the hon. Lady of all people, given her record, should lecture us on the importance of such matters.
I am always struck by the way in which people assume that whatever is happening at the present time will continue apace for ever and a day. After all, only four years ago we had a public sector debt repayment of £15 billion, and at the time some people told us—perhaps rather too enthusiastically and with too much optimism —that, if we carried on in the same way, we would be able to repay the whole of the national debt by the year 2000. I never supposed that that would happen; but, on the other hand, I do not suppose that we shall have a public sector borrowing requirement this size for every year between now and the year 2000.
We all know that the public sector borrowing requirement is the difference between two very large figures, and we all know that public spending and the income from revenue are directly affected by the state of the economy. Although we want the figure to be reduced as quickly as possible, we all understand why we have a PSBR of this size at present.
The hon. Lady, of course, said nothing about Labour's manifesto, with its long list of public spending commitments for which she was responsible. I am sorry that she left the Chamber so quickly—
Madam Speaker: Order. I ought to inform the hon. Gentleman and the House that the hon. Member for Derby, South (Mrs. Beckett) has apologised to me, and let the hon. Gentleman know that he will also receive an apology. The hon. Lady has a long-standing engagement.
Mr. Smith: I am most grateful to you, Madam Speaker. I would have expected nothing else from the hon. Member for Derby, South, who is always most courteous in regard to such matters.
The hon. Lady was responsible for the many public spending pledges in the Labour manifesto. The people asked, understandably, where the money would come from to pay for all those pledges. If Labour Members cannot answer that question—and it has never been answered—what is the point of putting all those pledges into their manifesto?
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I am also struck by the fact that, although people tell opinion pollsters that they are prepared to pay extra taxes to fund extra public spending, that is never entirely borne out in the results on polling day. I suspect that what most people want—it is an entirely understandable aspiration —are lower taxes and higher public spending. Only the present Government, on the back of economic growth throughout the 1980s, actually delivered that and only the present Government are capable of delivering it in the future.
Ms. Hilary Armstrong: I am very interested in what the hon. Gentleman has said. Can he now, on behalf of his party, commit the Government to meeting all their public expenditure pledges and reducing taxes?
Mr. Smith: The Government's position is set out very clearly in the "Autumn Statement", covering the next three years. The hon. Lady does not need to ask me that question; she will be able to see the position for herself if she obtains a copy of the "Autumn Statement" from the Vote Office. My personal view is that something that has been successfully achieved during the 1980s can be achieved again.
Ms. Armstrong: It has not been achieved.
Mr. Smith: The hon. Lady says that it has never been achieved, but income tax was cut from 30 per cent. to 25 per cent. at a time when public expenditure was rising and the public sector borrowing requirement was falling. If it has been done before, it can be done again, and it will be done again when the economy starts to recover.
Mr. Skinner: When will that happen?
Mr. Smith: It will happen during the 1990s. The hon. Gentleman knows very well that no one can be sure precisely when such things will happen, but I am confident that it will come about.
I welcome the commitment in the Queen's Speech to sound finance and budgetary discipline in another context. The paragraph about the European Community states that, as part of the United Kingdom's presidency of the Council, the Government will
"promote sound finance and budgetary discipline."
I believe that the need for that is urgent and that we are well placed to do it.
On many occasions, the European Community Court of Auditors has produced reports that are highly critical of spending in the Community, particularly on the common agricultural policy. I hope that the Government will take measures to see that we have effective mechanisms, just as we have in the House with Select Committees, including the Public Accounts Committee, to ensure that public spending in the Community means that taxpayers throughout the Community get value for money.
I welcome the statement in the paragraph dealing with the overseas aid programme which says that the Government
"will continue to press creditor countries for a further reduction in the official debt of the poorest countries."
My right hon. Friend the Prime Minister is to be congratulated on the initiative that he has already taken. The Government have been leading the way. I hope that, over the coming months, it will be possible for the Government to persuade other western countries to cancel entirely the official debt of the poorest and least developed

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countries. It is not just a moral issue; it involves our economic interest as well as that of the poorest people in those countries. I attach the greatest importance to that commitment.
I welcome the strong statement in the Queen's Speech—it may be the first for some time—in which there is an explicit reference to price stability. We are told that the
"Government will pursue, within the framework of the exchange rate mechanism, firm financial policies designed to achieve price stability.
For too long we have been satisfied with low inflation. It is good news that today we have low inflation and that inflation is containable. However, it is nearly a quarter of a century since we had one year in which the United Kingdom had stable prices. I am glad that the Government have committed themselves firmly to the objective of squeezing inflation out of the system altogether. It is inflation that destroys jobs, undermines savings and business confidence and negates economic growth.
Mr. Mark Wolfson: In support of his point, does my hon. Friend agree that within the ERM our European competitors—in this context, I mean competitors rather than partners—are likely to be more successful in containing inflation than they have been in the past and that, to maintain our competitive position and jobs here, it is even more important than ever that we squeeze inflation out of the system?
Mr. Smith: I agree with my hon. Friend. That is borne out by recent experience in Italy and, particularly in France since they joined the ERM. Although the experience has been painful, it has been worth while. We have seen inflation across the Community fall as a result of ERM policies.
United Kingdom membership of the ERM is only 20 months old and the benefits of that membership are now showing through strongly. One of the most underrated benefits is the fact that it brings about exchange rate stability within the Community. It means that people who trade within the Community—after all, the majority of our trade is now with other Community countries—are able to forecast the exchange rate in currency transactions with a degree of certainty that did not exist before. That is good news for British industry and British exporters.
The key point is that the ERM provides an external discipline that ensures that we bring inflation down and keep it down. We have brought down inflation and underlying inflation—output prices are at record lows—and as a result, when we believe that it is prudent to do so, we can bring down interest rates. I welcome the fact that my right hon. Friend the Chancellor felt able to make a further cut of 0.5 per cent. on Monday. We have now seen interest rates fall by 5 per cent. since their peak in October 1990 when, not coincidentally, we joined the ERM. That is good news for us. Also, I hope that when Treasury Ministers feel that it is appropriate, we will be able to move to the narrow bands of the ERM. Perhaps that will be possible when sterling has traded for a reasonable time within those bands. That will reinforce our commitment to the ERM and facilitate the further lowering of interest rates.
The Queen's Speech also refers to the convergence criteria in the Maastricht agreement. I welcome the Government's commitment in the medium term to complying with the convergence criteria, which relate
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principally to inflation, interest rates and fiscal policy. Because of the Government's prudent handling of the economy, there should be no difficulty in meeting those criteria. For example, the criterion on official debt stipulates that such debt must be no more than 60 per cent. of GDP in total. The United Kingdom level is far below that, whereas that of, say, Italy, is far above it.
I welcome the fact—although it is largely attributable to the Labour party leadership election—that we are to have a debate on public expenditure at this stage in the parliamentary year. That debate normally takes place after the publication of the White Paper. Today we have an opportunity to comment on public expenditure in the next spending round, which is about to start.
I suspect that my right hon. Friend the Chief Secretary will start his discussions, especially with the Department Of the Environment, quite soon. All the discussions on the next public spending round will start soon. In this debate we shall be able to express our views on public spending in 1993–94.
In that context, the first thing to say is that it is clearly vital to contain the overall level of public spending. That is the easy part. We can all say that, and then we go to my right hon. Friend and tell him which part of public spending should be increased, because we have a special interest in that subject. I do not suppose that my right hon. Friend receives very many recommendations on which areas of public spending could be reduced.
The first stage in the process is the announcement made at the end of July on local authority spending—the local authority settlement for 1993–94. That is an important settlement, because next year will see the introduction of the council tax and of care in the community, and the transfer from the social security budget to local authority budgets of that amount of social security spending which is attributable to care in the community.
I hope that at that time it will be possible for my right hon. Friend to identify the sum which is notionally being transferred from the Department of Social Security to local authorities, so that local authorities have a clear idea how much it is. I am prepared to forecast now that whatever that sum is local authorities will say that it is insufficient—but that is not my point. The point is that the sum should be clearly identified. From April next year, local authorities are to be given substantial new responsibilities under care in the community. That means that we shall have to examine the standard spending assessment in relation to social services.
Some counties, including my own, which manage to contain total spending within the standard spending assessment still have difficulty with social services. My hon. Friends know what pressures there are on social services budgets—and those pressures are likely to increase rather than to decrease following the introduction of care in the community.
I fully support what my right hon. Friend the Chief Secretary says about securing value for money in public spending. That is what the citizens charter is all about—value for money and quality service for the customers of the Government's services.
Another factor on which I am sure that my right hon. Friend will agree with me—although he did not mention it —is the introduction of the Government agency programme. We now distinguish clearly between policy advice and policy execution, which means that we are in a position to give better value for money to customers of

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Government services. I hope that that programme will be developed further—especially in the Departments in which it has not yet been introduced—so that eventually all civil servants and officials working in policy execution will be working for agencies with considerable independence of management. That is how we shall get better value for money for all our taxpayers.
3.53 pm
Mr. Frank Field: I begin my contribution in a similar vein to those we have heard this afternoon in congratulating you, Madam Speaker, on your appointment. I then wish to develop a speech that is rather different from those I have heard so far.
There are at least two ways to cover a canvas: the broad brush stroke can be applied or a far more detailed brush can be applied to the canvas. I wish to adopt a more detailed approach in taking up two themes that have already, rightly, dominated the debate: incentives, and the issue about people controlling their own lives. I want to develop those themes with the small brush approach, thinking of individuals in my constituency and, as a result of joint canvassing, in the constituency of my hon. Friend the Member for Wallasey (Ms. Eagle).
I speak at the beginning of a Parliament when the Labour party has lost four elections in a row. I do not belong to the school that believes that, with one more small heave, we shall be on the Treasury Benches. In terms of our percentage of the vote, our turnout was worse than it was in 1935. In responding to speeches, we have the double job of performing our role as the Opposition and trying to convince the Government to change policy when that is desirable, and of beginning a rethink of policy ourselves in a build-up to the general election five years hence. I want to begin that task this afternoon.
I hope that before long we shall be seen as a tax-cutting party, not because we just want to beat the Government at their own game, but because it is vital if we are to build real incentives for those at the bottom of the pile.
We have heard much about public expenditure, about its restraints, and about the difficulties of balancing the increased provision of first-class public services with the Government's objective of cutting taxation. What we have not heard about in the debate—I hope that we shall hear a lot more about it—is the growth of the other welfare state, the tax welfare state. It is now so generous that it omits from taxation more than half of all personal income. We should now begin to set out a stall to commit ourselves to phasing out those tax handouts. That cannot be done at a stroke because people have made major commitments, such as buying pensions or their own homes, and their budgets would be split asunder if such measures were carried out at a stroke.
However, there could be commitments over the life of a Parliament to phase out some of the major tax benefits. I pick out two. If we or the Government were committed to phasing out mortgage tax relief and the subsidies that go with the acquiring of pensions, by the end of a Parliament we could cut the standard rate from 25p to 18p in the pound. I believe that that is right for a number of reasons. It is right because we should cease to be paternalistic—believing that only if we bribe people shall we get them to
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buy houses or provide pensions. They will do that if they have enough income with which to do so because they are good things to buy.
Such a change is also right because it would create a level playing field for savings. One now has to be almost certifiable to save in any way other than buying one's own home or pension, given the extent of the tax subsidies. Such a change is right because it achieves the goal of cutting the standard rate. I think of the standard rate especially as it affects low-wage earners in my constituency and in Wallasey where the difference between 18p and 25p per pound of tax paid is very important.
One of the policies that I hope we shall press on the Government is to be genuinely non-paternalistic and to be genuine about seeking major cuts in the standard rate of tax. I want to achieve the objectives I have outlined and I take seriously the question that we often mouth in this Chamber—I wonder how seriously we take it—when we look at the wage slips of the low-paid workers in our constituencies and see how crippling some of those contributions are.
I congratulate the Secretary of State for Social Security on his post, and I am glad that he will reply to the debate. I link my plea to another plea about caution, although having an open mind about the targeting of benefits. It is no longer good enough for us to mouth all those phrases which, in a very comfortable way, we have uttered in the Chamber over the past three or so Parliaments. The recipe is not to the liking of the electorate. That does not mean that we will desert all our positions, but it means that we have to rethink from first principles again. Therefore, I am not against opening up the debate, as some Conservative Members have put it, about universal provision and targeted provision, but I wish to make a plea before we jump too quickly or carelessly into the debate, because we could with one hand tend to undo the good that the other hand may do.
I refer again to a typical constituent of my hon. Friend the Member for Wallasey and myself. He works a considerable time when work is available and picks up nearly £40 in family credit. He is grateful for that family credit—he makes no bones about it; the family would not survive without that payment. However, he is well aware of what we in the Chamber call his marginal tax rates—the amount that is taken in income tax, the amount that is taken in national insurance contributions, the loss of family credit as his earnings increase, and other deductions as well on housing benefit.
Therefore, when we talk about the nice, easy move from universal provision to selective or targeted provision, we must think of what we are doing to people at the bottom of the pile. Although, sadly, we now have an underclass —perhaps there will be other debates in which I may develop that theme—large numbers of other people are poor simply because, by their own efforts, they cannot get a job or there is no job to have. For example, in the Wirral a new Sainsbury store is opening. The company took pages in our free press to advertise just before the election. For every job that was advertised, however skilled, a breadwinner with two children would still earn a low enough wage to claim family credit.
Employers are adapting to the means-tested assistance that is being given. They are becoming dependent on that form of Government support, and our constituents are being trapped in it. They have to think whether they get another job or work longer hours, given what their

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marginal tax rates are and given what the Government have already done on changing the housing benefit scheme, whereby an unemployed person on income support has the whole of his rent paid, but, because the income scales were changed for those in work, people now move from having rent totally paid when they are unemployed to an income which is hardly any different when they are in work, but facing practically the whole of their rent charges. Therefore, a council tenant paying a large rent such as those that we have in the Wirral has now to be patriotic beyond belief to move from unemployment to work, other than finding himself in the position of making his family worse off.
Those are real conditions that our constituents must face. I make the plea that, when we open the debate about the future shape of welfare, we do not do so just on an intellectual level but use one of the great resources that each of us has, and that is that we represent an area in this country and that we listen to what our constituents say, particularly those who will be most affected by the changes. There is all the difference in the world between keeping a universal provision of child benefit, which is a springboard to freedom, and thinking about how more selective one might be in future about making above-the-board increases in the standard rate of the old-age pension.
I am taking much time, but I wish to end on one other theme if I may, and that is pensioners. I wish to open up two themes briefly. The House is awaiting the Government's response to the Select Committee report on the ownership and control of pension funds. Way back in 1976, I thought that the Labour party should advocate the sale of council houses. Unfortunately, it was not a view which my party accepted. We now have an opportunity of extending capital ownership on the pensions front which makes the sale of council houses small beer. I am talking about the equity stake that most of us have through our pension scheme. Most of us do not realise that we have any asset there at all. If one worked for Robert Maxwell, one realises that one does not.
A person on average earnings approaching retirement, will have a portfolio of about £100,000 to support his or her pension, yet no one thinks that he owns that £100,000. None of us thinks that collectively through our pension funds we own about a third of the stock market. If we are to achieve the next big leap forward in people having control of their own assets and having the right to move those assets from one pension fund to another accepted body, I hope that the recommendations in the Select Committee will be accepted.
I end as I began, on a sombre note. I make a plea about those pensioners who thought that they had assets in Maxwell-run pension schemes only to find out that the funds were either sadly depleted or non-existent. I know that the Government are thinking about what their response will be. I make an immediate plea to the Government. I do not expect the Government to say this evening that they will underwrite all those pension funds, but they could say that they will give a conditional undertaking to underwrite on a month-by-month basis those funds which now find that they are not solvent and, therefore, must close.
The Government know the disadvantages of schemes closing. Not only are pensions lost but the body which seeks to trace the assets which may have been misappropriated disappears with the closure of the
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scheme. So there is a real need to pump money on a short-term basis into such schemes so that pensions can be paid. But there is also a longer term objective. Through the schemes we may retrieve some of the assets and give them back to the pensioners who own them.
It is not simply a matter of people losing their pension. Many of us in the House will know from our constituents who are Maxwell pensioners that with the loss of their pension goes the loss of their home. Pensioners have to sell their homes because they do not have the monthly income to keep them going. So before many more schemes close —one closed two weeks ago—I hope that the Government will respond, not in a universal way but in a selective way, to ensure that while they are thinking about the longer term reforms no more pension schemes go to the wall. With the closure of a pension scheme, people face the horror of losing not only the whole of their provision for retirement but their other greatest asset, their house.
Mr. Wolfson: I support in the strongest terms the point that the hon. Gentleman is making. I have experience of several constituents who, in some cases, worked for 37 years for a company which was not part of the Maxwell group but was taken over in the last three years of their employment. They now have no pension whatever. We need to keep open all possible gates to retrieving those funds.
Mr. Field: I am grateful for the hon. Gentleman's support. I hope that those on the Treasury Bench listened most carefully to his comments.
Labour Members have difficulties in approaching the Queen's Speech after our fourth election defeat. I hope that in the next year or so we shall use the debates in the House, both to criticise and probe the Government, as we rightly should, and to open up the debate about what our policy should be so that in five years' time we shall not suffer five losses in a row.
4.9 pm
Mr. Peter Fry: I am delighted to be called so early in the debate on the Queen's Speech, particularly because it enables me to join in the congratulations to you, Madam Speaker, on your well merited promotion to the Chair. I should also like to take the opportunity publicly to congratulate my right hon. Friend the Chief Secretary and his colleagues on their promotion to the Treasury Front Bench.
As so often, the hon. Member for Birkenhead (M r. Field) produced a thoughtful speech. I should not like him to think that only constituencies in the north-west of England experience the problems that he outlined. Some of the ideas in his speech will cause much thought, not least on the Opposition Benches.
I reinforce the hon. Gentleman's comments about the terrible trap into which people fall, particularly when they are unemployed and have families to support. He mentioned those who pay council house rents. I hope that my right hon. Friend appreciates that a considerable number of people live in the private sector where rents are often much higher than in the council house sector, and where the pressure on people is even greater. Even with the family credit system, many of them would find it not worth working at all. The pressure exists throughout the housing sector for those who do not own their own homes.

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The hon. Member for Birkenhead also spoke about pensioners, particularly those who were let down by the collapse of the Maxwell empire. The Conservative party has a great obligation to ensure that people who take out private pensions receive them. It is not much good for us to say that we have an alternative to the state scheme and that we want people to stand on their own feet. We must ensure that when people have contributed money from their earnings and when firms have also contributed to pension schemes, those pensions are realised when they are due. There will be all-party agreement on both those points.
At the start of debates on the Queen's Speech, comments are always made about the election. I should just like to put in one little caveat to the euphoria that exists in the Conservative party. I must admit that, going round the country as I did, I did not find that the support for me and my party was based on unqualified approbation for everything that had happened over the past two years. The Government should accept that we were chosen as the best possible alternative—perhaps the least of all the available evils.
I think that that lesson has been learnt, and I welcome many of the measures contained in the Queen's Speech. We are entering a period when there may be less political strife and bickering than in the past 12 months. There is a feeling in the country that political bickering does no good in getting us out of the recession. Now that the election is behind us, people expect the Government to get on with the job of helping industry, helping to create jobs and helping people to raise their standard of living once again.
I was impressed that my right hon. Friend the Chief Secretary took as his theme value for money. Rather like the hon. Member for Birkenhead, I should like to look in a little more detail at one aspect of public expenditure. I was pleased to read in the Queen's Speech that the Government were committed to increasing the role of the railways in meeting the country's transport needs. However, I was not too happy to note that that was the only reference to the problems of the country's transport needs. The problem goes much wider than merely privatising part of British Rail.
While I am on the subject, I congratulate the Government on at long last grasping the nettle and dealing with how to bring competition into rail services and, at the same time, covering the cares and concerns of many people about what would happen if the whole system were privatised.
Sixteen or 17 years ago, I was a member of the Conservative party's transport policy committee when we first proposed the idea of separating the maintenance and ownership of the track from the operation of rail services on it. I am only too pleased that, at long last, that idea has been accepted by my right hon. Friends. The new regime that we set up for British Rail and the rail services can only benefit the country, the consumer and I hope, public expenditure as well.
However, the problem that has not been touched on, and which is fundamental, is that of how we shall deal with one of the greatest sources of waste and environmental pollution that exists in our society. How are we to use public expenditure to do something about the appalling traffic congestion in our major cities? The Government
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have already done a remarkable amount. I discovered that many people were totally unaware of the Government's achievements, and the fact that some imaginative schemes have been proposed and commenced for heavy rail systems, particularly in London.
There are light rail schemes, which are virtually 100 per cent. funded by the taxpayer, in Sheffield, Manchester and Birmingham. Many more schemes are queueing up to be approved. We have the biggest plan for inter-urban road building that the country has ever seen, which is surely important to ensure our economic recovery.
However, we have not yet resolved the problem caused by the massive public expenditure that will be needed to cope with the congestion that is becoming an everyday occurence, not only in the big cities, but in medium-sized towns. London is a special case, and I do not want to consider its problems at the moment, but I have been impressed by the fact that, if we are not careful and do not obtain value for money when we spend taxpayers' cash up and down the country, that will cost us much more in the future, not least in the environmental impact that the over-use of motor cars and lorries will have.
Some hon. Members will be surprised to hear me make such comments as, over the years, I have been known as a supporter of the road lobby, and I believe that roads play a fundamental part in the national economy. However, when we are dealing with the problems of urban centres, road building alone cannot be the solution. It is politically unacceptable, and the cost is too heavy. We have to ask ourselves, in the words of the Chief Secretary to the Treasury, "How will we get value for money?"
If we embark on enormously expensive schemes, they will take up money that could be used elsewhere. They also take a long time to complete and, as the former Secretary of State for Transport, Mr. Parkinson, said, if one conducts too many schemes at any one time in any one place, the ensuing chaos makes them counter-productive. We could turn to more of the light rail schemes that have been promoted, but it is my view that the number of those schemes that are viable is limited and that there is a danger that too many of them are being promoted merely to advance the aspirations of some local authorities. The problem remains.
I noted that the new Secretary of State for Transport said once again that the Government were considering road pricing. I warn my right hon. Friend that, just as many people who responded to the opinion polls before the election made monkeys of the pollsters, so there is a danger of assuming that, when people answer that they are in favour of road pricing and deliberately restricting the use of motor cars, that is what people actually think.
The second most important purchase that most people make after their house is their car. Having bought it, they are going to use it. The problem facing much of the western world is not stopping people buying and using cars but persuading them to use them less often—in other words, using public expenditure to persuade people voluntarily to leave their cars in the garage or to use park and ride operations.
I have not yet mentioned the one form of public transport that can make the greatest contribution to solving traffic congestion: the bus. The trouble with the bus is that it has a down-market image. Years ago, we used to talk about the man on the Clapham omnibus as the fount of all wisdom, the man whose opinion should be taken as the average view. Alas, today, too many

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passengers on the Clapham omnibus are pensioners or those on concessionary fares, children going to school or people on low incomes, not traditionally the groups whose opinions are first taken into account when decisions are made.
I suggest that, if my right hon. Friends want value for money from public expenditure on public transport, they should take a good look at ways in which they can exploit the bus, rather than devoting hundreds of millions of pounds to schemes that can offer only limited relief.
There are those who ask why we should make such a fuss about the bus; surely now that the bus companies have been deregulated, they can sort out the problems for themselves. I venture to suggest that they cannot. First, traffic is already too bad, and only the Government at national and local level can alter the rules to give the bus greater priority. That needs to be done.
Secondly, if higher income groups are to use this form of public transport, they must have a convenient system —a clean, comfortable and swift system. At the moment, it is virtually impossible for bus companies to purchase the kind of new buses they want. The bus building industry in this country has virtually collapsed in recent years. Treasury Ministers must re-examine the regime under which many bus companies operate, to enable them to produce the profits with which to buy better, cleaner and more modern vehicles.
Thirdly, we must look seriously at the regime in which we expect our public transport operators to run their services. I was privileged a couple of months ago to go to Brazil. Hon. Members may wonder what on earth Brazil could teach us about public transport, but they may be interested to learn that the finest system of buses that I have seen anywhere in the world is to be found in the city of Curitiba, in southern Brazil. With the right sort of investment, that town is achieving levels of service as good as those provided by light rail systems in many other parts of the world; at the same time, it has successfully enabled people to leave their cars at home and move around the city without causing enormous traffic jams.
We should examine other systems. I hope that the Treasury will allow the Minister for Public Transport to go and have a good look at how other countries are solving their problems. It is not necessary to spend enormous sums on heavy or light rail or even on road building. We need, as the Chief Secretary said, to choose the right priorities. By choosing them wisely much can be achieved, we can obtain value for money and our appalling traffic congestion can be relieved.
I hope that, when the Secretary of State replies to the debate, he will deal with the vexed question of the future of care in the community. There is considerable unease, especially in the private residential homes sector, about what will happen over the next two years as a result of the change in funding for people who cannot look after themselves. County councils are currently presenting their broad outline plans, but they cannot say exactly howl hose plans will be implemented, because they do not know how much money they will receive.
I hope that the Secretary of State is aware that many thousands of elderly people are quite happy to remain in residential care. However, a shadow is being thrown over them because of the uncertainty of future funding. One of the greatest assurances that my right hon. Friend can give is that those people will not suddenly find, because of a change in county council policy as a result of a vast
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reduction in funding, that they will not know where they will stay when the new system is introduced. If care in the community is to be placed at the forefront of our social policies, it is essential to find the public expenditure to enable the policies to be carried out, to the satisfaction and happiness of thousands of our elderly citizens.
4.26 pm
Mr. Matthew Taylor: I should like to repeat in public the private congratulations that I offered you, Madam Speaker, when I took my seat. The House looks forward to your continuing stewardship. The overwhelming vote of confidence in you was a measure of the respect for the work that you carried out when you were Deputy Speaker.
The speech by the hon. Member for Derby, South (Mrs. Beckett) failed to address the reality of the position of all the Opposition parties. The hon. Member for Birkenhead (Mr. Field) gave a rather more honest appraisal of the situation facing all of us who want to see not just a change of Government in the near future but, perhaps more importantly, the effective operation of democracy in this country.
In the weeks following 9 April, journalists, political commentators and politicians have advised, preached and speculated on the lessons that the Labour party and my party have to learn from the election result. There are certainly lessons to be learned, and the challenge is to provide an effective alternative. That means an alternative vision which is backed by practical, affordable policies. At this stage in the Parliament it is not enough for any Opposition Member simply to address the political situation as if those questions did not arise.
I am sure that, privately within the Labour party, those questions are being widely discussed, but in the past few days the tone of some of Labour's public comment on recent Government policy has failed to acknowledge that problem. That is not to say that the policies presented by my party and by Labour did not prove popular. Many Liberal Democrat policies and the positive way in which they were presented proved popular. Our pledge to invest more in education, even at the price of 1p on income tax, was the most popular policy of the campaign. We must also make it clear that a Liberal Democrat vote means Liberal Democrat policies, and fortunately people voting in today's local elections understand that. That will result in a record number of Liberal Democrat councillors and a record number of Liberal Democrat-led councils.
The Opposition parties have lessons to learn and thinking to do, but so do the Government. Indeed, a Government with such a reduced majority have the greatest responsibility to learn the lessons of the election and to consider what the citizens were saying. It is not enough to claim a mandate on a minority of votes or even on a small majority of seats in the House. Yet the Queen's Speech and the Prime Minister's comments yesterday suggest no such new thinking.
Shortly before the election campaign, I received a letter from the Prime Minister. It outlined, somewhat sketchily, his vision for the future and expressed the hope that I might share his views. It even suggested that I might contact the Truro Conservative association to see whether I could help in any way. I imagine that many members of the public received the same letter. No doubt the Conservative central office computer targeted it at those

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who were considered to be likely Tory voters, probably those in jobs with good incomes and with reasonable job security.
I wonder whether the Prime Minister sent his letter to the unemployed, to those whose homes have been repossessed, to old people struggling on the state pension or to those on health waiting lists. I doubt whether that was the intention, but it is those people who are most dependent on the Government's policies. Many of them will not have voted Conservative but some will have done so, perhaps in the shaky hope that they can rely on the Government to put things right. It is more likely, perhaps, that they did so because they were afraid that, with a Labour Government, their position might be even worse.
The Government have a duty especially to help those who for fear of anything else—another Government—put their trust in them. It was the Tories who fought a campaign to create that fear. Many of those who voted for them did so, as the hon. Member for Wellingborough (Mr. Fry) rightly said, not out of any enthusiasm for what had happened over the past few years under Conservative Governments but out of a fear—in my view, it was in part misplaced but in the Conservative party's view the fear was justified—of the options that were on offer. I do not believe that there was any great endorsement of Government policy. That being so, Conservative Members cannot afford to be self-satisfied about the Conservative election victory that was won on less than half the votes cast. They need to show that they deserved the victory, but there is little sign of that in the Queen's Speech.
During the election campaign, the so-called citizens charter was trumpeted as the flagship for a Tory Government. It appears, however, that no legislation is planned that would put citizens in charge of what takes place. No money is committed to giving the charter any bite. The Queen's Speech appears to be that of a Government who did not expect to be re-elected.
What are the plans to improve public services and how will they be funded? The subject of today's debate is public expenditure, but we have not heard how the Government will improve investment in basic public services. During the election, I believe that my party won the debate on education because the public recognised that the service could be improved only with substantial extra investment and that there was an honesty in explaining that that meant that they would have to pay for it.
The Labour party failed to bring the two components together. It gave the impression that it believed that the public could be persuaded that almost too much could be given at no cost to them. The Government said that it would cost, as it were, but failed to recognise that there was a mood to meet that cost or to face some of the costs that would be involved, provided that the public knew what it was that they were voting for and precisely what the costs would be. The poll evidence showed precisely that, when the issue was put together in that form—the potential benefits and an accurate indication of the costs involved—the public would support it, as they supported the 1 p increase in income tax that was proposed by the Liberal Democrat party.
How, for example, do Ministers intend to ensure that we have a high-quality train service, never mind who owns or operates parts of it? How do they intend to ensure that
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vital health operations are carried out quickly and well? How will they ensure that parents can be guaranteed high-quality education for their children in all instances and not only in flagship schools? How will they ensure that disabled people have access to the services and support that they need; and that care in the community can be made a high-quality reality delivering the support that people have been promised?
The Government say that they will provide improved services, but the financial equation fails to add up. The Government have also made other various spending commitments to index-link pensions, to child benefit and to a Department of Trade and Industry run by a more interventionist Secretary of State—who has made it clear that he will want additional cash. As more schools opt out, it will be in the expectation that they will receive the additional financial support that those which have already opted out have received.
Alongside those spending commitments, the Government have pledged further tax cuts and have said that their intention is to balance the books. Given the present and projected levels of borrowing, how can balanced books be achieved without cuts in services, let alone cuts in the promises that the Government have made? Indeed, it has already emerged that the Government projections assume too high a level of growth. More realistic assessments of growth suggest that borrowing will need to be even higher to meet the expenditure plans.
There have already been widely leaked projections for the coming public expenditure round, and cuts are expected. The services that will be hit will be the health service, education and community care—the very services about which the election showed people care most. Education authorities and governing bodies already face the prospect of having to sack teachers and cut the delivery of education to children in the classrooms. Over the next few months, the unwritten home truths about the Government's general election campaign will emerge. While the Government were effective in raising fear of the alternative, they were hugely ineffective in explaining the contradictions within their manifesto. That can mean only broken promises and further cuts.
How do the Government intend to lift our country out of recession and into sustained recovery? In my part of the world, we are well aware that natural growth, coming out of the few early signs that we are now seeing, will do nothing to tackle the deep-rooted problems of the British economy as a whole, and more specifically those of areas such as mine where, no matter how well the economy performs, there are always lower wages, higher unemployment and fewer prospects for young people.
We sought to present a costed manifesto that dealt with those problems—a manifesto aimed at recovery and investment in vital services such as school and college building programmes, housing schemes and NHS building, with investment that would create jobs while improving basic services. Whatever the result of the election, I believe that those policies were popular. As I toured the towns and villages, not only in my constituency but in areas where we did less well, the message I received was one of concern about schools, the health service, pensions and the sewage on our beaches.
There was uncertainty about whether people could risk the alternative that was offered to tackle those problems, but there was no uncertainty about the reality of those

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problems and the need for them to be tackled. It appears that the Government would rather ignore those concerns in order to achieve a tax cut. Why the obsession with tax cuts? The only way to achieve them will be through cuts in education and job creation and through further environmental decline. The economy needs new ideas and new investment if we are to emerge from the recession and if our long-term needs are to be met.
I shall cite a local example. Last July a Trade and Industry Minister told me that he recognised the case for Truro and St. Austell to receive assisted area status and a review was promised—but not until after the general election. Local people keenly await the result of that review, but it will call for additional investment by the Government. Cornwall has some of the highest levels of unemployment in the country. We need the benefits of assisted area status, combined with a development agency for that county, to bring us out of recession. The decision must be made now.
The Government know that they have campaigned on an agenda that means that they cannot possibly deliver the required investment while delivering cuts in taxes and the balanced economy that they have promised to deliver—at least, not unless they are prepared to go down the road suggested by the hon. Member for Birkenhead and attack tax benefits and privileges, including mortgage tax relief. Having stood for a party that talked about such reform, I know that the Government have been only too keen to exploit the subject without examining the issues that underlie such a programme. The Government will be judged on their determination to act on those matters.
The Queen's Speech contains many small actions, but fails to face up to the great acts, the great reforms, that Britain needs. Even the Government's narrow ambitions are undermined by the financial crisis and the self-imposed financial limitations which they face and which they still do not allow themselves even to acknowledge in public let alone face. That is the truth of the Government's programme, and that is why it should be opposed.
4.40 pm
Mr. Ian Taylor: I congratulate you, Mr. Deputy Speaker, on your new position. We look forward to you holding the fort on many occasions such as this when the House is not quite as full of hon. Members who wish to speak as you, in your position as Mr. Deputy Speaker, might wish. Nevertheless, I am delighted to take part in this debate on the Gracious Speech.
From my experience in my constituency, I believe that the problem with the Liberal Democrats' plan, which was mentioned by the hon. Member for Truro (Mr. Taylor), for 1p on income tax to fund education was that progressively during the campaign it was regarded as a gimmick. The principle of such an hypothecated tax does not stand up to examination, because ultimately the question arises: does everything have to be hypothecated? Why not have an extra 1p for something else and something else more? The idea also looked increasingly feeble in comparison with what the Government were already predicting that they would spend in Red Book proposals for the forthcoming financial years. Therefore, even on that basis the Liberal Democrats' proposal did not answer the question.
After the Liberal Democrats' sorry showing in the election, they will have to go a good deal deeper than that
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sort of exercise to win votes. I am not questioning the fact that education is important; I am merely saying that there is a much bigger debate about how to finance public services, including education, and the answer is not to hypothecate tax in that way.
I shall return to some of the broader themes but I do not want to miss the opportunity to pay tribute to the hon. Member for Birkenhead (Mr. Field). I shall not embarrass him by praising him too much—that might not be what he is seeking. However, I suspect that he embarrassed the Opposition Front-Bench spokesmen. Certainly, the hon. Member for Derby, South (Mrs. Beckett) would have done better to speak after the hon. Gentleman—that might have improved her own speech. I am sorry that she is not here to hear my comments, but listening to her speak one began to understand why the hon. Member for Sheffield, Brightside (Mr. Blunkett) considered that it would be a disaster if she were to succeed in her attempt to become deputy leader of the Labour party. There was no new thinking there. She spent most of her time trying to justify the Labour party's election campaign which so visibly failed to obtain the support of the British people. There was no message for the future non-Conservative forces, which may be seeking to coalesce in order to make a better attempt against the Conservative party at the next general election, whenever that might be.
One of the more interesting debates within the Labour party at the moment concerns the interpretation of its platform on the Budget during the election campaign. I was interested in the fact that the hon. Member for Dagenham (Mr. Gould) made a trenchant attack on the proposals of the right hon. and learned Member for Monklands, East (Mr. Smith), saying that what had crucially affected the Labour party's chances in the south of England—those who come from Scotland should remember that there are quite a few people in the south-east and south-west of England and in the midlands, as the hon. Member for Dagenham also pointed out—was its fatal capping of the aspirations of those people who were not earning as much as £20,000 per annum but who saw no good reason why they should not earn that much as their careers developed.
Before the Labour party preaches to the country, it is crucial that it should understand that, during the past 13 years of Conservative government, the country has changed and people do not necessary feel that they will always be at the bottom of the heap. They have a chance to improve themselves in all sorts of ways, not only through their earnings but through the houses that they purchase and the investments that they make, including pensions, which the hon. Member for Birkenhead rightly said was the great hidden asset of most British people, to which they pay least attention, but which is of great significance and magnitude.
We must understand that the British people do not like being taxed at levels higher than they regard as reasonable and do not welcome the prospect of being part of a socialist redistribution of wealth from one section of society to another which, in order to have some impact, must begin taking at a fairly low income level. I was delighted to hear the hon. Member for Birkenhead challenging those old ideas. His presence here is a tribute to him, although not necessarily to his party, which may have represented a greater threat to him than anyone else in his constituency at the general election, as we know only too well.

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I welcome the Gracious Speech. It contains many points which we shall be able to debate in the several days to come and subsequently.
I wish to breach convention slightly by taking up a point made by the hon. Member for Truro about the citizens charter having no real teeth and receiving little emphasis in the Queen's Speech. That is far from the truth when one considers not only the Queen's Speech but the speech yesterday by my right hon. Friend the Prime Minister. I have some little link with the Chancellor of the Duchy of Lancaster who is responsible for the citizens charter, so it is slightly in breach of convention for me to raise the issue in the House. Nevertheless, I shall do so, but only to set out the agenda.
The citizens charter and the principles behind it will now be at the heart of all Government decisions right across the board. It is an essential part of opening up public services and Government are making them more efficient and responsive. The new Department with a voice in Cabinet means that the citizens charter will not just have teeth but be of great importance. It is also critical to the concept of public expenditure. If I do not say too much about it it is because, as a Parliamentary Private Secretary, I am not free to do so.
The important statement in the Gracious Speech was that the Government intend to
"reduce the share of national income taken by the public sector and balance the budget over the medium term, reducing taxes when it is prudent to do so".
That is the right objective, which is probably shared, privately or openly, by several Opposition Members. It is important not to prejudge the speed or the nature of moving to objectives such as reducing taxation.
There is nothing wrong with reducing taxation. It is clearly not right to reduce taxation imprudently when the buoyancy of consumer demand which leads to company profitability is insufficient to increase the total revenue from tax. Therefore, given the current state of the economy, it is difficult to predict when it will be possible to reduce taxation. However, there is no doubt that we can assist the increase in buoyancy of company and private fortunes by reducing taxation if that is done at the right time. We should never get ourselves stuck on the problem of why it is that at the right time a reduction in the level of taxation can increase the revenues that the Government receive from taxation, as was shown in the 1980s. If the Opposition could grasp that point, they would understand why it is possible to have low levels of taxation and large increases in expenditure on our great public services.
Since 1979, we have had a good record in real terms of spending money on the great public services. There is no embarrassment about that for a Conservative. As a Conservative, I believe in the role of the public services. That does not mean that I believe that everything should be done by the Government, but there is no doubt, that where people in our community require assistance, that is quite properly acted upon by the Government, who should constantly seek to make sure that no one is left outside the net, in financial or other terms. That would create the kind of underclass to which the hon. Member for Birkenhead referred. Because an underclass increases instability in society, that cannot be part of a Conservative objective.
One of the greatest objectives of all Conservatives is to create a stable society. If that is not done, tensions will be
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created that lead to insurrections and changes in society at too dramatic a pace, which would be worrying to anyone of a Conservative mind. Over many decades, Conservatives have quite properly attempted to ensure that the inevitable divisions that occur in society—only a theorist believes that there can be no divisions—are not of a magnitude that could ever cause our society to become unstable.
As Conservatives, we do not necessarily believe that the closing down of such instabilities should be entirely a function of the Government. The role of the individual —or, to use today's colloquial term, the active citizen—is most important, in a partnership with the Government. A Government who encourage the individual's desire to bind others in their community to them, participate in voluntary work and have some say in the institutions that they value, such as health and education, are playing their part in encouraging those allegiances in society that are essential if social stability is to be maintained.
It is not the Government's job to do that alone, thus creating a dependency culture. It is their job to do sufficient to encourage others to participate in that process. That is relevant to the whole public sector, which should not be seen as a total umbrella or framework for everything that ought to be done. The public sector exists to enable individuals to contribute to what we as Conservatives consider to be socially desirable ends. Achieving that balance is a constant concern for all Governments. At some times there is more emphasis on state intervention and at others more emphasis on the Government withdrawing from that course.
The Government can achieve none of those socially desirable objectives unless there is a stable economy. We have encountered a difficult recession over the past two or three years, but it is of academic, although perhaps political, interest whether the Government were entirely responsible for starting it. Matters would have been much worse had we listened to the recommendations at the time of the right hon. and learned Member for Monklands, East, who argued for deeper interest rate cuts during the boom prior to the recession. He would have engineered a recession that was more vicious than that which we have suffered.
Our current situation is relatively stable. It was made clear at the G7 meeting only the other week that in comparative terms we have a stable base from which to recover in the 1990s and from which to compete against other nations. Our percentage debt as a total of gross domestic product is perhaps the lowest of them all, and that is a good position from which to embark on recovery.
It is of concern to anyone to have a public sector borrowing requirement of 4.5 per cent. of GDP, but at this stage in the recession, that is less than it might be—and is certainly less than that of certain other countries, which look upon us with some envy.
Since joining the exchange rate mechanism, we have enjoyed consistent interest rate cuts, despite the tensions that could otherwise have arisen. I agree with my hon. Friend the Member for Beaconsfield (Mr. Smith) that, when trading patterns predict that it will be safe to do so, we should move into the narrow band of the ERM, because currency stability is an absolute prerequisite of growth and economic rectitude for our country.
Sterling has performed extremely well in recent months, which indicates not only domestic but international recognition of the fact that the return of a Conservative

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Government and the continuation of our policies to damp down inflation and resolutely to maintain a proper balance in overall public expenditure create confidence. There can be no greater vote of confidence than the narrowing of the difference between the Lombard rate in Germany and this country's base rate to only one quarter of a point. That would have been unimaginable in the past. If someone had written that that would occur in 1992, he or she would have been written off as a lunatic or Sir Alan Walters.
There are, however, certain matters that the Government must address. There is no doubt that the public sector borrowing requirement is at a level higher than that with which we would feel comfortable. That has been admitted by the Government, and there is no point in trying to hide it. If we attempt to do so, we shall not be able to tackle that problem in the way that is necessary.
It is not necessarily relevant to worry whether the PSBR will grow next year to more than £30 billion, as the Red Book predicts; it is much more important to find ways of reducing it over a period. The great thing about balancing a budget over a cycle is that one passes quickly on without defining the word "cycle" or the length of the cycle. Nevertheless, that is an important objective, and one of which we ought never to lose sight.
I hope that the Government do not slip into the view that it will be sufficient to meet the Maastricht convergence terms. Although I believe that we ought to move towards the convergence set out in the Maastricht treaty—the Gracious Speech rightly gives priority to that—the objective of bringing the PSBR below 3 per cent. of GDP is not itself a sufficient target. We must obviously go much below that.
Whether a surplus can be achieved depends on many other variables, such as the rate of growth—which itself is dependent on the performance of other world economies, because our nation spends much of its time and effort on trading. It is, however, crucial to attack public sector borrowing, and there are two ways of doing that. We know that in the current phase, there is far from any truth in Labour's accusation that we bought votes and therefore increased the borrowing requirement. In net terms, we injected only about £1.8 billion through the Budget's tax changes and the move towards the 20 per cent. band, which Labour was foolish to oppose during the general election campaign.
Our real problem has been that, in a recession, the Government quite properly use the automatic stabilisers. I do not believe that the great debate that The Guardian tried to foist on the electorate during the campaign was relevant. I refer to the golden rule about balancing Government income and expenditure over any period, however calculated, and whether or not the figures exclude items of capital expenditure. I refer also to a recent leading article in the Financial Times, which, judging by its editorial on election day, is not necessarily a Conservative newspaper. According to the Financial Times, it is entirely proper for the Government to be borrowing at this stage in the cycle, bearing in mind the depth of the recession. I think that that is absolutely correct; it offends none of my Conservative economic principles.
Of course the automatic stabilisers to which I referred will create a burst of expenditure on unemployment benefit. The point is, however, that that expenditure will be more than compensated for as the economy picks up. There will be a lagging effect on both sides, but, once tax revenues have picked up as a result of the buoyancy of the
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economy—a buoyancy that I believe is already present, and independent evidence underlines my belief—they will rapidly begin to provide us with some scope.
Although I do not wish to predict or even to request further tax cuts at this stage, I nevertheless expect to see a dramatic difference over the next two or three years in the revenues that the Government receive from current taxation levels. That will begin to give us a degree of freedom. Any economist who predicts growth rates is either a fool or working for the Treasury, but it is true to say that the rate of growth that is generally forecast for the country could be well above the trend established in the 1980s. I am heartened by the G7 forecasts of growth in other countries. We may well find that an automatic correction takes place in the PSBR in regard to revenues, and that would benefit the Government.
The other side of the PSBR is expenditure. The Government have a remarkably good record of expenditure on the great public services. While not going back on any of our current plans, we should clearly restrain the rate of increase in that expenditure. My right hon. Friend the Chief Secretary—he is not in the Chamber now, but I congratulate him on his appointment—faces a difficult public expenditure round, but that is an essential part of ensuring that the economy as a whole is put in a position from which a strong recovery is possible. Many other matters will depend on that.
It is often forgotten, for example, that some of our great public services are undermined by inflation. Unless inflation is controlled, we shall eat away at the very public services that we wish to support. By bringing the overall economy under control and lowering inflation, we shall help to improve those public services. That it is possible to do that only and simply by spending money is one of the great myths of politics. We must attempt to restrain the rate of public expenditure growth.
That leads me to a major point. Clearly, all our citizens want better services—better education, better local government and a better health service. In their wisdom, however—a wisdom that they demonstrated by returning a Conservative Government despite the background difficulties—the British electorate know that better services cannot be achieved by means of money alone. Sensibly, the Gracious Speech referred to a continuation of the privatisation programme. This crucial factor must be taken into account: if a service does not need to be performed by Government, it is better for it not to be performed by Government.
Before that observation is dismissed as dogma, let me explain it. The Government run many services extremely badly, placing limitations on expenditure and capital investment that are totally contrary to the cycle needed by the industries concerned. Many people criticised us strongly for denationalising the water industry for instance. They seemed to think that water and water purity were God-given. Perhaps they were originally, but I would not want to rely on God alone for the treatment of sewage!
The fact is that, once the water industry was removed from Government control, the Government could fulfil their role of protecting the consumer by toughening the regulatory controls, because they were not simultaneously providing the service. It is impossible to be both regulator and provider. Now, there is a massive programme of investment in the water industry.
The hon. Member for Dagenham—who is trying to do all the Labour party's thinking, apart from that done by

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the hon. Member for Birkenhead—said that Labour had its own solution: simply change the Treasury rules. But that is not possible, simply because if the Government are the guarantor in the last resort, even of a leasing programme, the public sector must stick to the Treasury's public expenditure budget. Total freedom from Government will be necessary. Then, access to the private markets will make it possible to improve services and raise the level of capital in the industries involved, without reducing the Government's responsibility to ensure that those services are delivered efficiently.
Another aspect of the public sector is the removal of waste. Contracting out is one method, and I hope that it will be adopted across the board in the public services. The Government, as the purchaser and the regulator of quality, need not be the provider at the same time; as I have said, the same applies to all the former nationalised industries and public services.
Those are the ways forward, and they represent a much clearer view of the Government's attitude to the way in which society should be run. We do believe in state activity; we do believe in embracing the concept of the welfare state. Any Conservative Government will require social provision. The critical difference between the parties lies in the fact that our interest is in the end user rather than in the provider. The provider could be the Government, or it could be any private contractor wishing to offer its services. There is now fresh thinking about the way in which the Government can run the railways, coal, water and social security—the "next steps" agencies are an example. Ultimately, the pressure on public expenditure may be lifted, allowing access to private capital and resources.
I believe that those are the great strands of thinking on which the Queen's Speech was based. They are the way forward, and I am confident that the economy, as its base becomes increasingly strong, will be able to deliver better public services without necessarily resorting solely to dramatically increased public expenditure. I commend the Government's programme, and I welcome the Queen's Speech. I think that we are on the right track for a very successful few years.
5.7 pm
Mrs. Bridget Prentice: I am grateful for this opportunity to explain why the measures set out in yesterday's Queen's Speech will not benefit people in east Lewisham. First, however, let me say one or two words about my predecessors.
Colin Moynihan had held Lewisham, East since 1983. For much of that time, he was a junior Minister. I sometimes wonder whether the fact that the press often dubbed him a very energetic person might have been the reason for his being moved from sport to energy. I acknowledge his work in the constituency, and I am sure that the House will join me in wishing him and his wife —he recently married—all the best for the future.
Let me also mention Roland Moyle. He too was a Minister but served in a Labour Government. I want to put on record my thanks for his tireless work in the campaign for my election. I was honoured to receive his support, as I was to receive that of the people of east Lewisham.
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Mine is one of the three constituencies in the London borough of Lewisham. All three are now represented by Labour Members, supported by an important and efficient Labour council. From Blackheath to Grove Park and the Downham estate, the area is overwhelmingly residential, with little manufacturing industry: the main employers are local government and the health service.
Therefore, most people have to commute to work using the dilapidated, rundown and often unreliable Network SouthEast or have to sit in the congestion and pollution of London traffic. Great hopes lay with the extension of the docklands light railway, but now even that is bathed in uncertainty.
The people of east Lewisham have a community spirit. They want better quality services, not just for themselves but for their neighbours and those less fortunate than themselves. That is why they voted Labour. There is a history of rebellion against Government injustice. That is shown by the first rejection of the poll poll tax by Wat Tyler and John Ball on Blackheath. We also have our modern heroes: the community spirit was particularly apparent to the nation in the welcome given to Terry Waite.
In the last election, the people of east Lewisham expressed their dissent with Government policies in a more conventional way than that of 1381. One of the many reasons for that dissent, apart from the transport policies, was the level of unemployment and the poor prospect of training, particularly for young people. It is that upon which I wish to concentrate.
Unemployment in east Lewisham rose last year by a staggering 87 per cent. Long-term unemployment rose particularly steeply. Tragically for our young people, in whom I have a special interest as a careers teacher, there were 247 people chasing every job vacancy. It was the unemployment black spot of London. Only last month, on the Government's own figures, there were only 34 vacancies in the jobcentre and 17 in the local careers office. What hopes does that give to young people ready to play their part in the local community? What hope do the Government give to the three out of four young people in east Lewisham who have participated in Government training schemes and find, three months after completing them, that they are no closer to having a job? There was nothing in yesterday's Queen's Speech that touched their lives.
Why will not the Government consider that quality training with a guaranteed job will build us a work force that can compete with anything that our competitors can do? Why do they not see that giving people the skills to work removes the alienation and brings positive results that benefit not just the individual but society and the economy as a whole?
I want to speak briefly about a project in east Lewisham that is in desperate need of help. The local Rathbone Society has been training and supporting 50 local people with special educational needs. It has had the total backing of the provider agencies such as the Spastics Society and has trained people to work in retailing and care so that organisations such as the local council and Tesco have returned to it again and again to take on more of its trainees. It was funded through the training and enterprising council, although the money was paid directly to the national society.
On Friday 10 April this year—I make no comment about the significance of that date—it was closed down.

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Now, the 30 people who currently need the particular support given by their dedicated trainers are left with no idea of whether their training will he completed or whether there will be jobs for them to go to. Yesterday the Prime Minister said that he wanted to create a country in which everyone may realise their aspirations to rise as far and as fast as they can
"if they have the will and the skills to do so"—[Official Report], 6 May 1992; Vol 207, c. 73]
Those young people have the will and their trainers have given them the skills. The real test of the Prime Minister's fine words will be whether the Government will give them the opportunity.
5.14 pm
Mr. David Porter: I would not wish to be the only Member not to congratulate you, Mr. Deputy Speaker, on your new post, and I do so most wholeheartedly.
I am glad to have heard the remarks of the hon. Member for Birkenhead (Mr. Field), who spoke so earnestly and from his heart. His remarks may have surprised some people, but not me. I have learnt to respect him for his work in chairing the Select Committee on Social Security during the last Parliament. I still favour the targeting of benefits, but I accept his point and I hope that we can open a broad debate on that issue in the House on another day. Like the hon. Member for Birkenhead, I also wish to refer to Maxwell.
On behalf of Conservative Members, I thank the hon. Member for Lewisham, East (Mrs. Prentice) for the tribute she paid to Colin Moynihan. Now that she is here, I wish her well on behalf of all her constituents. I still remember my maiden speech nearly five years ago. I felt that I had got off to a fairly good start, but about halfway through it suddenly hit me that I was talking in the House of Commons and then it was not so good. At least I did not have the misfortune of someone in the House of Lords who is reputed to have dreamt that he was speaking in the House of Lords and then woke up to find that he was.
Mention has been made of the historic nature of this fourth term of Conservative Government—1826 and all that. That is very interesting for historians, statisticians and psephologists, but for me the more interesting feature is the challenge and opportunity that the fourth term presents. It is a challenge and opportunity for those of us who came here in 1987 because we already feel that in this Parliament there is a new sense of listening and learning and a determination to get it right. I hope that that will be reflected in the Bill to enforce the Maastricht treaty.
There is also challenge and opportunity in my constituency of Waveney, which is the forgotten slice of north Suffolk. It is the most easterly point of the British Isles and 120 miles from London. On a bad day, on the road or on a train, it might as well be 10 times that. Only when British Rail is no longer in the queue at the public trough, together with schools, hospitals and pensions, will it receive the investment that it needs. Therefore, I am pleased about the prospects for railways held out in the Queen's Speech.
For tourists, who are vital to our local economy, the relative isolation is part of the area's charm. However, those who live in such a rapidly growing area and work offshore or in fishing, farming, food processing, construction or the professions, know that it is an area where, even in the late 1980s, we still had higher than the
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average unemployment in East Anglia. A programme built on steady growth, low inflation and, as the Prime Minister said yesterday, creating the wealth to spend on welfare is welcome, and I believe that such a programme will deliver its promises.
Whenever a recovery occurs, there is always a delay between improving demand and employers feeling able to take on more staff. In the eastern part of East Anglia that economic fact has to be added to the reality of a changing economic base in Lowestoft and in the large rural hinterland. It has been suggested by some pundits that the English countryside is already rather urban. That is because the social outlook and values of local residents are no longer so different from those of townspeople and because basic services such as water, power and telecommunications are generally universally available. That may be so in some senses, but in East Anglia we naturally and properly have a view that we are different from elsewhwere and, within East Anglia itself, differences happily abound.
In public spending, the provision of public services, all Government policies, the policies of the Rural Development Commission, the training and enterprise councils, the enterprise agencies and the local authorities there needs to be a rural dimension. I hope that we can deal with that issue in another debate. 1 felt it right to set down a marker since East Anglia is not only the bread basket of Britain but the engine for growth and the hub of the wheel of northern Europe.
We need to address the small business sector which, just as in the 1980s, is still the great hope for economic growth. Perhaps the Government would look at their definition of a small business. Businesses with one or two people are small as are businesses with 15 or 50 employees. However, they are all lumped together in Government statistics, and that is not always helpful.
In new businesses in East Anglia—according to VAT registration—there was a net gain of 18,000, or 34 per cent., between 1980 and 1990. Research at the Warwick business school suggests that about 40 per cent. of all new firms will have a short lifespan and that about 56 per cent. of firms will remain small but will exist for many years. That leaves just 4 per cent. of new firms that will be the key to long-term job creation.
The Government policy of the right balanced economic climate and regulations has to suit 100 per cent. of new firms—not to mention all the firms that already exist. That will be the challenge for this Parliament. It is especially vital for Waveney and other parts of Suffolk and Norfolk that the Government get the climate for growth right and make sure that the balance of regulations is fair.
The broad title for today's debate is "Public expenditure". As has already been hinted, on both sides of the House our first instinctive tendency is to measure the success of a project, idea or programme by how much is spent on it, as my right hon. Friend the Chief Secretary said at the beginning of the debate. Money is the criterion. "How much?" demand Opposition Members as soon as a statement on a new scheme is made. "Too much," may be the response of at least some of my hon. Friends. The amount of public expenditure seems to be the macho benchmark these days.
We all know that that money has to be earned before it can be spent, and the package in the Queen's Speech about firm financial policies, balancing the budget, reducing taxes when prudent, supplying market mechanisms and

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incentives, and improving the working of the economy is not only welcome—it is plain common sense. Without that package, the promises about the aid programme to developing countries, and about improvements to public services, the health service, community care, pensions, schools and our environment, would all count for nothing.
One sentence in the Queen's Speech reads:
"My Government will continue to improve and modernise the social security system with sustained emphasis on those groups with the greatest need."
As economic recovery gathers pace, and as steady growth means that there is more room for flexibility in public expenditure, let us do more than keep faith with pensioners, which has long been our manifesto pledge. Yes, let us focus on targeting help on the elderly with low incomes, and let us direct efforts to the very elderly and the elderly sick and disabled. Yes, let us not lose sight of the needs of those in nursing and residential care or facing that prospect. But let us not neglect that group of people, now retired, who belong to the age group who gave the best years of their lives, their young adulthood, to the war effort, and who, through no fault of their own, could not take advantage of an occupational pension scheme. Because of their own efforts, many of those people are just above the benefit line, and, having worked hard and served selflessly, they now feel betrayed. I urge the Government to keep targeting, and to keep honing the arrows of spending that they aim, so that that group can be helped specifically, as appropriate.
The Maxwell saga has already been mentioned. I urge the Government to make an early statement in response to the report of the Select Committee on Social Security on the plight of all the pensioners robbed by Maxwell. That means the existing and future pensioners of all Maxwell companies, including British International Helicopters, which is now in administration in my constituency. Why cannot the good offices of Government be used urgently to co-ordinate the information and the rescue efforts so that no Maxwell victim suffers further anguish? Many Maxwell pensioners are now in such an urgent plight that it presents a danger to the whole pension-owning democracy, and cries out for urgent action. Will the new Select Committee have to draft a new pensions Bill, or will the Government do it—and do it quickly?
There are other omissions from the Queen's Speech. I know that the speech cannot contain everything, and that the catch-all phrase
"Other measures will be laid before you."
may cover those omissions, but what about training? The education Bill and the employment Bill will not deal with training. Is it not time at least for a White Paper on training needs, leading to a form of statutory deal for the physically handicapped, the blind, the deaf and others, such as the mentally handicapped and—as a separate group—the mentally ill? Those people represent a huge and talented seam of national assets, which is not always allowed to realise its full and rewarding potential.
What about Sunday trading? We expect the European Court, by the end of this year, to settle how British law should be shaped or scrapped as we seem no longer able to determine that for ourselves. Surely we can this Session reform the Shops Act 1950 in line with the proposals of REST—Recreation, Entertainment, Social and Family Travel.
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Why is there no pledge to update the sea defence laws? Another winter will come and go and the present ad hoc arrangements, with no coherent coastal protection or river flooding strategy, will stay in place. We who live in coastal areas will have to cross our fingers yet again. Will the Government respond urgently to the report of the Select Committee on the Environment on coastal zone planning?
Most people are disappointed at the delays in setting up the environment agency. I hope that that still remains a firm commitment. I trust that the appropriate Bill will be in the next Queen's Speech. I suppose that it makes sense to wait long enough to take account of the decisions made at next month's earth summit, so perhaps that is the reason for the delay.
If the pundits are right in saying that home ownership is reaching a ceiling, should we not be doing more than the Queen's Speech suggests to broaden the renting of homes?
I hope that I have offered my criticisms in a constructive manner. I am happy to welcome the thrust of the Queen's Speech and to play my part in implementing it, and in helping us to meet the challenges and opportunities as a group and as a Parliament. I welcome the chance that it gives me to continue to put and keep Waveney on the map, before either the Boundary Commission or the North sea sweeps it away.
5.25 pm
Ms. Hilary Armstrong: Thank you for calling me, Mr. Deputy Speaker. It is a great pleasure to see you in the Chair. I am not sure what it says about the office of Speaker and the role of the Deputy Speakers that both our Speaker and one of our Deputy Speakers now come from Yorkshire. Perhaps it means that this seat of government is beginning to recognise that north of Watford there is not only life, but sense, too—and common sense. The future talent of this Chamber should be drawn much more from the North.
The debate on the Queen's Speech is one occasion on which we are allowed to be more parochial than usual. My commitment to the North and my parochialism will emerge later in my speech.
I was interested to hear the speech of the hon. Member for Waveney (Mr. Porter). He was the first Conservative in the debate on the Queen's Speech that I have heard acknowledge that there are issues which the Government have to think about, which emerged clearly during the election campaign, and that there are problems that the Government have not tackled, which were not broached in the Queen's Speech.
Many of us were disappointed by the Queen's Speech because it was so lacklustre, and did not take the situation of the country as it is and try to work with it. I do not quite share the forward thinking that my hon. Friend the Member for Birkenhead (Mr. Field) betrayed today, but it is important that hon. Members on both sides of the House begin to recognise more fully and honestly the position of many people in this country, and our responsibility to tackle it. Neither side should be complacent about where we are now. The Government must be cautious about triumphalism based on the results of the election. There are many lessons for all of us to think about.
The nation is very far from being at ease with itself. Some of us come from even further north than Yorkshire. In fact, some of us look upon Yorkshire people as really

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midlanders. In the north, the Labour party has its highest vote for many years. Yet again, the Labour vote in the northern region, as in every English region, increased. Our vote in the north is now more than 50 per cent.
Any Government who are honest in saying that they want a nation at ease with itself must not neglect the aspirations and wishes of people who voted in that way. It is important to consider the make-up of the north. My area and the constituencies around it are now represented exclusively by Labour Members. The changes in that area have been overwhelming. There has been a shift. The traditional industries, such as mining, steel and shipbuilding, have gone. There are virtually no jobs in those areas now. Yet the people are voting Labour in greater numbers than at any time under this Government.
The people did not say that they wanted to get rid of public expenditure altogether. The Government need to take account of the lessons about the use of public expenditure learned in recent years in the northern region. The Prime Minister paid his first visit to the north during the election campaign, but unfortunately he missed the essence of what we have been trying to do in the north.
We accept the world as it is, and we have tried to use public expenditure to fuel and encourage private sector expenditure so that we work together to ensure a future and opportunity for people living in the region. That is why Nissan is in the region. Local authorities and trade unions work hard with central Government and with the private sector to give that opportunity.
That is why we have the Northern Development Company. It is not a central Government initiative; it is an initiative born of the aspirations of trade unionists, of local authorities and of the private sector. They wanted a development agency that recognised the changing nature of the north and the fact that there needed to be that partnership and a determination to overcome. Once those organisations in the north had got themselves together and worked out where they were going, we asked the Government for support. Last year, the agency was given the European prize as the best development agency.
We have tried to use diminishing public expenditure to draw in the private sector and thus to get the best from both. It is still true that the private sector is very wary of investing in the north, because it knows that it still takes enormous risks and because the recession has meant that, in recent years, more economic development has begun to be difficult.
Unemployment has again started to rise drastically. When unemployment rises in the north, it does not do so from a zero per cent. or 2 per cent. base; it rises from a high base. In areas such as Consett, we are approaching 20 per cent. male unemployment. Despite all the amazing things that have been done in that town, there is again significant male unemployment. We know that we need a partnership approach to be able to unlock that problem.
In this debate on public expenditure, I plead with the Government to change their ideological view which, unfortunately, we could detect in the Queen's Speech yesterday and in the Chief Secretary's speech today "Public expenditure bad, private enterprise good." Our experience in the north is that we need a partnership, that we need not to be ideological about either side, but to use expenditure from the public and private sectors as effectively as possible.
I turn to child care, in which the Government, because they have turned their backs on public expenditure, have
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missed opportunities, which means that private enterprise is not growing as it should. In recent years, I have talked to employer after employer. They say, "Yes, we recognise that child care is important and that we should open up opportunities for our employees—especially women, but also some of our male employees." Employers want to introduce child care, but they say, "We are not child care experts and we do not want to find that we have to do it ourselves, because we know that it needs a skilled and careful application."
Employers were pleased by the Labour party's proposal for partnership development. We said that we would use public sector funds to draw in employers' funds and to raise money from employees who could afford to contribute. By using public funds most effectively, the Government would then be able to ensure that women were able to maintain their career paths and so continue to pay taxes. An independent report which came out just before the election demonstrated that, if that approach was taken, child care would be paid for within 10 years by the increased contribution in individual taxes of people who were involved.
As a result of the dogmatic approach that things must be achieved by the free market, we have lost the opportunity to open up the individual choices that some families wish to make about their pattern of family life which would enable their children to have access to quality child care. The Government's dogmatic approach has moved them away from opening up those opportunities.
There is another area in which the Government, because of dogma, are reducing choice rather than opening it up. I often wonder whether the Government have the same understanding of the word "choice" as I do. The Queen's Speech contained a commitment to a Bill
"to extend choice and diversity in education."
I think that the Government mean that more children will have access to the private sector of education and that there will be more opting out of the state sector. That will not bring choice to the majority; it will reduce choice for the majority. It will give choice to the providers.
Other hon. Members have said that the Government are not interested in providers. In education, it is precisely what they are interested in. They want to emasculate local democratic decisions about the future schooling of children. By doing that, they will introduce not diversity, but division. That division will condemn groups of our young children and our adults to less opportunity and less choice in getting a quality education service. More than anything else, it will deny choice to communities and to the nation. It will reduce the overall quality of education.
If we are to lift groups out of poverty and to enable the poorest in our society to progress, they must be involved in education in a way that none of us has recognised in the past. Those people have to see education as a central part of their families, of their communities and of their individual lives. Only when the Government are prepared to draw away the veils of dogma will they begin to take hold of what real equality of opportunity for our youngest children and for our young adults will mean.
The people in my constituency who at present have to go to the neighbourhood school cannot afford to go to another school. Unless we ensure that the neighbourhood school, the village school and the small town school have no choice but to offer the very best opportunities in education, we shall offer those people not only no choice, but no future.

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I urge the Government to recognise some of the lessons from the election that we are having to recognise. The Government must think their way through what we are getting in terms of a divided society and of a group of people who feel that they have no hope and no future in this society. The Government must recognise that, and they must work to ensure that they think about those people's futures. They must work with us to unlock opportunity for those who at the moment have no hope, very little aspiration and very little belief that the Government care about them at all.
5.39 pm
Mrs. Barbara Roche: Thank you very much, Mr. Deputy Speaker, for calling me. May I congratulate you on your appointment?
I am extremely honoured to represent the constituency of Hornsey and Wood Green. It is one of the largest constituencies in population terms in London, and it is a collection of north London villages. It is an extremely beautiful constituency, with a great deal of open space, but it also has many inner-city areas and many residential areas.
I pay tribute to my predecessor, Sir Hugh Rossi, who held the seat of Hornsey and Wood Green for more than 26 years. He was widely recognised as an excellent constituency Member. It is the convention that, in one's maiden speech, one pays tribute to one's predecessor of whatever political complexion. In my case, it is no formal tribute. I have great admiration for the work of Hugh Rossi. He was an excellent Member of Parliament, and I look forward to following in his footsteps. He was well known in the House for his work as Chairman of the Environment Select Committee, and environmental matters are extremely important in the constituency.
Joyce Butler was the Member of Parliament for the Wood Green part of Hornsey and Wood Green, again for a long period—more than 24 years. Sadly, she died at the end of last year. She had a reputation second to none for making green issues a priority long before they became fashionable not only in the House but elsewhere.
My constituents feel passsionately about the preservation of their open space. There was a campaign to save Parkland walk from proposals to put a motorway through it. Local groups are working vigorously along the Archway road, to make sure that local homes are restored after more than 20 years of environmental blight. In my constituency we are also tackling the pilot scheme for red routes—a scheme which has led to business failure in a constituency in which nearly 8,000 people are out of work. The scheme has added to local unemployment and to the deterioration of the area.
I share the feeling of many people in my constituency who want Alexandra park to be preserved as an open resource not only for us in north London but for everybody in London who wishes to use and admire that lovely park. I also shared the sadness of many people in my constituency that the right hon. Member for Henley (Mr. Heseltine) as Secretary of State for the Environment did not list Alexandra palace, which is not only a symbol of Hornsey and Wood Green but the place where broadcasting began in this country.
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Hornsey and Wood Green is an area of many active community groups. Another of my predecessors was Lady Gammans. It was said of Lady Gammans that she could not hear the tinkle of teacups in Hornsey without being present. I hope to follow her example.
When I talk about Hornsey and Wood Green, it would be wrong not to mention the richness of the constituency and its benefit from the variety of community groups. We are very privileged to have a very big Cypriot community. That community, although it is integrated into the country, and of course its hopes and aspirations for its children are centred on many of the issues that are discussed in the House, is also concerned with what is happening in the beautiful country of Cyprus—a country that is still cruelly divided, and a country which looks at barriers coming down in the rest of the world and in Europe, but which sadly still remains divided. I hope during my career in the House to add to efforts to bring about a just solution to the problems of that beautiful place and to the uniting of that country.
I was extremely interested to read in the House Magazine that, as a new Member, I am one of about 9 per cent. who are members of the Bar. I shall not dwell at length on the many virtues of members of the Bar, because some hon. Members would wish me to do so. Suffice it to say that when I have been welcomed to the House by my colleagues, I have noticed a tendency to count their fingers after the warm handshaking.
I noted that the Queen's Speech emphasises crime and law and order. That is a subject in which I am naturally extremely interested. My constituency in the past has seen a 16 per cent. increase in crime over the past year. Many of those crimes are street robberies and burglaries which go to the heart of living in our great city—crimes which make it difficult for people to go out at night, attacks on women and vulnerable people, and attacks on our black and ethnic minority communities.
Our local council and the police have had a good relationship in combating crime. There have been joint sessions between local councils, the police and myself on the issue. However, the issue goes beyond the police and the local authority. It needs proper support from central Government and resources. Yes, we need more police officers on the beat. Yes, we need better community policing. If we are to have the new initiatives that the Metropolitan police plan to introduce, we need state funding, support and extra resources.
We also need a legal system that is prepared to bring about that change. We need to make sure that the royal commission brings forward proposals to restore the emphasis on measures to make sure that our judiciary and legal profession truly represent the people of this country and that they reflect our modern society. 1 hope that the Lord Chief Justice can follow the excellent example of Madam Speaker and dispense with the wearing of wigs. I know to my cost that wigs are extremely uncomfortable and hot, particularly in the summer months.
I hope to be able to make a contribution to matters which are of interest to my constituents and to the wider community. It is only by getting the legal system right that we can truly make sure that we have the democratic society that the country needs and that I hope to be able to help to achieve on behalf of my constituents in Hornsey and Wood Green.
5.48 pm
Mr. Malcolm Chisholm: Thank you, Mr. Deputy Speaker, for calling me at such an early stage.
There are many things that I could say about Ron Brown, my predecessor, but I shall confine my self to saying that he knew the importance of class politics, when deceiving or joking voices prattle on about a classless society. He was, of course, officially the hon. Member for Edinburgh, Leith, a conjunction of places that might cause some horror among the present residents of Leith, and certainly would have done in years gone by.
Seventy-two years ago, Leith was a completely different town from Edinburgh. At that time, a Bill was introduced to make the two boroughs into one. The opposition to that Bill was led by the father of the right hon. Member for Chesterfield (Mr. Benn), the then Liberal Member of Parliament for Leith, Captain William Benn. He made many wise remarks in a remarkable speech in the House on 8 June 1920—none of them so wise, however, as his decision five years later to resign his seat and join the Labour party, something which I would recommend to right hon. and hon. Members in the present Liberal party if they were here.
Two remarks in that speech connect particularly with current problems. Captain Benn pointed out in 1920 that the whole breath and life of Leith was industrial. He also said that it should not be assumed that, because two places were contiguous, the interests of the smaller community would be best served by joining both under one administration. The latter remark about Leith then reminds me of Scotland now. It is crying out for more control over its own affairs. Of course, the Conservative party used to fulminate against centralising socialism but now presides over the most centralised state in Europe. We on this side of the House are the decentralisers. We are the democrats. It is because we are decentralisers and democrats that we demand a multi-option referendum now on the constitutional future of Scotland.
To say that the whole breath and life of Leith is industrial was true in 1920, true in 1979, but hardly true today. In the past 13 years, manufacturing employment in Scotland has fallen by 37 per cent. and by an even higher percentage within Leith. The result of that in my constituency today is the appalling percentage of unemployed people: 20 per cent. of the economically active population in Leith. That is the highest percentage in Scotland and it is the official figure, without the many fiddles of the past 13 years.
Just as there was nothing in the Queen's Speech about bringing democracy to Scotland, so there was nothing about bringing jobs to Leith. That stark, horrifying reality of unemployment is the background to everything that I support or oppose in the House. In particular, I will support only economic policies which make massive inroads into those unemployment figures and the human misery that lies behind them.
Today's debate is about public expenditure, and I want to talk about three areas of public expenditure which I know are important to thousands of people in Leith—housing, health and child care. In the four weeks that I have been a Member of Parliament, I have been inundated at surgeries and on the telephone with requests about housing. People are desperate for homes, yet public expenditure by the Scottish Office on housing has been cut more than any other area of expenditure since 1979. I am
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angry, but hardly surprised, that there was nothing in the Queen's Speech about building more homes. That would make it just too relevant to the problems of ordinary people.
On health, the people of Leith have been deprived of various services in the past few years at their two main local hospitals—Leith hospital and the Western General hospital. Now they face the certainty of opt-outs. With the 1993 Scottish opt-outs stitched up before the election and many more pencilled in for 1994, that means a health service based on need, but unfortunately, it is the need to generate income rather than the needs of patients.
The people of Leith care passionately about the health service. I can assure the Government that they will fight for the return of services such as the accident and emergency department at the Western General and for the retention of their hospitals under full NHS control.
Public expenditure on housing and health are areas of public expenditure which have traditionally suffered during the past 13 years. Child care is a relatively new area, but hundreds of people in Leith—mainly women—are telling me that it must now be given proper recognition. It has been my privilege in the past year to be a member of the Greater Pilton child care action group, which is drawing up plans for a child care centre within Leith constituency, as well as raising the issue in a more general way.
Child care is at the heart of the political agenda in Leith. First, it is necessary for the relief of poverty. Unemployment is the biggest single cause of poverty. Hundreds of people—mainly women—cannot work because there is no free or affordable child care. Secondly, without child care, equal opportunities are meaningless. Child care is essential for sexual equality. Class politics, or any other kind of politics, is no good unless it practises and promotes sexual equality.
Thirdly, child care is necessary for the revival of the economy in a high-wage, high-tech direction—the only direction worth going in. It would pay for itself in a short time. That fundamental point has been the subject of at least two recent books and requires a speech to itself on another occasion.
I was told last week that there would be something about child care in the Queen's Speech. Once again, I was disappointed, but not surprised. The prospects for child care under the Conservative Government cannot be good, because the Government have shown so little concern in the past 13 years for the relief of poverty, the pursuit of sexual equality or the modernisation of the economy. However, I remind the Government of the recent European Commission recommendation on child care which talked of publicly funded child care for people in employment or training. I shall remind the Government of it again in the weeks ahead.
Leith wants jobs and homes. It wants child care and health care based on need. It wants democracy to help it to achieve that. It has never wanted Tory Members of Parliament or Tory priorities. Leith's motto is "Persevere". I should like to end with thanks to the people of Leith for sending me here, and a pledge to persevere until their priorities have won the day.
5.57 pm
Mr. David Ashby: I am privileged to follow two very interesting maiden speeches.
I listened with great interest to the speech of the hon. Member for Hornsey and Wood Green (Mrs. Roche). She made a most eloquent reference to her predecessor, Sir Hugh Rossi, whom we all remember as a most distinguished Member of this House who had a great love of, and a great interest in, the environment and who cared greatly for the environment, as we know from his chairmanship of the Select Committee. I came into greatest contact with him in his role as chairman of the British-Italian all-party committee. I hope that the hon. Lady will join that committee and will continue that interest in the British-Italian group. It is one of the most thriving groups. It has always taken a great interest in that country and done its utmost to renew friendships and keep friendships going.
I was interested to hear that the hon. Member for Hornsey and Wood Green shares my professional background. It seems that Hornsey and Wood Green likes lawyers. Sir Hugh was a lawyer. If she continues as she began today, she will make a great mark on the House. She made a most eloquent speech, and I congratulate her most heartily on it.
The hon. Member for Edinburgh, Leith (Mr. Chisholm) made a rather more controversial speech—
Mr. Frank Field: He has just taken his speech out of the Chamber.
Mr. Ashby: In that case, I shall leave my remarks on his speech until he returns.
I wish to raise five matters. Two of them deal directly with the economy and businesses, and with Bills to be presented to the House. The Leasehold Reform Bill will not affect businesses, but it should. It will deal only with private property, the long leases of which are coming to an end and where people have an interest in that property. However, a much bigger and, in terms of the economy, more important problem should be dealt with—business property.
In the past 30 or 40 years most local authorities—county councils and district councils—have done a great deal to bring businesses into their areas by creating business parks and pump-priming their areas. They have had the necessary roads laid, helped with the planning and assembly, and sold off plots of land, invariably on long leases which may vary in length from 30 or 40 years to 90 years in exceptional cases. Most such leases last for 30 to 50 years. In north-west Leicestershire we have several such business parks.
As a result, the biggest owners of business premises in this country are local authorities. They own vast acreages and billions of pounds worth of property, and their ownership is continuously increasing. Local authorities will soon have an excessive grip on business. Indeed, we may have already reached that stage. We are grateful for what local authorities have done, and I have no quarrel with them; it has been magnificent for the economy, especially for local economies and businesses. But if one considers the overall economic state of the country, that ownership makes no sense. It is simply not good for the country that so much of its wealth is nationalised—and whether it is in local or Government hands, it is a form of nationalisation. Factories, shops and business premises
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throughout the country are effectively nationalised. Their control is nationalised not in a long-term but rather in a short-term sense.
Businesses that started 30 years ago have built themselves up and flourished. They have invested in factories and other buildings to benefit the economy and are now reaching the end of their leasehold interests. Their buildings are a wasted asset. What happens when the leases run out? Will the benevolent local authority say that, as the business is benefiting the local area, it will increase the length of the lease so that the business can continue? I wish that that were so, but invariably it is not.
When it comes to renewing leases, local authorities will drive the hardest bargain of all. They are Shylocks and very strong in the business sense. They have control because they hold the majority of the business land in the area. They have a stranglehold on business and will double or treble ground rents. That is not good news for businesses, especially when they are suffering from the effects of the recession.
If that were the only story, my complaint would not be so important, but the problem is even greater because local authorities are now demanding a piece of the action—a percentage of the profits as part of the extension of the lease. That is extremely bad news and simply not the way for local authorities to behave.
Local authorities should not own property. They can own their council offices and remain in one or two traditional areas, but they should not be in the property business, owning vast business parks. They should develop business parks, help the infrastructure and see that the properties are rented out at the beginning. Thereafter, they should sell the business parks, either offering them first to businesses within the business park or selling them to a pension fund. The money could then be recycled and invested in other land, and the local authorities could go back to pump-priming further expansion within the area.
I have not heard this serious problem raised in the House before. The problem will grow if it is not tackled firmly. The position of businesses in leasehold property differs little from that of people who own long, declining leases on their homes. When we tackle the leasehold ownership of housing, we should also consider the leasehold ownership of factories, factory sites and land.
The reform of local government will no doubt form part of other Bills to be laid before Parliament. Consultation is now taking place, but I believe firmly that this will be our last opportunity to reform local government, and we must get it right this time. I shall no doubt have an opportunity to make a speech when the relevant Bill is introduced, but we must now reflect on the form that it will take.
Our problem with local government has always been that the structures are too rigid. We have county councils, district councils and parish councils. We put the present form of local government into operation in 1974, but we found that it did not work and had to get rid of the metropolitan structures such as the Greater London council. As a former member of the GLC, I could see then that it did not work and I was wholly in favour of its abolition. If we are not careful, we shall put a similar rigid structure in its place which will not work either. The beauty of local government as it evolved, and before we started to interfere too much with it, was that it found its

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own way forward without too much central interference. If we are to have successful reform, we shall have to return to that.
The right structure for local government is to be found in the district authorities, which should be allowed to find their own structure for various services. They should be free to make contracts with other districts—for example, to form an education committee. The same district council should have the opportunity to work with a quite different one, which might specialise in welfare services. That would give them flexibility and freedom. If, at the end of five years, a district council is dissatisfied with working with another authority on welfare service issues, it should be able to break the contract and form a new one with another authority. Such flexibility is essential if we are to reform local government, and achieving that flexibility requires keeping to the smallest units.
Also absent from the Queen's Speech was a reference to the reform of shopping hours. I know that we are awaiting a decision on that from Europe, but reform is urgently needed. The law has been flouted, which is not good.
Action from the centre is urgently needed to allow us the freedom to shop on a Sunday; we must not give in to those with narrow minds. At the same time, an element of choice must be given to shop workers so that they have the right to say, "No, I will not work on a Sunday." Shop workers should have the full protection of the law, and polls have reflected that opinion.
I think that the most recent polls, have shown that about 68 per cent. of those questioned were in favour of fewer restrictions on Sunday trading, and 93 per cent. believe that shop workers should enjoy the legal right to say no to Sunday working without suffering as a consequence. That is the form of change that is needed for Sunday trading. It is urgently required in this Session.
We cannot wait long for that legislation, as the law is looking like an ass. There is enormous pressure on local authorities, which have to prosecute when there has been a contravention of the law, but the contraventions are so numerous that the authorities' departments and the courts are unable to cope. Larger businesses are flouting the law quite openly, which is not good for this country. We must put the law right, and we must do so in this Parliament. Some recent cases have brought into disrepute the way in which our laws are policed and presented in court. There is much concern about that, and a loss of confidence in our legal system. We must address the issue in this Parliament forcefully, strongly and urgently.
The cases in which the Court of Appeal has allowed an appeal fall into two categories. The first includes those cases in which mistakes—I use that word advisedly—have been made at the policing stage, and there have also been failures and corruption in policing. Secondly, mistakes have been made on appeal and even in the courts. We must consider all those issues.
The Government have faced up to many of the problems relating to police evidence and the way in which it is presented in court. They have taken a number of important steps to ensure that any apparent gaps are closed. That has been done by the Police and Criminal Evidence Act 1984 and by the amendments to that Act in subsequent criminal justice legislation. All such measures have been welcomed by those who practise law—by those who work at the Bar, solicitors and the judiciary generally.
However, despite those provisions, there are examples of the police, believing that someone is guilty, tailoring the
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evidence to fit that belief or taking insufficient care when investigating the case to make certain that there is not perhaps another side to the story and those involved are not guilty after all. In such incidents, the police do not investigate the case fully to discover where the truth lies. That is a matter of grave concern and has been, and will continue to be, a cause of miscarriages of justice. But action can be taken to improve the position.
No single action could do more to stop such problems than a fundamental reform of the police force. The police are crying out for a national police force. The idea of a police force based on counties is antiquated and absurd. It denies the opportunity for forensic specialties, and denies the various police officers the ability to move between the forces and gain promotion. In addition, it means that the police are stuck within a small locality and police force for a long time, which is not good.
The fact that such practices are not healthy was shown by what happened in the various crime squads set up in the 1970s. We witnessed the effect that different crime squads had on each other when they were working together for a number of years. Malpractices and inefficiencies were not challenged.
The police force should be utterly reformed and a national police force created. All the detailed examinations of every aspect of policing that have been carried out by the Select Committee on Home Affairs and other committees have always concluded that there should be a national police force. We must get away from our prejudices and our fears about a police state. We must consider the many advantages of a national police force, and the fact that it would resolve many of the problems that we are now encountering.
Mr. Peter Viggers: Will my hon. Friend give way?
Mr. Ashby: I shall develop my next point and then give way.
It is not good enough simply to have a national police force; we need something else. The police force is a vast body of men and women; the problem is how to manage such a body without management expertise. Companies of all sizes have managers and directors—directors of finance, managing directors, personnel directors: in short, a managerial class. Without them, industry would fail. Everyone ascribes the success of industry first to its work force and secondly to its management. Other bodies of men also include a management class—the Army, the Navy and the Air Force all have such a class—yet the police force has no management class. It is managed, in army terms, by sergeant majors, half of whom have not even been on a command course.
I have inquired into what other police forces do. The best of them all have a management class or an officer class. I remember going to a school in Holland, in Apeldoorn, which trained officers in the Dutch police. I spoke to a young man of about 29 who had been an ordinary policeman and wanted to become an officer. He told me that he was not going to be a good officer because he was already 29 and too set in his ways. He thought that he might make a reasonable officer, but not a good one. To be a good one, he said, he should have gone straight into training at 18, 19 or 20. I could well understand what the young man meant.

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The same applies in most other activities. Why should the police force be exempt from an officer system? We need a management class to manage the time of the police, to make sure that they keep to the rules and to inquire continually into cases in which the rules have been broken. The police force needs managers to manage it; if it had them it would do much to overcome the problems that have arisen at the police stage in cases that come before the Court of Appeal.
Mr. Viggers: I can see the sense and the force of my hon. Friend's argument for the abolition of the county police forces, and others hold the same view. However, I for one feel that the county police authorities make a significant input to police decision making, and I would be interested to know whether my hon. Friend has formed a view on how, if the county police authorities were abolished, this valuable input would be made.
Mr. Ashby: There is absolutely no reason why such an input should not continue to be made. A national police force would not mean the end of organisation at county or regional level. Indeed, it would be impossible to have a national police force without some sort of managerial breakdown at regional level—but that does not preclude a national police force, or regional police forces having slightly different uniforms, such as they have now.
I offer from my county of Leicestershire an example of the importance of having a national police force. The chief constable applied for and was offered the post of commissioner or chief constable of the transport police. He was delighted, until his police committee told him that he could not take the job because it would mean having to pay more into his pension. So the transport police did not get the man they wanted and the chief constable of Leicestershire had to remain in his position. No doubt he was delighted to do so, and he does a tremendous job, but it must have left some bitterness to discover that he could not advance as he should have done just because of a small-minded approach on the part of the police committee and its unwillingness to pay more into his pension.
That leads us to the wider question whether there should be a transport police at all. There are far too many police forces in this country, and we should do away with the transport police, the port police, the atomic energy police and all our other numerous police forces. We should have one police force. This large number of forces has no point any more—they date from an earlier age when we did not have modern communications and modern expertise.
To summarise, there is an urgent need for leasehold reform which will include business premises. It is essential to reform shopping hours, and to reform local government, basing it on small units. We need a fundamental reform of the police to bolster law and order.
I make a final plea for one more change in the processes of law and order. Some appeals have been based on identification, and if one thing cries out for reform it is this area. We must implement Lord Devlin's report of 20 years ago. It said that no one should be convicted on identification alone because it is a most unsafe and unfair method. There should be corroboration in some particular of the identification. I notice the hon. Member for Hornsey
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and Wood Green nodding. She is a barrister, and she knows what I am talking about. There is no lawyer who does not feel the utmost unease about convictions resulting from identification alone. One of the most urgently needed reforms of our legal system is to introduce corroboration in some particular to every identification case. To that end we must enact Lord Devlin's recommendation.
The Court of Appeal ducked out of that reform. It had the opportunity to change the law in the case of Turnbull, but it ducked it. It ducked out of insisting on corroboration. The court appears to have ducked the issue in several of the appeals that have come before it, appeals which have been allowed on referral back to the court only after a long interval.
Written confessions are another case in point. I have always been uneasy about them. I well remember the furore in this House when eight service men in the RAF were acquitted at the Central Criminal court of charges of passing information to the then enemy, the Russians. I think that I was the only person who said that that was a great day for British justice. In no other country, and certainly not in Russia, would eight people who had signed confessions be acquitted. It was shown that those confessions contained matters that were totally and utterly wrong and untrue, and the accused always maintained that the confessions were not properly obtained. The jury's verdict showed that they were not properly obtained, and I am loyal to the verdicts of juries.
However, in many confession cases juries have convicted, and in recent cases confessions were found to be invalid and incorrect. Too often the confession is used as a short cut to resolving a case. As in the law relating to identification, the law on confessions should be changed to require the confession to be corroborated by some material particular elsewhere. Urgent reform is required.
I am grateful for being allowed the time of the House, and I hope that those urgent reforms are brought in quickly.
6.31 pm
Mr. Hugh Bayley: I am grateful for being called so early in the new Session and I congratulate you, Madam Deputy Speaker, on your appointment. I am also grateful to the electors of York for returning me as their Member of Parliament. I pay tribute to my predecessor, with whom I had many sharp disagreements on many issues. However, in one area of policy he made his mark in the House, as I am sure hon. Members will agree. It was child safety and safety in the home. I also pay tribute to his predecessor, Alex Lyon, who is still remembered in York as an exceptional constituency Member of Parliament. That was sharply brought home to me when my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) visited York a few months ago. People came to her in the street to ask about Alex.
I know that my maiden speech should not be controversial, but I am provoked into responding to a couple of matters raised by the hon. Member for Leicestershire, North-West (Mr. Ashby) who spoke about the problems, as he saw them, of local authorities owning property. In York an extremely old city council has owned property for hundreds of years. There are advantages in that. Shambles, one of our city centre streets, which is the finest and, I think, probably the only complete medieval street in Britain, is there because it has been in public

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ownership for hundreds of years. It was taken into public ownership under environmental health legislation. Traditionally, it was the butchers' street in York and taking it into public ownership was a way of providing regulation.
York city council's heritage of owning property in the city centre puts it in the enviable position of being able to levy what I think is the second lowest poll tax in Yorkshire and one of the lowest in the country. It was able to do that because it had the benefit of investment which it built up for the public good over the centuries.
I am also provoked to respond to the suggestion of a need for a national police force. In North Yorkshire, my county, crime has risen from 20,000 reported offences a year when Labour left office in 1979 to 50,000 such offences. The North Yorkshire police force has exceptionally good information technology and perfectly adequate means of communicating with other police forces. We need not a national police force but more police officers and more resources for local authorities to put into crime prevention.
Partly because I have digressed to respond to the comments by the hon. Member for Leicestershire, North-West, I shall spare the House the traditional guided constituency tour that occurs in so many maiden speeches. That is because I suspect that many hon. Members have already visited York. I invite those who have not done so to visit it in the near future. I shall use my time in the House as an advocate for my constituency and my constituents. I hope to be involved in debate on the future of the confectionery industry and on the need for the current GATT talks to retain export restitutions so that food manufacturers in the United Kingdom can compete on equal terms with manufacturers from outside the European Community.
My hon. Friend the Member for Lewisham, East (Mrs. Prentice) spoke eloquently about the need to improve rail services for London commuters. She spoke about the desperate state of clapped-out Network SouthEast trains that run from her constituency to the centre of London where the majority of her constituents work. There is a need for new trains and a need for them to be built by BREL in York. It recently received a stop-gap order which will keep the works in business for about 12 months, but we need a much longer programme of orders so that this country retains the ability to manufacture modern aluminium-bodied railway carriages.
BREL in York is the only place in Britain that manufactures modern suburban aluminium-bodied railway carriages. We need the work in York and commuters in the London area need modern trains to provide a good service. There is no point in a citizens charter offering penalty payments to London commuters if British Rail does not have the goods to provide the decent service that the charter requires.
I shall deal primarily with the issue of community care raised by the hon. Member for Wellingborough (Mr. Fry). In less than a year, the Government will start to transfer resources of about £2,000 million from the social security budget to social services departments to provide community care. That will be done from the social security residential and nursing care support budget. Is that enough? Community care may be a better option for many patients, but it is by no means a cheap option. Social services departments throughout the country—those in North Yorkshire are no exception—have felt the financial
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squeeze of pressure on local government finance and the effects of the poll tax. Will they have the resources to improve not just the quantity but the quality of community care, which was one of the matters stressed in the Gracious Speech? The fact that there is an increasing demand for community care is a tribute to the existence for more than 40 years of a free and demand-led, needs-based national health service.
More people are living to an old age and they need community care in their later years. More children survive infancy. Many of those who would not have survived some years ago are disabled. I have heard many harrowing stories from my constituents about the difficulties that they have in obtaining the community care that they need to enable them to look after their children.
I was approached recently by a family who have a 21-year-old Down's syndrome daughter. The family took the decision to foster a 21-year-old Down's syndrome man. That family will look after their natural child and foster child for as long as they can, but they recognise that at some stage they will no longer be able to care for them. The family hope that the natural child and the foster child will be able to look after each other and provide companionship and security. The family would like to find full-time day care for the two children in the same clay centre. North Yorkshire social services department admits that the two children should have that care but it is unable to provide either child with full-time day care. It is certainly unable to provide the two of them with full-time day care at the same day centre.
Had the foster child not been fostered, he would have spent the rest of his life, as he had spent the beginning of it, in an institutional home. He has been given the opportunity to live with a loving family in the community, but without community care support that sort of benefit for those who would otherwise be in institutions is likely to be lost.
I have been dealing also with the case of an extremely severely disabled young woman whose parents are now no longer able to care for her. An argument has developed between the health and social services authorities over who should take responsibility. The young woman is occupying a respite care bed at huge expense to the health authority. There are others who need that bed and she is preventing them from taking it because no long-term provision can be found for her.
The family was offered a bed in a home in Skipton, which is many miles from York. If the young woman had moved to Skipton, her family would no longer have been able to visit daily and she would have felt abandoned. Are we to provide community care services that will ensure that people are cared for in the community in which they live and in which their families can provide support, or are they to be shuffled off to wherever a bed is available?
I welcome the commitment in the Queen's Speech to the citizens charter. Coming from York, I could hardly do otherwise, because four years ago the city produced the very first citizens charter. However, merely to have a citizens charter is not good enough if public services are not provided with the funds to deliver the high quality of service that the charter demands.
North Yorkshire county council is examining a proposal to divest itself of 20 old people's homes. That may save the council money in the short term, but only between now and April of next year when the community care budget is transferred from the Benefits Agency to

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local government. The real question is whether the divestment will improve the quality of care that is referred to in the Queen's Speech. Will it improve choice for the residents? Will it improve the opportunity to obtain provision that is local to where people live so that an elderly person who moves into a home is able to retain links and friendships in the community in which she or he lived?
Previously I was employed in a professional capacity as a health economist. I undertook a study not long ago into long-term care for the elderly, which included interviews with 1,300 people living in nursing and residential homes. Among other things, they were asked to express their views about the care that they received, the freedom of choice that they had in their homes and the overall quality of care that was available. Those who lived in local authority homes thought, generally speaking, that the quality of care was good. In the private sector, opinions were extremely variable. Some private homes were extremely good and some were unacceptably poor.
If more old people's homes are to be transferred from the public sector to the private sector, it will be necessary to ensure that the quality of care within those homes is retained. According to the 1,300 residents, the public sector was much better than the private sector when it came to quality control.
The problem with statutory inspection and regulation procedures is that they concentrate on areas that can be measured relatively easily, such as the number of rooms, the number of toilets, staffing and the control of drugs. They do not focus on the key to caring, which is the personal relationship between the carer and the elderly person, the handicapped person or the disabled person. That relationship cannot be measured through the statutory process, but it must be ensured if high-quality care—the sort of care that the citizens charter wishes to ensure—is to be maintained. It is not only North Yorkshire county council that is proposing to divest itself of its old people's homes.
I am concerned about what divestment means in terms of freedom of choice for the residents of old people's homes. Will they have freedom of choice about the life that they lead within the home—for example, whether they can choose when to have a bath, whether they have a choice of different dishes at meal times and whether they can choose the clothes that they buy and wear? All those facets are important, and equally important is whether people retain a choice when it comes to the type of home into which they should move.
As I said, I was involved in interviewing 1,300 residents. Only one in 20 of those in local authority homes said that he or she had even considered moving into a private home. Only one person in 30 in private homes said that he or she had even considered moving into a local authority home. These elderly people had extremely firm views about the type of home and the type of regime in which they wanted to live, and that choice must be maintained. The short-term cash benefits for social service departments of divesting themselves of their directly managed homes, which will run out in a matter of months, mean nothing when set against quality of care and choice for residents.
The residents of these homes will live in them for the rest of their lives. As people who are concerned with the
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provision of community care, we have a responsibility to ensure that quality and choice within residential homes are as good as they can possibly be. There should be a granny test: if a home is not acceptable for someone's parents or grandparents, it should not be acceptable to anybody else's.
It is all very well to say that the Benefits Agency now or the social services department in future will pay the fees of those who cannot afford to pay for themselves in private sector homes, but that is not always the outcome. I recently received a call from a couple who were extremely frightened on having received a bill for £2,121.95 in respect of the woman's brother two weeks after he had moved into a private care home. They did not have the means to pay the bill. They also received a demand to sign a form to indemnify the home against the fees if the woman's brother was unable to pay them. In addition, they received what I can only call a pressurising letter from the matron of the home.
Fortunately, I was able to take up the matter and say that that couple had absolutely no responsibility to pay the fees on behalf of the woman's brother—and, sure enough, the social security authority agreed to pay the fees. What would have happened if that couple had not found somebody to shout for them at that critical time? What if they had used their life savings to pay the fees? It is not good enough for the public sector to provide services on contract unless it can guarantee that the proper people, at the proper time, will pay for them.
I welcome the community care approach, but there are 6 million unpaid, informal carers throughout the country, without whose services the community care system would fall apart. Ten thousand of those carers are in my constituency, with about the same number in other constituencies. They need a decent carers' benefit and respite care for those for whom they are caring. They need proper community services, such as home help and laundry services, which are not being provided by social services departments because of the financial squeeze on them. Those informal carers are the biggest army of overworked, unpaid, undervalued heroes and heroines in this country. The whole system could fall apart. The closure programme for long-stay institutions will certainly fall apart if carers do not get the back-up and support from social services departments that they need.
The hon. Member for Wellingborough said that it was unclear how social services departments would finance their responsibilities. That is a disgrace. It is only 11 months from when they will have to meet those responsibilities. It is no wonder that those who care for the elderly, the disabled and those with learning difficulties are scared. It is a great shame that £14 billion has been spent on the failed poll tax when it could have been used for decent funding for social services departments to provide the community care that we all know is needed. It is a public spending responsibility that the House must grapple with and come to terms with, and it must do so quickly so that those who depend on that support can know well in advance of April that they will get the backing that they need.
6.52 pm
Mr. Peter Viggers: I am grateful to you, Madam Deputy Speaker, for the opportunity to make my maiden speech in this Parliament—although not my

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maiden speech as such, as I made that 18 years ago. I wish that after 18 years I had one part of the skill of the hon. Member for York (Mr. Bayley) in marshalling his arguments and winning the ear of the House. I respect the way that he presented his argument. He obviously has a keen interest in his constituency and in the subject about which he spoke most—the welfare of the elderly and others. I have no doubt that he will be keenly listened to in the House in future, and I congratulate him on an exceptionally good speech.
The hon. Gentleman's predecessor, Conal Gregory, was a friend of many in this House, and we very much miss him. I am not sure whether it is his intention to knock out the hon. Gentleman at the next election. If so, Conservative Members will wish him well, despite the praise that I have lavished on the hon. Gentleman. Wherever Conal Gregory is and whatever he plans to do, I am sure that we wish him well and respect the many efforts that he made on behalf of his constituents during the time that he was in this House.
May I say, Madam Deputy Speaker, what a pleasure it is to see you in the Chair? We are all happy that you agreed to accept the position of Deputy Speaker. We have experience of you as a Chairman of Committees, and we know that you are not one from whose path one strays lightly.
The main subject of today's debate is public expenditure. As my constituency contains more service men and women and more service voters than any other, it will be no surprise if I begin with the subject of defence. I regard defence as the first priority of Government and the area upon which they should spend money before they consider anything else.
I am happy that the proposals in the "Options for Change" document produced by the last Conservative Government have been carried out. There were many dire threats about the consequences of the changes and we were told that there would be severe cuts. In fact, the strength of the Navy has diminished only slightly, from about 63,000 to 60,000. Naturally, the Army must bear the brunt of the reductions. It is no longer realistic to imagine that the Warsaw pact's tanks will roll through central Europe. The Warsaw pact has gone, and Russia has even applied to join NATO. We do not need to retain the same level of forces in Germany, so quite realistically the Army is being reduced by about 40,000. The RAF is being reduced from 80,000 to 75,000. The number of civilians employed in the United Kingdom will be reduced from about 140,000 to 120,000.
I regard those reductions in defence spending as realistic, taking account of the reduced threat from our major prospective aggressors, the Warsaw pact countries, which had built up a massive superiority of forces over NATO and the western forces. However, the reductions are not so extreme that they reduce our level of forces below that which takes account of the fact that this is and remains a very dangerous world. Appropriately, it is now proposed that we should make a major contribution to the rapid reaction force, which will be commanded by a British general. That force will be available should there be a crisis in the world that merits such a response.
As the world shrinks and communications continually increase, so different tyrants, dictators and prospective aggressors throughout the world may pose a major problem even for this country, thousands of miles away.
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Our defence policy is balanced, and it has taken full account of the "Options for Change" proposals. I am happy that we now have balanced forces.
On the matter of other public expenditure, we must always remember that initiative, enterprise and wealth do not grow in Whitehall. It is our duty to lighten the burden on those who have those qualities of initiative, enterprise and wealth production and to ensure that those qualities are properly liberated. We must take full account of the message from the Pacific basin, and perhaps above all from areas such as Hong Kong, Taiwan and Singapore where, because of the light control on industry, it has been able to flourish and produce wealth beyond their and our wildest dreams.
It was said recently that Thatcherism would live on after Mrs. Thatcher. I believe that to be true. I truly believe that our former leader was instrumental in bringing about a watershed of change throughout the world. Those who have had the opportunity, as I am grateful to have had, of travelling widely will know that, even in countries such as China, people are taken by the fact that free enterprise has provided wealth in other parts of the world. At the end of a lunch or banquet, my Chinese hosts would often say, "Mrs. Thatcher, very strong lady."
The message of Thatcherism—that it is possible to reduce the burden of public expenditure and public control—has been taken up around the world. Japan is privatising its railways—a matter of great controversy when I was last there. The message of Thatcherism is being applied successfully around the world.
Since 1979, the Government have returned 46 businesses to the private sector, from which the taxpayer has benefited—I use that word unashamedly—by £41 billion. In 1979, nationalised industries were costing us £50 million per week, £2.5 billion per year. Those same privatised companies are now paying £2 billion per year in corporation tax. The message of Thatcherism and the return of nationalised industries to the private sector has been effective in management and financial terms.
It is necessary to keep public expenditure and the level of taxation down. One message that the Labour party should have learnt during the election is that no one wins friends by proposing to increase taxation, and not only does one not make friends, one does not increase revenue. The reduction in the highest level of taxation after 1979 led to an increase in the proportion of tax paid by the top 5 per cent. of taxpayers from 25 per cent. to 30 per cent. of all income taxation. That proves that the previous Labour Government had been over-taxing to such an extent that the taxation was becoming inefficient and producing less revenue.
There are areas where the Government have been criticised for holding back on public expenditure but where they have in fact been increasing it—something which I proudly support. Two examples are the national health service and the education system. Those two areas can be improved in ways other than increasing the amount of money spent on them. Throwing money at a problem is no answer. My wife is a doctor working for the NHS, and she feels keenly that throwing money at the service is not the answer; it needs better management. I am confident that the separation of the providers and the purchasers of services within the NHS will lead to more efficiency by a reduction in the size of the overall management unit. How can anyone possibly maintain that the NHS, which I

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understand is the second largest single organisation in the world, second only to the Chinese army, and which has existed since 1945, should remain unreformed?
I believe that the reforms in the NHS are working. My constituents are happy with the service that they receive. In the context of a public sector spending debate, it is relevant to note that, since 1979, we have increased spending on the NHS by 56 per cent. in real terms and we that are now spending some £620 a year on health care for every man, woman and child. That is a large amount of money. Our record is extremely good. Every Labour Government have resulted in an increase in waiting lists; every Conservative Government have resulted in waiting lists being reduced. That is a proud record.
Similarly, we have increased spending on education by some 50 per cent. Here, too, I believe that improved management will play an important part. Teachers in my constituency are happy with the local management of schools, which they feel gives them more control over their budgets, and they are happy with the concept of grant-maintained status. The one school in my constituency which has moved to grant-maintained status is excited about the possibilities that that will give it for spending its own money and providing its own management services. There, too, contrary to the general tenor of my remarks that we would contain public expenditure, we have increased public expenditure, with good results. I believe that there is a high level of satisfaction with the NHS and a growing satisfaction with our education system.
There is one specific area in which there could justifiably be a modest increase in public expenditure and public effort. I refer to one area of trade and industry for which my right hon. Friend the Member for Henley (Mr. Heseltine) has been given responsibility and which I myself once had some responsibility for. I remember the very few words with which Mrs. Thatcher invited me to take up my office. All I knew was that a reshuffle was in progress. I was called in by the Prime Minister, who said, "Peter, I want you to be responsible for trade and industry—in Northern Ireland." For three years, I had that responsibility, which gave me a chance to compare notes with my counterpart responsible for trade and industry in Great Britain—my noble Friend Lord Young—and to take some account of Britain's export efforts and how they could be improved.
We can learn some lessons from the Japanese Ministry of International Trade and Industry, which co-ordinates trade and industry activities in Japan. I hasten to add that I do not believe in increased control or subsidy of industry within the United Kingdom, but the Government have an opportunity to draw together and co-ordinate the export efforts of some of our largest companies.
I was delighted to see the news today that Trafalgar House, in conjunction with a Japanese organisation, has won a major contract for a bridge in Hong Kong, but we are not always so successful. We can learn from the co-ordination of effort which is put behind industry in other countries which send out a flying squad of experts such as accountants, bankers and lawyers but also engineers to ensure that the best companies are selected and work closely together to win major overseas contracts.
Sometimes, two or three British consortia compete for the same contract, whereas other countries, notably Japan,
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manage to narrow their competitors down and throw all their weight behind one consortium. In that narrow area, my right hon. Friend the Member for Henley should be encouraged to bid for slightly higher public expenditure in order to bring that idea to fruition. Elsewhere, I believe that public expenditure should be strictly curtailed. The economy is ready for recovery; if we hold back on public spending, that recovery will surely come.
7.7 pm
Mr. Llew Smith: I have the privilege to follow in the footsteps of Michael Foot and Nye Bevan, and I do not pretend that I can do the job in the way that they did, but I hope that I can do it in a way that is relevant to the communities that they both represented and loved.
Michael Foot is a grand socialist and an inspiration to the Labour movement. As a Member of Parliament he was outspoken, but always in the defence of his constituency. That constituency has a history of struggle, and the past few years have not made much difference to that. In that period, thousands of people have been made redundant because of the rundown of the coal industry, as well as thousands more who were dependent on that industry.
In recent months, many of the jobs which have supposedly replaced those which have been lost have been low-paid, part-time and non-union. Some months ago, I overheard a redundant miner chatting to his friend, expressing pleasure in the fact that he had found alternative employment. But he went on to say that unfortunately, despite having found alternative employment, he was about £100 per week worse off. I suspect that he would have welcomed the introduction of a minimum wage of £3.40 per hour.
The message from my community is that we want jobs. We desperately need jobs, but we do not want jobs at any cost. We want jobs that pay decent wages, which are carried out in decent conditions and which bring dignity to their labour. A higher level of public expenditure would assist our communities, and would begin to create jobs and to defeat the problem of low pay.
I do not want to give the impression that everyone in south Wales is losing out—that the whole population is unemployed or suffering under low pay. In recent years, there have been some winners. For example, John Elfed Jones, chairman of Welsh Water, increased his annual salary from £76,000 in 1990 to £143,000 in 1991. Wynford Evans, chairman of South Wales Electricity, saw his salary increase from £67,000 in 1990 to £120,000 in 1991. Privatisation has obviously worked for some, but not for the majority of my constituents.
Low pay and unemployment are not the only problems confronting Blaenau Gwent, great though they are. It also has problems with its housing stock. Many houses are too old, and others desperately need repair. A high level of public investment is needed to overcome those problems. The local authority needs an opportunity to use the money that it raised from the sale of council houses to build new homes and to repair dilapidated property.
A great deal of television publicity has been given to cardboard city in London, but Wales has its own cardboard cities. Shelter estimates that there are 60,000 homeless people in Wales, and another survey suggested that 80,000 families—around 160,000 people—are living in substandard accommodation. In Wales, more than

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200,000 people are either homeless or living in substandard homes. In my opinion, and in the opinion of the community that I represent, that is unacceptable.
Investment is also needed in the national health service. Blaenau Gwent has some of the worst health problems in Wales. The people who make up that community, because of its history, are the real experts when it comes to the health service. They were somewhat surprised some time ago to find that local councillors who cared for and had committed their lives to the NHS were all of a sudden thrown off Gwent health authority, to be replaced mainly by business men. They included a building contractor, a management consultant, a former controller of purchasing and supply for British Gas, a former pharmaceutical industry consultant, and a farmer who specialises in pick-your-own fruit. In fact, I believe that she specialises in strawberries. Perhaps a right hon. or hon. Member could inform me and my community how those skills are relevant to the running of one of the greatest services in the world.
If the national health service is to live up to the dreams of its pioneers, the people running it should be those who have devoted their lives to it, are committed to it, know what is required to improve it, and would be accountable to the people. The NHS was the finest piece of socialist legislation this century. It set out to deal with many of the problems that confront my community, and it will not stand idly by while the health service is devastated.
Blaenau Gwent is also the victim of privatisation. When its bus service was privatised, we were told by the Government—as were people throughout the land—that that would result in a cheaper, more efficient, and cleaner service. Instead, the service has gone into receivership. The shopping centre in Tredegar has also gone into receivership, while other shops and places of interest and entertainment have closed because of the recession. Many shops are also confronted by difficulties caused by subsidence that is probably the result of old mine workings.
Tredegar was once a proud town that was boasted about throughout the land. To pass through it today is a sad experience. I have invited the Secretary of State for Wales to visit that community, and I repeat my invitation in the hope that the right hon. Gentleman will visit it in the months and years ahead, to see how he and the Welsh Office can respond to its problems.
I do not want to give the impression either that Tredegar is the only town with a problem. Its problems are seen time and time again throughout Blaenau Gwent. The Prime Minister's only response in his speech yesterday was to announce more privatisation. Before he privatises the coal industry, I ask him to instruct his Ministers to speak to the experts—to those people who have devoted their lives to the coal industry, and who worked in the old private mines. They will describe the conditions that once prevailed, and explain why it would be so wrong to privatise that industry again.
Michael Foot once described himself as an inveterate peacemonger. I tend to follow in that tradition, which is relevant not only to world peace but to my own community. Although we can always find the money to go to war, we rarely find the money to ensure that people can enjoy their dignity in times of peace. If my constituents are to experience that dignity, they need the money that is spent on preparing for war to be used instead to overcome many of the problems that confront them now. If that is
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done, those problems will become part of history, and I will be able to report to the House the progress that has been made.
7.16 pm
Mr. David Wilshire: I add my congratulations and good wishes to those that have already been expressed to you, Madam Deputy Speaker. I am sure that you will have a very enjoyable time, and that we will all try to make your life reasonably simple.
Public expenditure is an all-embracing subject, and there is a great temptation to roam over whatever territory one chooses in a debate such as this. I will resist that temptation and focus on a specific aspect of public expenditure, in drawing the attention of the House to particular problems and possible solutions to them. I refer to central Government spending via local government. I deliberately phrase it in that way, for reasons that I shall explain shortly. [Interruption.] I have rightly been told off by my hon. Friend the Member for Dartford (Mr. Dunn) for failing to congratulate the hon. Member for Blaenau Gwent (Mr. Smith) on his maiden speech. I ask the hon. Gentleman to accept my sincere apologies: I should have known better.
I was pleased to be congratulated after my terrifying ordeal of making a maiden speech all that time ago, and I wish that I had acquitted myself as well as did the hon. Member for Blaenau Gwent. He began by reminding the House that he was following in the footsteps of Nye Bevan and of Michael Foot, but was unsure of his ability to do so adequately. If all the hon. Gentleman's speeches are as good as that which he made tonight, he will soon be in the same category as his predecessors. I am sure that we can look forward in the years to come to more orations that follow in the footsteps of those two noble parliamentarians.
The hon. Member for Blaenau Gwent said also that his predecessors had served their constituents well and had stood up for their beliefs. Although I do not share the hon. Gentleman's beliefs, I find it easiest to have respect for the opponent who fights hard for his or her constituents and who stands up unashamedly for his or her beliefs. The hon. Gentleman did both tonight, and I am sure that he will continue to do so. If he does, he will gain my respect and that of the whole House. I again ask the hon. Gentleman to accept my apologies for my earlier bad manners.
I return to the subject of central Government spending by local government. I put it that way deliberately, for reasons with which I shall deal shortly. The House should consider the issue, because large amounts of central Government money are involved, and at present it is proving incredibly difficult to target the money in the way intended by the providers. Let me give an example.
In the last public expenditure round, the Government took the view that a certain sum was necessary to provide adequate social services for my county of Surrey. That indeed is the proper role of central Government. The Government passed the money, by way of the standard spending assessment, through the Department of the Environment to Surrey county council. Now, £8 million of the money earmarked for Surrey's social services is being spent on other services provided by the county council. Hon. Members know the size of the mailbags that we receive when social services provision is not of the

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standard that constituents want. That is an example of how difficult it is for a Government of any political persuasion to target funds under the present system.
My third reason for drawing attention to the problem is the fact that local government expenditure has proved extremely difficult to control—again, irrespective of the political colour of the central Administration. Successive Governments have tried to control it, and have encountered problems. When Governments say that they want to sort out the spending of public money by local government, they really mean that they want to get public expenditure under control.
If our aim is to control the spending of public money via local government, surely trying to control local government income is not the most effective method. When I have difficulties with my bank balance, it is the expenditure involved with which I must deal first. Surely it is self-evident, at least in private circles, that, when we experience expenditure problems, we must control expenditure. That is the first lesson that I would draw from 20 years of trying to do something about local government expenditure.
There is no point in arguing about whether local government expenditure needs to be controlled. All expenditure, public or private, needs to be controlled. Money is a finite resource, and there is never enough to meet all needs. It must be controlled, whether we like it or not; and I believe that it must be controlled directly. Over the years, every attempt to control this part of public expenditure by means of income control has failed. As each method proves unsuccessful, another method is invented, even more draconian than the last and even sillier. There are plenty of absurd examples.
How, then, do we control local government expenditure? I have four suggestions. First, the Government must be certain that they have identified the source of the money involved. Secondly, they must be certain that they have identified the real purpose of the expenditure. Thirdly, they must be clear about who controls what is going on. Finally, they must ensure that there is a link between the providers and the client or customer.
All that may strike hon. Members on both sides of the House as eminently obvious. Why do we need to discuss something that is self-evident? The answer is that, although the solution may seem obvious, things are being handled badly at present.
First, let us consider the need to identify the source of the funds. The argument goes like this. There are many kinds of provision, and many kinds of expenditure—public expenditure, voluntary sector expenditure and quango expenditure, for example. Each type of expenditure needs to be controlled in a different way, and it is therefore vital for us to be clear about the source of the finance.
Probably the best illustration of the wrong way in which to categorise public expenditure is provided by the public-expenditure category called local government spending. That is because a range of sources is involved. There are councils' fees and charges; there is agency allocation of money—for instance, transport supplementary grants; there is the local tax, whether it be community charge, council tax or rates. Then there is the grant from central Government. Each of those different sources
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requires a different method of control. For example, the marketplace controls fees and charges: a council can charge only what the market will bear for, say, swimming facilities. But the marketplace does not and cannot control the amount that is provided by central Government.
If we are to control this part of public expenditure, we must be absolutely clear about the source of finance. That is why I said that I wanted to discuss the issue of central Government spending via local government, for that is what the central grant is—central Government expenditure. Anyone in the Treasury will confirm that. It needs to be identified for what it is, and discussed separately.
There is another catch. In saying that we need to control central Government expenditure via local government, we may forget that central Government expenditure is a pretty poor category as a source of money. It includes money from the Departments of Transport, Education and Health, from the Home Office and from many other Government Departments. We need to be clear about the source of every element of the central Government grant.
Secondly, we need to be clear about the purpose of the expenditure. That, too, may sound obvious, but far too many spending categories are vague; many are far too large or far too small; and even more are just plain confusing. We talk readily in the House about public expenditure on education, as though education spending were an entirely proper category of expenditure which we could control. But when a local councillor talks about education spending, he or she is talking about spending money on primary schools, secondary schools, clothing grants and remedial help for children: that is what councillors understand by the label "education".
An Education Minister, however, takes education spending to mean expenditure on all schools and on further and higher education, but certainly does not take it to mean expenditure on clothing or remedial help, which are the responsibilities of the Department of Social Security and the Department of Health respectively. It is small wonder that there is poor control of education spending, when two people engaged in a debate on the subject find that they are talking about different issues.
There is another reason for the confusion. Neither the councillor nor the Education Minister is talking about the totality of education, for neither is talking about expenditure on private schools or tutors. If we are to control public expenditure, we must get the categories right.
Thirdly, we must sort out who controls each section of public expenditure. That brings us straight into a debate that has been going on ever since local government began —the debate about the nature of the real relationship between central Government and local authorities in terms of expenditure.
There are those on both sides of the House who believe that local government should be left to get on with its own spending and that one solution would be less interference. However, central Government have a role in all expenditure, whether it is public or private. The nature of a country's economy is a concern of central Government. Some of my colleagues are great believers in non-intervention, but even a decision by central Government not to intervene has a profound effect upon public expenditure and the national economy. Therefore, the two extremes of saying that we need do nothing or that we must do everything do not hold water.

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We cannot get away from the fact that there must be central Government involvement. Therefore, we must ask what central Government should be involved in. I can offer only one guiding principle: he who pays the piper calls the tune. In my Surrey example, central Government believed that they were making available £8 million for what they had decided was a correct priority. However, that £8 million was not spent on that priority.
It is small wonder that people in the Department of Social Security and the Department of Health are angry to discover that the money is not being spent on what they decided was a correct priority. The principle of he who pays the piper must apply if central Government are providing money for a specific purpose. Whether money is spent by central Government, local government or a voluntary agency, the provider of the funds must have control.
There are obstacles to my argument. My hon. Friend the Parliamentary Under-Secretary of State for Social Security needs to make money available to local government. What does she have to do? She provides that money for the Department of the Environment, which then passes it on as a block grant. There is another reason why targeting and control are not much good. If all the Departments that are providing money for local government pass it on to the Department of the Environment, there is an intermediary. Intermediaries in the chain of control are not a good idea.
Another problem is that both local government, in its capacity as a mini-Government, and the Department of the Environment have their own priorities and policies, so my hon. Friend the Under-Secretary of State passes money to the Department of the Environment which imposes its priorities, and when the money is passed to, for example, Surrey, there is a second lot of priorities. There is no effective control in that method.
We need to know what the tests could be for controlling such expenditure. For example, there is no way in which local taxation could fund an expensive service such as education. An expensive service will almost certainly need to be controlled by central Government if there is to be effective control of expenditure. However, if one focuses on local democracy, that is a different argument—one may end up sacrificing effective control to achieve it. Thus, the first test is, if it is expensive, it is central.
The second test must be who sets the standards. I do not think that the House would become excited about whether the grass verges in my constituency of Spelthorne were kept half an inch high or an inch high. That is a matter for the worthy burghers of Spelthorne to decide. However, from the newspapers and my mailbag, I get the impression that, if the standard of literacy in Cornwall is different from that in Kent, mayhem would break out in the House because that should not be tolerated.
That tells us something about who should control expenditure on reading. Although some standards can be set locally, things may change. I cannot imagine a time when the length of grass in Spelthorne will become controversial, but one must be flexible in case a standard suddenly becomes controversial.
Having said that he who pays the piper must have control and that whoever sets the standards should have the final say, if that increasingly becomes central Government, where does that leave local government? Regardless of who is providing the money or controlling
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the public expenditure, we must ensure that there is some mechanism that allows local needs and priorities to be brought to bear. That is the role of local government.
I know from my experience on a local council—many of my colleagues also have a background in local government—that although councils do not control hospitals, if there is a proposal to close a hospital, the council becomes agitated. If enough people complain that there is not a decent supermarket, councillors become concerned.
That is the local input to the totality of the provision of services and the spending of money. It has nothing to do with whether local government is the provider. Therefore, my argument that he who pays the piper should control spending does not undermine local government input into the spending of money and the provision of services.
Mr. Bob Dunn: I am very interested in what my hon. Friend is saying. If, inevitably, the vast majority, or indeed the totality, of secondary schools become grant-maintained, who should have the authority to decide expenditure? For example, in previous years a lower level of expenditure has been followed in secondary schools in Kent compared with secondary schools in London. If all schools in Kent were to become grant-maintained, who would have the authority to bring up the levels of spending in the county? Would it be the burghers of Kent or the Government? That is a conundrum.
Mr. Wilshire: Yes, it is a conundrum. However, what must be made clear in my argument is that the line of communication is from the school to the Department of Education and Science, because that is where the money is coming from. That is the strength of the grant-maintained system. A school that feels hard done by can argue with the provider of money rather than with county hall, which is simply the middle man. In this analysis, I would not try to answer the question in detail, but the principle of talking directly to the provider of funds bears out my thesis.
Where does this lead us? The Government must turn their mind to controlling expenditure by local government. They must do that by controlling expenditure, not income. We have tried that with the rates and the comunity charge, and we are now trying the council tax. Until we grasp the nettle of controlling expenditure directly, the House will again and again be asked to make changes.
If one is to identify the source of the funds and ensure that the provider provides directly, the Government will have to grasp another nettle. That involves taking the Department of the Environment out of the business of funding services provided by local government. That is a major change, but I believe that it is necessary. The only control that the Department of the Environment should have over a service provided by local government is when it is the provider of the money rather than the processor of the money.
We must be clear about purpose. We must look hard when we say that we want a specific sum to be spent on such and such. We must ring-fence it and ensure that it is spent properly. That requires a fair amount of rethinking by the Treasury.
We need a new role for local government. Happily, we have all started to talk about the enabling role of local government. I believe that this approach to local government expenditure leads to a greater enabling role for local government.

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Those of us who were here during the last Parliament and those who have been here a great deal longer than I have will remember that public expenditure has always been an issue. If my crystal ball is any good, I believe that it will become a big issue in the months ahead. If we are to get on top of the problems of public expenditure now and in the future we must deal with local government expenditure. If we are to do that, major reforms in our way of controlling local government expenditure are still necessary, and I urge them on the Government.
7.39 pm
Mr. Dennis Skinner: I have been listening as carefully as I can to the argument about who should control local government expenditure. One thing is certain: being on a local authority today is very different from what it was when my hon. Friend the Member for Jarrow (Mr. Dixon) and I were in local government in the 1960s—and when my hon. Friend the Member for Workington (Mr. Campbell-Savours) was in local government, too.
Then we could do things without central Government interfering. I remember when we could put in for spending money on slum clearance on a scale gigantic for the size of the authority, which covered a population of about 10,000. We got grants from central Government to do that, and we used to be able to balance the books. We could decide the rents. There was no busybody from central Government telling us what rents in Clay Cross should be.
When I talk to people on local authorities nowadays, despite all that the hon. Member for Spelthorne (Mr. Wilshire) has said, the main burden of the argument that I hear from Labour councillors is that they do not have the power to do what they would like to do. They cannot build houses as they used to, although they have the money to do it.
Mr. Wilshire: The hon. Gentleman may view what I am about to say as an attempt to deflect some of his wrath away from my direction, but is not meant in that way. The example that he cites probably makes my point. He talks about central Government trying to control rents. I argued that an attempt to control income—rent is income—is doomed to failure. So, for once, we may be making the same point. That may upset the hon. Gentleman rather than pleasing him.
Mr. Skinner: If I introduce a Bill in this Session of Parliament to give local authorities the power to spend their capital receipts from council house sales on building houses in order to get rid of some of the cardboard boxes that litter every town and city in Britain, will the hon. Gentleman support me?
Mr. Wilshire: The hon. Gentleman has not extended the thought process that I was using. I agreed with him about income, but he has now switched to expenditure, and it is expenditure that we wish to control. If he is inviting me to vote with him to abolish expenditure control, he will have a long wait.
Mr. Skinner: Now I have got the gist of it. I had thought that the hon. Gentleman was on a flight of fantasy—but now we get down to it: he is the same as all the other Tories, the same as the rest of the ragbag over there. They
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all believe in the same thing. They do not believe that local people in the towns and cities controlled by Labour should have the power to build houses so as to put roofs over the heads of the 200,000 homeless people.
We have millions of tons of bricks; the London Brick Company has millions of bricks. A quarter of a million people in the construction industry are without jobs. There are all those homeless people who do not know where to live, and it costs a small fortune to lodge them in bed-and-breakfast accommodation in many London areas. Yet the Government are so besotted with controlling local government from the centre that they will not allow local people to decide to build some houses.
That is all that is needed—it is a question of political will. The hon. Gentleman can potter about with figures as long as he likes, but it will not make any difference to the basic fact that we need a Government who will give local authorities the power to build houses so that they can start rehousing people. If some of the capital receipts could be used, the dole queues would go down, too.
The hon. Member for Kent talked about opted-out schools. The hon. Member for Kent—
Mr. Dunn: Dartford.
Mr. Skinner: Dartford is one bit of Kent. The hon. Member for Dartford (Mr. Dunn) was a Minister at one time—until Mrs. Thatcher decided to sack him during the holidays. She wanted to have a big change-round and she said, "Sack Dunn." That was the word that went round, but as it happened during the holidays people had gone off to the four corners of the world, and they could not find Dunn. The big clear-out was to take place in October, and the hon. Member for Dartford, who was a junior Minister at the Department of Education, was still in his job when he came back, because Mrs. Thatcher could not find him. He had gone as far away as her son Mark—whom she managed to discover, although it cost a bob or two.
Mr. Dunn: That story is embellished more and more as time goes on. I was not sacked in October—
Mr. Skinner: But the hon. Gentleman was sacked?
Mr. Dunn: —but in July. Yes, I was sacked; I do not deny that.
Mr. Skinner: Later on.
Mr. Dunn: No, it was in July 1988. I was there when I was sacked and the hon. Member for Bolsover (Mr. Skinner) was not.
When the hon. Gentleman was talking about schools, he implied that the 1960s and the 1970s were a golden age when there was no governmental interference. He is now in his seventh decade, so he will remember the time when Labour Secretaries of State for Education and Science said to local authorities, "If you do not go comprehensive, we will starve you of cash and withdraw your money." That happened with the Labour Governments of 1964–70 and 1974–79, and it is a good example of governmental interference.
Madam Deputy Speaker (Dame Janet Fookes): Order. So far I have been fairly mild, by my standards, but I deplore interventions which turn into speeches.
Mr. Skinner: If I may briefly reply to the hon. Member for Dartford, Madam Deputy Speaker, I must say that I do not recall the Government ever withdrawing money

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from Derbyshire county council because it had not gone comprehensive. 1 was on that council between 1964 and 1970, and, despite six years of Labour Government, there were only two comprehensive schools in the whole of Derbyshire. But no money was withdrawn from Derbyshire, although it had not obeyed the diktats to which the hon. Gentleman referred. Some people may have said that it would be a good idea to withdraw money, but it did not take place.
When making his speech about local government, the hon. Member for Spelthorne gave the impression that local government could implement Acts of Parliament without any extra money. There have been at least 10 major Acts affecting local government during the past 10 years—the House passes at least one every year—and they have cost local government a small fortune to implement. The Government expect local government to find the money from within their existing budgets, without being able to use what they have already got. That is one reason why rates shot through the roof.
Another reason why rates increased was that the Government decided to withdraw about £60 billion-worth of rate support grant equivalent over the years. Local government tried to keep up with the mandatory Acts of Parliament that it had to carry out, so the rates had to increase and local government got the blame.
That is where the poll tax came in, and that cost another £14 billion. The Government talk about saving money, yet they are the ones who spent all that money on the poll tax. There are many Conservative Members still in the House who went trooping through the Lobbies, glad to vote the poll tax through. The result was that local government was burdened with £14 billion-worth of extra expenditure, as well as having £60 billion less in rate support grant.
At the same time, local government was having to deal with the fact that, as a result of the advances in medical science, people now live longer. That means that social services departments in every local authority have to pay more for each person in their area who manages to hang on for another two, three or four years. That is one reason for the massive proportionate increase in the sum that has to be spent by local government, even when the population may remain roughly the same.
The same is true of the disabled. If people live longer, they are disabled for longer, and the net result is that thousands of people in every constituency need more money from the social services for aids and appliances, such as stair lifts and ramps. Yet the Government tend to think that it is possible for local government money to be cut and for local government to manage to do the job it is expected to do.
Crime has gone up about threefold in many towns and cities since the Government came to power. Local authorities have to deal with that, except in London where it is dealt with differently. Where do the Government expect local authorities to get the money from?
In Derbyshire, we had a bizarre situation the other week. The chief constable of the West Midlands—he and his force have been guilty of so much malpractice and so many faulty decisions in their area—was appointed to carry out a survey of Derbyshire police.
Mr. Don Dixon: The hon. Member for Spelthorne (Mr. Wilshire) is leaving.
Mr. Skinner: He has probably gone to do some more reckoning up.
The chief constable of the West Midlands is criticising the local authority in Derbyshire when everyone knows that the crime rate in some British cities, including London, has gone through the roof.
There has been mention of the citizens charter. Conservative Members give the impression that the citizens charter is a wonderful and beautiful thing. It is just a con trick by the Prime Minister. When we get to the next election, many people will find that out.
In my constituency, somebody talked to me about dioxin not long ago. He said, "Ey up, Dennis, can we complain under the citizens charter to get rid of the dioxin in the milk?" I said, "That's a good idea, but you had better check on it." The truth is that whenever one comes up against a problem of that dimension—all the local community wants to make a complaint to ensure that the matter is resolved—the citizens charter means absolutely nothing.
Last June, milk was contaminated by dioxin. The Minister of Agriculture, Fisheries and Food came to the Dispatch Box and told us that it would be a nine days' wonder. He gave the impression that it would all be resolved by the end of June or by July. It is now next May, yet there are still three farmers in my constituency who are not allowed to farm because the dioxin is still there. What good is the citizens charter for those people?
If we want to help people in the community, there is another way in which to do so. We could spend more money on the citizens advice bureaux, because in reality they did the job of the citizens charter. Thousands of people in every constituency trotted along to the citizens advice bureaux. What did the Government do? They cut the money for the citizens advice bureaux, yet they have the cheek to talk about a citizens charter.
We used to have a system of widespread appeals on every aspect of social security legislation. We did not need a citizens charter for that. People could ask the social security for a grant, and if they did not get one they could appeal. What did the Government do? They believe in a citizens charter, but a few years ago the Prime Minister introduced legislation to stop people having the right to appeal when they were turned down for a grant. On top of that, the Government told people that they would have to have a loan and get deeper into debt. That is hypocrisy on a grand scale.
The same is true for all those on hospital waiting lists. What good is the citizens charter to them? We can go through all the aspects of where it hurts in life. What rights do people have to make a complaint against the Government? In almost every respect, people have had rights taken away.
It was not long ago that we argued in the House about the right for law centres to be kept in operation. There used to be law centres in most large towns and cities. What did the Government do? They closed down many of them. The same is true of legal aid. If we really want to help people to make a complaint against the Government, the state or local authorities, what better than to extend the amount of legal aid available? The citizens charter is just a con trick to give people the impression that the Government are giving them rights. The truth is that the Government have taken them all away.
Several hon. Members have referred today to borrowing and public expenditure. The Chief Secretary to

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the Treasury, who is dealing with cutting expenditure, talked about getting rid of the public sector borrowing requirement in the "medium term". I have heard the jargon in here for years, including "medium term", "mirrored J-curve" and "crawling peg". I have heard them all. They come and go like the names of washing powders, although they are important at the time. People talk about them as if they will last for ever.
I asked the Chief Secretary what he meant by "medium term" and when the PSBR—which is supposed to be £28 billion, but which is more likely to be about £35 billion in the autumn statement—would come back into balance. he said that it would be in the "medium term". I asked him what the "medium term" was. We all know that in the past two years the PSBR has increased geometrically, so we know that it will not be in balance by the end of this Parliament. The Government do not have a cat in hell's chance of getting the budget into balance.
Only two years ago, there was a tiny PSBR. The following year, it was up to £14 billion and this year it is supposed to be £28 billion. We then have the £2 billion of tax cuts and we shall have an autumn statement. I am going to take a chance on it: I am prepared to bet that the PSBR will be closer to £35 billion by the next budget in March than it will be to £28 billion.
The Government have the cheek to tell people that the Labour party is not fit to run the country. This gang of supposedly clever business men and women—most of them have been moonlighting Members of Parliament in their time, who made money hand over fist before they became Ministers—have told us that we are not fit to govern. Yet this Government had more than £100 billion of North sea oil tax receipts and £40 billion of privatisation receipts. They have managed to get the country into debt to the tune of £28 billion, according to the official figures. That is how bad the Government are.
Mr. Campbell-Savours: The answer to the conundrum may be in the Red Book, as the Prime Minister suggested yesterday. It seems that borrowing will rise next year to £32 billion, according to the Red Book. It will then decline the following year to £25 billion, then to £19 billion and then to £6 billion. I understand that that is the period that the Government determine as being "medium term".
Table 2A.2 on page 16 of the Red Book deals with where the money will come from. That table deals with the burden of taxation. If I recall correctly, during a press conference in the general election campaign, the Prime Minister was asked by Mr. Anthony Bevins, the political editor of The Independent, "What does this table mean?"
Madam Deputy Speaker: Order. I have reminded a Conservative Member that he was supposed to be making a brief intervention, not a speech. I must therefore ask the hon. Member for Bolsover (Mr. Skinner) to resume his speech.
Mr. Skinner: My hon. Friend the Member for Workington (Mr. Campbell-Savours) made the point that buried away in the Red Book are figures that show that the Government have been pulling a fast one. They hoped that nobody would discover it. The truth is that the Government are up to their necks in debt. That is the bottom line. That clever set of business men and women have got the country up to its neck in debt. If the truth had
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come out at the election and had not been subjected to such treatment by the tabloid press about Labour taxes and so on—untrue reports concerning about £1,250 for everybody in Britain—and the leaflet to which my hon. Friend referred earlier, and if people had known what was in the Red Book and how they were being conned by the Government, the result could have been different.
Mr. Campbell-Savours rose—
Mr. Skinner: If my hon. Friend wants to complete what he tried to say, by all means I shall give way to him.
Mr. Campbell-Savours: I refer my hon. Friend to table 2A.2 in the Red Book, which is where the information is hidden away. It shows that the Government are projecting an increase in the burden of taxation from 35.75 per cent. of non-North sea money GDP to 38 per cent. They are predicting an increase at the very same time and during the same medium-term period as they are predicting a reduction in borrowing. Perhaps my hon. Friend, or even the Secretary of State, will be able to explain the connection between the two.
Mr. Skinner: We all know that, in their first 13 years, the Tory Government increased taxes. Most people think that taxes mean income tax, but the truth is that they are much wider than that. We are talking about customs and excise and value added tax, which has more than doubled. The truth is that the Tories have increased tax from about 34 per cent., or just over, in 1979 to about 36 or 37 per cent. in the past year. There was a minor reduction because of the £2 billion in handouts—bribes—just before the election, but by and large the Tories have increased the total tax take. My hon. Friend is saying that hidden away in the Red Book is a proposition that, to balance the books in the medium term, there will be another increase in tax, and the chances are that VAT will be up to about 25 per cent.
Mr. Jacques Arnold: If the hon. Gentleman wants to do something about debt, how would he advise the Labour party to cope with the debt that was incurred by the Sheffield extravaganza?
Mr. Skinner: I shall tell the hon. Gentleman what I would do to resolve some of the problems in Britain. I would have a fully employed economy. There are 3 million people out of work, but the official figure is only 2.7 million. When we add on all the kids on slave labour schemes and all the women who have not registered but were previously in work, we are talking about 3.5 million people without a job and on that pile of human misery known as the dole queue. The cost is equal to at least £8,000 per person to be unemployed per annum. It is costing the country more than £30 billion to keep those people idle.
That is what I would have said at Sheffield if I had been given the chance. As the hon. Member for Gravesham (Mr. Arnold) is so keen, I would have made that statement on television, but for some reason or other the television managers did not want to hear me; they painted me out of the picture during the general election campaign.
Mr. Arnold rose—
Mr. Skinner: I shall not give way. You, Madam Deputy Speaker, made it clear that you did not want such interventions. The hon. Gentleman has had one crack of

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the whip. He wants to go back to Kent and guard his back. Almost certainly he will be in the next batch of 40 or 50 hon. Members who lose their seats at the next election. The hon. Gentleman should not come rabbiting to me. He has made noises on the Back Benches during the past five years and he had not even the guts to vote against the poll tax. I do not need lectures about Sheffield or anything else. I am telling the hon. Gentleman where I would get the money to finance the budget.
I would have a fully employed economy. Everybody knows that we cannot place every person in work, but, at one time in the post-war period, we never had more than about 500,000 or 600,000 out of work—what they call cyclical unemployment. If we reduced unemployment to that level, we would save £25 billion. We would be near enough to wiping out the public sector borrowing requirement. Once we get people back into work, they pay tax and insurance. I ask my hon. Friends who have influence in the higher echelons of the Labour party to make sure that we list full employment in the next manifesto. Let us make sure that we talk about it well in advance of the next general election. That is one way to balance the books.
I shall give hon. Members some more tips. In the first 10 years of the Thatcher Government, the richest 1 per cent. in Britain received £26.2 billion in tax cuts. If I were the Chancellor of the Exchequer in a Labour Government, I would haul back that money in the first 12 months. I do not believe that the richest 1 per cent. in Britain, which includes the Queen, who does not pay any taxes, should get away with that kind of money when people live in cardboard boxes, without a roof over their heads, and when pensioners have to scratch by on about £50 a week.
Mr. Simon Burns: Does the hon. Gentleman believe that, when the Labour leadership elections are out of the way, the Labour party will go down the route advocated by the hon. Gentleman, or will his party agree with his hon. Friend the hon. Member for Birkenhead (Mr. Field), who earlier advocated that the Labour party should cut the standard rate of income tax to 18p in the pound as a long-term objective?
Mr. Skinner: I did not hear the speech of my hon. Friend the Member for Birkenhead (Mr. Field). I think that he is trying to paint another rainbow alliance, but I do not want to do him a disservice—it is probably something of that order.
I make it plain that I believe that the rich had it pretty good during the Thatcher years. It is time that that money was brought back. I do not believe that they should be allowed to make that money. On top of that, most of the people we are talking about have had massive salary increases of £50,000, £100,000 or £200,000 a year. About 200 Tory Members in the previous Parliament—I suppose it will be the same in this Parliament—were not content with salaries of £30,000. They were picking up moonlighting jobs at £100,000 a time. Some of them had as many as 10 directorships in the past few years. They were making money hand over fist.
Peter Walker left office to look after the family. In 12 months he had 10 directorships, probably the equivalent of 100,000 quid. The ex-Chancellor of the Exchequer Lawson picked up about £200,000 for a two-day week at a bank. Those people have the cheek to talk to us about the rich and about where the money is coming from. I would have
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no hesitation in bringing back that money. [Interruption.] And I would tax the Queen as well. Every survey shows that 80 per cent. of the population believe that that should be the case.
We could go further on defence. I have heard hon. Members talk about defence cuts. In the 20 years that I have been in the House we have always heard about Labour cutting defence, but, in the past two or three years, which party has cut defence? The answer is the Tory party. It really is an amazing turn of events. Conservative Members have been cutting defence expenditure and accusing us of being unpatriotic.
I would reduce defence expenditure. I do not see the point in Britain spending more money per head of population than European countries such as Germany. I just do not see the sense of it. I know that Germany is going through some difficulties now because we have got a good strike on. [Laughter.] I do not knock it. I believe in workers fighting for their rights. There is nothing wrong in that. Conservative Members should not laugh too loud and too long. Do not think for a moment that the people who create the wealth—the workers—will not take action some time in the future. It always turns full circle. It may be a little passive at the moment, but, make no mistake, it will change eventually.
I would save about £7 billion on defence and use that for the national health service, to pay better pensions to old-age pensioners and to give a little bit more to the disabled. I will tell the House where I would save some more money. This is not Labour party policy, and it was not discussed in the election campaign by those in power. I would save some money in Northern Ireland. It is costing at least £1 billion per annum to keep the troops in Northern Ireland. I would bring them out. It cannot be done straight away, but I would draw up a plan. We have had 20-odd years of the killing fields of Northern Ireland.
Ministers come to the Dispatch Box one after the other and say, "Things will get better. We have a new initiative." We listen to them for two years and then they get sacked and someone else is put there who comes up with another initiative. But those initiatives do not resolve the problem of self-determination in Northern Ireland. So I would save another £1 billion in Northern Ireland.
I would not have spent the £3 billion on the Falklands adventure. That is what it cost. So when people say to me, "Where is the money coming from?", I can show where I could save £50 billion already. I am prepared to balance my books, unlike the Government who have got us into this unholy mess.
The same is true of the Common Market. Britain pays £17 per week for every family in Britain to finance the tinpot common agricultural policy. Make no mistake: if I had that brief, I would put a stop to that.
Mr. Campbell-Savours: That is our policy now, Dennis.
Mr. Skinner: Well, it is not mine. My hon. Friend has a different policy on the Common Market from me. If he wants me to reveal my policy here in the House of Commons, I will. Before we entered the Common Market, which has been an unmitigated disaster, we had a deficiency payment system for farmers. After 20-odd years in the Common Market, many farmers—although not all; many gentlemen farmers are happy—who remember the deficiency payments system say, "Yes, it was a better system than the one that we have now."

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If my hon. Friend believes that the Common Market's halcyon days are not over, he should simply read the newspapers. The Common Market is not what it was in the 1950s, 1960s and 1970s. The economic growth days have gone.
Mr. Campbell-Savours: All I am saying to my hon. Friend is that Labour party policy at the last election was to secure a massive reduction in our payment into the agricultural budget. We advocated the reform of market pricing for agricultural products. To what extent is my position different from that of my hon. Friend on these matters and, in particular, on agriculture?
Mr. Skinner: I read the manifesto closely. I was involved in the policy review. Although my hon. Friend might have believed the jargon that he read in the newspapers, the truth is that at no time was a statement made about the precise amount that a Laour Government would save on the common agricultural policy. Many things were said which might have given that impression, but that was not the precise nature of what we fought the election on.
I have an honest difference of opinion with my hon. Friend. We shall come home to this cake and milk eventually because the Common Market and political union will not be on offer much longer. It will not happen. I say here and now that there will never be a time when someone with the name of Baron von Traushauser will stand for Labour in Bolsover and win in a general election. We all know that it will not happen. If people cannot accept the bottom line, why do they parade all these wonderful virtues of political union? That is what it means at the end of the day.
The right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), who used to be Leader of the Liberal party—
Mr. Campbell-Savours: The Liberals are not here.
Mr. Skinner: They are never here. We know that they are not here. The right hon. Member for Tweeddale, Ettrick and Lauderdale thought that he could be the great political adventurer, trot across to Italy and fight in a Common Market election. What happened to him? He got about as many votes as Lord Sutch did, or his old mate David Owen did when he finished up.
I would love to be able to say that there will be world government. I want it. I believe that that is how we could achieve socialism on a grand scale. But I am not a fool. I see the Scots arguing the toss about breaking away from the United Kingdom. I do not knock that, if that is what they want. But what does it tell me? It tells me that they have a different culture and want to have it identified. That is the real world.
Hon. Members: Hear, hear.
Mr. Campbell-Savours: Conservative Members are agreeing with my hon. Friend.
Mr. Skinner: I do not worry what anyone says, because I know in my heart that I am right. I know that wasting time and energy on a grand political design which has been foisted on us from the top will not work. If we were dealing with socialists in the Common Market, it would be
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different. Does my hon. Friend suggest for a minute that Helmut Kohl is a socialist who has come from the working class?
Mr. Burns: What about Jacques Delors?
Mr. Skinner: I do not think that he is any different.
I suggest that the Common Market is coming from the top downwards. From a socialist point of view, if any substantial changes are to take place they must come from the bottom up. The Common Market is an apparatus designed by people such as Shirley Poppins, Dr. Death, Woy of the Wadicals and all that gang. Where are they now? Can they be found? They are people who pass through political history and disappear. They have great ideas. They used the Labour party for 15 or 20 years to pursue their tinpot ideas.
We have to read our history not only of Britain but of all the other countries. There have been a thousand treaties between Britain and other western European countries. Where are most of those treaties now? If we ask the Library, it will tell us. They are in the dustbin of history. They do not last for ever. I have no doubt that for a short period some people were excited and were caught in the time warp. They believed that those treaties would last for ever. But treaties do not last for ever. People ought to understand that.
The idea of a European currency and a European bank will not happen. Why bother? We have to build socialism on our own plot of land. There is nothing wrong with building it in a much wider field, but we must prove that we can do it on our own turf. That is what I am about. That is why I put forward these propositions to balance the books, achieve full employment, and give local authorities the power to build houses again and spend more money on schools and hospitals for an aging population.
If the other thing happens, so be it, but I will not put the horse before the cart. That is what some of our people will have to understand. That is why, when it comes to the vote on Maastricht, I want my hon. Friends to vote with me against it. If all of us on these Benches do the same, the Government will be in trouble because they have a majority of only 21. If we can get all our people to vote against Maastricht, we shall test those on the other side who reckon that they will cast their vote against it. Who will bail out the Government? It will be a great political event because the Liberals will bail out the Tory Government and be sunk for ever. They did not do very well in the general election, but they will go even further down the pan.
Mr. Campbell-Savours: My hon. Friend has put a powerful case, but, as he knows, I do not agree with much of what he says on European union. What does he feel about the social chapter, which will bring to this country standards that he would want to support and which are not otherwise available under the Government?
Mr. Skinner: I have no hang-up about improvements for workers, wherever they come from. If someone introduces a Bill to improve the lot of workers and take a little power away from the bosses—we cannot enhance the power of workers unless we take power away from somewhere else—I would support it. There is no yellow brick road along which everyone can walk together and live happily ever after. That is not real political life. If a

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social chapter clause is introduced which says that workers in Britain will be given 10 weeks holiday, just as Members of Parliament have during the long recess, I would not care who introduces it. But it will not come. The Government are incapable of delivering it because the bosses in the Common Market run the show, and they will not give all workers 10 weeks' holiday in the summer. If they did so, I have no doubts about what I would do.
Mr. Campbell-Savours: Will my hon. Friend be just a little more clear?
Mr. Skinner: I have been clear.
Mr. Campbell-Savours: If it were possible to secure within the treaty, when we legislate for it in the House, amendments that carry the areas about which the Labour party is concerned, would my hon. Friend then be tempted into the Lobby to support it on the basis that he was supporting principles that he holds so dearly to his heart?
Mr. Skinner: My hon. Friend has not checked the record. On a couple of occasions, two minor social security matters relating to care, one of which my hon. Friend the Member for Oldham, West (Mr. Meacher) will remember, went before the European Court. I was then asked whether I was in a dilemma over it and I said that of course I was not. Anything that advances the cause of working people, wherever it comes from, does not place me in a dilemma. But I shall not vote for the Maastricht treaty because it is a pig in a poke. My hon. Friend knows that there are no such provisions in the Maastricht treaty—
Mr. Campbell-Savours: At the moment.
Mr. Skinner: And there never will be, because the bosses run the Common Market.
Has my hon. Friend ever stopped to think about the political complexion of the countries in the Common Market? There are only two socialist countries among the 12, and they are not really socialist, so there is none. That is even worse.
Mr. Jacques Arnold: Then why is the Labour party so much in favour of it?
Mr. Skinner: I am speaking for myself. I am trying to make a statement on the Queen's Speech, but I have been drawn into questions on the Common Market. I have made my position clear. It is not new. Many people know where I stand on the issue. I am simply saying that I would save £17 a week per family—obviously, I could not save it all, but that is what it costs to prop up the common agricultural policy. I would make massive inroads into saving some of that amount.
We do not need the Common Market. Britain produces 50 to 60 per cent. of its food. We must import a lot because we do not live in a climate in which we can produce all our food. We must export many manufactured goods—rather, we used to—to pay for that food. It is not a bad idea to produce enough food in Britain to reduce the balance of payments deficit on food. I would devise a method to suit us rather than Germany and Italy. They have other fish to fry, which is only natural because they are different countries.
I am not being xenophobic but stating a fact. People should understand that. If everyone in this country acknowledges that Wales is different from England—some of my hon. Friends are Welshmen and proud of it and
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other people are proud of being Scots, and I do not knock their culture—why, when someone says that Germany is different, are they told that they are being xenophobic? I do not know the difference.
As an immediate move, I would not hesitate to get out of the exchange rate mechanism because it will not last even as long as the grand design on political union or the central bank. Like all the other forms of apparatus for managing currency, it will not last. There was an attempt at a gold standard before the war and economists wrote long articles about how wonderful it was, saying that it would reign for ever. But it did not. Rather, it helped to create mass unemployment in Britain. After the war and the Bretton Woods agreement, there was another attempt. There was then the floating pound, and that did not work either. It is like saying that we are not fit as socialists to run our own country and our own family purse but must give it to the Bundesbank.
I feel strong enough to do it. I do not need to go running to Germany and Italy, where the neo-fascists are now rearing their ugly heads on a grander scale than ever before and where mass unemployment is now the order of the day in many of the eastern European countries, gradually spreading into the other 11 European states within the Common Market. We no longer see massive growth in the Common Market but internecine warfare. We see warring tribes all along the edges of the Common Market. Now that Germany has annexed East Germany, it has run into serious trouble. Religious fundamentalism is now stronger than ever before and my hon. Friend the Member for Workington still goes on about the grand Common Market. These are different days. We are living in a different age and the great days of economic growth are over.
Mr. Deputy Speaker (Mr. Michael Morris): Order. I should be grateful if the hon. Gentleman would address his remarks to the House rather than to the hon. Member for Workington (Mr. Campbell-Savours).
Mr. Skinner: I was arguing about the Maastricht agreement, which is mentioned in the Queen's Speech.
Mr. Deputy Speaker: I am not arguing about the content, but the hon. Gentleman keeps referring to his hon. Friend and the rest of us would like to join in the debate.
Mr. Skinner: There is such a thing as a debate. It is your first time in the Chair, Mr. Deputy Speaker—or maybe you have been in it before. This place is still a debating chamber and I picked up the remarks of a Conservative Back Bencher, then from another Tory who had made a speech. I picked up some other remarks and my hon. Friend the Member for Workington has made some reasonable remarks in his own way about an important issue and on which he holds certain views. This is a Queen's Speech debate and we have a right to discuss it.
Mr. Deputy Speaker: I do not challenge the content of the hon. Gentleman's speech, but simply ask him to refer to the whole House so that the rest of us can listen.
Mr. Campbell-Savours: May I take my hon. Friend back to the ERM? He said that it will go in the same way as similar apparatus in history. That may be the policy and strategy. Would there be a need for ERM if we had a single currency?
Mr. Skinner: There will not be a single currency.
Mr. Campbell-Savours: There might be.
Mr. Skinner: It will not happen, because the climate and environment in the Common Market are now different from what they were during the great growth years when the grand designs were made. The Common Market is no longer what it was when those grand ideas were put forward. There is now insecurity all over the place, and when people feel insecure and see unemployment—12 million people are now out of work in the Common Market—and other difficulties, that insecurity results in their being insular. They then start to look closer to home for answers. The great ideas are then pushed on to the back shelf.
Even if the idea was great, unfortunately for my hon. Friend, the climate is totally different now. We shall debate this matter in the future, but I feel pretty confident about what will happen.
While I am dealing with the Common Market, I shall dispose of the subject of proportional representation. I looked at the Queen's Speech carefully and noted that it contained no mention of it. If ever people in this place and in this country have been led up the garden path, it is on the issue of proportional representation.
When the Liberals—who are not present—were challenged about it in the general election, they did not know whether they were on this earth or Fuller's earth. What is proportional representation? In which brand do they believe? They suffered a reduction of about 5 per cent. in their overall vote throughout the country. The people declared their feelings in the general election. I wish that we had received 42 per cent. of the poll, as we should then have been sitting on the Government Benches. I would have relished the opportunity of making some of these comments when in power. I believe in taking power from the bosses, unlike some others.
During the election the Liberals advocated proportional representation on washday Monday, Tuesday and every time they opened their gills. No one can say that we did not have a vote on that issue in the election—we did. The subject did not go unnoticed; people had it rammed down their throats until they were sick of it and, ultimately, more than 80 per cent. voted against it. That is the truth—
Mr. Campbell-Savours: I was not one of them.
Mr. Skinner: There are odd exceptions.
No one can tell me that proportional representation did not get a good run for its money in the general election. It was found flagging. If the general election had been a horse race, proportional representation would still be at Tattenham corner, trying to get round the course when the other horses had finished—it was as far behind as that. Let us hear no more nonsense about that.
One factor that helped us to lose the election was that, near the end of the campaign, some of our people started to follow Paddy Backdown's tail and ran after him and proportional representation. As a result, people gained mistaken ideas about a hung Parliament, and became uneasy and insecure. We should have been positive and spent the last few days of the campaign talking about a real classless society, a subject which is not mentioned in the Queen's Speech.
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The Prime Minister is always on about the classless society, so he should put something about it in the Queen's Speech. If he wants a classless society, he should get rid of the House of Lords. We cannot have such a society unless we get rid of the House of Lords and the honours list. It is not enough simply to tamper with them. We must get rid of all the money that is given to those who jump queues in the national health service in order to get a private bed. We must stop giving additional money to allow people to send their kids to posh schools, bailed out by tax relief of one sort or another.
One detestable aspect of the Queen's Speech involves the privatisation of British Coal, not only because it will throw even more people on the scrap heap, but because of the economic cost to the country. We imported 20 million tonnes of coal last year—equivalent to 20 pits and about 20,000 miners. We are talking about an extra £1 billion on the balance of payments. What will the figure be if the pits are privatised and their number reduced by another 20 or 30? That would increase the balance of payments by at least another £2 billion.
We are talking about throwing people out of work. It costs £8,000 every time someone is thrown on the scrap heap of the dole queue—a sum picked up by the taxpayer. The Government, who talk about a classless society, have the cheek to include the subject of the privatisation of the coal industry in the Queen's Speech; and the same is true of rail.
I had the appalling experience the other day of talking to one of my constituents, Eion Watts, who said that he had been to one of the colliery review meetings on the future of Markham Main pit in Yorkshire. British Coal is so arrogant now that the Tories have won the election that it summoned the union representatives from the National Association of Colliery Overmen, Deputies and Shotfirers, the National Union of Mineworkers and the rest and read a statement declaring simply that the Markham Main pit would shut and waved them goodbye.
Do we remember 1984, when, in the middle of the strike, the Tory Government and British Coal promised that there would be a review of all the pits, and proper arguments would be held on their merits or otherwise? On this occasion, the pit workers were kicked out of the door. Privatisation of the coal industry will do the same thing, but on a grander scale.
Mr. Ray Powell: My constituency of Ogmore has been a mining constituency for more than 50 years. Since the Government were elected in 1979, they have closed all seven pits in my constituency and put 7,850 miners on the dole. We have not recovered from that during the past 13 years and, with privatisation, in all probability the last three or four pits left in the whole of Wales will close and thousands more will be put on the dole.
Mr. Skinner: I agree. There were about 14 pits in my constituency when I first became a Member of Parliament and there are now two. My hon. Friend is absolutely right. Wales has been treated as badly as any coalfield in Britain.
The constituency of my hon. Friend the Member for Ogmore (Mr. Powell) contains many retired miners and miners' widows, many of whom receive solid fuel allowances or money in lieu. As there are a couple of Ministers present, I shall ask them for a guarantee that, if privatisation takes place—we shall fight it to the very end,

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and I hope that there will be no pairing by Labour Members, who should all go through the Lobby to fight that policy day and night—those people who suffered in Wales, Derbyshire and elsewhere will not be stripped of that fuel allowance or the money in lieu.
There is no privatised industry in Britain that will pay out to those people—more than 500,000—who receive fuel allowances. Where will the money come from? Is there a private entrepreneur who will foot the bill? I do not believe that there is. That is an important issue. The Government had better find some answers as there will be an even bigger march to this place if such action takes place.
What happened to the pensions of the miners in Wales who had worked for Wales for 40 or 50 years, and to their widows? What guarantee do they have? There are Maxwell types waiting to get their greedy hands on the £1.4 billion worth of extra money in the miners' pension scheme. Already there have been clever articles in The Daily Telegraph and The Sunday Telegraph telling advisers and financiers how to get their hands on the money in miners' pension schemes in the event of privatisation. We know what the Tories would do in that event.
The Queen's Speech contained something about shorter hours for Members of Parliament. The Government have a majority of 21. I have a message for one of my hon. Friends who is a stalwart on this issue—no names, no pack drill, but he may be prepared to let me mention him. He is the Labour party deputy chief Whip, my hon. Friend the Member for Jarrow (Mr. Dixon). If we are to fight the Government on all their privatisation policies and other issues, we need to ensure that Labour Members are present in the Chamber to challenge those policies in the early hours of the morning. There must be no talk of wrapping Members in cotton wool and giving them time off.
We have been elected to fight the class enemy. Millions of people were disappointed that they did not gain a Labour Government, and they would be even more disappointed if they thought for one minute that we were not taking on the Government through the long hours to fight them at every possible turn. I propose a battle to the end.
8.37 pm
Mr. Bob Dunn: I congratulate you, Mr. Deputy Speaker, on your appointment and wish you a long and happy time in the Chair. I guarantee that I shall not cause you trouble, as long as I am called frequently.
I echo some of the sentiments expressed so admirably by the hon. Member for Bolsover (Mr. Skinner) in his speech, which I think lasted for the best part of an hour. I have listened to him on many occasions during the 13 years that I have been a Member, and he of all people is a man who has kept true to himself and his beliefs. He has never watered them down or changed them. He has never taken advice from a spin doctor or a public relations agency. Today, we heard a vintage speech—because he expresses what he believes, he believes what he expresses. That is not always true of speeches made in the House.
The hon. Gentleman's references to developments in the European Community also struck a chord among Conservative Members, as did his references to proportional representation, which echoed a sentiment expressed yesterday by my right hon. Friend the Prime Minister in his comments on the Gracious Speech.
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We have all become accustomed to the refrain that proportional representation would bring stability and fairness to government, but it would not, as has been proved in Italy which is now enjoying its 49th Government since the war. It has not worked either in the Federal Republic of Germany, where the grand coalition of the CDU and the SDP ran affairs for about 15 years. Members on both sides who flirt with proportional representation —some of my own colleagues believe in it—must recognise that PR simply transforms stability of government into instability and transfers responsibility for the shape of Government policy to a small group of extreme parties.
Under any system of PR—the Italian example is the best—which gives parties seats in the Chamber according to their strength outside it, the possibility of the National Front and extreme parties of the left gaining seats is opened up. That would result inevitably in clusters around a core party.
I believe in policies that I do not want to give up, just as the hon. Member for Bolsover has a philosophy that lie wants to turn into policies that he would not give up. We have a commonality and an amity of interest in that regard.
Mr. Campbell-Savours: The hon. Gentleman writes off proportional representation as if there were only one system of it, but there are many. The single-member constituency system would not provide for the election of curious and extreme minorities and would be to the advantage of the major parties. The hon. Gentleman grossly misrepresents the impact of greater proportionality of representation.
Mr. Dunn: It is true that there are as many different systems of PR as there are countries that follow it, but the worst system of all is the party list system, under which the hon. Member for Bolsover would not be in the House, as he and I both know. Perhaps that is why he rejects any idea of PR.
Ten years ago I had the pleasure of seconding the motion on the Loyal Address and I am glad that through all the Queen's Speeches since then there has run the thread of pushing out responsibility from the hub to the rim. That theme continues in this Queen's Speech too. I especially welcome the determination to open up even more responsibility to parents and schools. I was an education Minister when the grant-maintained system was made law. There are five schools in my constituency which are now independent of the local education authority. They offer greater dynamism, choice and excellence, and by doing their own thing they meet the needs of the industrial and commercial community in north-west Kent. Parents, governors and teachers whom I have met have all expressed the view that the decision to go grant-maintained was right and proper and in the interests of the schools in question. I hope that as more schools move out of local education authority control the dynamism in education that I have always tried to foster on behalf of my constituents will grow and flourish.
I welcome some of the new appointments to the Government. Perhaps the appointment that gave me greatest pleasure was that of my hon. Friend the Member for Crawley (Mr. Soames), who has been made Minister with responsibility for food. I hope that he will not take it amiss when I say that my initial reaction on hearing of his appointment was to think that the party managers had

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shown a sense of humour. I am sure, however, that my hon. Friend will overcome his problems of birth and girth and become an extremely able Minister.
I was intrigued by the remarks of the hon. Member for Birkenhead (Mr. Field), who referred to pensioners who have worked for and paid into pension schemes operated by companies that were plundered in recent years by the late Robert Maxwell. I hope that in the next few weeks and months the House, together with the Government and the Select Committee on Social Security, will deal with the problem facing many of our constituents because of the termination of their pension payments. I am sorry that that was not mentioned in the Queen's Speech, but I do recognise the difficulties that the plundering has caused the Government. I hope that sense will prevail and that my constituents will gain consolation and solace in time from the return of the money taken away from them by Maxwell.
I was pleased by the reference in the Gracious Speech to British Rail. Along with my hon. Friends the Members for Gravesham (Mr. Arnold) and for Maidstone (Miss Widdecombe), I have battled over many years to improve commuter services from our constituencies into central London termini. I welcome the introduction of the new Networker trains on the north-west Kent lines serving Dartford and Gravesham, and the decision to break up British Rail's monopoly by introducing private competition. I do not believe that the proposals go far enough, but I am a firm believer in taking one step at a time, so I hope that eventually there will be more movement towards the greater privatisation of British Rail and towards allowing it to raise on the open market the funds that it needs and deserves.
British Rail's quandary at the moment stems from its being told to behave in a businesslike fashion while being unable to raise money on the open market in the same way as ICI or Sainsbury would. We should unfetter British Rail and give it the capacity to borrow money for capital works. I do not believe in continuing to inject public money into British Rail. It must become a businesslike operation serving commuters who, because of the nature of transport systems in north-west Kent, have to use British Rail. Often there is no real alternative.
I wholly disagree with the idea of a national police force; our party must not embrace it. I represent one of 16 constituencies in Kent, which has a population of 1.5 million. We have special needs, not least those caused by the development of the channel tunnel, which has to be policed, and by the construction of the high-speed link and the associated difficulties. We are in the front line for Europe and for the movement of goods and people. Kent's needs are peculiar to Kent, although Kent's functions are in the national interest. It is nonsensical to set up a national police force advisory body to represent the interests of the public. We need a police force for Kent, answerable to our police authority. I declare an interest in that my wife is a member of the Kent police authority, but even if she were not I would still be against the establishment of a national police force. It might be fine while we were in government, but the Labour party has different values, standards, philosophies and principles and I should be very worried if central political control were extended to a national police force. I therefore record
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my strong protest against any such proposal. I welcome the Gracious Speech and look forward to the implementation of many of its measures in this parliamentary year.
8.50 pm
Miss Emma Nicholson: I add my congratulations to those of other hon. Members on your elevation to the Chair, Mr. Deputy Speaker. I was fortunate enough to serve under your chairmanship in several Committees. Your chairmanship is always marked by wit and firmness and I look forward to your long service in the Chair.
The maiden speeches have been marked by sincerity and commitment to the welfare of constituents. I am sure that all hon. Members respect and honour such virtues. Yesterday and today we heard some stale arguments, attempted resurrections by the Leader of the Opposition of the arguments that lost his party the general election. He had at least some ideas, even though they were conclusively rejected by the electorate. The leader of the Liberal Democrats did not even offer that, but returned to proportional representation and the other failed ideas that always leave the House empty as he rises to speak. That is in contrast to the freshness of style, approach and content of the Prime Minister's response to the Gracious Speech. He leads a reforming Government who promise to create fresh opportunities and return more freedom to citizens of the United Kingdom, their families and communities.
The Prime Minister will build upon the successful and great Conservative reforms of the 1980s. The scorn poured out yesterday by the Leader of the Opposition and directed at Conservatives seemed to flow harmlessly back to him because we have succeeded in our reforms to date. Our great programmes on health, education, social security and privatisation are the keystone, cornerstone and jamb of our democracy, giving power to the people and not to the state. They have been copied by other nations. The blueprint offered to the developing world by the World bank and events in eastern Europe show that our programmes are being copied quickly and successfully in countries such as Poland and Russia.
The poorer former socialist-run economies remind us of a truth that should mark the coming years—that real freedom is economic freedom. Without the freedom to save and purchase as the individual wishes, and without the freedom to inherit and pass on wealth, there is dependency upon and control by others. Under the Labour Government practices which we inherited, that control was classically state acquired and run. We have broken the spell. It could even be said that we have kissed and awakened the sleeping princess of individual energy and creativity of the British people.
Our next step is most important. We must address as a priority the amount that the state spends. We have altered the balance of tax raising and the European Community VAT model is now ours. But the percentage that the state spends must now be the determinant, the marker, for our Conservative commitment. Let us aim to reduce that 43 per cent. of gross domestic product to at least 40 per cent. That would bring us closer to the average ratio of the Organisation for Economic Co-operation and Development, not well above it as happened in most post-war years.

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We must urge the Government to look at the big spenders. Some 22 million of our citizens receive social security benefits. We must look at the environment, about which my hon. Friends have spoken so ably and with much knowledge. The welfare state must be the servant and not the master of the public purse. We have not yet reached our goal. The 13 years of Conservative government have increased in percentage terms the income taken by the Government in taxes from those on average earnings. We pay too much tax. We have altered the balance, but we have not grasped the nettle of reducing the percentage. The extension of the 20p tax band to the first £2,000 of earnings is wonderful news to Conservative Back Benchers. It is real Tory news announced yesterday by the Prime Minister himself.
Where have we failed? What must be our next step? We must rigorously question the redistributive theory. Why should services throughout the United Kingdom be created to the same national level? That is the "Big Mac" philosophy, without the quality controls. We must question, challenge and overthrow the assumption that the state will provide from the beginning to the end of life. The great users of public services and public funding are in the middle income group, and expenditure on those services is not expenditure for the poor. We must reassess our priorities because surely the middle income group now have sufficient wealth, created under Tory Governments, to pay at least a part of their way. Only when that happens will the really poor benefit in the way that they truly need.
Those imperative assumptions will take years to change, despite the fact that they have been rocked in countries as far apart in culture and income as Sweden and Zambia. We must move from non-judgmentality to impartial but rigorous assessment of need, and match that need with underpinning that will lead to help for success. We must grasp the nettle of universal benefits. We must reform housing. Why should we have state ownership at all? Some 20 per cent. of housing is still state owned. Why not zero per cent? In recent years, it has been socialist thinking that an Englishman's home is the castle of the state.
We must reform the police. More money has not meant, at least not yet, a reduction in crime. We must also reform local government. We started that under the John Banham commission. We must look again at pensions and cut subsidies. We must forget the socialist gravy train, because it ran into the buffers of the International Monetary Fund. The agencies represent wonderful thinking that we must carry further and we should look firmly at the creation of a body based on the Audit Commission. What about a real British Fontainebleau, matching our excellence in the civil service by sharing with industry knowledge at a much earlier training and learning age? If the excellence and flexibility of top civil service thinking are matched by the citizens charter corrupts throughout, we shall have a model of a modern Major Government—slimline and effective government service to the electorate.
The open government reform is most welcome because knowledge is power and that power should rest with the citizen. We must not be short-sighted in our determination to succeed in shrinking the mushroom cloud of public expenditure. We must invest in areas where government must provide services. We should have statutory education from the age of four and should reassess our commitment to nursery schooling. That would help women.
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There should be an equal opportunities employment commission that offers equal opportunities not only to women but to that great and undervalued section of the population, the disabled and to ethnic minorities. That commission could focus on employment, because equality of opportunity issues are best coped with by the relevant Departments. One of the keynote practice employers in equal opportunity is the civil service. Sir Peter Kemp of the Cabinet Office and his colleague, Susan Haird, the equal opportunities officer, are carrying out wonderful and careful work which industry would do well to follow.
The Government must spend, or continue to get others to do so, on infrastructure such as roads and sewerage. The privatisation of the coal industry and the beginning of the nibbling away at the privatisation of the railways are welcome music to Conservative ears. I believe that we should shed everything that it is not strictly necessary for the Government to run. The determinant of what ownership will give the best results for all our citizens should be competition, not ownership. Competition, in a variety of ways, offers the best services. Ownership is of less importance.
The great place on which the Government must spend is the national health service, in which we have trusts and management choice. All sorts of good things flow from the NHS, and I am confident that our 90:10 per cent. ratio in health provision is good. It has resulted in first-class management, and that is where our reforms are starting to bear fruit.
The electorate declared conclusively last month that socialism and its weaker sibling, the Liberal Democrats, are finished. The Conservatives are the reformers now. We are a Government who are truly worthy of the nation. We shall all enjoy a happier and a more tolerant, prosperous, generous and efficient five years under the leadership of our great Prime Minister.
8.59 pm
Mr. Michael Meacher: First, Mr. Deputy Speaker Morris, I congratulate you on achieving your post. I add my congratulations through you to Madam Speaker on achieving her prestigious position and on the overwhelming majority with which she won it. We look forward to you and her regulating our affairs in the House with good-humoured forcefulness when it is even more packed than it is now.
I take the opportunity to compliment several of my hon. Friends on what I am sure the House will agree was a series of remarkable maiden speeches. One of the benefit s of an election, even when one's party loses it, is the inflow of new talent. My hon. Friend the Member for Lewisham, East (Mrs. Prentice) made a forthright speech in which she extolled especially the need for better training. We look forward to further speeches from her in which she harasses the Government on what is unquestionably a major deficiency in their policy.
My hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche) spoke of her special concern on a range of constituency issues, including environmental matters. She directed her attention also to Cyprus and the Law Commission. I do not forget her recommendation that the tradition of legal wigs should be dropped. I can assure her that the list of anachronisms does not end there.
In a debate on public expenditure, my hon. Friend the Member for Edinburgh, Leith (Mr. Chisholm) made a

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passionate speech on the issues that concern his constituents and, indeed, the entire country. These included decentralisation of power, unemployment, housing, hospitals and child care. As those issues embrace much of today's debate, my hon. Friend is clearly a natural. With your permission, Mr. Deputy Speaker, I am sure that he will be a frequent contributor to our debates.
My hon. Friend the Member for York (Mr. Bayley) made an eloquent speech about the special constituency interests of the beautiful city of York, where I had the great pleasure of living for several years, and about his deeply felt concerns in respect of community care and the care of the elderly in residential homes. He raised issues forcefully on behalf of many who often do not have a public voice. We look forward to his strongly keeping such issues before the House.
My hon. Friend the Member for Blaenau Gwent (Mr. Smith), in the spirit of his great predecessor, Michael Foot, made a passionate plea on the great issues that have always been at the centre of socialist struggle: low pay, bad housing, the health service and privatisation. I do not know what it is about south Wales, but it seems always to produce great champions of the people. We clearly heard another one in the making this evening.
It is to be noted that the non-controversial principle of maiden speeches that ruled firmly when I entered the House seems to have gone for good. I can say only that the pleasure that we derived from the speeches to which I have referred was all the greater for that.
It is customary on these occasions, when the Minister is newly appointed, to offer congratulations. That is a formality which I am happy to follow. However, if the reputation of the Secretary of State for Social Security is any sign of his future performance, we can certainly assure him of a hard pounding. One likes to think that, as was said earlier today, the Prime Minister has a sense of humour in some of his appointments. On this occasion, I fear that the joke may be at the expense of the unemployed.
The Prime Minister likes to claim that he has some affinity with the unemployed because, for a brief period, he was one of them. The truth is that nobody who had any concern about the unemployed would have appointed the right hon. Gentleman as Secretary of State for Social Security—[Interruption.] I hope that I am wrong. I shall be willing to apologise to the House in due course if the record shows that. However, everything that we know about the right hon. Gentleman leads us to view his tenure of office with considerable apprehension—not on our behalf, but on behalf of those for whom we speak.
Before I come to the contents of the Queen's Speech, I wish to refer to what is not in it. There is a glaring omission, to which my hon. Friend the Member for Birkenhead (Mr. Field) drew attention, and which was then taken up by a number of Conservative Members, including the hon. Member for Wellingborough (Mr. Fry). There is no mention of establishing a proper pension fund framework, which is now urgently required not only to prevent any repetition of the Maxwell saga, but to deal with a series of dubious manoeuvres that have occurred in several other cases, not least treating pension funds as the trigger for takeover targets.
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On an even more urgent matter, there is no mention in the Queen's Speech of what the Government intend to do in support of thousands of Maxwell pensioners who, through no fault of their own, and to a large degree due to the Government's negligence, now face being deprived of their basic livelihood—[Interruption.] I shall come to the reasons for saying that in a moment. Does the right hon. Gentleman accept—it is obvious to most people—that the banks recklessly encouraged Maxwell in his orgy of borrowing and takeovers? If so, will he repudiate the statement a few days ago by the Governor of the Bank of England and put pressure on the banks to return the pension fund assets that they now know to be stolen, as is the law with other property known to be stolen?
If there is still a shortfall—there may be one of £200 million to £300 million—will the right hon. Gentleman meet that out of the Exchequer? I should be very happy to give way to him if he wishes to answer that question now. I certainly want an answer tonight. If he chooses not to reply at this moment, I give him notice that I shall intervene in his speech, because we want an answer to that question tonight. It is an urgent matter which demands an answer from the Secretary of State, and only he can give it.
I ask that question because the Government are liable to meet any shortfall. The Secretary of State's predecessor was culpably negligent in failing, for 22 months after the Social Security Act 1990 received Royal Assent in July of that year, to bring forward two regulations—one on the 5 per cent. ceiling on self-investment and the other making the pension fund a debt to the employer in the event of a winding up. Those two regulations would have made the Maxwell depredations very difficult, if not impossible.
I ask again: will the Government pay for their own negligence? If it is of any assistance to the right hon. Gentleman, and in case he is tempted to say that the Government cannot afford to do that at a time of public expenditure restraint, I shall put two considerations to him. One is that the Government saw fit to compensate the Barlow Clowes losers who openly speculated on offshore profits. In that case, how could the Government not compensate those who believed, in good faith, that they were putting their money into the most secure possible investment for their retirement?
Secondly, if the Government can afford £6 billion to bribe younger people to opt out into personal pensions, and if they can afford nearly a further £1 billion during the next five years to bribe older people to take out personal pensions—the Queen's Speech, which is generally devoid of detail, goes out of its way to re-emphasise that detail, which we knew already—the Government certainly can afford to protect the Maxwell pensioners.
Therefore, I ask for the third time whether the Government will deal with the chaos of trustee law regarding pension funds, and compensate the Maxwell pensioners. Will the Secretary of State answer that question now, because the House needs an answer to it? The Secretary of State clearly does not intend to answer the question now. I repeat that we shall not leave the Chamber until we have some answer to that question tonight.
Mr. Skinner: We might be here all weekend.
Mr. Meacher: I cannot make the Secretary of State answer the question, but I can repeatedly intervene and demand an explanation. If he is on his feet, he has to give some answer, so we shall wait to see what happens.
The Queen's Speech is more opaque than usual when it comes to the social security paragraph, but the Government never announce the big changes in social security in the Queen's Speech, particularly when they are bad news. They did not announce, either in the manifesto or in the Queen's Speech, the ending of the pension link with earnings in 1980, which, according to the Government's figures, has cumulatively robbed pensioners of more than £35 billion. Nor did they announce beforehand the child benefit freeze, which, between 1987 and 1990, cost mothers and children more than £1 billion.
But the drift of the Queen's Speech is perfectly clear. The most ominous phrase in the Queen's Speech says it all. It says that it is the Government's intention to
"reduce the share of national income taken by the public sector".
Clearly, the Department of Social Security, with a bigger budget than any other single Department, is to have its budget cut sharply. That is why a right-wing Thatcherite Minister has been appointed Chief Secretary and why a right-wing Thatcherite Minister has been put in charge of social security.
The cycle is perfectly clear. The Government so mismanaged the economy with an inflationary credit boom in the mid-1980s that they were forced to jack up interest rates to trigger a recession, and now that that savage disinflation has produced a PSBR of at least £28 billion, they are determined to offload most of the hardship on to the most helpless and vulnerable sections of the population whom they hope and believe cannot or will not retaliate—the pensioners, the unemployed, the sick and disabled, the lone parents and the low paid.
Mr. Ian Taylor: The hon. Gentleman talks about those most in difficulty. Given the targeting that he was implying in his comments, does he support a shift towards selective benefits and away from universal benefits?
Mr. Meacher: There was considerable debate earlier on that issue. Unlike many people who use the words, when I tell the hon. Gentleman that I shall be coming to that point later in my speech, I mean it.
That is the strategy which is contained in the phrase in the Queen's Speech.
"with sustained emphasis on those groups with the greatest need."
Decoded—we have had plenty of experience of this—it means more means testing, more rationing, more cuts for the 22 million people in Britain dependent on benefit. It means more chipping away at benefits for the poor on low incomes in order to give tiny increases to the poorest on the lowest incomes of all. That is the bitter experience that we have had during the past 13 years.
Yes, the Government believe in redistribution, but never from the rich to the poor, only from the poor to the utterly destitute. I have three fundamental objections to the Government strategy of targeting, which is Toryspeak for means testing, and clearly is about to be considerably expanded.
The first of my objections—and I readily admit that this is the least effective of them, because the Government have as much compassion as a jar of vinegar—is that targeting is manifestly unjust. Last month, the Institute of Fiscal
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Studies reported that, since 1979, tax and benefit changes have given an average of an extra £87 a week to the richest 10 per cent. in our society, while the poorest 10 per cent. were forced to take a loss of £1.
How can it be right now to kick the poorest 10 per cent. in the teeth again? The Government have already produced the most unequal society since the Edwardian era. On the one hand, there are the 1 per cent. of the population who are the richest—and they total more than half a million people, so we are not talking small numbers. According to the Government's own figures, they have seen their incomes increase by no less than £877 per week since 1979. That is not the result of pay rises or of perks —although they have massively increased, too—but of cumulative tax cuts over 13 years.
On the other hand, there are the pensioners—3 million of whom are forced to make do on only £54 a week. That became by far the lowest pension in the EC, except for Greece and Portugal, after the Government removed the pension link with earnings. Also, 2.75 million unemployed are reduced to living on £43 per week per adult. That is also by far the lowest unemployment benefit in the EC, after the Government made 11 separate additional cuts in unemployment benefit since 1979.
More than 1 million young people aged 16 to 17 are denied entitlement to any benefit if they cannot get a job, obtain training or enter further education, through no fault of their own. That is unlike any other country in the EC. The Government have forced young people into debt and into criminal activity in order to survive. The National Association of Citizens Advice Bureaux reports continually reveal continuing destitution and starvation at levels that we have not seen for decades.
Worse still are the 10 million people living on or below income support—which is only £42 a week for an adult. Eight years ago, silently and without any announcement, the Government broke the link between earnings and that final safety net benefit. Those are the people whom the right hon. Gentleman will be hitting if he cuts social security benefits further.
If the Secretary of State denies that he will do that—I want an answer to this question, too—will he give the House a categorical assurance tonight that there will be no change in the next five years in the status of the retirement pension or of child benefit, as universal benefits available to all without a means test? I will gladly give way if the Secretary of State will come to the Dispatch Box. All he has to do is say that there will be no change—just utter the single word "No". We are entitled to an answer. What are the Government's plans? What do they intend to do?
The Secretary of State for Social Security (Mr. Peter Lilley): I shall answer.
Mr. Meacher: The right hon. Gentleman says that he will answer. We shall seek to ensure that he does. If he will not give that assurance, and if he will not deny that he is planning to cut social security benefits further, I have three questions for him.
Mr. Lilley: Of course we will stick to the pledges contained in our manifesto—unlike the Labour party, whose heir presumptive seems determined to open up the very issues on which the hon. Gentleman wants an assurance from the Government: an assurance that we will not review the position. Will the hon. Gentleman give the House an assurance that he will not serve under the right

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hon. and learned Member for Monklands, East (Mr. Smith) if he asks his social security spokesman to review whether child benefit and the retirement pension should be means tested?
Mr. Meacher: It is the right hon. Gentleman's party which has just won a general election. Although it may surprise the Conservatives, they are still the Government, and the people of this country—10 million pensioners and 12 million families receiving child benefit; that is 22 million people altogether—want an answer to my question. Will the Government maintain the retirement pension and child benefit as universal benefits? The right hon. Gentleman still has not answered that question.
As the right hon. Gentleman will not give the assurance that I seek, let me ask him three questions. First, how can it be right for someone like him, on £1,212 a week, to decree that £43 a week is too much for an unemployed person to receive? How can he say that that amount should be cut, when he has no experience whatever of what it is like to have to get through a week on £43, which must cover all expenses except housing?
Secondly, how can the right hon. Gentleman persist in a policy of extending means testing, when the latest evidence confirms yet again what Opposition Members have always said? We have constantly pointed out how self-defeating, and what poor value for money, that policy is. The Oxford-Oldham study, published last week, shows yet again that, despite the spending of millions of pounds on expensive advertising promotions by the former Secretary of State for Social Security—who has just entered the Chamber, right on cue—family credit still reaches only 50 per cent. of those for whom it is intended, while child benefit reaches 100 per cent. of its intended targets.
My third question is, in many ways, the most important. What right has the Secretary of State to make further cuts in national insurance benefits? They are not charity; they are not donations. They are rights that have been paid for. The Government have already increased national insurance contributions by 38 per cent. since 1979. If any private insurance company made such swingeing increases in premiums and then cut benefits that had already been paid for, it would be taken to court and convicted of breaking its contract. If the Government believe in the rule of law, they should be subject to the same rules.
My second fundamental objection to the Government's social security strategy, as revealed—somewhat opaquely —in the Queen's Speech, is that it flies in the face of everything that the Prime Minister said yesterday. He said that he wanted to build a society in which choice and freedom existed, and in which there were no barriers. Let me repeat his words, which were quite striking. In that society, he said, people would be able
"not only to get their feet on to one rung, but to scale the whole height of the ladder".—[Official Report, 6 May 1992; Vol. 207, c. 73.]
How does the Prime Minister expect people on benefit— who, after all, constitute a third of the nation—to get their feet on the ladder at all, when he has crippled those feet?
Unemployment is still rising by an average of 30,000 a month, and the Government are cutting training budgets by £300 million. How, in such circumstances, can people
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on benefit get into the labour market to better themselves? How can people on £30, £40 or £50 a week find the wherewithal to launch themselves? The unemployed have been targeted, not for choice and opportunity but for bearing the costs of the Government's economic mismanagement. If unemployment is a "price worth paying", the unemployed form a class worth dispensing with.
Pensioners, too, are trapped in poverty, because the Government have broken the link between pensions and earnings. That has cut £17 a week from the income of a single pensioner and £28 a week from the income of a married couple. Lone parents are trapped into dependence by a lack of child care facilities, even though most of them would much prefer to earn in order to support themselves and their children.
All those people—more than one third of our nation —have no alternative to social security at this time, yet the Government intend to kick them when they are down. Those people form the excluded Britain. Conservative Members make no mention of them in their rhetorical speeches in this debate. They are the disappearing ones to whom the Government turn a blind eye until they grate by sleeping in shop doorways or on the steps of the opera. They formed the gap in the Prime Minister's opening speech yesterday. They are the people whom the classless society will never touch and was never intended to touch. Their enforced losses and deprivation over the past 13 years are financing the opportunity and incentives for those who are able to climb the ladder. For them, the Prime Minister's citizens charter is a sick joke.
Mr. Tim Smith: Can we take it from what the hon. Gentleman has said that not only is he not in favour of any extension of selective benefits but that he would prefer to see them reduced and have a system of more universal benefits? Is that right?
Mr. Meacher: I believe that universal benefits are the only way of ensuring that the poorest in our society receive the benefits that Parliament has intended that they should receive. The retirement pension is the only thing available to 2 million or 3 million of the poorest pensioners, and child benefit is of key importance not just to the poorest families but to those on middle incomes. Child benefit is without any poverty trap, because it is not means tested. It is essential that those benefits should be preserved and that is my immediate requirement. That is why I asked the Secretary of State whether the Government intend to keep them. He did not answer that question and he still has not done so.
Mr. Lilley: We have not had an answer from the hon. Gentleman. Will he serve under a leader whose manifesto for the leadership election says that he wants to carry out a review of all universal benefits to see whether they should be means tested?
Mr. Meacher: Can we be clear about this? I am glad that the Chief Secretary is with us. I take it that there has been some discussion between the Secretary of State and the Chief Secretary. Is the Secretary of State confirming that the basic retirement pension, open to all at the age of retirement, and child benefit will be preserved as universal benefits over the next five years?
The Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe): It is in the manifesto.
Mr. Meacher: I am glad that we have that assurance from the Under Secretary. I hope that the grimace on the face of the Chief Secretary is not a sign of pain. That is an important achievement in this debate.
Mr. Ian Taylor rose—
Mr. Meacher: I want to make progress. [Interruption.] We are here to discuss the Queen's Speech and the Government's intentions. People are interested in those who have just won the election and their intentions over the next five years. At this time, and probably for the next two or three years, that is exclusively what matters to the people of this country. That is why we are sticking to that issue, and will continue to do so.
My third fundamental objection to the Government's social security strategy set out in the Queen's Speech is one which the Secretary of State, however hard-nosed he may be on compassion or inequality—
Mr. Lilley: The hon. Gentleman has asked me questions and I have answered them all in full. He owes it to the House to answer the question whether he would take part in a review of the universal benefits which his right hon. and learned Friend believes should at least be considered for means testing.
I shall see that the pledges in our manifesto are implemented. Will the hon. Gentleman remind the House that, when he was in government he participated in a breach of Labour's pledges to pensioners, both over the Christmas bonus and over the link with earnings?
Mr. Meacher: Certainly, I gladly recall for the House that on two occasions the Labour Government did not pay the Christmas bonus—that is a matter of historical record. However, the result of that was that pensioners lost £20 altogether. By comparison, they gained 20 per cent. in real terms during the last five-year period of Labour government. Over the past 13 years of Tory government, pensioners have gained fractionally over zero per cent., because there has been no real gain for pensioners—at least for the poorest pensioners, who do not have other income, and that is what really matters. That is the difference between the parties. There was a 20 per cent. gain over five years of Labour government and virtually nothing over 13 years of Tory government. [Interruption.]
My third point is something about which the Secretary of State should be concerned—[Interruption.] Let me finish this point. If the Government persist with their policies for another five years—and, indeed, tighten the screw further—I say advisedly that there is a real risk of a social explosion.
In America in the 1980s, there was the same Government-driven generation of inequality as there has been here, both at the top and at the bottom. For the first time, we now have about 2.5 million people living in families forced below the safety net of income support by social fund loan repayments, poll tax arrears, electricity and gas repayments, rent arrears and so on. Three quarters of the people who are desperate for last-resort assistance from the social fund are now turned away. Not only are there beggars on the streets, but children are inadequately clothed and fed, and our housing is crumbling. More than 20 per cent. of homes are now officially unfit for human habitation.
The relative deprivation that pervades this country is not so very different from that in south central Los
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Angeles. The explosion there provoked lawlessness, but its causes were poverty and injustice. The same tinderbox ingredients are increasingly present in Britain for anyone with eyes to see.
I am talking about the people with no voice, no hope, and often no votes—more than a million of them have fallen off the electoral rolls as a result of the poll tax. I warn the Government that, if they are provoked further, the underclass—call it what you will—will have no other means to make their presence felt except by insurrection in the streets. I desperately hope that that does not happen, but we are not the Government and we want to ensure that the Government do not deliberately provoke an explosion. Many of us believe that they may.
In its own research studies, the Home Office recognises that the rocketing crime rate is linked to poverty and recession. A few months ago, Robert Reiner, professor of criminology at the London School of Economics, concluded an in-depth study with the following words:
"The bottom line is that, if we separate out long-term trends and more recent sudden changes, the rate of increase really does relate to increased poverty and inequality, and to sharp declines in consumption levels amongst the worst off."
The Secretary of State is playing with fire by pushing inequality at the bottom still further. The clashes in Trafalgar square two years ago and the five nights of disorder on the Meadow Well estate in Newcastle last summer were a warning. I believe that that warning should be heeded.
I draw attention to the news today that President Bush has concluded that the main lesson from the Los Angeles riots is that there must be a huge and continuing Government programme to lift the victims of society out of poverty—one which must be sustained so that they do not fall back into poverty. That is clearly desperately needed in America today. Even in the absence of immediate riots, such a programme is desperately needed here too. That is one major reason why we find the Queen's Speech so lacking in judgment and in wisdom.
9.35 pm
The Secretary of State for Social Security (Mr. Peter Lilley): I join everyone in welcoming you, Madam Speaker, to your high office and in adding my congratulations to you on achieving it. I also add my congratulations to the chorus of maiden speakers we have heard today, if that is the correct collective word for maiden speakers. All were of an extremely high standard, as the hon. Member for Oldham, West (Mr. Meacher) has just remarked.
I took a particular interest in the contribution by the hon. Member for Lewisham, East (Mrs. Prentice) who paid an especially kind tribute to her energetic predecessor. She represents an area in which my family had its roots. Although she represents it with great lucidity, she does so in accents that I do not recall from my youth. She mentioned the particular problem of the Rathbone Society in her area. I have made rapid investigations and I have discovered that it suffered from unresolved organisational problems which caused it finally to close on 24 April. All those being trained by it are being found other places by the South Thames training and enterprise council.
I was also interested in the excellent contribution by the hon. Member for Hornsey and Wood Green (Mrs. Roche). She paid a welcome tribute to Hugh Rossi, who was one of the outstanding Members of Parliament and a

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former Minister in my Department. My wife comes from the area and she was originally a councillor there, so I will keep a beady eye on proceedings.
I unfortunately missed the speech of the hon. Member for Edinburgh, Leith (Mr. Chisholm), but I gather that he made an impressive contribution and argued that child care should be his top priority. I shall read his speech with interest.
The hon. Member for York (Mr. Bayley) rightly paid tribute to Conal Gregory, a friend to many of us here. I agree with him about the importance of getting right the changes in the arrangements for community care as they are made.
I am sure that all hon. Members will join the hon. Member for Blaenau Gwent (Mr. Smith) in his tribute to his predecessor. Michael Foot was one of the great orators and wits whom the House has known. I was glad that his successor had a fluent and confident style. I am sure that all those hon. Members will make important contributions in the House again. We look forward to hearing from them in future and we miss their predecessors.
The hon. Member for Derby, South (Mrs. Beckett) appears, as my hon. Friend the Member for Beaconsfield (Mr. Smith) said, to have learnt nothing from defeat. She defended, in an astoundingly lengthy contribution, the record of the 1974–79 Labour Government. One felt for a moment that she was not so much a part of a dream ticket as of a nostalgia ticket—nostalgic for a nightmare at that.
The most important and significant Opposition contribution came from the hon. Member for Birkenhead (Mr. Field). He was thoughtful, creative, compassionate and reasonable. The thought passed through my mind, "Thank heavens he is not standing for the leadership of the Labour party." I am not convinced that his proposals on taxation are necessarily viable or workable, but I am certain that they present our party with a greater electoral threat than anything that the right hon. and learned Member for Monklands, East (Mr. Smith) has been or would be able to devise ahead of a future election.
The hon. Member for Birkenhead is undoubtedly right to point out that targeting, if achieved by steep rates of benefit withdrawal, can give rise to serious disincentive effects. I shall certainly look at the specific examples that he gave and see whether there are lessons to be learnt.
On the Maxwell issue, the hon. Member for Birkenhead will know that the Government will respond to his Committee's report in due course. On the specific proposal that the hon. Gentleman put today, I am afraid that it would be far more open ended than it appears and, I am sure, than he intends. But I can assure him that we are keeping in close contact with the trustees, actuaries and managers of all the pension funds concerned. Action is being taken energetically to try to resolve the ownership of assets and return them to the funds. If, in the meantime, anyone is not receiving his or her pension, they are of course entitled to the guaranteed minimum equivalent to their SERPS entitlement. If they need support from the benefits system because of uncertainty as to their income or future income, we have alerted the social security offices to make sure that, if necessary, emergency provisions are put into effect to make sure that they receive that help. I
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hope that the hon. Gentleman will recognise that we are trying to respond as positively as we can to the very serious problems that are raised by that issue.
Mr. Frank Field: Have any of the funds that fear that they may not have the assets to continue to pay pensions approached the Government, asking them to underwrite their commitments in the way that I suggested, or have no approaches been made at all?
Mr. Lilley: I do not think that anyone has made the specific proposal that the hon. Gentleman has suggested to us. Obviously, in the first instance, the trustees are seeking the return of those funds. One hopes that that will be achieved as rapidly as such a complex matter can be achieved.
Mr. Meacher rose—
Mr. Lilley: I am about to refer to the fascinating list of questions of the hon. Member for Oldham, West, if I may. Indeed, I shall come straight to them if that will help him to contain himself. He said that there was no mention in the Queen's Speech of a new framework for pensions. I have just said to the hon. Member for Birkenhead that we will be responding to the Select Committee's report on the subject. Of course, we are committed in the manifesto to a full review of pension law and the framework of pension law. The hon. Gentleman wanted the banks to restore stolen property. Of course, every effort is being made to identify and return it, and it is right that that should be the case.
The hon. Member for Oldham, West asked whether the Exchequer would give an open-ended guarantee to meet any shortfall. He recognises in advance that that cannot be the case. He argued that the Department had brought about the situation by failing to bring in two items of legislation which, in his view, would have made it impossible for the late Mr. Maxwell to carry out his wrongdoing. There is absolutely no reason to suppose that those pieces of legislation would have had that effect. They were, of course, delayed because of the serious, costly implications that there could have been of the Barber judgment interacting with them, and there is absolutely no evidence that had they been introduced already they would have prevented what has happened.
The hon. Gentleman knows, too, that the Barlow Clowes situation is not and was said at the time not to be a precedent. He knows, I should have thought, that when he says that £6 billion has been used in what he describes as a bribe to persuade people to take up private pensions, he has simply got the wrong figure by a large factor. He is including the contribution that individuals would otherwise have had to make to SERPS, which instead goes to the private pension schemes. Those private pension schemes being funded means that there is a flow of committed long-term savings available for long-term investment in industry. That must be something which surely all of us who believe in investment wish to encourage.
Lastly, the hon. Gentleman repeated his question, "Do the Government intend to deal with trustee law?" Obviously I shall not give details at this stage, but the review will cover the whole framework of pension law.
So the hon. Gentleman's remarks on those fronts did not carry us much further than in the previous Parliament. Nor did they on several of the other matters that he raised.
Mr. Meacher: The Secretary of State will not be surprised to know that I am far from satisfied with his answers. First, I asked whether he would press the banks to return the assets in the way that the Governor of the Bank of England has said that they should not. Does the Secretary of State believe that they should? We do. Does he?
Secondly, the Secretary of State does not seem to have answered the question about underwriting the continued payment. He said that no approach had been made. If an approach were made, would he support it? Thirdly, if there were a shortfall even after the banks returned the assets, would the Government meet it and provide compensation as they did in the case of Barlow Clowes?
Mr. Lilley: The hon. Gentleman seems to wish me to answer his questions three times even though he has refused to answer my questions. I repeat the answers. Of course, there is no question but that assets identified as belonging to the funds must be restored. I made it clear to the hon. Member for Birkenhead that his proposal was unfortunately much more open ended than it appeared at first sight and, therefore, we could not endorse it. If the hon. Member for Oldham, West failed to catch that, I am sorry about it.
Perhaps I may now return to the mainstream of my remarks. I must begin by thanking the hon. Member for Oldham, West for his kind, if somewhat mixed, words welcoming me to the job. Many of those who have welcomed me to the job have recognised that it is not entirely a bed of roses. Someone pointed out that when I was Financial Secretary to the Treasury it was my responsibility to relieve taxpayers of about £70,000 million a year through a complex and incomprehensible system of interlocking taxes. Now I am responsible for handing out £70,000 million a year through a complex and incomprehensible system of benefits. I think that it was my predecessor who said that the only difference was that one was far more unpopular giving it out than taking it away.
It is a particular challenge to follow my predecessor, who is unrivalled in his knowledge of the system and his manifest dedication to the beneficiaries. The hon. Member for Oldham, West is a great luminary on these subjects. He has detailed knowledge of the benefits system and I recognise his personal commitment to all those who are in need.
The only occasion that I recall on which the hon. Gentleman and I have previously debated was at a meeting in my constituency which he might recall. It was called by his union, the Confederation of Health Service Employees. I was foolish enough to accept the invitation. I fully realised that the entire audience would be on the hon. Gentleman's side. But the union took the additional and somewhat unnecessary precaution of inviting seven platform speakers to support him. I had none. I was getting a pretty good drubbing, but I took comfort in the remark of Einstein, whose theory of relativity was denounced by 100 German professors. He replied:
"If I were wrong it would take only one professor to prove it."
Mr. Meacher: But they did not support the right hon. Gentleman.
Mr. Lilley: At the election we found a great many people to support me and remarkably few to support Opposition Members.
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I have always admired the hon. Gentleman's debating style. He is never knowingly understated. He is not afraid to exaggerate a little. He might even be described as the Dame Edna Everage of the Opposition Front Bench. He deserves praise from this side of the House for other reasons, too. He is the unsung hero of the Tory election victory. After all, it was the hon. Member for Oldharn, West who committed Labour to the initial pledges which forced the shadow Chancellor to spell out how he would raise taxes—a commitment damaging in itself but rendered incredible by the additional pledges that the hon. Gentleman crammed into his party's manifesto. We calculated that the hon. Gentleman's pledges alone totalled £13 billion or more—over a third of Labour's total promises. No one could match him, no one could stop him and no one could believe him. Never in the field of public expenditure has so much been promised to so many at the expense of so few.
Now the hon. Gentleman is playing a key part in the subsequent election—for the leadership of the Labour party. On 28 April, The Guardian reported:
"Already left wingers such as Michael Meacher and Robin Cook are arguing that the party's historic support for universal benefits, such as child benefit and pensions, must be reconsidered in favour of targeting."
That gave the right hon. and learned Member for Monklands, East the impression that the coast was clear to his left. So he promised in his leadership manifesto to
"examine in an open-minded way the balance between universal and selective benefits."
He said:
"There may be a case for many of them remaining universal, but it's only right … to re-examine everything. I have not ruled anything out of court."
Unfortunately, that crossed in the post with a letter to The Guardian from the outraged hon. Member for Oldham, West repudiating the very idea of a move in favour of targeting. The leter said:
"I have never said or implied … any such idea".
So the brothers are in a real mess. The heir presumptive is at loggerheads with the spokesman incumbent. We want to know whether the spokesman incumbent will remain so when the heir presumptive wins the election.
Mr. Meacher: The Minister has made the point that I was going to make. After 20 minutes of his speech he has not yet reached the Queen's Speech, but I wanted to ensure that he understands that the report in The Guardian had no foundation whatsoever. He has now quoted it to make a long and cumbersome point about the internal discussion within the Labour party.
Mr. Lilley: On the subject of being long and cumbersome, the hon. Gentleman took six minutes of my speech and has just reattributed them to me retrospectively. Therefore, if I cannot deal with all the points as I wish, it is his fault. I never expected to be outflanked to the right by the right hon. and learned Member for Monklands, East. I can only assume that he covets my "Spitting Image"—uniform, monocle, jackboots and leather gloves. And he is welcome to them.
The Labour party spent the last four years claiming that we had laid the social security system to waste and that we did not care. The electorate did not believe it because its rhetoric was manifestly at odds with the facts. We have increased spending by over half in real terms since we came to office. It is absurd to say that a party that spends

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£70,000 million on social security does not care about those who need it. That is over £10 from every working person every working day being spent on social security.
Ms. Armstrong: What are the future trends of Government policy? Will the Minister recognise the point made by the hon. Member for Waveney (Mr. Porter) that 16 and 17-year-olds are not finding places on youth training schemes because places are not available? The hon. Gentleman said that there were problems with that and that benefit was still not being paid.
Mr. Lilley: Opposition Members keep asking me to get on with my speech and then taking time out of it.
We have an excellent record on social security, not least on the disabled. We have increased real spending on long-term sick and disabled people by 150 per cent. We have increased the number receiving attendance allowance fourfold, to nearly 1 million. We have increased the number receiving mobility allowance sevenfold to nearly 660,000.
We are adding further help from two new benefits this April—disability living allowance and disability working allowance—which will bring help to around 300,000 disabled people, at a cost of an additional £300 million in 1993–94.
We were the first to give proper recognition to the role of carers. We have increased the numbers on invalid care allowance from 5,000 to 155,000 and we introduced the special carer's premium in income support.
For pensioners, too, we have a good story to tell. Pensioners' real average incomes have risen by 34 per cent. since we came to office. That is faster than the incomes of those below retirement age and five times faster than under Labour. Pensioners have benefited from the growth of private pensions, the positive yield on savings, the development of the state earnings-related pension scheme and the abolition of the hated earnings rule.
We have also targeted extra help on the least well off. Last month we increased pensioner premiums for the over-80s and disabled pensioners by more than inflation. From October 1992, there will be further increases in all the pensioner premiums: £2 per week for a single person; £3 for a couple. We will have given £700 million extra since 1989 to poorer pensioners over and above the normal benefit upratings. That proves that one can target without introducing a means test into the basic retirement pension —a point which the hon. Member for Oldham, West may have to make to the right hon. and learned Member for Monklands, East.
The election revealed how fundamentally different the approaches of the Government and the Opposition are to social security. Labour believes that the problem is inadequate funding, which can be made good by a once-for-all increase in spending. We recognise that demands on social security are rising inexorably. There will be more elderly people, there will be more frail people and people's expectations will continue to rise. A once-for-all increase will not cope with that.
We need a continually growing economy to fund those demands, which means a low-tax, lightly regulated, enterprise economy. Moreover, many needs are better met directly by long-term economic growth than by reliance on the benefit system, however generous. Sound economic
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policies feed through to private pensions through higher dividends, to generate jobs, to permit a wide range of self-provision and to protect savings. I am convinced that the policies that we are pursuing will ensure that Britain is one of the first countries out of the world recession—just as it led the world out of world recession in the early 1980s. We will again generate jobs. Let us remember that during the 1980s Britain created more jobs than most other countries in the European Community combined and we still have a higher percentage in work than in any other country in the Community.
This is a momentous period for our social security system. Major change is likely to come to a head in the next few years for a variety of reasons. First, the Maxwell case has made it clear that we need to review the occupational pension framework. Unlike the hon. Member for Oldham, West, we agree with the Select Committee on Social Security on that. I shall be announcing my plans for that review to the House in the course of the next few weeks. The Barber case will put heavy burdens on private pension schemes. The Coloroll case will clarify that and, together with the Maastricht protocol, will, we hope, remove the threat of retrospection. But it will leave many loose ends to be tied up.
The Government are committeed to equalise the pension age. I shall be considering the responses to our consultation paper, when consultation ends in June, with a genuinely open mind.
In April 1993, there will be a change in responsibility for community care, which will involve major changes in social security. A new Child Support Agency is being established. Finally, our pledge on personal pensions has to be implemented.
Let me make clear my priorities. While fulfilling our commitments, I believe that we must apply six criteria. I want to focus benefits, with any improvements that we can afford, on the most needy. I want to minimise the disincentive effects of our benefit structure. I want to simplify the system wherever possible. I want to ensure that our system adapts to the differing needs of the people it is intended to benefit—the elderly, the disabled, the unemployed and families—not to force people to adapt to a complex system. I want to bear down on fraud and abuse, since every penny misappropriated means less for those in real need. I want to encourage personal responsibility, not undermine it. That is why I attach such importance to the Child Support Agency, whose remit is to ensure that parents meet their legal and moral obligations to help maintain their own children. It is why I shall press ahead to enact our pledge to encourage personal pensions. The extension of personal pensions to 4.5 million people has been an enormous success. It has dramatically widened the range of people with their own pension to supplement that provided by the state. It is increasing the volume of committed long-term saving available for long-term investment by industry. And it has given millions of people greater flexibility and mobility.
The hon. Member for Oldham, West calls the incentives that have encouraged this welcome growth a bribe. His right hon. and learned Friend, in his ill-fated shadow budget, threatened to abolish the incentive—and even to repudiate retrospectively the obligation to pay it in respect of savings made last year. Nothing could demonstrate more clearly the divide not just between Labour and

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Conservative, but between Labour and the British people. Labour Members are out of date, out of touch and out of office.
The electorate have shown that they reject Labour propaganda about the failings of our system; they distrust Labour's pledges as ill targeted and irresponsible. They acknowledge the massive increase in benefits that we have financed. They know continuing improvements require a dynamic and enterprising economy. They want extra help to be focused on those in greatest need—
It being Ten o'clock, the debate stood adjourned.
Debate to he resumed tomorrow.

Benefits and Mortgage Payments
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Arbuthnot.]
10 pm
Mr. Simon Burns: I am grateful to have the opportunity so early in the life of this Parliament to raise an issue of particular importance to two of my constituents—the income support system and mortgage payments. I congratulate my hon. Friend the Member for Bury, North (Mr. Burt) on his elevation to office and on his first Adjournment debate as a Minister. I am not sure whether this is the right thing to say, but I hope that he enjoys this one and goes on to answer many more in the Chamber over the coming years.
The problem that has been highlighted by the case brought to my attention by two constituents—I do not want to name them—illustrates an aspect of policy that I do not believe Parliament envisaged or would want to perpetuate.
The income support system as constituted means that claimants who are repaying mortgages may have an additional amount to cover their mortgage interest paid on top of their usual personal allowance. Obviously, it is paid only for the house-related element of a loan, not for any other items for which a mortgage, rightly or wrongly, has been raised, such as the purchase of a car.
I appreciate that when housing costs are considered "excessive" they may not be met in full; for instance, when a house is unnecessarily large or in an unnecessarily expensive neighbourhood, or when costs are higher than the costs of other suitable accommodation in the same neighbourhood.
I also appreciate that since late last year the Government have legislated to alleviate income support and housing problems, to limit the number of repossessions of the homes of people unfortunately caught in this sad predicament.
Nevertheless, the problems highlighted by my constituents' case raise important issues that must be examined. When there are disputes between the Department of Social Security and claimants over mortgage payments or related matters, they are dealt with by an appeals system established by Parliament. This is the nub of my case and I should like to suggest that individuals are penalised and that the system is stacked against those caught by this problem.
Parliament has created the social security appeal tribunal to adjudicate cases of dispute. Quite rightly, it is immune to political interference, but is the system working as well as it should and as envisaged by Parliament when it established that system?
Although an adjudication officer may refer a claim or question to an SSAT, only the income support applicant has the right to appeal to an SSAT, but the law allows both the applicant and the adjudicating officer the right of appeal against a decision given by an SSAT to the social security commissioners, with leave and on a point of law. That is where the problems arise and cause undue hardship and unfairness to constituents such as mine.
To explain what that means, I shall elaborate a little on the problems still faced by my constituents. Unfortunately, both the husband and wife became unemployed as a result of the economic climate of the past year or so. They had a mortgage of £30,000. To many people, such a mortgage

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would be relatively small and those who are thrifty would welcome it. However, the house is valued at the current market price of not less than £210,000. I suspect that four years ago it was worth noticeably more.
The adjudicating officer took the view when my constituents claimed for income support that with such a small mortgage vis-a-vis the value of the property, they should sell their house and buy a cheaper one. As they did not do that, the adjudicating officer decided that they should not receive help to pay the interest on their mortgage. That raises important issues which I shall discuss later.
My constituents appealed to the tribunal and won. The tribunal, in its reason for the decision, said:
"Effectively this house includes an element of capital which has always been intended to be used when freed by a move down market to buy an annuity or to augment the pensions available to the couple. This is a perfectly prudent and reasonable decision by a married couple and in the view of the Tribunal effectively to force the couple to move at this juncture by selling at a value lower than that which they are satisfied is the proper and reasonable market value would be totally unreasonable."
I wholeheartedly share the tribunal's view, as will every reasonable person. To strengthen its decision, the tribunal added that it
"sees nothing in the regulations which compels them"—
my constituents—
"to take this view".
To add insult to injury, the adjudicating officer has now decided to appeal to the social security commissioner against the tribunal's decision in favour of my constituents. He has been given that right by Parliament, and that raises serious issues which the Minister should address. The system is unfairly loaded against people such as my constituents.
First, people who are desperately seeking jobs will not usually be out of work for long periods vis-a-vis their total working life. Why should they be expected to sell their homes and move down market during what will, one hopes, be a small part of their working life? Surely the benefits system and the mortgage payment regime are designed to help tide over people who have temporarily fallen on hard times or are in difficulties. They are safety nets to provide such people with badly needed financial help when they are seeking jobs and seeking to re-establish their finances.
Secondly, why should my constituents and, I suspect, other people be expected to sell property at a time when there are serious problems in the housing market and property would probably have to be sold at much less than its market value in normal times?
Thirdly, does my hon. Friend the Minister accept that people such as my constituents find it extremely difficult to understand why they should find themselves in such a predicament when a Mr. Peter Julien of Hampstead is able to have his £1,700 a week mortgage paid by the Department of Social Security because he has a £630,000 mortgage, unlike my constituents who have an extremely modest mortgage of £30,000?
Fourthly, my constituents have been told by the officials handling their case that their £30,000 mortgage is too small in comparison with the value of their property and that if they had had a larger mortgage and had not been as thrifty or as financially wise as they have been, the
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problems that they are now having with the adjudicating officer would not have presented themselves. I suspect that if they had a mortgage of £80,000 or £100,000, the adjudicating officer would not be in the slightest bit interested in them and they would without question be receiving help with their mortgage interest, without appeals to tribunals and without the insult of an appeal against the appeal following the decision in their favour by the tribunal.
Why should my constituents be penalised for being careful and thrifty and having a relatively small mortgage? It is odd that those who are thrifty and minimising the amount of help that they need from the state are penalised. If they had been more foolish, as it were, or if they had not been fortunate enough to have such a small mortgage, they would be receiving moneys without question and without the problems that they have experienced. What justification is there for taking it out on my constituents —that is how it seems to them—because they have a relatively small mortgage?
Fifthly, why should those with larger mortgages find life so much easier under the DSS regime? Why is it that life for those people seems to be not as full of the hassles that face my constituents?
Sixthly, why is the adjudicating officer seeking to use my constituents in a test case when the tribunal to which they have already been has found in their favour? The DSS regime will have access to unlimited public funds and the best legal advice to pursue its appeal against my constituents before the commissioners. My constituents, who are on the income support system—in effect, they are battling to save the house in which they are living—will not have unlimited access to public funds in preparing their case.
It has been suggested that my constituents should go to their local citizens advice bureau for free legal advice and help. I accept that the Chelmsford CAB does a magnificent amount of good work to help individuals, but I do not think that it would seriously suggest that it can compete with the advice to which lawyers for an arm of the DSS will have access. My constituents could possibly seek legal aid, but there are ramifications within that system that are not as clear cut and simple as they might seem at first hand.
I appeal to my hon. Friend the Minister. My constituents are little people who are caught in a situation in which they are clearly out of their depth. Surely the system should not operate in this way. Surely they should not be penalised over and above being out of work against their wishes. They appealed to the tribunal and they won their case, and surely that should be enough. Why is it that an adjudicating officer under powers given to him by the House can take the matter a stage further to appeal against that decision? It seems that the entire system is being weighted in favour not of the applicant and the help that is provided by the state but of those who are meant to be giving the maximum amount of help within the rules and regulations that are provided by the state.
I accept that my hon. Friend the Minister cannot interfere because of the way in which Parliament has set up the system. The principle that we cannot have political interference must be right, but that does not stop Ministers who are responsible for the relevant policy re-examining matters to ascertain whether it is working and has been implemented in the way that Parliament decided that it should be, to provide what I believe should be the maximum amount of help for those who are probably

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having the most demoralising, debilitating and miserable time of their life while being out of work, and who on top of that are having to fight for the house in which they live.
10.14 pm
The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt): I want to take this opportunity, Madam Speaker—it is my first opportunity —to congratulate you on your appointment. You have had slightly longer to settle into your position than I have had to settle into mine.
I congratulate my hon. Friend the Member for Chelmsford (Mr. Burns) on his good fortune on winning the ballot for the debate and I thank him for his kind remarks about my appointment. I am grateful to him. I also congratulate him on the way in which he explained the sensitive circumstances surrounding the case of his constituents. He did so with his usual care, consideration and clarity.
I welcome this opportunity to comment on my Department's policy on helping income support claimants with their housing costs. Before I do so, I should like to use the occasion of a new Session to tell the House about the provision the Government have made for income support recipients this year. As the House knows, the structure of income support consists of personal allowances, paid according to age and family status, and flat-rate premiums for groups recognised as having special needs, such as disabled and elderly people and families. That enables the Government to focus help most effectively on those groups that face the greatest pressure.
I make no excuse for reminding the House that in 1992 we will ensure that some 5 million people on lower incomes will have the advantage of an increase significantly higher than price increases as measured by the retail prices index. In addition, the uprating index on which the increase is based now better reflects the range of expenditure that income support recipients have to meet. The uprating this year includes items for water bills and miscellaneous items such as repairs and insurance. In fact, this year we have uprated income support by an index that is 2.9 per cent. higher than the RPI, which I am sure the House will agree demonstrates our commitment to helping people on low incomes. The total expenditure on income support will therefore increase by about £1 billion.
I now come to the specific subject matter of the debate —the question of mortgage interest and the benefit system. The purpose of income support help for mortgage interest is to ensure that home owners who are not in work and have suffered a drop in income have sufficient resources when they come on to benefit to meet their reasonable housing commitments without the benefit system being used to pay for a capital asset. Generally, that means that the full interest on loans taken out to buy, repair or make certain improvements to the home is included in the calculation of the claimant's weekly needs.
It would, however, be wrong for the taxpayer to meet an open-ended commitment to pay the full interest on a home loan without regard to the essential nature of home ownership, the type of accommodation occupied as the home and the circumstances of the individual claimant and family. There are, therefore, a number of measures to help to provide a balance between taxpayer, lender and claimant which ensures that the responsibility and burden of home loans are equitably placed. The first of those
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measures is that the amount allowed for mortgage interest in income support is restricted to 50 per cent. during the first 16 weeks of a benefit claim for someone under the age of 60. That affected 40,000 out of 310,000 claimants receiving help with mortgage interest in May 1990.
The reason for that restriction is that we consider it reasonable to expect lending institutions and borrowers to carry some responsibility for house purchase in the short term, and that restriction is now commonly accepted and is workable. The Council of Mortgage Lenders, which represents more than 90 per cent. of mortgage lenders, has recently renewed assurances given when the rule was introduced that it would not expect anyone to lose his home as a result.
We also think it reasonable to restrict help where the accommodation is not considered to be appropriate for full support by the taxpayer. For the majority of claimants, such a restriction is not applicable and the interest on their mortgages is met in full for as long as their circumstances remain unchanged. However where, for example, the home is expensive compared with others in the same area, where the home is located in an expensive area, or where the size of the accommodation is clearly larger than the requirements of the household, we consider it right to limit the charge to the taxpayer. My hon. Friend made the same point in his opening remarks.
I must stress that such a restriction will apply only if it is reasonable to expect the claimant to move. If it is not reasonable, mortgage support will continue for as long as there is the need. But it would clearly be wrong to put claimants who are able to move into a more privileged position than those who are not on benefit who change their homes when necessary in response to a change in their financial circumstances. For claimants able to move we therefore consider it reasonable to restrict the amount allowed in income support to the amount needed to obtain suitable alternative accommodation. Provided, however, that the claimant was able to afford the mortgage commitment when it was taken on, the restriction is deferred for the first six months of a claim, and for a further six months so long as the claimant is using his or her best endeavours to obtain cheaper accommodation. I believe that the House will agree that a total period of one year in those particular circumstances to find more suitable accommodation provides a reasonable balance between the claimant and the taxpayer. It also puts people who are receiving benefit and those who are not on the same footing, in that similar circumstances will provoke broadly similar reactions.
As my hon. Friend said, he has a constituent caught up in the regulations governing those restrictions, and he makes two particular points on the way that the regulations operate. First, he refers to the case of the Secretary of State for Social Security v. Peter Julien, in which judgment was given recently in the Court of Appeal. As is plain from the judgment, the point at issue was whether the social security commissioner was wrong in law in deciding that Mr. Julien could afford the mortgage commitment when it was entered into and whether, as a consequence, the amount allowed for mortgage interest should be restricted from the outset of the claim, rather than from a later date. My right hon. Friend the Secretary of State is giving that judgment careful consideration, but it clearly has no bearing on the circumstances described by my hon. Friend when he outlined the issues raised by the case of his constituents. They have received full mortgage

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interest, subject to the restriction to 50 per cent. for the first 16 weeks, taken into account for the full 12-month period allowed by the regulations, and there is no question of a restriction from the outset of their claim.
The second issue raised by my hon. Friend was the treatment of a claimant's equity in the home when a restriction is made. In the circumstances that I have previously outlined, the intention is to restrict the amount allowed in income support to the amount that would be needed if the claimant were to obtain cheaper, suitable, alternative accommodation.
For those claimants who have large mortgages almost equal in value to the value of their property, are in inappropriate accommodation and choose not to move, we consider it reasonable to reduce the burden on the taxpayer by restricting the amount allowed to the amount that would be needed to pay for more appropriate accommodation.
For those with smaller mortgages who have some equity in their homes, we consider it reasonable to assume that such equity should be used to help provide that alternative accommodation. In some cases, the equity would not be enough to provide alternative accommodation without a mortgage. The interest on the smaller mortgage that would be needed to secure that accommodation is included in income support. But in other cases, including the case raised by my hon. Friend, a mortgage would not be needed, and no amount for mortgage interest is allowed.
It has never been the intention of the legislation to drive people from their homes. On the contrary, the scheme provides full help with the costs of appropriate accommodation without restriction. Even where the accommodation is considered inappropriate for the taxpayer to provide indefinite support, in the circumstances that I have previously described, the workings of the scheme, with its allowance of up to 12 months to enable claimants to find more appropriate accommodation, still provides that bridge of support needed by some in difficulties. As to whether it is reasonable to consider whether the home is an investment, I sympathise with those selling in the present housing market, but it would be unfair to alter the income support rules specifically to take account of that. It would be unfair both to those who are not on income support and have to move in a difficult market and to those who have chosen to save money in other ways who are unable to receive any income support at all while their savings are more than £8,000. It is also helpful to remember that lower property prices cut both ways—less is realised on sale, but, equally, less is needed to buy.
Perhaps I should take the opportunity to remind the House that the income support scheme provides a substantial sum in support of mortgage interest. In May 1989, the last year for which figures are available, some £554 million went to some 310,000 claimants—an average of £34 a week for each claimant.
My hon. Friend raised two further issues about the adjudication officer and his role in the scheme. I remind the House that the adjudication officer acts independently of the Department. His role is to establish the facts of a case and to apply social security statute and case law to those facts. In his consideration of claims or questions
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arising under the mortgage interest regulations, his decision depends very much on the claimant's individual circumstances and on the circumstances of the type of mortgage he holds. That, as can be imagined, can get very complicated and allows scope for dispute. It is here that the appellate system—the social security appeal tribunal and the social security commissioners—plays a vital role, in that it allows a higher independent adjudicating authority to reconsider in full those cases where such a dispute has arisen.
My hon. Friend suggested nevertheless that in such disputes, the odds are stacked heavily in favour of the adjudication officer because of what he refers to as the machinery of the state. This is far from the truth. As I said, the adjudicating authorities act independently of my Department, and that is clearly evident in the manner in which they undertake their duties.
The adjudication officer is represented at all appeal tribunals by a presenting officer—but, and this point needs to be stressed, it is not the job of that representative to "win" the case. His role is to act impartially—he is known as "a friend of the court"; to help the tribunal to assess accurately the facts and relevant law. He is as likely to make a point in favour of an appellant as he is of the adjudication officer. The tribunal itself has an inquisitorial function, not an adversarial one, as is the case in the courts. It has an enabling role, in that it actively seeks to elicit the facts and to enable appellants, be they represented or not, to present their own cases.
The key for all tribunals is that they must at all times observe the rules of natural justice, thereby ensuring that both parties to the dispute are afforded a fair hearing. That policy of equal treatment extends also to the right of appeal to the social security commissioners, about which my hon. Friend expressed some concern.
As my hon. Friend is aware, such an appeal can only be made on a point of law and with leave of the chairman of the tribunal or a commissioner. Moreover, when contemplating applying for such leave, the adjudication officer will seek guidance from the chief adjudication officer. An adjudication officer on the chief adjudication officer's staff will usually make an application for leave only where there is a substantial amount of benefit at stake, either currently or potentially, or where it is felt that a commissioner's decision would contribute significantly to case law. It is important to have the law clarified. I assure my hon. Friend that it is a carefully considered response, based on a genuine belief that a tribunal decision is in error of law.
I am sure that the House understands that, in such circumstances, the doubts of the adjudication officer that the law had been incorrectly interpreted should have an avenue for redress. We see that means of seeking clarification of the law on behalf of us all as essential for ensuring the continuity and consistency of the law, and for safeguarding the correct expenditure of public funds.
We have to look also at the question of fairness. If my hon. Friend accepts, and I think that he does, that local tribunals operate independently, I hope that he will also accept that for the sake of equity, both parties—that is, the appellant and the adjudication officer—must be given the same right of appeal against their decisions. It would be against natural justice for that right to be given solely to the claimant.
I will say a few words about representation at tribunals, and before the commissioners. I accept that, in spite of the

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best efforts of the tribunal and the adjudication officer's representative, an appellant can feel exposed and inadequately equipped in such a situation. For that reason, my Department actively encourages appellants to obtain advice and representation before attending any tribunal hearing. With legal aid not being available for representation, appellants are directed towards the local advice agencies—for example, the citizens advice bureaux, who provide their services free of charge. Over the years, such organisations have built up a wealth of expertise in social security matters and have represented thousands of appellants before local tribunals and the commissioners.
With regard to the commissioners, although my hon. Friend believes that the advice provided by such lay organisations would be inadequate when faced with the Department's lawyers, experience suggests that is not necessarily the case, and that argument also fails to take account of the commissioners' independent role and legal
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expertise. In view of that, I can reassure my hon. Friend that his constituents need have no reservations about approaching their local CAB.
I thank the House for its patience in listening to my speech on this complex yet important subject. I hope that I have been able to reassure my hon. Friend on the issues that he very properly raised. I fully appreciate the very difficult decisions that now face the constituents to whom he referred, but I hope that he agrees that the Government provide very substantial help for mortgage interest through the income support scheme, that the rules under which that help is given place the burden of home ownership equitably between claimant and taxpayer and that the way in which we try to ensure the balance of decisions has been properly considered.
Question put and agreed to.
Adjourned accordingly at half-past Ten o'clock.

NATIONAL FINANCE

  Vehicle Excise Duty
  Mr. Burns
  To ask the Chancellor of the Exchequer if he will make a statement on the arrangements for granting exemptions from vehicle excise duty.

  Sir John Cope
  The Government have reviewed, in the light of the introduction of the new disability living allowance on 6 April, the arrangements for exemptions from vehicle excise duty for disabled people.

  People in receipt of the higher rate of the mobility component of disability living allowance will continue to be eligible for exemption and invalid carriages will also continue to be exempt.

  We have decided to bring forward legislation to repeal, from a day to be appointed by a statutory instrument, that part of the Finance Act 1971 and the Vehicle (Excise) Act 1971 which exempts disabled passengers from duty in Great Britain and Northern Ireland. This is subject to the House approving the necessary Ways and Means resolution, which will be among those appearing in the Order Paper on 8 May.

  Transitional arrangements will be made to ensure that all those who currently receive the exemption under the disabled passengers scheme continue to do so after the relevant legislation has been replaced.

  Charitable Giving
  Mr. Burns
  To ask the Chancellor of the Exchequer if he will introduce legislation for the measures he announced in his Budget to give further encouragement to charitable giving through the gift aid scheme and covenants.

  Sir John Cope
  Yes. As announced in the Budget, the forthcoming Finance Bill will include provisions to reduce from £600 to £400 the minimum limit on donations qualifying for tax relief under the gift aid scheme and to relax the rules for tax relief for some charitable covenants. We now propose that these changes should apply from today, 7 May, instead of 1 July as originally proposed.

  The Inland Revenue will also be introducing simpler procedures for tax repayment claims by charities from 1 July.

  I hope that charities will find these measures helpful and will make full use of them. Further details are given in an Inland Revenue press release published today.

  Building Societies
  Mr. Burns
  To ask the Chancellor of the Exchequer if he has any proposals affecting the tax rules for building societies.

  Mr. Dorrell
  A question has been raised in current judicial review proceedings, not yet heard in the courts,2
  about the validity of the composite rate tax—CRT—charge for 1986–87 to 1989–90 on interest paid to investors. It is suggested that legislation in 1991, in connection with the transition to new arrangements for CRT in 1985–86, has retrospectively changed the basis on which the CRT rates should have been set for the four subsequent years. Around £15 billion has been collected by reference to those rates.

  The Government's view is that the composite rates for the years concerned are valid and I am clear that they were set in accordance with Parliament's intentions in passing the 1991 and earlier legislation. I do not believe, however, that it is acceptable for the Exchequer's claim to the amounts involved to be in doubt, possibly for a period of years. 1 therefore propose to bring forward legislation in the forthcoming Finance Bill to confirm the composite rates for the years 1986–87 to 1989–90 set in the relevant Treasury orders. This is subject to the House approving the necessary Ways and Means resolution which will be among those appearing in the Order Paper on 8 May.

  Finance Bill
  Mr. Burns
  To ask the Chancellor of the Exchequer when he will publish the Finance Bill; and if he will make a statement.

  Mr. Dorrell
  The Finance Bill will be published on 20 May, subject to the House approving the necessary resolutions before them. These will appear on the Order Paper for 8 May. The Bill will provide for the implementation of those Budget measures which are not already law. As well as other measures, it will also include a number of technical changes to prepare the tax system for the single market, which have already been the subject of consultation.

PRIME MINISTER

  Bankruptcy (Scotland) Act 1985
  Mr. Bill Walker
  To ask the Prime Minister if he will make a statement on the allocation of functions associated with the operation of the Bankruptcy (Scotland) Act 1985 between the Secretary of State for Scotland and the Secretary of State for Trade and Industry.

  The Prime Minister
  I have approved a reallocation of policy responsibility for the Bankruptcy (Scotland) Act 1985 from the Secretary of State for Trade and Industry to the Secretary of State for Scotland, who already has administrative responsibility for the operation of that Act. This will take effect from 7 May 1992.

  Bringing together the policy and administrative responsibility for the 1985 Act will facilitate the introduction of measures to control the rising cost of sequestrations in Scotland while at the same time maintaining an effective service.

  The Secretary of State for Scotland will bring forward proposals for legislation at the earliest opportunity.

  The Secretary of State for Trade and Industry continues to be responsible for all areas of insolvency law except those covered by the Bankruptcy (Scotland) Act 1985. His responsibilities are mainly set out in the Insolvency Act 1986 and the Disqualification of Directors Act 1986. They include the insolvency of registered companies in Scotland.

  Armed Forces (Pay)
  Mr. Shersby
  To ask the Prime Minister if he will make a statement about the pay of medical and dental officers in the armed forces.

  The Prime Minister
  The Armed Forces Pay Review Body has submitted to me a supplementary report on the pay of medical and dental officers in the armed forces. The report recommends a basic pay increase of 5.5 per cent. and additional pay adjustments which provide overall pay increases of between 5.5 per cent. and 9.5 per cent. The average increase is 5.6 per cent. The Government have decided to accept the recommendations of the Armed Forces Pay Review Body and to implement them in full with effect from 1 April 1992.

AGRICULTURE, FISHERIES AND FOOD

  Agricultural Wages Order
  Mr. Barry Field
  To ask the Minister of Agriculture, Fisheries and Food what measures he has adopted to enforce the provisions of the agricultural wages order; and if he will make a statement.

  Mr. Gummer
  The Agricultural Wages Act 1947 requires the appropriate Minister to undertake prosecutions in order to enforce the provisions of the agricultural wages order in those cases where prosecution is considered appropriate. I and the Secretary of State for Wales have therefore arranged additional training for agricultural wages inspectors so that they are better able to meet the rigorous requirements of the Police and Criminal Evidence Act 1984 when preparing cases for prosecution.

  Up to now, the Ministry of Agriculture, Fisheries and Food and the Welsh Office Agricultural Department have taken civil court action to recover the underpayment of workers' wages. The deterrent effect of recovery actions of this kind is marginal and not commensurate with the resource costs involved. The Secretary of State for Wales and I have therefore decided to discontinue taking civil actions of this kind and to concentrate on criminal prosecutions. Civil actions can still be undertaken by the worker, or by the workers' union on his or her behalf, as indeed they are now. With the consent of the worker concerned, my officials will assist such actions by the provision of information obtained during the investigations of the agricultural wages inspectors.

  My right hon. Friend and I are confident that this approach will result in a more effective enforcement effort, to the advantage of the worker and the industry as a whole.

TRANSPORT

  Transport Council
  Sir Anthony Durant
  To ask the Secretary of State for Transport what was the outcome of the meeting of the European Transport Council on 26 and 27 March.

  Mr. MacGregor
  The meeting of the Council of Transport Ministers was held in Brussels on 26 and 27 March. My noble Friend Lord Brabazon of Tara represented the United Kingdom on both days.

  Agreement was reached on the aviation agreement with Norway and Sweden, based on article 84(2) of the treaty,
  4
  extending the Community acquis to Norway and Sweden. The Council noted the progress made on the third package of aviation liberalisation measures, and discussed briefly a report from the Commission on aviation state aids. Lord Brabazon stressed the importance we attached to firm Commission action on aviation state aids.

  Although no agreement was reached on proposals for a definitive regime for road haulage cabotage, some progress was made towards agreement on road passenger cabotage, with proposals for a phased liberalisation of non-regular services and liberalisation of some limited cross border regular services. It was agreed that the Commission should have further discussions with Switzerland and Austria on the implementation of the transit agreements.

  Good progress was made towards reaching a final agreement on maritime cabotage, but a number of important elements of the package are still to be resolved.

TRADE AND INDUSTRY

  Oil and Gas Resources
  Mr. Duncan-Smith
  To ask the President of the Board of Trade when he published the recent report on the development of the oil and gas resources of the United Kingdom, the Brown Book.

  Mr. Eggar
  I published the latest edition of the Brown Book on Thursday 30 April and arranged for copies to be placed in the Library of the House and the Vote Office. The report provides a detailed account of the development of the oil and gas resources during 1991.

FOREIGN AND COMMONWEALTH AFFAIRS

  Council of Ministers
  Sir John Hannam
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will publish in the Official Report a statement of forthcoming business in the European Community's Council of Ministers.

  Mr. Garel-Jones
  The Development Council met on 4 May.

  A joint Environment/Development Council met on 5 May.

  The Foreign Affairs Council will meet on 11 and 12 May and will discuss the Commission's proposals for the future financing of the Community—the "Delors II package"—follow-up to the Union treaty and immigration policy. The Council will also consider recent developments in the negotiations of the general agreement on tariffs and trade Uruguay round, the Lisbon conference on aid to the former Soviet Union, relations with the Maghreb and the negotiating mandates for the association agreements with Romania and Bulgaria. Community trade and co-operation agreements with the Baltic states and Albania may be signed in the margins of the Council. A co-operation council with Israel is scheduled for 12 May.

  The Internal Market Council will meet on 14 May and will discuss exchange of officials and customs code. The Council may also consider frontier controls; renting and lending rights; networks; the Berne and Rome conventions; the second company law directive; the third life insurance directive; the multi-annual programme on

  5
  services statistics; drugs precursors; procurement of services by the utilities; European company statute; contaminants in food; the CE mark and data protection.

  The Health Council will meet on 15 May and will discuss the adoption of a directive amending directive 89/622 on the approximation of the laws, regulations and administrative provisions of the member states concerning the labelling of tobacco products and the marketing of certain types of tobacco for oral use. The Council is also likely to be invited to express views on a Commission draft directive for a ban on tobacco advertising. The Community action programme on nutrition and health, draft resolutions on future work on hereditary illness and acute human poisoning will also be considered. It will discuss progress in negotiating a regulation setting up a European drug monitoring centre and make a declaration announcing the holding of a European drugs prevention week during the United Kingdom presidency. Ministers may also consider a Commission report on AIDS; the anti-dumping code; health related activities in other councils; and pharmaceutical pricing and minimum standards for rehabilitation centres.

  The Culture Council will meet on 18 May and will discuss the Commission's proposals for a Council directive on the return of cultural objects and a proposal for a regulation on the export of cultural goods. The Council will also consider a Commission communication on new perspectives for Community cultural action and the European city of culture programme after 1996. The Council will discuss the Commission's proposed action plan for the introduction of high definition television, HDTV; a public awareness campaign for books and reading; the use of permanent paper and the conservation of acid paper; the Lisbon conference on cultural sponsorship and copyright and neighbouring rights.

  The Agriculture Council will meet on 18 and 19 May. It will discuss reform of the common agricultural policy, the 1992–93 price-fixing proposals and the agricultural aspects of the GATT Uruguay round. Milk products and wild game meat may also be discussed.
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  The ECOFIN Council will meet on 19 May. It will examine the German and possibly the Italian economic convergence programmes as part of its continuing exercise of multilateral surveillance. The abolition of fiscal frontiers will also be discussed. Alcohol rates and structures directives are also scheduled for discussion by the Council, as are the draft VAT rates directive and the draft 7th VAT directive which relates to trade in secondhand goods, antiques and works of art. The Council will consider relations with the former Soviet Union and the Commission's proposals for the future financing of the Community. They may also discuss the proposed capital adequacy directive.

  The Energy Council will meet on 21 May and is likely to discuss the directives on the liberalisation of electricity and gas.

  The Environment Council will meet on 26 May. It will discuss proposals for a regulation on the supervision and control of waste shipments and a directive on air pollution caused by ground level ozone. The fifth environmental action programme prior to the United Nations Conference on Environment and Development summit, carbon dioxide emissions and energy efficiency will also be discussed.

EMPLOYMENT

  Advisory, Conciliation and Arbitration Service
  Mr. Brandreth
  To ask the Secretary of State for Employment when she intends to lay before Parliament the annual report of the Advisory, Conciliation and Arbitration Service.

  Mr. McLoughlin
  I have today laid the ACAS report for 1991 before both Houses of Parliament. The report has been published today and copies are now available from the Vote Office.

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chichester.
Several Lords Several Lords—Took the Oath or Affirmed.

Prisoners and Criminal Proceedings (Scotland) Bill [H.L.]
The Earl of Strathmore and Kinghorne: My Lords, on behalf of my noble friend Lord Fraser of Carmyllie, I beg to introduce a Bill to amend the law of Scotland with respect to the detention, transfer and release of persons serving sentences of imprisonment etc. or committed or remanded in custody; to make further provision as regards evidence and procedure in criminal proceedings in Scotland; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Earl of Strathmore and Kinghorne.)
On Question, Bill read a first time, and to be printed.

Community Care (Residential Accommodation) Bill [H.L.]
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, I beg to introduce a Bill to make further provision with respect to the making of arrangements under Section 21 of the National Assistance Act 1948 for the provision of residential accommodation in premises managed by persons other than local authorities. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Baroness Cumberlege.)
On Question, Bill read a first time, and to be printed.

Mauritius Republic Bill [H.L.]
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, I beg to introduce a Bill to make provision in connection with Mauritius becoming a republic within the Commonwealth. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Baroness Chalker of Wallasey.)
On Question, Bill read a first time, and to be printed.

Dog Control and Welfare Bill [H.L.]
Lord Houghton of Sowerby: My Lords, I beg to introduce a Bill to establish a dog control and welfare council and to amend Section 2 of the Dangerous Dogs Act 1991. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Houghton of Sowerby.)
On Question, Bill read a first time, and to be printed.

Address in Reply to Her Majesty's Most Gracious Speech
Debate resumed on the Motion moved yesterday by the Baroness Carnegy of Lour—namely, That a humble Address be presented to Her Majesty as follows:
"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."
3.15 p.m.
Baroness Chalker of Wallasey: My Lords, first allow me to thank your Lordships for the very kind and generous welcome you have shown me. It is a very great honour to open your Lordships' debate today on the gracious Speech. However, at the beginning of this debate, on behalf of my noble friend Lord Cranborne and myself, I wonder whether I may say that we are just a little alarmed to find that the significant letter M is absent from your Lordships' list of speakers. We wish to assure you that today we are both maidens.
After 18 years of what one might describe as rough and tumble in the other place it is good to know that there is still a little magic left in the world. It is thanks to this noble House that today I am a maiden once more. As a one time cricketer may I ask your Lordships to use your charms rather than your bouncers if you must try to bowl a maiden over?
It is with genuine modesty that I rise to speak today. I speak with modesty and some pleasure because the debate on this gracious Speech allows me to concentrate on certain issues on which I have been privileged to work. I refer to the European Community, security, aid and Africa. My noble friend Lord Cranborne will seek to cover the specific issues which your Lordships raise in the course of the debate.
At a time of change it is crucially important to keep a firm hold on fundamentals. These do not change. We strive for security, prosperity and stability in a safer and more democratic world. The quest for these aims shapes our response to the new agenda in international affairs.
Our future prosperity depends on a healthy international trading system. To achieve this we work through the European Community. As your Lordships are well aware, the Community's agenda is dominated—I hope only temporarily —by the consequences of Maastricht. In the coming weeks we

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shall be asking for Parliament's approval to ratify the Treaty of Maastricht. It is worth recalling the background. Last year, while negotiations proceeded in the two inter-governmental conferences, in Britain we held a thorough and open democratic debate about the implications. It was not easy but in our view it was necessary. This domestic debate greatly strengthened the hand of my right honourable friend the Prime Minister at Maastricht. The concerns registered—notably in your Lordships' House—affected the final shape of the treaty. Four main points dominated the British debate.
First I shall deal with economic and monetary union. Stage I is up and running. Portugal is the latest member state to join the exchange rate mechanism. Only Greece remains outside the ERM. For Stage II we have set the rules according to British requirements: monetary policy will remain the preserve of national governments throughout Stage II. Stage III can come about only when strict conditions of economic convergence are met—conditions which Britain, with Germany's help, insisted upon. Crucially, the treaty also gives Parliament the right to decide whether or not the United Kingdom should join Stage III.
Secondly, Maastricht reinforced the rule of law in the Community by ensuring compliance with ECJ judgments, by fines if necessary. That is a UK proposal. Another success is the provision for better auditing of the Community's budget, which is now around £42 billion a year. It is vital that it be both properly and publicly accounted for.
Thirdly, we enshrined the principle of subsidiarity for the first time. The European Community can now concentrate on doing more effectively the things which Europe should do together. As the Community broadens its membership it will be ever more important for decisions to be taken at the right level. That means the national not the Community level, unless there is good reason to do otherwise.
Fourthly, we have established a firm basis for deeper co-operation among the Twelve on foreign policy issues, and on difficult issues such as immigration, asylum and judicial co-operation. Hence the Maastricht treaty's pillared structure. For the first time it has been accepted and set down in treaty form that the Treaty of Rome is not the sole way in which our Community can develop. Instead of extending Community competence and taking power away from member states, Maastricht decided to ensure that the Twelve could work together on an inter-governmental basis, so as to maximise their common power. That is an approach to which I strongly subscribe.
The Treaty of Maastricht provides a sound basis for the functioning of the Community. It is a good treaty. We are happy with it because the final text reflected our key concerns. Soon Parliament will have the opportunity to scrutinise its terms.
Ratification is the key to unlocking the substance of the rest of the EC's agenda. The Community faces three stiff short-term challenges—what my right
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honourable friend the Foreign Secretary has called the "Siamese triplets" of GATT, CAP reform and future financing.
GATT seeks to open markets, to establish free and fair competition. Open markets allow consumers a greater choice of goods at lower cost. They also provide a competitive spur to business and give opportunities to British exporters, particularly of services. That is the only route to lasting improvements in European prosperity.
A successful GATT result would also help developing countries. They need trade in order to develop their economies. When those begin to function properly their whole society benefits from the extra resources generated. Failure would increase the already growing pressure for protectionism and the creation of inward-looking trade blocs, with catastrophic consequences for the developing world.
An effective GATT agreement must go hand in hand with reform of the CAP. In the CAP negotiations we shall be seeking to reduce costs, to give greater rein to market forces, to give more weight to the environment and to gain a fair outcome for the British farmer. Progress has been made over the years in improving the workings of the CAP, but on its present basis it is unsustainable.
In February, M. Delors launched a review of Community finances. That was presented as a consequence of the decisions taken at Maastricht. His proposal was an opening shot. There will be a detailed debate over the next few months. We shall look at ideas for more spending with a cautious and sceptical eye. There is an argument for higher spending, but the case for savings elsewhere in the budget is no less strong.
GATT, CAP and future financing are the immediate European priorities. Looking ahead to the coming UK Presidency, perhaps I may add two more: completing the single market and enlargement. In 1986, on behalf of the United Kingdom, I signed the Single European Act. The Act set a deadline of 31st December 1992 for completion of the single market. Our aim is that all essential elements of the market should be completed by the end of our Presidency in December.
Preparations for the next stage of enlargement will be a priority for the British Presidency of the EC. The first phase will probably see the accession of several EFTA members; three have already applied. In that way Britain is helping to shape the Community's agenda for the next century. We continue to use our influence to make the EC open and outward-looking, to give priority to the Community's relations with the rest of the world. Perhaps I may add my tribute to the noble Baroness, Lady Serota, for all the work that she has done. It was of great help to me in another place in trying to unravel some of the difficulties with which both Houses of this Parliament have frequently been presented by the European Community.
At Maastricht, the Twelve agreed to establish a common foreign and security policy and to develop the Western European Union as the means to make a greater European contribution to the defence of our continent. But the agreements reached at Maastricht

35
made crystal clear that anything and everything done in the security field has to be compatible with the common defence and security we already have through the Atlantic alliance. As the gracious Speech notes, NATO remains the keystone of collective European security. Only NATO provides a credible, collective defence. Only NATO combines the transatlantic and European dimensions to our security.
However, the alliance is changing. Indeed it has to change. We no longer talk of East-West relations, of confrontation between two blocs, but of an altogether more varied array of links between Europe, East and West. Last year Mr. Gorbachev was swept aside just as his twin creations, glasnost and perestroika, began to transform the Soviet Union. The peoples of the Commonwealth of Independent States are getting used to elections, to differences of opinion, to working towards a market economy. The countries of Eastern Europe have made a decisive choice for democracy.
Although the single massive threat has all but disappeared, risks remain. There are still over 27,000 nuclear warheads in the former Soviet Union. However, there is room for hope, a requirement for change, but no place for complacency. NATO has responded. In Rome last November, the alliance adopted a new strategic concept which addresses the new realities. In parallel, the alliance has started to extend the hand of friendship to its former adversaries to the east through the North Atlantic Co-operation Council.
The tragic events in the former Yugoslavia are a reminder that all is not well in all parts of the new Europe. With our EC partners we are doing what we can to consolidate the new republics, to put pressure on the recalcitrants. We follow the twin strategy of peace-making through the EC, peace-keeping through the United Nations. My noble friend Lord Carrington is fully engaged as chairman of the EC's Peace Conference. On the ground, EC monitors have been joined by UN liaison officers to hold the ring, to build confidence and so to create conditions where the parties can contemplate the necessary political settlement. We were deeply saddened by the death last Saturday of a Belgian monitor, the sixth EC monitor to die. But our commitment is unwavering—a unit of 260 British medical personnel has joined the UN protection force. Despite the difficulties, the international community remains determined to succeed.
We cannot, as Europeans, allow ourselves to focus exclusively on Europe. Some issues are world problems. Others, Britain must address as a direct responsibility.
In Hong Kong, our responsibility and main interest can be expressed simply: to administer Hong Kong justly and efficiently up to 1st July 1997, when China resumes sovereignty; and to achieve a secure and prosperous future for the people of Hong Kong after that date, on the basis set out in the Joint Declaration. We shall continue to work for those key objectives in the interests of Hong Kong under the new Governor, my right honourable friend Mr. Patten. I am sure that your Lordships will join me in wishing him a most successful tenure in one of the most demanding jobs in
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the British public service. It was my privilege to follow him at the ODA; I can think of no one better suited to guide the changes in Hong Kong.
In Africa, we are trying to help political change come about in a democratic way, in accordance with the rule of law. In much of the continent this change is already well under way. Botswana has been a democracy for over 25 years. Namibia and Zambia have recently held democratic elections. In Nigeria and Ghana plans are well in hand. In Angola, there is a tremulous hope for ending the conflict. For Mozambique the Rome talks are crucial; everything hinges on a successful cease-fire.
In Africa as a whole it is perhaps southern Africa which presents the greatest challenge. In South Africa we must help in the transition to a non-racial, democratic society. The 68 per cent. "yes" vote in the 17th March referendum—a tremendous personal endorsement for President de Klerk's reforms—has opened the way for more rapid constitutional progress. Appalling problems remain; more than 800 people have died in township violence so far this year; population growth exceeds economic growth by more than five times; and now the region must cope with its worst drought in living memory.
The European Community plans a visit by the Troika—the past, present and future presidencies—to South Africa. Britain will of course take part. We and our European partners continue to look for ways to support the constitutional process, assist peace efforts and stimulate economic growth.
Britain is doing a great deal to help African development. In 1990, 46 per cent. of our bilateral aid went there. Together with the funds we channel through the multilateral agencies, our total assistance amounted to some £750 million.
But for many countries in Africa, famine again overshadows any thoughts of sustained development. In both southern Africa and the Horn, the drought has given us advance warning. We all have the chance to save lives before it is too late. That is why last week I announced Britain's bilateral contribution of a further £20 million for emergency relief in southern Africa, in addition to the £10 million committed on 4th March. I am also glad to report to your Lordships that earlier this week, the Community Development Council agreed to send 800,000 tonnes of food aid to drought affected countries, mainly in Africa.
The tasks facing us in helping the developing countries remain enormous, but I do see some hope. As noted in the gracious Speech, almost everywhere governments are trying to encourage economic reform, to make themselves more accountable and to improve their respect for human rights. Where advice or training is needed, we give it. Where the call for reform is not being heeded, we have taken the lead with our European Community partners and others to persuade, cajole and—if there is no other way—to cut development aid in the worst cases. We are beginning to see the benefits; those countries undergoing radical structural adjustment are now clearly doing better than others, not just in Latin America but in Africa too.

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In Eastern Europe and the former Soviet Union, we now have an additional role to play. Within the EC, we proposed the association agreements; the first three have now been signed with Czechoslovakia, Hungary and Poland. We contribute 18 per cent. of the aid programme which the Community gives as grants: £595 million has so far been committed for the former Soviet Union, with £720 million in 1992 for Central and Eastern Europe. These programmes already have a positive effect: Hungary ran a balance of payments surplus for the first quarter of this year; there has been no need to renew balance of payments support for Czechoslovakia.
Our know-how funds are also making a distinctive contribution to the huge task of economic reconstruction. The funds used are separate from and additional to those for developing countries. We have taken the lead in supporting privatisation in Poland and Czechoslovakia. We have helped set up a stock exchange in Budapest. One thousand Russians from the financial sector are coming to London for training in a modern market economy. In all these ways we are supporting the work of the reformers. Such is the success of the know-how funds that other donors are now copying this method of assistance.
The peaceful revolution in the East relies, first, on the efforts of the peoples involved. Secondly, it needs outside help. Britain has given the lead in helping Russia, Ukraine and other CIS states in joining the IMF and World Bank—and at unprecedented speed. Likewise, we were the first to call for the establishment of a stabilisation fund to help President Yeltsin and his Ministers underpin their determined reform programmes. Billions of dollars have been made available to Russia and the other states in the form of debt referral, new credits and grants.
There remains much to be done throughout the former Soviet Union, but we have set the course and month by month we see progress. Later this month donors will gather in Lisbon to review progress since the January Washington conference on humanitarian assistance to the region.
The international agenda is formidable and goes much wider than the four areas that I have been able to touch on. We need, for example, to co-operate better in managing the world's scarce resources. My right honourable friend the Prime Minister was the first head of government of the Group of 7 to commit himself to attend the Rio Earth Summit. He will take to that summit Britain's commitment to the target of returning to 1990 levels of carbon dioxide emissions by the year 2000.
Whatever the agenda, one thing is clear: Britain has real influence. We are a permanent member of the UN Security Council, a member of the EC, NATO, G7, OECD and the Commonwealth. We are the only country which is a member of all those key international groups. We make a major and serious input to all of them.
Our resources are not unlimited. So in order to protect and promote British interests we must use them effectively. But where there is a good case, we
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make strenuous efforts to find the resources. We meet our obligations, whether in the Gulf War, or in Yugoslavia, Namibia, Cambodia or wherever.
In sum, Britain remains a significant power. But your Lordships may be sure that the Government are not complacent. Thirty years ago the late Lord Stockton made his famous "winds of change" speech. There followed a period of sustained and sometimes painful change throughout Africa, guided by one of the most remarkable Secretaries of State for Colonial Affairs, my mentor, the late right honourable fain Macleod. By his wise counsel, Britain helped many countries to gain their independence in the wider world. Today that wind of change is blowing once again, and not simply in Africa. Britain stands alongside the emerging democracies, working with them to achieve the stability, peace and growth so vital for their success.
3.38 p.m.
Lord Cledwyn of Penrhos: My Lords, perhaps I may first very warmly welcome the noble Baroness, Lady Chalker, to her position as foreign affairs Minister in this House. The noble Baroness won a high reputation as Minister for Overseas Development, and in her wide-ranging speech she has set the scene for our debate today. We also welcome the noble Viscount, Lord Cranborne, and look forward to his speech later in the debate.
In the debate on the Address last October I asked whether, against the background of wars and revolution, we should look to the future with hope or despair. I said then that I believed that hope outweighed despair, although we must try to avoid wishful thinking. Our immediate and most important concern must be the development in the old Soviet Union, now the CIS, and the old Warsaw Pact countries referred to by the noble Baroness. To refer to them in these terms is to realise the immense change which has taken place in a short space of time. The single sentence in the gracious Speech is, I regret to say, quite inadequate, and it fails to convey the urgency and the importance of the revolution which has taken place in Eastern Europe. We believe that it is essential that President Yeltsin should succeed in his efforts to avoid the fragmentation of the CIS and to build agreements between the states on the basis of a new constitution. I understand that the proposed new constitution would be democratic and would resemble that of France and the United States of America. That is very encouraging if it can be achieved. But it means settling the division of power between central and local government. We wish President Yeltsin every success in his great task.
Of course he needs the moral and practical support of the West. I was glad to hear what the noble Baroness had to say about this. The latter, I am bound to remind the House, was not quickly forthcoming; but we are glad to know that economic assistance is increasing substantially at the present time. An historic step was taken on 28th April when Russia and 13 other republics were formally received into the International Monetary Fund. The result is that the IMF allocated Russia a first loan of 4 billion dollars

39
which will lead to the creation of a 6 billion dollar special fund to back the power of the convertible rouble. Further, I believe that the CIS will qualify for 25 billion dollars of World Bank loans over the next six years. We warmly welcome the developments referred to by the noble Baroness; but I shall be grateful if the noble Viscount, Lord Cranborne, will let us know whether the Government consider that the measures are adequate to enable the CIS countries to transform their economies. That must be the aim. The last thing we wish to see is further destabilisation in Eastern Europe.
I ask the question because we all know that transition is complex and difficult, mainly because of the inter-republic rivalry and ethnic strife. The troubles in Georgia and Nagorno-Karabakh reflect that, and we hope that the United Nations with the Community and the CSC in Europe can and will combine to help resolve those debilitating problems. NATO and some members of the old Warsaw Pact have asked CSC to help the Russian mediation effort in Nagorno-Karabakh, and we shall be glad to know what progress is being made to bring the fighting to an end.
At this point I feel that I must again pay the warmest tribute to the noble Baroness, Lady Cox, for the tremendous effort she has personally made to help the people of this unfortunate region.
Perhaps I may turn to another subject which deeply concerns the noble Baroness and about which she spoke. Other noble Lords will refer in their speeches to the appalling tragedies which are taking place; namely, the 60 million people who are threatened by famine in Africa. Reports of their suffering are filtering in day by day. It has been said many times in recent months that the reconstruction problems of Eastern Europe are distracting the world's attention from the great hunger crisis in Africa. The dimension of the problem is so huge as to make us turn away in shame and inadequacy. Millions of people are on the verge of dying through starvation. The noble Baroness referred to newly-democratic governments such as Zambia and Namibia which are in danger of destabilisation. Mozambique is a tragic shambles. As the noble Baroness said, a cease-fire there is essential. The noble Baroness's department has published a paper, Famine in Africa, which gives details.
The noble Baroness has done her very best, but I regret to say that the Government's aid budget is still unsatisfactory, with an expenditure of only 0.27 per cent. of GNP on overseas aid in 1990–91. I am sorry to say that this represents the worst recorded level of British aid since OECD began to keep records. I must ask the noble Baroness whether she will be good enough to convey the deep anxiety of this House to the right honourable gentleman the Foreign Secretary. As she said towards the end of her speech, there are limits to what Britain alone can do. This is 1992 not 1892.
Whether or not we like it, our primary role today is as a member of the European Community. What is crucial is that we make the best of it. That means that we must play a constructive and sensible role, and the
40
fact that Britain assumes the presidency of the Community on 1st July gives the Government a greater opportunity to do that.
We appreciate what the noble Baroness said about the Maastricht Treaty. That Bill will be very important and we shall be looking at it carefully in due course. I shall not therefore go into detail now. There is, however, one question that I should like to put. When he replies, will the noble Viscount, Lord Cranborne, outline the steps that the Government are taking to ensure that the European Central Bank is located in London? Will he say whether the Government consider that their insistence on an opt-out clause to EMU supports or hinders our bid to have the bank located in London?
As the House knows, the Community is on the threshold of radical change mainly due to the implications of enlargement. We need a full explanation of those implications. They are broadly two-fold. First, the door in the Community is likely to open to members of EFTA. Secondly, we know that certain of the Eastern European countries are knocking on the same door. Will the noble Viscount tell us the position of Finland, Austria, Sweden, Malta and Cyprus, and whether Norway and Switzerland are serious and urgent applicants to join? What reforms will need to take place in the Community if those seven countries become members? There are vast economic, constitutional and defence issues to be worked out.
I am sure that those matters are being discussed among the Twelve, notably in Bonn and Paris; and it is curious that this critical issue is not mentioned in the gracious Speech. I should like to know the Government's view. There is a summit in Lisbon next month, and a report on enlargement of the Community is now being prepared. What is the Government's contribution to that report? Will the present structure of Council, Parliament and Commission be suitable and effective in a Community of 17 members? Will new members be allowed to preserve their neutrality? There are profound questions to be answered, and it is vital that we should discuss them at the start of a new Parliament.
The Community of 17 or possibly 24 members would not be the Community that we know today. Parliament and the British people therefore must be kept fully informed of the developments and their possible economic and constitutional effects upon the people of this country.
The noble Baroness mentioned a number of other matters of importance. I shall try to touch upon them briefly. She referred to the running conflict in Yugoslavia and currently in Bosnia Herzegovina. I should like to pay a very warm tribute to our colleague the noble Lord, Lord Carrington, for the patient efforts he has made to bring peace to the area as chairman of the EC Conference.
The role of Serbia and its leader in this seemingly endless fighting appears to me personally to be a sinister one. I hope that I am wrong. Cease-fire follows cease-fire. There is no respect for pacts or agreements. We condemn that totally. I shall be grateful if the noble Viscount, Lord Cranborne, will tell us the

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Government's attitude to the United Nation's intervention and the imposition of sanctions upon Serbia. Do we agree with France, Germany and Poland who have called upon the United Nations to extend its peace-keeping role from Croatia to Bosnia Herzegovina? Mr. Boutros Ghali cannot move without authority, and it is sad and painful to witness the destruction of Sarajevo and other old cities and the death of so many people. Do the Government envisage any initiative through the Security Council? There may be no other alternative. We would be very glad to support the Government in any positive and progressive move in that direction.
This House has also continued to take a close interest in developments in the Middle East. The American Secretary of State has done his level best to make some progress in the talks; and we must pay him the warmest tribute. As we know, the talks have been tortuous, and we recognise that thus far there is no evidence of a breakthrough. The reason is well known; namely, that Mr. Shamir will not countenance Resolution 242 and the principle of "land for peace". The fifth round of bilateral talks is now taking place, and perhaps we can be told how they are proceeding.
The noble Baroness dealt with another area in which this House takes a close and continuing interest; namely, South Africa. It is good to be able to say that the scene there looks brighter. The progress of reform has been strengthened by the result of the recent referendum which gave full backing to President de Klerk's reforms. We must congratulate him upon his handling of a complicated situation. At this stage, we can only say that we hope that the proposals to form an interim government will come to fruition. Given the complexities, Mr. de Klerk and Mr. Nelson Mandela have worked well together, and the final solution must depend on agreement between them.
The gracious Speech mentions the Government playing an active part in South Africa. It would be helpful if we could be told by the noble Viscount precisely what that means. Our aim should be to help find a permanent solution and act and react in concert with our partners in the Community, taking account also of the views of our Commonwealth friends.
Time makes it impossible for me to discuss other issues of great importance which come within the ambit of this debate. No doubt we shall be having separate debates upon them during the Session. The noble Baroness reminded us that Hong Kong is of particular interest and urgency as 1997 will be upon us very quickly now. We wish Mr. Chris Patten well in his post as governor, although I must say that we would have preferred a less convoluted way of making that appointment. He faces very heavy responsibilities, and his political experience will help him to seek a balance between the various interests in Hong Kong. I feel also that his experience of political life will encourage him to support the introduction of democracy into the colony. I am sure that we all look forward to welcoming Lord Wilson, the present governor, into this House in due course.
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The continued repression of East Timor and the criminal imprisonment of Aung San Suu Kyi are not forgotten. Events in Afghanistan are also very relevant to our debate. We hope that all-out civil war there can be avoided. We support any initiative through the United Nations to promote and sustain a ceasefire in Afghanistan.
Those international problems—and there are others in Iraq, Cambodia, Cyprus and South America —prompt me to ask once again: what can Britain do to help? There are clearly strict limitations, and the plain fact is that we can be effective only if we act in concert with our allies and friends in the Community and the United Nations. There are some things that we should not do, and I must point to that again, as I did in a debate some moths ago; namely, selling arms or giving aid to predatory and repressive countries. We should have learnt that lesson by now.
In short, our conduct on foreign affairs can be supported only if we get our priorities right. We must of course secure our defences, as the noble Baroness pointed out. However, enlightened self-interest is no longer enough. As an old parliamentary democracy, we must not dismay or disappoint those countries which are struggling to build democracy by operating weak and vacillating policies. Our policies in Britain must be honest, compassionate and strong. That should be our constant and unwavering aim.
3.55 p.m.
Lord Bonham-Carter: My Lords, it is a great pleasure to associate myself with what the noble Lord, Lord Cledwyn of Penrhos, said in welcoming to your Lordships' House the noble Baroness, Lady Chalker. I congratulate her on her maiden speech which lived up to the very high expectations which I, for one, harboured. Her arrival here is a double pleasure. I always find it a pleasure to greet a defeated Tory. It is all the more agreeable when that defeat brings to this House someone of such distinction as the noble Baroness.
I associate myself also with the words spoken by the noble Lord, Lord Cledwyn, about the arrival of the noble Viscount, Lord Cranborne, whose speech we look forward to at the end of this debate, together with the speeches of the other two maiden speakers, the noble Earl, Lord Cromer, and the noble Lord, Lord Prentice.
There are 28 other people who wish to participate in this debate. Therefore, I suspect that the words that I have to pronounce will be all the more welcome if I keep them reasonably brief. I shall attempt to do that partly by telling your Lordships what I shall not speak about; namely, a large number of matters which have already been mentioned. I do not propose to go into detail on the Maastricht Treaty because we shall have an opportunity to discuss that when the Bill is brought before your Lordships. I do not propose to talk about Hong Kong which we have discussed on many occasions and which I hope we shall discuss in the future. I do not propose to speak about overseas development. I know that that is the particular responsibility of the noble Baroness and I shall follow

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her activities with interest. There are a huge number of issues which have been mentioned but which I shall have to omit from my remarks today.
When I look around the world I see an extension of the political instability which was the consequence—the inevitable consequence—of the revolutions of 1989. Political and economic reform of the countries of Central and Eastern Europe—and indeed those countries which constituted the USSR—is taking its time and is proving more difficult and more lengthy than some foresaw. Nowhere is that more apparent than in the vast problems facing Germany in absorbing what was the GDR into its political and economic life. The difficulty of introducing political and economic reforms simultaneously has been underestimated. It was wrongly assumed in many quarters that the two marched hand in hand and supported each other. In fact, so far as I can see, there is absolutely no evidence that economic reform is a necessary conjuncture of democratic politics.
Indeed, where the market economy has grown, it has nearly always been imposed by authoritarian governments, colonial governments or occupying powers. Very rarely has it been introduced by democratic governments. When it has been introduced, it will be supported, but people will not vote for 20 per cent unemployment, a drop in the standard of living and all the problems facing those countries which are trying that great and new experiment. Nowhere is that more vividly demonstrated than in Poland where the present parliament has not passed one significant piece of legislation, where yet another minister of finance has resigned, where the budget has not been approved and where there is a tug of war between the president and parliament. An area with a more tragic and dangerous form of instability, as already mentioned, is Yugoslavia.
The position of the Community therefore becomes more crucial as the one element of economic and political stability in this part of the world. Even there a different kind of instability is apparent in, for example, the diminished authority of President Mitterrand, the economic problems facing Chancellor Kohl and the constitutional crisis taking place in Italy. That makes the position of our Prime Minister an exceptional one, with this country about to take up the presidency and he the victor of a recent election. He has a free hand and a major role to play. It is to be earnestly hoped, as my noble friend Lord Jenkins of Hillhead has said, that now he is his own man with his own government, he will play that hand in a positive fashion confirming, in the words of a leader in the Financial Times today, that
"A British Government has at last accepted that it is part of the European entity",
and that their aim is to be a leader of that Europe.
The noble Baroness, Lady Chalker, said that there were three challenges to the Community at the moment and added a further three. I too have three challenges which are closer to her second three than to her first three. They are, enlargement; the consequences of enlargement, to which the noble Lord, Lord Cledwyn of Penrhos, rightly referred; and the
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development of a common foreign and security policy capable of dealing with events such as those in Yugoslavia rather more rapidly and effectively.
The Government's frequently expressed enthusiasm for enlargement requires refinement and a clearer definition of exactly what it means. It has been and can be interpreted by malevolent observers as a means of destroying the homogeneity and political effectiveness of the Community by making it so broad and large that it loses all focus and effectiveness of practical action.
While the addition of all or some of the Eftan countries (as they have become known) to the Community presents neither major political nor economic problems—though it raises some rather interesting questions in relation to neutrality —when we go beyond that group of countries with long democratic traditions and well-based economies to Central and Eastern Europe, we must walk carefully. For example, as has already been mentioned, it is the expressed wish of Poland, Hungary and Czechoslovakia to become members of the Community by the end of the century. That is highly desirable. However, I confess that when one looks at the progress they are making on the political and economic front in their various ways, they have a long way to go. I shall return to that topic in a moment.
We must think even more carefully and cautiously about the digestive capacity of the Community. How much can it actually absorb? How much can it bring within the system, such as it is, that it has created? We must also think about the degree of cultural affinity which is required for membership as well as economic and political convergence. We may well find that we have to develop a series of different relationships with some countries—forms of association which do not demand the full acceptance of the Treaty of Rome and all its developments—if we are to help those countries along without weakening the structure and homogeneity of the Community. The means of association can have varying degrees of intimacy.
Events in the Balkans and the experience of Greece within the Community suggest that those countries have even further to go before they can accept the rules that we demand. But even were we to limit the number of new members of the Community to some or all of the EFTA countries, the institutions of the Community, as the noble Lord, Lord Cledwyn, said, would be placed under almost intolerable strain. I raised that matter in November and December of last year in connection with Maastricht and received no indication that the Government were thinking deeply about it. We now have alarmist articles in the Conservative press and in particular the Sunday Telegraph about M. Delors' plans to transform the Brussels Commission into a "European Government". British officials are reported to be "appalled by the plan". Even the Sunday Telegraph admits that M. Delors is addressing a genuine problem. The Guardian reports that most European Community governments appear to back him.
If we do not like the Delors proposals, which have not been formally tabled as yet, what are our proposals? Perhaps when he replies the noble

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Viscount can tell us what the Government think about the amendment of the institutions of the Community in the light of its imminent enlargement. If we have no proposals, is not that a culpable lack of foresight? A machinery devised for six countries and which is working under considerable strain with 12, will prove unworkable for 15, 16 or 17.
Not unconnected with that is the problem created by Greek behaviour towards Macedonia where Greece vetoed European Community recognition. That led even this country to see the necessity to abandon the unanimity rule on some aspects of foreign policy. Directly one abandons the unanimity rule the whole concept of political co-operation becomes blurred. One has a machinery which makes the national position of some countries subordinate to the majority of wishes. That is not what is normally meant by political co-operation. I believe that by the mere force of events, such as the relatively small one to which I referred, political co-operation will be forced to develop on lines which at present the British Government have refused to admit.
It is a substantial agenda. It is one over which the Prime Minister will have to preside during this country's presidency. Developments of the kind to which I referred seem not only desirable but essential if the Community is to have an effective voice in the counsels of the world. It is only through its economic power and political influence that the forces making for stability in Europe, in the former USSR and in the Middle East, will be tamed and the political instability which is present brought under control and replaced by some degree of political stability and a substantial degree of economic progress. All in all in the next year the Prime Minister has huge responsibilities and a huge opportunity.
4.8 p.m.
Lord Bramall: My Lords, the early mention of security in the gracious Speech emphasises that the world is still an uncertain and dangerous place. It is to be hoped that the collapse of the Warsaw Pact and the melting of the cold war; all those miscellaneous but compelling economic pressures; the improvement and greater openness of worldwide communications and the increased sophistication of international diplomacy will continue to see that the world solves or at least contains its problems without ever again having to resort to conflict on the scale of World War I or World War II.
The potential for more minor but also dangerous and infectious confrontations brought about by ethnic rivalries, the plight of refugees and some still unsolved territorial disputes is still great. Those responsible for our foreign and defence policies will have much to do in the months ahead carefully monitoring those mobile and volatile situations, trying to establish proper and lasting balances of power and, of course, supporting the United Nations which encouragingly the world now seems more prepared to trust with the arbitration and policing of its problems.
Within the context of the gracious Speech, as the noble Baroness the Minister has said, the Government
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will undoubtedly be trying to establish and sustain a more European foreign policy to which we and others can feel able to subscribe; and hand in hand with that, as we have heard, to strengthen the European pillar of the NATO security alliance which is still the best guarantee of stability in a widening Europe. But I hope that that will be done without encouraging United States isolation in European or indeed in the affairs of the world as a whole because, let us be quite clear, without the structure, resources and logistics provided by America no effective military action under whatever banner would be possible if such action, as proved to be the case in the Gulf, was thought to be the only sensible response.
Therefore I see the WEU, as I believe the noble Baroness has implied, more as a very useful forum for debating defence policy and for the formulation of greater European co-operation in defence rather than as any kind of rival structure to NATO. Above all, we shall want—and our membership of the Security Council puts on us a special obligation to do this—to be able to react positively to United Nations initiatives designed to ease tension, to let warring factions off the hook, and to take part in any disaster relief operations which so continually need the world's attention. Our foreign policy needs to be properly supported by, and synchronised with, our defence policy so that we really can meet our objectives and protect, and if necessary, intervene when the government of the day deem that our national interest and international obligations are unacceptably affected. Sometimes that occurs, if historical precedent is anything to go by, after a most rapid and radical change in hitherto conventional thinking and accepted political parameters. The only certainty in the defence field is the unexpected.
When the urgency and extent of the threat which had so long concerned and preoccupied us had apparently evaporated, it was felt right to carry out a fundamental review of our defence arrangements. No one could possibly argue with that even if some of us felt that the phrase "options for change" turned out to be something of a misnomer; that the pursuit of a largely illusory (in the short term) peace dividend was somewhat premature, and that the pressing financial cart had been put before the properly thought-through strategic horse.
But all that is water under the bridge. In any case the world has moved on in the past two years. The final line up of the former Soviet republics and their control of the Red Army and nuclear weapons are still uncertain. Yugoslavia, at the heart of Europe, has produced persistent bloody conflict. Germany is in a muddle for the first time since the economic miracle. The problems of the Middle East are no nearer being solved. The tragedy of Ireland is ever with us as it has been for four centuries. Therefore it is not surprising that Options for Change, sensible and constructive as it has emerged in parts, has revealed some significant shortcomings particularly in army manpower. There is now scarcely an informed observer who does not believe that without an injection of between 3,000 and 5,000 extra men the army will not be able even to carry out its day-to-day commitments without intolerable overstretch let alone produce support for the Rapid

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Reaction Corps or be able to meet the invariably unexpected emergencies like the calls of the United Nations which always prove to be very manpower intensive.
Therefore I beseech the new team at the Ministry of Defence to look again at this problem and to think carefully how these extra men can be most effectively reintroduced into the system and how funding to support such an increase can be provided so that the rest of the very tight programme is not affected unacceptably.
In that respect I can see some political attractions in reprieving this or that regiment from the amalgamations and mergers which have caused such dissatisfaction in some parts of the country. I point out to your Lordships that with the present chaotic organisation of our regimental system, with large and small regiments mixed up together and all feeling that they have prior claims to special consideration, the selection of which regiment should be reprieved could cause almost as much ill-feeling as the original decision on which ones to merge. In any case I believe that the first priority must be to ensure that any extra manpower goes to seeing that whatever units are needed and retained in the order of battle—that does not only apply to the infantry —are maintained at a proper and viable strength for their full range of duties and that they do not continue to he overstretched nor, in an emergency, require reinforcing by as much as 30 per cent. to 40 per cent. by a whole hotch-potch of cap badges as had to occur before the Gulf War.
There may also be a case for putting back some extra manpower into the army's training machine which I believe is in danger of making itself a laughing stock, largely through trying to achieve too great manpower savings than an efficient, coherent training organisation will bear or an effective regimental system to which Ministers have committed themselves, deserves. In peacetime training is absolutely everything.
At the same time I urge Ministers to look again at the future organisation of the combat arms, particularly the infantry, and to take account of the advantages which can accrue in terms of flexibility, regimental homes, specialist training, military music and more consistent regimental manning, from a larger grouping of infantry regiments with at least two or three battalions in each group or large regiment and thus avoid the cap-badge traumas which occur every time you need, as from time to time you must, to change the number of units upwards and downwards in the order of battle.
I also suggest that it is high time that the Government looked again at their nuclear policy which was untouched by Options for Change. With the all too vivid experience of the Gulf War and the Lockerbie air disaster, no one in their right mind would want to see this country without some adequate nuclear deterrent or perhaps defence. But the nuclear threat has changed as fundamentally as the conventional one in terms of probable direction, urgency and extent. No one can really imagine that a four-boat Trident force, each with a very large number of multi-warhead missiles designed to deter or strike in
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a most specific doomsday scenario, would necessarily give the right response in an altogether different situation or indeed constitute a minimum deterrent in a world where these weapons are virtually unusable.
There may be a number of options and I do not want to get involved in them. It may be too late to change direction radically. The important thing is that the whole subject should now be looked at with an open mind because the old attitude of "we're here because we're here because we're here" and anyone who thinks differently is a cissy, is rather irritating and has certainly outlived its usefulness.
Finally, I urge the Government, within the framework of their foreign and defence policy outlined in the gracious Speech, to do everything possible to enhance where necessary our intelligence services. I am sure that the noble Baroness will talk about them later on. They have suddenly achieved enormous publicity and a high profile. The new threats are quite different and a great deal more diverse than the ones against which we were on our guard at the height of the cold war. It is also much more difficult to know how to react to them once they have emerged. There can never have been a time when to be forewarned is to be forearmed and thus give us a considerably more secure and effective response than would otherwise be possible.
In this respect I believe that the Armed Forces, as they become reduced in size, may be able to help by earmarking and seconding suitable young men and women—there must be many of the right calibre—to the intelligence services as was done quite extensively in India and Burma before and during World War II and indeed throughout the latter part of the 19th century and the early part of this century.
I am not asking for a new or fundamental review —and certainly not for one in which the Treasury is allowed to establish yet another and a still more stringent set of ground rules. I am asking that Options for Change is taken out, dusted and revised in the light of the real world as we have now, in the past 18 months, had time to reassess it, and with the new team, not perhaps so bound as its predecessors, to statements made in the past.
We have without doubt the finest Armed Forces in the world, provenly effective over a wide range of situations and much respected by the people of this country. But we will not keep them that way if we consistently underman them, overstretch them and fail to give them any real strategic direction as to what the Government expect them to be able to do in the future. Moreover, I genuinely believe that far from being an anachronism or an intolerable drain on our financial resources highly professional, non-political Armed Forces are, in fact, in this modern but still dangerous world a highly beneficial element in the structure of our national life; a measure and reflection of the kind of influence that we want to exert in international affairs, and an essential insurance policy within a reasonable percentage as regards those assets that we need to protect if we are to go forward from strength to strength in confidence both economically

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and socially. I hope that the new team at the Ministry of Defence will find this debate useful and, where necessary, will take heed of it.
4.21 p.m.
The Earl of Cromer: My Lords, I well recall the advice that my father gave to me as to when the time comes to make the maiden speech in your Lordships' House. He advised me to choose as arcane a subject as I could in the hope that a smaller audience would alleviate one's natural apprehension. Looking about me today I see that this is one piece of paternal wisdom which I have not followed.
For a few minutes today I would like to take your Lordships to China: a place of astonishing economic success; where there is little unemployment and where the economy has been growing, year in and year out, at an average of 6 per cent. over the past decade, where hunger and dismal poverty used to be the norm and where colour televisions and luxury cars are now common place.
I will talk today on Hong Kong and China, an area where I have lived continuously for the past 20 years. But my perspective will be that of a "China trader" and, as such, I tend to view Hong Kong from China, rather than the other way round.
I view the future for both Hong Kong and China in robust terms. I am encouraged to be optimistic by China's own experiences. Over the past 15 years, China's economy has been completely transformed. The country's leaders made the brave decision to embark on radical reforms—years ahead of Eastern Europe and the former Soviet Union—and the results have amply justified their boldness.
A vital element in the reform programme was the "open door" policy towards the rest of the world. China thus became the first communist nation to welcome foreign investors. Today, there is now as much as £30 billion invested by foreigners in the country. Foreign trade is now over £80 billion and foreign reserves more than £20 billion. It is striking that Hong Kong businessmen now employ directly some 3 million industrial workers in Southern China. The ordinary Chinese citizen has been the principal beneficiary of economic reform. Living standards have risen dramatically, and in Southern China and the coastal areas personal incomes now approach those of some regions of the European Community.
Now that China has made such a success of economic liberalisation, it has come under considerable foreign pressure to make equally bold steps towards political changes. China's leaders resist these pressures for a variety of reasons. One important factor is mistrust of our motives, reflecting China's troubled relations with the outside world over the past 150 years. In addition, when Chinese leaders survey the crises which have tragically overtaken so much of the former Soviet bloc, they naturally conclude that the Chinese Communist Party remains their country's best protection against chaos and economic collapse.
I believe that we should take a more generous view of China's progress over the past 15 years. Over the last 40 years, the Chinese nation has suffered from
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costly experiments in political extremism. They have put this unhappy past behind them. China possesses a mature culture, based on an ancient civilisation. It would be patronising to the Chinese people to suggest that they require instruction from us about the way in which they ought to determine their own political future. Instead, we should have confidence that, as China adopts increasingly the economic policies and institutions which are the foundations of the world's liberal economies, so personal freedom will increase still further in China itself.
For the people of Hong Kong, the political climate of China is a considerable and very great concern. The territory's 6 million people will become citizens of China in five years' time. These people are understandably anxious about their future: they are to be absorbed into the very system from which they or their forefathers fled. However, as China's economic reforms gather place, the anxieties, very evident in Hong Kong in the late 1980s, are ebbing.
Capital is now flowing into Hong Kong; the brain drain has slowed. In fact, the number of applications for British passports to be issued under the British Nationality (Hong Kong) Act was, to general amazement, actually undersubscribed. There is a new feeling of confidence in the air especially as business, the ruling ethos of Hong Kong, continues to boom —fired largely by economic growth in China itself. China is no longer such a threat; it is, in fact, one of the very reasons for Hong Kong's current financial strength.
There is a greater awareness in China too of the importance of Hong Kong—the two territories are each other's largest trading partners and some 60 per cent. of foreign investment in China comes from Hong Kong. The Chinese Government have assisted this change in Hong Kong attitudes. They have shown themselves able to respond favourably to business sentiment in Hong Kong. More recently, the Chinese authorities have shown an encouraging capacity to listen to Hong Kong's voice on more political issues.
The surging Hong Kong economy and the revival of confidence in its future are based on very solid political and diplomatic foundations. The 1984 Joint Declaration established a framework for Hong Kong's future under Chinese sovereignty which, in retrospect, clearly provided an assurance of economic and social stability that has stood the test of time. The Chinese Government have since translated its broad pledges to preserving Hong Kong's unique characteristics into a detailed Basic Law.
The challenge for Hong Kong is the creation of confidence: confidence inside Hong Kong that the Chinese leadership will continue to honour the Joint Declaration and implement in full the spirit of the Basic Law; and confidence among China's leaders in Peking that the people of Hong Kong will prove loyal, conscientious and valuable members of the Chinese nation after 1997. I believe that this confidence will continue to strengthen with the growth of contacts between the Chinese authorities and the leaders of the Hong Kong community.
It is inevitable that, as 1997 draws close, there will be new tensions between Hong Kong and China, and

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it is our responsibility, during the remaining five difficult years of British administration, to endeavour to preserve Hong Kong's prosperity and the welfare of its people and to moderate the more extreme expectations on either side. In Hong Kong, we will have left a monument to capitalism in Asia and a lesson in achievement from which it is hoped that the Chinese Government will profit.
I am aware that one of the many strengths of your Lordships' House is the many diverse skills that are found among your members. I would hope that in time my own somewhat unusual first-hand experience in the political and business conditions in what remains of the communist world in Asia may add to this well of knowledge.
4.29 p.m.
Lord John-Mackie: My Lords, it is fine to be able to congratulate a maiden speaker who really knows what he is talking about. The noble Earl avoided any controversy and I am perfectly sure that his tremendous knowledge of Hong Kong and China will be of great help not only to the Government but to noble Lords on all sides of the House. I congratulate him very heartily indeed. I was rather amused by the noble Earl's recreations and the extremes of them. They include mountaineering and deep-sea diving. I hope that the mountaineering is the safer of the two.
I have just two points to make. They are not strictly concerned with foreign affairs though they relate to an international problem. It is a major problem facing the world today and one that is not sufficiently appreciated by most people. I refer to the feeding of the starving. The noble Baroness mentioned the aid that is provided in various ways but the aid that is required is far in excess of anything that the various charities are able to supply. The charities are doing a wonderful job but a look at the figures brings home the seriousness of the problem. The world's population is around 6 billion at the present time. Of that total, around 1,500 million are starving. Of those, 700 million are starving to the extent that they can keep alive but are not strong enough to work. They are just keeping themselves alive. Eight hundred million of the rest actually die every year. Roughly 100 million of those are children and 40 million of those children are under five years of age. That is a tragic situation and cannot be tackled by charities alone. I do not want in any way to deride the charities. My goodness, they do a tremendous job.
In 1982, just after I came into the House, the noble Lord, Lord Renton, who is not in his place at the moment, made a speech on this subject. He quoted some figures and pointed out that there were two problems. The first was to feed those who are starving and the second was to teach them to grow their own food or to grow as much of it as possible. He pointed out that those were both long-term problems. How right he was. That was 10 years ago. I cannot remember the figures he quoted but the figures I have given today show that we have not made any progress in solving these difficulties.
On the question of growing more food, all kinds of objections are made to what might be done. It is said
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that to give people food destroys the markets of their own farmers. We should make deficiency payments to farmers so that they carry on producing food while at the same time we put as much food as possible into the countries affected. Africa has already been mentioned. The drought in Central Africa will have effects which last longer than one year. The whole of the eastern side of Africa right up to Eritrea and Sudan has tremendous irrigation problems. Some areas in India have similar problems, as do other Far Eastern countries. I am glad that the noble Earl, Lord Cromer, said that China, which used to have a considerable problem, has overcome it. I have never been to China but I have heard that, although the people are not too well fed, they are better fed than they were a few years ago.
What can be done? In Europe today we have taken out of production 1 million acres of agricultural land. We have set that land aside while this starvation problem is going on in the rest of the world. Surely to goodness that is about the most immoral thing we could do. I believe that an international body should be set up to ensure that food is produced and distributed to the starving. It takes time to increase production. Many people think that one can just send an expert agriculturalist with a BSc to the countries in question to give them advice and that the problem can then be solved overnight. In 1930 we were producing between 30 and 35 per cent. of our temperate foods. It was not until 1974 that we were producing 80 per cent. of our requirements. That was a long time and a war took place in the interval which required us to produce as much food as possible. Therefore to teach people all over the world to produce more food is not an easy task.
Another problem is over-population. I do not wish to quote population figures but we all know the rate at which population is rising. In 1982 there were 4.6 billion people in the world. In 1989, seven years later, the figure was 5.2 billion. In this country the population has increased by nearly 1 million since 1982. The problem of population must be tackled somehow. Organisations such as the Marie Stopes organisation are trying to deal with the problem and are doing a very good job indeed. However, charities are trying to do a task which should be shouldered internationally. I have before me a pamphlet from Population Concern, which is a very good name, which shows exactly what is happening in the world. It makes the point at the beginning that the world has bred to death. That is a true point to make because if the population continues to rise at the present rate we shall be breeding ourselves to death. I should like to think that this country and this Government will give a lead, a strong lead, in the matter.
4.38 p.m.
Lord Gladwyn: My Lords, the end of the cold war was, on the face of it, a great victory for the Western Alliance, headed by America. But at the same time the end of the Russian Empire in the East of Europe, and, even more so, the present virtual collapse of Russia itself, have liberated long suppressed and violent emotions in an area ranging from Zagreb to Alma Ata

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and from Riga to Sofia which may well result in widespread anarchy—a sort of generalised Yugoslavia —unless they are somehow brought under control by the world community as a whole.
What do I mean by the world community? I mean at least the principal sources of power; namely, the United States of America (associated with Canada), the European Community, China, Japan and no doubt India, together—it must be devoutly hoped—with a Russia which has emerged from its present parlous state in some form of association with its previously dependent republics. True, membership of the Security Council of the United Nations, which alone can provide legal authority for any world peace-keeping action, cannot be changed except with the consent of all five permanent members of the council. I am afraid that there is no reason, at present, to suppose that such consent will be forthcoming—it will not be.
The special position of the five permanent members —including Great Britain and France, which are now much less important both numerically and economically than Germany or Japan—can, however, for the time being at any rate, be justified by the fact that as a result of the cold war they are still, with the exception of Israel, the only nuclear powers. But, for this special position to be maintained—that is to say, to ensure that there is no proliferation of nuclear weapons throughout the world—two things, among others, seem to be necessary.
First, they must make it absolutely clear that they are determined to make good their present intention of greatly reducing their own nuclear armaments, beginning with those of America and Russia and then, eventually, turning to those of the other three. Next, they should all, as I think, declare their intention of never using their nuclear (or, indeed, their chemical or biological) weapons on a first strike. For them to do so against another nuclear power would obviously be impossible, for the ensuing retaliation would obviously be worse than defeat. To do so to avoid defeat by a non-nuclear power is, with the end of the cold war, an obvious absurdity. China and Russia have already made such declarations. I can see no reason why, in their own interests, the other three should not also do so.
But—and here is the point—if they make such a declaration, they should also say that any state which may, in spite of the non-proliferation treaty, come into possession of a nuclear weapon, must give a similar undertaking. If it should, in violation of this, employ nuclear weapons in any circumstances whatsoever on a first strike, it would risk the use of such weapons against itself. By such means third states should be deterred from possessing an expensive weapon which, in practice, could never be used and thus the danger of proliferation avoided.
Apart from such action, what can the Security Council do to avoid giving the impression that it is, for the most part, simply the agent of the major industrial powers of the Northern hemisphere intent on imposing their rule upon the rest of the world? It could revive the Military Staff Committee consisting of the
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military representatives of the five permanent members (dormant since 1946), part of whose duties under Article 97(1) of the charter is to persuade those states which are both willing and able to do so to earmark significant forces to be placed at the disposal of the Security Council on demand. There would be no reason why one or two of the larger powers, who might reasonably expect to be members of the council one day, should not also be members of the committee and indeed sit in with the council itself when its reports are discussed—though, naturally, without a vote. That suggestion is not very far from that made recently by Mr. Gorbachev—indeed, I think it was yesterday—in America.
As an extension of that idea and to prevent the Military Staff Committee becoming too unwieldy, it might be further agreed—no doubt unofficially—that the maintenance of peace in the Americas (that is to say, North, South and Central America) should be left, in practice, to the Organisation of American States. If so, great states like the Argentine, Brazil or Mexico would have small interest in joining the committee or eventually, for that matter, the Security Council itself. It goes without saying that the Military Staff Committee should consider not only the forces "earmarked" by individual states but also those which might be made available, by, for instance, NATO, the Western European Union, or, one day, a European political community.
How, indeed, does "Europe" come into the picture? How far will it be likely to play a significant part in the maintenance of world security? We must not delude ourselves: the end of the cold war, welcome though it is, has resulted, for better or for worse, in a considerable weakening in the drive towards European unity and in the appearance, in almost all the countries concerned, of extreme Right-wing and nationalist movements which we imagined had been finally discredited as a result of the Second World War.
In particular Germany, now united and with the Russians almost back in their own country, has largely lost her old fear of an ancestral enemy and consequently feels instinctively that she now can, to some extent, pursue a policy of her own. Moreover, the necessity of pouring vast resources into East Germany has clearly made her more hesitant about pursuing the aim of a common currency. Indeed, the sheer expense of reunification is perhaps only now dawning on the Germans.
Is, therefore, Maastricht itself in some danger of not being ratified by all the signatories—as it must be before it can come into force? We must get over the Irish difficulty somehow, and I can hardly believe that, in the event, ratification will be rejected in Bonn. But in France the treaty is, from what I hear, becoming increasingly unpopular, and the political situation there is not good. In Italy, too, there is doubt whether the country is capable of producing the real political revolution that will be necessary before it can assume the obligations of monetary union. Even the accession of Spain is not certain, while that of Denmark depends on a referendum, the result of which no one can with certainty predict. And if Maastricht founders how can

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the European Community as such continue to exist? How can the new democracies of Eastern Europe, already struggling with privatisation, be able to conclude with it those treaties of association and eventual union without which a return to some kind of directed economy would appear to be the only alternative? That is a danger, I suggest.
I should be happy if the Government could assure me that there is nothing in these apprehensions. But, even if they can, I hope they will not neglect the possibility, if things do go wrong, of still working towards some kind of European political union, which alone would then bind Germany to the West, the resulting joint European force, in conjunction with what we must hope will be a continuing North Atlantic Alliance, providing the basis for a revitalised United Nations capable of monitoring world peace. It is anyhow difficult to see how there can otherwise be that great reduction of expenditure on armaments which perhaps alone can free the immense funds that are now necessary if we are somehow to counter the appalling ecological effects on the world of two centuries of Northern hemisphere industrialisation, with a notable poisoning of the atmosphere, the land, the rivers and the sea.
Finally, are we really to tell the ever increasing billions of the impoverished Third World that it is only by following our fatal example that their lot can ever be improved? Ecologically that could only make matters worse. If the pollution of the world is to be stopped, it can hardly be by successfully holding out to all those billions the prospect of owning at least a washing machine, a refrigerator a TV and a car. Some other means must be found for coping with their present woes and our present concerns—to say nothing of halting the present disastrous increase in world population—even if all this should involve some reduction in our northern standard of living.
I like to think that this is not an impossible task over the years—chiefly, no doubt, for America, Europe and Japan. It may be that the predictions of our scientists, however justified, are too apocalyptic. Perhaps we are, to some extent, suffering from the "end of the world" illusions that convulsed Europe a thousand years ago. But one thing is certain; unless, with the end of the cold war, we can construct a new machine for ensuring peace, our ecological problems will be all the more difficult to solve. To this end, where can we look other than to a revitalised United Nations?
4.54 p.m.
The Archbishop of York: My Lords, I must apologise for my late arrival for this debate and what will regrettably be an early departure. I am particularly sorry to have missed the opening speech of the noble Baroness, Lady Chalker of Wallasey. The Archbishop of Canterbury and I are today launching a major report on Church music. I have to attend a press conference and later I shall have to sing for my supper—not literally, fortunately!
I was delighted by the reference in the gracious Speech to the promise of further initiatives on arms transfers. The Prime Minister has already made a
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notable contribution to the control of such transfers by securing the establishment of a United Nations register of arms sales. It seems to me that there is unlikely to be a better time to strengthen such controls still further. The lessons learnt from the Gulf War about the effects of a short-sighted sales policy in the Middle East are still very much in mind. We are conscious of the dangers from former Warsaw Pact countries that arms will fall into the wrong hands. The United Nations is slowly gaining a new authority as a peacekeeper. There are financial indications too that this is the right time to look for further international agreement. Banks will hardly be anxious to finance further arms deals given the number of bad debts they have on their hands. I suggest that it is therefore a moment in history when more strenuous efforts to establish international policies on arms sales are not only needed but stand some chance of being politically attractive.
So what more might be done? I take some suggestions from a report published yesterday under the auspices of a body called the Council on Christian Approaches to Defence and Disarmament. This is an international body of which I am British president. It brings together a wide variety of people of very different opinions, all of them interested in this field, who meet on the sole basis that they are Christians. I believe that the council has a good record of thinking in these matters.
The report published yesterday entitled Profit Without Honour? is a major study from a Christian perspective of the politics and ethics of the arms trade. From among the suggestions in the report I want to make brief mention of four. First, the principle of transparency in arms deals, by which is meant making information about them publicly available, is a vital first step in controlling such deals. However, at the moment, such transparency is one-sided. The United Nations register of sales is concerned only with transfers and not with total production. In consequence, the policy bears most heavily on those countries which are not themselves producers. From their point of view it must be seen as discriminatory and is therefore likely to be resented and possibly evaded.
Furthermore, unless the policy is seen to apply to producers as well as to receivers it surely cannot fulfil one of its main purposes as a confidence-building measure. I realise some of the difficulties in publicising information about production, but I believe that this is a further step which needs to be explored.
A second point concerns the need for multilateral initiatives in this field and in particular the importance of trying to secure European agreement on arms sales policies. This is surely one of the areas in which European co-operation could be taken a step further without raising larger questions about political union, particularly if we are prepared to build on our NATO experience. I believe that an agreed policy on European arms sales could be an important element in our efforts to cope with the growing Eastern European nationalisms as well as with problems in the Middle East.

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Thirdly, we need to be even more discriminating in judging recipient countries of arms sales on their human rights records and on their political stability. In particular, we need to avoid the disastrous mistake made more than once by the United States administration in thinking, "My enemy's enemy is my friend." Sometimes, as regards human rights issues, the Churches have local information which is closer to what is happening on the ground than that which comes through official channels. Therefore, I hope that the Foreign and Commonwealth Office will continue to recognise that there is a useful field of co-operation here. Kenya is a good example of a country in which the Churches could have been more active at an earlier stage in drawing attention to what was happening. Judging countries on their human rights records is immensely difficult. Surely, those who must make such judgments need all the help they can get.
Fourthly, the arms trade is an area in which the Government could be more interventionist in preparing the ground for eventual contraction. It is part of the argument contained in our report that arms sales are not like other sales and cannot be judged by purely commercial criteria. We do not allow commercial criteria to operate unchecked at the point of sale. Therefore, it is logical that in the conversion of some of the arms trade to less-threatening purposes there could likewise be government intervention in the form of help. Nobody should be forced to produce unnecessary arms which then have to be sold to inappropriate countries in order to keep workers in employment. But neither can we simply destroy such employment in an industry which is to a large extent dependent on government without effective government action to ease the process of change. I offer those four suggestions—there are more in the report—to those who will be preparing practical measures to implement the promises contained in the gracious Speech.
I wish to add a brief word on another topic mentioned in the gracious Speech. I do so with temerity after hearing the excellent maiden speech made by the noble Earl, Lord Cromer, on the subject of China and Hong Kong. I too wish to say a word about Hong Kong. I do so as the joint author of a report on the area prepared for the British Churches in 1989. We wrote about the huge loss of credibility which Britain had suffered in the eyes of the wide variety of Hong Kong citizens from all walks of life whom we met on our official visit there. Subsequent contacts suggest that, if anything, that loss of credibility has grown worse. The new Governor of Hong Kong, whose appointment I warmly welcome, will have a hard time trying to reverse the process.
It appears to me that if we look at the long-term prospects of the area it will be enormously important to us as well as to Hong Kong to retain the good will of its people, even at the cost of not persisting in the hopeless business of trying to meet China's more unreasonable demands. Hong Kong, with its new
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airport and its vital role in China's economy, has excellent prospects of survival, which is more than can be said of communism even in China.
The exclusion of Hong Kong citizens from British citizenship still rankles. I believe that previous debate about the issue was fatally confused by the false supposition that those who wish to retain British citizenship do so primarily because they want the right of abode in Britain. I do not believe that that is the case. I believe that what they want is a continuing link with Britain through that citizenship, even after 1997 and despite all the difficulties. I realise that politically it is now probably too late to do anything. The next sensitive moment will come when the Asylum Bill returns to Parliament. If the new Bill is seen as making it unlikely that refugees from Hong Kong will find acceptance here, supposing that the worst happens, it will do further damage to already damaged relationships.
Apart from being sensitive on such points, I believe that the single most important thing that the Government can do for Hong Kong during the next five years will be to strengthen its democratic structures. If we leave behind us a community which still looks and feels more like a colony than a democracy we shall have failed the people there. We shall have failed to live up to our own ideals of government and we shall have lost what can still be a valuable partner in whatever the future holds for South-East Asia. I hope that the new Governor will seize that point and I wish him well. I hope too that the Government will do all that they can to restore the confidence of the people of Hong Kong in British integrity.
5.6 p.m.
Lord Prentice: My Lords, it is almost 35 years since I made my maiden speech in another place. By a strange coincidence I was then, as today, the third maiden speaker to be called in the debate. However, that occasion was worse because the debate had been delayed for a long time as a result of an emergency debate instigated by Mr. Tony Benn.
Another difference is that today I have been greatly encouraged by the maiden speeches of my noble friends Lady Chalker and Lord Cromer. It is good to be able to congratulate them before making my own effort. I believe that every friend of the aid programme is greatly relieved by the fact that the departure of my noble friend Lady Chalker from another place has not meant her departure from the ODA. I speak as one of her predecessors—indeed, I believe that she has four predecessors in this House. She brings to the job a unique combination of compassion and brisk common sense. That has made her work in the department greatly respected in this country and throughout the world.
I wish to speak about the work of the ODA. In doing so I hope that I shall not trespass too much on the conventions of a maiden speech. I realise that there are noble Lords—I have previously engaged in public debate with one or two —who are totally against the concept of development aid. However, most noble

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Lords support the programme. If there is controversy it is not between parties; there may be different individual views.
I believe that an aid programme is a moral imperative. Development aid—I underline the word "development"—is an essential part of a modern and civilised relationship between the developed countries and poorer countries. Clearly it is not the whole relationship; the gracious Speech refers to other aspects and in particular to the determination of the Government to complete the Uruguay Round. That has considerable relevance to the developing world, as the noble Baroness pointed out.
I do not care greatly for the kind of argument which suggests that trade or private investment is better than aid. I believe that the developing world needs more of all three; perhaps in different proportions, country by country. Broadly speaking, there is scope for much more of all three.
More important still are the efforts made by developing countries themselves, which must be conducive to their development. I was glad to read the paragraph in the gracious Speech which speaks of the aid programme in these terms:
"Its objectives will include promoting good government, sensible economic policies and respect for human rights".
I suggest that those objectives are not only clearly worthwhile in themselves but are also conducive to development. If those criteria are followed, then, pound for pound, dollar for dollar, mark for mark, in terms of aid programmes there will be greater developmental effect.
Inevitably, we frequently consider these matters in terms of deprivation and suffering. That includes at the moment the latest news out of Africa, to which both Front Bench speakers referred, as did the noble Lord, Lord John-Mackie, in a moving speech. The appalling drought—the worst in living memory—has been superimposed on countries many of which already suffer considerable problems. In a brief visit to the region a few months ago, I saw parched fields in South Africa where the maize crop had completely failed. That is an unmitigated disaster there and perhaps a greater disaster in poorer countries further north, such as Mozambique.
I am sure that the Government were absolutely right to increase the aid commitment a week ago and to work, as they did, within the European Community for a bigger European effort. However, I wish there were more media coverage and public awareness in this country of the success stories of the development programme. It is the bad news that makes news: the good news is equally remarkable and I often feel that people would be interested in it. Newspapers, radio and television underestimate the potential interest of their readers, listeners and viewers, who would like to learn more of human progress in many parts of the world. For example, the green revolution in tropical agriculture over the past quarter century has had a tremendous impact on the production of wheat, rice and other crops, particularly in Asia. India, which was suffering dreadful recurrent famines until the middle of the 1960s, is now self-sufficient in basic grains. It has even been an exporter in some years.
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Take the manufacturing achievements of some of the developing countries. One thinks first, but not exclusively, of countries in East Asia. In 1960 some countries on the list of the developing world produced about 4 per cent. of the world's export trade in manufactured goods. They now produce about 19 per cent. Let us take the enormous achievements of the World Health Organisation: the eradication of smallpox, the defeat of other killing diseases in many countries. Take the figures for adult literacy in the developing world, which have increased considerably over the past 20 years in almost all countries of the developing world. The life expectancy figures have increased, those of infant mortality have decreased.
That progress is mostly due to the efforts of developing countries themselves, but what we and other aid donors can claim is that we have helped them to help themselves by aid programmes which have become more practical, sophisticated and efficient as a result of the process of learning from experience over the years.
Of course, some progress aggravates problems; the health improvements make the world population explosion even greater. But this is surely not a reason for turning our backs on the problems with a kind of Malthusian despair. It is simply a case of saying, "We must rethink some of our priorities". Clearly, no development plan these days makes much sense without a population policy.
Perhaps I may finish on this note. The one thing wrong with our aid programme is that it is not big enough; it ought to be larger. I shall not engage in the numbers game, I do not believe that there is any magic about a particular percentage of gross domestic product, but the programme should be larger. So, in the main, should the programmes of other aid donors. The programme has been increasing modestly in recent years and, in the Autumn Statement by the Chancellor of the Exchequer, further increases were set out for the current three-year period. Compared with the previous period, there would be an increase of 17 per cent. in cash terms or about 3 per cent. in real terms. But there will be no increase in the proportion of our national product. In other words, the programme will grow slowly with the national product, as it has been doing. It will not increase as a proportion. I believe that it should, and this applies to other countries as well. I underline the point that Japan and the United States, the two richest countries of all, have proportionally a much worse record than we have.
If I am told that this is not fashionable, and that what is to happen shortly is to be a further discipline on public spending in the next public spending round, I am not against that general proposition. However, I should like Ministers —particularly Treasury Ministers—to consider the editorial in last week's edition of The Economist:
"This is not just a matter of saying no when others ask for money. To give his government a sense of reforming purpose, Mr. Major must look anew at everything the state does, and dare to change its shape".

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I believe that that indicates a selective increase in some programmes, which should include the aid programme. It is in the long-term interest of our country, and most of all we should do it because it is right.
5.17 p.m.
Lord Bruce of Donington: My Lords, it is my pleasure on behalf of the House to offer our felicitations to the noble Lord, Lord Prentice, on having so successfully got his maiden speech in this place behind him. I never had the privilege of knowing him well because unfortunately, by the harsh arbitrament of arithmetic, I was dismissed from the constituency of Portsmouth North in 1950 at the same time as he arrived as a Labour Member of Parliament for East Ham North. So I never really got to know him well.
The noble Lord's speech today carried powerful overtones of the time he spent as Minister for Overseas Development in 1975–76. He has had a distinguished career. He served with the Royal Artillery from 1942 until the end of the war in both Italy and Austria. He attained office under a Labour Government and held successive high offices of state until the 1979 election. In the interim, he acquired a certain flexibility of political attitude which enabled him successfully to depart from the party to which I have the honour to belong and join the party opposite. Even there, once again he has had a most distinguished career. We all wish him well and hope to hear from him many times in future debates in your Lordships' House.
At the same time, I willingly associate myself with the remarks which have fallen from the lips of my noble friend Lord John-Mackie on the speech of the noble Earl, Lord Cromer, whom I congratulate.
Now that we have a friendly atmosphere, I also wish to congratulate the noble Baroness, Lady Chalker, to whom I have already expressed my personal pleasure at seeing her on the Benches opposite. We welcome her again this afternoon. I hope she will forgive me for saying that she reminds me, in many of her characteristics, of a European commissioner whom I knew very well, a Mr. Gundelach, who until his death was the leader of Directorate 6—of the agricultural division. Unlike many others in all parts of the world he never tried to duck a question. That is not the case with many people, even as regards Members of this House and of another place. Mr. Gundelach used to meet each question head on. He would never try to hedge, come what may. I believe and hope the noble Baroness will place herself in that category. I am sure she will.
This afternoon the noble Baroness confirmed what the Prime Minister said yesterday when she said that the Maastricht Treaty would soon be presented for ratification in your Lordships' House, together with the enabling Bill. The purpose of my opening remarks is to suggest that we ought to allow far more time for the consideration of that measure than is apparently envisaged at the present time. The declaration which is part of the Treaty of Maastricht—that is, a solemn declaration signed by all the governments concerned —states that,
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"the governments of the Member States will ensure, inter alia, that national parliaments receive Commission proposals … in good time"—
I underline the words "in good time"—
"for information or possible examination".
There are hundreds of proposals emanating from the Commission every year. If they are all subject to such consideration, surely that same consideration must apply to the treaty itself.
Under the guidance of my noble friend Lady Serota we were always quite sure that all proposals had to pass her personal scrutiny, let alone that of her staff. I wish to pay tribute to the diligence with which she applied herself to that task. However, I return to the words "in good time." What is meant by those words? I have been engaged recently in examining in detail the 355-page text of the treaty, printed on pale yellow paper, as signed on 7th February last. Incidentally the Foreign Secretary is reported as saying that he has not read that document. Members of his department may have read it, and I sincerely trust they have. Perhaps the Minister was joking when he said he had not read the document.
I have examined the signed treaty that contains Mr. Hurd's signature and I have to report there are significant differences between the treaty as signed and the version that was given to us as the draft treaty on 10th December last. Today we have been issued with a further version. That printed document was available at two o'clock this afternoon. On the basis of past precedents we shall have to check through that document also to see whether it confirms what is printed in the pale yellow document through which I have waded. There is now a fourth document issued by the Commission itself. The document issued this afternoon by Her Majesty's Government contains the usual plain honest stuff and is priced at £13.30. However, we do not have to pay that.
The version issued today by the Commission entitled Treaty on European Union—a real glossy document—is priced at £6.50. I am interested in the differences in price of the different documents. One wonders what hidden subsidy, undetected in the Commission's budget—that budget is rarely examined in detail by Ministers—accounts for that discrepancy.
I return now to the treaty itself. As I said, it differs significantly from the version of 10th December in many respects, after one has allowed for drafting errors and clarifications. Moreover, it makes significant alterations to the Treaty of Rome itself. I wonder how many Ministers have read the document. If asked to put up their hands, I doubt whether I should see a sea of palms. If one searches through the document, one discovers it is a shambles. Its use of numerical cross references makes reading it a complete nightmare if one tries to refer back to the previous version and to the Treaty of Rome. The document contains ambiguities, generalities and inferences. The document's authors do not even bother to define some of the more contentious terms and new office inventions which are incorporated within it.
In this House there are distinguished Law Lords and many members of the Bar and the solicitor's profession. I very much doubt whether any

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self-respecting lawyer, let alone accountant, would wish to associate himself with the document. It is quite clear that we must examine the document in far greater detail and that we must conduct a far more searching inquiry into the implications of the treaty not only as regards the system of government but also as regards this House, the legal system as a whole and the people of this country. Otherwise, on the basis of the dull doctrine of inevitability—I do not accept that doctrine and I hope many other noble Lords do not accept it—the enabling Bill and the ratification of the treaty stand in danger of going through on the nod. I believe that that would be a tragedy for the country as a whole because only later, when it is too late, will we discover the treaty's practical implications on our lives.
Lord Stoddart of Swindon: My Lords, I am obliged to my noble friend for giving way. I am sure my noble friend is aware that the Bill has now been published. It is a two-clause Bill. I understand that it will be unamendable. Bearing that in mind, is my noble friend satisfied with the assurances that were given by the noble Baroness, as regards holding full and proper discussion on the measure, that a proper discussion will be possible? Is my noble friend confident that the Bill will not be guillotined in the House of Commons, as was the Bill on the Single European Act?
Lord Bruce of Donington: My Lords, I am most grateful for my noble friend's intervention. I do not wish to question in any way the more general assurances that I have been given so far and which have been communicated to the House. However, I am bound to say that I share the anxieties of my noble friend. I therefore demand that proper time be allowed for Members of Parliament, both in the other place and in your Lordships' House, to study the matter thoroughly and for the question to be raised in the media.
There seems to be no reason why the discussion and presentation of the treaty for ratification should not be delayed for some time. I shall explain why. As may not be generally known, in June there are to be financial discussions, once again initiated by the Commission which is never backward in putting forward such proposals. It is proposed that increased funds should he provided for what are described by Monsieur Delors and the commissioners as the means "to match our ambitions". That will involve an increase in the VAT base applicable to own resources. It may involve the British taxpayer in paying an additional £1 billion to £2 billion per year in support of the proposals put forward in that document. Your Lordships will recall that I had to reprove Monsieur Delors for being quite rude to our own Foreign Secretary in connection with the doubts which he expressed on that matter. I reiterate that reproof now.
What is not generally known is that the abatement of Britain's contribution to Community funds which, to her eternal credit, Mrs. Margaret Thatcher secured at Fontainebleau, is in danger and the Commission will argue for its abolition. According to the
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Government's own figures, published in their periodic review of the activities of the Community, that rebate in itself is worth between £2 billion and £3 billion.
Like my late right honourable friend Aneurin Bevan, I do not believe in going naked into the council chamber. Therefore, why does the Prime Minister not wait until the conclusion of those financial negotiations which, as I say, involve a potential loss of between £2 billion and £4 billion to the British taxpayer? Why does he not say, "I am not going to ask Parliament to ratify this new treaty unless we get satisfaction on this particular issue"? There is nothing to be gained by agreeing prior to those discussions everything that is demanded of us. I therefore plead with the Government to take that view into account, bearing in mind that even since that time, flushed with his apparent success, Monsieur Delors has now gone further and proposed that the President of the Commission should become the president of Europe.
That is the new concept: all effective power should be taken away from the Council of Ministers. Indeed, one gained some inkling of that from the report which appeared recently in the Financial Times that Monsieur Delors, President of the Commission, accompanied by the President of Portugal, was scheduled to have an interview with Mr. Bush, President of the United States. One gathers the esteem in which the present President of the Commission holds himself in relation to world affairs.
I shall not go into further detail in relation to the Maastricht Treaty. However, there is a matter which I wish to put seriously to your Lordships. One of the greatest battles in the world is the battle against poverty. The rich nations are becoming richer and the poor nations are becoming poorer. That problem still has to be solved. However, superimposed on that problem there is now a further problem, which is evidenced throughout Europe. It is the battle of democracy against bureaucracy.
Bureaucracy can be of two kinds. There is armed bureaucracy represented by armed forces, which happily in most developed countries are under political control. In the eastern states the battle has been one of democracy against bureaucracy. In Europe the battle is not yet joined.
The Council of Ministers is composed of Ministers who have full-time responsibilities in their own countries. I am sure that they work diligently, as Ministers do here. They cannot have the time to examine matters in great detail. So it was that the Council of Ministers itself established under Article 151 an organisation called COREPER, the Committee of Permanent Representatives. It comprises the ambassadors, their deputies and sometimes their subordinate staff. It is that body, which is always attended by the Commission, which sets the agenda for the next Council meeting. It does more than that. It specifies which items are up for discussion and decision by the Council. There is a further list which details those items which can be signed on the nod without even discussion or being read.
There is exactly the same kind of bureaucracy in the Commission itself. That Commission was recently before the European Court for not even having

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bothered to sign, the orders which it issued, in accordance with Article 12 of its own procedures. I wonder how many pieces of legislation have been received by Her Majesty's Government over the past year which have not been properly drawn up and authenticated by a Commission which is so convinced of its own powers that it does not even bother to do so.
That is the battle of democracy against bureaucracy. I want desperately to be satisfied that both the Government and members of my own party have taken that on board. I hope that they are not prepared, for the sake of the aura which may surround them as a result of being pro-European and idealistically disposed towards a federal concept, to bask in a sense of apparent idealistic purpose. I hope that they will consider that it is their duty to make sure that the frontiers of bureaucracy are rolled back, not only in Europe but throughout the world. It is to that task that many of my friends and I will dedicate ourselves for so long as we are able.
5.37 p.m.
Lord MacLehose of Beoch: My Lords, I thought that the subject of Hong Kong offered too broad and specialised a field to cover adequately in a speech appropriate to such a wide-ranging debate as today's. However, the noble Earl, Lord Cromer, did so extremely well, and I congratulate him on his maiden speech. We used to know each other in Hong Kong. I am delighted to see him here and to hear him in such good voice and talking such good sense. I hope that we hear from him often. Nevertheless, Hong Kong is of great and steadily increasing importance to us. As I understand that a short debate concentrating on Hong Kong may he possible next month, I shall be extremely brief this evening.
On the economic front, in both Hong Kong and China—and, as the noble Earl said, the two are virtually indissoluble now—broadly the picture is one of remarkable success in the present and confidence in the future. Indeed, the vibrancy of the southern Chinese cities reminds me very much of what one experienced in Hong Kong say 20 years ago. The success is due on the one hand to Hong Kong's capital management and commercial expertise; but on the other—do not let us forget—to the Chinese policy of "opening to the world", with all the local economic relaxations that are involved.
In those two areas of Hong Kong and southern China the opportunities for British exports seem vast. On the political front of Hong Kong differences about how the Joint Declaration should be implemented were considerably eased by the Prime Minister's visit to Peking last year. That was a great help. However, much detail is involved in many large fields. There is a residue of mutual suspicion. Progress is slow and time is getting short. There seems to be room for more diplomacy and possibly even, on both sides, some rethinking.
On the domestic political front in Hong Kong itself, the direct election of 18 members of the Legislative Council last September greatly changed the character of that council, at any rate for the time being. The
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implications for government of that change have not yet been fully absorbed or thought out. Meanwhile, the next elections are as near as 1995. On them will depend whether a legislature will be in place that will conform sufficiently with the Chinese Basic Law, so that it can be relied on to support sound government in Hong Kong through the transition period, as we all very much hope. However, for that to be possible, substantial change looks necessary.
As I said, the enormous economic success of Hong Kong has been due in no small part to the policies of the Chinese Government. The difficulties on the political side are due in part to the official and unofficial relationship with China. For my part, I fully believe that the policies relating to economic success are of much greater substance than the details over which political differences have arisen. I should add at once that I have the greatest admiration for the way in which the noble Lord, Lord Wilson, and this Government have managed to maintain progress over the past three years in circumstances of unexpected difficulty and complication, and under many conflicting pressures. There will now be a fresh look. In any case, any change in governor will produce that.
Again, Mr. Patten—and please do not misunderstand me, my Lords—is a different kind of governor from his predecessors. That wholly coincides with the likelihood of a new look. Like other noble Lords, I wholly applaud his imaginative appointment. No doubt Mr. Patten will wish to examine on the ground in Hong Kong the problems that are so well publicised here in the press. I am sure it will be helpful to do so before he settles himself into the saddle for the large number of hurdles that lie ahead.
Meanwhile, I entirely agree with the optimistic thrust of the noble Earl's speech. Most of the ingredients are already there in Hong Kong and China for the increasing welfare of Hong Kong people, for the success of the last spell of British rule and for the SAR to follow. Mr. Patten should have a notable governorship. I am sure that he will find it as fascinating and rewarding as his predecessors have done.
5.43 p.m.
Lord Cockfield: My Lords, in such a wide-ranging debate covering the full spectrum of foreign affairs and defence, it is perhaps not surprising that I do not directly follow up what the noble Lord, Lord MacLehose, said, though clearly his remarks were greatly appreciated by the House and were, I believe, supported by the great majority of noble Lords.
Instead, I propose to revert to the subject of the European Community, about which the noble Lord, Lord Bruce of Donington, made some comments. He made one point which had some merit; namely, the plea that we should have a consolidated edition of the treaties as amended at Maastricht. The noble Lord will remember the attempts that we made in the last Parliament to ensure that copies of consolidated treaties of that kind were made available to your Lordships. This is an outstanding example of where that should be done.

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It is an immense advantage to have my noble friend Lady Chalker to answer on behalf of Her Majesty's Government on both foreign affairs and the European Community. I hope that it will not be misunderstood if I say how much we appreciate having somebody who has actual first-hand experience of these matters, which she can talk about with authority and conviction.
From that I pass to making a more general comment. In this country we face a real problem in dealing with the European Community. The English Channel is a psychological as well as a physical barrier. For something like 1,000 years now we have fought our wars, or participated in wars, on other people's territory. It has been their countries and their lands which have been devastated. It has been their cities which have been destroyed. It has been their populations which have been decimated and at times reduced to servitude. At the end of the war—whatever war it happened to be—we retreated to our island fortress, pulled up the drawbridge and in effect said, "A plague upon all your houses".
In those circumstances, it is not surprising that we have not entirely participated in the development of political thought and philosophy on the Continent of Europe. If we fail to understand them in just the same way as they fail to understand us, it is in part at any rate a product of our very different history. As we enter a new Parliament, we have to ask ourselves what can be done about that situation. The noble Lord wishes to intervene.
Lord Bruce of Donington: My Lords, I am grateful to the noble Lord. He referred to the British habit of pulling up the drawbridge and separating ourselves from Europe. Does he regard the rescue of Europe across the Channel with our own forces as pulling up the drawbridge?
Lord Cockfield: The fact of the matter is that after nearly every war we have retreated to our own territory. It may be within the noble Lord's knowledge (at least it is within his lifetime) that we failed to participate in the original Community, the Iron and Steel Community; we did not participate in the Messina conference and we were not original members of the European Community. That is something which I greatly regret and I am glad to see that the noble Lord equally seems to regret it.
I return to the point that I was making; namely, that in a new Parliament, with a new or at least a reconstructed Government, we have to ask ourselves what we can do about that situation. It is a different question from the one that we would have asked in the Thatcher years. Then the question would have been: what should we or need we do about the situation? That at least has changed. We now regard ourselves as members of the European Community and committed to it. We have to see to what extent we can develop our philosophy, thoughts and policies in this country in a way which is consistent with membership of the European Community.
Perhaps I may illustrate that. I, and possibly other people, have some difficulty in seeing how one can be at the heart of Europe if at the same time one opts out
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of the two most important developments in Europe at the present time. In case that is thought to be a party political criticism, perhaps I may say that if it ever came to action—which is highly unlikely—I doubt very much whether the other parties would take a more active interest in European affairs. At the moment all we have is rhetoric unmatched by deed. I strongly suspect that if it ever came to the point the parties opposite would be just as anxious as the Conservative Party to defend what they conceive to be Britain's interests, whether they were right or wrong in that respect and in their judgment.
However, that leads me inevitably to ask: what are Britain's interests in this matter? First, I believe that it is the function of governments to lead and not just to follow and to mould public opinion, not simply to reflect it, still less to pander to and reinforce popular prejudices. I shall therefore start by stating that what really matters are Britain's long-term interests. Our policies should reflect those long-term interests and not be side tracked by pressures exerted by groups or lobbies with political, financial or other sectoral interests, often of a short-term nature.
We have to start by recognising that as latecomers to the Community, we have neither the prospect of changing nor the moral right to change its fundamental characteristics. It is not, and never was, simply a free trade area. We wished it were and that is why we never joined at the outset. But we lost that argument 30 years ago and it is no good thinking that that decision can now be changed. The Community was from the outset designed as a community with wide economic, social and political objectives. We can help fashion those objectives. We can possibly ensure that they will be better than they would have been without our contribution, but we cannot stand aside from them. If we try to do so, we shall be crying in the wind and our words will be swept away unheard.
The fundamental question is a simple one. Are we likely to be better off in economic and political terms if we form part of a Community of 300 million or 400 million people which we have actively helped to shape; or as a fully independent and free standing sovereign state of only 50 million people? The answer to that is clear: "sovereignity", in the sense that the question implies, no longer exists in the modern world. There is no such thing as "independence", the real situation in the world as it exists is one of interdependence. Nor, regrettably, have we shown any great competence in the management of our own economic affairs. History does not suggest that we would, or could, on our own do any better in the future than in the past. And just as, first, the Americans, and then the Japanese, have run our automobile industry for us, and we have taken great satisfaction in their achievement, possibly we would not be the losers if our monetary policy were largely determined by a European central bank guided by the philosophy and skill of the Bundesbank supported by the other central bankers of the Community.
Even if we were to look at the Community simply as a trading operation, as governments in this country are still apt to do, the simple truth is that we have nowhere else to go. The old Commonwealth was

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increasingly drifting away from us long before we joined the Community. The new Commonwealth has given us no great joy; and the United States, valuable market though it is, is beset with protectionism.
On the monetary front, sterling has long since lost its place as the reserve currency of the world. It is no longer the classical "store of value" that it was in Victorian times. In the past 25 years it has fallen in value compared with the deutschmark from 10 deutschmarks to the pound to 2.95 deutschmarks today. If that is the kind of achievement in which the noble Lord, Lord Bruce of Donington, takes great pride and pleasure, it is an achievement that has brought great pain and anguish on the British people, let alone others elsewhere. Unless we wish to join the dollar zone or the yen zone, our only sure refuge and hope for the future lies in a European currency.
On the political front we were once a great power. Today on our own—and the words "on our own" are critical—we are little more than President Bush's closest and ever present ally when he finds himself in trouble. Our true hope for the future must be in a powerful, integrated Europe in which we play a leading role.
But there is one thing that we have to accept. It is one of the facts of life and it exists whether or not we wish to accept it. One cannot pick and choose. One is either a member of the Community and accepts its full panoply of policies in the political as well as in the economic field, in the social field as well as the industrial field, or one will find oneself increasingly marginalised and ultimately confined to the stony wasteland by the roadside. And, my Lords, do not be misled by reports in the media about dissensions in other member states. Most of the arguments are negotiating ploys, internal political bickering, or attempts to gain an advantage. None calls into question the fundamental objectives of the Community. While we hold the presidency it is our duty to ensure the ratification of the Maastricht Treaty and to make every effort to help member states to resolve the difficulties that they face.
Perhaps I may take up the point raised by the noble Lord, Lord Bruce of Donington, about the Fontainebleau Summit at which the British budget contribution was finally agreed. Of course the issue goes back much beyond 1984. The success of the Fontainebleau Summit depended on the fact that President Mitterrand, who was then in the chair, was prepared to put the interests of Europe as a whole in front of the interests of France in particular. It has always been the honourable tradition of the presidency that it subordinates its own national interest to the interests of the Community as a whole. I hope that we in fact follow that tradition when we hold the presidency in less than two months' time.
I want to leave those general matters and comment for a moment on the Delors II package. It is likely to prove the Community's most immediate and important business this year and particularly during the British presidency. We have important points to make and it may be that some of the figures proposed are too large. However, I hope that we shall approach
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the negotiations in a constructive spirit and with the realisation that much of the Community's future development is at stake. It is a misconception to think of the Delors package simply as a financial operation. It is described in that way but in truth, the money is simply the financial expression of the underlying policies. If we have accepted the policies and even more so, if we are promoting them, as we are in the case of enlargement, we cannot stand aside from the financial consequences that they involve.
The Government's rhetoric on enlargement has been somewhat diminished over the past few months. It started with the "Urals to the Atlantic". In the Queen's Speech, it has almost come down to EFTA on its own with a mild nod towards the other countries. However, I am bound to ask the Government whether they have made a serious attempt to assess the financial consequences of enlargement of the Community to include the countries of Central and Eastern Europe.
The EFTA countries pose no problem. They are relatively wealthy countries and they have advanced economies. However, when one starts looking at Poland, Czechoslovakia, Hungary, Romania and Bulgaria, the position is entirely different. The Community is still paying the cost of the enlargement which brought in Spain, Portugal, Greece and, indeed, Ireland. We have objected to the continuing cost involved in those enlargements. Do we really know what it will cost to bring in those countries of Eastern Europe? One looks at what has happened in Eastern Germany and the tremendous burdens that the extended Federal Republic is now carrying. The cost of those countries on the European Community will be immense, if not astronomical. The Government must come to terms with the fact that if they are promoting those policies, it is not unreasonable that they should be asked to pay the cost or to contribute towards the costs of the policies that they promote.
Coming back to Delors II in general, in the end our attitude to that will reflect also our attitude to the Community. It will show whether a new Parliament, and in many respects a new government, have at long last come to terms with the world in which we must live.
6.3 p.m.
Lord Judd: My Lords, it was good to hear the powerful maiden speech by my old political boss, the noble Lord, Lord Prentice, this afternoon. How strongly I endorse what he said about the media and the positive stories to be told! The maiden speech of the noble Earl, Lord Cromer, was also telling as a voice of wisdom and experience.
I join with those who have today welcomed the noble Baroness, Lady Chalker, to her new place here in this House. For those of us who have worked and enjoyed working closely with her in the past, she has established herself personally as second to none in her anxiety about third world issues. She clearly comes from the one-nation element in her party but she stands for more. Her perspective and commitment to the concept of one humanity are badly needed in the counsels of state.

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Statistically, still, somewhere in the world every 2.5 seconds of every day a child dies of poverty; and 1.5 billion children, women and men, are still without any health care whatever. There are 45 million refugees and displaced people in the world. Against that demanding background, there is no disposition on these Benches to politic on the backs of the poor. If the Government as a whole demonstrate in this House —and most importantly in the other place—their determination that the UK will fully shoulder its responsibilities in the world, striving to meet the 0.7 per cent. of gross national product UN aid target in the fight against poverty and injustice, on those issues they will certainly enjoy much support from all sides of this House.
As the noble Baroness reminded us, there is yet again a heart-rending and massive humanitarian crisis in Africa. In the Horn, 23 million people are at risk from acute food shortages and are in need of rapid assistance. As the Minister reminded us, in Southern Africa, the worst drought for 50 years has devastated crops in Zambia, Zimbabwe, Malawi, Namibia and South Africa. In Mozambique the ravages of drought are compounded by cruel warfare and consequent corruption.
We naturally welcome the £20 million that the noble Baroness has recently made available as a beginning, and we welcome the decision by the Development Council of the European Community to make available an extra 680,000 tonnes of food aid for Africa, with 120,000 tonnes for other parts of the world in need.
However, as we learnt last year, if famine is to be averted, it is not just a matter of deciding to allocate the food. Can the Government assure us this evening: first, that the extra food will begin to arrive in Southern Africa before the end of June, and that effective plans are already in place for the co-ordinated arrival of the rest in a way that takes account of the port capacity and need? Secondly, that the IMF and World Bank will modify their structural adjustment programmes to reduce food prices in order both to help the poor buy available food and to provide subsidies on vital agricultural inputs to help stimulate food production for next year? Thirdly, that help will be provided for port rehabilitation in Beira, Dar es Salaam, Maputo and Lobito, and for inland transport and transport management. Fourthly, that assistance will be forthcoming for economic and social reconstruction and rehabilitation in Somaliland, Ethiopia, Eritrea, Namibia, Zambia and Angola. Fifthly, that special action will be considered at and by the United Nations to ensure access to those in need in Mogadishu and protection for the large numbers of internally displaced people in and near Khartoum.
As we come to the special United Nations conference on environment and development, eminent scientists on both sides of the Atlantic have predicted that we have barely 30 years in which to get a grip on management of the environment before the crisis threatens to become terminal. It is estimated that the price of correcting the world's environmental problems will be 625 billion dollars per year, with an urgent need for 125 billion dollars of that each year to
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be transferred from North to South. However, in 1990 the 21 development assistance committee members of the OECD provided little more than 54 billion dollars in official aid to the South.
Apart from the alarming depletion of the ozone layer in heavily populated latitudes of the northern hemisphere, 35 per cent. of the earth's land surface, accommodating one-fifth of the world's population, is in danger of becoming desert. Every year, 7.5 million hectares of tropical forest and 3.8 million hectares of open dry forest are disappearing; and a further 4.3 million hectares are degraded. The number of food-insecure people in Africa alone has risen to 100 million. Global warming, with consequently rising seas, already threatens the poor of places like low-lying Bangladesh, Egypt and the Nigerian river states.
Many of the world's poorest people live in the most fragile of environments. The forests, rivers, lands, grasses, marine resources and rainfall are on what most of the world's people rely to meet their basic needs. It matters immediately to the village farmer in Zambia if the rains fail. It matters immediately to Philippine fishing communities if their seas are over-fished by huge commercial fleets. It matters immediately to the Brazilian forest people if their forest, their food source, their meaning of life, is desecrated. Yet denied access to more productive land or waters, frequently as a result of external economic pressures, poor people are increasingly compelled to eke out a meagre existence in an environment unable to support their growing numbers. For example, desertification is not wholly a natural phenomenon. It is the result of human interaction with the environment.
But the bulk of the environmental problems which confront us do not arise in the poor world. Eighty per cent. of global fossil fuel is used in the North. It is that, coupled with the insatiable consumption–80 per cent. by 25 per cent. of the world's population—and the wanton pollution by the industrialised world which most leads to depletion of the ozone layer and to global warming.
In would-be enlightened circles it is fashionable these days to claim respectability by stating a commitment to sustainable development. But that is not of itself convincing. Sustainable development alone could lead either to an era of unprecedented international tyranny as those who have hang on to what they have—even maximising it—while the majority are held at bay or to an era of unprecedented international anarchy as the poor stand up, begin to march and to demand their rights. Every time we advocate sustainable development, it is essential to understand that environmental degradation both causes and is caused by poverty. Indeed, the environment debate must be rooted in a commitment to social justice for the poor.
To meet all that, there must be a streamlining rationalisation of the United Nations system, strengthening its authority and bringing together its various agencies in long-overdue constructive cooperation. The international financial institutions like the World Bank and the International Monetary

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Fund need to be made much more accountable than they yet are for the social and environmental consequences of their actions. GATT must address the structural needs of the third world and should undergo a radical overhaul to make it relevant to the strategic priorities for global survival.
Rio cannot be seen as an end in itself. It should be a spur to vital ongoing policies and action at local, national, regional and international level. It has to challenge conventional economic accounting and the omnipotence of inevitably short term market economics, putting the long term social and environmental costs for humanity firmly on the agenda. Clear objectives and targets will have to be established against which progress can be measured.
In the battle against poverty and for the environment we are all players, though I suspect that history will find that difficult to establish in the context of our recent myopic general election. It is by their resolve on international cohesive strategy that the Minister and her Government will be judged. They will have considerable goodwill in this House if they are able to perform convincingly.
6.13 p.m.
Lord Bethell: My Lords, I give a warm welcome to the gracious Speech and in particular to two sections of it. The first is the second paragraph where Her Majesty announces that next Tuesday she will be addressing the European Parliament in Strasbourg. That is an extremely welcome development. For some years Britain has been the only country in the Community whose head of state has not addressed the European Parliament. A certain amount of comment has been caused by that fact and there have been suggestions that it is no coincidence; that it is for political reasons that her advisers were not able to allow her to come to Strasbourg. It is good news that those difficulties have been overcome. I am certain that Her Majesty will receive a warm welcome from members of the European Parliament of all countries and all political persuasions.
I should like also to give my congratulations and a particularly warm welcome to my noble friend Lady Chalker whom we in Strasbourg know well from the time when she was in charge of European affairs for the Foreign Office. The noble Lady was a frequent visitor to us and a guiding hand in our deliberations. In truth, she was our favourite "head girl" for the years that she was there.
Likewise I welcome my noble friend Lord Cranborne. He may be surprised to hear that his speeches on Europe are also well known in Strasbourg, though perhaps for opposite reasons. However, perhaps over the next year or so he will find time to visit us in the European Parliament and discover that we are not as bad as all that.
I am delighted that the gracious Speech makes mention of the forthcoming ratification of the Maastricht agreement which is so far one of the greatest achievements of the Prime Minister in his
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premiership. It is a tribute to the Government's speed off-the-mark that a copy of the Bill is already available in the Printed Paper Office, short though it may be.
I hope that the ratification will not be the cause of great dissension among your Lordships or in another place. It would send entirely the wrong signals to our partners, to other member states if, at the moment we are about to assume the presidency of the European Community, we are seen to be at loggerheads over the Maastricht agreement. It was a brave and sensible attempt by the Government to reconcile the differing views on Europe held by members of the British Parliament and the views held by other member states. It was a Chinese puzzle put together by the Prime Minister with great skill and courage. One must not forget that it was presented in its present form to the electorate in the Conservative manifesto and therefore the Government have a mandate from the people to implement the Maastricht agreement.
I hope that we will now see a coming together of the British people around the Government's position on Maastricht. After all, we all believe that certain reforms must be made to the European Community's structures. We believe in the fundamental reform of the common agricultural policy, in the further reform of the budgetary procedures and a fair budgetary outcome for all member states including our own. There may be differences between us over the social chapter but even here I venture to suggest that all sections of British public opinion believe in a closer alliance between the workforce and management. If a difference exists between us it is to the extent to which that should be made subject to statute, whether national or European. I hope that that bridge can also be crossed.
I hope that the media will concentrate a little less on the trivia of the European Community during this crucial year for Europe. I hope that they will write less about the European harmonisation of lawnmowers, leeks, tomatoes and bacon-flavoured crisps and perhaps mention from time to time how much we owe to the founding fathers of Europe—Monnet, De Gasperi, Adenauer and Winston Churchill—for the fact that for the past decades war has been avoided largely because the countries of Western Europe have been brought close together. I do not believe that the countries of Central and Eastern Europe would have been freed of communist dictatorship if there were not a beacon of democracy shining towards them from the European Community and beckoning them to choose the democratic path.
Surely, if there is to be peace in Yugoslavia, the European Community has a great part to play in it. Like my noble friend Lady Chalker I should like to pay tribute to the memory of the six European Community monitors who recently lost their lives in Bosnia trying to bring peace to Yugoslavia.
I wish to mention a couple of points where I believe that the Government can take a positive attitude and strengthen their position over the European Community. During the election campaign there was some temptation for Ministers to play the "European card". The dread word "federalism" appeared from time to time in the run up to polling day. I urge the

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Government not to continue their policy of execrating federalism and damning it as the worst of all unmentionable sins. It is a word that means many different things to many different people. I believe that it was explained to some extent by my noble friend Lady Chalker earlier this afternoon.
To me and I believe also to my colleagues of all nationalities in the European Parliament, federalism does not mean that of the United States of America, Australia or Germany; it does not mean that Britain should be reduced to the position of Nebraska, New South Wales or North Rhine Westphalia. It means an entirely separate relationship based on the principle of that dread word "subsidiarity". It means, as my noble friend Lady Chalker pointed out, that a decision-making power should be passed to the European institutions only if it cannot be properly implemented at national level. On that basis we can have a consensus among the 12 that federalism in that sense is to be approved. My understanding is that that was the gist of the agreement on federalism at Maastricht even though that word was not actually used in the agreement. Certainly all 12 governments approve the principle of subsidiarity.
It makes sense that whole areas of decision-making should, for the foreseeable future, remain within the purview of the national government. For instance, I cannot see the day when matters such as housing, health and education will be passed to the European institution. The vast amount of economic, foreign and defence policy will remain under national control. However, we have to appreciate the fact that we are being urged again and again to get our act together over economic matters and over such vital questions as Yugoslavia.
We cannot have it both ways. For instance, we cannot insist on having 12 different policies as regards Yugoslavia and at the same time have a coherent policy and put monitors into the field in Yugoslavia in a united effort to achieve peace and to bring prosperity to that war-ridden country; it has to be one or the other. For the moment I dare say that it has to be a mixture of the two. If we can achieve consensus in foreign and defence policy then let it be done whenever possible.
In passing, on the question of the pillars, which the Minister also mentioned, I would like to utter a word of caution. If one has too many of these pillars of inter-govermental authority one is providing a hostage to fortune as one is setting up an authority with no permanent civil service to administer the pillar and with no proper democratic control by an elected body over that particular part of the administration. That may be necessary at the moment for foreign affairs, defence matters and questions of immigration, but I am not sure that it is something to be greatly welcomed as a matter of principle.
I wish to conclude with a few words about the European Parliament. I greatly welcome the Government's achievements in bringing about some greater powers for the European Parliament in the Maastricht Treaty. I have no doubt that those provisions will go through although there will be a number of people who will object to them, minimal
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though they be. Clearly I have not succeeded in persuading Ministers that greater powers can be given to the European Parliament without in any way taking power away from your Lordships or Members of another place. I still believe that greater powers should be given to the European Parliament vis-à-vis the Commission in Brussels. I am not talking about the decision-making process with the Council of Ministers at the end of legislation; I am talking about the administration of the Community in Brussels where at present there is a democratic deficit.
That deficit exists because there is no one keeping the kind of control over the civil servants in Brussels and the bureaucrats which noble Lords and Members of another place do over Whitehall. We may have access to the bureaucrats but we do not supervise them. We do not control them in the way that we should and in the way in which we are entitled and obliged to do under the treaty. To some extent we have responsibility without power. We are allowed to move amendments to laws which are given to us at the initiation of the Brussels civil service. Again, that is a strange way of putting forward laws. The amendments are then subject to the cancellation or approval of the Commission. I wonder how noble Lords would feel if their amendments were subject to cancellation not by another place, which is understandable, but by Whitehall civil servants. I wager that noble Lords would be trying to change the law if that were the case.
Likewise at the moment the European Parliament cannot compel attendance by commissioners or their staff at our committee meetings although some progress has been made towards that. We also have difficulty in obtaining prompt replies to our letters. That situation comes about simply because there is an incorrect balance of power and authority between the Commission and the European Parliament. There has been a great step forward in the Maastricht Treaty in that the European Parliament will be given the power to agree or not to the new commission when it is appointed in the summer or autumn 1994. We shall have something akin to the advise and consent procedure enjoyed by the United States Senate over key appointments.
Sadly, it is a once and for all power. The power given to us is one vote. We either take all the commissioners, president and all, or we reject them all. We take them or reject them as a job lot. I would much prefer it if we were able to approve or not the president of the Commission, the individual commissioners and the members of the Court of Justice, one by one, after, if necessary, interviewing them in committee and finding out their political views, intentions and qualifications. In that way the European Parliament could have some control over the Commission. It would be a much more politically significant body.
Therefore, I advise the Government that a number of my noble friends and I will be moving amendments to the European Community's amendment Act to that effect in order to test the Government's views on the question of giving specific powers for "advise and consent" to the European Parliament over members of the Commission and other key appointees. Whether or not it will be possible to implement that under the

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Maastricht Treaty will be something that can be borne in mind when another inter-governmental conference takes place in the not too distant future.
6.30 p.m.
Lord Chalfont: My Lords, in my brief contribution to this debate, I shall concentrate on defence matters and it is right that, as usual, I should declare an interest as chairman of Vickers Shipbuilders, although I shall go far wider than that interest this evening. I should like to lend my strongest possible support to the ideas and proposals that have been advanced by the Government and the noble Lord, Lord Bramall.
I urge the Government—and especially, but not only, the new team at the Ministry of Defence—to look again at their defence policy and, particularly, to look again and with a fresh mind at the defence review that we now know as "Options for Change". I shall not follow the noble Lord, Lord Bramall, on the strength of the Army, the number of ships that we need or the size of our reserves or even deal with that most important matter of our intelligence resources, although they are all vital matters; I should like to concentrate on another aspect and problem which, to me, is of more fundamental concern. I refer to what in my view was a sad lack of any radical and rigorous strategic analysis behind the review that is known as Options for Change.
That concern has not been invented by me or even monopolised by me. Serving and retired officers of great distinction have voiced some of the misgivings and concerns that were expressed earlier by the noble Lord, Lord Bramall. Academic experts who have spent the whole of their professional lives studying defence matters have advanced their own criticisms of the process. Members of both Houses of Parliament who have great experience in these matters and who are deeply versed in them have said that they have great concerns about Options for Change. Perhaps most importantly, the Select Committee on Defence in another place, which was then chaired by an honourable gentleman who is now a member of Her Majesty's Government, was scathing—I think that it is right to use that word—when it commented on the defence policy.
As it might be illuminating, perhaps I may remind your Lordships briefly of some of the comments that have been made about the defence policy. The Select Committee on Defence stated:
"What SDE 91"—
that is the paper that promulgated Options for Change—
"regrettably fails to do, and does not even set out to do, is to argue in any detail the rationale behind the changes proposed, or provide a coherent strategic overview".
Those are fairly severe words.
Professor Lawrence Freedman of King's College, London, who is by no means a cold warrior by anybody's standards, has said:
"The flaw is that it sets in motion a dramatic restructuring of Britain's armed forces without attempting to describe the circumstances in which they will be likely to operate".
Again, that seems a sad omission.
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David Bolton, the Director of the Royal United Services Institute, in an article on the strategic concept of NATO which evidently lay behind Options for Change, commented with that modesty of expression that is so characteristic of former Royal Air Force officers:
"Producing a force structure before an overall strategy and agreed concepts of operation is certainly unusual".
The report of the House of Commons Select Committee on Defence also noted:
"a smaller fleet must inevitably mean the abandonment or reduction of some existing peacetime tasks".
It also came to the disobliging conclusion that the Government have managed to combine a theoretical preference for a smaller surface fleet with a practical acceptance of a larger one.
The final and, for me, perhaps the most telling comment of all came from the Chesney Gold Medal lecture at the RUSI last year by Correlli Barnett, a distinguished strategist and historian and a disciple of the late, great Captain Liddell Hart, whose theme had the rather provocative title "Total Strategy and the Collapse of British Power". The lecture concluded with the following words about the Government's defence review:
"despite all the lessons of our history we still do not have a realistic total strategy in which economic policy and resources, foreign policy and defence policy fit together in a coherent whole to serve coherent ends. As is indeed demonstrated by that all too characteristic Whitehall production 'Options for Change' and all that is so far flowing from it".
It would be foolish to ignore such comments from a range of experts and senior officers who know what they are talking about. We now need a realistic total strategy. I would go a little further than the noble Lord, Lord Bramall, because I believe—I understood the noble Lord to say that he did not—in a radical review of the whole of our defence policy. That may result in the decision that we should have larger forces than we have now. On the other hand, it may even result in the decision that we need larger cuts than are presently proposed, but at least the decision would have the merit of being coherent and convincing and behind it would be a proper strategic assessment of the role that this country will play in the world at the end of this century and the beginning of the next.
Much will depend on the Government's view of that role. What is this country to be in the future? In the past—throughout most of our history—we have been involved in all the great decisions that have affected our own national security and that of our friends and allies. We have been at the heart of the great strategic geopolitical decisions that have been taken over the years—indeed, over the centuries. We have played a part, not only in the great world wars, but in the settlement of most relatively minor disputes around the world when threats to stability, security or democracy have appeared.
It may well be that that phase has come to an end and that our future destiny is to play some tame or minor role in world affairs. In my view, that would be a tragic decision, but it is for the Government to decide. I beg Her Majesty's Government to approach the business of deciding our future defence policy not as a resource-driven exercise in which we cut our

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Armed Forces simply to meet the resources that we think that we can apply to the establishment of our military force structure, but to engage in a profound, strategic and geopolitical assessment of where we are going. It will then be for the Government rightly and justifiably to take the decisions that will be needed and to apply the requisite resources to our force structure.
If the Government should decide—I have said that I very much hope that they will not—that in the future we shall play a relatively minor role compared with that which we have fulfilled throughout our history and if, as a result, logically and intelligently they decide upon reductions in our military power and in the strength of our Armed Forces and, therefore, in the size and shape of our defence industries, other consequences will flow from that which will be equally difficult to deal with. I refer to the profound industrial and social consequences and I speak as an employer who has recently had to declare redundant thousands of men and women as a result of Options for Change. That may be necessary; I simply state it as a fact. If Options for Change continues to be implemented in its present form, I shall have to declare redundant thousands more men and women from the defence industry.
As I have said, I readily concede that, if that is the Government's decision about the size of the Armed Forces and defence industries that we need, so be it. But there will be pain and sadness among those who have made their livelihood in those fields. I would advance the proposition that this is not something that the Government can rightly leave to free market forces. I do not believe that the Government can leave the reconstruction consequent on the enormous contraction of the defence industry entirely to market forces.
That is not to suggest government intervention in industry on the classic pattern. It is to suggest, however, that it is a moment, if the Government decide upon a policy of this kind, when they must get together with industry and in collaboration with industry reconstruct the whole of the industrial policy and shape of this country. It cannot be left to industry alone. Those who have made their livelihood and employment in a defence industry which has been partly constructed for commercial purposes but partly in the national interest cannot be left to bear the pain of all this change entirely on their own.
I conclude by saying that in the debate on Options for Change towards the end of the last Parliament there was something of a tendency for the Government to be reluctant to listen to the kind of criticisms that I have been outlining and some of which I have been quoting today. There was a regrettable tendency to say, "My mind is made up. Pray do not confuse me with facts". These are facts and opinions which the Government must take with the utmost seriousness. I hope that when he comes to reply the noble Viscount will be able to tell us that the new team, when it is installed, will be taking some of these criticisms very seriously indeed.
6.42 p.m.
Baroness Park of Monmouth: My Lords, I too most warmly welcome my noble friend Lady Chalker to the House. We are indeed fortunate to have her here. I greatly admired and enjoyed the other two maiden speeches, too. I wish that time had allowed me to speak to her known expertise on Africa, where a tragic situation is now playing itself out and where I spent an important part of my service overseas. But on this occasion I must, as usual, play Cassandra on the political implications of Options for Change, even though the noble and gallant Lord, Lord Bramall, has said so much so expertly, already.
In the gracious Speech, Her Majesty's Government clearly indicate that they intend to work with our allies to adapt NATO to changing risks and to restructure our armed forces to meet these changes. I submit that we can only play our part in all this if we retain sufficient effective strength to meet potential threats, not just our existing commitments. What are these threats?
In Russia and the CIS there exist both short and long term dangers. Secondly, there is the risk posed by expanding Islamic fundamentalism, already actively setting up links with the former central Asian republics, coupled with nuclear proliferation. Fifteen countries will have the bomb by the end of this century. Kazakhstan has just declared its intention to retain its nuclear weapons, which include well over 1,000 strategic nuclear warheads, rather than return them to Russia for destruction. Russia itself is reported to have sold £141 million worth of rocket technology to India, allegedly for the space programme, but capable of being used for developing advanced ballistic missiles. Not least, in recent Russo-German talks Khasbulatov spoke to Herr Genscher of a pan-European infrastructure. Germany is investing extensively in Russia and the CIS countries. Looking far ahead, a Russo-German partnership could become a far more powerful axis than the Franco-German entente and would pose an early threat to both Czechoslovakia and Poland in terms of pressure to redraw frontiers. Here perhaps I may say how vital it is to us to continue to give serious support to the Poles and the Czechs, who are energetically trying to restore democracy in their countries.
Within Russia, as the noble Lord, Lord Cledwyn, pointed out, and in the CIS, the situation remains highly volatile and ethnic tensions are increasing. There are local wars or civil unrest in Checheno-Ingushskaya, North Ossetia, Moldava and Dnester, and in Tadjikistan, and gravest of all, in Nagorno-Karabakh, where the noble Baroness, Lady Cox, has so often risked her life and where GRAD missiles are being used. Meanwhile up to 500,000 Russians, refugees from the former Soviet Union, have flooded into Russia, and many more can be expected.
The threat to the survival of Boris Yeltsin, which is a particular threat for us, now comes with special strength from the nomenklatura of the powerful defence-industrial complex. The conversion programme promised by Gorbachev has proved both costly and politically dangerous. More than 4 million

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of Russia's most highly skilled, sophisticated and privileged scientific workers, whole secret towns in the defence complex, and the 8 million more men and women who manufacture the weapons, cannot easily be thrown into unemployment, or properly used to make saucepans. The whole defence complex, intricate, autonomous, powerful, is proving virtually impossible to dismantle. Russia's spending on defence in the first quarter of 1992 was 55 per cent. of the budget, twice as much as for the national economy, and expenditure for arms liquidation was expected to equal the cost of their production.
There are also major ecological problems: the dumping of nuclear waste in Novaya Zemlya has left hundreds of seals dying of cancer, and an anthrax outbreak at Sverdlovsk in 1979 is now attributed to the chemical weapons programme. However, Mr. Yeltsin's solution is apparently twofold. In the name of defence sufficiency, he is encouraging the continued output of new weapons for the Russian forces. He promised the continued production of nuclear submarines on a visit to Severodvinsk, the base near Archangel, and he gave similar reassurances to the Federal Atomic Centre at Anzamas-16.
Secondly, he has taken steps to establish Russia as a major seller of arms abroad. A recent presidential decree set up the Armed Forces Management Institute to control all sales of arms abroad. It has allowed the sale of 1,600 military aircraft. Georgia is ready to export SU25 fighter bombers; T72 and T81 tanks are said to be available at a price; and the 15 enterprises forming the Tula arms and shell complex are now licensed to sell arms—AK74s and grenade launchers. This plant was to be converted to civilian production by 1993, and the area is described as an ecological catastrophe because of pollution. But the costs of conversion were too high.
This is the second option. Russia is expected to make 10 billion dollars in 1992 as an arms exporter, according to the chairman of the state committee for conversion. The defence complex is much happier. But should we be? We have apparently chosen to put disarmament before verification, but shall we end with neither? Quite apart from the genuine difficulties of destroying missiles, we should not forget that the Russians have a long record of being economical with the truth on their nuclear holdings. I submit that on the worst scenario—and it is never wise to ignore this in planning—we could end with a Russia as powerful as the former Soviet Union, with a highly professional army possessing the most sophisticated weapons, and a major arms exporter, with inevitable consequences for arms proliferation. If it has formed a Russo-German axis, it will wield very great power. If meanwhile the Islamic fundamentalist powers increase both their strength and their fire-power, and may be fully prepared to use it, we have the makings of a very dangerous international situation. Shall we be facing it with a seriously depleted defence capacity, both industrial and military? At the very least I urge the noble Viscount, Lord Cranborne, whom we welcome most warmly to this House, to represent to the Government the need to wait another year or two
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before taking any irrevocable steps to reduce our power to act within NATO as a viable military force and to make a valid contribution to the peace-making efforts of the UN.
We need to be able to play our part in a flexible response to UN interventions which may need to range from Cambodia and possibly the Bangladesh-Burma border to Yugoslavia. I believe that our contribution is uniquely valuable in terms of skills. I urge him too to act upon the wise words of the noble and gallant Lord, Lord Bramall, and, in an earlier debate, those of the noble and gallant Lord, Lord Cheshire, in recognising the crucial part which good intelligence plays both in the early identification and assessment of threats, including disinformation, and in countering them. It was good intelligence that prevented the Cuban missile crisis from escalating into war. Good intelligence is the best, and I suspect the cheapest, possible insurance against war.
6.50 p.m.
Lord Jenkins of Putney: My Lords, I have known the noble Baroness, Lady Chalker, for more years than her youthful appearance would seem to make possible. Throughout the whole of that time, I have been surprised by the skill with which she was able to pursue progressive policies within an environment in which that word would seem to be regarded as something less than a compliment. But when the noble Baroness told us today that her mentor was none other than lain Macleod, I began to understand. Macleod was an equal expert in that operation. He defeated me roundly at Enfield West in 1950. I have therefore known of him for longer than I have known the noble Baroness. However, it is interesting to note that in this Chamber, in the course of a remarkably fine introductory speech, the noble Baroness felt able to claim lain Macleod as her mentor. I congratulate her on that fact.
We also heard today another remarkable maiden speech from the noble Earl, Lord Cromer. We can congratulate him on his speech, without the usual hypocrisy, from this side of the House. Indeed, one can speak entirely genuinely of one's appreciation of his speech which I think would have impressed anyone on any side of the House who heard it by the degree of its knowledge and understanding. While talking about speeches, I should like to say how delighted I was to listen to the congratulations and appreciation of the noble Lord, Lord Chalfont, as regards the speech made by the noble and gallant Lord, Lord Bramall. Although Field Marshall Lord Bramall has not condemned Trident in the round terms exercised by his equally distinguished military colleague, the noble and gallant Lord, Lord Carver, he did display a certain lack of enthusiasm for it. The noble Lord, Lord Chalfont, is to be congratulated on his capacity to appreciate the strength of the argument put forward by the noble and gallant Lord, Lord Bramall, despite the fact that he has a certain mild self-interest in the matter which of course he always declares. For that reason, I believe that he is to be congratulated. I see that the noble Lord wishes to intervene. I am happy for him to do so.
Lord Chalfont: My Lords, I am most grateful to the noble Lord. I cannot allow this round of congratulations to pass without introducing a slightly abrasive note. It would of course have been wrong of me, even having declared my interest, to enter into any kind of debate about the future of the Trident submarine force as I am so closely associated with it. However, I can assure the noble Lord that my silence did not imply consent.
Lord Jenkins of Putney: My Lords, I entirely accept that.
The gracious Speech says that,
"Britain's minimum nuclear deterrent will be maintained".
However, it does not say what that means, as I shall, I hope, illustrate in a moment. The gracious Speech also says":
"My Government will work to strengthen the United Nations. They will require full Iraqi compliance with Security Council Resolutions".
But it does not say that Britain will comply with those resolutions, as I shall also illustrate. It is not much good requiring Iraq fully to comply with United Nations resolutions if one is not prepared fully to comply with them when they might appear to interfere with one's own self-interest. I shall also refer to that aspect in a moment.
As that old Tory, Doctor Johnson, said, "Example is always more efficacious than precept." That universal truth applies to the Government and it equally applies to Her Majesty's loyal Opposition. When we abandoned unilateral nuclear disarmament in favour of "Me last" we abandoned example and joined the Conservatives in preferring precept. That step does not appear to have been electorally advantageous. Perhaps Dr. Johnson was right. However, it is still possible for this country to set an example on non-proliferation. At present, we are the leading vertical proliferator. Our example denies our precepts. That point is made in greater detail in a brief by the International Security Information Service and not, I may say, by the Campaign for Nuclear Disarmament. However, before I turn to that document, I must stress that the precepts uttered by Mr. Major, as president of the Security Council last January, are not followed by the example given by Mr. Major's Government in this country. I have highlighted a number of things from that speech which indicate appreciation and support for the policies and resolutions of the United Nations. For example:
"The members of the Council underline the need for all Member States to fulfil their obligations in relation to arms control and disarmament; to prevent the proliferation"— that means vertical as well as horizontal proliferation—
"in all its aspects of all weapons of mass destruction", and so on.
Then we come to the actual policies followed by the Government. That is, perhaps, rather different. The ISIS brief to which I have just referred suggests what changes are needed in government policy so that this Government could fully carry out the resolutions of the United Nations. If their policy is to remain consistent with their treaty obligations, three suggestions are made. First, the Government should announce that they will not deploy any more strategic
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nuclear warheads on Trident than are presently deployed on Polaris; in other words, they will maintain existing policy of no more than 48 warheads per boat. Secondly, they should agree
"not to procure a tactical air-to-surface missile (TASM) and to support a global ban on all substrategic nuclear weapons".
Thirdly, the Government should,
"announce a moratorium on all UK nuclear tests and support the resumption of negotiations towards a CTBT [comprehensive test ban treaty]".
I have not included in my congratulations the noble Viscount, Lord Cranborne, because he has not yet made his maiden speech. Whether shall be able to congratulate him will depend upon the nature of his reply to the question which I put just now as to whether the Government are prepared to modify their policy. If he were to be the messenger of such a change it would indeed be most welcome. Nevertheless, I may be perfectly prepared to congratulate him on his speech technically, irrespective of what he says. But it would be even more welcome if he showed that the Government are prepared not only to talk peace internationally but also to back peace on their own soil. That is what we really want.
Curbing the spread of nuclear weapons around the world should be a crucial policy objective during this Parliament. In 1995 the non-proliferation treaty will be the subject of an extension conference at which the parties will decide for how long the NPT should continue. All political parties are agreed on the importance of the NPT for our future security. All are agreed that in the light of the clandestine nuclear weapons policy pursued by Iraq, and not only by Iraq, the treaty needs to be strengthened. That will involve having to persuade non-nuclear weapons states to accept far more intrusive inspection of their nuclear facilities than are required at present so as to ensure that they are not developing from civil nuclear energy into nuclear weapons.
Unless the nuclear weapons states, including the United Kingdom, are prepared to take their treaty obligation seriously, especially those under Article 6, and also to allow for greater openness of their own nuclear facilities and stockpiles, the prospects of the necessary improvements to the treaty being accepted will be greatly diminished.
What does Article 6 say? It seems to me that the essential point is this. Each of the parties to the treaty should undertake in good faith to pursue negotiations on effective measures relating to the cessation of the nuclear arms race at an early date, and to nuclear disarmament and on the treaty on general and complete disarmament under strict and effective international control. If the Government do not take that seriously then they can hardly expect anyone else to take the NPT seriously.
These are the matters to which I wanted to draw your Lordships' attention and I shall be most interested to hear the reply of the noble Viscount, Lord Cranborne. If it were not getting so late I should have liked to have said something more about Trident, but your Lordships have heard me for long enough on this subject to know broadly my views. But we are now moving into a situation in which it is possible—and as I said, this is not a brief from CND; it is a brief from

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an entirely different body—for us to begin to understand each other. If we cannot entirely accept each other's point, we can at least move a little in the direction in which all of us want to go—that is, the preservation of the peace of the world.
7.2 p.m.
Lord Beloff: My Lords, one can at least agree with the last phrase in the speech of the noble Lord who has just addressed us. He will not expect me to take up the rest of his argument. We have crossed swords—if he will permit a military metaphor—on the topic of nuclear disarmament before. He seems to me —and he is not unique in this—to be very much prepared to make the same argument on an international matter, irrespective of the changes in external circumstance. Mutatis mutandis, that speech could have been made by him a decade ago when the former Soviet Union was still a great and formidable superpower. But he is not alone among your Lordships in being stuck in a time warp. It seems to me to be equally true of some speeches that we have heard this afternoon on a quite different topic: the European communities. The noble Lords, Lord Cockfield and Lord Bonham-Carter—and I am sorry that they are not in their places; perhaps they knew that I might have something to say about their stance—seem not to have observed that one consequence of the great upheavals in Eastern Europe to which reference has been made by many speakers has been changes in the perception of the world by the citizens of Western European countries.
Whatever may have been the original achievements —and they were great—of Monnet and others in finding a way of bringing together the late antagonists, the French and the Germans, that period and the institutions to which it gave rise have come to an end. The European Community is not something which can look forward to a period of massive expansion of its activities, or a massive expansion of its resources; but must, on the contrary, consider whether it has by now not exhausted its role.
It does not seem to have occurred to many people who have mentioned the appalling events in Yugoslavia—massacre, deportation, the movement of populations in Europe itself—that the European Community, despite the undoubted diplomatic skills of the noble Lord, Lord Carrington, has failed, and that it is quite likely that future historians will say that the pressure by Germany for the premature recognition of Croatia and Slovenia without the instruments of defending them against the inevitable reaction of Serbian nationalism, was an error. So far from Greece being regarded as contemptible—and I agree that their particular stance on Macedonia could be criticised—for not wishing to go along with the rest and therefore bringing the rule of uniformity into play, it might have been better if Britain and France had been a little firmer in insisting on a uniformity of approach to the problems of Yugoslavia.
However, it is not surprising. After all, Germany is a great country. It has achieved national unity, or reunification, in circumstances which could not have been foreseen even a few years ago. It is bound to be
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taking a different view of its responsibilities in Europe from the view which it took when it was cut off from part of its own people and territory and was only gradually managing to find some modus vivendi with Eastern and Central Europe. As my noble friend Lady Park reminded us, with its long association with Russia it was bound to be different.
Similarly, the French at one point clearly believed—and it is not clear that they believe this any longer—that by trying to tighten the institutions of a European Community they could somehow subordinate the greater population and greater economic strength to their own desires and intentions. Surely this discovery of national interests is bound to have its effect.
There are forces which are going in the other direction; but these are not, as I think the noble Lord, Lord Cockfield, would argue, pressures from public opinion in Europe. There is no great enthusiasm any longer in any major European country—I leave out the gallant Belgians —for the European idea as existed in the decade after the catastrophe of the Second World War. People are now saying, "What is in it for us?" This explains—and it might well have been foreseen—the reaction following the idea of a single currency. That idea seemed splendid to the Germans when they thought that everybody would use marks, or whatever they call them. However, when they realise they are being asked to give up an important element in the control of their economy—which until the past week or two has been so successful—they suddenly begin to say, "Is this what we really want?"
The noble Lord, Lord Bonham-Carter, quite rightly called our attention to the fact that many of the countries of Europe —and Germany is the most recent—are undergoing considerable political strains. He mentioned Poland. That is important because it is the key country in the eastern central bloc. The noble Lord also mentioned Italy. I suppose that it was not possible for him to mention that one of the reasons for Italy's political instability is the appalling system of proportional representation. That makes it impossible for the country to have a stable government or even to create a government. We now find that even the modified version in Germany is presenting considerable problems as Chancellor Kohl's ministers fall away from him one by one.
Therefore, surely the noble Lord, Lord Cockfield, is wrong in condemning Britain's instinct to look again at its own national interest and ability to run its own affairs. As the noble Lord rightly said, when M. Delors asks for more money it is not merely a question of raiding our pockets as taxpayers; he does so because he sees an expansion of the functions of the body of which he is head. He cannot be blamed for that, as I have said to your Lordships on previous occasions. There is in the air of Brussels a certain virus which produces what the medical profession might call "the commissioner's itch". One cannot become a commissioner in Brussels without wanting to do more and more. If one comes from a small country which does not play a great national role—an instance is Mrs. Papandreou—one will get up to all kinds of

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tricks in order to keep oneself busy. The fact that that may adversely affect international relations is secondary.
It may be that there is the possibility of a European political union—I hope that there is. However, it will not be a political union composed of the kind of people who have hitherto, without control even from the European Parliament, as was pointed out by my noble friend Lord Bethell, attempted to run the affairs of western Europe. The argument is that if we have expansion we must also have deepening. That appears to me to be patent nonsense. It is important to bring the countries of Eastern Europe into some kind of association with the rest of us because it is the best guarantee of their continued democratic development. What we need are institutions which do not compel them to make the impossible jump towards a level of prosperity equal to that of the rest of western Europe. That cannot be done in measurable time.
The part of central and eastern Europe which appeared to have—and for many reasons should have —the best prospects was East Germany. The problems which Germany now faces arise because that difficulty was obviously wholly underestimated by the German Government. Therefore, the talk of cohesion and of giving money to southern European countries to pull them up is irrelevant because it cannot and will not work. The British taxpayer will not be alone in pointing out that countries and continents can exist with different levels of economic achievement and can co-operate through their own democratically chosen statesmen. In considering the Community we must be prepared not only to consider Maastricht and the other proposals which will come before us but to try to think historically about whether we are looking at something that is here to stay or an important monument to an important but now past moment in Europe's history.
7.15 p.m.
Baroness Elles: My Lords, while I do not agree with what was said by my noble friend Lord Beloff I believe that his speech must make us consider deeply some of the aspects of government policy and the road down which we are going. I do not agree with my noble friend but I believe that some of his remarks were of profound significance and it would be foolish of us to ignore them.
The contents of the gracious Speech indicate the great importance and significance of Britain's wide-ranging role in world affairs and the responsibilities accompanying that role. Within the European Community, while assuming the Presidency in the second half of this year, that does not of itself leave much room for innovation. Nevertheless, it is a key to the decisions to be taken and to the timing of them. Britain's constitution, although it may be far from perfect, has ensured its strong position in relation to other member states. We have a monarch of whom we are justly proud and to whom we are grateful for the immense tasks undertaken on behalf of Britain both within our country and overseas. In addition we have a stable government with a mandate from the people to govern.
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As my noble friend Lord Beloff has indicated, of the three other large member states it can be observed that one has no president and only a caretaker government more than a month after a general election. That leads to the conclusion shared by all the major parties of that country that proportional representation as an electoral system has rendered the country ungovernable. They are seeking a formula along British lines. In recent regional elections in another large member state only 20 per cent. of the electorate supported the governing party, again following the same electoral system. Following those elections only two regions were able immediately to form a governing body. The third large member state was referred to by my noble friend. As a result of its electoral system, and in accordance with the agreements between the coalition parties in power, the Chancellor did not have the freedom to choose his own Foreign Secretary. How grateful we are that my right honourable friend the Prime Minister can choose our Foreign Secretary and how grateful and proud we are of that Foreign Secretary. Therefore, Britain with its strong government is pre-eminently in a position to lead its fellow member states in the European Community in both the internal and external issues which face our part of the world and can take into consideration the interests of our own country.
It is particularly to be welcomed that. Her Majesty has been graciously pleased to accept to visit the European Parliament. Like all institutions it is far from perfect but through direct elections it is a genuine attempt to represent the people of the EC. It is the only elected body so to do. In that connection I wish to take the opportunity not only warmly to congratulate my noble friend the Minister on her maiden speech but also to express the gratitude of former and current members of the European Parliament, as did my noble friend Lord Bethell. They benefited very much from the Minister's period in office in charge of European affairs, from her constant visits to the European Parliament and from the concern and assistance that she has given so readily to all British representatives. Indeed, we are most grateful.
Her concern has not been confined to Europe. Having returned from Zambia yesterday it is impossible not to be aware that the result in Wallasey was received with a tremor in southern Africa. Only a couple of days later was there great relief throughout the region because it was announced that my noble friend had been elevated to a peerage and would continue to use her skills and to carry out her former responsibilities. The democratisation process in southern Africa is impressive. However, we know from experience in other parts of the world that the aspirations of people, in particular those gained as a result of the new-found freedom through the democratic process, are difficult to meet in the short term.
It is in that region that the worst drought since the beginning of the century is causing untold hardship and human suffering. It could set back the longer-term social and economic development of the region. Indeed, many noble Lords have referred to the

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dramatic situation. The United Kingdom has responded positively to the calls for emergency aid by committing some £30 million in drought aid to southern Africa. That is a generous sum. I was pleased to be in that part of the world when the news was announced by my noble friend Lady Chalker and to witness the gratitude expressed by governments.
The unprecedented scale and persistence of the drought indicates that more aid is required in the short term. The European Community has recently pledged £160 million in food aid, amounting to 680,000 tonnes of cereal. To put the short-term requirement into perspective, the Malawi Government have apparently recently estimated their maize requirement for 1992–93 as 600,000 tonnes—almost equal to the total amount committed on 4th May. So it seems that the level of aid will need to be increased and also measures taken to ensure that it is distributed effectively and efficiently to the areas most in need. I understand that considerable work is being done by NGOs in the field and that they have undertaken this responsibility.
As well as the immediate implications of the drought, in the longer term there will be a direct effect on the capacity of individual countries to implement the important structural adjustment programmes prescribed by the World Bank and the IMF, as well as governments' efforts to democratise and open up their political systems. Without considerable support—and this does not necessarily mean money—the long-term prospects for social and economic development could be badly affected.
The need for closer economic co-operation on a regional basis has never been more self-evident. The PTA—the Preferential Trade Area—has been working hard to study and implement such co-operation. We have accumulated much experience over the past 35 years in developing a framework for effective social, political and economic co-operation in Europe, with its problems as well as its solutions.
Although perhaps this is not what noble Lords who are not so keen on the European Community would like to hear, a great deal of study is going on as to the way in which the European Community's economic integration has been taking place. We in Britain can do much to assist southern Africa in facilitating regionalisation. It is a prerequisite if the region is to compete with other growing trading blocs in the world for relatively rare and scarce global capital and skills. However, it is not only European leaders who are responding and helping. Regional leaders also recognise, in the light of political change, that past differences should be eradicated and that it is necessary to build a framework of co-operation on a regional basis.
This, I believe, is an area where Britain can and does assist, through its good offices, by drawing from both our European and our considerable historical experience of the southern African region. I was constantly reminded there of the goodwill and high respect in which Britain is held.
Some noble Lords have mentioned population. The question is: what population policy is to be followed? In my view, the real problem is not the population
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figures, it is poverty and keeping the peace in the area so that people can stabilise their lives and grow food for their own needs. Although the link between population figures and economic growth has relevance, that is not the fundamental problem. There is no known case in history where there has been economic growth without an increase in population which eventually regulates itself and stabilises at a certain level.
The noble Lord, Lord Prentice, I think, gave a classic example when he referred to India. In the 1960s it suffered great famine because of shortage of food but it has now become self-sufficient in the main grains. I do not have the figures in front of me but I believe that in the 1960s there was a population of 400 million and now it is over 700 million. That goes to prove that one can become self-sufficient in food without necessarily cutting down or controlling the population.
We only have to think in historical terms that 100 years ago there was a far smaller world population but far greater poverty, whether in Europe or in other parts of the world. Eliminating people does not necessarily solve the problem of poverty and starvation. It is a problem which I believe could well be considered far more deeply. We should cease to entertain what I call the politically correct notion that population control will solve many of the world's problems. I do not believe that it will.
The point is also relevant to the southern African region. In Angola, for example, there is a population of about 5 million with a vast area of land which could once again be made fertile if only there were peace in the region. In Zambia there are only 8 million people in an area twice the size of Britain. In Botswana there are 1 million people in an area the size of France. Yet these countries are expected to achieve economic growth and modern infrastructure and develop industries which will sustain their populations. In numerical terms, it is not possible. Surely we in this country, together with other EC members, have just signed an agreement with EFTA in order to increase the size of our economic market and benefit from distributing, manufacturing and marketing our goods. Why should we deprive the southern African region and other parts of the world which do not happen to be in the northern hemisphere of the opportunity to increase their population and increase their growth?
I do not maintain that it is necessary to increase the population in all countries in order to increase economic growth. But I do not accept that it is necessary to control populations in those countries in order to benefit in this part of the world and achieve a higher standard of living. I very much hope that at some stage we shall be able to debate the question in greater depth.
To return to the southern African region, population affects it very much. The time is surely approaching when the issues of regional co-operation and closer integration must be addressed by us jointly with southern African leaders. Southern Africa, with its considerable material and human resources, will then more easily take its rightful place within the international economic community.
7.26 p.m.
Lord Craig of Radley: My Lords, perhaps I may turn our focus again to the North Atlantic Treaty Organisation and its future. I listened with interest to the remarks of the Minister, the noble Baroness, Lady Chalker, to whom I add my words of welcome on her elevation to this House.
The treaty has served us well for the past 40 years and more. It has helped to secure two objectives, in addition to the key one of keeping the former USSR from attacking this country and our vital interests. Those two objectives I would describe thus in shorthand: first, the transatlantic commitment—particularly that of the United States—to Europe; secondly, the avoidance of strife—of war—between us and any other of the member nations which make up the alliance.
It is debatable whether the absence of a North Atlantic alliance would have been instrumental in allowing conflict to break out yet again this century between us and others of our European partners. It is perhaps a little ungallant, if nothing more, even to postulate such a horror. But in truth, the lessons of history do not give comfort on this score. Contemplating events over the past few months in what was once Yugoslavia is to realise that mankind only a few hundred miles from here can still pick a fight with neighbours.
However, all that said, the most important reason for NATO and its framework of security policy and defence strategy, its force structures and military doctrine, has been to provide the level of deterrent and resistance required to see off the once most potent Soviet and Warsaw Pact threat.
So much for the past and what is well understood by noble Lords. But how does it all look as we contemplate the new world orders which are almost daily unfolding before our eyes? The disintegration of the Soviet Union and the current lack of harmony between some of the nations which make up the Commonwealth of Independent States hardly looks like an imminently menacing threat to the western countries of Europe. Of course, between them the Commonwealth nations still control a vast and powerful offensive capability. NATO's latest strategy rightly takes this into account. We cannot lower our guard too far. While things look promising, they could still turn out badly. Those weapons—which include thousands of nuclear weapons—could still be used for blackmail or worse. We are wise not to take human beings' behaviour solely on trust.
But as the weeks and months go by, and if the new arrangements being put in place between the West and the countries of the former Soviet Union prosper and take root, as we must hope that they will, how long will we be able to hold together the defence and other security arrangements which we have built up and restructured over the years?
There are bound to he pressures to release more and more of the expensive resources tied up in our widespread and complex command and deployment arrangements. No matter how good the present housekeeping and belt-tightening in the defence field may be, they will not satisfy the critics. There will be
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pressure to do even more: to slim down and withdraw to one's own country to avoid the extra costs of overseas deployment. It will be argued that we are not going to have to face some rapid and totally unforeseen deterioration in the security situation in Western Europe, so let us go for home basing and cut costs. We might not like it but we would not be wholly surprised by such pressures.
But where would this leave those other two national NATO objectives of keeping the United States here on the ground and a major player in the defence structures and of the continuing need to safeguard the internal peacefulness between the allied nations? The latter, it may be argued, will be adequately taken care of by the growth in the structures and interdependence of the European Community. But will that be enough and will it continue to attract and retain the interest and commitment of the transatlantic partners? Without their continuing involvement the future of NATO does not seem to me to be based on anything of a lasting and vibrant nature.
Europeans still seem to need the undisputed primus inter pares status of the United States. When the chips are down all are prepared to accept their leading role and position. But without them, we are in danger of not having a clear idea of who is going to take the lead. As we have seen only too embarrassingly in the case of Slovenia and Croatia, the European Community is not an ideal forum—at least not yet —to arrange a common policy. While we may be able to survive that without too much difficulty in peace, it could be quite another thing in a shooting war. Then there is no time to indulge in protracted debate or fudge. Enemy action would have to be countered. Lives of servicemen could be at stake. Clear, unambiguous aims set by political authority must be given to guide the actions of commanders in the field. Until we find more satisfactory answers to these real and difficult issues NATO remains essential to our security. I therefore welcome the Government's commitment to NATO in the gracious Speech.
The present steps to sustain the health of NATO are mainly directed at getting its new post-Warsaw Pact strategy together. However, I wonder whether adjusting the strategy is going to provide NATO with the right kiss of new life. Is not there a need to consider more fully how best to restructure the underlying philosophy of the alliance? As a result of the threat to our security over the past 40 years we have rarely had to think aloud about the other aspects of NATO's contribution to European security; aspects which have been of enormous value to our prosperity and happiness.
In these few remarks I have been trying to do no more than pose a few questions about the way ahead for NATO. I am not confident yet that we have fully identified the best way to carry it forward for the next decade and beyond. Are we sure that the concepts of expansion in terms of membership, let alone in terms of geography, will help sustain its key contributions to our own national security? On the face of it perhaps they should but we seem in danger of putting our money on rather too many runners of similar and expanding shape. The Western European Union, the

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Conference on Security and Co-operation in Europe, and no doubt other bodies lead to a proliferation of committees and conventions and repetitive bureaucracy. As we seem to be saddled with them, I can only assume that those wiser than I in these matters think that this is the right way to be going. I hope that they are right. I hope that we can afford to pay for it all while still providing ourselves with adequate forces which have a mix of the essential capabilities we will need to handle the inevitable unforeseen events that will mushroom before us in the years, maybe even only months, ahead.
Although both have a part to play I have yet to be convinced that the diplomatic pen is now a substitute for the sword of defence in preserving our peace and prosperity. I hope that Her Majesty's Government will continue to encourage frank debate about how best to sustain all the valuable objectives which we have found in the north Atlantic alliance and how best to contribute to them in the future.
7.35 p.m.
Lord Geddes: My Lords, the gracious Speech made mention of Hong Kong. I warmly welcome what was said. We here must not, and I am sure will not, even give the impression let alone allow it to be fact that the United Kingdom is losing interest in Hong Kong. My noble friend Lady Chalker, and my noble friend Lord Cranborne to whom I give a warm welcome, re-emphasised that point. That, too, was most welcome.
The noble Lord, Lord MacLehose of Beoch, did me the signal honour of inviting me to join him last month on a five-day trip to Fujien and Guangdong Provinces of the People's Republic of China. He and I, together with my noble friend Lord Marlesford, had spent the previous week in Hong Kong. Like the noble Lord, Lord MacLehose and my noble friend Lord Cromer, I intend to give equal weight in these remarks to both Hong Kong and South China, not least in that, geographically, the former is part of the latter and of course will join it politically on 1st July 1997. I congratulate my noble friend Lord Cromer most sincerely on a quite remarkable and outstanding maiden speech. We first met some 16 years ago when I, too, was living in Hong Kong. He was a fount of knowledge and wisdom then and is clearly even more so now.
I found Hong Kong in tremendously good heart. The Vietnamese refugee problem appears close to resolution, with only seven arrivals in the first four months of this year and with agreement with Vietnam very close for the repatriation over the next three years of all 50,000 of those who have been screened out. Hong Kong's economy is flourishing in a way that the Western world, dragging itself out of a deep recession, can hardly comprehend. The Chep Lap Kok Airport project is well under way and today's announcement of the award of the Tsing Yi Bridge contract to an Anglo-Japanese consortium is most welcome.
In typical Hong Kong style its business community, while not forgetting the 1989 horrors in Tiananmen Square, has nevertheless put that disaster behind it
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and has well and truly got on with the business in hand. Indeed the situation can probably be best summed up by the comment I heard from many in Hong Kong that, from a business viewpoint, 1997 has already come and gone. If there are problems in Hong Kong, they are political ones. During our visit we had meetings and discussions with the full spectrum of the Hong Kong political scene as well as government departments. I came away with three key impressions.
First, the present Governor, Lord Wilson, has kept his hands firmly on the reins and is increasingly widely respected. He has done a quite outstanding job in and for Hong Kong and, as I said in our debate on 29th January, Hong Kong's loss is going to be our gain in this House. However, the job is an increasingly burdensome and exhausting one. The decision for change having been made, I welcome the appointment of a politician to the post and wholeheartedly endorse the appointment of Mr. Christopher Patten to succeed Lord Wilson. I do not exaggerate when I say that his will be an awesome task but he is a man of well proven ability, all of which he will need to lead a successful and prosperous Hong Kong to 1997.
Secondly, one of his tasks will be, I believe, to accelerate the liaison between the most senior individuals in Hong Kong's Government administration and their opposite numbers both in Beijing and in Guangdong. That in itself is no easy task. The business community has had and continues to have such top level contact in Beijing. It is in my opinion vitally necessary for similar governmental liaison to take place in order that each party (and particularly the mainland Chinese) gets an understanding of how the administrative systems in the other's territory function. On the other hand it is equally necessary to avoid giving any impression that Hong Kong must seek approval from the mainland for decisions taken prior to 1997. It is the thinnest of political tightropes but one which must be walked most immediately to alert Beijing to the dangers in continued slow progress in the joint liaison group.
Thirdly, I can see a real potential danger if the activities of some of Hong Kong's emergent political parties, however well meaning they and the individuals promoting them may be, exceed the limit which the mainland can tolerate. In that context I am not condoning the political system in the People's Republic but simply trying to address hard practical political reality. While the power struggle in Beijing is not yet resolved, nevertheless the pragmatism of Mr. Deng Xiaoping is presently prevailing and the very last thing that Hong Kong wants to do is to present political ammunition, to the detriment of all and particularly Hong Kong, to the more hard-line elements in Beijing and thereby reverse the open policy which has prevailed, particularly in South China, over the last 14 years.
Of course the United Kingdom on behalf of Hong Kong (and Hong Kong itself) has to stand up for its rights, and of course the details of the Basic Law must properly reflect all the vitally important provisions contained in the Sino-British joint declaration of 1984. It is therefore both natural and equitable that the views of Hong Kong be given due weight. However,

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the present Hong Kong political situation is a very curious one, there being various degrees of what might be described as opposition parties but no government party. It may therefore be that the business community of Hong Kong which, as my noble friend Lord Cromer said, has made Hong Kong the great success story that it is, may have against its will to become more overtly political.
As for South China, I can only describe it as mind boggling. Time does not allow me to quote the quite extraordinary statistics of growth over the period of the open policy so perhaps I may just give some fleeting, and at times deliberately facile, examples to make my point. We visited four special economic zones, and here confusion sets in between the present names of those places and the old ones, and I shall give both. We visited Xiamen (previously Amoy), Guangzhou (Canton), Shantou (Swatow) and Shenzhen (Shumshun). All four were bustling, thriving communities of, at this stage, varying degrees of sophistication but all, as the noble Lord, Lord MacLehose, said, emergent replicas of Hong Kong itself. Capitalism is in full swing and encouraged. Vehicular traffic jams exist. Mobile telephones abound. Men and women are well dressed, the women brightly so. I did not see one Mao suit all the time we were there.
The provincial governments have significant and increasing autonomy from Beijing. Those provincial governments are investing huge sums, particularly in transport, infrastructure, telecommunications and power generation. Strong emphasis is being given to education both at secondary level, which is to be compulsory to the age of' 15, and tertiary. We visited the most impressive university at Shantou which is fully funded by Mr. Li Ka-Shing from Hong Kong.
In Guangdong province in particular the standard of hotels was well up to Hong Kong's standards, and that is very high. It was interesting, and perhaps not a little amusing, to be greeted by the general manager of the Shantou International Hotel with, "Good evening, my Lord.- That is not what one expects in mainland China. In that same hotel I watched the whole of the BBC1 nine o'clock news live on the television in my room.
Last but not least in this mini-kaleidoscope of reflections, we visited four quite different examples of joint venture companies—a spinning mill in Guangzhou in which Coates Vyella of the UK has a 50 per cent. interest, the Guangzhou San Miguel Brewery (where interestingly the manager concerned advised me that the municipal water supply was the purest he had come across in the world), a microchip factory in Shantou which was a joint venture with Hong Kong, and a colour television factory in Shenzhen which was a joint venture with Japan. The first three were flourishing but the colour TV factory was, on the manager's own admission, suffering particularly from the desperately slow-moving bureaucracy in Beijing.
In each and every direction that we looked, South China is bubbling. If the Beijing government, in spite of all its domestic preoccupations, can be so successful in the south eastern cities of China surely one can be confident that it will handle Hong Kong sensibly. As
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for Hong Kong itself, its political problems are relatively small in comparison with the deadlock with China of only a year ago and, to a considerable extent, the Hong Kong people may have to look to themselves for blame if those problems are not sorted out.
Overall, I was immensely encouraged by what I saw and heard both in Hong Kong itself and particularly in South China. The two areas are rapidly converging economically, which itself bodes very well for 1997 and beyond.
7.46 p.m.
The Earl of Onslow: My Lords, the noble Earl, Lord Cromer, spoke with as much authority on Hong Kong and China as did his great grandfather—or perhaps it was his great great grandfather —on Egypt. Indeed, the comments of my noble friend Lord Geddes on China underline the fascination and success of China's development. The speech of the noble Lord, Lord Prentice, was an excellent example of how to put a case with logic and clarity, for a point of view with which I disagree totally. I hope that both the noble Earl and the noble Lord, Lord Prentice, will speak often and with the same skill.
When I was a small boy one of my father's favourite stories was of a telegram sent to an ancestor of my noble friend Lord Cranborne by the then Lord Salisbury which read:
"Cranborne Cranborne Salisbury Salisbury 15.15 Salisbury".
On those grounds alone I welcome him to this House.
To welcome my noble friend Lady Chalker is a pleasure. To acknowledge her influence and command over the ODA is but natural. What is perhaps more controversial is to query whether she should stay there a moment longer. I do not, of course, question her ability. I hope especially that she will be promoted among Her Majesty's present advisers. What I question is the concept of foreign aid, which can be more accurately described as government to government subventions. I hope that when he comes to reply my noble friend Lord Cranborne will say how long aid is forecast to last.
My noble friend Lady Chalker was right when she said in her opening remarks that common agricultural policy reform and the GATT agreement are vital for world trade. Trade makes men rich; aid impoverishes all. When allied to the CAP's food-dumping policy it does even more damage.
In today's Spectator my noble friend Lady Chalker writes a letter which is in the best tradition of Peterson Sahib, protector of the poor. She defends the existence of her department. She says that Mauritius and Ghana have changed their policies as a result of aid. In so far as they have changed at all I suggest that they would have had to change very much earlier had there been no aid hand-outs. After all, that was the policy which Mrs. Thatcher applied to nationalised British industries. Look at the results. My noble friend Lady Chalker was an enthusiastic supporter of that policy. Why should the position be different overseas? Why should not the Government of Tanzania be as

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sophisticated as the board of British Airways? To suggest that it could be anything else is nothing other than patronising.
Our PSBR is too large and must be squeezed. The Chancellor of the Exchequer has admitted as much. The aid budget would be a good start.
We always hear quoted Marshall Aid. Marshall Aid lasted but four years. It is held up as the foundation of modern European affluence. That view is certainly challengeable. After all, Weimar Germany of the 1920s received large quantities of foreign currency under various plans such as those of Mr. Dawes or Mr. Kellogg which approached, if they did not exceed, the amount of Marshall Aid. Weimar frittered away and debauched its currency until it was wrenched on to a sound basis by Schacht in the late 1920s and early 1930s. What was the foundation of post-war German economic success? I suggest that it was not Marshall Aid but Ludwig Erhard's currency and trade policies. They were the foundation.
It is noteworthy that the United Kingdom received more Marshall Aid than did Germany. I think we would all agree that there has been a difference in economic performance between Great Britain and Germany since the war.
A discourse on Marshall Aid is a fitting introduction to a discussion on aid to Africa, Asia and Latin America. I think it is time that the whole concept of overseas aid should be examined and not just accepted as "a good thing" in the sense of "1066 and all that".
In recorded time no country or economy has developed by outside government-to-government subvention. Was the rich silk trade between China and Justinian's Byzantium founded on a subvention from the Visigoths of North Africa? Or did it prosper because the merchants had a sound and certain knowledge, a competent bezant, and a secure market for those bales of silk which could take two years on a camel's back to travel from China to Constantinople? Did Theodoric the Goth give start-up aid to Venice to found a spice trade entrepot in some obscure island surrounded by inaccessible and lacustrine marshes? Did Adrian Darby begin iron founding in Shropshire with World Bank funds? Of course not. The Arkwrights and the Stephensons, the cotton and the railways, the coal and steel of 19th century Britain prospered and developed because of human ingenuity, the availability of private risk capital and a sound and light government.
Therefore, when I look down the ODA list of major recipients of largesse from the British taxpayer, I ask: when is it ever going to stop? I do not ask that question because I am a hard man. I ask it because I believe that it is actively harmful for us to continue pursuing such policies and I wonder whether aid is not actually counterproductive, keeping rich tyrants or incompetent governments in power at the expense of the poor taxpayers in rich countries.
India alone now has an army three times as large as ours in 1939, when it comprised the British regiments and the old imperial army. That army had to police a whole subcontinent and hold an empire from Hong
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Kong to Aden. Today India buys Russian rocket engines. It has at least two aircraft carriers and an oceangoing navy. It is the sixth power to explode an atomic device. It runs a discredited economic policy of 1950 socialist design. Why, therefore, do our taxpayers have to give £88 million a year to subsidise such grandiose plans, especially as India runs a very restrictive trade policy?
The ODA says that aid is targeted. Another word for targeted is hypothecated. We all know what the Treasury thinks of hypothecated aid. Kenya is a recipient of £40 million of our largesse. Last Christmas a friend of mine who runs a help agency for the rich took to Harrods in a suitcase £40,000 in used £1 notes, to buy on commission presents for the friends and children of Mrs. Biwot, the wife of the Kenyan finance Minister. I do not know the Kenyan finance Minister's salary but I bet that it does not cover that kind of largesse or the hiring of an aircraft to take the goodies back to Nairobi. I am equally prepared to place further moneys with the bookmakers that Kenya's exchange control regulations do not allow but probably encourage suitcase-borne hard currency exports.
Ghana, 35 years after independence, remains a large aid recipient. After 80 years of colonial rule the Gold Coast became independent and was left with bulging foreign exchange reserves and a healthy economy. The reverse is now the case. The government of Jerry Rawlings, which seems to arrive in power with monotonous regulatory, normally by shooting their opponents, are in debt to a horrendous amount and the economy is in ruins. In her Spectator letter, my noble friend Lady Chalker says that aid has changed Ghana's economic policy. No aid might have brought it to its senses long ago. Aid has enabled despotic governments—Jerry Rawlings's is certainly one of them—to stay in power, to continue to exploit their subjects and to ruin their countries.
Indonesia gets £17 million of our money—oil rich Indonesia, Pacific rim Indonesia of East Timor fame. Why? Are your Lordships further aware that we give £20 million a year in aid to China? Is it necessary for us to do that? We have heard about its successful development without aid and read about what it got up to in Tiananmen Square. I do not believe that that is a useful purpose for British taxpayers' money.
No prosperity has been built on charity. It has been built on sound money, light government and liberal trade and economic policies. Socialist intervention and import control systems have never produced real prosperity, only corruption and poverty, such as that of oil rich Nigeria. Incidentally, in oil rich Nigeria the northern chiefs decided that they wanted to increase their power so they invented large numbers of people in their provinces. When that was done the income per head of the Nigerians went up by about 15 or 20 per cent. All the United Nations aid policies have been calculated on a gross national product per head of a lot of imaginary people. Nigeria receives £33 million of our aid.
Zimbabwe receives £28 million. It has a problem feeding its population. The drought does not explain all. It just exaggerates the problem. Much of the fault

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must be set at the door of illiberal trade policies and dirigiste governments which made the situation in both Zimbabwe and Malawi much worse. I suppose that it is tactless to remember that when Mr. Ian Smith's Rhodesia was gripped by sanctions it managed to feed its population. I have one further gem of information for your Lordships. We give rich Singapore £74,000 a year of aid. Why on earth do we give £74,000 to Singapore?
Aid has more accurately been described as indiscriminate government-to-government hand-outs. It has continued for 45 years. Do Her Majesty's Government know for how long it will go on? Can they even guess?
7.57 p.m.
Lord Weidenfeld: My Lords, I wish to associate myself with the words of approval and indeed admiration for the maiden speakers. The noble Earl, Lord Cromer, was instructive and very thought-provoking. I was impressed and touched by the maiden speech of the noble Lord, Lord Prentice. I thought that it reflected the courage and integrity of a long political career and political odyssey with which I sympathise. I am particularly anxious to pay tribute to the noble Baroness, Lady Chalker, for her speech and also because I have first-hand experience of seeing her in action, holding her ground at international conferences. She has a deep insight into both the spheres of overseas aid and European enlargement and development.
It is an irony of history that the inglorious aloofness of successive British Governments before the last World War toward the fate of Eastern Europe should now stand us in good stead in Yugoslavia. We have no axe to grind. We do not share France's lingering passion for Serbia, German and Italian comradely compassion for Croatia, nor Austria's far from dispassionate memories of Bosnia, Sarajevo being a code word for imperial collapse. No, we have no axe to grind.
Therefore it is seemly and proper that the noble Lord, Lord Carrington, should now be Europe's umpire. Though there is none better suited than he to judge that ghoulish scene, his brief is frustrating and limited. Indeed, sometimes it strikes me as being more of a Uriah's letter than an evangelical mission because the carnage continues. It cannot be allowed to last much longer. Has the time not come for a summit peace conference with teeth? We need a proper, credible forum which can make decisions. It should have the combined muscle, power and prestige of Brussels, the Helsinki network, NATO, the Western European Union and the Security Council. It should clearly be seen to be the voice and instrument of the world community. I do not believe that I present an original view. There was today a moving article on Bosnia by the The Times correspondent. It reflects and replicates the views of many other European eye witnesses. It is a terrible situation. The time has come when we put to the parties a choice of either facing the harshest sanctions, indeed even military intervention, or, as a reward for peace, the prospect of concrete plans for rehabilitation.
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I do not single out the Serbs as the sole transgressors although their callous intervention on behalf of their allied irregulars counts heavily against them. I do not exonerate the Croat rulers or any of the three parties in Bosnia. But the urgency to find a solution is indisputable. Bosnia Herzegovina is burning today. Macedonia might erupt tomorrow. How many of us trust the apparent truce in Cossovo between the Serbs and the local Albanian majority?
While each and every European country, including Britain, is undergoing some form of economic turbulence with a hundred domestic priorities besieging the public exchequer, it may sound unrealistic or eccentric to ask Her Majesty's Government to take a leading position in regarding the Yugoslav issue as being as urgent, dramatic and relevant as the struggle against Saddam Hussein appeared to be when we loyally supported the United States. This time Britain and Europe face a war on European soil—the first European war in 50 years. We must defuse this dangerous cluster bomb in the Balkans, splinters of which could strike and hit lands of people not only throughout the former communist world but beyond.
The noble Baroness talked about European enlargement. The noble Lord, Lord Bonham-Carter, drew our attention to the disquieting situation in Poland. I am also alarmed about events in Czechoslovakia. The rift between Czechs and Slovaks might culminate in secession. But it is indeed a vicious circle. If they secede the Slovaks will have to face their own insoluble ethnic problems with the Hungarian minority. If they stay and do not change their view towards Prague, they will impede development and make reform more sluggish by a cumbersome constitutional construct of three parliaments and one federal government. It is therefore not a good outlook.
My views are closer to those of the noble Lord, Lord Beloff than of the noble Lords, Lord Cockfield, or Lord Bonham-Carter. I believe that the wider Europe is more important than the deeper Europe. It is not because I do not hold passionately a view that Europe must be consolidated and developed but because where there is a will there are the institutions to implement it. I believe that we should not be too mesmerised by the organisational and institutional problems which the widening of Europe would entail.
Perhaps I may submit the case of a small country that could be rescued ahead of its embattled ex-confederates. I speak of Slovenia, the first country to overturn communism in free elections. Its community of 2 million people is among the oldest and most civilised in Central and South East Europe. It has an advanced standard of living, a functioning democratic system and a degree of economic reform that makes it a worthy applicant for accession. Perhaps the European Community may be persuaded to allow the Slovenes to jump the queue and possibly start negotiation immediately after Austria's and Sweden's applications. Why should a country that has proved itself willing to change have to wait until those components of former Yugoslavia are ready for their entrance examination? Those components may have

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years of probation to face; they may have to prove that they can deal with ethnic and political minorities and fulfil all norms of a civil society.
Slovenia would certainly not prove more difficult to integrate than Portugal or Greece when they first filed their applications. Her immediate regional neighbours, Austria and Italy, could help her greatly economically. Germany has close ties too. The Slovenes in a short time have produced a good young leadership. For nearly two decades, even at the height of the cold war, there were close contacts between professional and business people, intellectuals and artists, within that region known as Alpe Adria (Alps and Adriatic). There is a great future for intensive cultural and economic symbiosis in that region of Europe. If we can prove that the peace breaker can be called to justice, and a small and peaceful nation rewarded, the message would be heard and, one hopes, heeded throughout the world, but especially in the vast and unsettled lands of the former Soviet Union.
I wish to say a brief word about the know-how fund. I was delighted that the noble Baroness referred to it in her remarkable speech. Perhaps I may urge the noble Baroness and the Government to give particular attention to the extension of the fund, in particular in the field of education throughout the ex-communist world between the Baltic and the Black Sea. It is a subject which needs a special debate in your Lordships' House. The British Government should do all they can to further training schemes in Central and Eastern Europe and, at the highest level, to provide post-graduate facilities for those who might become the future leaders in the professions and the multinational companies of a democratic, civil society. It is to the credit of Britain's institutes of higher learning and private sponsorship that European studies has become a growth subject with Oxford taking the lead. It is through that qualitative service, if developed and extended with government help, that we may extinguish the last flickering of savage tribalism on the soil of the most civilised continent.
8.9 p.m.
Baroness Cox: My Lords, I was pleased to note that in the gracious Speech the Government are pledged to continue their immensely valuable work in encouraging democratic reforms in the former Soviet Union. I should like to support this commitment and in so doing to refer to my recent experience in Nagorno-Karabakh as an illustration of its importance. I am most grateful to the noble Lord, Lord Cledwyn, and my noble friend Lady Park for their most generous words concerning my involvement there.
This small, mountainous, historically Armenian enclave located by Stalin within Azerbaijan may seem remote not only geographically but also in terms of relevance to our responsibilities. But I believe that recent developments in Karabakh have far-reaching implications for us, especially for policies concerning human rights, humanitarian aid and diverse geopolitical issues in the former Soviet Union, including democratic reform.
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I have visited Karabakh seven times since last May under the auspices of two independent organisations concerned with human rights and humanitarian aid: the Andrei Sakharov Foundation and Christian Solidarity International. Four of those visits have taken place this year and I grieve to report that the situation has deteriorated catastrophically. On my first visit of this year, in early January, my colleagues and I were appalled at the deterioration since last October. President Yeltsin had removed the former Soviet Ministry of the Interior troops who had, since the coup, been undertaking a peace-keeping role. After their departure, Azeri forces had moved in, using their new vantage points to fire on the capital city—Stepanakert—and towns and villages throughout the region. Azerbaijan has also maintained a tight blockade around Karabakh, cutting off electricity, running water and supplies of food, fuel and medicines. The only lifeline to the Armenians of Karabakh, who comprise 80 per cent. of its 180,000 population, is by hazardous flights from Erevan. Those are frequently attacked and the courageous pilots risk their lives every time they fly.
By January of this year, the twin effects of bombardment and blockade were making life almost intolerable for the Armenians trapped in Karabakh and especially for the 80,000 still living in Stepanakert in bitter cold, with no heat, no running water and no sanitation. A dearth of medical supplies is forcing surgeons to treat patients suffering from serious wounds, amputation, burns, bullets in spines and glass in eyes with no anaesthetic or pain killing drugs. They are having to rely on vodka to try to alleviate pain.
On my return from that visit, I could not rest easy thinking of that unrelieved suffering. The Home Office, to which I should like to express my gratitude, was extremely helpful in providing an export licence for scheduled drugs. Christian Solidarity International rose to the challenge by providing enough money for me to return in a matter of days with £15,000-worth of morphine and other analgesic and anaesthetic drugs.
The fact that such suffering had been allowed to continue unrelieved by major aid organisations raises, I believe, serious questions to which I shall return. However, I suggest that it should not have been left to two small charities to try to till such a large vacuum of desperate need.
On my return to Karabakh for the second time in January, I was appalled by the escalation of the conflict, for the Azeris had begun to use the fearsome GRAD multiple missile rocket launchers, which can fire 40 rockets in every volley, with a destructive capacity of 12 hectares. Those terrible weapons of destruction have been raining down on the civilian populations of Stepanakert and on towns and villages around the region. For example, when I was again in Karabakh in March, on a single day—which had been agreed as a cease-fire—the Azeris fired 400 GRAD missiles from their stronghold in Shusha, 250 on Stepanakert and 150 on two neighbouring Armenian villages. I visited one of those villages that day—Shosh—and saw human and animal corpses and homes still burning from the attacks.

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Most recently, I was in Karabakh three weeks ago with 50 tons of medical supplies and food. The situation is now extremely grave. Stepanakert is a mere carcass of a city. There is hardly a building which is not destroyed or damaged and many outlying towns and villages are similarly devastated. Because of continual attacks by GRAD missiles, civilians spend almost the entire time, day and night, sheltering in basements and cellars which are often unlit, unheated and so overcrowded that it is impossible to move. As the Azeris have still cut off running water, there is no sanitation and there is a risk of epidemic disease as temperatures rise. In Stepanakert, food is limited to one kilogram of flour and one quarter of a kilogram of sugar per adult per month. Dairy products are unobtainable. All the hospitals are destroyed. Casualties are treated in basements under the former communist party headquarters. Maternity cases were being cared for in basements under the parliament building, which had already been shelled. However, I heard last weekend that even those underground facilities have been destroyed by further shelling, with the death of two babies and four adults.
On 12th April my nursing and medical colleagues and I saw the aftermath of a massacre in the north of Karabakh. We were told that the village of Maraghar had been attacked by Azeri forces on 10th April and 45 Armenian villagers had been killed, many with great brutality. With great reluctance and anguish, villagers exhumed bodies to show us the evidence of mutilated, burnt and decapitated corpses. We also saw ransacked and burnt out homes, many still smouldering.
Most recent reports speak of yet further escalation of assaults by the Azeris, with a risk that they may launch an all out attack at any time. The Karabakh authorities have issued urgent pleas to the world for food and medicine, saying that their people are "on the brink of perishing". Those recent developments have not been widely reported in the British media, partly because the blockade makes it extremely difficult and dangerous for journalists to gain access to Karabakh. That is in marked contrast with the ease with which they can visit Azerbaijan to publicise the, Azeri version of events and to witness the suffering of the Azeri people also caught up in that tragic conflict.
That is partly why, so far, I have concentrated primarily on the suffering of the Armenians. Of course, in war, people of both sides suffer and we are also concerned with the plight of the Azeri civilians. We have raised money and prepared consignments of aid for them too. On previous missions we have also visited Baku and Azeri communities in Karabakh and have reported their anxieties.
However, our general assessment is one of asymmetry of aggression and human rights violations. Both sides engaged in the conflict inflict harm and suffer casualties. However, it is the Azeris who have imposed blockades on Karabakh and on Armenia. It is the Azeris who first used GRAD rocket launchers against civilians and undoubtedly the Azeris are superior in numbers and weapons, including military aircraft taken from former Soviet arms bases in Azerbaijan.
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Therefore, as I begin to draw to a conclusion, I wish to re-emphasise the gravity of the situation in Karabakh and to raise a few questions concerning human rights, humanitarian aid and the wider geopolitical significance of the conflict.
First, there are serious human rights violations that need urgent attention. Not only is the right to life being violated by the blockades and by attacks on civilian populations, but there is also evidence of gross maltreatment of prisoners and hostages. We have met recently released Armenian hostages whose beaten bodies testified to the torture suffered at Azeri hands. We have interviewed also Azeri prisoners and hostages held by Armenians and have been generally satisfied that those we met are being treated in humane conditions.
However, the most urgent imperative is the need for a ceasefire and the introduction of stabilising measures to maintain peace while a political solution is negotiated. I was disappointed when I visited Washington in February to give evidence to a congressional CSCE briefing when the representative from Azerbaijan refused to accept the possibility of a United Nations peace-making initiative, claiming that Azerbaijan preferred to settle the problem of Karabakh as an internal affair. I believe that those are sinister words.
However, I should like to express my great appreciation of initiatives undertaken by our Government and by the CSCE to try to achieve peaceful solutions. I should like to ask my noble friend when he replies whether there is any news concerning CSCE initiatives currently under way and whether there is hope that those may be implemented before it is too late, before Azerbaijan may take what it may regard as the final military solution.
Secondly, on the issue of humanitarian aid, it is surely disturbing that suffering on the scale, intensity and duration that has been endured in Karabakh should have been allowed to continue unrelieved by the well resourced organisations of the international community and that small charitable organisations such as the Sakharov Foundation and Christian Solidarity International should have had to try, inevitably rather inadequately, to fill that vacuum.
During my last visit I met personnel beginning to arrive from the International Committee of the Red Cross but their advent only came after many months of suffering. I believe that that raises a question which I hope to raise in coming months on the need for us to consider the possibility of a more readily available rapid relief task force which I believe that we in Britain are outstandingly professionally well equipped to provide.
Thirdly and finally I turn to the wider geopolitical significance of Karabakh. On my return from visits to the region I have been privileged to be received twice by Russian Defence Minister Shaposhnikov, who emphasised his anxiety over the potentially far-reaching repercussions of the conflict if it is allowed to escalate—repercussions which could extend beyond Armenia and Azerbaijan and even well beyond the Transcaucasus. The implications of such a conflict

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highlight the need for any United Kingdom defence policy not to underestimate the volatility of this and many other areas within the former Soviet Union.
I finish on a note of hope. As I indicated, the CSCE has been actively pursuing initiatives to de-escalate the conflict and to try to protect human rights. In that context I believe that Karabakh has a significance far beyond its own borders. For, if principles, policies and procedures can be devised and implemented which could save Karabakh from degenerating into an even worse bloodbath, they could serve also as valuable precedents for the numerous other flashpoints in the former Soviet empire and perhaps prevent their people from comparable suffering.
The political challenges of those areas are formidable, especially the conflicts between the principles of territorial integrity and self-determination. But the priority must be to establish ways in which those can be addressed by discussion and negotiation—not by bullets and rockets. If the CSCE and other intermediaries can transform the conflict in Karabakh into peaceful dialogue, a ray of hope will be ignited in the Transcaucasus which could shed light over a vast and troubled horizon.
I conclude by commending the Government once again on the initiatives they have already taken and expressing hopes that the suffering of the peoples of Karabakh will soon be alleviated; that they will soon be able to live in peace and freedom in their ancient homelands, and that they will feel that their agony has not been in vain.
8.22 p.m.
Lord St. John of Bletso: My Lords, I join in welcoming the Minister, the noble Baroness, Lady Chalker, to your Lordships' House and congratulate her on her maiden speech. The continuing endeavours of the Minister and her re-appointment will be a source of significant comfort to developing countries around the world, and in particular South Africa, where she is well liked and well respected by all parties and has established herself as a key international player in the transitional process. The noble Baroness is known for her straight talk and good advice. Her initiatives to link the granting of British aid through the Overseas Development Association to the concept of good governance within the recipient countries have had an extremely positive effect, particularly in Africa.
I wish to address your Lordships' House tonight on her Majesty's Government's support for the efforts to build a democratic society in South Africa. South Africans often remind themselves of the old Chinese curse, "May you live in interesting times". Indeed, 1992 has not just been an interesting time; it has been a decisive year for the country. Even though I spent the first three months of this year in South Africa it is still difficult for me to keep abreast of the dramatic changes unfolding each week.
Six months ago when the subject of South Africa was last debated in your Lordships' House the key issues revolved around the discussions with the ANC and others on the impediments to negotiation which
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included the release of political prisoners, the return of exiles from abroad, the lifting of sanctions, the violence in the townships, the political trials and of course the death sentence, and the secret projects of the government. Of those issues, most have now been resolved to a greater or lesser extent with the notable and tragic exception of the violence in the townships. That is the situation despite the signing of the National Peace Accord last year. The problem of violence in South Africa remains difficult and complex and I shall return to this point a little later.
Of most significance in South Africa today has been the establishment in December last year of CODESA —the Convention for a Democratic South Africa—to which all political parties have been invited to negotiate on the process for moving towards a truly democratic South Africa. To say the least, the progress made has been astonishing. CODESA consists of five working groups discussing, first, political participation and the role of the international community; secondly, the constitutional principles and the constitutional-making bodies and processes; thirdly, the transitional interim government arrangements; fourthly, the future of the so-called homelands; and, finally, the timeframe and implementation of the agreements.
Despite the complexities and differing stands on the key issues, the negotiations have been a remarkable success with a high spirit of co-operation and compromise. The outcome of the negotiations will become apparent at the second formal session of CODESA which commences on 15th May. What has so far emerged has been an encouraging measure of agreement in principle on aspects of a new constitution, including a Bill of Rights enforced by an independent judiciary, proportional representation and other checks and balances. Agreement has also apparently been reached—it has not been confirmed —on the principle of the security forces falling under the control of the interim government structure.
The role of the international community in the transitional process appears to have been clarified. A working document has suggested the involvement of the United Nations at various levels in the process. Combined with the most encouraging 68 per cent. majority "Yes" vote achieved by President de Klerk in the recent referendum it seems likely that later this year some form of interim government will come into effect. With significant progress having been achieved on the political challenges facing South Africa, attention now needs to be focused on the socio-economic challenges where clearly political emancipation without an associated tangible economic benefit will surely undermine long-term political stability.
I believe that the international community has a significant role to play not just in the provision of direct financial assistance, but also in educating all parties concerned. Perhaps Her Majesty's Government will give consideration to the possibility of initiating a know-how fund for South and southern Africa to expedite the implementation of sensible economic and social reform.

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Among the anxieties of many international investors is the continuing violence in South Africa. The noble Baroness, Lady Chalker, made mention of the fact that over 800 people have died this year in the townships in South Africa through violent actions. The violence can be attributed to a number of variables and these include the factional fighting, the so-called third force which is known to be the extreme right wing and left wing elements who have clearly been trying to derail the reform process. But also, and most importantly in my opinion, are the consequences of chronic unemployment in South Africa. I have made mention in your Lordships' House of some of the demographics of the country where over 60 per cent. of the population are under the age of 23; where 45 per cent. of the economically active population are unemployed—that is excluding the informal sector. As the Minister mentioned earlier, the population growth rate currently exceeds the economic growth rate by five times.
The issue of violence is one of the key issues which CODESA will have to face. That raises the issue of the private armies. The ANC has so far refused to disband its armed wing, Umkhonto Wesizwe. Neither has the Pan African Congress's armed wing, the Azanian People's Liberation Army, been disbanded. And of course there is always the continual threat from the extreme white, Right-wingers, the Afrikaans Weerstand Beweging. While there has been an enormous amount of compromise in the political negotiations there is still the deep-rooted problem of mistrust between the various population groups. Clearly that is an internal problem which the South Africans need to resolve among themselves, but in my opinion a substantial improvement in economic growth would have a profound influence on decreasing violence in South Africa.
I encourage and applaud the efforts made by Her Majesty's Government to ensure that early support is given by international financial institutions such as the International Monetary Fund and the International Bank for Reconstruction and Development. It is undoubtedly the case that access to external long-term capital will be a critical ingredient to ensure not only the economic growth required to redress the chronic unemployment and economic imbalances within South Africa, but also the prospect of sustained future growth.
It is also to be hoped that the ANC will soon ask for the lifting of the remaining economic sanctions once the framework has been agreed for an interim government. A key feature of the South African economy has been the emergence of the informal sector and the establishment of a number of self-help associations such as the National Stokvels Association of South Africa. It is hoped that Her Majesty's Government will encourage and support, both through financial and technical assistance, these initiatives. As the noble Lord, Lord Cledwyn of Penrhos, pointed out, there must surely be scope for Her Majesty's Government to increase their allocation of funds for overseas aid. His reference to the 60 million people affected by the chronic drought in Africa is terrifying.
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In conclusion, I wish to congratulate Her Majesty's Government on their resolute and supportive stand in encouraging the reform programme in South Africa over many years against at times a barrage of international criticism. It is hoped that now, with the road wide open leading to a fully democratic South Africa, South Africa will soon join the Commonwealth.
8.32 p.m.
Lord Vivian: My Lords, I have listened with great care and interest to your Lordships today and especially to the speech by the noble and gallant Lord, Lord Bramall. Some months ago I touched on the need to devote sufficient resources to our vital intelligence organisations. Some of your Lordships are aware of my interest in this field. However, this evening I wish to speak on the army and on some of the many problems arising from the third report of the Defence Committee on Options for Change already referred to by the noble Lord, Lord Chalfont. In due course I am sure that all these points will he answered, but I believe that the time is right to bring some of these matters to your Lordships' attention today.
In this debate I would like to focus noble Lords' attention on a vital and most important question arising from a system known in the army as double-hatting roles which may not have been clearly understood by all. Ultimately it concerns the manpower ceiling of the army. That figure has been set at 116,000 men and women providing 104,000 trained soldiers. The question is whether this proposed future army is large enough to ensure the safety and security of the United Kingdom. I believe that the proposed cuts have gone too deep.
In the third report on Options for Change the Ministry of Defence has stated that this force of 116,000 is large enough to meet our present and future commitments without undue strain on those forces. The logic behind those assurances is that our forces earmarked for the NATO Allied Rapid Reaction Corps are double-hatted and could be withdrawn from NATO and redeployed in the event of national or international crises outside the NATO area.
What would happen if NATO denied the United Kingdom the request to redeploy a force from the Rapid Reaction Corps in the interests of our own national defence which was under threat in some other part of the world? I can think of at least one occasion within the past few years, and there may well be more, when NATO would not have allowed us to withdraw a force from BAOR. In these most uncertain times we can with confidence only expect the unexpected as has been said many times before. The likelihood of tensions rising in Eastern Europe within the Commonwealth of Independent States or the Balkans would give occasion for NATO to reject any application to redeploy our assets to face an unexpected threat to our own British interests.
If that should happen—and it is perfectly feasible —under the existing options for change there would be no viable force to meet another situation threatening the interests of the United Kingdom. In these circumstances the regular army would have no

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armoured regiments, no armoured reconnaisance regiments, and only four infantry battalions with three Royal Marine Commandos to deploy to counter such an emergency. There is a real need for more infantry battalions even for low intensity operations.
I agree that it is expensive to have troops purely earmarked for individual scenarios and it is much more cost effective for forces to be double-hatted whenever possible; but not when there are or could be clearly conflicting interests, least of all if it should place the security of our own country in jeopardy. A statement from a 1980 Defence Estimates paper which is still very much relevant today states:
"Without the national security, which defence capability provides, plans to control inflation, restore incentives, secure economic growth, improve our health care and our children's education rest on sand; for, the national life in which these objectives can be pursued in peace and freedom may disappear beyond recall".
Of course our defence forces should be reduced and restructured as a result of a diminishing threat from the East, but not to such an extent that we are gambling that a threat to NATO and to British interests in some other part of the world would not happen at the same time. The solution to this contingency is to increase the army manning level from 116,000 personnel to include a strategic reserve division or some similar force which would not be earmarked for NATO. We would have to pay a higher premium, but in return the risk diminishes.
I would now like to cover some other relevant and important subjects concerning the army. Great steps have and are being taken to provide simulated training for our soldiers which, once bought and installed, would considerably reduce the cost of training. These systems, which are very much welcome, improve aspects of individual training such as tank gunnery, missile firing and vehicle driving, but cannot replace the stress and strain of operating in armoured vehicles, nor crew fatigue, nor the extremes of climate and weather, nor the essential experience of living in the field. Low level troop, squadron and regimental training are the key to our highly skilled and professional army today. It has been noted that battle groups are likely to go to training areas in Canada every other year, but with the Soltau training area in Germany due to be closed in 1994 and with many other restrictions being imposed by the Germans, where will the annual low level training be carried out in future for those troops in Germany?
Next, I would like to make your Lordships aware of the overstretch which will continue to exist within the new proposed armoured regiments. Not content with reducing the Royal Armoured Corps regiments from 20 to 12, eight of which will be equipped with tanks and only two of which will be armoured reconnaissance regiments, the number of tanks for each armoured regiment has been reduced from 57 to 50 and yet there is still an agreed deficiency of 37 crewmen to the establishment of the armoured regiment. How can that be seen to be "smaller but better"? The reduction of the number of tanks and a
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continuing deficiency of crewmen can only lead to overstretch, low morale and inefficiency. The Defence Committee report states:
"the reductions in the Royal Armoured Corps have been disproportionately heavy".
It has been noted that an increment of 220 men has been proposed to help the Guards Division with its public duties. Surely it should be possible to allow an add-back of 37 crewmen for the remaining light armoured regiments to ensure that they are fully effective in the future. That requires an urgent review, with the proposed manpower ceiling of 116,000 being increased accordingly. If that cannot be done, I suggest that there is Treasury influence in Options for Change after all.
I have mentioned that proposals have been made to reduce the number of armoured reconnaissance regiments from five to two. But it is likely that the United Kingdom may play a greater part in United Nations' peace-keeping roles in the future and the ideal units for those peace-keeping roles would be those with reconnaissance and communication skills —the armoured reconnaissance regiment. On current planning, the only two remaining armoured reconnaissance regiments are committed to NATO. Furthermore, because there will be only two of those regiments, the Rapid Reaction Corps Regiment has to be found from the Territorial Army. I have served alongside the Yeomanry and a more enthusiastic and keener body of men would be hard to find—and they make good reconnaissance soldiers—but no TA regiment should be committed to a potential war theatre without an intensive period of at least six months' battle training—and presumably time will not allow for that. It illustrates well the point that without a third regular reconnaissance regiment we neither have a regular reconnaissance regiment for the Rapid Reaction Corps itself nor for a non-aligned strategic reserve force as discussed previously.
The report of the Select Committee on Defence has concluded:
"We are concerned less the armoured reconnaissance strength envisaged in Britain's Army for the 90s, reduced from five to two regular regiments, proves too small even in relation to peacetime requirements, including international peace keeping operations, and may lead to difficulties in ensuring the maintenance of armoured reconnaissance skills. We consider that the outcome of the proposals for the way in which peacetime armoured reconnaissance commitments are met should be kept under close review and that the possibility of finding a further armoured reconnaissance regiment should not be ruled out at this stage."
It has rightly been agreed that the regimental system should continue. There are many pillars to this system, founded on the relationship that exists between officers and men nurtured by advancing their careers together in the same regiment and by mutual respect for each other within this special family. A recent paper recommends the removal of cavalry bands, one of the pillars of the regimental system. These bandsmen are not only musicians, but also medical orderlies and stretcher bearers in times of conflict. They are very much part of the regimental system. If those pillars continue to be removed, the regimental system will collapse and we shall bitterly regret that day. Cavalry bands should be retained as part of the regiment.

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If there is no review of the proposed 116,000 manpower ceiling for the army, there will be a large number of redundancies. The main problem areas will be finding jobs and housing for those ex-servicemen. The Ministry of Defence has appointed a Major-General to oversee the resettlement process for personnel leaving the army, but more effort must be made and greater links must be forged with industry to try to find employment for those redundant servicemen. That is a particularly difficult task in times of considerable unemployment, but I encourage the Government to make a temporary appointment to link the Ministry of Defence resettlement organisation with the other key Ministries to provide a better and fairer chance for all our redundant servicemen.
The problem is exacerbated by the fact that 1.2 million units of rentable accommodation have been wisely purchased by those living in them and are now not available on the housing market. The Ministry of Defence has started a housing task force and is doing all it can to help. It has allowed more military personnel to become technically illegal occupants of quarters. However, about 3,000 ex-servicemen are already living in the equivalent of bed-and-breakfast accommodation. On top of that, it has been estimated that an additional 20,000 servicemen will leave the Armed Forces annually over the foreseeable future. Surely these people deserve fair treatment for their past contribution. They, with their great efforts and personal sacrifices, have made a major contribution to one of the longest periods of peace that this country has known in recent years, and they should be properly rewarded for what they have done. The dole queue and bed-and-breakfast accommodation is no reward for those who have served their country so loyally.
I do not have time to discuss the many aspects of the restructuring and reorganisation of the army. However, I should like to commend two aspects that should be studied if they have not been already. The first is whether it is necessary to retain the divisional level of tactical command. The second is that the Royal Armoured Corps may be reduced to only 12 regiments. As the roles of tank destruction and reconnaissance are common to both the Royal Armoured Corps and the Army Air Corps, perhaps the latter should be merged with the former to establish one corps, which would presumably produce substantial administrative and staff savings.
In conclusion, I believe that double-hatting our proposed strategic reserve divisions with NATO is an unacceptable risk and imperils the security of our nation. There is a clear need for that type of force to be independent of NATO. To man that division, there will be a need for more infantry and armour, and an increase in the ceiling of 116,000. Field training areas in Germany must be found for annual use. The establishments for armoured regiments should be increased by 37 men and serious consideration should be given to whether there is a need for a third armoured reconnaissance regiment. Cavalry bands should be retained within regiments. Greater help should be given by the Government to finding jobs and housing for redundant servicemen. Studies should
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be carried out to identify whether it is necessary to retain the divisional level of tactical command and what financial savings might be made by merging the Army Air Corps with the Royal Armoured Corps.
I congratulate the Select Committee on Defence on its most explicit report on Options for Change and, like many of your Lordships, will be most interested to hear the answers to the many questions that are raised in that report, some of which I have touched on today.
8.46 p.m.
Lord Marlesford: My Lords, I found myself in certain sympathy with the noble Lord, Lord Cledwyn of Penrhos, when he referred to what he saw as the somewhat inadequate reference in the gracious Speech to the contribution that Her Majesty's Government will make to the former Soviet Union and Eastern Europe. History will probably judge that that is the most important challenge and the greatest potential crisis that we shall face this decade. I would have hoped that the words "economic progress" might have been added to the words "support democratic reform" in the gracious Speech.
I should like to take a few moments to say something about what I believe needs to happen in Russia, but should like first to put this in a somewhat broader context. For nearly five years we have been watching with wonder the two mighty and benevolent forces that have burst upon the communist world. Let us use those now familiar Russian words glasnost and perestroika. Glasnost brings the daylight under which the plants of totalitarian communism shed their leaves and, one hopes, die. Perestroika is that restructuring of the economy that must involve the dismantling of the bureaucratic centralism of the socialist system into something with the vitality that comes from the forces of a market system.
In this, there has been much difference between China and the former Soviet Union. The Chinese leadership is not too keen on glasnost, but there has been a remarkable amount of perestroika—much of it on a small scale with a dramatic improvement in Chinese agriculture and a significant volume of direct investment, especially in southern China, by entrepreneurs—many of them small—from Hong Kong. My noble friend Lord Geddes gave some fascinating examples of the sort of thing that is happening in southern China. The issue of how far perestroika can go without glasnost would in itself form the subject of a worthwhile debate. In his interesting maiden speech, my noble friend Lord Cromer gave some of his views on that subject. I believe that glasnost without perestroika can lead only to disappointment and then the dangers that come from disillusion.
The problem in the Soviet Union was precisely that —much glasnost and little perestroika. The reason is obvious. The cost of glasnost is low; the cost of perestroika, especially to the nomenklatura, is high. That is why they have opposed it and are still doing so. In this, Marx was right; a privileged class is inclined to oppose change which is to its disadvantage. We in the West have to beware that our capital is not used to keep the former Soviet nomenklatura in the style to which they were accustomed.

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The initial result—and I think it is probably to be welcomed—has been the break-up of the Soviet Union. But it carries with it great political dangers. For disillusion could lead to anarchy and thence to counter-revolution and the re-establishment of an equally odious form of dictatorship. My noble friend Lady Park raised a chilling spectre of what this might mean; and my noble friend certainly knows what she is talking about.
This is realised in the West and that is why there has been much talk of massive international economic aid to the former Soviet Union. My noble friend Lady Chalker, in her notable maiden speech, expanded on that. But I believe that it is the micro-economy of Russia on which we need to focus our advice and our help. It is not just a matter of billions of dollars of credit, debt remissions or subsidies from the IMF to the governments of the former Soviet Union such as Russia. It is the sowing of the tiny seeds of market capitalism in Russian soil which can lead to sustainable development.
Two weeks ago I had the opportunity of a brief visit to Russia. It was in strange, almost surrealistic circumstances. I was invited by the French Champagne company, Louis Roederer, to travel with a group of some 90 journalists from the USA, Japan and seven European countries to St. Petersburg. The objective of the French company was to promote its up-market brand of "Roederer Cristal" which was introduced as a special champagne for the Tsar in 1875. Hence the surrealism. But I do not suppose that the company expects to sell this champagne, delicious though it is, to the Russians now or in the near future. St. Petersburg was merely a backdrop. I was struck by several points on my visit which may, I think, indicate how the Russians are helping themselves and how they can be helped.
One arrives at St. Petersburg airport, by any standards a third world airport, but none the worse for that. What matters is that the security and customs officials who examine one's passport and baggage are now welcoming instead of glowering. There is little traffic on the streets except for buses, trucks and a few taxis. That is no bad thing either. But surprisingly there are no bicycles. Everyone seems to walk. Your Lordships who know China will realise what a real contribution the bicycle can make to personal transport in cities. I, of course, as some of your Lordships may know, believe that it should be used a great deal more in our own capital city. Why the Russians do not have bicycles I do not know. But it suggests that there is some scope for perhaps small-scale foreign investment in a joint venture to manufacture cheap and cheerful bikes. Perhaps a Hong Kong entrepreneur could help.
The streets of St. Petersburg are remarkably clean and put to shame many of the streets in the centre of our own capital. We stayed in a remarkable hotel, the five star Grand Hotel Europe. It is an ancient hotel, beautifully refurbished by, and managed by, Swedes. The staff are Russian, none of them—a deliberate choice of the Swedish managers—having had any previous hotel experience. I am told that the Swedes
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took them on a hotel boat for six months to give them intensive training before the hotel opened. The hotel now employs 250 young Russians who are paid partly in dollars. As noble Lords will know, a dollar is worth a great deal more there than anywhere else. After 70 years of sullen and suspicious service to foreigners by hotel staffs throughout the Soviet Union, it was a joy to be there. The prices were comparable with those of other five star hotels around the world. It was a small centre of excellence in St. Petersburg.
Most exciting perhaps were the signs of enterprise culture at the grass roots level; that is, a mass of hawkers on the streets. That to foreigners they are selling redundant KGB uniforms and caviar of doubtful freshness, and to each other dried fish, cheap watches and books, matters not at all. What is important is that they are there and in large numbers. Those of us who know Hong Kong will remember that many of the refugees from communist China in the three decades which followed the Chinese revolution started their business lives as street hawkers. They were the embryonic entrepreneurs who built today's prosperity in today's Hong Kong.
There is no doubt—and this I gathered from the organisers of our visit—that most of the established managers and administrators in Russia are still lead weights of bureaucracy. Seventy years of socialism and nearly half a century of brutal repression take some putting right. I believe a way forward is to separate enterprises from state control as much as possible. Let me take as an example the wonderful Hermitage Museum in St. Petersburg. Roederer has given it 50,000 dollars to replenish its library and to clean and restore some of its pictures. It would be good if someone would also help it to label properly all those wonderful collections. The Hermitage is probably quite a good example of the kind of structural changes necessary in Russia. I should like to see the Hermitage separate itself completely from the Russian state, for financial purposes at least. It has 3.5 million visitors each year. Half a million of them are from overseas. A decent foreign currency entrance fee could yield a five million dollar annual revenue.
The Hermitage has huge reserve collections which are never shown. At present the staff are most averse to the idea of selling any pictures. They reminded me that Stalin had done so in the 1920s and that the proceeds had gone straight into the state coffers. I suggest that the Hermitage could set up an inalienable capital trust with funds from the sale of pictures. The trust funds would be held overseas and professionally managed. Would that not make the sale of such works of art a more attractive proposition? The fund could perhaps help to provide the cash to make the Hermitage a wonderful centre of artistic and scholastic excellence.
How can our Government help the Russian micro-economy? First, I believe that they should spread our diplomatic representation more widely over the country. At present the embassy staff are almost all in Moscow. There is one first secretary living out of a hotel bedroom who is trying to set up a consulate in St. Petersburg. The Germans and the French are way ahead of us. I had a most interesting

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talk with Mr. Eberhard Von Puttkamer, the German Consul General in St. Petersburg. He already has a staff of 45. The French have their Service de l'expansion Economique for Russia, and a substantial Consulate General in St. Petersburg. I hope that we can get some more of our people on the ground soon. After all, we have the know-how fund of £50 million over the next three years for the former Soviet Union which was set up by the Chancellor of the Exchequer. The noble Baroness, Lady Chalker, justifiably referred to this with some pride. Half of that amount is destined for Russia. I believe that £1 million used sensibly through the know-how fund is probably worth about £100 million of IMF credits to the state government.
There are opportunities. If we take them it will be good for Britain economically and in terms of influence. But more important it will help to achieve the Government's objective of democratic reform referred to in the gracious Speech and my hope of economic progress for the Russians. That is crucial if the fall of the Berlin Wall is to have ushered in an era of peace.
8.59 p.m.
Lord Bridges: My Lords, I should begin with an apology for an apparently unscheduled intervention at this stage. For some reason my name seems to have dropped off the speakers' list. That explains why I speak now. This has some advantages for me if not for your Lordships because the subject I wish to address particularly is our relationship with the European Community.
I have the advantage of having listened to a number of excellent speeches this afternoon and this evening, beginning with the admirable maiden speech of the noble Baroness, Lady Chalker. Having listened to those speeches I can conclude that we are in some agreement at least upon the significant issues which need to be decided in London about our policy towards the European Community in the near future. I would describe them as four main issues, beginning first with the ratification of the Maastricht Treaty. Secondly, there is the enlargement of the Community to admit new members; thirdly, changes to the common agriculture policy; and, fourthly, a review of the Community's institutions and finances and a possible increase in own resources. All those subjects are on the agenda. Very important decisions will have to be taken on those essential items of business.
In addition, we are involved in what I call three continuing processes which are already in train. The first is the position of sterling in the exchange rate mechanism and the effect which it has on our national economy. The second is the completion of the Community's own internal market which, as we have been reminded, is due to be completed by the end of this year. The third, and perhaps the most difficult and the most immediate in our minds, is the application of a common foreign policy to the war in Yugoslavia or, perhaps more accurately, the attempt to apply it.
It is clear to me that 1992 is a year of very great importance for the European Community and for our role and influence in it. The immediate issue, as the
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gracious Speech says, is the ratification of the Treaty of Maastricht. I note that a great deal has happened since the House last debated the subject on 18th December. The prospects of ratification have become rather less certain than seemed likely at that time. In Ireland, and in Denmark, the decision to ratify or not will depend on the outcome of popular referenda, an unpredictable process. In France the Conseil d'Etat has ruled that the constitution needs amendment as a result of the treaty, and the complex procedure to bring that about is under way. Meanwhile, in Germany, public opinion has shown much anxiety about the effect of the treaty and of economic and monetary union on the stability of the deutschmark. All those developments are new, mostly unexpected and render ratification uncertain. I leave out of account any ambushes that may be prepared in another place which I suppose are also possible.
Meanwhile, in Britain, we have heard very little about those matters since the election campaign began. Indeed, European issues, which are so central to the future of our country, were hardly mentioned in the campaigns conducted by the two main parties. That is strange when we recall the political furore on those matters less than six months ago. If an election is intended to be, in some measure at least, a public consultation on the main issues of the day, it is a pity that so little was done to inform the electorate of what was at stake in the immediate future. It is very relevant to the jobs and prosperity of the whole people.
After ratification, the second large issue concerns the enlargement of the Community. Decisions reached on that question will be just as significant and far-reaching as ratification of the treaty itself; arguably, they are perhaps even more important. I believe that the House may expect a report on the subject from the Select Committee on the European Communities when it has been reconstituted. No doubt there will be an opportunity to debate the subject of enlargement in due course. But I should like to suggest the following considerations to your Lordships.
The first is that it would accord with our general interests if as many of the EFTA states as wish to join, and which can accept the provisions of the treaties, should be enabled to do so. Secondly, there should be no ambiguity on the issue of political neutrality. The Community should be able to develop its policies in the field of political security. New members now acceding should not be able to invoke their past attachment to neutrality to prevent that from happening. Thirdly, we should take care to avoid the creation of a Community of two or more tiers or, to use expressions which have been common in that context, a Community of variable speeds or of different geometry.
I must admit that I am somewhat concerned by the last danger which I believe to have been made more real by the compromises the Government reached at Maastricht. By opting out of the social provisions and reserving for our own decision in Parliament movement to Stage III of economic and monetary union, Britain has set a precedent which others may seek to follow when acceding to the Community.

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Personally, I do not consider that a Community à la carte would be a satisfactory route for Europe to follow. The Community would be a much weakened institution if we followed that course. It would be less useful and less influential in world affairs.
Of course, a two-tier Community—formal, in the sense that I described—would be a quite different matter from a Community which sets long transitional periods for new members states to enable them to make fundamental changes to their economy and thus avoid undue social disruption over a period of years. Agriculture in the Nordic countries seems to me to be such a case in point.
The third big issue is changes to the agriculture policy. Mr. MacSharry's proposals are still on the table, although somewhat altered perhaps. The focus is once again on direct negotiations between the Commission and Washington in the GATT context. We all hope that those negotiations will succeed and that real improvements to the CAP will follow. That is a very high priority for the United Kingdom. It is most unsatisfactory that we, as the second largest contributor to the Community's budget and as a large importer of foodstuffs from our Continental neighbours, should suffer more heavily on our own farms than any other member state. That, at least, is my personal impression.
Finally, and inevitably linked to the issues of enlargement of agriculture, there is the whole matter of the Community's budget and possible further changes to the Community's institutions.
According to reports which we have all read in the press and which have already been cited here today, President Delors is looking for a big increase in the Community's budget by 30 per cent. or more. It is also reported that he wishes to see further changes to the Community's institutions so as to enlarge the authority of the Commission—and I suppose of its president—and to diminish the role of the Council of Ministers. I agree with those speakers in the debate who find these ambitions are excessive and do not accord with the spirit of the times. If the president of the Commission has it in mind to propose substantial new fiscal burdens on member states he is liable to be rebuffed, and that would not help anybody. In particular, a confrontation might well occur with Germany where anxieties about public finance are now so widely expressed.
Also, more broadly, I do not agree with the underlying assumption that more institutional changes should precede enlargement. This was just the argument used before Maastricht—that the Community should take a further step towards more centralised authority so as to link Germany more firmly with it. That thesis is neither fair to Germany nor capable of producing the desired result.
I do not believe that alterations to the Community's institutions can have much effect on the significant changes of political direction now under way in Central Europe. After all, the political process is a living and organic affair and does not respond in that kind of mechanical way, although Cartesians would have us think otherwise. As to enlargement, let us
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examine what changes and improvements to our institutions we judge to be necessary when we know which other member-states are going to join, and when we can assess the consequences and needs more exactly.
Finally, I come back to the question of a two-tier Community. As I have said, it is this aspect of the Maastricht Treaty which causes me some anxiety, and I trust that we shall not go further down this road. In the past, we have steadily declined suggestions, mostly emanating from France, that a two-speed, or two-tier Community is the answer to everybody's problems. But we now seem to have created this animal for ourselves of our own volition. I can see the tactical and short term advantages of this, and indeed much ingenuity was displayed in working out the treaty of Maastricht; but all the same, I cannot find much satisfaction at the birth of this creature. Nor do I believe it to be really necessary. The main justification for opting out concerned the final stage of transition to the Economic and Monetary Union. But it now seems quite possible that Germany may in the process of ratifying the treaty in Bonn introduce a Bundestag resolution on the process of ratification which would have very much the same effect as those which we have done by inserting it in the treaty.
The opinions now being voiced in Germany are rather similar to those heard in another place a few months ago. So perhaps this may offer at a future date a route back to the single-tier Community. I certainly hope so as I believe that it would serve our long-term interests better.
In conclusion, I believe that these European Community issues call for big decisions on matters of lasting importance in the near future. A newly-elected government are in a good position to take measured judgments and a long term view. I trust that this is what will happen.
9.12 p.m.
Lord Mayhew: My Lords, with a new Parliament, we have a new team of Defence Ministers, and in particular a new Defence Minister in this House; and we warmly welcome the noble Viscount, Lord Cranborne. Over the years his family has produced one or two Conservatives of a rather better type than the general run, and we have high hopes that this will be observed by the noble Viscount.
Certainly the new team of Defence Ministers will not find it difficult to improve on the record of the old team. This particularly applies to nuclear weapons policy. That is the point at which I shall begin because during this Parliament we shall raise this matter again and again. The old team grossly exaggerated the level of nuclear weaponry needed by this country. For example—and we shall return to this—they propose not only to have Trident—I shall come to that later —but to add to Trident a totally new airborne nuclear missile system. In the last Parliament when we asked them why, they gave a series of different and wholly unconvincing answers. The first answer was, "There's a NATO requirement for a British sub-strategic nuclear weapons system". The assumption behind that is that there is some aggressor who might not be

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deterred by the strategic deterrents of the United States, France and Britain, plus the sub-strategic deterrents of France and the United States, but who might be deterred if, in addition, there was a British sub-strategic nuclear weapons system. That was such a stupid assumption that the Government have now abandoned it. They no longer say that there is a NATO requirement for the weapon, and I predict that they will not say that in the future.
The Government then went on to a different argument. They said, "But we might have to face a nuclear threat independently of our allies from some minor nuclear power which might not be deterred by Trident, such an immense deterrent, but might be deterred by a smaller, sub-strategic deterrent". Equally, that is nonsense. The Government do not explain how that appalling scenario takes place, and what disasters in foreign policy have landed us in such a position. They do not say why Trident could not, if required, be deployed in the sub-strategic role. Trident can fire a single warhead with much greater accuracy than any airborne missile system—indeed, with pinpoint accuracy at great range. The Government do not explain why Trident cannot do the job.
Now they have abandoned that argument and we now come to their third excuse. Noble Lords may not recall it, but it appears in Hansard. The excuse is that Trident is too vulnerable for the job. It is ridiculous to say that an airborne missile system which requires airfields and aircraft, which is easily detectable and whose position is known, is less vulnerable than Trident, which is under water and undetectable. I warn the noble Viscount that we shall return to the matter again and again until the Government abandon such a ridiculous idea. Until we hear new explanations, we shall assume that the demand for TASM is less a considered response to a genuine threat than a means of finding a new role for the RAF when the free-fall bombs become obsolete. That will remain my provisional conclusion until I hear from the noble Viscount again.
The second error in the Government's nuclear policy is their proposal to acquire excessive numbers of warheads for the Trident fleet. Under pressure from opposition on other Benches and on these Benches, the Government appear to have lessened the number of warheads which they propose to acquire. However, we have not been told by how much nor what the new level will be. Originally the Trident fleet, like Chevaline before it under the Labour Government, was meant to be able to overcome the anti-missile defences of Moscow. That city was then the heart of a vast, centralised, expansionist empire. Do the Government still regard as an operational requirement the ability to destroy Moscow as it now is? Surely not. If not, why do we need more warheads than Polaris? Indeed, why do we need as many warheads as Polaris? We shall press the Government for an answer to those questions during this Parliament.
The gracious Speech pledged the Government to work to prevent the proliferation of weapons of mass destruction. Of course, TASM and those warheads are proliferation in itself; they are a form of vertical
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proliferation. How do the Government believe that they will encourage the negotiations which are to take place for the renewal of the non-proliferation treaty in 1995 if they go to the conference proliferating in nuclear weapons, possibly being the only country to do so? Why now of all time do the Government consider it possible to increase Britain's nuclear capability absolutely and in relation to the rest of the world? That is a fantastic error and we shall return to it during this Parliament.
The old team of Government Ministers were also seriously at fault in their decisions on our conventional Armed Forces. That was a major error as was stressed today by noble Lords who take a different line on what the Government's defence policy should be. We all agree that the Government made a grave mistake in taking decisions about reductions in conventional forces before conducting a comprehensive review of our strategic requirements. We on these Benches have said that for many years. However, I concede to the noble Viscount that when in doubt it is a time-honoured habit of opposition defence spokesmen to call for a comprehensive defence review. In that way we can declare that radical changes are needed without committing ourselves to explaining exactly which changes they might be. I concede that and it might apply to a number of us here today. However, at the moment the position is extraordinary and unprecedented. Today the threats to our security, taken together, are not of the same magnitude as the threat by the Soviet Union of conventional attack on the West, which has suddenly disappeared.
That means that the need for an overall strategic defence review is of unprecedented importance. The Government must begin asking the big questions. After a slow start in the last Parliament, they began by adjusting their defence policy to the new realities of power. They recommended some reductions. Immediately, they ran into difficulties with their Back-Benchers for whom almost any reduction in arms, of whatever kind, is anathema, as the noble Viscount will soon find. Indeed, listening to the debate tonight, he may well have found it.
I forbear to quote the repeated grim warnings we have received from Back-Benchers opposite about the continuation of Soviet military power, of its ever increasing military budget, of the burgeoning and menacing submarine fleet, and so on. We heard a little of it again this afternoon. Alternatively, we were given grim warnings, sometimes in the same speech, about the total bankruptcy and chaos in the Soviet Union. That too was put forward as a reason for not reducing British arms.
I am sure that Ministers hope that in this Parliament their Back-Benchers will make a better showing on defence than they did in the last Parliament. We certainly hope so. But the fact is that the Government need to convince their Back-Benchers that the collapse of the Soviet Union has made it possible to make radical changes and radical reductions in our armed forces without in any way weakening the security of the nation. I hope that the Government will convince their Back-Benchers of this

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at last and also those persuasive and entirely honourable noble Lords who have declared an interest in the defence industries.
The starting point of a review must be an assessment of the threats, actual and potential, and the resulting commitments. They will be commitments we shall share with friends and allies in NATO, Europe and the United Nations. On these Benches, we look forward to the day when all our defence commitments will be shared by allies. We look forward to a common defence policy in Europe; to common procurement; to a common defence budget and integrated forces. However, this defence review must ask: are there any commitments that we share with our allies which we do not really now need? It must ask, for example: do we still need to earmark huge naval forces to protect American reinforcements crossing the Atlantic in the event of a protracted war in Western Europe? Do we need to earmark amphibious forces for the defence of Norway against the Soviet Union, when Russia today controls only a minute fraction of the Baltic coast?
What about the role of the RAF? Does it require a role in nuclear weapons delivery? What is its role in home defence? Against whom is it defending us? As for the infantry, the review must ask whether the rapid reaction corps establishment of 100,000 men, to which we contribute disproportionately, is too generous, and also, how a British contingent there can be made more easily available and better trained for service in Northern Ireland. These are the questions that the Government will have to ask. They must avoid the trouble they caused last time by not asking these big questions first before reaching decisions on smaller questions.
The review must not be Treasury-led. I agree with a number of spokesmen who have made that point. Therefore there must be no attempt by the Treasury—backed no doubt by home spending departments—to impose a ceiling on defence expenditure until the MoD and the Foreign Office have assessed all the actual and potential threats and have assessed what is necessary to provide against them.
However, that does not mean that the Treasury does not have a role in the defence review. It is a measure of the loyalty of servicemen of all ranks and of their rightful pride in their accomplishments and their capability that they should resist cuts in defence expenditure. That is true also of retired senior members of the defence forces. It is entirely right that they should take the line they do; but it is only one side of the argument. There are other arguments, and qualified people should not hesitate to put them forward in conjunction with the defence review.
As I have said, it was a major mistake of the Government in Options for Change not to ask and then answer the big questions which face us before taking decisions on the lesser ones. In this Parliament we on these Benches will do our utmost to prevent the Government from making the same mistake again.
9.26 p.m.
Lord Richard: My Lords, I shall start by making what I hope are a few pleasant comments about one or two pleasant people. I welcome the noble Baroness who is with us for the first time today. I listened to her speech with a great deal of interest. It was a powerful speech. It was a tour d'horizon as regards the Government's policies in all kinds of areas. She made the Government's policies all sound very attractive and perhaps a little over simple. However, we look forward very much indeed to hearing her speak again.
I also wish to welcome the noble friend of the noble Baroness. I have not had the pleasure of hearing her noble friend speak but I look forward to doing so in a few moments. While I am in a congratulating mood I hope I may say a few words about the two maiden speeches we have heard tonight. We can genuinely say that both were maiden speeches of quality. They both had something to say and they were both delivered with fluency and confidence. The noble Earl, Lord Cromer, gave us an original speech when he gave a view of the Hong Kong/China relationship and sets of problems. I personally find that relationship quite fascinating and thought provoking. The noble Earl's speech was well informed and he spoke clearly from his personal experience. His speech was refreshingly new and I congratulate him wholeheartedly on it and look forward to hearing him speak again.
The maiden speech of the noble Lord, Lord Prentice, was for me something of a novelty. Given his previous position in politics and my previous position in politics, it is the first time I have listened to him speak from a full frontal position, so to speak. Usually the noble Lord was standing up at a Dispatch Box and all I could see was the back of his head. It is a pleasure to see the noble Lord as well as to listen to him. The speech he gave us tonight was clearly tinged with his own experiences at the ministry of overseas development. We look forward to his being in a position to make sure that his noble friend on the Front Bench, who now occupies the Ministerial place that he once occupied in a Labour government, will live up to the ideas that he expressed this afternoon. At any rate we welcome the noble Lord and look forward to hearing him speak again.
In our debates on foreign affairs and defence matters it is interesting to note what issues seem to be fashionable and what issues seem to have dropped out of fashion. I have observed that today little has been said about the Middle East. I hope noble Lords will allow me to say that tonight we have heard refreshingly little about the Arab/Israeli dispute. I believe Saddam Hussein's name has been mentioned only once in the course of the debate. We have heard a speech on southern Africa from the noble Lord, Lord St. John of Bletso. I was not able to listen to that speech myself and I apologise for that. However, that issue is not one that has been at the centre of our debate.
Four or five issues have concerned the House in today's debate. First, there was the question of aid, particularly to third world countries. I am very pleased to see the noble Earl, Lord Onslow, going to his place because I may have something to say about

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his contribution to the debate in a moment. Secondly, there were the issues connected with Maastricht and particularly those concerned with enlargement. Thirdly, the House was interested in the issues surrounding Hong Kong and 1997. There was also the defence package, about which we heard so eloquently from the noble and gallant Lord, Lord Bramall, the noble Lord, Lord Chalfont, and most recently from the noble Lord, Lord Mayhew, speaking from the Liberal Benches.
I should like to say a few words on all those issues. I shall start with aid. The House will understand if I single out the contribution of the noble Earl, Lord Onslow, as the opposite extreme to what I would characterise as the moderate view on aid. I have rarely heard a speech which was both so eccentric and so revealing. I am grateful to him for his speech, for he managed to highlight for the rest of us in this House the desirability of our foreign aid programme being aimed at countries which are clearly in need.
If the noble Earl asks why we on these Benches believe in aid I have to say that it is simply because if people are starving we think that it is our duty to help them. If countries are undeveloped we think that it is probably our duty to do our best to help them. If countries or regions are in need, again we think that, collectively, living as we do in a particularly privileged country in a privileged part of the world, it is part of our duty to try to do something to help them. I listened to the noble Earl with great interest, and with amazement rather than amusement because what he said was not funny. He certainly made a significant contribution to our debate.
The Earl of Onslow: My Lords, does that great paean in praise of aid include the £74,000-worth of aid for Singapore? Is Singapore regarded as poor and undeveloped? That is an ODA figure and not my figure.
Lord Richard: My Lords, I have no idea why £74,000 goes to Singapore. I have no doubt that at some stage somebody in the bowels of the Overseas Development Agency will discover why and write to the noble Earl. If they would like to write to me at the same time, I should be delighted to read the letter. If the noble Earl really thinks that the quality of our aid programme in relation to the third world can be judged by one payment of £74,000 to an as yet unknown source in Singapore, he applies strange criteria.
I turn to Hong Kong. There is very little that I want to say about the subject except to congratulate not only the noble Earl, Lord Cromer, which I have already done, but also the noble Lord, Lord Geddes, upon his interesting contribution and the new perceptions which he brought to the subject. It is good to hear that southern China is beginning to do well economically and that Hong Kong seems to be booming economically. As my noble friend Lord Cledwyn of Penrhos, the Leader of the Opposition, said earlier, we on this side of the House welcome the appointment of Mr. Patten as Governor. We wish him well. He has an immense and difficult task and we hope that he performs it successfully.
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In view of the nature of the difficulties and the part of the world concerned there are bound to be immense problems between now and 1997. I have long believed that, if the economic circumstances of Hong Kong and southern China as they come closer together are favourable and improving, the transition to 1997 will be eased to a considerable extent. I am delighted to know that that seems to be happening.
Perhaps I may say a few words about defence. The noble and gallant Lord, Lord Bramall, the noble Lord, Lord Chalfont, and the noble Lord, Lord Mayhew, in effect criticised Government policy and Options for Change. The same theme ran through their speeches—namely, that commitments and forces have got out of balance. In other words, there has not been a sufficiently exact and precise assessment of the commitments that we have to fulfil to enable any government to take sensible decisions as to what level, mix and balance of forces may be needed to fulfil those commitments. I am bound to say that that is a criticism which has some force attached to it. It is a criticism that I share and one that I have expressed before in this House. Whatever the reasons for Options for Change and the Government's policy in the last Parliament, I hope that there is now a fresh opportunity for a major look at what Britain's commitments are currently, what they are likely to be in the future and what mix of forces—nuclear, non-nuclear and conventional forces—will be needed in order to fulfil those commitments.
I hope that the new government will say that they will look seriously at this matter and when they have done so come back to Parliament with proposals. The proposals may be the same; they may be new; they may be better or worse proposals. But at least there ought to be a better balance between the commitments and the level of the forces that are supposed to be necessary in order to fulfil them.
I turn to the Community and two issues in particular on which I wish to comment: enlargement and the relationship of the Western European Union to the Community defence and security policy as it emerges from the Maastricht treaty. The noble Lord, Lord Beloff, has obviously returned from the Recess refreshed and bubbling over with ideas. He asked some formidable questions. In effect, he asked whether we have run our course so far as concerns the Community. Has the great political and economic adventure which was launched by Jean Monnet so many years ago via the European Coal and Steel Community in order to bring peace and stability to Western Europe come to an end? Are the pressures that are now being put on the Community from outside by other countries and from inside by the electorates of the member states of the Community now such that we can no longer go on with a Community broadly of the structure that we have at present?
As I said, they are formidable questions. I have no doubt in my own mind that, if there were an attempt —a crude and perhaps over-speedy attempt—to enlarge the Community to perhaps 20 or 25 members with the existing institutions in their present state, I suspect that the Community would almost certainly

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find taking in that number at one gulp indigestible. I do not believe that the institutions could survive an abrupt enlargement of that kind.
However, I do not think that anybody is talking about abrupt enlargements of that kind. At least I hope not. Like any sensible eater approaching a banquet, one should take it slowly, course by course —if it is not perhaps too patronising an analogy to compare the applicant countries with plates on a table. I should have thought that, with perhaps minimal amendment, the existing institutions would be able to cope with the absorption of the EFTA members, not immediately but over a reasonable period of time.
So far as concerns the East European countries, frankly I do not believe that at this stage it makes any sense at all to try to work out in advance—as the noble Lord, Lord Bridges, said—the kind of changes that may be necessary to the institutional structure of the Community if and when we reach the stage of considering the membership of Poland, Hungary, Czechoslovakia, the Lithuanian countries and perhaps even Romania. That is so far down the road that at this stage to lose faith in the institutions and structure that we have—which, even on the admission of the noble Lord, Lord Beloff, have created a great deal, and in European terms have mattered a great deal, over the past 40 years—because of the possibility of geopolitical indigestion in 10 years' time seems to me to be a doctrine of despair, which I am bound to say I would not follow.
After all, what was the objective of the Community? It was not merely to produce a free trade area in which we could all trade. The objective of the Community as I have always understood it was to produce a greater degree of political unity in Europe, so that our countrymen could stand up in the world on a basis of equality with other areas of the world which, if we were not capable of influencing them, might indeed produce policies inimical to us. That impetus for a greater degree of unity in Europe still exists. It has not gone merely because at this stage we may find future difficulties with a process of enlargement.
Finally let me turn to one point regarding the treaty that I wish to deal with specifically. I gave the Minister notice that I would refer to it. It is the relationship of the WEU to NATO and to the other parts of the treaty. I have looked at the treaty; I have pondered over it. I have had my red pencil out, underlined, and put my markings on the treaty. I do not understand it any more now than when I started.
Perhaps I may give an indication of the parts where I do not follow what the Government intend. In Title V, Article J, at page 80 of the authorised version one finds this. It is the version in a blue cover of which my noble friend Lord Bruce approves; the one in yellow he does not approve. The treaty states:
"A common foreign and security policy is hereby established which shall be governed by the following provisions".
I understand that, I think. Then there is set out an obligation on the member states to inform and consult each other. It is stated that,
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"The common foreign and security policy shall include all questions related to the security of the Union, including the eventual framing of a common defence policy, which might in time lead to a common defence".
I follow that. The document then states:
"The Union requests the WEU, which is an integral part of the development of the Union, to elaborate and implement decisions and actions of the Union which have defence implications".
I follow that. The mainspring, the origin, of action in the defence, security and foreign affairs field, so far as concerns this article, seems to lie with the Council of Ministers. The Council of Ministers says that it is necessary to do this and that we shall then get WEU to implement it. My Lords, so far so good. That I understood.
The problem is that, if one then turns to the declaration made by the members of the WEU, it seems to give the WEU a far greater initiating power in relation to a common European and defence policy than appears to me to have been envisaged in the earlier articles of the treaty. I do not wish to spend too much time quoting chunks of the document at this hour of night but perhaps I may quote one paragraph, which states:
"WEU will be developed as the defence component of the European Union and as a means to strengthen the European pillar of the Atlantic Alliance".
I follow that. It continues:
"To this end it"—
the WEU—
"will formulate common European defence policy".
It does not refer to the Council of Ministers but to the WEU. For the purpose of this argument, I do not mind which formulates it, but I believe that there is a confusion, in my mind at least, between the role that the declaration seems to give to the WEU and the role that the treaty seems to give to the WEU.
If one reads further, one finds that in the operational role of the WEU it is envisaged that there shall be military units answerable to WEU, to be used in what timescale and in what circumstances I know not, under whose direct control I know not, and in order to deal with what particular foreign policy issue I know not. My confusion becomes worse confounded. I do not raise that point in a spirit of confrontation with the Government. However, since the gracious Speech yesterday stated specifically that the Government were aiming to develop the Western European Union it is a legitimate question that we are entitled to ask.
It has been a lengthy but an interesting debate. I found the injection of the elegant pessimism of the noble Lord, Lord Beloff, in the debate a slight surprise but, as so often with the contributions of the noble Lord, Lord Beloff, it added spice to the proceedings.
9.45 p.m.
The Parliamentary Under-Secretary of State, Ministry of Defence (Viscount Cranborne): My Lords, I rise with what I now realise is purely conventional trepidation to address your Lordships for the first time but nevertheless, certainly in my case, it is very real.
If I may be particular, in one respect that trepidation is extended and made all the deeper by my experience in another place. When I embarked there upon my maiden speech I was all too conscious of the

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fact that I delivered it in the wake of what was, by common consent, one of the greatest maiden speeches since the war delivered by no less a figure than the present parliamentary sketch writer to The Times. Your Lordships may think that I am a glutton for punishment because not only did I manage to select an important debate on that occasion on which to open my batting in another place, but rather I seem to have done the same again in your Lordships' House. Not only that, but I seem to have selected a debate in which there have been not one but three brilliant maiden speeches which I somehow must try to live up to. Perhaps I may say that that is a very realistic and sensible cause for feeling trepidation in your Lordships' House.
The second cause for anxiety is perhaps not so particular but is more generally felt by noble Lords who embark on their maiden voyage in your Lordships' House; that is, that we are all extraordinarily conscious of the great depth of experience and knowledge which is contained in this Chamber. There is perhaps a very good example of that experience and knowledge which is before us in this debate today because I am sure that your Lordships will have observed, as indeed I have, that your Lordships' House is the only one which has shown the good sense to debate defence at all in its consideration of the gracious Speech. Certainly in view of my new responsibilities, there can be no doubt at all where one of the main priorities of any Government must lie. Once again, it falls for your Lordships' House to remedy some of the more obvious defects of another place.
The hour is late. This has been an extremely long and certainly from my point of view a most interesting debate. I am sure that your Lordships, like me, will believe that at this hour of night there are certain matters which are more important than politics. One of them is a large dinner and another is a comfortable bed. Therefore, if your Lordships will allow me and will accord me that indulgence which is traditional on occasions of this kind, in trying to answer this debate I should like to address myself in particular to the matters for which I am now at least partly responsible to your Lordships' House in the Ministry of Defence. If I feel that I have time and have not bored your Lordships too much, I shall endeavour in particular to address some of the questions asked of me by the noble Lord, Lord Cledwyn, in his opening address.
Before I turn to those matters, if your Lordships will allow me—and indeed if it is allowed in your Lordships' House for one maiden speaker to commend another—I should like to add my congratulations to the three wonderful maiden speakers to whom we have listened this evening. I hope that my noble friend Lady Chalker will agree with me that we are old friends and colleagues. It is no surprise to me whatever that she acquitted herself as well as she did. I believe I need say no more.
However, perhaps I may address myself to a former school fellow of mine who I have not seen, to my certain knowledge, for 30 years. I was not surprised but gratified to find that my noble friend Lord Cromer returned from abroad not only more fluent but
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considerably better informed than I remembered him on the playing fields of Eton. As one who has spent a little bit of time travelling in Hong Kong and parts of southern China I was impressed and agree wholly with his analysis, which was delivered with such aplomb and considerable knowledge.
I have one other tribute to pay, if your Lordships will allow me, to my noble friend Lord Prentice. He also is a former colleague in another place. Indeed, I remember well the distinction with which he fulfilled his role. I am delighted that this evening at any rate I am also in good company there.
I want to move on and will try not to detain your Lordships for too long. However, this debate reflects the extraordinary reserves of knowledge and experience to be found in your Lordships' House. It has become a truism to say that the world has changed in the past three years or so. Nevertheless, it is worth emphasising from where we are starting in addressing the future defence policy of our country. As noble Lords from all quarters of the House will have observed, it is no good trying to erect a defence and security policy in vacuo. We must try and address ourselves to the risks and the threats that we perceive; to make a judgment and develop a policy and defence capability accordingly.
Nobody—here I address myself particularly to the noble Lord, Lord Mayhew—would seriously suppose that the threat has done anything other than vastly diminish. That must be common ground between us all. Nobody seriously believes that we are facing the possibility of a heavy armoured attack from the central front in Germany directed by the forces of a defunct Warsaw Pact. That is an absurdity.
However, many noble Lords here are infinitely better historians than I shall ever be. I refer specifically to my noble friend Lord Beloff whose speech I especially enjoyed, particularly in the light of the somewhat tendentious comments about my own record delivered from the same Bench by my noble friend Lord Bethell in an earlier intervention. Those who are better historians than I will realise, as I certainly contend, that the fall of great empires is never—and it is as erroneous in historical terms as it is in political terms to say "never"—followed by periods of great stability. I suspect that the fall of the Soviet empire is certainly showing us the truth of that general observation. We are living in a world where the threat is lower but where stability has in many ways decreased.
None of us liked the idea of the balance of terror. It was what the French call a pis-aller. But it brought in its wake an element of dreadful stability in which there was a kind of quadrille dance by both sides. The balance of terror made it perfectly clear that that quadrille, with a bit of luck, would not transgress the bounds of security. That is no longer so. There is no doubt that some of the reaction that I observed in some parts of your Lordships' House to the address of my noble friend Lady Park, was wholly unwarranted. Anybody of my noble friend's great knowledge and experience, which is universally recognised in this House, will realise that when she speaks of possibilities and threats, particularly in the countries that were

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covered by the former Soviet Union, there can be no doubt that your Lordships, and certainly I for one, should listen with the greatest of care to what she says.
There is also no doubt (is there?) that Russia, for all her troubles, economic and otherwise, so eloquently referred to in particular by my noble friend—I forget his name now; I knew him under another incarnation and I hope that he will forgive me—is still the largest military power in Europe and the very instability there makes its own actions all the more unpredictable.
Therefore, when we are addressing ourselves to a new strategic and defence policy, it is all very well, as the noble Lords, Lord Chalfont and Lord Mayhew suggested, that we should identify the threat and that we should use and draw on distinguished academic names to which the noble Lord, Lord Chalfont, referred, in order to be able to predict with absolute certainty where the threat is coming from. I suggest that the noble Lord, Lord Chalfont, might have been nearer the mark if he had delivered his remarks at a time when the threat was rather more easily distinguished.
That is no longer the case. The difficulty of formulating a strategic and security policy these days is the unpredictability of the world situation. It is for that reason that the overwhelming characteristic of the world situation today can be encapsulated in one word: unpredictability. It is the fact of the unpredictability of the world that induced my predecessors and their military advisers, when they were assessing how we should react to the events in the former Soviet Union, to come to the conclusions that they did in that much reviled document, Options for Change.
Let us be clear. Defence is, we hope, an insurance policy which we will never have to cash in. It is important that it should be there. But certainly in this new world the sort of civil mechanisms to which my noble friend Lady Chalker referred in her opening remarks, should be, and should continue to be, the front line of our attack in the establishment of stability in the world.
Perhaps I may add to what my noble friend said. She described a number of civil institutions. The noble Lord, Lord Bridges, expressed some surprise, I believe, that there were so many of them. If noble Lords will allow me, I shall not comment immediately on his remark with which I have a considerable amount of instinctive sympathy. I believe that those civil institutions will gain enormously in credibility because that credibility will derive in very large part from the existence, among those who establish and guarantee those institutions, of a strong military capacity as an insurance policy. Whether we seek to stabilise Eastern Europe by the means which many of your Lordships have referred to this evening as being possibilities or we seek to stem the proliferation of nuclear weapons or we wish to prevent the spread of terrorism, I believe that our defence capacity and its nature are even more of an integral part of our foreign and security policy than perhaps they were before.
If we are to maintain that credibility I cannot emphasise too strongly the key role that a joint
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military alliance policy must play just as a joint policy plays a role in what I might term the civil institutions to which my noble friend referred in her opening remarks. In this connection, perhaps I may say how delighted I was to hear the comments made by the noble Lord, Lord Craig of Radley, in his most interesting speech. NATO is the vehicle for the partnership to which I have referred. After all, we are extremely fortunate that NATO is in place; that it works and that it is based on long experience and on a long period of operation. It is interesting that NATO has increasingly shown itself to be flexible and to be able to adapt to changing circumstances, and even to circumstances that have changed as rapidly as has happened in the past two or three years. Perhaps the most important point about NATO—I hope that your Lordships will forgive me if there is an element of trying to teach one's grandmother to suck eggs in what I am saying—is that the United States of America is committed to it.
It is perfectly clear to Her Majesty's Government and, I am sure, to almost all of your Lordships, that just as my noble friend's civil institutions are unlikely to work unless they are based on a partnership between the United States and Western Europe, so security and defence institutions must be predicated on exactly the same premise. That is why in a previous incarnation I was delighted to be able to listen to the distinguished lecture that was given at the International Institute for Strategic Studies by General Colin Powell a little earlier this year in London, when he said:
"I hope there is no doubt in the mind of anyone here tonight that notwithstanding all the changes we see in the world the Atlantic Alliance is still the essential glue holding together the Western Community. The alliance is essential not because it connects armies, navies and parliaments and peoples, it is essential because it connects the values and principles that underlie them."
The general then went on to make a clear and uncompromising commitment to NATO on behalf of the present American Government and defence establishment.
The noble Lord, Lord Richard, asked a question which, in all frankness, rather stumped me. There is no doubt that the Western European Union has a very important part to play in the transatlantic basis of our future security arrangements. That part was enhanced by the Maastricht agreement which, if properly interpreted, will undoubtedly be good for Europe and for NATO. It will enable a stronger European defence effort to be developed. As long as that is developed and is compatible with NATO, it can do nothing except strengthen the basis of our security. Work to develop the WEU's operational role is already under way. The aim is to create a sensible structure that is compatible with NATO. It should draw on as wide a range of European forces as possible, including, of course, the Franco-German force, and those of other partners.
Returning to the question asked by the noble Lord, Lord Richard, about "Who formulates policy—Ministers or the WEU itself?", I must tell the noble Lord in all frankness—and this is not a very good start in your Lordships' House —that I do not know the

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answer to that question, but I hope that it will be "Ministers" because that is where the decision belongs.
I have talked in general terms about the basis of our approach. Perhaps your Lordships will allow me briefly to make one or two remarks about the specifics arising out of Options for Change. I listened with keen attention, as I hope that I always will, to the keen remarks of the noble and gallant Lord, Lord Bramall and the noble Lord, Lord Vivian, both of whose speeches made a deep impression on me. Nothing at the moment has persuaded the Government that the basis for Options for Change should be reassessed. Nevertheless, it is important that we should at least remain true to the basic factor of unpredictability and unforeseen circumstances in world affairs, a matter referred to very often during the course of this evening's debate.
Options for Change will deliver the capability that is needed. Nevertheless, I shall continue to listen with keen attention to noble Lords, particularly the noble Lords, Lord Bramall and Lord Vivian, and others who take the same view and have the same experience. I certainly do not wish to give any indication that I am not open to argument or, more importantly, that my more senior colleagues are not either. I am well aware that your Lordships' House is based not only on courtesy but on the force of what is said here. I should like to make sure that any response I give is as reasoned as the comments that we have heard this evening.
I know that there has been a great deal of unhappiness, particularly in the Army, about some of the implications of Options for Change. If your Lordships will allow me a personal note, with three Grenadier brothers and a Grenadier father, who is, I am sure, looking rather balefully at what I say this evening, how could I be anything else but firmly conscious of the extraordinary contribution that the regimental system and regimental loyalties make to the effectiveness of the British Army? They may be intangible but they have won more battles than I ever shall. I am also well aware that the Brigade of Guards —if noble Lords will allow a family special pleading —are not just ceremonial soldiers; and if they are to remain the effective fighting force they are today, that has to be taken into account. I hope in particular that my noble father will not press me further this evening if only on the grounds that he, perhaps more than all noble Lords, would like to get home to bed.
A number of points have been made on other matters during the course of the debate. I shall not address myself very much further to what the noble Lord, Lord Mayhew, said about the nuclear deterrent. Suffice it to say that Her Majesty's Government are wholly convinced of the need for a strategic nuclear deterrent. I am sure the noble Lord knows as much by heart as I do the arguments that we have deployed before. On the question of sub-strategic capability, I notice that the noble Lord has tabled a Question for next week. The hour is late. Will he allow me to wait until next week? I am not running away. The Government always hold these questions under review. On the other hand, there is no doubt that, so
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far as concerns the Government's nuclear and deterrent policy, we are convinced that there remains a case for a sub-strategic capability, whatever form it might eventually take.
The noble Lord, Lord Cledwyn, asked me a number of questions. He asked in particular about sanctions against Serbia. We certainly accept that there is a need to keep up pressure on Serbia and on the Yugoslavian national army. We also have to ensure, as I am sure the noble Lord will agree, that any measures are effective. We must not be tempted to go for measures that would not bite just to salve our own consciences. The noble Lord will know that more than any other noble Lord. Sanctions which would seriously affect the Serbian economy need to be agreed by the United Nations. Our current assessment is that it would be difficult to get a resolution in the council. I have to say to the noble Lord that we have not, in a developing situation, ruled out anything yet.
Very rapidly I should like also to refer to what the noble Lord and the noble Lord, Lord Weidenfeld, said about the importance of the success of President Yeltsin. We most strongly agree with that point of view. It is extremely important to help the reforms and nearly $50 billion of assistance to the former Soviet Union, including $24 billion from the Group of Seven, is already agreed or in place. I should say that, as with aid matters, it is equally important not only that we should give aid in the right way but that it should be effective. Those of us who have spent much time over the past few years travelling in the former Soviet Union will know that that applies in that country as much as in any other.
The noble Lord, Lord Cledwyn, also asked what steps we were taking to get the European Central Bank into London. He knows, as I know, that the City of London is Europe's leading financial centre and that it intends to remain so. The City itself is making the case for putting the European monetary institute and the European Central Bank within its confines. Ministers support that case enthusiastically. Immediately after Maastricht, my right honourable friend the Prime Minister made it clear that the EMU protocol would make no difference to London's claim. I hope that my right honourable friend, and others, will be able to keep the noble Lord fully abreast of developments as they occur.
A number of other points were raised by the noble Lord, Lord Cledwyn. I wonder whether he would forgive me, as my eye is very much on the clock and as I was told by experienced performers that 20 minutes was the maximum that is even tolerated by your Lordships, if I wrote to him about the question of expansion of the European Community. It is an extremely important point and one to which other noble Lords addressed themselves, especially my noble friend Lord Cockfield and also the noble Lord, Lord Bonham-Carter, whose experience and knowledge of Poland in particular is one of which I have had personal experience—he will not remember that, but I do. If I may, I should like to address myself to those points or ask my noble friend to do the same by letter.

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That is really all that I wanted to say to your Lordships this evening. However, I have one further point to make in conclusion by way of wrapping up the debate. I am very conscious that defence is something that we only grumble about when it goes wrong. When a country such as ours has to address a major change in its defence stance, if those who are responsible for it get it wrong they will never be forgiven. I am conscious that I am a small cog in a very large MoD machine. But I know that my ministerial colleagues are well aware of the magnitude of the risks that they take if they do get it wrong. I should like to close my reply by giving an illustration to show how easy it is to get it wrong. It was said many decades ago in 1914 that, "War is too foolish to fight, too fantastic to be thought of in the 20th century. Civilisation has climbed above such perils. The interdependence of nations, Christian charity, the sense of public law, liberal principles and common sense have rendered such nightmares impossible". "Are you quite sure?" the individual concerned asked, "It would be a pity to be wrong". My Lords, that, perhaps, is the sentiment that should inform us when we address ourselves to questions of defence in this House.
10.14 p.m.
Viscount Astor: My Lords, on behalf of my noble friend Lord Caithness I beg to move that this debate be now adjourned until Monday next.
Moved, That the debate be now adjourned until Monday next.—(Viscount Astor.)
On Question, Motion agreed to, and debate adjourned accordingly.

Greater Manchester (Light Rapid Transit System) Bill [H.L.] Price's Patent Candle Company Limited Bill [H.L.] River Humber (Upper Pyewipe Outfall) Bill [H.L.] Ulster Bank Bill [H.L.]
The Chairman of Committees acquainted the House that pursuant to the resolution of 12th March last the Bills had been deposited in the Private Bill Office together with the declarations of the agents; the Bills were presented, read a first time, read a second time pro forma and reported from the committees.
Harris Tweed Bill [H.L.] Humber Bridge Bill [H.L.] Llanelli Borough Council (River Lliedi) Bill [H.L.] River Humber (Upper Burcom Cooling Works) Bill [H.L.] South Yorkshire Light Rail Transit Bill [H.L.]
The Chairman of Committees acquainted the House that pursuant to the resolution of 12th March last the Bills had been deposited in the Private Bill Office together with the declarations of the agents; the Bills were presented, read a first time, read a second time pro forma and committed to Unopposed Bill Committees.
Croydon Tramlink Bill [H.L.] Durham Markets Company Bill [H.L.] River Usk Barrage Bill [H.L.]
The Chairman of Committees acquainted the House that pursuant to the resolution of 12th March last the Bills had been deposited in the Private Bill Office together with the declarations of the agents; the Bills were presented, read a first time, and reported from the Examiners.
London Local Authorities Bill [H.L.] River Calder (Welbeck Site) Bill [H.L.] Woodgrange Park Cemetery and Crematorium Bill [H.L.]
The Chairman of Committees acquainted the House that pursuant to the resolution of 12th March last the Bills had been deposited in the Private Bill Office together with the declarations of the agents; the Bills were presented, read a first time, read a second time pro forma and committed to Select Committees.
British Waterways Bill [H.L.] Greater Manchester (Light Rapid Transit System) (No. 4) Bill [H.L.] Llanelli Borough Council (Burry Port Harbour) Bill [H.L.] Mersey Docks and Harbour Bill [H.L.]
The Chairman of Committees acquainted the House that pursuant to the resolution of 12th March last the Bills had been deposited in the Private Bill Office together with the declarations of the agents; the Bills were presented, read a first time, passed through all their remaining stages pro forma and sent to the Commons.
British Railways Bill King's Cross Railways Bill London Docklands Railway (Lewisham, etc.) Bill
The Bills were brought from the Commons; the declarations of the agents having been deposited pursuant to the resolution of 12th March last, the Bills were read a first time and reported from the Examiners.
Cattewater Reclamation Bill London Regional Transport (Penalty Fares) Bill London Underground (King's Cross) Bill
The Bills were brought from the Commons; the declarations of the agents having been deposited pursuant to the resolution of 12th March last, the Bills were read a first time, read a second time pro forma and committed to Select Committees.

British Railways (No. 2) Bill
The Bill was brought from the Commons; the declaration of the agent having been deposited pursuant to the resolution of 12th March last, the Bill was read a first time, read a second time pro forma and reported from the Unopposed Bill Committee.
House adjourned at fifteen minutes past ten o'clock.

  EUROPEAN TRANSPORT COUNCIL, 26th and 27th MARCH
  EUROPEAN TRANSPORT COUNCIL, 26th and 27th MARCH