Sitting of 16 March 1993

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

    TEC Courses (Sheffield)
    Mrs. Helen Jackson: To ask the Secretary of State for Employment what percentage of students entering TEC courses in the Sheffield area (a) complete their course and (b) obtain employment when they finish.
    The Parliamentary Under-Secretary of State for Employment (Mr. Patrick McLoughlin): In Sheffield in 1991–92, 34 per cent. of people leaving youth training and 61 per cent. of those leaving employment training had completed their agreed training. 51 per cent. and 32 per cent. respectively of all those leaving courses were in employment six months after leaving.
    Mrs. Jackson: In view of those appalling figures, showing that, at the end of youth training, two out of every three people on the scheme have no job to go to, and that two out of every three students on employment training are still out of work six months later, does the Minister accept that it is now time to put resources and money into real education and training for manufacturing jobs, and to make resources available so that local authorities can finance students properly through discretionary grants?
    Mr. McLoughlin: I am sure that the hon. Lady will welcome the fact that, since 1986, unemployment in her constituency has fallen by about 24 per cent., and in the constituency of Sheffield, Central by 21 per cent. In Sheffield, Brightside, unemployment has fallen by 21 per cent. since 1986, and in Sheffield, Hallam by about 36 per cent. I should have thought that even the hon. Lady would have welcomed that.
    Mr. Sykes: Is my hon. Friend aware that, some time ago, when Hamleys, the famous toy shop in Regent street, wanted to resettle in Sheffield, it was said that its rates in Sheffield would be higher than the rates in Regent street? Does my hon. Friend not agree that that is an example of the kind of ridiculous practices that Sheffield city council has pursued over the past 25 years?
    Mr. McLoughlin: My hon. Friend's point about recruitment is true. That is why I am pleased that the Meadow Hall development has opened and made Sheffield council think carefully about how to attract business to its area.
    Mr. Tony Lloyd: Is it not astonishing that the Minister should answer the supplementary question asked by my
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    hon. Friend the Member for Sheffield, Hillsborough (Mrs. Jackson) by citing unemployment figures, of all things? For how many months now have the Government increased unemployment? Yet the Minister cites unemployment figures in their favour. Is not the reality that the training, whether on ET or YT, and whether in Sheffield or nationwide, is pathetic, and that fewer than a quarter of the people on ET and fewer than one third of those on YT obtain a qualification? The last thing we need today is more promises of cheap low-quality training. What does the Minister intend to do to give decent-quality training to people out of work?
    Mr. McLoughlin: What is pathetic is the way in which the Opposition continually carp and talk about training, yet have opposed every training scheme that the Government have introduced.
    Mr. Evennett: Will my hon. Friend confirm that Britain is the only country in Europe that offers training places to 16 and 17-year-olds without a job? Should we not therefore be grateful, and encourage young people to take up the training places, with a view to getting jobs at the end of the placement?
    Mr. McLoughlin: Indeed, my hon. Friend is right. Most young people who go on courses appreciate that youth training has been a substantial help in finding employment. The Opposition have said many times that we are failing to meet the youth training guarantee, but they have gone off talking about that subject because of the successful manner in which the TECs have managed to fulfil the guarantee overall.

    Labour Statistics
    Dr. Wright: To ask the Secretary of State for Employment if she will give figures on employment levels in manufacturing industry in each year since 1979.
    The Secretary of State for Employment (Mrs. Gillian Shephard): Employment in manufacturing in Britain was 4,593,000 in September 1992 compared with 7,253,000 in June 1979. Information for the intervening years can be obtained from the NOMIS database in the House Library.
    Dr. Wright: Does not the Secretary of State understand that those figures tell the whole story about what has been happening to this economy since 1979? Three million jobs have been lost in manufacturing industry and half a million jobs have been lost in manufacturing in the west midlands alone. Does she not understand that it is an economic disaster because, when we get a competitive devaluation, we do not have a competitive base to take advantage of it? It is a social disaster because it destroys lives, families and communities—[HON. MEMBERS: "Question."] Finally, the question to the Secretary of State is this: when she spoke to the Chancellor of the Exchequer this morning, did she say, "Come on: the Prime Minister has told us we made a mistake. The time now is for jobs, jobs and more jobs"? Or did she say, "Let's have"—
    Madam Speaker: Order. I call the Secretary of State.
    Mrs. Shephard: As for what transpired this morning, the hon. Gentleman will have to possess his soul in patience—if he is capable of doing that. Instead of doing what the Labour party usually does and talk down British

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    achievements, the hon. Gentleman should be congratulating British manufacturers on their highest ever export levels and on their outstanding improvements in productivity and profitability over the past decade. Or perhaps the hon. Gentleman advocates a return to Labour's manufacturing policy: overmanning, millions of working days lost through strikes and Red Robbo.
    Sir Michael Neubert: Is not employment in manufacturing declining in most major industrialised countries, even in Germany, whose workers are now the most expensive in the world? Is it not extraordinary that, with its commitment to the statutory minimum wage and support for the social chapter, the Labour party wants to take us down that uncompetitive path?
    Mrs. Shephard: Yes, that is indeed extraordinary. As my hon. Friend has said, manufacturing employment peaked in this country in the mid-1960s, and there has been a steady decline under all Governments since, as there has been in all other major industrialised countries. However, if we followed the policies of the Labour party, we would quickly cease to be competitive.
    Mr. Barry Jones: Does the right hon. Lady know that, in my constituency, 500 of the best kind of manufacturing jobs have been lost at British Aerospace, Broughton, on the airbus project? Is she aware that it is feared that very soon more jobs will be lost in the same factory on the production line of the world-beating executive jet, the 125 series? May I have her assurance that she will tell the Cabinet that development area status should not be taken from my constituency? Does she understand that manufacturing jobs and regional policy go together? We want a national strategy for manufacturing.
    Mrs. Shephard: I am reminded of the hon. Gentleman's passionate advocacy of free trade in our employment debate last week. I note what he says about the status of his constituency. As he will know, that is not a matter for me: the potiential job losses that he mentions are a matter of commercial decisions for the company concerned. However, whatever, happens, my Department in the form of TECs and the Employment Service, stand ready to help wherever people face unemployment.

    Labour Statistics
    Mr. Robathan: To ask the Secretary of State for Employment what measures she intends to bring foward to assist the unemployed in the east midlands.
    Mr. McLoughlin: New arrangements, announced at the time of the autumn statement, will offer almost half a million more opportunities on our programmes in 1993–94 than we are providing this year.
    Mr. Robathan: I thank my hon. Friend for that response. He will know that my constituency of Blaby is not one of those badly affected by the current high rates of unemployment. While recognising the awful and tragic consequences of unemployment, will my hon. Friend add his not inconsiderable weight in support of the excellent work of the Leicestershire TEC in my area and, in particular, the imaginative approach of the career choice scheme which is encouraging disaffected youngsters to go back into employment training, the child care voucher scheme—
    Madam Speaker: Order. May we have a question?
    Mr. Robathan: Will my hon. Friend particularly add his support to the close involvement of the TEC with the Leicestershire city challenge scheme and initiative fostering a partnership between the private and public sectors?
    Mr. McLoughlin: My hon. Friend's point is correct. I shall be in Leicester tomorrow to sign the city challenge agreement between the Government and the city challenge organisation.
    Mr. Janner: Does the Minister agree that the hon. Member for Blaby (Mr. Robathan) is as wrong as his noble predecessor in his approach to the handling of unemployment, and that what matters in Leicester and the rest of the east midlands, where the traditional manufacturing industries of hosiery, knitwear and footwear are collapsing, is not to train unemployed people for jobs that will not exist but to help existing industries to stay alive and employ people?
    Mr. McLoughlin: I am surprised that the Chairman of the Employment Select Committee downgrades and denigrates the training opportunities that are provided throughout Britain. That is an appalling indictment of him. The important factor is the amount of inward investment which has been attracted. The east midlands has benefited greatly from that inward investment. I should have thought that even the hon. and learned Gentleman might have welcomed that.
    Mr. Nicholas Winterton: Does my hon. Friend consider that those who wish to undertake training should be encouraged? Therefore, does he believe that a good idea for helping the unemployed in the east midlands might be to make expenses incurred in whatever way in undertaking training allowable against tax?
    Mr. McLoughlin: My hon. Friend asks a junior Minister to comment on tax matters. Today in particular, I do not wish to embark on that.
    Mr. Barnes: If the initial pit closure programme is implemented in Derbyshire and Nottinghamshire, some 30,000 jobs in coal mining and associated industries will be lost. What will that do to help unemployed people's prospects of getting work in the east midlands? Will he have a word with the Secretary of State for Trade and Industry to tell him that it is time to call the dogs off?
    Mr. McLoughlin: My right hon. Friend the President of the Board of Trade will make a statement on the White Paper in due course. I should have thought that even the hon. Gentleman might welcome the Toyota investment in Derbyshire. That £700 million investment is the largest single investment in any country for some considerable time.

    Jobcentres (Gloucestershire)
    Mr. Clifton-Brown: To ask the Secretary of State for Employment how effective the jobcentres in Gloucestershire have been in placing people back into work.
    The Minister of State, Department of Employment (Mr. Michael Forsyth): Since 1 April 1992 jobcentres in Gloucestershire have placed 12,270 people in work—an increase of 18 per cent. on the same period last year.
    Mr. Clifton-Brown: My hon. Friend will be aware that every person who is newly unemployed is entitled to go to a jobcentre and have an in-depth interview for up to 45 minutes—[Interruption.]—to plan how to get back into work. Is not that, combined with the success of the jobcentres which my hon. Friend has just announced, a practical measure which shows that the Government are prepared to help the unemployed, unlike the Labour party, which merely utters platitudes?
    Mr. Forsyth: My hon. Friend is right. I am sure that the House will have noticed the jeers from Opposition Members when he referred to the excellent work done by the Employment Service. Of those people who become unemployed, two thirds find work within six months as a result of the efforts of the Employment Service. We owe a debt of gratitude to the Employment Service. For the longer-term unemployed, a range of measures, including job clubs, have been successful in placing long-term unemployed people back into work.

    Child Care (West Midlands)
    Mr. Anthony Coombs: To ask the Secretary of State for Employment what steps the TECs have taken to encourage the provision of child care in the west midlands.
    Mrs. Gillian Shephard: The work of TECs to set up child care provision in the west midlands will be boosted by the £45 million child care grant which I announced on 16 December last year, to be introduced this April.
    Mr. Coombs: Given that Britain employs a higher proportion of the female population than any other country in Europe bar one, and that in the past three years the number of registered day nurses has doubled, does my right hon. Friend agree that there is enormous potential in the private sector to provide child care such as that provided by the excellent Hickory Dickory Dock nursery in my constituency? Will she do everything that she can to encourage that?
    Mrs. Shephard: I am delighted to hear of my hon. Friend's enthusiasm for the Hickory Dickory Dock scheme. He is right: there has been a large growth in private child-minding and nursery provision. However, there is no doubt that my initiative, which has been keenly welcomed by playgroups the working mothers associations and others, will be a very useful supplement to the work that he describes, including that of the Hickory Dickory Dock scheme.

    Job Clubs (Wales)
    Mr. Sweeney: To ask the Secretary of State for Employment what assessment she has made of the performance of job clubs in Wales.
    Mr. Michael Forsyth: The job club programme is very effective in helping long-term unemployed people in Wales. In the last year, job clubs in Wales have helped nearly 12,000 people, the majority of whom have found work as a result, with others going on to training, further education or self-employment.
    Mr. Sweeney: Will my hon. Friend join me in congratulating those who operate the job clubs on their success? Does he agree that the effectiveness of their work is vital in maintaining the morale of those who become unemployed?
    Mr. Forsyth: I am very happy to join my hon. Friend in congratulating those who run the job clubs. Eighty per cent. of the clubs have been contracted out to private-sector organisations, and approximately 53 per cent. of the people participating in job clubs in Wales are going on to employment, with a further 14 per cent. going into further education, training or self-employment. That is one reason why we will be expanding the number of job club places by some 75,000 during the next year.
    Mr. Wigley: Does not the Minister realise that what we need in Wales are not job clubs, but jobs themselves? Does he not recognise that, in the old coal-mining areas and the old slate quarrying areas, we have long-term unemployment among the under-25s? What is he going to do to provide jobs for those people, rather than the apology provided by his job club regime?
    Mr. Forsyth: If the hon. Gentleman had been listening, he would have heard that job clubs are singularly successful, in placing people in work, particularly in Wales. The hon. Gentleman should also know that more than 80 per cent. of people placed in jobs by job clubs are filling vacancies which have not been advertised through jobcentres.
    The hon. Gentleman ought to be a little less gloomy. The facts are that, in the last year, manufacturing output is up, exports are up, investment is up and real incomes are up. The hon. Gentleman really ought to cheer up and give credit where credit is due.

    Working Carers
    Mr. Wicks: To ask the Secretary of State for Employment what attention her Department is giving to the needs of those who work and also care for relatives.
    Mr. McLoughlin: The Department's policy of encouraging flexible working arrangements is of particular benefit to those who combine work with family responsibilities.
    Mr. Wicks: Given the significance of the worker/carer issue—one in eight full-time employees and one in five part-time employees have caring responsibilities—will the Government introduce firmer employment measures to complement the community care strategy?
    Mr. McLoughlin: There are a number of areas in which the Government have helped. The Department is always willing and ready to advise employers on the best way to arrange flexibility for people with care responsibilities.
    Mr. Rowe: Does my hon. Friend agree that the community care proposals have already brought into being' an extraordinary range of varied provision for all kinds of people with such difficulties, which are very real? Will he give an assurance that his Department will join the Department of Health in encouraging the further expansion of these very desirable developments?
    Mr. McLoughlin: I give my hon. Friend that assurance.

    Work in the Community
    Mr. Michael Brown: To ask the Secretary of State for Employment what plans she has to encourage work in the community.
    Mrs. Gillian Shephard: Opportunities to undertake community work are currently available on employment action and other programmes run by my Department. My hon. Friend will be aware that training for work, which comes into force at the end of the month, will combine employment training and employment action.
    Mr. Brown: Is my right hon. Friend aware that the employment action programme currently enables people to work in the community, cleaning up heritage sites and removing graffiti? Can she give some idea of how she might expand this programme? May I suggest that the railway stations between Newark and Cleethorpes, which suffer from graffiti, could come within the ambit of the scheme?
    Mrs. Shephard: There is no doubt that the various tasks undertaken by people on the employment action scheme are not only useful but valuable. My hon. Friend clearly has his own enthusiasms—other tasks include helping elderly people, teaching literacy and numeracy skills and, in my constituency, running a museum.
    Mr. McAllion: If the Secretary of State is serious about encouraging work in the community, why does she not intervene directly in the community of Dundee, where the management of Timex have sacked the entire work force for the crime of exercising their legal rights under the Government's trade union legislation? Is the Secretary of State content to add to the ranks of mass unemployed and so create the conditions in which those out of work envy those in work, those in work fear those out of work and bad employers such as Timex can drag down wages and conditions by exploiting the existing conditions?
    Mrs. Shephard: The issues between Timex and its employees are a matter for the company; I note that the Advisory, Conciliation and Arbitration Service has not yet been called in.
    Mrs. Peacock: Does my right hon. Friend agree that more people who are presently unemployed would be willing to become involved in voluntary work if they did not lose their entitlement to benefits when they undertook that work?
    Mrs. Shephard: Unemployed people can engage in unpaid voluntary work and retain their benefits as long as they continue to look for work and are willing to give up that voluntary work at 24 hours' notice. My hon. Friend makes a valid point and, as she doubtless knows, we intend to build on the successes of employment action with other schemes.

    Vacancies
    Mr. Hardy: To ask the Secretary of State for Employment how many unfilled vacancies are currently recorded by her Department; and what is the extent of duplication of these numbers where vacancies are listed at more than one office.
    Mr. Michael Forsyth: Some 104,700 in January 1993. There is no duplication, as each vacancy is counted only once.
    Mr. Hardy: Will the Minister give the House a categorical assurance that no duplication has previously occurred and been counted? Does he accept that if duplication has occurred, it may provide an innocent explanation for ministerial claims to have observed the green shoots of economic recovery? In that case, the cause would have been duplication and error, not villainy, as some of us suspect.
    Mr. Forsyth: I am astonished at what the hon. Gentleman has said. I should have thought that he would know that the Employment Service in South Yorkshire has placed about 50 per cent. more people in jobs than two years ago. The Employment Service advertises a minority of the vacancies, which is why it has been advertising for more employers to place vacancies with it. The hon. Gentleman is well aware—as is everyone in the House—that there is a recession. However, the Employment Service is doing an excellent job and I am sorry that the hon. Gentleman seeks to denigrate its excellent activities.
    Mr. Forman: I welcome my hon. Friend's clarification that there is no duplication, but is it not also true that the officially recorded statistics for vacancies understate the true number as they do not take account of those that are privately notified?
    Mr. Forsyth: My hon. Friend is absolutely right. Vacancies may be advertised in several jobcentres so that people have an opportunity to apply for the jobs. We do not count the vacancies twice, but individually.
    Mr. Dobson: Will the Minister confirm that, according to the Government's figures, there are 31 people chasing every job vacancy in the Chancellor's constituency, 181 people chasing every job vacancy in the Chief Secretary's constituency, and no fewer than 195 people chasing every job vacancy in the constituency where the Prime MInister grew up?
    Mr. Forsyth: What I will confirm is that, if the hon. Gentleman had had his way and there was a minimum wage and a payroll tax, and we had embraced the social chapter, there would be 2 million more people out of work in this country.

    Workfare
    Mr. Steen: To ask the Secretary of State for Employment what research her Department is currently undertaking into workfare; and if she will make a statement.
    Mrs. Gillian Shephard: We are considering a range of options to help unemployed people to use their time constructively.
    Mr. Steen: Does the Secretary of State remember that in 1975 I, with Sir Leon Brittan, wrote to The Times advocating that the young unemployed, while waiting to join the work force, should be encouraged to become a force for good by being given opportunities to provide personal service in the community for the benefit of people less fortunate than themselves and should be paid a wage equivalent to their unemployment benefit? Eighteen years on, the situation has not changed. Young people should be given an opportunity to do something, rather than take taxpayers' money and do nothing in return.
    Mrs. Shephard: Of course, I remember my hon. Friend's letter very well. I know that his interest in these matters goes back a considerable time. He has always argued that the principle of mutual responsibility should be applied in the designing of schemes for unemployed people—particularly young unemployed people—and I agree.
    Mr. Cryer: Is not it the job of the Government to avoid mucking about with marshmallow schemes like workfare to create fake jobs and instead to adopt an economic policy that will encourage manufacturing industry to provide proper jobs for all our people? While the right hon. Lady is about it, will she condemn those people who take taxpayers' money but do nothing in return, such as Tory Members of Parliament, who take their salaries and also line their pockets with the proceeds of outside job after outside job?
    Mrs. Shephard: Some hon. Members take two lots of money from the taxpayer. I refer, for instance, to those who have a dual mandate in Europe. Conservative Members know that people want real jobs. That is why our policies have been aimed at producing the lowest inflation rate that we have had for 25 years, the lowest interest rates in the European Community, a competitive exchange rate, the lowest level of business taxation, and non-wage costs at 61 per cent. of the level of those in Germany. That is what we mean, but not what the hon. Gentleman means, by the right framework for real jobs.
    Mr. Paice: When considering workfare, will my right hon. Friend look behind the hype of exploitation and all the other adjectives that are used to describe the scheme? Will she recognise that, for many people, doing something useful in return for the money that they receive as benefit is a means of retaining some pride in themselves and that there is a sound and valid argument for the introduction of the widest possible opportunity for this to happen?
    Mrs. Shephard: It is certainly desirable that unemployed people be helped to keep in touch with the world of work while they are being assisted to seek and to train for work. My hon. Friend will be aware of employment action and of the range of opportunities that are thereby made available. As I said earlier, we intend to build on success of that kind.
    Mr. Galbraith: May I congratulate the Minister of State for rebuking the Prime Minister's ideas on workfare? In the 5 February issue of Today, the hon. Gentleman said:
    "I have seen workfare, and it does not work."
    Can the Secretary of State confirm that her Minister of State and her Department will continue their opposition to workfare and not simply use it as a cheap form of labour or as another means of fiddling the unemployment statistics?
    Mrs. Shephard: For the hon. Gentleman's information, I can say that the Prime Minister, in his Carlton club speech, did not suggest that all-embracing, large-scale schemes should be introduced to require people to work in return for benefit. Nor, indeed, did he use the word "workfare". Given the close attention that the hon. Gentleman pays to these matters, I am surprised that he did not notice that the Minister of State, my hon. Friend
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    the Member for Stirling (Mr. Forsyth), condemned some of the schemes that he had seen in the United States as being costly and ineffective.

    Retraining
    Mr. Rathbone: To ask the Secretary of State for Employment what assessment she has made of the need for retraining of those in jobs to meet present and future job requirements.
    Mr. McLoughlin: Our assessment is that more effective investment in the skills of people in work is needed. The Government's policies are operating to encourage such investment. In particular, training and enterprise councils are promoting the use of the new "Investors in People" standard.
    Mr. Rathbone: Does my hon. Friend accept that, with fast-developing technology, there is a continuing requirement for the retraining of people in jobs and the retraining of management and that TECs, such as Sussex TEC, have a special role to play?
    Mr. McLoughlin: I agree with my hon. Friend. The TEC movement has an important role and it is interesting to note that each TEC develops policies most suited to its own area.
    Mr. Enright: Since the Government have squandered substantial oil revenues and have frittered away immoral earnings from gas, electricity and water, what confidence can ordinary working people have in their investment in retraining?
    Mr. McLoughlin: They can have the confidence that they have shown in the last four elections by re-electing us.
    Mrs. Browning: Is my hon. Friend aware that one group of people who are particularly anxious to be retrained are those aged over 45? Will he guarantee that he will do all that he can to encourage the TECs and other training organisations not to discriminate against people on grounds of age? Over-45s have much to offer and they are as entitled to a restart as anyone else.
    Mr. McLoughlin: I agree entirely with my hon. Friend. If I hear of any TECs that are discriminating against older people, I will take up the matter with them.

    Low Pay
    Mr. Burden: To ask the Secretary of State for Employment what is her estimate of the numbers working in the public sector earning less than the Council of Europe's low pay threshold analysed between (a) full-time male employees, (b) full-time female employees, (c) part-time male employees and (d) part-time female employees.
    Mr. Michael Forsyth: There is no recognised Council of Europe low pay threshold.
    Mr. Burden: The Government may not recognise it, but poverty pay does exist. Does the Minister recognise that a hospital domestic, for instance, earns £121·14 for a 39-hour week, less than is paid at Tescos and £78 per week less than the average for women's pay? Does he recognise that Government pay policy, which they intend to impose,

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    will give that woman 90p extra? Is not it disgraceful that the Government are prepared to condemn their own employees to poverty pay?
    Mr. Forsyth: If the hon. Gentleman is concerned about poverty, he should recognise that the biggest single cause of poverty is unemployment and that his party's commitment to a minimum wage would add 2 million to the unemployed. The hon. Gentleman asked about European standards on minimum wages. Those countries that have embraced a minimum wage are the countries which are struggling with the highest unemployment, like socialist Spain.
    Mr. John Marshall: Does my hon. Friend agree that the low paid would prefer a job with low pay to no job? Is not it immoral for hon. Members to seek to legislate for the unemployment of their constituents rather than their continued employment?
    Mr. Forsyth: I agree entirely with my hon. Friend. Both in the House and in Europe, people have to recognise that passing legislation for better working conditions does not deliver better working conditions unless they have been earned. One thing that we have to do if we are to get unemployment down is to be more competitive. The continual attempt by Opposition Members to add to the cost of employment will add to the numbers on the dole.
    Ms Quin: Is not the gap between the highest and the lowest paid wider now than at any time since 1886? Whereas in other European countries the pay gap has remained constant in recent years, it has widened dramatically in Britain. Does not that show clearly that besides the large numbers of people who are unemployed there is also a great problem of people on low pay? Are not all those people getting a poor deal from Tory Britain today?
    Mr. Forsyth: Even Mr. Delors has recognised the problem of Europe pricing itself out of world markets. He suggested the other day that we needed a global social chapter to address that problem. I venture to suggest that the hon. Lady should look at the figures. Germany now has 50 per cent. of its labour costs—[HON. MEMBERS: "Oh!"] Labour Members may jeer, but half of German labour costs arise from non-wage costs. That compares with 10 per cent. in Pacific rim countries and 25 per cent. in Japan. If we cannot compete, jobs will leave Europe and go elsewhere. The hon. Lady should recognise that.
    Mr. Nigel Evans: Does my hon. Friend agree that many British businesses carefully monitor their total wage costs and that if a minimum wage were imposed on them they might have to get rid of some of their employees? Does he further agree that higher wage costs would lead to higher inflation, at which Labour Members are experts?
    Mr. Forsyth: I agree with my hon. Friend. The key to competitiveness and employment lies in keeping wage costs down and ensuring that they reflect performance and productivity. That is the way forward. The best way to determine wages and conditions in the workplace is negotiation between the employer and employees. That is not a matter for government either at national or European level.

    Redundancies (West Midlands)
    Mr. Robert Ainsworth: To ask the Secretary of State for Employment what was the total number of redundancies in the west midlands in the last quarter for which figures are available.
    Mr. McLoughlin: The latest available figures from the quarterly labour force survey show that 25,000 people were made redundant in the west midlands in the three months before the survey of the summer of 1992.
    Mr. Ainsworth: Does the Minister accept that that is proof that redundancies are continuing at a staggering rate? There are now 7,266 people out of work in my constituency, with 62 people chasing every job vacancy in the west midlands. Do the Government have any responsibility for that?
    Mr. McLoughlin: The hon. Gentleman said that unemployment in his constituency is 7,266, but he failed to say that that it is 16 per cent., or 1,406, lower than in 1986. Unemployment in the constituency of Coventry, North-West is 12 per cent. lower and in Coventry, South-East it is 23 per cent. lower. I should have thought that the hon. Gentleman might have welcomed that.
    Mr. Fabricant: Has my hon. Friend visited Stuttgart or Munich recently and seen the number of BMWs and Mercedes that are sitting unsold in car parks? Does not he welcome the 350 new jobs that have been created by Lucas, the hundreds of new jobs that will be created by Jaguar and the 3,000 new jobs that will be created by Toyota?
    Mr. McLoughlin: I am grateful to my hon. Friend. I do not share his travel experience, but I very much welcome the investment that has been made in Britain, which would not have been made if we had followed the policies proposed by the Opposition.
    Mr. Grocott: Does the Minister remember the heady days of the 1960s, when he was at school and when engineering companies in the west midlands were thriving, engineering apprentice schools were full to overflowing and there was optimism abroad and plenty of jobs? Is not it crystal clear that the records of the Labour Governments of the 1960s and 1970s on manufacturing industry show that Labour Governments work and Tory Governments do not?
    Mr. McLoughlin: That is rather strange coming from the Member who represents Telford, given the amount of inward investment that Telford has been fortunate enough to secure. I should have thought that the hon. Gentleman would welcome that for his constituents.

    Unemployment (East Hertfordshire)
    Mr. Wells: To ask the Secretary of State for Employment what measures she is bringing forward to assist the unemployed in east Hertfordshire.
    Mrs. Gillian Shephard: The new employment and training measures that will begin in April offer the widest range of help to unemployed people that we have ever provided. We expect to offer almost half a million more opportunities in our programmes in 1993–94 than we are providing this year.
    Mr. Wellš: I thank my right hon. Friend for that constructive and helpful reply, for which my constituents in Hertfordshire and Stortford will be grateful. Are not the depressing remarks that are constantly made by Labour Members about unemployed people being on the scrapheap entirely refuted by her constructive words?
    Mrs. Shephard: My hon. Friend is right to point out the extremely positive work that is done by the Employment Service, which last year placed 1·4 million unemployed people back in work.
    Mr. Olner: Does not the Minister realise that not only in east Hertfordshire but all over the country people need proper employment? Is she aware that only last week Rolls-Royce announced further redundancies of very highly skilled personnel? When will the Government recognise that the manufacturing base of this country is disappearing fast under their leadership? When will they go and let people who want to work work properly?
    Mrs. Shephard: I have to point out to the hon. Gentleman that, although, of course, I share his concern for anyone who is facing unemployment or redundancy, he and his hon. Friends have absolutely no constructive or uniform views on either the economy or employment. It would be a great help to him and his hon. Friends if the official Opposition spokesman on employment stopped his vendetta against employers, whom he continues to describe as scum, and bankers, whom he now describes as shortsighted, stupid and on the make. That is not a very constructive approach to employment.

  PRIME MINISTER

    Engagements
    Mr. Byers: To ask the Prime Minister if he will list his official engagements for Tuesday 16 March.
    The Prime Minister (Mr. John Major): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Byers: The Prime Minister will know that, according to the latest Government figures, there are now 39 unemployed people chasing every job vacancy. Is the Prime Minister aware that this morning Littlewoods pools stated that the odds against winning a dividend on their coupon are 39 to one? Can the Prime Minister explain to the House how it is that, after 14 years of Conservative Government, an unemployed person has as much chance of getting a job as of winning the pools?
    The Prime Minister: The hon. Gentleman neglected to mention that in recent years in his constituency unemployment has fallen by 20 per cent. Perhaps that is something that he should have borne in mind.
    Mr. Bill Walker: Is my right hon. Friend aware that the taking-stock exercise has gone down extremely well in Scotland? Will he confirm that this Government will never bring forward proposals for unwanted, expensive regional assemblies in England, where over 80 per cent. of taxpayers and the population live, nor will they bring forward proposals for assemblies in Wales, Scotland and Northern Ireland?
    The Prime Minister: I can confirm that, as, indeed, I did at the last general election. We do not believe that such extra assemblies would be helpful either to democracy or to good government in any part of the United Kingdom. I know that there are contrary views in the House. On the Opposition Benches we find unionists, federalists, separatists and devolutionists. That does not add up to a great deal; often not even effective opposition.
    Mr. John Smith: Will the Prime Minister publish the report by the Department of Trade and Industry on the state of Britain's manufacturing industry?
    The Prime Minister: The report to which the right hon. and learned Gentleman refers was private advice to Ministers and I do not propose to publish it all. I am surprised that the right hon. and learned Gentleman should raise that question the day after the news that manufacturing output rose to its highest level for 18 months and that it was up on the year before. Perhaps for once the right hon. and learned Gentleman will acknowledge good news.
    Mr. John Smith: So much for open government. The Prime Minister knows that he is the first to publish information whenever it suits him. Why does he wish to conceal from the British public the devastating assessment of the Department of Trade and Industry in his own Administration—I quote from its report—that our manufacturing product base is weak and deteriorating?
    The Prime Minister: The right hon. and learned Gentleman is up to his old tricks yet again. Whatever he can do to talk down British industry, he will do. If he read a little further in the report from which he gleans his information he would recognise that our productivity has improved faster than that of Germany, France, Italy or the United States. I ask again: when will the right hon. and learned Gentleman help to talk up British industry and stop talking it down?
    Mr. John Smith: Does not the Prime Minister now see that he should publish the report, because it also says that the main source of new products is imports, that British industry is fundamentally weak, suffering from inadequate investment in new technology, and that there are flaws which it will take decades to remove? Is not it clear to everyone that the reason why he is frightened to publish it is that it reveals that 14 years of Conservative government have done deadly damage to British industry?
    The Prime Minister: Perhaps the right hon. and learned Gentleman will explain why output in the engineering industry is rising, computers are rising and textile output is rising. Perhaps he will explain why the CBI survey shows yet another increase in output expectations—[Interruption.]
    Madam Speaker: Order. The House must come to order.
    The Prime Minister: They cannot accept anything but bad news as far as this country is concerned, so they will not like the fact that manufacturing investment has risen in each of the past three quarters. Those are the figures which the right hon. and learned Gentleman never mentions. He knows them, but they never pass his lips.
    Mr. Brazier: Does my right hon. Friend agree that the measure introduced temporarily last November to ease the

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    Treasury rule on capital receipts for housing authorities was sensible? Will he join me in condemning what is happening in Canterbury, where the Treasury rule is being abused and the housing account is being raided by the Liberal-controlled authority to squander funds on leisure facilities?
    The Prime Minister: I was not myself aware of that particular point, but my hon. Friend has made me aware of it in a most forceful way. I shall pass it on to my right hon. Friend.
    Mr. McAvoy: To ask the Prime Minister if he will list his official engagements for Tuesday 16 March.
    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.
    Mr. McAvoy: Hon. Members on both sides of the House know that one sign of a weak Prime Minister is constant clarification of what he really meant to say. Last Tuesday the Prime Minister talked about "when" Scottish water will be privatised and then tried to cover up by saying that he should have added the words "if implemented". Does the Prime Minister accept that such weak behaviour fully justifies the Paul Johnson quote:
    "Major is what he is: a man from nowhere, going nowhere, heading for well merited obscurity as fast as his mediocre talents can carry him"?
    The Prime Minister: When the hon. Gentleman gets here, perhaps he can make that sort of remark.
    Mr. Rathbone: To ask the Prime Minister if he will list his official engagements for Tuesday 16 March.
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mr. Rathbone: Following my right hon. Friend's answer to the Leader of the Opposition, is he aware that people in manufacturing are indebted to him for his confirmation of the importance of those who work making things? Will he spend a moment today commending the engineering skills that make that possible?
    The Prime Minister: I shall certainly be happy to do as my hon. Friend says. As he knows, and as I have repeatedly made clear, I believe that manufacturing is vital to the United Kingdom economy and that engineers have a key part to play in that. Figures released yesterday showed an encouraging picture, with output in electrical and mechanical engineering rising strongly, as did manufacturing output overall.
    Mr. Eric Clarke: This is the first chance that I have had to ask the Prime Minister a question. When are the Government going to implement the recommendations of the Industrial Injuries Advisory Council, which stated that emphysema and bronchitis should be considered as industrial diseases for people who have had mining experience? Is the delay one that saves the Government money since, as we have seen in the past, the claimants die off?
    The Prime Minister: The report has been with my right hon. Friend the Secretary of State for Social Security, who has been discussing it with colleagues. I hope that an announcement will be able to be made very shortly.
    Sir Michael Grylls: Does my right hon. Friend agree that it is rather a sorry reflection on the standards of the Opposition that the Leader of the Opposition has to rely on the material—
    Madam Speaker: Order. Let me remind the hon. Gentleman that the Prime Minister is responsible only for Government policy, not for what the Leader of the Opposition gets up to.
    Sir Michael Grylls: Will my right hon. Friend encourage the Leader of the Opposition to visit British industry, where he could see some of the great successes such as in motor cars, television and the chemical industry, where we are now leading the world?
    The Prime Minister: I would endeavour to encourage that understanding opposite. I am sure that the right hon. and learned Gentleman heard what was said and I look forward to him taking note of it.
    Mr. Tony Banks: To ask the Prime Minister if he will list his official engagements for Tuesday 16 March.
    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.
    Mr. Banks: I realise that everyone's mind is on the Budget, but may I ask the Prime Minister to give some thought today to the future plight of great whales, which has a price beyond calculation? Does he recall when some of us came to 10 Downing street to present a petition signed by half a million people protesting about Norway's intention to carry on with commercial whaling? Will he now make a protest to the Norwegian Prime Minister so that she and everyone else in Norway knows that if Norway goes ahead with commercial whaling, there will be no place for it in the Community and that appropriate sanctions will be taken against that country?
    The Prime Minister: I will certainly raise the point that the hon. Gentleman mentions, which he has raised with me before and which we have raised with Norway on a number of occasions in the past. But I will not take the hon. Gentleman's advice on the second point. Norway is keen, I think, to join the Community and I hope that in due course she will.
    Mr. Faber: To ask the Prime Minister if he will list his official engagements for Tuesday 16 March.
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mr. Faber: In the light of reports last week that about 30 per cent. of 14-year-olds now achieve a reading age of between nine and 11, does my right hon. Friend agree that it is more important than ever that these children are rigorously tested regularly and that the results are made available to their parents? Will my right hon. Friend join me in condemning the disgraceful action proposed by the National Association of Schoolmasters/Union of Women Teachers which will wreak havoc in the classroom?
    The Prime Minister: I very much agree with the thrust of my hon. Friend's remarks. No one can be happy with the level of achievement in English that is thrown up by the report, but if we are to help pupils and raise standards, we need testing and the national curriculum. If we get the tests, we shall see which children are falling behind and we shall then be in a position to take action to help them. I

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    would certainly deplore any action to disrupt those tests and I look for support in that from every part of the House.
    Mrs. Fyfe: Would the Prime Minister like to demonstrate his support for open government by instructing the Secretary of State for Scotland to publish details of the secret correspondence he had with the leader of the Scottish National party?
    The Prime Minister: I rather thought that it had been published.
    Mrs. Gorman: To ask the Prime Minister if he will list his official engagements for Tuesday 16 March.
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mrs. Gorman: During his visits behind what used to be the iron curtain, did my right hon. Friend have a chance to go shopping, as I did recently on a visit to Kiev, where I discovered that the contents of the very best department store were about the equivalent of a boot sale on a bad Sunday afternoon? Is not it true that, despite the attempts of the Opposition to talk this country down, this is still the best democracy in the world? But, before we hand over our government to Brussels, should not we consult the British people through a referendum?
    The Prime Minister: For one magical moment I thought my hon. Friend was going to carry me entirely with her. I strongly agree with the first part of her question and I think that no one is in any doubt about the acutely difficult situation faced by the Russian Parliament and by the Russian leadership at the moment. We very much hope that the Group of Seven will be able to help the reform
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    movement in Russia and we certainly intend to do so. So far as the referendum is concerned, I can give no comfort to my hon. Friend.
    Mr. Miller: To ask the Prime Minister if he will list his official engagements for Tuesday 16 March.
    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.
    Mr. Miller: On 31 March last year, the Chancellor of the Exchequer told Channel 4 News:
    "We will not have to increase taxes. I cannot see any circumstances in which that will be necessary."
    Does the Prime Minister appreciate that if the Chancellor breaks that pledge in a few moments' time, no one will ever trust anybody on the Government Benches again?
    The Prime Minister: The hon. Gentleman will not have long to wait on that point. It is an odd question to come from him, when the leader of his party said recently:
    "Well, we change our policies as we move towards a different election. We're not necessarily committed to what we did at a particular election."
    Mr. Bennett: On a point of order, Madam Speaker. May I ask you to confirm that it is the normal convention of the House that when a Minister quotes from a document, that document should be placed on the Table of the House? As the Prime Minister quoted from a report on the state of manufacturing industry, can we take it that that report will now be placed on the Table of the House?
    Madam Speaker: If a direct quotation was made from a state paper, the Minister in question should table that paper for the entire House.

WAYS AND MEANS

  Budget Statement
  Mr. Deputy Speaker (Mr. Michael Morris): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that, at the end of the Chancellor's speech, copies of the Budget resolutions will be available to hon. Members in the Vote Office.
  3.31 pm
  The Chancellor of the Exchequer (Mr. Norman Lamont): In my Budget last year, I announced a far-reaching reform that was supported, I believe, on all sides of the House. From November this year, public expenditure and taxation will be brought together in one annual Budget statement.
  The advantages of the new system are clear. Ensuring that tax and spending decisions are taken at the same time will allow better control over Government borrowing. Indeed, that is the main purpose of the change. With tax, spending and borrowing decisions presented in a single statement, the relationship between them will be much easier to understand. However, for now, our existing, and, to me, rather antiquated, procedures remain in place. I shall therefore concentrate today largely on the tax side of the accounts. My Budget should nonetheless be considered alongside the autumn statement that I delivered just four months ago.
  In that statement, I set a firm limit on public sector wage increases. This was essential and we shall stick to it. And I established tight overall spending ceilings for the next three years. But I also gave priority to programmes that would help to promote growth and the long-term performance of the economy. In this way, the autumn statement played a key role in putting Britain on course for recovery.
  My Budget today is designed to ensure that this recovery will be sustained. Above all, this Budget has two objectives: first, to support the recovery in the year ahead; and secondly, to set out a clear medium-term strategy for bringing the borrowing requirement back towards balance. The "Financial Statement and Budget Report," with a number of press releases filling out the details of my proposals, will be available from the Vote Office as soon as I have sat down.

  Budget Statement

    WORLD ECONOMIC BACKGROUND
    It is impossible to review the short-term prospects for the British economy without first considering what is happening in the world outside. Many people talk as if Britain's economic problems were unique, as if we can somehow insulate ourselves from the economic tides that sweep across the world. The truth, of course, is quite different. As ours is an open economy which exports a third of its output, developments abroad have a profound impact on Britain.
    The one ray of light on the world scene has been the recovery in north America, and particularly in the United States. The United States economy grew by over 2 per cent. last year, with growth in the final quarter revised up
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    to an annual rate of 4¾per cent.; but the success of the United States stands in marked contrast to developments elsewhere.
    Industrial production has been falling in many of the world's largest economies—over the last year it has fallen 2 per cent. in Italy; by 2½ per cent. in France; by 6½ per cent. in Germany; and by 7 per cent. in Japan. By contrast, in Britain, industrial production has actually risen, and the recent indicators of GDP confirm this gloomy world picture. Even Japan has now been visited by the prospect of recession, with gross domestic product declining by ¾ per cent. in the second half of 1992. France and Italy have also had to cope with falling output. And Germany, still struggling with the costs of reunification, has now suffered three successive quarters of declining GDP.
    It was against this background that my right hon. Friend the Prime Minister and I secured agreement at the Edinburgh Council last December to a European growth initiative. This was closely modelled on my own autumn statement, and was designed to deal with the most serious problem facing the European Community—and the seemingly inexorable rise in unemployment across the continent.
    Last year, unemployment in the Community rose by 1¼ million, and it is projected to rise further this year, to some 11 per cent. of the work force. France, like Britain, has 3 million unemployed; in Ireland and Spain more than one in six are out of work. Even in west Germany, unemployment is rising once again.
    To a large extent, this pattern reflects the impact of recession, but, particularly in the European Community, the recent rise in unemployment comes on top of a relentless upward trend. In the Community as a whole, unemployment rose in every single year from 1973 to 1985; and although it fell back in the boom of the late 1980s, it has stayed at well over twice the level of 20 years ago.
    Unemployment in Europe is much higher than in many other parts of the world; and it cannot be reduced simply by stimulating demand. A deep-seated problem needs more fundamental solutions. It requires more flexible markets, not just for labour but also for goods and services, and it requires support given by Governments to be directed less at propping up declining industries and more at helping the unemployed to rejoin the work force.
    Above all, if we are to secure a lasting reduction in unemployment over the years ahead, we must continue to resist the imposition of job-destroying measures emanating from Brussels.
    The high-cost economies of the European Community cannot insulate themselves from the world outside—from the more flexible economies of the Pacific rim and north America. Nothing would do more damage to job prospects, not just in Britain but across Europe, than the imposition of further tax or regulatory burdens on employers. That is why this Government will never sign the social chapter.

    UNITED KINGDOM ECONOMY
    While activity has been falling in many parts of the world, GDP in Britain rose slightly in the second half of last year. With interest rates down by four percentage points in just six months, Britain enters the year ahead in a more favourable position than most of our major competitors. That is confirmed by the European Commission, which expects Britain to be the fastest growing of all the major European economies both this year and next.
    The substantial interest rate cuts I have made provide a solid foundation for recovery this year, and they come alongside the measures in my autumn statement to revive business confidence. We are already beginning to see their effects.
    Lower interest rates have contributed to a pick-up in the growth of narrow money, while retail sales have been on a steady upward trend for almost a year. The abolition of car tax has prompted a surge in activity in the motor trade, right at the heart of British manufacturing. New car registrations were nearly 16 per cent. higher in the latest three months than a year earlier.
    By the end of this month, the additional money that I provided in the autumn statement will have taken about 20,000 properties off the housing market. Although house prices remain weak, building society commitments and advances are stronger, and both house builders and estate agents are now reporting increased activity.
    The extra support that I announced for British exporters will reinforce the competitiveness of our companies trading overseas, while exports in the last three months of 1992 were already at record levels; and the temporary increase that I announced in capital allowances will provide a continuing boost to business investment over the next six months. According to the CBI, manufacturers are more optimistic now than at any time for almost five years.
    The recovery we have seen in confidence rests, above all, on one crucial foundation—the dramatic progress that we have made in getting inflation down. There has been much debate about Britain's experience with the ERM. Today I wish to make just two observations. First, it was absolutely vital to get inflation in this country down. The two years that we spent in the ERM were tough, but the war against inflation was one we had to fight, and one we had to win. Secondly, once sterling left the ERM, and with inflation sharply down, we were right to take the opportunity that that gave us to relax policy and get interest rates down.
    Inflation is now at its lowest level for over 25 years. The rapid fall in the headline rate is, of course, partly the result of the reduction in mortgage rates; but even more significant is the fall in the underlying rate. That is down in the last year from 5½ per cent. to 3¼ per cent. Except for a few months in 1986, after the collapse in the oil price, underlying inflation has not been this low since February 1968.

    SHORT TERM PROSPECTS
    In my Mansion House speech, I announced the establishment of the panel of independent forecasters. My intention in doing so was to demonstrate more clearly that the judgments the Government have to make are not based on one single forecast.
    I have now received the panel's first report, and I am most grateful to it for its contribution. The panel recognises that the substantial relaxation of monetary policy has greatly improved the prospects for recovery in 1993. Its forecasts for growth this year vary between ¼ and 2 per cent., with an average of just over 1 per cent.
    The Treasury's forecast is very similar. Broadly in line with the average of the panel's forecasts, we expect GDP to grow by 1¼ per cent. this year, with the recovery gathering pace through the year. Growth in the year to the second half of 1993 might reach 1¾ per cent., rising to 3 per cent. in the first half of 1994.
    However, as the panel stresses, uncertainties remain. It is possible that growth this year may exceed the 1¼ per cent. forecast that I have made, but there are significant downside risks, too. It is very difficult to be sure when consumers will feel that their finances are sound enough to support a stronger growth of spending, and there are, as I have said, considerable doubts about the prospects for our major export markets.
    This will inevitably affect the prospects for the current account. The deficit in 1992 was about £12 billion, and as the economy recovers and the unfavourable short-term effects of the fall in the exchange rate feed through, I expect the deficit to widen this year to £17½ billion. But the measures that I shall be putting in place today should help to strengthen our trade position over the years ahead; and I expect the deficit in the meantime to be readily financeable.

    THE MEDIUM TERM
    The key to an improved trade performance lies in the competitiveness of our products, and the signs are encouraging. Earnings are now growing more slowly than at any time for 25 years. Labour productivity has been rising rapidly; and while unit wage costs in manufacturing have been rising in Japan and Germany, here they showed no increase at all during 1992. British business now has a great opportunity to expand into overseas markets and to replace imports at home; but costs must he kept under firm control.
    The Government's task is to provide a clear and predictable framework for policy—to ensure that business has the freedom and the support it needs to get on with the job. Our strategy for sustained growth rests on three key principles: first, that growth comes from the private sector, not from Whitehall; secondly, that a continuing commitment to low inflation is vital if competitiveness is to be maintained; and thirdly, that the only way to increase the country's long-term growth rate is by improving the supply side performance of the economy.

    SUPPLY SIDE POLICY
    Supply side improvements are seldom the stuff of headlines, but the policies that this Government have pursued have begun to improve the way that markets work. We have transferred to private ownership some two thirds of the state sector we inherited; and our labour market reforms have given back to management the power to manage, so that last year the number of days lost to strikes was the lowest for a century.
    But we still have a long agenda of unfinished business. In my autumn statement, I set out proposals to increase

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    the role of the private sector in modernising Britain's infrastructure. I also announced additional resources to underpin the education reforms that we have set in train.
    The wealth of a nation depends largely upon the skills of its people; and nothing could be more important for the long-term performance of the British economy than the steady improvement in education and skills that this Government are determined to bring about.

    INFLATION AND MONETARY POLICY
    However, if long-term improvements in economic performance are determined largely by the supply side, we have seen all too often in the past 20 years how short-term prospects can be blown off course by inflation. I am absolutely determined that this should not happen again.
    The Government's objective is to keep the underlying rate of retail price inflation within the range of 1 to 4 per cent.; and to bring it down to the lower half of that range by the end of this Parliament. I expect underlying inflation to be 3¾ per cent. at the end of this year, close to the top of its target range, but inflation should fall further over the medium term. Monetary policy is set to meet that objective.
    The detailed framework for monetary policy was set out in my letter to the Treasury and Civil Service Select Committee last autumn; and since then, I have introduced two further developments to demonstrate our determination to conduct monetary policy in a way that will deliver our inflation target. We now publish a monthly monetary report which shows the information that guides our decisions. I have also asked the Bank of England to provide regular reports on our progress towards meeting our inflation objective.
    Interest rate decisions are based on a continuing assessment of monetary conditions, measured principally by the growth of narrow and broad money, and movements in the exchange rate and asset prices. Alongside the target for inflation, I am setting monitoring ranges for both the narrow and broad measures of the money supply; for the period of this Parliament the ranges are 0 to 4 per cent. for M0 and 3 to 9 per cent. for M4.
    In judging the prospects for inflation, I have to weigh the evidence from all the indicators, taken together. If any one is out of line, it is particularly important to assess its significance against the performance of the others.
    Following the recent substantial reduction in interest rates, M0 growth may be above its monitoring range in the period ahead, but, on the basis of the indicators taken together, I believe that interest rates at their current level are consistent with the achievement of the Government's inflation objectives. At the lowest level in the European Community, they are also fully consistent with the prospects for recovery this year.

    FUNDING
    I turn now to funding, a subject of peculiar fascination for many City commentators and of particular interest to a number of my right hon. and hon. Friends. The Government's full fund policy ensures that their borrowing does not add to inflationary pressures. I am clear that this policy remains appropriate, but, from time to time, it has been right to reconsider its detailed application.
    I have therefore decided that transactions by banks and building societies in gilts will, from now on, be included in
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    the funding definition. In periods when banks and building societies reduce their holdings of gilts, extra sales to other sectors will be needed, but in current conditions the change I am making will help to ease the pressures on liquidity and avoid complicating money market management. If it also leads to some strengthening in the growth of M4, that would be no bad thing.
    In the year ahead, sales of gilts will, as usual, form the bedrock of the funding programme, but national savings will again make an important contribution.

    FISCAL POLICY
    In controlling inflation, monetary policy must of course be supported by a sustainable fiscal policy. I expect a PSBR in the current financial year of £35 billion—slightly lower than projected at the time of my autumn statement, but, because unemployment tends to increase for a while, even after growth has resumed, and because some taxes, particularly corporation tax, are collected a year in arrears, I expect borrowing next year to rise further. The PSBR for 1993–94 has therefore been set at £50 billion, some 8 per cent. of GDP.
    Unless action is taken, large deficits will continue over the medium term. The PSBR could still be around 6 per cent. of GNP in 1996–97, the last year of this Parliament. I do not believe that borrowing on that scale is acceptable, and I shall be announcing measures today to reduce it progressively over the years ahead.
    In the early 1980s, we took steps to bring the public finances back under control. We turned a PSBR of over 5 per cent. of GDP into a surplus of 3 per cent., and we nearly halved the ratio of public sector debt to GDP. We did not shrink from making the necessary changes then and I shall not shrink from making them today.
    The rise in the PSBR since 1989–90 is largely due to the recession, and, because of the reduction in the national debt in the 1980s, I have been able to allow the so-called "automatic stabilisers"—the increases in public spending and the reduction in tax receipts that directly reflect the weakness of the economy—to operate fully. It was right, I believe, to do this to maintain the level of demand during the recession. However, just as a business cannot go on year after year ignoring a fall in cash flow caused by a downturn in the economy, so too the Government cannot keep on running up debt in the hope that recovery will solve our problems. Even if the higher debt we now face was largely caused by the recession, the extra borrowing still has to be financed. As debt mounts up, so does the debt interest. In this way, what might have started off as a cyclical deficit could soon become a structural deficit unless action is taken to bring borrowing down.
    All around the world, we see countries striving to reduce their fiscal deficits or suffering from their failure to do so sooner. President Clinton's programme shows that the need for fiscal discipline is now widely understood. The deficit which the Italians are now having to deal with is a salutary warning to those who think that a problem postponed is a problem solved. Those who argue that there is no need for action should confront the consequences of such a course—the consequences not just for the public finances but also for the level of interest rates.
    For all these reasons, I believe that the greatest threat to sustained recovery in Britain would come not from a lack of demand, but from excessive Government borrowing over the medium term. We have to address that problem now.
    Action to bring the fiscal deficit down clearly has to start with the amount that the Government spend. The new control arrangements that I put in place last year were an important first stage, and we now have firm ceilings for expenditure over the next three years that will keep the growth of spending below that of the economy as a whole.
    But proper control of public expenditure cannot be achieved simply by setting targets. It requires a continuous examination of each and every Department and of all the functions of Government. What was once a desirable role for the public sector may no longer be appropriate today. That is why the fundamental reviews of public spending are so important. Those reviews will inevitably take time, so I have also had to look at the revenue side of the accounts.

    BUDGET JUDGMENT
    In doing so I have had to balance two key objectives: first, the essential task of helping recovery; secondly, the need to tackle the deficit so that the recovery will be sustained. I believe that my proposals today strike that right balance. In the year ahead, 1993–94, their effect will be broadly neutral, thus allowing the recovery to take hold, and I will be announcing later some measures to improve that prospect by helping business and the unemployed.
    However, for subsequent years, as the economy strengthens, my proposals are designed to build in a wedge of steadily rising revenue. Overall, they will raise revenue by £6½ billion in 1994–95 and by £10½ billion in 1995–96—the equivalent of 1½ per cent. of GDP.
    In setting out the Government's plans for raising revenue, good intentions are not enough. I intend that, as far as possible, these proposals should be legislated for this year, in this year's Finance Bill. Taken together with the tight public spending plans that I announced in the autumn statement, they should ensure that the PSBR returns towards balance over the medium term; but if further action proves necessary, I shall not hesitate to take it.

    REVENUE MEASURES 1993–94

      TAXATION OBJECTIVES
      The proposals I shall be announcing today are part of a continuing programme of tax reform—a programme which has strengthened work incentives and improved the efficiency of the economy. In deciding where to look for additional revenue, I have been guided by a number of principles: first, that, where possible, money should be raised in a way that will not damage the working of the economy; secondly, that in general this means that reducing the value of allowances and broadening the tax base is preferable to increasing marginal tax rates; thirdly, that taxation should support social, health and environmental objectives.
      I will deal with my revenue-raising proposals in two parts. I will start with my proposals for the year ahead, 1993–94; I will then describe the measures that I propose for the two years thereafter. For the year immediately ahead, as I have said, my proposals are very broadly neutral. The objective has been to strengthen the recovery
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      by giving help to business, but, in order to pay for that, I have had to raise revenue from other sectors of the economy.

      ALLOWANCES
      The first is income tax. With inflation down to levels not seen for a generation, I propose for the year ahead to freeze the personal allowances, the married couple's and related allowances, the basic rate limit and the income limit for age-related allowances. The threshold for inheritance tax, the capital gains tax exempt amount and the earnings limits for tax relief on pension contributions will also remain unchanged. This will save some £670 million this year.

      EXCISE DUTIES
      The second is excise duties. The removal of customs controls at the channel has been welcomed by many thousands of travellers who are now seeing the benefits of the single market at first hand. It has also brought many benefits to British business, including some 10 million fewer forms this year. But there is a natural concern as well about the impact of an increase in cross-border shopping, and the effect that it might have on British businesses, particularly in the south-east.
      In considering what changes to make to excise duties, I have had to balance that against the need to raise revenue. I have therefore decided to raise the duties on most alcoholic drinks by only 5 per cent. this year. From 6 pm today, the total tax on a pint of beer will rise by about 1½p, and that on a bottle of wine by about 5½p.
      I have also received many representations this year about the taxation of spirits, and, in particular, the taxation of whisky. This is one of Britain's most successful exporting industries. I promised in my Budget speech last year to resist proposals from Brussels to introduce tax rules that would hit whisky sales in Europe; but, having succeeded in that, it is important that our own tax regime does not further disadvantage the industry. I have therefore decided to make no change in the duty on spirits this year. I am sure that that will be welcomed by hon. Members on both sides of the House, and especially in Scotland.
      I turn next to tobacco. Last July, my right hon. Friend the Secretary of State for Health published a White Paper containing our commitment to maintain the real value of the taxation on tobacco products, but again I have also had to take into account the impact of the single market. I propose, therefore, to increase the overall burden of duty by some 6½ per cent, four percentage points above the rate of inflation. This will add 10p to a typical pack of 20 cigarettes—and, I regret to say, some 4½p to a pack of five small cigars. But I also propose to make this increase in a different way from usual.
      As the House will recall, cigarettes are subject to two different excise duties: a "specific" duty, which is a flat-rate charge per cigarette, and an "ad valorem" duty, on their price. Given that the health objective is to tax the harm that cigarettes do, it is better to tax the cigarettes themselves than to tax their price. I therefore propose to increase the specific duty on cigarettes by 10 per cent., while cutting the ad valorem duty from 21 per cent. to 20 per cent. This will mean a proportionately bigger tax increase for cheap cigarettes, many of which are imported.

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      I also propose this year to increase the duty on most gaming machines by 20 per cent. Taken together, those changes will raise £290 million in 1993–94 and £365 million in 1994–95.
      I turn now to motoring taxes, where I propose to combine raising revenue with tax reforms. When I abolished car tax in my autumn statement, I said that I would recoup the cost from other motoring taxes. I therefore propose to raise all fuel duties by 10 per cent. from 6 pm today, putting 12p on a gallon of unleaded petrol and 15p on a gallon of four-star. From midnight tonight, vehicle excise duty for cars—the tax disc—will also rise, by £15, to £125.
      Taken together with the abolition of car tax, those measures will raise a net £400 million in 1993–94. The overall impact will be to shift the tax burden from car buyers to car users; and to help both the environment and the industry. Together with the increases that I have announced on alcohol and tobacco duties, it will add a quarter of a percentage point to the RPI in April, compared with indexation.

      FUEL SCALES
      Alongside the increase in fuel duties, I propose to increase by 20 per cent. the scale charges for free fuel supplied to company car drivers for private use. I also propose to abolish the 50 per cent. discount currently available to drivers doing more than 18,000 business miles a year. Employees can, of course, avoid this tax altogether by paying for the full cost of all fuel provided for private journeys themselves. The environmental impact of my proposals on fuel duties will be strengthened by reducing the number of motorists who use fuel at no direct cost to themselves. This measure will raise £65 million in the year ahead and £70 million in 1994–95.

      COMPANY CARS AND VANS
      I turn next to the tax treatment of company cars. From its introduction in 1976 until 1988, the income tax charge on company cars significantly under-estimated their true value. Since then, charges have been steadily raised to more appropriate levels. I propose this year to complete that process, by bringing the car scales up to a level which fully reflects the true value of the benefit of a company car. That requires an increase in car scales of 8 per cent., bringing additional revenue of £100 million in 1993–94.
      However, as I said last year, the structure of the current regime remains unsatisfactory. In most cases, the value put on the benefit, and the tax that is payable, are determined not by the price of the car, but by the size of the engine. That might have mattered less when the scale charges were very low, but it now gives rise to serious distortions.
      Following consultation with the industry, I propose from 1994–95 to replace the current car scales with a simple system based on the price of a car. The annual benefit of a company car will be valued for income tax purposes at a fixed percentage of the manufacturer's list price. To ensure that the reform is revenue-neutral, I propose to set that percentage at 35 per cent. Company car users will then pay income tax at their marginal rate on that amount.
      However, I do not believe that it would be right to apply the full rigour of the charge to those who use the company car largely for business purposes. I therefore propose that there should be a discount of one third for
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      those company car users who drive more than 2,500 miles a year on business, and a discount of two thirds for those who do more than 18,000 business miles. In future, the tax on company cars will rise or fall automatically with the price of those cars. It follows that there will no longer be any need to set the tax charge each year in the Budget.
      My reform will reduce tax distortions in the car market and enable manufacturers and fleet managers to plan production and purchasing in a more rational and stable system. For these reasons, I believe that it will be welcomed. I also propose to replace the existing complex arrangements for taxing employees' private use of company vans with a simple scale charge, covering both the van and any fuel provided, set at the modest level of £500. This will raise £10 million in the year ahead and £35 million in 1994–95.

      ANTI-AVOIDANCE
      In addition, I intend to close a number of loopholes which have been exploited by people to avoid tax. First, from midnight last night I propose to exclude from the business expansion scheme all schemes which involve the provision of loans to BES investors. The BES was set up to encourage investment in small business—not to provide highly subsidised loans for top-rate taxpayers. Secondly, I intend to end the practice whereby group companies buy up other companies with capital losses simply in order to set those losses against their own capital gains. Thirdly, I intend to restrict the situations in which changes in company ownership can create scope to avoid advance corporation tax. Finally, I propose to tighten the rules for foreign companies under United Kingdom control.
      Full details of these and other measures are provided in a series of Inland Revenue press notices being issued today. The revenue is not insignificant. Taken together, the measures should raise some £70 million in the first year, rising to over £460 million in the following year.

      TAURUS
      Before leaving my proposals for 1993–94, I wish to make clear the position on stamp duties on securities and property other than land and buildings. Following the decision by the Stock Exchange last week to abandon TAURUS, stamp duty will remain in place at least for 1993–94, raising £1 billion during the coming year. I will review the position further in the light of the conclusions of the securities settlement task force set up by the Bank of England.
      The measures that I have proposed so far will raise £2·4 billion in 1993–94, not including stamp duty. Of this, £750 million is required to finance the abolition of car tax. I will be using a large part of the rest to reduce taxes on business.

      REVENUE MEASURES 1994–95 AND BEYOND
      Before I turn to business taxes, I intend to set out my tax proposals for 1994–95 and the years thereafter. As I have already explained, these tax proposals will build up over the years, creating a wedge of increasing revenue, which, as far as possible, will be legislated for in the coming financial year.

      NATIONAL INSURANCE CONTRIBUTIONS
      In my autumn statement, I took some tough decisions on current spending to maintain capital programmes, but, to protect the poorest and most vulnerable members of society, we also decided to uprate social security benefits in full. That decision was warmly welcomed on all sides of the House. However, had no further action been taken, the effect of that decision, combined with the rise in unemployment, would have been to push the national insurance fund into deficit. To prevent this, I introduced a new Treasury grant, and legislation to implement this has been taken through the House.
      This makes sense at a time when ensuring economic recovery is our priority, but it is clearly not a fair or reasonable basis for financing the national insurance fund over the medium term. A Treasury grant is paid for by the general body of taxpayers, including millions of pensioners who have already made a full contribution to the fund throughout their working lives. Accordingly, my right hon. Friend the Secretary of State for Social Security and I propose to place the finances of the national insurance fund on a firmer footing.
      I do not propose to increase national insurance contributions in the coming year. However, from April 1994 my right hon. Friend and I propose to increase the class 1 main rate of employee national insurance contributions by 1 per cent., to 10 per cent., and the class 4 rate for the self-employed by 1 per cent., to 7·3 per cent. The arrangements for employees earning below the lower earnings limit and the self-employed with profits below the lower profits limit will be unchanged by these measures. The necessary legislation will be brought before the House in the coming year.
      Taken together, these increases will raise about £1·8 billion in 1994–95 and £2·2 billion in a full year.
      However, that will still leave a deficit in the national insurance fund of £2·8 billion in 1994–95 and a similar sum the following year. National insurance contributions are, of course, paid not just by employees and the self-employed, but also by employers; and when a deficit of this size emerges in the fund, it is natural to look to all contributors to make up the balance. The remaining deficit is roughly equivalent to an increase in the employer national insurance contribution rate of 1·2 per cent. from 10·4 per cent. to 11·6 per cent. However, having reflected carefully, I do not believe that it would be appropriate to increase the burden on employers. I therefore propose to retain a smaller Treasury grant to make up the continuing shortfall in the fund.

      NORTH SEA FISCAL REGIME
      One of the main objectives of this Government's tax reforms has been to eliminate tax rules which distort investment decisions. This was the driving force, for example, behind the far-reaching reform of the corporation tax system in 1984. Today I wish to carry this principle through into another important sector of the economy—the North sea, and in particular petroleum revenue tax, or PRT.
      When PRT was introduced in 1975, the North sea oil sector looked very different—oil prices were very high and the typical oilfield was relatively large. The purpose of the new tax was to ensure that the Exchequer got its fair share
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      of the large profits to be made in the North sea, while companies were left with a reasonable return on their investments.
      However, as the North sea has developed, the PRT regime has come to look increasingly anachronistic. As profits in many existing fields attract a marginal tax rate of over 83 per cent. there is little incentive for companies to keep costs under control or for additional investment in existing fields. Moreover, as a result of the uniquely generous allowances that are available, the Exchequer is no longer getting a fair return. In 1991–92, the PRT regime actually cost the Exchequer £200 million.
      As many in the oil industry recognise, this is neither reasonable nor sustainable. The North sea tax regime has to be placed on a clear long-term footing, so today I intend to set out a major reform which will raise revenue in the medium term and give the oil industry a stable framework to plan ahead.
      I propose from 1 July this year to reduce the PRT rate on existing fields from 75 per cent. to 50 per cent., and for new fields I propose with effect from today to abolish PRT entirely.
      It follows that, for new fields, I also intend to scrap all the allowances that go with the existing PRT system, including, for example, relief for exploration and appraisal expenditure that can be set against PRT on existing fields: but contracts entered into before today for exploration and appraisal will continue to get relief against PRT on existing fields for the next two years. Allowances that can be claimed within existing fields will remain essentially unchanged.
      This reform will greatly simplify the tax regime for new fields, disapplying at a stroke some 300 pages of complex legislation; and it means that the only tax on new oil fields in the North sea will be corporation tax—at 33 per cent., the lowest rate of business tax in the industrialised world. Britain will have a competitive tax regime which strikes a reasonable balance between the interests of the industry and those of the nation as a whole.
      The paradox of this reform is that, despite the abolition of PRT for new fields, and the reduced rate for existing fields, after 1993–94 it will actually raise revenue for the Exchequer. I expect the yield in 1994–95 to be some £300 million and in the following year to be some £400 million.

      RELOCATION EXPENSES
      I turn now to another area where reform is long overdue—the tax treatment of job-related relocation expenses.
      When a company asks its employees to move house, it may offer help with relocation expenses. Usually, that involves paying for the cost of the removals, but sometimes, if the move is to a more expensive area, the employer will also pay allowances towards the employee's higher living costs.
      For the past 40 years, we have allowed employees to receive most of this help tax-free, provided the employee has sold his existing home—a condition which has been the subject of much criticism. That means that someone whose employer gives them as much as £25,000 might pay no tax on it at all. On the other hand, people who decide to move to find work and pay their own costs get no help whatsoever from the tax system.
      I see a case for some measure of relief where employers help meet employees' removal expenses, but it is difficult,

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      in my opinion, to find a convincing rationale for a system of tax relief whose effect is to give the biggest subsidy to those moving to the highest-cost areas. With these reliefs expected to cost the Exchequer no less than the staggering sum of £800 million this year, I believe that the time has come for reform.
      I am therefore asking the Inland Revenue to withdraw the present extra-statutory concession which helps people moving to a more expensive area, and I propose to restrict relief on removal expenses to payments of up to £8,000 for people whose employers require them to relocate after 6 April this year. Under the new system, the existing home need no longer be sold to qualify for relief.
      Although these changes come into effect immediately, they will not start to raise revenue until the year after—about £200 million in both 1994–95 and 1995–96.

      MORTGAGE INTEREST RELIEF
      I turn now to mortgage interest relief. The rapid expansion of home ownership is one of this Government's most enduring achievements, and I have no plans to change the existing ceiling for mortgage interest relief of £;30,000, but in the last few Budgets we have taken steps to improve the focus of mortgage interest relief and to contain its costs—most recently in my 1991 Budget—by restricting the relief to the basic rate.
      Even so, mortgage interest relief is expected to cost the Exchequer £4·3 billion next year alone. I propose, therefore, to reduce the rate at which relief is given from 25 per cent. to 20 per cent., but I propose to defer the implementation of this change until April 1994. In all, this change will yield £900 million in 1994–95 and £960 million in the following year.
      At the current mortgage rates, no borrower will be more than £10 a month worse off from the reduced rate of relief, and for many with mortgages below £30,000 the increase in payments will be even smaller. Moreover, it is the level of interest rates, not the amount of tax relief, that is the most important determinant of the cost of a mortgage. Because interest rates have fallen so far since October 1990, payments on the average mortgage have been cut by over £150 a month, so the cost of the change I am proposing is equal to just a fraction of the benefit mortgage payers have already received from lower mortgage interest rates.
      I know that there are some elderly people with life annuity home income plans which allow them to draw down some of the savings that they have invested in their houses. Such schemes will continue to attract relief at 25 per cent.
      I am fully aware that, despite some encouraging signs of increasing activity, the housing market remains fragile. That is why the changes I have described will not come into effect until next year; and it is also why I have one further proposal which will affect people buying houses. Whereas my proposals on mortgage interest relief do not apply until April 1994, this measure comes into effect immediately. I propose to double the stamp duty threshold to £60,000 for documents executed from today and not stamped before 23 March, when the required Budget resolution has been considered by the House.
      This means that the cost of buying homes priced at between £30,000 and £60,000 will be reduced by up to £600. From today, the number of transactions in the housing market liable to stamp duty will be halved. This
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      will be of particular benefit to first-time buyers, who tend to buy less expensive homes. With mortgage interest rates at their lowest level for decades, this reduction in stamp duty should provide a further stimulus to the housing market. The change will cost £220 million in 1993–94 and about £270 million in the following year.
      Last year, I announced a significant change in the treatment of the married couple's allowance, giving couples greater flexibility in allocating it between them. Today, I have a further important change to propose.
      At present the married couple's allowance reduces a taxpayer's liability at his or her marginal rate. A taxpayer on the 20 per cent. lower rate benefits by £344, but a higher rate taxpayer gets £688—twice as much. There is no good reason why an allowance intended to recognise the responsibilities of marriage should give least to those on low incomes and most to those right at the top of the income scale.
      From 6 April 1994, therefore, I propose to restrict relief for the married couple's allowance to the lower rate of 20 per cent. It will then be worth the same amount to taxpayers at all levels of income. The allowances which are linked to the married couple's allowance for those aged under 65 will be similarly restricted.
      Because of the higher level of MCA to which they are entitled, this change will bear harder on elderly married couples, so, also from 1994–95, I propose to increase by £200 the married couple's allowance for those aged 65 and over. This will ensure that pensioners paying tax at the basic rate are affected by the change in the same way as any other basic rate taxpayer, and some elderly married couples in the lower rate band will actually gain slightly.
      As I have said, these changes will not come into effect until 1994–95. They will raise about £900 million in 1994–95, and £1·2 in 1995–96.

      GREEN MEASURES
      In recent years, there has been much debate on the subject of global warming and the role that tax measures can play in combating it. This has led the European Commission to propose a Communitywide carbon tax. There may indeed be a case for further co-ordinated international action on global warming, but I remain unpersuaded of the need for a new European Community tax. Tax policy should continue to be decided here in this House, not in Brussels.
      Individual countries should, of course, take their own measures to give people the right signals to encourage the efficient use of energy. Today, I shall propose measures designed to do just that, and to raise revenue at the same time.
      Last June, my right hon. Friend the Prime Minister signed the United Nations convention on climate change at Rio. This was a milestone in international efforts to halt global warming.
      When Britain and other countries have ratified the convention, the Government will be committed to bringing forward measures aimed at returning greenhouse gas emissions from this country to 1990 levels by the year 2000. My right hon. Friend the Secretary of State for the Environment published last December a consultation paper which set out the various options.
      The largest contribution to the growth in United Kingdom carbon dioxide emissions in the coming years is expected to come from the transport sector. I therefore

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      propose to make clear today the Government's long-term intention on road fuel duty. We intend to raise road fuel duties on average by at least 3 per cent. a year in real terms in future Budgets, in addition to the increase I have already announced for this year.
      In deciding the level of duty to be levied in any particular Budget, we will, of course, take full account of conditions at the time—including, if charges for motorways and urban roads are introduced, the overall level of taxes and charges which road users are paying. However, my announcement today will help manufacturers and consumers to plan ahead. It should provide a strong incentive for motorists to buy more fuel-efficient vehicles, and it will raise at least a further £520 million in 1994–95 and £950 million in 1995–96.
      However, in order to meet the commitment that we entered into at Rio, action will be required not just in the transport sector, but across the whole economy, and in deciding how best to meet our carbon emissions target, we will need to ensure that the right incentives are in place throughout the economy—encouraging people to consume less and conserve more. Above all, it is crucial to avoid taking measures that will have a disproportionate impact on the competitiveness of British industry.
      Against this background, I have one further measure to propose that will not only encourage greater energy efficiency in every household in the country, but will also raise a considerable amount of revenue for the Exchequer over the years ahead.
      Fuel and energy supplies to industry pay VAT in Britain. Those to the home do not. In this respect, we are unique in the European Community. I therefore propose, over the next two years, to end the zero rate of VAT on domestic fuel and power. Again, this change will not come into effect immediately, but in 1994. VAT will be charged at 8 per cent. from 1 April 1994 and at 17½ per cent. from 1 April 1995.
      This measure will raise some £950 million in 1994–95, £2·3 billion in 1995–96 and around £3 billion a year thereafter. For the first time, the rate of VAT on domestic fuel and power will be the same as that charged on goods like loft insulation material, which improve energy efficiency. This will bring to an end the current anomaly, which makes nonsense of any attempt to use the tax system to improve the environment.—[Interruption.]
      Mr. Deputy Speaker: Order. The House should listen to the Chancellor.
      Mr. Lamont: My intention is to legislate for this proposal this year.
      Social security benefits will, of course, rise automatically to reflect the price effect of this change, but I recognise that this will cause particular problems for those on low incomes. My right hon. Friend the Secretary of State for Social Security will take this into account when the income-related benefits are uprated next year.
      Taken together with the measures which have already been announced, these tax proposals take Britain two thirds of the way to meeting the Rio target, and they will do so in a way that does the least possible damage to the competitiveness of British industry. I am confident that the remaining gap can be filled through sensible energy-saving measures, as and when the convention is ratified by our major industrial competitors.
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      The measures I have announced so far will raise substantial revenue in 1994–95 and beyond. I turn now to my measures for business.

    DEREGULATION

      SELF-ASSESSMENT AND SIMPLIFICATION
      As the House is aware, the Government have embarked on a major drive to reduce the burden of regulation on industry. I will therefore start with three significant measures of deregulation, which should be of particular benefit to the self-employed and to small businesses generally. Self-assessment of income tax has operated successfully in many countries, including the United States, but none of my predecessors has found a way of introducing it here. For most people, that has not been a problem—the PAYE system already deals very simply with the tax affairs of some 16 million employees—but for the 8 million taxpayers who have to fill in a tax return each year, the current arrangements are very far from simple.
      Following a detailed consultation exercise, I now propose to offer these people, including 4 million self-employed, the option of self-assessment on income tax. Legislation will be brought forward in next year's Finance Bill to implement the proposal from the earliest practicable date, which is 1996–97.
      For those who choose to take it up, self-assessment should provide a significant reduction in bureaucracy and paperwork; and it will also bring out more clearly the link between public spending and the burden this places on the individual taxpayer. A more transparent tax system can only lead to more informed choices and debate; and I believe that self-assessment for a third of all taxpayers will contribute to that.
      But for self-assessment to work, the system has to be simple enough for taxpayers themselves to be able to fill in their own returns. My second reform will achieve a significant simplification, particularly for the self-employed. One of the least attractive features of our present tax system is that it is simply too complicated for them to work out how much tax they owe: people setting up in business on their own are more or less forced to employ an accountant.
      Since 1926, the self-employed, working under the so-called "preceding year" basis of assessment, have generally paid a tax bill based on profits they made up to two years previously. People with several different sources of income may be assessed on a number of different bases, with separate tax bills and payment dates for each. It would be difficult to invent a more complicated system for taxing the self-employed, even if one set out with that very intention.
      Under my new proposals, people will have just one tax bill each year, covering all their income, and the self-employed will pay tax on the profits they make in the current year, not the preceding year. This should be a major simplification; and I am sure it will be warmly welcomed.
      Taken together, these two measures amount to the most fundamental reform of income tax administration since the introduction of pay-as-you-earn in 1944.

      STATUTORY AUDIT
      My third announcement is of particular interest to smaller businesses.
      At present, all businesses which are incorporated have to have their accounts audited. While it is clearly important that accounts should be reliable and indeed that the Inland Revenue and other users should have the assurance they need that the accounts have been drawn up properly, the current statutory audit requirement imposes a disproportionate cost on many small businesses. My right hon. Friend the President of the Board of Trade will therefore shortly be issuing a consultative document setting out options for reducing this burden, at least for the very smallest businesses that are incorporated. This would deliver significant savings and would represent a major step in cutting out red tape and bureaucracy.

      BUSINESS TAXES
      Reducing the Government's borrowing requirement will benefit business by ensuring that the recovery is sustained, but, as I said in my Mansion House speech last October, the Government are determined to keep our policies under continuous review to ensure that British business has the backing it needs to compete in world markets. This is particularly true of our tax policies.
      Britain already has the lowest rate of tax on business profits in the industrialised world, and we have a personal tax system which makes it attractive for entrepreneurs and managers to live and work in Britain. We intend to see that continue.
      Britain has had an outstanding record over recent years in attracting investment from overseas—indeed, we have attracted no less than a third of all foreign investment into the European Community over the last few years—but we cannot be complacent. With the advent of the single market, the competition in Europe to secure inward investment has become ever more intense. So my Budget sets out to ensure that our business tax regime retains its clear competitive edge.

      SURPLUS ACT AND THE TAXATION OF DIVIDENDS
      In discussions with business organisations over the last few months, one issue has come up again and again—the problem of surplus advance corporation tax, or ACT. Many believe that this feature of our tax system both penalises successful British-owned international companies and distorts investment decisions.
      This issue has, of course, been with us for many years, and it has so far defied solution. Nonetheless, I made a commitment in my Budget last year to return to this subject, and I am pleased to be able to report to the House that I have now found a way forward.
      I hope that the House will bear with me, as I am afraid that my proposals are complex, but they do attack the problem of surplus ACT, they are central to the strategy of this Budget, and they raise significant amounts of revenue.
      At present, ACT is paid on dividends at 25 per cent. This funds a tax credit which covers the basic rate income tax bill of the shareholder, but, as its name implies, it is also an advance payment of the company's corporation tax bill.
      In normal circumstances, the system works very well, but sometimes it does bring problems, particularly for companies which earn a large proportion of their profits overseas. These companies often end up paying an ACT bill on their dividends that is greater than their entire
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      United Kingdom corporation tax liability. The so-called "surplus ACT" that results cannot be claimed back, so in effect it becomes an extra tax on profits.
      This can have damaging economic effects. For example, it gives some companies a strong incentive to move important activities, including research and development, abroad, leading to the loss of skills and jobs in this country. It cannot be right to distort the commercial decisions of British companies in this way or to give companies a positive incentive to move elsewhere in Europe; so today I am putting forward some proposals that will go a long way towards alleviating the problem.
      First, I shall establish a special tax regime from 1994–95 to help foreign-owned international companies which are considering setting up their headquarters in the United Kingdom. This will make it more attractive for international companies to base their operations in Britain, and it will further promote London's position as Europe's leading financial centre.
      Secondly, I am today issuing a consultation document proposing a scheme under which British companies may choose to class any dividend paid out of overseas profits as a "foreign income dividend". Unlike normal United Kingdom dividends, this will not carry any tax credit, and although ACT would initially be payable in the usual way, the company will be entitled to a refund if it gives rise to surplus ACT. Once fully operational, this scheme could reduce the build-up of surplus ACT by some £250 million a year.
      Finally, I have one further proposal which will help not just companies with surplus ACT, but all dividend-paying companies; and it will do so in a way that will raise considerable revenue. I propose simply to reduce the rate of ACT in two stages, from 25 to 22½ per cent. in 1993–94 and then to 20 per cent. in 1994–95. This will give companies which pay dividends a cash flow benefit of about £2 billion over the next two years, and it will reduce the build-up of surplus ACT by about £300 million next year.
      I also propose to reduce from 25 to 20 per cent. in 1993–94 the tax credit that shareholders get when they receive a dividend.
      Those who are familiar with these issues—a select few, I fear—will know that tax credits affect two main groups of shareholders. Those with no tax liability, particularly pension funds, can claim a cash payment from the Inland Revenue for the tax credit, and higher rate taxpayers have to make up the difference between the 40 per cent. top rate of tax and the 25 per cent. tax credit they receive.
      The reduction in the tax credit that I am proposing will therefore have two important effects. First, the payments that lower rate payers, non-taxpayers and particularly pension funds, get from the Inland Revenue will be reduced by five percentage points, saving the Exchequer no less than £1 billion a year. Secondly, higher rate payers will have to pay an extra 5 per cent of tax on the dividends they receive in order to discharge their liability to tax at the top rate of 40 per cent. This, in turn, will yield an extra £200 million a year.
      Finally, in order to ensure that most ordinary shareholders are not affected by this change, I propose to reduce the rate of tax on dividends from the current basic rate of 25 to the lower rate of 20 per cent. The effect of this, combined with the change to the tax credits, is to leave basic rate taxpayers neither better off nor worse off than they are now.
      Thus, these proposals achieve three objectives at the same time. They will give companies a £2 billion cash flow boost over the next two years, they will significantly reduce the problem of surplus ACT for the future, and they will raise £900 million extra revenue for the Exchequer from 1995–96 onwards.
      There is, however, one group for whom I believe it would be desirable to ease the immediate effect of these changes. I therefore propose for charities to phase in the effect of the reduction in the tax credit over a four-year period. I also have some further measures for charities, to which I shall turn later.

      EXPORT CREDIT
      The House will be relieved to hear that my next measure is a little less opaque, but it is equally important for the long-term success of British manufacturing.
      In the autumn statement, I announced a substantial increase in export credits to help British businesses win major contracts abroad, but the fact remains that export credit insurance has proved expensive for the taxpayer. For that reason, the Government have negotiated hard over the years to secure a reduction in the subsidies offered by other countries. Some progress has been made, and we shall continue in that effort, but in the meantime British firms, in my opinion, are sometimes at a competitive disadvantage in seeking business overseas. My right hon. Friend the President of the Board of Trade and I have therefore looked again at the whole range of ECGD services and have decided to make some important changes.
      The first relates to premiums. Last year, premiums were cut on average by about 20 per cent., but there is scope to do more. We have therefore decided to make a further reduction of 7½ per cent. in the average level of ECGD premiums. This means that, while premiums for individual export markets will always differ, the average level of premiums paid by British exporters next year will be down to around the average paid by their G7 competitors.
      The second is export credit cover. In the autumn statement, I increased the cover available to exporters by £200 million this year, and by a further £500 million for 1993–94. Over the next three years, my right hon. Friend and I propose that additional cover of £1·3 billion should be made available for those exporting into some of the fastest growing and most important markets around the world. Taken together with my autumn statement announcement, this means that the annual cover for these markets will have increased by more than 75 per cent. in just four years.
      As a result, British firms will now be able to go into export markets with greater confidence that they can compete on a more equal basis with their overseas competitors. I am sure that they will seize the opportunities that are now available to them.

      INSURANCE
      Over the years, one of Britain's most successful exporting industries has been insurance, but for some years now the industry has argued that the tax reliefs available to some of their European counterparts put them at a competitive disadvantage. In fact, that is not the whole story; in other respects, our own tax system is very favourable. Nevertheless, having reviewed the position
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      again, I believe that there may indeed by a case for allowing tax relief on certain types of equalisation reserves covering occasional, exceptional losses.
      However, if such reserves were to be allowable for tax, they would also have to be within the regulatory framework for the industry. This would be a major departure for both the tax and regulatory systems. A consultation document will be issued later this spring to consider the options.

      LLOYD'S
      I also propose to introduce a significant reform of the tax regime for Lloyd's. I propose to tax the gains on the disposal of assets which form the premiums funds of Lloyd's names in the same way as those of corporate insurers, and I intend to replace the current reserve arrangements with a better targeted reserve, which should enhance Lloyd's ability to deal with the particularly volatile type of risk which makes up most of its business.
      My proposals will greatly simplify the taxation of Lloyd's. Lloyd's has certainly had a difficult time recently, but it remains vital if London is to retain its pre-eminent position in the world insurance market. Taken together, the two reforms I am proposing will cost the Exchequer nothing.

      SMALL BUSINESS
      The measures I have announced so far will be of help particularly to large businesses, but small firms play a crucial role in our economy. Small businesses do not follow the economy; they lead it. That has been demonstrated time and time again. In this Budget, I shall set out some further proposals which will help small businesses to lead the recovery once again.

      LOAN GUARANTEE SCHEME
      Following heavy losses in recent years, the banks are bound to be more cautious in their lending in future. Moreover, the fall in property prices has reduced the security for many of their loans. As the recovery progresses, small firms may therefore find that their prospects for expansion are increasingly threatened by a shortage of bank finance. My first proposal is directed precisely at that problem.
      The Government's loan guarantee scheme helps entrepreneurs who have viable projects but who do not have the track record or loan security to attract sufficient finance on their own. It enables them to borrow with a Government guarantee, usually for 70 per cent. of the value of the loan, in return for paying a premium of 2½ per cent. on the guaranteed part of the loan.
      In Germany and the United States, a large proportion of lending to small businesses is done at fixed rates of interest. By contrast, in Britain, most borrowing is linked to the level of base rates. I have long believed that many small businesses would benefit from making more use of fixed-rate finance, which would give them more stability and would enable them to plan ahead.
      I propose therefore to make a substantial reduction in the loan guarantee scheme premium for guarantees on fixed-rate lending. This will fall to ½ per cent. and will, I hope, encourage more fixed-rate lending. I also intend to reduce the premium on other variable rate loans to 1½per

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      cent. The premiums will henceforth apply to the whole loan, not just the guaranteed portion. This change should take effect in the next month or so.
      I also propose that the limit on the size of loan allowed to such businesses should be raised from £100,000 to £250,000, and the proportion of the loan guaranteed increased from 70 per cent. to 85 per cent. I am sure that those proposals will be warmly welcomed by small businesses. My right hon. Friend the President of the Board of Trade and I will be taking this forward urgently with the banks.

      CGT REFORM
      My second measure relates specifically to entrepreneurs who have built up successful businesses and now wish to sell them in order to start up a new one.
      The current capital gains tax regime provides generous annual exemptions to those who make regular capital gains from trading in shares, but it is much less generous to the entrepreneur. Typically, he sells shares in his own company only once, so has only one year's annual exemption to set against gains built up by hard work over a lifetime. Thus, for every £100 taken out of the old company at the margin, he has only £60 to invest in a new one. It is hardly surprising that entrepreneurs complain that they are locked in by the CGT regime, and prevented from investing their talents elsewhere.
      For this reason, I propose in future to defer the payment of CGT for any entrepreneur whose gains from the sale of his own company are reinvested in another qualifying unquoted trading company, or companies. I know that this will be widely welcomed by the venture capital industry.
      I also propose to relax the conditions for CGT retirement relief by reducing the qualifying shareholding from 25 per cent. to 5 per cent.; and to extend this relief to cover full-time employees as well as directors. These changes will cost £50 million in a full year.

      VAT THRESHOLD
      I turn now to the VAT regime, which for many small businesses takes up a great deal of time and can be a particular source of worry. The best way to help is to keep them out of the VAT system altogether. I am therefore raising the VAT threshold to the maximum extent possible. The new threshold will be £37,600.

      CASH ACCOUNTING AND BAD DEBT RELIEF
      Over the past couple of years, I have also announced measures to allow traders to reclaim VAT on debts which remain unpaid after 12 months, and to encourage firms to take advantage of the cash accounting scheme under which traders only have to pay VAT to Customs when they themselves have been paid by their customers. I now intend to take this further in a way that will help many small businesses.
      I propose to increase the ceiling on turnover below which firms may join the cash accounting scheme by £50,000 to £350,000. This will allow an extra 15,000 businesses to benefit, on top of the 400,000 that qualify already.
      I also intend to help businesses which are too big to take advantage of the scheme. At present, VAT can be
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      reclaimed on any invoice which remains unpaid after 12 months. I propose to halve that qualifying period to six months.
      These measures will give considerable help to companies, improving traders' cash flow by some £150 million in the year ahead.

      VAT PENALTIES
      In addition, I have a further series of reforms to propose to the current system of VAT penalties.
      First, I intend to focus the rules better so that only larger errors and the most persistent offenders will incur the "misdeclaration penalty". This will reduce the number of penalties imposed by over 40 per cent. Secondly, I propose to place a three-year limit on the number of years' interest that can be charged when tax has been underpaid. Thirdly, I have decided to reform the VAT default surcharge so that traders will be notified sooner of default and surcharged at a lower rate, and only on larger defaults. This will make the surcharge more effective, but remove some 125,000 small traders from the default surcharge altogether. I know that this will be welcomed by small businesses.

      KEITH REPORT
      I have one final reform of the VAT penalty system. Following Lord Keith's 1983 review, the Government concluded that it would be wrong to give Customs discretion over the level of VAT penalties. After considerable debate, this conclusion was eventually accepted by the House—I remember the strong debates very well—but the controversy has continued ever since, and, over time, more and more people have come to believe that it is wrong to have a penalty regime which is almost entirely automatic.
      I have considered this matter all over again, and I have concluded that the time has come to make a change. I propose, therefore, that Customs should be given some discretion to mitigate the penalties for misdeclarations, to enable them to take account of the individual circumstances of the trader. If necessary, of course, the trader will still be able to appeal to a VAT tribunal, which will also have greater scope for discretion.
      These reforms will put the VAT compliance system on to a secure long-term basis. They will be of most benefit to small businesses, for whom the burden of compliance is heaviest; and I know that they will be widely welcomed on both sides of the House.

      BLOODSTOCK
      I have already announced my intention to extend value added tax to domestic fuel and power from 1 April next year. I have one further announcement to make on VAT.
      As the House knows, it has long been this Government's intention to switch the burden of taxation from direct taxes on income to indirect taxes on consumer spending. It is perhaps less well known that Britain has one of the lowest effective rates of VAT in the European Community.
      Against this background, and in a Budget designed to place the public finances on a sound footing, I have inevitably had to look very carefully at the whole structure of our current VAT regime, and particularly at whether all

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      of our existing zero rates should be maintained. Some of these zero-rated goods—for example, food and water—are clearly amongst the most basic necessities of life. Others—for example, sewerage and newspapers—perhaps fall into a different category.
      Having reflected carefully, I have decided nonetheless not to extend the VAT base beyond fuel and power. I do, however, have one further announcement on VAT, which will I hope offer some consolation to those hon. Members who would rather be at Cheltenham today, watching the Champion Hurdle.
      For some time, the bloodstock industry has been concerned about competition from other EC countries which levy a lower rate of VAT on horses. The single market has exacerbated this problem and created a major incentive to move bloodstock business abroad, threatening 30,000 jobs.
      There have been intensive discussions between the Jockey Club and Customs, and I am pleased to announce that a way forward has been found. As a result of proposed changes in the Jockey club's rules, owners who wish to do so will now be able to organise their racing activities in a more commercial way. This in turn will enable them to meet the normal business test for VAT registration and to claim credit for VAT on purchases, subject to the usual rules.
      I know that there have been representations on this from both sides of the House, and I know that registration on this basis meets the industry's concerns over this problem. No Government have done more for racing than this one—and quite rightly so, for it is an important industry, and a vital part of our national life. This measure will be welcomed by the industry and by its many supporters in this House.

      UBR
      I have one final announcement, which will be of direct help to many businesses.
      My last Budget helped many thousands of firms by altering the business rates transitional arrangements to accelerate the gains of those who gained most from the change in the system, while freezing real rates bills which otherwise would have risen substantially.
      The freeze applied for one year only, so many businesses now face a substantial increase in their rates bills in the year ahead—up to 20 per cent. over and above inflation on large properties and up to 15 per cent. on small properties.
      It would, I believe, be wrong to impose such increases in present circumstances. I therefore propose for a further year to freeze in real terms the rates bills of those losing from the new system.
      As a result of this and last year's measures, no business will face a real increase in its rates bill in the year ahead, and many will benefit from reductions. In cash terms, that means that no bill will rise by more than 3·6 per cent.—the increase in the RPI in the year to last September.
      Subject to Parliament's approval, the Government will again pay extra sums into the business rates pool to ensure that the income of local authorities is not reduced. My right hon. Friend the Secretary of State for the Environment will shortly introduce a Bill to implement these proposals. Full details will be published today in a press notice.
      The new measure will reduce the total business rates bill in England and Wales next year by 2·6 per cent. Bills in Scotland and Northern Ireland will likewise be reduced by 2·6 per cent. in aggregate. My right hon. Friends the Secretaries of State for Scotland and for Northern Ireland will be announcing the details.
      These measures will again bring significant and early benefit to many thousands of businesses throughout the United Kingdom. About 800,000 business properties will benefit. The revenue cost is estimated to be some £370 million in 1993–94, and some £260 million in 1994–95.
      Taken together, the measures I have announced will reduce the burden on business by about £1 billion in the year ahead. I hope that the House will agree that this is the best possible use for the sums I have been able to raise this year.

      NATIONAL LOTTERY AND CHARITIES
      The House is aware, also, of the Government's plans to introduce a national lottery from next year. This will provide a substantial increase in resources for a number of good causes: charities, sport, the arts, the national heritage and the millennium fund. I have no doubt that the lottery will be both popular and successful.
      We have always made it clear that the national lottery will be taxed. In deciding the tax rate, I have taken into account the level of tax on other forms of gambling and the extent to which spending is likely to be diverted from other taxed activities. Much, of course, will depend on how the lottery develops and I shall keep the position under review, but for the first year of its operation I propose that national lottery tickets should be taxed at a rate of 12 per cent. Existing society and local authority lotteries will be exempt. Winnings will incur no tax whatsoever. I believe that these proposals will make sure that the national lottery gets off to a good start.
      Since 1979, the Government have done an enormous amount to help charities. Indeed, their special position in society is recognised by the substantial tax reliefs, approaching £1 billion, that they already receive, and they will also benefit from the new lottery. I now have two further changes to propose.
      First, I intend to raise the annual limit for income tax relief under the payroll giving scheme from £600 to £900 with effect from 6 April. Secondly, I propose that the minimum gift attracting tax relief for single donations under the gift aid scheme should be reduced from £400 to £250 from today, thus increasing substantially the incentive, through the tax system, to charitable giving.
      These measures build on the principle that tax reliefs for charity should focus on what individuals give, rather than what charities themselves spend. Taken together, they will boost tax relief on donations to charities by some £30 million in a full year.

      EMPLOYMENT MEASURES
      In the autumn statement, the Government announced a number of measures to help the unemployed, and in my Budget I have set out my further proposals to help business and sustain recovery. That it the best way to promote employment.
      However, we know from experience that unemployment may continue to rise for a while even after growth has resumed. That is a matter of great concern to the whole country, and it is a concern which I fully share. My right

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      hon. Friend the Secretary of State for Employment and I have therefore decided to take further special measures to help an extra 100,000 unemployed people.
      First, we have decided to provide more help for those who wish to set up their own businesses under the business start-up scheme. This offers advice and financial assistance, and has been one of the most successful employment schemes. We propose to offer an additional 10,000 places in 1993–94. That will give a direct boost to small business creation and self-employment in years ahead.
      Secondly, the Secretary of State for Employment proposes to introduce a new initiative to allow the long-term unemployed to learn the practical skills they need to find work. In the past the benefit rules have been an obstacle to allowing them to study. We intend to introduce an education allowance that will enable 30,000 long-term unemployed people to study on full-time vocational courses.
      Thirdly, it is widely agreed that, in every community, there are plenty of jobs needing to be done, and plenty of people who want to do them. My right hon. Friend the Prime Minister has recently indicated the importance of offering more unemployed people the opportunity to undertake some form of useful work or other activity. We are therefore launching a new community action programme to allow 60,000 of the long-term unemployed to do part-time work in their local communities, organised by voluntary groups. Those involved will be paid an allowance based on their previous benefit rates plus a small premium. The scheme will start as soon as possible.
      Those who have been unemployed for a long time tend to lose touch with the job market, and the problem is that they find it increasingly difficult to find an employer who wants to take them on. We propose to test in pilot schemes the feasibility and effectiveness of a new approach under which, rather than pay benefit to the long-term unemployed to do nothing, payments will instead be made, for a limited period, to an employer who recruits them. Employers taking on people who have been out of work for at least two years will receive a one-year subsidy based on the benefits which would otherwise have been paid. That subsidy will taper off as the period of employment progresses. Pilot schemes using different approaches will be launched this summer in four parts of the country. If they can be made to work, I believe that they could be useful, and would lead to permanent jobs for the long-term unemployed as the economy recovers.
      Finally, the establishment of training and enterprise councils throughout the country has successfully brought local business people into the design and running of training and enterprise programmes for the unemployed. I now propose to offer the TECs a new £25 million fund. My right hon. Friend the Secretary of State for Employment will invite TECs to submit competing applications to develop the most imaginative schemes to help the long-term unemployed and stimulate job creation. The degree of local business involvement will be an important criterion against which each application will be judged.
      These measures will cost £230 million, and will give special help to those who need it most, including disabled people. The disabled will be given priority in the vocational education initiative and in community action, helping us to build on our achievements in helping the disabled back to work. In the first nine months of 1992–93
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      the Employment Service found jobs for 31,000 unemployed disabled people, 25 per cent. more than in the same period of 1991–92. I am sure the House will welcome this.

      PRIVATE FINANCE
      Mr. Deputy Speaker, in my autumn statement I announced significant changes to the rules for the private financing of major infrastructure projects. This initiative has met with an enthusiastic response, and today I have a number of specific developments to announce.
      First, hon. Members will recall that legislation has already passed through both Houses permitting the construction of a new fast rail link that will cut the journey time between Heathrow and Paddington. I can now announce that BAA plc and British Rail have agreed to proceed with this project, the Heathrow Express. This is a major new joint venture, involving private sector investment of nearly £300 million. As well as providing a substantial boost to the construction industry, this project will significantly enhance the transport infrastructure of the nation's capital.
      Secondly, there is crossrail, a public sector project first proposed in 1989 to reduce congestion in central London. The Government remain committed to securing for London the benefits that crossrail will bring, but we now believe it would be preferable to take this project forward as a joint venture with the private sector. The present proposals for crossrail will therefore be re-examined. Our aims will be to maximise the participation and financial involvement of the private sector and to secure the best value for money for the taxpayer.
      One of the most ambitious civil engineering projects ever conceived has been made possible by private finance. I refer, of course, to the channel tunnel. This will provide a fast link between Britain and Paris, cutting journey times dramatically, but those times could be cut still further by reducing the time taken for journeys within Britain itself. For that to happen, a new rail link will be required—from London down to the channel tunnel itself. This will be a massive undertaking—one of the largest infrastructure projects in this country since the war—but, after careful consideration, the Government have decided to make a firm commitment to the project. So I can announce today that the channel tunnel rail link will go ahead.
      My right hon. Friend the Secretary of State for Transport will be inviting the private sector to come forward with bids so that the project can be taken forward as a joint venture as soon as possible. We will discuss timing with the private sector. We hope to be able to introduce a Bill as soon as the legislative timetable permits, and to see the new line fully completed around the end of the decade. The Government will make their own financial contribution, recognising the benefits that will accrue to domestic travellers from the new link. Full responsibility for the project, its management and completion will be transferred to the private sector.
      Subject to the results of detailed work by British Rail over the next few months, the London terminus of the new link will be located at St. Pancras. This will provide a new lease of life for this magnificent Victorian building, which will become the gateway to London for international passengers. My right hon. Friend the Secretary of State for Transport will make a statement on the details of the route shortly.
      Over the years ahead, my private finance initiatives will play an ever increasing role in the modernisation of Britain's infrastructure. The projects I have announced today represent a considerable step forward. They will not only improve the country's transport network; they will also create jobs. I am sure they will be warmly welcomed by the country and by the House.

      INCOME TAX
      I turn finally to income tax. My priority in this Budget has been to set out a clear strategy for reducing public sector borrowing over the medium term. I am therefore unable this year to reduce the basic rate of income tax. I also propose to leave the higher rate of tax unchanged at 40 per cent.
      However, in my Budget last year, I opened up an alternative route for moving over time towards our ultimate objective—a 20p basic rate of income tax for everyone. The new lower rate band I announced last year at a stroke took 4 million taxpayers on low incomes down to the 20 per cent. rate, cutting their marginal rate of tax by a fifth.
      In this Budget, I have taken my reform a step further. The Government's 20p pledge not only involves a reduction in marginal tax rates for 19 million basic rate taxpayers, but, also, when the basic rate is eventually brought down to 20p, tax reliefs for basic rate taxpayers will, of course, be worth 20p in the pound, too. In this Budget, I have brought forward that change by restricting three specific tax reliefs to 20 per cent., not just for basic rate taxpayers, but for all taxpayers.
      First, I have reduced the tax credit on dividends to 20 per cent., to cut the rate of advance corporation tax which companies pay on dividends. Secondly, I will be reducing the rate of relief on mortgage interest payments to 20 per cent., to cut the subsidy on borrowing and to pay for a reduction in the tax on housing transactions. Thirdly, I will be restricting the tax relief for married couples to 20 per cent., to make it worth the same for all taxpayers.
      All these measures are sensible reforms in their own right. When revenue has to be raised, it is far better to do this by broadening the tax base than by increasing tax rates; but, in addition, the restrictions I have introduced will also allow me to make further progress in getting income tax rates down.
      I therefore propose to increase the width of the new 20p band in 1993–94 by £500 to £2,500. That will help all taxpayers currently paying tax at 25 per cent., and it means that, in the coming year, nearly 5 million taxpayers will
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      face a marginal rate of income tax of only 20 per cent. Already, for about a fifth of all taxpayers, I will have delivered on our promise of a 20p rate in the first Budget of the Parliament, and I will have done so by a sensible and fair reform of the tax system.
      But I can also go further. The measures I have announced today will also allow me to make a further extension of the 20p rate in 1994–95. From 1 April next year, I propose that the 20p band should cover the first £3,000 of taxable income, £500 more than in the year ahead; and we shall continue to widen the 20p band in the years to come—year by year, we will make our progress towards our objective: a 20p basic rate of tax for everyone.

      CONCLUSION
      In the first Budget of this Parliament, I have set out the Government's economic strategy. I have cut the tax burden on business; and given help for small businesses, exports and the unemployed. I have demonstrated clearly how we will bring Government borrowing down in the years ahead. That is the only way to sustain growth and build a strong and sound economy in the 1990s.
      This is a Budget for sustained recovery and a Budget for jobs—not just for this year and next year, but right through this decade. I commend it to the House.

      PROVISIONAL COLLECTION OF TAXES
      Motion made, and Question,
      That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—

      (a) Beer (rate: existing regime) (motion No. 2);

      (b) Wine and made-wine (motion No. 5);

      (c) Cider (motion No. 8);

      (d) Tobacco products (rates) (motion No. 9);

      (e) Hydrocarbon oil (rates) (motion No. 11);

      (f) Vehicles excise duty (rates: general) (motion No. 16);

      (g) Vehicles excise duty (exceptional loads: 1) (motion No. 17);

      (h) Vehicles excise duty (old bicycles) (motion No. 19);

      (i)Vehicles excise duty (trade licences) (motion No. 20).—[Mr. Lamont.]

      put forthwith, pursuant to Standing Order No. 50 (Ways and Means Motions), and agreed to.
      Mr. Deputy Speaker: I now call on the Chancellor of the Exchequer to move the motion entitled "Amendment of the law". It is on that motion that the Budget debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week, and then they will be decided without debate.

Budget Resolutions and Economic Situation

  AMENDMENT OF THE LAW
  Motion made, and Question proposed,
  That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

  (a) for zero-rating or exempting any supply, acquisition or importation;

  (b) for refunding any amount of tax;

  (c) for varying the rate of that tax otherwise than in relation to all supplies, acquisitions and importations; or

  (d) for relief other than relief applying to goods of whatever description or services of whatever description.—[Mr. Lamont.]

  [Relevant documents: European Community Document No. 4683/93, the Commission's Annual Economic Report for 1993, and the draft Decision adopting the Report.]
  5.24 pm
  Mr. John Smith: I am happy to offer the Chancellor the customary congratulations on the style and manner in which he delivered his Budget. As he noted, this will be the last spring Budget and he is the last Chancellor who will deliver the Budget in its traditional form.
  I welcome the change to a unified Budget and public expenditure statement, a change which, after all, the Opposition proposed. May I suggest a further reform for the new arrangements later in the autumn? The Chancellor should consider abolishing the increasingly absurd purdah rule. I suggest that he makes an early announcement to that effect, perhaps the earlier the better, so that he and not someone else can take credit for an overdue reform.
  Those who have listened to this debate will have been shocked beyond belief at the cynicism of the Conservative party which went into the last general election as the party committed to low taxation. [HON. MEMBERS: "We have done that."] Conservative Members say that they have done that. Some innocents on the Conservative Benches describe the Budget as a Budget of low taxation. Let me remind the House of what the Government said during the last election campaign—[Interruption.] I know that some Conservative Members do not want to hear this, but I think that the public do.
  Let me start with VAT. On 28 January 1992, the Prime Minister said:
  "There will be no VAT increase. Unlike the Labour party, we have published our spending plans and there is no need…to raise VAT to meet them."
  It is difficult to be more categoric than that. During the election campaign, the Conservative campaign guide stated—[Interruption.] I know that that is a matter for humour, but we are entitled to treat it seriously. The guide stated:
  "Following a series of unfounded and irresponsible scares by the Labour party, the Prime Minister has confirmed that the Government has no intention of raising VAT further."
  To get precisely to the point, during the election campaign, at a press conference, Mr. Tony Bevins of The Independent asked the Prime Minister on 27 March 1993:
  "Can you give the same pledge that Mrs. Thatcher gave in 1987 that you will not extend the scope of VAT to children's shoes and clothing, gas, electricity and food?"
  The Prime Minister replied:
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  "I've made the pledge in the past, I've made it clear. We have no need and no plans to extend the scope of VAT."
  I do not know how the right hon. Gentleman can sit there as Prime Minister of a Government who are capable of deceit on such a scale. The Conservative party went into the election and was pressed day after day about increases in VAT and still came back the answer, "Lies and scaremongering from the Labour party. The Conservative party wouldn't do anything like that." Those people make pledges as though they matter not a whit.
  It is not just a question of VAT—and I will consider the effect of the VAT increase. The Prime Minister knows perfectly well that commitments were made on national insurance as well. On 28 January 1992, the Prime Minister stated:
  "I have no plans to raise the top rate of tax or the level of national insurance contributions."—[Official Report, 28 January 1992; Vol. 202, c. 808.]
  However, the Government have proposed today a 1p increase in national insurance contributions. No doubt they will go to the country and say, "We haven't increased income tax. We have marginally increased the 20p band." People are not so foolish. They understand clearly that 1p on national insurance is, if anything, worse than 1p on income tax. Apart from anything else, it bites further down the scale. On tax on income and tax on spending, the Conservative party has cynically and ruthlessly betrayed the pledges which it gave to the people of this country. It will not be forgiven for that.
  The Conservative party used to say that VAT was all right because, after all, people could choose whether they bought the goods on which VAT was levied. Will it tell us now that people can choose whether to have gas or electricity in their houses? The Government must know perfectly well that throughout the land a 17·5 per cent. increase in fuel bills will push many families who are just on the edge, wondering whether they will manage, to despair.
  It is no good the Government saying that they will adjust income support levels. Millions of people in Britain are poor but do not qualify for income support and will be hit savagely by the 17·5 per cent. increase in the basic cost of living. The Chancellor says, "It is all right: I have extended the 20p band." But what does the extension of his band amount to? This year it amounts to about 25p a week and at best in future years it will amount to £1. How will that help people to meet the extra bills that they will have to pay as a result of all the other tax increases and reductions in allowances? Indeed, taken together, the tax increases announced in this Budget must be one of the highest hikes ever.
  We have also seen the freezing of allowances. That means that more people will be brought into both the standard and higher rates of tax. All this from the party which said that it was the party of low taxation and paraded that all over the country during the general election campaign. There are hundreds of examples of that day after day.
  The Government have betrayed their pledges and caused unnecessary increases in the cost of living. They should have been busy in this Budget looking for loopholes in taxation. The Chancellor may have discovered a few here and there, but there are massive loopholes in taxation by which people do not pay the proper amount of tax. Here we have the Government putting an even heavier burden on the ordinary people of

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  Britain. The Government must bear in mind that the public's conclusion about the Budget will be simple and clear: the Conservative party is a party without honour and without feeling.
  The other question that people will ask about the Budget is whether it will bring down unemployment. [HON. MEMBERS: "It will."] There can surely be no doubt that unemployment is Britain's No. 1 problem. We shall see in the November Budget whether this Budget has brought down unemployment. If Conservative Members want that to be a test, we shall make it a test for the Government. The Government cannot simply wish away unemployment. The Chancellor announced inadequate measures on that front. The Government do not seem to understand how depressing and debilitating it is for our people to suffer unemployment of more than 3 million. It is economic madness as well as a social tragedy.
  Ministers should bear it in mind that there is hardly a street in Britain in towns or villages, in the country or elsewhere, which the tentacles of corroding unemployment have not reached. It is also depressing to consider that, each time we plunge into another Tory slump, it gets longer than the one before. The last one lasted five quarters. We have already gone 10 quarters in the slump that we are suffering now—the longest since the 1930s.
  What measures does the Budget contain to deal with the problem of unemployment? The Chancellor said that the Secretary of State for Employment would announce a few measures which would potentially affect 100,000 people. But 300,000 people have lost their job since the election alone. So even at his most optimistic, the best that he can touch is one third of the people who have become unemployed since the Conservative party was elected on a pledge to reduce unemployment. The measures are wholly inadequate to deal with the scale of Britain's jobs crisis.
  There is some merit in the Chancellor's proposals. For example, he has removed the restriction on people on benefit taking up educational courses. Why do we have to wait so long for a simple and obvious change such as that to be introduced? Why does misery have to become desperately acute before the Government will take even minor measures to deal with it?
  As we know, the Government's spending on training—one real way in which we could tackle unemployment—has fallen between 1991 and now by 14 per cent. in real terms. That is a reduction of £300 million. So the amount of training falls by 14 per cent. at the same time as unemployment increases by 87 per cent. That gives a clear idea of the Government's approach to the problem.
  The Chancellor's proposals in the Budget hardly fill the hole that has been created by the Government's previous actions. Therefore, the Government cannot claim any credit for action on unemployment. That is hardly surprising because the Chancellor gives such a low priority to the unemployed. Who has been more callous and complacent than him? Both he and the Prime Minister want us to forget that it was the Chancellor who told us in the House that unemployment was a "price well worth paying." He said it; he meant it. He has never apologised for it. If nothing else, he might have done that today.
  An apology is also due from the Chancellor for the failure of his last Budget—a failure which makes us, and indeed the whole country, cautious about believing anything that he says to us today. After all, his record undermines his credibility. Let me remind the House what he predicted a year ago. He said that the economy would
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  be growing by 3 per cent. and manufacturing output would be growing by 4 per cent. by this time. Let me remind the House of the sad reality—the outturn.
  The economy shrank during the whole of 1992 and, even on the latest figures and giving the Government the benefit of the doubt, an increase of barely 1 per cent. per annum is likely. Manufacturing output, instead of growing at 4 per cent. as predicted last year, is not growing at all according to figures published yesterday. A year ago in the Budget the Chancellor predicted that the PSBR would be moving virtuously back towards balance. We know how absurd that was. We know how the Chancellor's management of the economy has thrown Britain deeper into debt, with a projected PSBR of £50 billion.
  If the public had known what would be the outcome of the right hon. Gentleman's Budget last year in terms of constantly rising unemployment, deepening recession, rising bankruptcies and home repossessions, let alone the betrayal of election pledges, how many of them would have given the Tory party the benefit of the doubt on the night of 9 April last year? Precious few. We now know that their trust has been spectacularly betrayed.
  The other vital question to which the country wants to know the answer is when action will be taken, in a Budget or otherwise, to halt the long, sad economic decline of Britain. Where are the measures of investment and training that will revive the British economy and, in particular, its vital manufacturing sector? The Government will not publish the report from the Department of Trade and Industry that tells us about our problems of weak investment and our skills problems and shows with chilling reality what is happening to British manufacturing industry.
  The most important and worrying factor is that investment in manufacturing industry is 6 per cent. lower than it was in 1979 when the Conservative party took office. It appears that civil servants in the Department of Trade and Industry are guilty of the dreadful crime of talking Britain down. Any criticism of this incompetent and dishonest Government is regarded as talking the country down. People are more worried about who is pulling the country down—the Government. They are unable to face up to the scale of the challenge that Britain faces. We shall run into serious balance of payments deficits. We had another foretaste of that in the Chancellor's predictions today.
  From the industrial revolution until 1983 we had a surplus in manufacturing trade. Under this incompetent Government we went into deficit for the first time in 1983 and we have remained there ever since. If we examine Conservative economic policy, we find that it will be extremely difficult for us ever to return to a surplus. We shall be able to set a course of sustainable economic recovery only when we begin to invest in industry, in the skills of our people and in the public infrastructure so crucial to our economic development.
  On the infrastructure front, we got one reannounced real project and another one postponed. People are doubtful about this channel tunnel business. It appeared to me that the right hon. Gentleman was postponing it yet again. We may find that we have no proper connections on this side of the English channel, while the other side has excellent connections. As for the railways, the most intelligent step that the Government could take would be

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  to remove the threat of privatisation; that would be sensible, and would do a great deal of good to the morale of a beleaguered industry.
  Let me briefly remind the House of the Conservative party's promises. It promised economic recovery following its election. Hon. Members may remember the slogan: "Vote Conservative on Thursday, and recovery will continue on Friday". That was 300,000 unemployed people ago. According to the Conservatives, the public expenditure programme set out for the future would be rigorously maintained. There would be no cuts in public expenditure; that was another scaremongering Labour story. What is happening now? The Chief Secretary to the Treasury is undertaking what may be the biggest review in this country's history to cut public expenditure.
  Mr. Michael Fabricant: Very good.
  Mr. Smith: The hon. Gentleman may say "Very good", but his party did not say that at the time of the general election. I am sure that, when voters asked the hon. Gentleman, "What about spending on schools, hospitals and training?", he replied, "Do not worry; all the programmes that the Conservative party has put in place are costed, and they will be fully maintained if you elect a Conservative Government." Did the hon. Gentleman tell those voters, "The Chief Secretary will slip in a few months later and undo all those promises"? That is yet another example of a blatantly broken promise. Worst of all, the Government promised that there would be no increase in taxes, direct or indirect.
  This is a shameful Budget, presented by a cynical party, and I hope that the Conservatives live to regret it.
  5.41 pm
  Mr. John Biffen: I note the content of the Budget, and will refer to it in due course. First, however, let me congratulate my right hon. Friend the Chancellor of the Exchequer on the sheer stamina with which he made his powerful case. His was a valedictory speech—a valedictory Budget speech, that is, in the light of the reforms that will be implemented in the autumn, when the Chancellor must deliver a speech covering not only budgetary arrangements but public expenditure.
  It occurs to me that the House must seriously consider the form that our proceedings will take. The Chancellor's audience is not confined to the House of Commons; he has an audience outside. He will face the difficult task of making a speech of reasonable duration without reverting to Gladstone's five hours of 1853—I have done a little homework to acquaint myself with the potential limits of such speeches. Determining the appropriate form of our debates once the Budget and public expenditure speeches have been combined will present the House with a serious problem.
  I wish to make a few general observations about the speech of the right hon. and learned Member for Monklands, East (Mr. Smith). First, let me say how much I enjoyed it. The right hon. and learned Gentleman spoke from the heart about revenue and public spending issues; he did not touch excessively on the subject of borrowing, but it was there, just beneath the surface. He was speaking of the very matters that brought the House into being, and on which it has asserted its authority for generations. He
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  spoke as though he thought that that arrangement was permanent, but he knows very well that he must fight to ensure that the House remains master of these great areas of economic policy. He must partner his convincing rhetoric with the logic of his hon. Friend the Member for Dagenham (Mr. Gould): I offer him that dream-ticket prospect.
  Of course we welcome the approaching debate between the two sides of the House, which will concern the social and economic priorities that we consider appropriate in regard to revenue and public spending and wise in regard to borrowing. That is what this place is all about. At least the words of the right hon. and learned Member for Monklands, East supported that proposition; I hope that his judgment does the same.
  Before commenting more directly on the Budget, let me declare my interest. I am a non-executive director of Glynwed International plc and J. Bibby and Sons plc—both manufacturing companies—and I am therefore interested in the Budget's contribution to our manufacturing base. My right hon. Friend the Chancellor has made some valuable proposals for industry, and his advance corporation tax measures—he confessed that they were somewhat technical, which, in my view, showed a moderation of judgment—will be widely welcomed. Equally welcome will be the priority that my right hon. Friend has given, in a difficult time politically, to the industrial sector; that is matched by the proposals in respect of unemployment.
  I shall confine my remarks to the central issue of the deficit. In a Times article on 3 March, just a few days before his death, Lord Ridley said:
  "What has happened for years now is that fiscal policy has been too lax and monetary policy too tight."
  I am very happy to preface my comments with that quotation. I believe that, given his views and the manner in which he conducted his campaigns, Lord Ridley will long be remembered in the House as an example of the grit that provides the pearl in the parliamentary oyster. I have a deep personal affection for his memory, and I welcome this opportunity to place on record my esteem for such a personality.
  I fear that the deficit is uncomfortably large. That is an anxiety that I share with my right hon. Friend the Chancellor—and, indeed, with almost every other Member of Parliament; certainly with every Conservative Member. Given that the deficit is perceived to be running at about £50 billion, what measures should be taken? I may be a little more anxious than some of my colleagues, because I do not accept the proposition that it will wind down easily with the recovery in the economy. There is now a discontinuity between output and employment; I think that output can recover, while unemployment will continue to lag behind that recovery. In that event, all the recessional costs of the deficit are likely to remain higher than those resulting from past practice.
  My right hon. Friend says that he will try to deal with the deficit by means of substantial measures to increase revenue. I am happy to stand here, shamelessly, as a taxing Tory. I cannot believe that, in the present circumstances, the deficit can be seriously reduced other than by an increase in revenue, which means identifying taxes that can be raised to that end. I am not outraged in the least by the increases in national insurance, or by the increases in VAT in respect of fuel and power. We have a narrow tax base

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  in comparison with our major partners and competitors, and the proposed reforms are welcome. I will leave it at that.
  I am not quite so happy about the timing. I understand the deep anxiety that is felt: the recovery from recession is tentative, and must not be subject to undue heavy-footedness on the part of the Government. However, I feel slightly uneasy about leaving the increases in taxation until so far in the future. Therefore, I would welcome it if the matter could be reconsidered in the November Budget.
  In politics, there is a most powerful instinct—the Augustinian tendency—to say,
  "Lord, make me perfect—but not yet awhile."
  I feel that the Budget contains all the right instincts, but the timing is a little cautious and too far into the future. I hope that my modicum of unease will not be validated. I should be delighted to discover that my right hon. Friend has made good judgments on both the measures and their timing. Above all, as my right hon. Friend needs luck, that is exactly what I shall wish him.
  5.50 pm
  Mr. Malcolm Bruce: I recall being asked yesterday what I thought that the Chancellor might achieve in the Budget. I said that, if he were sensible, he would recognise that, after the disasters that he had inflicted on us, he could do very little good, but should be careful not to do harm.
  Clearly, the Chancellor was not listening to me or anyone else. The Budget will be greeted with disappointment and despair in many quarters of the country. It gives a sharp rap over the knuckles to those who suggested that we were at the bottom of the recession and could expect things to get better. It is clear that the Government expect things to become worse, and we are all going to be dragged down with them next year and the year after.
  As to the general background, I find it extraordinary that the Chancellor of the Exchequer can stand at the Dispatch Box and calmly state that the public sector borrowing requirement will be £50 billion next year. He did so having totally lambasted those people who suggested that, if he had taken a little more advice earlier and invested earlier, he might have avoided the situation in which he now finds himself. The Chancellor fails to understand the meaning of investment and the Government's role in ensuring that investment takes place. He is now borrowing to pay for failure, rather than investing to secure success.
  The Chancellor's comments on the events of black Wednesday and our leaving the exchange rate mechanism were extraordinary. If one were to believe the right hon. Gentleman, that would have been the first national debacle to be masterminded in advance. He gave himself credit for the achievement, and failed to recognise that he has not left British industry and the British economy in a position to deal with the single market. For a Government who claim to believe in the single market, it is the height of embarrassment to enter that market on 1 January, having just left the mechanism that was designed to make it work with some stability and confidence.
  As the right hon. and learned Member for Monklands, East (Mr. Smith), the Leader of the Opposition, powerfully and eloquently made clear, the reality is that the Government have been found to be political cheats who reached a position of power by sheer dishonesty and
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  defrauding the electorate. The Budget is a tax-raising Budget designed to tax, tax and tax again—it will tax this year, tax next year and tax even more the year after.
  What a cheek for the Government to pretend that theirs is the tax-cutting party. They have consistently increased taxes year after year, but so far the public have believed them. One can only hope that today's Budget will finally make the public realise that the Tories can never be trusted to tell the truth, even about history, never mind about promises for the future.
  The Budget contains taxes—not just income tax. As the right hon. and learned Member for Monklands, East said, the extension of the 20 per cent. band amounts to a difference of 50p a week. For most people on middle incomes, that money will be clawed back by the Budget's failure to index the general allowance. Therefore, most people will be £1·50 a month worse off as a result of those two measures.
  The Budget increases excise duties by double the rate of inflation. The increases in tobacco prices are mischievous and malicious. I believe that increases in tobacco tax are desirable for the health of the nation, but why target people on lowest incomes, who buy the cheapest cigarettes? That seemed to be a vindictive little measure. The increase in car tax will be particularly condemned in rural regions, where there are no other means of getting about and the Government have not introduced measures to try to improve the existing means.
  My right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) asked me what we could welcome in the Budget, as we should try to be even-handed as we are Liberal Democrats. I find precious little to welcome. I welcome one aspect: the Chancellor has listened to the arguments and recognised the importance of the Scotch whisky industry. As three distilleries in my constituency have recently had to reduce their labour, I hope that that proposal will at least prevent further job losses in that important industry.
  There are some welcome measures for the small business sector, such as those relating to the loan guarantee scheme and to value added tax on cash accounting, although the increase could have been much more. I have no doubt that the voters of Newbury will be expected to welcome the changes in the bloodstock regime, but I doubt that they will be very much impressed by them when they look at the consequences for their electricity bills.
  By freezing the increase in business rates, the Government have acknowledged the burden that the rates create. However, they have also acknowledged their total failure to create a viable system of business rates that does not require an annual fix.
  The Budget will be desperately disappointing for the unemployed. The Chancellor referred to worries about the rise in unemployment and the difficulties that the unemployed face, but he showed little willingness to grasp the nettle. With respect to the community action programme, I suppose that it is refreshing to bring back something which worked, but which was abolished by the Government. However, that measure will help only a relatively small number of people.
  The requirement for special measures for the long-term unemployed are welcome in principle. However, by limiting the measures to people who have been unemployed for two years, the Government have drawn

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  them far too tightly. I only hope that the pilot schemes will prove successful and the measure will be extended to people who have not been unemployed for that long.
  When we look at the list of bad news we see a 1 per cent. increase in national insurance—a tax increase by any other name. We see the restriction on mortgage tax relief, which constitutes a real cost increase for domestic home owners. We see the freezing of tax thresholds and the appalling prospect of the introduction of full VAT on fuel in two years. That is the one measure for which the Chancellor will be universally condemned. It is breathtaking that the Chancellor can introduce such a measure in such a way without acknowledging the poverty and hardship that it will cause millions of people who are on low incomes but do not quality for benefit. Few people in the country will not find the 17·5 per cent. increase in fuel bills in two years anything other than a substantial burden.
  The Budget is, effectively, a Budget of despair and a Budget of desperation which contains little for the unemployed and nothing for those struggling to cope with the recession. In it, the Chancellor merely exhorts those looking for hope and encouragement to hang on now. By God they will have to pay later.
  5.57 pm
  Mr. David Howell: As my right hon. Friend said in his marathon Budget speech, of course recovery is coming. We know that from seeing what is happening in the United States, where the growth figures and indicators are rapidly improving. I see no reason why the progress should be aborted unless, having been started by George Bush—who received precious little thanks for it—President Clinton becomes too enthusiastic in his protectionist tendencies. If President Clinton does so, recovery will be damaged and improvements here will be correspondingly damaged. However, I do not believe that will necessarily happen. As long as we keep a maximum pressure on the Americans and everyone else to avoid protectionist measures, the recovery will come. My right hon. Friend was right to set the measures that he has announced in the context of that coming recovery, to ensure that it goes ahead and is not aborted and undermined by over-hasty measures or allowing the economy to overheat too soon.
  Budget occasions—of which this will, mercifully, be the last—generate expectations that are far too high. Everyone looks to my right hon. Friend, or the Chancellor of the day, to achieve miracles when they cannot be achieved at any time, certainly not today. One forgets the European context in which my right hon. Friend is operating. Anyone who thinks that we have problems should look at the rest of Europe. Italy is going down into a black hole; France is about to experience a political earthquake, rather belatedly having the vestiges of socialism—all but President Mitterrand himself—swept away and finding itself in a completely new phase; the Swedish economy is drowning altogether; and the German economy is shrinking.
  In those circumstances, it is indeed miraculous that my right hon. Friend has been able to produce a Budget of balance and prudence and to develop so many interesting, if not necessarily very dramatic, proposals to carry us forward into the recovery process—a process that the
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  United Kingdom will be the first European Community country to enjoy. We shall certainly have a higher rate of growth than Germany and many other continental European countries.
  Like the very best Budgets, this one will mature. It will not result in immediate flag-waving and cheering, but neither does it justify rather splendid ranting such as we heard from the right hon. and learned Gentleman the Leader of the Opposition, who seems to have a basically erroneous concept of what my right hon. Friend is doing. My right hon. Friend says that he has gone this year for a Budget that is broadly neutral. That is a sensible but difficult stance. My right hon. Friend is building in, for coming years, a wedge of changes in the fiscal and monetary balance which will make sense against the background of rising economic activity. I recognise the skill of that approach, which I think is right.
  I greatly enjoyed the speech of my right hon. Friend the Member for Shropshire, North (Mr. Biffen). Indeed, I always enjoy his speeches. I am a little less worried than he is about the timing of the Chancellor's proposals. Incidentally, I should like to associate myself most closely with my right hon. Friend's remarks about the late Lord Ridley—a marvellously non-conformist character who sometimes drove his friends, and certainly his opponents, to distraction, but who contributed mightily to the thinking part of our affairs. He will be sadly missed. My right hon. Friend the Member for Shropshire, North has said that Lord Ridley was the grit that generated the pearls in the parliamentary oyster. Indeed, my right hon. Friend himself is not a bad piece of grit. In any case, we shall certainly miss Nicholas Ridley very much indeed.
  It is too soon to go into the minutiae of this very complex and interesting Budget, so I shall refer to three major issues. The first is the purdah that is associated with Budgets. I agree with the right hon. and learned Gentleman the Member for Monklands, East (Mr. Smith) that it is a very good thing that we may now be moving—I hope that we shall indeed move—away from this ridiculous convention, which guarantees that tax reforms are ill considered, ill prepared and dumped on an unsuspecting world in ways that have to be heavily revised, at great cost, afterwards.
  I shall be very glad indeed if my right hon. Friend's bold reform—bringing the revenue and expenditure sides of the Budget together, starting this November—results in opening up the discussion of tax reforms, which we could have done with years ago. It is absolutely ridiculous that, at present, the Treasury policy-makers have to go into purdah, whereas many of their advisers, including the seven wise men, have no purdah at all. Indeed, they fill every column with contradictory views, and these are added to by a variety of people—assorted ex-Chancellors and other commentators of every kind.
  In the case of this Budget, when there has been a vast surplus of advice, all we have lacked is additional comment from the Archbishop of Canterbury or the Chief Rabbi. We have had a swirl of outside advice, but the Treasury has been held in purdah, unable to participate in policy-making.
  The House of Commons ought to be able to take a little more initiative, perhaps by organising hearings before the Select Committee on Treasury and Civil Service in advance of the Budget. There is nothing to prevent us from doing so. We might have difficulty in getting Treasury Ministers to answer, but we could certainly set the debate

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  going far more vigorously than happens at present. In this regard, the House has a role to play, in addition to my right hon. Friend's initiative of changing the whole timing of the Budget cycle—a move that my right hon. Friend will be remembered for being bold enough to make. Others will have to sit back and say that the officials never told them they could do that—as was said in the 1930s, when the Conservatives decided to go off the gold standard.
  The second point on which I want to comment relates to capital and infrastructure. This is one area in which constant weakness has raised costs and accelerated the rate at which, in each cycle, the economy becomes overheated, increasing the volatility and management difficulty of the British economy. I want to see a very much greater impact from investment in the infrastructure of this nation. to cut costs and make us more competitive and to help to accelerate employment, as undoubtedly will happen.
  I welcomed in the autumn statement, and I welcome now, the final sweeping away of the old Ryrie rules, which prevented adequate harnessing of private capital to the public sector. It is very exciting that new projects are coming forward and that we shall be able to do what the great cities of Asia have long since been doing: mobilise massive flows of private capital to bring infrastructure, particularly transport, into the 21st century—in our case, even into the 20th century. In expressing that welcome, I gladly declare my own interest as a non-executive director of Trafalgar House, which has a major interest and has had some success in developing privately financed public-sector projects.
  Easing the advance corporation tax rules and improving the Export Credits Guarantee Department cover will also help very much in that direction. But that is not enough, so I must ask my right hon. Friend and his advisers in the Treasury to consider going further and starting to develop in this country what has been developed in many other countries—a separate capital budget for that part of the total budget which relates to public sector asset creation. The figures appear in the expenditure papers and, no doubt, in the Budget papers that are now being circulated, which I have not yet had time to examine.
  We are told that, of the total Budget spend, about £30 billion is designated for public-sector asset creation. Our friends in Japan say that a Government deficit should be financed by operating on the basis of market psychology and bringing home the fact that much of the deficit arises precisely from capital spending. The Japanese therefore have infrastructure bonds and normal deficit bonds, which they put before the market.
  That would not get round the problem of the market's attitude that this is all Government expenditure and should all be treated with the same scepticism when it comes to financing. However, we could make a major start in changing the psychology of the funding problem if it were possible to designate much more carefully and clearly the part of total Budget expenditure and the part of the total deficit to be funded that represented capital expenditure and public sector asset creation.
  I ask my right hon. Friends in the Treasury to consider that idea much more carefully in the future. I believe that it would help us to get out of the bind that we have been in. Throughout the 1980s, we enjoyed great success in achieving rapid growth in the economy, but we did not see adequate growth in support and infrastructure—the true supply side of the economy—that many of us, from the
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  early 1980s, urged was necessary. We said that, if that course were not pursued, there would be serious bottlenecks, considerable cost increases and a slow-down in the general performance of the economy.
  That is a very important area, and I was very glad to hear what my right hon. Friend the Chancellor had to say about it. However, more thinking, better presentation and a little more radicalism in respect of funding the capital side of the Budget are required.
  I am glad that we are now thinking radically about proposals to give people the opportunity and the dignity of working part-time or doing voluntary work, or of going into full-time education or training without forfeiting the state payments—perhaps "benefit" is the wrong word.
  I understand the joy for the Opposition of taking the figure of 3 million, or wherever we have got to, and using it as a rolling pin with which to hit the Government on the head. There are experienced Members on the Opposition Benches who have made proposals over the years for changing the nature of unemployment. They know that 3 million is a good figure with which to bash the Government but that it is not a real representation of the problem.
  We have to unravel the larger figure, and understand that within it there is a vast variety of different conditions which require sensitive and varied remedies in order to remove the whole concept of the scrap heap of unemployment. We must create in every individual who wants work, and in some who may have given up hope of getting work, the feeling that they have a function and a dignity in society.
  It is right to start with small schemes, and my right hon. Friend announced a few small schemes; indeed, some are not so small. They are interesting, and I hope that they will grow and develop, and that it will be possible, even in the adversarial politics which we operate in the House, to begin to do away for all time with the idea of the "scrap heap" of unemployment and the self-inflicted misery and undermining of confidence that that language creates. It should be made clear that everyone has a function, and the dignity which goes with that function.
  On the monetary side, what my right hon. Friend is trying to do—again this is not the stuff of headlines—is achieve some rebalancing between the monetary and fiscal stances in the economy. We have had the welcome descent in interest rates which has been amazingly rapid, and monetary conditions are reasonably easy. If the Bundesbank cut interest rates again, it might be possible for us to go a point or two lower, although it would be unwise for my right hon. Friend to change the relative short-term interest rate posture of the British economy vis-a-vis the German economy.
  Whenever we talk about monetary policy in the House, and whenever I hear my right hon. Friend talk about his plans for short-term interest rates, I feel that he is taking too much on his shoulders. The responsibility for short-term interest rate policy should be spread more widely and should be given more publicly to a central monetary authority, a reformed Bank of England, rather than left solely to the action and discretion of the Treasury, the Chancellor of the Exchequer and other Ministers.
  People will say that monetary policy should not become unaccountable in the hands of bankers, but one does not need to go all that way. A sensible compromise would

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  ensure that day-to-day responsibility for setting short-term interest rates and handling short-term monetary policy could be in the hands of a central monetary authority, while there was appropriate consultation with the political masters and those accountable to the House. That is possible—it happens in other countries. The Bundesbank is not totally separate from the political influences in Bonn. It pays attention to them, but it controls monetary policy short term, and that gives monetary policy and the setting of short-term interest rates additional credibility, which our system lacks.
  I should like to see a more independent Bank of England, without a total separation between the monetary authority and the Treasury. That would avoid the over-politicisation of interest rates and would enable that whole side of the budgetary balance to be managed in a more sophisticated way. It would give additional credibility to the currency and to the monetary judgments about short-term interest rates in relation to the currency. It would strengthen monetary policy generally. I hope to hear more constructive thoughts on that from my right hon. Friend in future; I believe that they will come.
  Generally, this is obviously a Budget of consolidation for this year, but it also makes an important point and breaks with a restrictive stance of the past. The Treasury was a "one year only" organisation—it could think only one year ahead. All parties in the House have urged that Treasury policy should begin to evolve one, two or three years ahead, both on the revenue and on the expenditure sides. One day, it might be possible to get Treasury officials to agree to something that cost more in year one because it would produce savings in years two and three. I can think of many projects which fell at that hurdle when I was a Minister; if a project cost more in year one, it was dismissed out of hand.
  With courage, which is his characteristic, and boldness, my right hon. Friend has started to raise our eyes to the length of the true budgetary cycle, which stretches over two or three years. It has taken courage, particularly at present, to do that and to drag the House into the modern world when not everything can be compressed within a one-year timetable.
  So we have consolidation now, and radical change lying further ahead. Given that recovery is coming, and given that it has to be sensitively handled, not by the elephantine assaults of the right hon. and learned Member for Monklands, East but by the subtlety and patience of my right hon. Friend the Chancellor, I believe that we are on the right path, and that we should stay on that path and give him full support.
  6.15 pm
  Mr. Roy Hughes: It is customary to contratulate the Chancellor on the delivery of his Budget. That I readily do. I note that his two senior colleagues, the right hon. Members for Shropshire, North (Mr. Biffen) and for Guildford (Mr. Howell), have rallied to his support, but it has been one of the least inspiring Budgets that I have had the privilege of listening to in my years in the House. One could recognise the reluctance to pour weedkiller on those lingering green shoots; nevertheless, much damage has been done by the Budget and an opportunity has been missed.
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  We have heard the Chancellor's first Budget in 1993. There may be a second bite at the cherry in the late autumn, but there is wide speculation that the right hon. Gentleman will not be in office then. Indeed, as I see things, the future of the Government is in question. No party can remain in office unless it can command a majority in the House, particularly on the main plank of its programme—Maastricht.
  In speaking in Budget debates in recent years I have repeatedly emphasised the terrible problem of heavy unemployment. I have indicated what a waste it is and the damage that it is doing to the very fabric of society. The Government never appeared to accept that concept. Even now, they seem to be paying only lip service to it.
  Officially unemployment has topped the 3 million mark, but the real jobless figure is more than 4 million. Therefore, the complacency of the right hon. Member for Guildford amazed me. To illustrate the severity of the position, let me point out that there are 27 people chasing every vacancy. For people under 25 years of age, unemployment in January was nearly 900,000, and that figure is rising. What chance have those young people got? Their lives are stunted from the word go. As to the long-term unemployed, those out of work for one year or more total more than 1 million. What a tragedy for so many people; they are thoroughly demoralised.
  The Government moan about their borrowing requirement, but do Ministers ever stop to consider that it costs £9,000 a year to keep an unemployed person, which, in turn, means that unemployment is costing the taxpayer £27 billion a year?
  Unemployment has social effects. It creates poverty, breaks up families, creates homelessness and ill health and leads to suicide. We are all vividly conscious of the ever-escalating crime rate, which is a constant worry to all decent citizens. Much of that crime is directly due to unemployment. The devil has certainly found work for idle hands and we now have a large alienated underclass.
  Another major factor in that increase in crime is the breakdown in family life. Government policies should aim to strengthen the family unit, which is the basis of an orderly society. Putting people back to work would certainly help, but now we have the lethal combination of mass unemployment and a soaring crime rate. No wonder the morale of the nation has never been at such a low ebb.
  In that context, the Chancellor delivered his Budget today. All he did was to hand out a few breadcrumbs. I appreciate that he does not have a magic wand. We did not expect him to cure all our major evils overnight and he has a huge deficit to contend with. Nevertheless, he has great powers and he had a great opportunity. The question is whether he rose to the occasion. The answer must be no.
  Imposing VAT on fuel, gas and electricity is simply criminal. It will have a highly detrimental effect on the poorest section of community—old people. The announcement was a complete negation of the Government's election and many other promises.
  One of the Chancellor's measures seems to be to cane the motorist. We are essentially a road-based economy and one does not need to be a Cambridge economist to realise that increasing the cost of transport increases the cost of almost everything. Not many months ago, the Chancellor assisted the motor industry by getting rid of car tax. The industry has responded magnificently. The principal redeeming feature of the economy in recent months has been the resurgence of the motor industry. February's

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  figures show that sales are up 16 per cent. on the equivalent month last year. The industry needs encouragement, particularly to develop its export trade, which can be so advantageous to our present adverse balance of payments.
  We do not have car assembly plants in Wales. Nevertheless, the Welsh economy is now heavily reliant on the components sector, and to penalise the industry only aggravates and increases unemployment in Wales and elsewhere. I say to the Government, back the car industry because it can do so much to stimulate the economy and build a sound trading base, as those two industrial giants, Germany and Japan, realised long ago.
  The building industry could do much to rejuvenate the economy and put people back to work. In the past month, there has been, admittedly, a marginal improvement in this sector but, overall, the building and construction industry is in dire straits. Building employers reckon that a further 100,000 jobs are at risk. Last autumn, the Chancellor released the receipts from the new sales of council houses, but only for a limited period. Much more is required. I am sorry that he did not introduce such a measure this afternoon. We urgently need a phased release of all capital receipts from the sale of council houses and land. Such a measure to help increase housebuilding, besides putting people back to work, would help to meet the pent-up need for social housing. Providing bed-and-breakfast accommodation for homeless families is far more costly, and only political dogma prevents the necessary action from being taken.
  Likewise, so many empty council housing association properties need renovation. Many school buildings are urgently in need of repair. We need to regenerate local areas affected by the decline in manufacturing and in the coal and defence industries. Such measures would be a boost for the building and construction industry. We did not, I am afraid, hear any such proposals from the Chancellor this afternoon.
  Another important aspect is training. Skill, after all, is the key to national competitiveness, and as a nation we are being left behind. Training opportunities for all who need them should be given a high priority. The British people are resourceful and, with the necessary skill training, a start could be made in rebuilding our manufacturing industry, which has been neglected for so long. A report that was leaked in recent days revealed that our manufacturing industry is in a parlous condition.
  My hon. Friend the shadow Chancellor has set out clearly how such measures as I have briefly mentioned could be paid for—by imposing a public dividend on the excess profits of the privatised utilities, by closing tax loopholes, which are costing the Exchequer millions, and by maintaining tax on share transactions. To achieve recovery, we need emergency investment in the industrial and manufacturing sectors of our economy. That could increase exports, reduce imports and help to provide for a lasting recovery. Even the CBI's pre-Budget message recognised that recovery should be given the highest possible priority. The Chancellor has not met the nation's needs in that sense. He should go without further delay before he does so much more damage.
  6.28 pm
  Mr. David Knox: I join my right hon. Friends the Members for Shropshire, North (Mr. Biffen) and for Guildford (Mr. Howell) in
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  congratulating my right hon. Friend the Chancellor on his third Budget speech. His first two Budget speeches were well constructed and to the point and today he maintained the high standards that he established on those two previous occasions. His speech was rather longer today and I join my right hon. Friend the Member for Shropshire, North in paying tribute to the stamina that he showed.
  The House is indebted to my right hon. Friend the Chancellor for the style with which he presented his Budget. It was a difficult Budget, but he produced a skilful Budget in extraordinarily difficult and tight circumstances. I congratulate him warmly on doing so and look forward to his fourth Budget towards the end of the year.
  I enjoyed the speech of the Leader of the Opposition very much. I think that it could be best described, in the word that Mr. Matthew Parris frequently uses, as a rant.
  For many years the debate on the first day of the Budget was marked by speeches from Sir John Stokes and Sir Alan Glyn. Both of those gentlemen retired at the last general election and I am afraid that this occasion will never be quite the same for me now that they are gone. Nevertheless, the hon. Member for Newport, East (Mr. Hughes) is—as indeed I am—a veteran of these occasions. Indeed, Mr. Deputy Speaker, I believe that in a former incarnation you were as well. No doubt the hon. Gentleman and I will continue the tradition and be joined by others, including my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant), who has recently been joining us.
  I welcome most of the proposals in the Budget. The measures which my right hon. Friend has introduced concerning industry, insurance and the environment will undoubtedly bring considerable benefits to this country. They are, however, very complicated and it would be wise to refrain from comment at this stage until one has had time to study them in rather more detail.
  I welcome the further move towards the 20 per cent. basic income tax rate. Clearly, it was not possible to go very far in this respect today, but I am glad that my right hon. Friend was able to take another step in this direction. Whatever anyone may think, there is no doubt at all, as recent election results have shown, that a reduction in the basic rate of taxation is something that the people of this country want—and it is, after all, our task to respond to the wishes of our masters.
  Despite the size of the public sector borrowing requirement, I am glad that my right hon. Friend introduced a neutral Budget today. It would have been very dangerous had he not done so, because it might have cut off expansion. I shall have more to say about this in a minute or two. It was rather ingenious the way in which my right hon. Friend managed to maintain a neutral Budget but nevertheless took steps which will ensure that the PSBR will be reduced in future years, by which time, we hope, economic growth will have restarted and the economy will be moving forward again. My right hon. Friend deserves considerable congratulations on the ingenuity which he showed in this respect.
  I am glad that my right hon. Friend found it possible to introduce further measures to help the unemployed. As growth takes off, as my right hon. Friend very rightly pointed out, unemployment will continue to rise, and it is only right that measures should be taken, albeit of a

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  short-term nature, to try to ease the lot of those people who will be out of work over the next few months, and perhaps over the next year or two as well.
  I was very glad that my right hon. Friend did not introduce value added tax on books and newspapers. Like most hon. Members, I have had considerable correspondence on this matter during the past few weeks. I am glad that at least in this respect I shall be moderately popular with my constituents for the next week or two.
  I was rather less happy about the increase in the tax on petrol. I have a widespread rural constituency and my constituents rely on their motor cars. They will not be terribly happy, therefore, about having to pay an additional amount in petrol tax. On the other hand, I am pleased that my right hon. Friend has maintained the discrimination in favour of unleaded petrol as I feel that this makes a real contribution to improving the environment in which we live.
  I was rather interested in my right hon. Friend's proposal concerning the self-assessment of income tax. This is an idea that was floated by the late Lain Macleod in the late 1960s. At that time there was a young man working in the Conservative research department. He later went on to become the Member for Kingston upon Thames and today is the Chancellor of the Exchequer. I wonder whether he got that particular idea from his days working with lain Macleod over a quarter of a century ago.
  This Budget will not be judged in the medium or the long term by the specific measures that it contains, because they will be forgotten very soon. The Budget will be judged on the contribution that it makes to getting the economy out of a recession that has lasted for far too long and to reducing a level of unemployment that is far too high.
  I thought that the measures that my right hon. Friend introduced in his 1991 Budget and again in his Budget last year were more than enough to generate growth and get us out of recession. Indeed, in the spring and summer of last year there was quite a lot of evidence, admittedly mainly anecdotal, that this was happening. Then everything came shuddering to a halt. The trouble was, and still is, a lack of confidence and I suspect that that owes a great deal to the uncertainty about the ratification of the Maastricht treaty.
  Although I have no doubt that the European Communities (Amendment) Bill will eventually reach the statute book later this year, the delaying tactics of the Europhobes and others whose motives are purely party political are having a very damaging effect on the British economy. Their behaviour is creating grave doubts in the minds of our European partners and in other countries about our intentions and is undermining economic confidence and holding back our economic recovery. The early ratification of the Maastricht treaty would do more than anything else to restore economic confidence and enable us to move out of recession. And, of course, it would make my right hon. Friend the Chancellor's job much easier.
  However, the ratification of the Maastricht treaty will not be enough on its own. If confidence is to be restored, there must be a certainty that the demand for goods and
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  services will increase and so lead to an increase in the demand for the labour to produce those goods and services.
  That is why I was delighted that my right hon. Friend ignored the advice from some sources to increase taxation significantly in his Budget and to cut public expenditure. In the depths of a recession nothing would have been more foolish. Tax increases and public expenditure cuts would inevitably have resulted in a reduction in demand, which would have cut off the green shoots, pushed back the start of the recovery and made recovery much more difficult. The right time to increase taxes and cut public expenditure is when the economy is booming and looks like overheating. The wrong time is in the depths of a recession. Then, taxes should be cut, as the Chancellor cut them last year, and public expenditure should be increased, as it has been in the past two years.
  The level of demand will be boosted over the next few years as a result of the devaluation of the pound during the past six months. British goods and services are now cheaper in export markets and foreign goods and services are now dearer in the British domestic market. This provides British industry and commerce with greater opportunities to export more and sell more at home and I hope that they are exploiting to the full the advantage that they now enjoy.
  It will be some time before the beneficial effects of devaluation are reflected in the balance of payments figures; perhaps it may be as long as two years. But the effects on the level of demand in the United Kingdom should be apparent much sooner. I feel that the level of demand generated by my right hon. Friend's recent policies, including the Budget, should be sufficient to generate the necessary level of growth to enable us to move out of recession and to start growing once again.
  I have already welcomed the measures announced by my right hon. Friend to tackle unemployment. They will help to ease the worst effects in the short term, but they will not deal with the fundamental problem. The long-term solution to the problem of unemployment lies in the demand management policies about which I have been speaking. Between February 1985 and January 1987, unemployment in this country exceeded 3 million. It then fell quite sharply, so that by 1990 it was slightly in excess of 1·5 million. Over the past three years, alas, it has risen again, and it is now just over 3 million. From 1945 until 1974 we had full employment. The level fluctuated a little, but unemployment exceeded I million only twice, and then only briefly. In 1955 and 1965, also very briefly, unemployment fell to the very low level of 1·1 per cent. of the working population, about one tenth of what it is today.
  Unemployment did not start to rise when the present Government came into office. It began to rise in 1974, under the previous Labour Government, and has been at an unacceptably high level ever since. I do not think that the Labour Government or the present Government can be proud of their records on unemployment over the past 19 years.
  In recent years, there has been a feeling that high unemployment is inevitable. It does no harm, therefore, to remind ourselves that for most of the post-war period the situation was very much better than it is now. The current level of unemployment shows how far we have moved from the high level of achievement of the 30 years

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  immediately after 1945. Nor does it do any harm to remind ourselves of the effects of unemployment, socially and economically.
  Unemployment is socially divisive. It is difficult to have one nation, which is, after all, the principal domestic aim of my party, if 3 million people are out of work and if 1 million of those are long-term unemployed and have been out of work for more than a year. Lord Callaghan once said that the real division in our society is between those in work and those who cannot find work. Unemployment is also economically wasteful. If we are not using all the available labour, we are not maximising national output. It means that, as a nation, we are forgoing wealth which we could enjoy.
  It is nonsense to suggest that demand has peaked and that there is no work available. We all know that we could consume more goods and services if we had the opportunity to do so. We also know that we could spend much more on social and public services. Potentially, there is plenty of additional demand for goods and services, public and private. The task facing us is to ensure that the level of demand is sufficient to utilise the potential supply of labour, capital and enterprise. That is the way back to full employment.
  If a much lower level of unemployment is to be achieved and maintained, there must be pay restraint. In the past, there has been a strong tendency for the British economy to generate increases in earnings in excess of the increases in output, causing wage and salary cost inflation. The tendency has been especially powerful when the economy has been booming.
  Until 1979, successive Governments tried to control excessive wage and salary increases by incomes policies. Since then, the determination of pay has been left to employers and employees and when the increases got out of hand and inflation rose the Government tried to brake those increases by demand deflationary policies.
  Recently, although still too high, wage and salary settlements have fallen back sharply, almost certainly as a result of the recession. The Government rightly want a 1·5 per cent. limit on public sector pay this year and they hope that increases in the private sector will be of the same order. Few doubt that pay restraint is necessary at present but, if it is necessary now when increases are likely to be modest because of market conditions, surely it will be even more necessary when pay increases start to rise again as we move out of recession, as unemployment falls and as labour shortages reappear.
  If we are to avoid having to brake back the recovery before full employment is reached, because wage and salary increases are out of control, consideration should be given to extending the attempts to restrain pay settlements to longer-term arrangements. If the Government are right to believe that low pay settlements in the public sector protect jobs—and they are—surely low pay settlements elsewhere in the economy will also protect jobs. Is not there a case for thinking again about incomes policies? Is not the right time now—in the depths of the recession—when the pressures for pay increases are at their weakest?
  6.44 pm
  Mr. Bill Michie: I know that it is traditional to congratulate the Chancellor of the Exchequer. I shall do so because it is the tradition rather than because I believe that I should appreciate, or congratulate him on, what he has presented to the House.
  The Chancellor made a very long speech—far too long. I was always told, in engineering research and certainly when I was a local government councillor, that if one did not have a good argument, one should make a long report. That is fair enough when dealing with reports: the way to get out of that is to do a fast reading course, get rid of all the rubbish and read only the facts. Unfortunately, a fast reading course does not help me when I listen to a long speech such as that which we heard this afternoon.
  I shall not dwell on the speech for too long because much has already been said about it, but I am bitterly disappointed that there is to be value added tax on fuel, a fuel tax. That is perhaps the most cruel thing that the Government could do. I do not believe that everyone will be compensated through their benefits, as the Chancellor claimed. He knows very well that thousands of families will not qualify for such help with the fuel tax. In the past, we have discussed old people suffering from hypothermia and worried about whether they could keep warm and how we could help them. Now a dreadful tax burden is being placed on them, which will make matters even worse. I am very disappointed about that.
  I am also disappointed about the fact that, despite some of the issues that the Chancellor raised, the message did not get across as to exactly why the country has been going downhill. The hon. Member for Staffordshire, Moorlands (Mr. Knox) said that it was due to the world recession, among other things. That is true, but it seems that it is never anyone's fault. I believe that it is partly the fault of the Government and partly the fault of the philosophy by which they live.
  I do not believe that one can stand aside and let things happen; nor do I believe that high wages are the reason for depression and unemployment. There is a theory that high wages bring a nation to its knees, but I should like someone to explain to me why the countries of the third world, where people are paid peanuts for hard work, are not the richest nations in the world. It does not work that way. The problem is that we do not understand the difficulties that face us.
  I started this week by visiting schools in my constituency and discussing further school closures, which are to take place because of a supposed lack of money or the standard spending assessment. The Government say that we must have training and a skilled work force. Schools are being closed, but the Government still expect to have a more skilled work force. Again, I do not understand the logic of that.
  Local authority spending is being greatly reduced. The infrastructure around our towns and cities is falling apart, family life is disintegrating and crime is rising. What is the answer? The Government take more money out of the local economy, but I do not see the logic behind that.
  More and more people are homeless, but, like many hon. Members, I receive letters from building companies who write to Back Benchers in sheer desperation asking us, for goodness sake, to ask the Government to do something because the industry is going to the wall. I did not hear much in the Budget which will help those people. The

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  Budget was a big disappointment on the local authority, education and housing fronts and, perhaps even worse, on the job front, which has already been mentioned. The Chancellor said that short-term prospects were not the answer. I fully understand what that means. One cannot throw money at a project and hope that jobs will be provided sooner or later and that new skills will suddenly appear. That has never been the case. I accept one or two points that the Chancellor made, including the fact that employers will get a subsidy if they employ someone who has been out of work for two years; in other words, one buys oneself a job with one's dole money. I welcome the proposal to help 100,000 people who are unemployed to start small businesses. That will be nice for the 100,000, but pretty poor for the 300,000 who have lost their jobs since the last election.
  I welcome the proposal for 30,000 long-term unemployed people who may be able to go back into some form of education, but I am still worried about what sort of education they will get and what sort of training skills they will achieve.
  I had a wry smile at another of the Chancellor's proposals, for a new community action programme for the voluntary sector which should help to provide jobs or opportunities for at least 60,000 people. I seem to remember that there was a very good community programme, created by this Government many years ago. It was so good that it was popular. It was not only popular but it created permanent jobs and good wages, but once it got to that level the Government scrapped it altogether because people were getting decent wages and decent training. I hope that the Government have learnt some lessons from the past and will create a community action programme that is beneficial, not just to the community but to the unemployed.
  I come to the business of action for jobs and the reasons why our industry is in dire trouble. I echo the query raised by my right hon. and learned Friend the Leader of the Opposition: if there is such good news, why is it not published? Why have not the Government come out with a fanfare of trumpets to say that the whole of manufacturing industry is on the up? It has not been published and I assume that we have to suspect the worst: that the situation is not as good as the Government are claiming.
  Skills cannot be introduced overnight. One problem that I have had over the past few years has been to explain to the Government and other hon. Members that one can shut a factory any day very quickly and disperse the skilled labour force on to the dole queues or elsewhere, but one cannot recreate a factory overnight. Once those skills have been lost they cannot be found among those standing on street corners. That is not the way in which engineering skill and technology work. Surely this Government must have got that message by now. We are talking about a 14 per cent. reduction in real training for jobs. Statistics that I have here show that Government spending on training, at constant prices, was £2·4 billion in 1990–91. It fell to £2·1 billion in 1991–92 and remains at the same level this year. It is planned to remain at £2·1 billion for 1993–94, but will fall to £2 billion in the two years after that. In real terms, spending this year has therefore been reduced by £300 million on 1990–91 levels, a reduction of 14 per cent., yet
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  the Goverment are still claiming in this Budget to be increasing training and education for the country's future prospects. While we have had this reduction in training, unemployment has risen by about 87 per cent.
  I said at the beginning of my speech that I feel no enthusiasm about the Chancellor's speech. It strikes me that the Government are still slow in learning that, in order to have a nation that is wealthy, it has to be a nation that is working and is competing in the world in technology and new sciences. The only way in which the Government or the nation can achieve that is by long-term investment and long-term planning.
  Our industrial base is in tatters. I walk through some parts of my constituency and see the places where I used to work and where my father used to work where there is nothing but dereliction. There is nothing in the Budget which will cure that either overnight or in the long term.
  As a plug, Mr. Deputy Speaker, I draw the attention of the House to my early-day motion No. 1540 entitled "Technical and Engineering Capability and the Vulcan Bomber". Basically this expresses the hope that the last of the Vulcan bombers should stay in this country because it is a demonstration of the engineering and design skill of this nation in the past. Many of those designers and engineers are still alive today and some are still fairly active. I say that as one who had the privilege of being near a Vulcan bomber for many years, many years ago, and as one who has a soft spot for it. We should keep it, as I said in this early-day motion, to demonstrate to our future generations what skills we had in this nation and to inspire them and, I hope, this Government to invest in a proper diversification programme in order to retain and retrain skills for peaceful products.
  It is no good saying that we have no cold war at present and therefore we cannot afford to invest in defence and that we have no idea of how to invest in peace.
  It reminds me of the story I heard once about creating jobs in shipbuilding. An old man suggested that we should build luxury liners so that 4,000 old-age pensioners could be put on those luxury liners in the winter months—especially now that we are going to have a fuel tax—with 2,000 or 3,000 staff to look after them and let them go floating around to warm climates. The shock horror is that no nation can afford that sort of logic, but when one looks at it we have the Ark Royal and other large warships with thousands of highly paid, highly skilled and highly trained personnel floating around the world and we feel that to be a necessity. It may be a necessity, but if the will is there to do it for time of war, which we hope never comes, many of those ships would be lost in the first year. Surely with the right will we can create products for peace and protect our skills and our jobs for the future.
  I must make one point on a subject on which I thought the Chancellor did not dwell: putting pressure on the banks. Many small businesses, as most hon. Members will know, have complained about the way in which banks have treated them in the past two or three years. I hope that sooner or later we shall have a Government who will get a grip on the banks and protect some of our small companies.
  There is plenty of money in this nation and I hope there always will be. If one asks where one finds all this money, it is amazing how the Government can find money for their pet projects like defence; how they could find money on black Wednesday when billions of pounds went down the

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  pan because of the stupid ERM fiasco and also when billions were spent trying to prop up the poll tax system created by this Government and scrapped by them.
  No one will convince the Opposition that there is not enough money to invest in the nation and bring it back to the top of the industrial nations ladder, where it rightly belongs. We should stop frittering away our taxpayers' money on stupid projects proposed by the Government which are built on bias and prejudice. We should instead invest in this nation, which I believe will once again be one of the best industrial nations in the world.
  7 pm
  Sir Anthony Grant: The hon. Members for Sheffield, Heeley (Mr. Michie) and for Newport, East (Mr. Hughes) made what were from their point of view sincere speeches, even if they contained an excessive degree of gloom. I have no doubt that we shall hear persistently from the Opposition Benches tales of gloom and woe.
  I am extremely fond of the hon. Member for Newport, East, with whom I have often crossed swords in debate. He is a splendid constituency Member who reminds me of another great Welshman, Lord Tonypandy, who once told me about a report that appeared in a local Welsh newspaper of a funeral. The noble Lord recalled that the report read, "As the coffin was being lowered, the vicar, the Reverend Eli Jones, slipped, fell into the grave and broke his leg. That cast a gloom over the whole proceedings." That reminds me of the gloom that can be spread by the speeches of Opposition Members, even though it is wholly inappropriate to our economic recovery.
  The Chancellor has for a long time been unjustly maligned. I have no hesitation in congratulating him on the way in which he has resisted much unnecessary abuse and has introduced a skilful and relevant Budget. Let us not forget some of the difficulties that he faced when he took on the task, including a world recession and the need to deal with some mistakes in monetary policy that had been made since 1987.
  Mr. Bill Michie: Nobody admits mistakes.
  Sir Anthony Grant: I hear what the hon. Gentleman says. I assure him that I admit my mistakes. The mistakes of which I speak were egged on and connived at by the Opposition parties, which encouraged the sort of action which led to the difficulties that my right hon. Friend had to face. That in turn led to our needing an over-rigid monetary policy which resulted in great suffering among, in particular, two sections that were least able to deal with it. I refer to the construction industry and the housing market and small firms, about which I shall say more shortly.
  I am particulary glad that, in terms of political correctness, it is now recognised that the economy cannot be dealt with purely by monetary means and that we must also adopt fiscal policies. I am glad that we have returned to that more sensible and flexible system. As a result of the severe problems that the Chancellor faced on taking office, there was a total lack of confidence in business.
  Mr. Michael Spicer: My hon. Friend said that the Government's mistakes had resulted from monetary policy being too rigid.
  Sir Anthony Grant indicated dissent.
  Mr. Spicer: I must have misunderstood my hon. Friend. The problem was that they abandoned monetary policy in favour of fixed interest rates. That was the mistake to which my hon. Friend should allude.
  Sir Anthony Grant: Immediately after black Wednesday, when stock markets throughout the world seemed to collapse, there was over-reaction everywhere, particularly in this country. A few Conservatives of great financial rectitude—including perhaps my hon. Friend—did not take the same view, but the Opposition parties were in favour of interest rates being lowered unnecessarily. I, too, was guilty of favouring such a policy and I accept blame in that respect. We were obliged later to have an over-rigid, over-intense interest rate policy which reached as high as 15 per cent. before we entered the exchange rate mechanism.
  I will not pursue that now, though I am sure that my hon. Friend the Member for Worcestershire, South (Mr. Spicer) will do so if he has an opportunity to speak in the debate. We now recognise that not just monetary policy but a mixture of monetary and fiscal policy is essential to run an economy such as ours. So I welcome the thrust of the Chancellor's strategy.
  I am sufficiently long in the tooth to remember the time when, in 1967, the then Labour Government had to devalue. In the following Budget, introduced by the present Lord Jenkins of Hillhead, we had the biggest increase in taxation anybody could remember. He was cheered to the echo—I was in the Chamber at the time—for taking that action. So the Labour party cannot teach us anything about increases in taxation.
  At that time, Lord Jenkins emphasised that recovery following devaluation should be export led. The principle holds good today. The difficulty is that, at a time when we require an export-led recovery, the countries of Europe and Japan are suffering from recession. That makes our export effort more difficult but even more vital.
  I welcome the Chancellor's measures on export credit guarantees. I recall from the days when I had some responsibility for that issue how the credit game was played by other countries and we were easily deceived. I am glad that the Chancellor is aware of that and is introducing measures to improve credits for our exporting industries.
  As Opposition Members are wholly committed to the Rio environmental decisions, perhaps they will explain how they would implement them. What measures would they introduce? We await with interest their answer in due course. They must not dodge the question. If they try to do so, my hon. Friends and I will persist in repeating it.
  I agree with my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) that unemployment is the gravest problem we face. It also represents a major burden on the public sector borrowing requirement. In the 1970s, about which my hon. Friend spoke, I had some humble responsibility in the then Government, when the unemployment total reached I million. The hon. Member for Bolsover (Mr. Skinner) thumped the Dispatch Box hysterically and created a disturbance of monumental levels.
  My responsibility at the time was for the regions. When we were unceremoniously thrown out of office in 1974 by an ungrateful electorate, unemployment had come down

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  to about 700,000. Immediately Labour took over, it went up, and within a year it reached 1 million. There was then not a peep from the hon. Member for Bolsover and his hon. Friends. So we need no lessons from the Opposition about unemployment. Even so, it is a grave problem and I welcome the measures that have been announced to deal with it.
  Only the revival of the small firms sector will have a true long-term impact. Large firms have already shed labour during the recession, and I fear that their labour forces will never return to their previous levels. Small firms have the resilience and flexibility, especially in the county of Cambridgeshire, to respond to the measures that the Chancellor has wisely introduced.
  I was almost the first Minister to be responsible for small firms. The late lamented Lord Ridley had had that responsibility for about three weeks before I came to that office. In those days we clearly recognised that the future of the economy in a free market society lay with a healthy small firms sector. After we left office, the whole thing declined under Labour rule, and nothing was done to help small firms. The hon. Member for Bradford, South (Mr. Cryer) was the Minister responsible, and small firms languished under that regime. Later, when the Conservatives took office again, they were rediscovered, as it were, and I hope that we will retain that attitude.
  It is essential to small firms—indeed, for the whole nation—that inflation is kept under control. The Chancellor and the Government can take pride in the way in which they have handled the problem of inflation. Small firms also want low interest rates. I have always wanted lower interest rates because I detest a high interest rate policy. Although I want pressure on them continually to be downwards, we have probably reached the stage when a degree of stability is justified. Small firms would now welcome stable inflation and stable interest rates. They wanted, and have now obtained, help with investment, and assistance with the corporation tax and VAT thresholds. They sought assistance with capital gains tax and inheritance tax and, above all, with the wretched uniform business rate. My right hon. Friend the Chancellor noted all that, and I congratulate him on his sensitivity in recognising the needs of the vital small business sector.
  In particular, I am glad that he recognised the difficulties of small businesses in grappling with VAT and Customs and Excise. I have received endless numbers of letters about the ferocity with which the Customs and Excise administer their task. Small firms have described them as the Gestapo and the KGB. That is probably an exaggeration as they are worthy and honourable civil servants, but they have been over-zealous and draconian. I am pleased to see the changes that my right hon. Friend has announced.
  One problem that has not been addressed is that small firms are greatly affected by the credit game—or indeed the credit racket. Large firms abuse smaller suppliers and contractors by taking their credit to the limit, causing considerabe cash flow problems. When I was in office I said that it was disgraceful, but larger firms were not prepared to admit anything until we found evidence that it was true. I was then thrown out of office and that was the
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  end of that. However, the problem still exists. It should be possible to find a legislative format to bring some sanctions to bear.
  Mr. Mark Wolfson: Does my hon. Friend agree that there can be a damaging and dangerous domino effect when large, principal contractors are slow to pay so that three or four sub-contractors down the line are all dependent on the money coming through?
  Sir Anthony Grant: My hon. Friend is absolutely right. In the absence of legislation, will Treasury Ministers and my right hon. Friend the President of the Board of Trade think carefully about the problem and emphasise to the large industries with which they are always dealing that it is in the nation's interest that they should pay their bills on time and ensure that small firms, which they were once, have a reasonable cash flow?
  Manufacturing industry has made remarkable strides since 1979 when we were bottom of the productivity league of G7 countries. We are now at the top. Output and investment have increased and are increasing. Progress in industrial relations has been quite remarkable. As my right hon. Friend the Chancellor pointed out, not since Victorian times or thereabouts have there been so few strikes. We can be justifiably proud of that. However, my right hon. Friend the Prime Minister was right to point out that industry requires more attention in the present economic climate and in future.
  Compared with our partners in Europe and elsewhere, we have not paid much attention to manufacturing as we should. It is a matter of national culture rather than Government policy. If we were to ask anyone in the street in Britain what we meant by an engineer, most people would think of a grubby chap in overalls who repaired cars. However, the same term in Germany, Japan and elsewhere means someone who is held in high esteem and occupies an important position in industry and in the company. We have to move towards that attitude.
  In the days when we were trying to encourage regional policy, I sought to encourage brighter people to run manufacturing industry in the north-east and the north-west. The difficulty was that the rewards, the prestige and the ease of work were greater for the brightest people if they went to the City of London to do no doubt very important paperwork in the service sector. We have to address that problem, and I would like to see the manufacturing sector in general and engineering in particular given a much higher profile.
  My right hon. Friend the Chancellor has set the correct course for the future. He has tiptoed delicately between financial rectitude and the need not to damage the delicate flower of recovery. The small business sector will respond most vigorously, especially in East Anglia and Cambridgeshire.
  Dame Elaine Kellett-Bowman: And the north-west.
  Sir Anthony Grant: And the north-west, as my hon. Friend says.
  All that is needed now is that mythical word, confidence. Confidence can be achieved only by stability and, with great respect to my hon. Friend the Member for Worcestershire, South, small businesses want certainty. Therefore, I echo the remarks of my hon. Friend the Member for Staffordshire, Moorlands. The sooner we get

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  over the uncertainty about Maastricht and our situation in Europe, the better it will be for everyone. The CBI, the chambers of commerce and all the industrialists with whom I have spoken want it over and done with so that there is certainty for the future. I hope that that will soon be the case. If it is, I look forward with great confidence to the future of our economy, thanks to the wise management of my right hon. Friend the Chancellor.
  7.16 pm
  Dr. Jeremy Bray: The hon. Member for Cambridgeshire, South-West (Sir A. Grant) asked what the Opposition would do about the undertaking under the Rio convention to reduce carbon dioxide emissions. I offer one simple device off the cuff. If VAT on domestic fuel and power is considered the appropriate solution, it would be perfectly possible to make that revenue-neutral on VAT by reducing the average rate, so that there was no net increase in cost to the consumer but there was a switch in taxation to discourage people from using so much fuel and power. However, the Treasury do not think that way. They are concerned not with Rio but with the biggest single Budget measure—the £2,300 million that they are taking out of households by levying VAT on fuel and power.
  The Chancellor faces a difficult situation, but he has only himself to blame. First, he is simply not believed by the market, by his colleagues in Government or by the House. We have seen a public facade building up in his defence, behind which his hon. Friends will be able quietly to knife him in the back. There were and still are good reasons why a Chancellor who trimmed his sails, changed course and abandoned his policies on the scale of black Wednesday should feel he had to go. The job has to be held by someone who is believed. No amount of special pleading about being overwhelmed by speculators will do—that is always the story. In any case, the Chancellor was maintaining that the economy was not vulnerable to the speculators.
  Secondly, the Chancellor represents a Government who made the most colossal errors of judgment by unleashing the credit boom of the late 1980s. There were plenty of warnings, not least from within the Treasury, and even from that much maligned Treasury model, as I showed at the time, but they were ignored.
  Thirdly, having suffered such wounds, the Chancellor is devoid of all principles. I mean principles not in any moral or high-minded sense, but simply in the sense of relating one day's improvisations to the next to avoid them cancelling each other out.
  The Government used to have a medium-term financial strategy. It survives as monitoring ranges on a number of variables which do not include the most important one, which is the exchange rate. A target for the increase in tax yields three years ahead is offered up as a fetish to the markets of £10·5 billion, but elsewhere in the financial statement is the estimate that the error in forecasting the PSBR for the coming year is some £6·5 billion. For the error three years ahead, there is no estimate, but it must be far more than anything like the £10·5 billion that the Chancellor is offering up.
  The Chancellor is unlikely to argue that no strategy is preferable to a wrong strategy, but others not saddled with the Chancellor's mistakes can stress the importance of having a workable strategy, and that is what I shall try to
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  set out. A workable strategy is a political necessity. People need some sense of where the economy is and where it is going if they are to behave sensibly in their personal interest and that of their families. People do not believe the Chancellor, so they are not prepared to train for the long-term, to invest or to plan for the future. Still less are they told by the Chancellor that their real incomes today have grown faster, and are now some 10 per cent. higher, than the economy can afford. We also need a strategy to get us out of the difficulties we are in and to keep us out.
  I say to my right hon. and hon. Friends that there is no easy way out for us. The popular ideas of Keynesian demand management provided a workable rule for correcting small excursions from full employment in situations where there was a sheet anchor against inflation in the shape of Bretton Woods and a stable valued dollar. With the extreme imbalances that we have today of unemployment and the current account and public borrowing, we have to look deeper.
  Nor, I say to my hon. Friend the shadow Chancellor through my hon. Friends on the Front Bench, is it sufficient for us simply to advocate the supply side measures of more investment and training, vital though they are. The arguments about the imbalances are not part of the detail that can be worked out only in the circumstances as we find them as we approach the next election. While politically it is right for us to point out that we are suffering from Tory errors and that it is a Tory responsibility to deal with them, we have to show that we know what the imbalances are and realise their full seriousness, and show ourselves more competent to deal with them when it comes to be our job to deal with them.
  What, then, of the design of a viable strategy? What does it mean in terms of immediate policies? In general terms, the answer is obvious: it has to be aimed at restoring and maintaining the balances—unemployment, the current balance and public borrowing. It should be prepared to use all available instruments, down and up—direct and indirect taxes, interest rates, funding and public expenditure—recognising that they all have an economic and political cost. The strategy may express the policy priorities of the Government, but even with all the instruments, the freedom of movement for a Government to express their priorities is severely circumscribed, and the greater the imbalances, the less scope there is for indulging those Government priorities.
  All that is so much waffle for politicians and economists educated in a purely verbal tradition, who have never been taught to add up, never mind multiply. What happens is that one verbal simplification is pitched against another, the one adopted inevitably meeting disaster, leaving the sponsors of the unadopted simplification claiming that they had the right answer and believing that they were right.
  Despite the all-too-obvious weaknesses and failures of economics and economists, a great deal of progress has been made in technical analysis of economic management in the past 20 years. Technical analysis is a good servant but a poor master. It is in the interests of Ministers, journalists and gurus to rubbish it, because they find it difficult to master. It is difficult to master, but that is part of their job. What matters is whether it works. Does it point to practical policies that impress politically?
  It is a measure of the Chancellor's stupidity that he has allowed the Treasury's capability for technical economic analysis to degenerate in recent years. Any half-sensible

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  Chancellor makes sure that he is as well equipped as anyone else in the game. I welcome the panel of independent forecasters, but behind the scenes it only shows up the increasing weakness of capability within the Treasury.
  Of the three principal instruments that the Treasury should have, the main one is the characterisation of the national economy and its behaviour—the Treasury model. That model has been stagnant now for five years. It has grave, well-known errors within it, and nothing is done to correct them from year to year. There is no treatment within the Treasury of the global economy. The work that was once done there has now been farmed out to the National Institute of Economic and Social Research and to the London business school, and they run the international model used by the Treasury. Therefore, the Treasury inevitably does not fully understand all its characteristics.
  Finally, when it comes to characterising the efficiency and performance of industry, the DTI may bleat until the cows come home and officials in its innovation unit may produce a report—only a few weeks ago, those officials told me that they expected it to be published—but it is useless them bleating in that way if they cannot characterise the impact of the dire situation of manufacting industry on the economy as a whole. The Treasury has no means of listening to such arguments.
  Modern economics treats economic management as a game between different players, with different interests and capabilities. Monetarist doctrine was built around ideas of expectations. That gave way to concepts of commitment, learning and credibility. My favourite is a recent Federal Reserve Board working paper on "Rational Addiction with Learning and Regret". I am not too sure about the rational bit for the Government, but otherwise it is a strategy that I should have thought would appeal to them.
  It is not necessary to go into the technical arguments. What is necessary and possible is to point to the broad nature of the conclusions. The imbalances are so large that, if they are not corrected, they will get worse. They are also so large that it is irrelevant to argue whether unemployment should be 2 or 4 per cent.: it should be a great deal less than 10 per cent. It is irrelevant to argue whether the current balance should be allowed to stray over 2 per cent. of GDP: it should be in surplus in the depths of the recession. It is irrelevant to argue whether public borrowing should exceed the 3 per cent. Maastricht criterion: it should not be heading over 8 per cent., even in the depths of a recession. Inflation is a scourge, and if it is not kept low, it runs the danger of becoming south American. However, low inflation has no virtue on its own if it is achieved at the cost of wrecking the other essential balances.
  The trouble with arguing that we must deal with those structural imbalances, but not yet, is that they will get more difficult and painful to deal with later. They cannot be corrected overnight, nor even within five years. We can make a start now and, by being seen to make a serious start, set going the virtuous circles of increasing investment, confidence and stability.
  For each instrument, we must ask how much it can contribute to improving one balance without damaging the others more. It is a matter of analysis. Let there be
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  argument about that, and let us hear the argument. The panel of independent forecasters could provide such material, and the Treasury could match it. However, having looked at the evidence, my judgment is that an increase in income tax on those in work would help public borrowing more than it would harm unemployment. A further reduction in interest rates would weaken the exchange rate, and the sheet anchor against south American inflation, more than it would help investment and employment. An increase in Government investment would help employment and competitiveness more than it would harm public borrowing.
  Then the argument moves on to the detail of the instruments—whether they be tax rates or allowances, and what conjuncture of relative interest and inflation rates, and what kind of public investment, we should have. The dynamics of policy must be set out, showing how policies will adapt to changing circumstances while pursuing consistent objectives in a consistently maintained strategy. No such thinking goes on in the Treasury today. Treasury people do not even attend the conferences at which such policies are argued out.
  At the same time, of course, vigorous supply side measures are needed—in the sense not of lower taxes but of greater skills, better quality, greater appeal and enhanced capacity. That is a matter not of subsidy and second-guessing, but of looking for the features of company finance, corporate control and competition that have so weakened British manufacturing, or have never allowed it fully to develop.
  None of the tax measures that the Chancellor today announced to bolster the corporate sector, especially small firms, addresses the differences that are so inescapable when we compare the position of small and medium-sized manufacturing enterprises in this country with those in Germany.
  The Select Committee on Science and Technology has just returned from an examination of industrial competitiveness in Germany—talking to the Government, and visiting firms and research institutions. The remarkable fact is that in Germany firms bearing names such as Bosch, Diesel, Zeppelin and so on are all still there today, but they are booming. They maintain high research budgets, and increase them when profits fall. In contrast, the Chancellor was trying to make it easier for the entrepreneur to sell out of his company. That is the last thing that a German industrialist would do; yet here we are facilitating precisely that weakening of control and commitment that underpins the strength of the German engineering industry.
  Mr. Alan Duncan: Is the hon. Gentleman not taking an over-rosy view of the German economy at the moment? Mercedes Benz has just announced that it intends to lay off 30,000 people, Porsche has suffered a reduction of about 80 per cent. in its exports, and the German machine tool industry is all but in a state of collapse. The rosy picture that the hon. Gentleman paints is rather inaccurate.
  Dr. Bray: The German unemployment level is about half that of the United Kingdom, and the average income in Germany is a great deal higher than it is here. The hon. Gentleman is confusing the short-term situation with the underlying strengths of the German economy. The same

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  goes for the Japanese economy. The hon. Gentleman really ought to go and look at those economies at first hand.
  Judged by the criteria of what a strategy should be like, the Chancellor's Budget lacks perspective on the severity of our problems, and any sense of strategy. It is a rag-bag of expediency, put together in a futile bid to save his own political skin.
  7.32 pm
  Mr. Michael Spicer: I have been in the House for almost 20 years, and one of the coincidences over that time is that when I have been on the Back Benches., more often than not I have followed the hon. Member for Motherwell, South (Dr. Bray) in such debates.
  I do not know whether I should reveal this, but the hon. Gentleman and I share what could be called a professional interest and experience in the rather tricky, if not dreary, business of econometric forecasting. I was involved with that many years ago, and I know that the hon. Gentleman was, too. Indeed, it was out of that experience that he created the requirement for the Treasury to publish forecasts, as it now does.
  I admit that I have moments of enormous gloom about this forecasting business, but I have to accept what partly lay behind what the hon. Gentleman said—that it is still necessary to bash on with the forecasts, if only because it is self-evident that changes in monetary policy and interest rates have their full impact two years out. So, whether one likes it or not, one has to anticipate what the effect of a particular policy change will be two years out.
  I begin what I want to say by agreeing—perhaps surprisingly—with the opening remarks of my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant) in praise and support of the Chancellor of the Exchequer. My right hon. Friend has not only comported himself with great stamina today, but has dealt extremely courageously with the enormous torrent of criticism and personal abuse that he has suffered over the past few months. I put on record my personal respect for the dignified way in which he has responded.
  I say that despite the fact that I am someone whom I believe the Chancellor has in the past called a "moaning minnie" and a "siren voice", for advocating lower interest rates, for reasons that I have mentioned, two and a half years ago. At that point it seemed to me that, two years out, high interest rates would have the effects that we see now. The hon. Member for Motherwell, South, too, said that interest rates should have been lower then, and I believe that my hon. Friend the Member for Cambridgeshire, South-West said the same. However, I do not believe that either of them gave any reason why interest rates were kept high.
  The reason, self-evidently, was a policy of giving priority to exchange rate management, as opposed to the management of monetary policy in the interests of this country. That is the exact opposite of what my hon. Friend the Member for Cambridgeshire, South-West said. The problem was not too rigid a monetary policy but exactly the opposite—an abandonment of monetary policy.
  Sir Anthony Grant rose—
  Dr. Bray rose—
  Mr. Spicer: I have prompted two hon. Gentlemen to intervene. I shall give way first to my hon. Friend, and then to the hon. Member for Motherwell, South.
  Sir Anthony Grant: I remind my hon. Friend that interest rates reached their highest level before we entered the exchange rate mechanism. They then went solidly down, whatever other criticisms one may have.
  Mr. Spicer: I am glad that my hon. Friend has raised that point. The process of informally shadowing the deutschmark and having an informal fixed exchange rate started two or three years before we finally formalised the situation by going into the exchange rate mechanism. We should have learnt by the mistakes of the previous two or three years where the problem lay.
  For a while, interest rates were too low and we had inflation, which was caused by the fact that we were gearing up to the German economy and giving greater priority to our exchange rate policy than to monetary policy. That was a continuum of what had been going on for three or four years, and I am glad that my hon. Friend has reminded us that the process goes further back than our entry into the ERM.
  Dr. Bray: I do not believe that I advocated lower interest rates two years ago. When the economy has been put into a grossly unstable situation, one has to take action to correct that. The mistake was made in 1987. Lord Lawson well describes in his book how the crash on the stock exchange led him to reduce interest rates at a time when all the signs were that both interest rates and taxes should have been increased.
  Mr. Spicer: That may be one interpretation of events. Another—which has the merit of following the way in which the policy was pursued after 1987, through 1988 and 1989—relates that monetary policy, in so far as it existed, was determined to maintain a certain parity within exchange rates, especially against the deutschmark. I believe that that is how most commentators and historians now view that policy, which was maintained until white Wednesday last September, when we came out of it. I shall deal with that in a moment, if I may.
  The Budget deals with two issues that I believe are interrelated—the deficit, and growing unemployment. Those two issues are related because they share the same derivative—low growth over the past two or three years. Indeed, so low has growth been that it has been negative by 4 per cent. over the past 30 months.
  As I have said, that low growth rate has been caused by excessively high interest rates, which in turn were caused by a policy that placed greater priority on exchange rate manipulations for many reasons relating to Maastricht and the policy in Europe. Replying to what my hon. Friend the Member for Cambridgeshire, South-West said about confidence, one of the essential requirements now is continuity of policy.
  We must learn the lesson of the past six years, of putting an exchange rate policy and a determination to move towards a single currency in Europe above the direct monetary interests of this country. We should perhaps have learnt that lesson by the 1930s, when we tried to link our currency to the United States' economy through the gold standard. That did not work. In fact, it was a disaster. However, we tried it again, although we have now stopped

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  for a while. The greatest boost to confidence would be to state quite clearly that we are now going to manage our economy in terms of its own requirements.
  At present, the British economy requires sustained economic growth. That growth, as my right hon. Friend the Chancellor of the Exchequer said, requires a relaxed and easy monetary policy. He said that his narrow money target was zero to 4 per cent., and that the target for M4 was 3 to 9 per cent. Most people would say that the narrow money target is within the band, although, as my right hon. Friend the Chancellor said, at the higher end. However, in respect of broad money, which many people believe is the crucial factor in getting the economy moving again, most analyses show that it is still very low, if not still negative. It certainly was negative until very recently.
  It is clear that the basic policy parameter and confidence factor to which my hon. Friend the Member for Cambridgeshire, South-West alluded requires an easing of monetary policy. The objective is also clear: to create such substantial, steady and progressive growth that unemployment will fall, causing the totality of benefits to reduce, the tax take to rise and the deficit to be addressed.
  My right hon. Friend the Member for Shropshire, North (Mr. Biffen) made a very interesting point earlier in that context. Indeed, the hon. Member for Motherwell, South may have alluded to the same point. My right hon. Friend said that one of the problems with trying to generate employment at the moment is that there is a discontinuity between output and its effect on employment. We may be going through a new industrial revolution, particularly affecting the services sector. Investment seems to be causing unemployment rather than employment. We need at least 2 per cent. growth simply to keep steady in terms of employment levels.
  We are experiencing enormous strides in productivity at the moment. It may be argued whether that is because we are at the back end of a recession or because there are substantive industrial revolutionary effects, and that we are entering a new phase. However, it seems that we need about 2 per cent. growth just to stay steady in respect of employment levels. In order to bring down unemployment, we will have to generate growth levels that we have not been able to sustain in the past. The task is rather enormous. We must aim for above 2 per cent. simply to reduce unemployment from its present rate.
  That requires an investment culture and a substantive investment procedure from now to the distant future which will create and expand jobs as opposed to just replacing labour for capital. I believe that such an investment culture has three ingredients. My hon. Friend the Member for Cambridge, South-West and my right hon. Friend the Chancellor of the Exchequer have already alluded to the first of those ingredients. The first ingredient is good labour relations.
  Undoubtedly, one of the great gifts of the Conservative Administrations of the 1980s was to provide for stable, sound and good labour relations. The figures that my right hon. Friend the Chancellor referred to earlier are remarkable. We had a better strike record in the last year than we have had for 100 years. That is a tremendous contribution and of enormous importance to investors, particularly those considering investing from abroad.
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  Foreign investment must be added to the massive investment that will be required to keep pace with the rate of unemployment.
  The second ingredient is the continuation of a liberal trading policy, and this is where I become so concerned about our obsession with trading with Europe. Of course it is important that we trade with Europe. It is important that we have open trading relationships with Europe. However, as has been said several times today, Europe will, into the foreseeable future, be a rather slow growth place with which to trade.
  Leaving aside the fact that we trade typically £10 billion per annum in deficit with Europe, the fundamental point is that, unless we are very careful, we will lock ourselves into a political union governed by a protectionist philosophy.
  The great thing about Britain, our enormous advantage and the reason why we have had such investment in this country over the past 10 years is not that we were going to join a political union; in fact, quite the reverse. Our advantage has been that we stood on a bridge between Europe and the rest of the world, because we had a liberal trading policy. Companies could come here in the knowledge that they could trade both with Europe and with the growth areas of the world, which in the next few years may be the United States, and which will certainly include the Pacific basin.
  We have the largest and the third largest international airports in the world because we happen to be at the crossroads of much international trade. The fact that this country is a bridge between continental Europe and the other great trading sectors of the world is an enormous advantage.
  If we are to maintain in future the kind of investment from abroad that we have enjoyed in the past, we must maintain open trading policies and our relationships with the rest of the world. We must continue to act as a bridge between Europe and the rest of the world.
  It is wrong, and the converse of the truth, to say that we encourage jobs by joining a protectionist, political union in Europe. Quite the reverse: the jobs come because we are a bridge between Europe and, outwith Europe, hopefully with the rest of the world.
  Mr. William Cash: Did my hon. Friend notice the quite extraordinary and outrageous survey by the CBI which it sent to Members of Parliament and to peers, which stated that inward investment to this country from the top Japanese and American companies would be adversely affected if we failed to ratify the Maastricht treaty? All the points that my hon. Friend has made so validly were completely undermined by the extraordinary parliamentary briefing, which bore very little relationship to the report actually submitted to the CBI. The CBI put its own spin on it and gave the impression that, by failing to ratify the Maastricht treaty, we would jeopardise inward investment. Those companies quite clearly stated in the report that that was not the case, and that it would make no difference at all.
  Mr. Spicer: I am glad that my hon. Friend makes that important point. I saw the press reports at the weekend. Many canards have been spread about all this, not only in Britain. We are told that, through political union, every country will get more jobs. The Danish Government are

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  using the argument that political union will create more jobs. It is suggested that every country in Europe will have more jobs as a result of political union.
  Britain will get the jobs if we are part of a wider trading movement which pervades the world.
  The Economic Secretary to the Treasury (Mr. Anthony Nelson): I endorse my hon. Friend's point about the importance of trade with countries outside the European Community. Of the £1·3 billion of extra Export Credits Guarantee Department cover announced by my right hon. Friend the Chancellor today, a great majority will be in developing countries, in which we are up to our limits in terms of cover. Many major projects and export development opportunities lie in those countries. I am sure that my hon. Friend will join me in welcoming that.
  Mr. Spicer: I certainly welcome the concept of putting ECGD on a par with other countries. I also welcome the proposal to make it cover other countries. However, unless I misheard him, my hon. Friend made a specific point about developing countries. Our relationship with developing countries is important, but I was referring to linking in to fast-growth parts of the world. I take my hon. Friend's point.
  My third point is the real guts of what I want to say. The third and most important characteristic of a country which wishes to attract the massive investment which I have said we shall require merely to keep pace with the present rate of unemployment is low taxation. It is on taxation that I have some comments to make about the Budget.
  I am pleased that my right hon. Friend the Chancellor of the Exchequer has found it possible to focus more on indirect taxation than direct taxation. It is magnificent that he has set the target of reducing the base rate ultimately to 20 per cent. That has to be right. He is right to maintain the rate of direct taxation and to have various measures around it which relate to business.
  I am worried about one danger. I do not say that the Government have fallen into it yet, but I have a lingering worry. It will be made clear when we relate expenditure and revenue in one Budget. Of course the Government are right to have combined the Budget and the autumn statement. Until we have one Budget, it will be difficult to say clearly whether we have allowed expenditure to get out of control.
  I am concerned that, in our fiscal policy, we ensure that our expenditure meets the revenue that we have available and not the other way round. I want to see the revenue determined first; we should then fit the expenditure into what we can afford. If revenue starts to chase up expenditure—that is the danger—a dangerous ratchet effect can be created. Then more expenditure is chased by higher taxation in the interests of sound finance.
  We reach a point that my right hon. Friend the Chancellor rightly said he wanted to avoid, at which the wealth-creating private sector is squeezed out. He was right to say that not Whitehall but the private sector ultimately creates new jobs. In order to allow the maximum private sector investment from which growth must occur, we must ensure that public expenditure is brought into line with what we can afford as a nation. That means that it must be brought into line with low taxation.
  Once we have growth, of course, the tax take increases, and we enter a benign cycle. We have more money for
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  hospitals and public expenditure. However, it must be that way round. We shall not know until the autumn whether public expenditure is properly under control, but it must be that way round. Therefore, the broad policy must be one of public expenditure related to what we can afford and in current circumstances an easing of monetary policy.
  Above all, we must have a monetary policy which reflects the future requirements of the country, not a monetary policy which fits the requirements of other countries through a fixed exchange rate. We are now, at last, on the right track. There is the hope of recovery, but a massive and daunting task lies ahead.
  Mr. George Howarth: I am following the hon. Gentleman's arguments on his third point closely. Does he accept that there is an alternative way of looking at public expenditure? If it is focused carefully on capital projects which generate demand in the private sector, it can be offset by the increased yield of taxation, which feeds back into public finances. There is a careful balancing act to be performed. Public expenditure can work in the reverse of the way he describes, provided that it is properly focused on areas of public expenditure which create demand from the private sector.
  Mr. Spicer: Of course there is a relationship between public spending and private investment on occasions—I could not agree more. One wants to make sure that the mesh is correct.
  I listened to what my right hon. Friend the Member for Guildford (Mr. Howell) said about distinguishing more clearly between capital and current expenditure. I have a little more difficulty than my right hon. Friend on that, because in the public sector there is a much closer connection between current and capital expenditure. If one spends money on roads, there is a blurring of money for repairs and so on, which is current expenditure, and capital expenditure. Of course I accept that there is a relationship between the public sector and the private sector in that context. It is important to get that relationship right and to establish proper contracting procedures and so on.
  However, if we are to achieve the growth we require—for the reasons that I gave earlier, we require enormous and sustained growth—it must ultimately come through the private sector. That is what the Budget is all about. In that context, I wish it well. As my right hon. Friend the Chancellor and others have said, we shall look at it again when we come to match expenditure with revenue in the autumn.
  7.57 pm
  Ms Diane Abbott: In Hackney we have the 11th highest level of unemployment in the country. So the test of the Budget for ordinary people in Hackney, as for ordinary people everywhere, is what it will do for unemployment. We are told that by this summer the total number of people unemployed in the country as a whole will be the highest since records began 100 years ago.
  So if the Budget does not meet the test of addressing unemployment, it will have failed. Of course, the Chancellor did not ignore the subject. He revealed with a flourish a package of new schemes which are supposed to be what the Budget will do for the unemployed. So I wish

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  to examine those schemes to determine to what extent they offer substantial help for the unemployed and to what extent they are merely window dressing.
  Five main schemes—some of them new, some beefed up versions of old schemes—were revealed this afternoon: learning for work, community action, an increase in the business start-up scheme, a new scheme called TEC challenge and a proposal to give subsidies to employers on a pilot basis to employ the long-term unemployed.
  The Chancellor tells us, with enormous pride, that the learning for work scheme will provide 30,000 places for the long-term unemployed to undertake a year's vocational training. First, 30,000 is not a huge figure; it represents a handful of places per constituency. Secondly, and more important, the provision of 30,000 places for a year's vocational training does not begin to meet a demand that has become increasingly loud in the months preceding the Budget—that the Government re-examine the rule that prevents people from studying for more than 21 hours without losing benefits.
  It is heartless of the Government to puff up the provision of 30,000 places when hundreds of thousands of unemployed people who would benefit from the range of training and education opportunities that are available in our institutes of learning will continue to be thwarted. They will still have to face the fact that, if they return to educational training for more than 21 hours, they will lose their entitlement to benefit.
  The rule is particularly heartless in the current circumstances. Whatever Conservative Members say, we shall face high unemployment rates for some time. For weeks, the Government have hinted and teased about the possibility of flexibility on the 21-hour rule; the learning for work scheme that they have offered in its place is a derisory response to our objections to a rule which continues to be unfair, and continues to penalise unemployed people who genuinely want to retrain and to improve their education.
  We are told that the community action scheme will offer 60,000 places for unemployed people to work in the community. That figure, too, is not very high, compared with the unemployment figure of 3 million. More important, however, the scheme offers people a mere £10 on top of their benefits to engage in voluntary work. Ministers ought to stop and think. Ten pounds a week will not even pay for travel and lunch, and it certainly will not help unemployed women to pay child-care and creche costs.
  Community action is crippled from the start. It will not meet the needs of unemployed women with children; and, certainly in London and the south-east, that extra £10 will not make it practical or feasible for people to consider voluntary work. Many of them will be unable to pay for travel, meals or the new clothes that they may need to do such work. I note, moreover, that community action is supposed to be delivered through the voluntary sector—the self-same sector that the Government have decimated for many years by cutting local authority funds.
  The other part of this glorious package is the business start-up scheme. We were told that there would be 10,000 more places on that scheme. Ministers do not mention,
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  however, that after three years only 58 per cent. of the businesses started under it are still going. I dare say that, after four years, the proportion will be even lower.
  The Government's other brand-new scheme is the training and enterprise council challenge scheme, under which TECs across the country will bid for money from a central pool for job creation schemes. The schemes will be judged according to the extent to which they involve the private sector. The Government seem to have no idea about the reality of life in our inner cities. In areas such as Hackney and other parts of inner London, and Manchester and Birmingham, the private sector is virtually atrophied: in Hackney, the largest single employer is the local authority, followed by the health service. [Interruption.] Conservative Members may sneer, but schemes that depend too heavily on the involvement of the private sector necessarily discriminate against residents of the inner cities.
  Mr. Peter L. Pike: Does my hon. Friend agree that, in constituencies such as hers, the slashing of the urban programme will have a bigger impact on jobs—or, rather, on the loss of jobs—than the Budget?
  Ms Abbott: That is an important point.
  Conservative Members jeered at the notion that local authorities were major employers in areas such as Hackney. It is not the fault of people in Hackney that traditional areas of employment—small businesses related to the docks, for instance—have declined since the war. The structural changes that have taken place in inner-city employment are not the fault of the inhabitants; they should be able to trust the Government to understand those changes and tailor job-creation schemes accordingly, rather than sneering in a way that suggests that the preponderance of local authority employment results from choice.
  Mr. Duncan: Will the hon. Lady outline the measures taken by the glorious council in Hackney to attract private enterprise back into her constituency—if any such measures exist?
  Ms Abbott: I know that the hon. Gentleman is not familiar with the problems of the impoverished inner city, so I shall forgive his ignorance. Let me tell him, however, that the Government have chosen Hackney council to participate in the city challenge scheme. It is working closely not with the private sector, because the private sector in Hackney is atrophied, but with housing associations and other voluntary organisations to help to improve and renovate housing in Hackney.
  Hackney council is keen to work with the private sector in 1993. I invite the hon. Gentleman to accompany me any day of the week and to walk up Kingsland high street and Stoke Newington high street, to visit the industrial estates on the edge of the Lea valley and to see what has happened to industry and business in Hackney under the present Government. Hackney's last major employer closed down four or five years ago. It does not suit a Government who have done so much to smash manufacturing in areas such as London and the south-east to sneer at the people of Hackney because they rely on the local authority as an employer more than they would like to do.
  Let me return to the Government's much-touted package of schemes. We shall have to see how the final scheme works—the scheme that will subsidise employers

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  to take on the long-term unemployed. I do not wish to knock it before it has got off the ground, but such schemes are particularly heartless, in that they are promoted as a realistic answer to the problems of unemployment. We hear today that, even in the borough of Hackney, 58 people are chasing every job vacancy. That figure is not particularly high: in other London boroughs, particularly the outer boroughs, the figure is even higher. Surely it is heartless to promote and publicise such schemes, suggesting that only a lack of will or ability on the part of the unemployed prevents them from working. In fact, if the jobs are not there—and, for 57 out of every 58 of my constituents, they are not there—the most wonderful schemes in the world cannot return people to employment.
  Listening to the Chancellor's annual speech is always interesting, but those who wish to know the truth must look at the Red Book. Given the amount that will go into the Government's schemes in the coming year, the package of schemes to which I refer will receive the equivalent of only £55 million in 1993–94. That is a derisory amount to spend on employment. I realise that it does not represent the entirety of Government spending, but it is the entirety of spending on the schemes that I have mentioned. It is particularly derisory and heartless given that we are approaching the summer, when unemployment will be at its highest since records began.
  These schemes are simply window dressing. They are Mickey Mouse schemes, which offer a shadow of hope to the unemployed but do not begin to meet the reality of the unemployment crisis that faces people in in other parts of London, in the south-east and internationally.
  I am afraid that it is hard to escape the conclusion that the Government are interested in forcing people back into the labour market at the lowest possible wages. At least the Government now talk about putting people back to work, but they promote a low-wage economy. If I were a member of the Government, I would not be so enthusiastic about boasting about the amount of inward investment to this country, as the Government have been reduced to doing.
  Part of the reason for the inward investment to this country is the fact that we speak English, which has nothing to do with Government policy. Another reason for that investment is that wages in this country are 44 per cent. of those in Germany. I do not believe that growth and a return to full employment in this country can be sustained by basing our competitive edge on low wages rather than skills, training and education. In the long term, it cannot be a viable course for this country to seek to compete on low wages and poor conditions rather than education and training. That is why it was regrettable that the Government did not see fit to re-examine the 21-hour rule for people on benefit as it stops them entering full-time education and training.
  If one wants to find the truth of any Chancellor's Budget statement, one has to look at the Red Book. We should forget about the window dressing and see what the Red Book says about unemployment. It says that it will be "some time" before unemployment starts to fall again. What does the Government's panel of advisers—the seven wise men—say about unemployment? The panel prophesy that unemployment will continue to rise and that, by the end of the year, it will be between 3·1 million and 3·4 million.
  The Budget offers nothing for the unemployed in the short term apart from window dressing. The Government
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  know that, and the presentation and content of the Budget are heartless. The Budget does not begin to meet the concerns of ordinary people in Hackney and the country as a whole.
  One aspect of unemployment which, sadly, will probably not be raised during the entire five-day debate is black unemployment. Recent research has shown that black unemployment in this country is twice as high as white unemployment. In my constituency, the unemployment rate among young black males is as high as one in two. Those frightening figures for black unemployment are a tragedy for the black community because the generation of black people who came here from the Indian sub-continent, the Caribbean and across the old Commonwealth in the 1950s and 1960s came specifically to work. It is a tragedy for those in the black community that their children and grandchildren are being thrown on the economic scrap heap.
  Specific factors affect black unemployment in this country. They include the shake-out of labour in public services, health and transport, which have traditionally been high employers of black and ethnic minority people. Black people are affected by discrimination and by what Americans call the "last to be hired, first to be fired" philosophy. The loss of jobs in local government affects black people, who had a choice of fair employment opportunities in local government, certainly in big cities.
  What are the Government doing about unemployment in general and black unemployment in particular? They are doing nothing. The Government talk about employer-based training schemes. Statistics prove that such schemes discriminate against black and ethnic minority trainees. It is cruel for the Prime Minister to talk about a nation that is at ease with itself when the Government are prepared to let unemployment rip and bear most heavily on some of the most vulnerable sections of the community.
  What the black community—and, indeed, the rest of the community—demand from the Government is action on unemployment and policies to generate full employment. The black community want the Government to take the lead as an equal opportunity employer and to ensure that their training schemes are not discriminatory and are equally accessible to white and black trainees. They want the Government to show some concern, and support and devise specific schemes to address the problem of black youth unemployment in inner cities. I know that not many people are concerned, but black workers from all over the Commonwealth helped to rebuild this country after the second world war. I believe that their children and grandchildren deserve better from the Government than the studied indifference that they have encountered in previous years.
  Unemployment has affected the housing market in the south-east. There can be no return to business confidence in London and the south-east without a revival in the housing market. I cannot talk about conditions in the north, Wales or Scotland, but I know that the rise in the housing market helped to promote a feeling of boom conditions in the late 1980s in London and the south-east. That feeling may have been unrealistic, but there was a feeling that we were experiencing a boom. We will not have a revival of confidence unless the Government do something about the housing market.
  Today the bankers Morgan Grenfell have issued a report showing what those of us who are home owners

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  living in London already know—house prices in London have fallen 25 per cent. in the past four years and the council tax will further depress house prices in London. There are more people in London living in houses worth less than their mortgage than anywhere else in the country. The stamp duty changes will do little to help home owners in London and the south-east. One cannot get much in inner London for £60,000, which is the top limit for those who will be helped by the stamp duty changes. Unless there is a revival of confidence in London and the south-east so that people believe that they have a chance of obtaining and retaining jobs, the housing market in London will not start to move again.
  Even on the Government's own figures—which, as we know, have been adjusted and massaged to put the best possible face on reality—there are more than 10,000 unemployed people in Hackney. One in four males is unemployed and almost one in five women is unemployed. What is worse is the fall in the number of unskilled people in the labour market because they are not even bothering to register as unemployed. The cuts in local authorities and health authorities that will take place this year as a direct result of Government policy will make the unemployment rate in Hackney even worse. Local authorities and health authorities are the major employers in inner city areas. People in Hackney, and, I suspect, all over the country, want a return to full employment.
  When I was a sixth-former almost 20 years ago, my contemporaries—young people of 16 and 17 who were thinking of leaving school or going on to further education—and I had discussions and thought about what jobs we would do. It never occurred to people leaving school in the late 1960s and early 1970s that they would not work at all. One of the harshest results of the Government's mismanagement of the economy over the past decade has been that a generation of children have left school in Hackney and elswhere who feel that they will never work. They believe that it is not worthwhile getting an education or training because the jobs are not there. To blight the hopes of a generation in that way is one of the cruellest things that the Government have done.
  It is all very well for Conservative Members to weep crococile tears now—
  Mr. Derek Enright: They are sniggering.
  Ms Abbott: Yes, they are indeed sniggering, which shows how little the problem concerns them. It is all very well now—in the 1990s—for Conservative Members to weep crocodile tears about the unemployed and to wring their hands in anguish over the issue, but Labour Members and people in the country know that throughout the 1980s the Government deliberately used high unemployment as a weapon to smash the trade unions and keep down wages. Nobody takes those crocodile tears seriously now.
  The test of the Budget for ordinary people—not journalists and political professionals—is what it will do about the central tragedy in economic life: the unemployed. The unemployed are offered Mickey Mouse schemes, window dressing. This is an exercise in public relations. The statistical and economic data behind the Chancellor's speech indicate that the Budget is based on the assumption that unemployment will continue to rise in the foreseeable future.
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  What has been presented to us today is failure. The Budget fails my constituents. It fails the unemployed people of Hackney and in the rest of the country. It will be seen for what it is. When, in a few years, the Government go to the electorate, the way in which they have cheated, deceived and failed the unemployed will not be forgotten or forgiven.
  8.20 pm
  Mr. Ian Taylor: If there is anyone who has failed, it is the hon. Member for Hackney, North and Stoke Newington (Ms Abbott), who has not addressed the question of how to reduce unemployment. All hon. Members would very much like to see full employment. On that question, there is no difference between us. The differences between us relate to the means of achieving and maintaining full employment. That is the aspect of the matter which the hon. Lady and, indeed, the rest of her party need to address. We heard a short, jolly, churlish and negative speech from the right hon. and learned Member for Monklands, East (Mr. Smith).
  I simply do not understand why Opposition Member after Opposition Member failed to welcome the strategy behind the Budget. The purpose is to create a medium-term and long-term framework for industry and the rest of the economy—
  "the only way to achieve sustained growth and high levels of employment."
  What we need is a framework within which to stabilise the economy and encourage and strengthen businesses that invest in Britain's future. That is what we heard from the Chancellor of the Exchequer this afternoon and what the country wanted to hear.
  The words that I quoted a moment ago are from a document issued by the Labour party last week. It is described as Labour's budget for jobs and I have scanned it with great interest. Having looked at the strategy, I am puzzled by the fact that Labour Members have not welcomed the Chancellor's speech. What is the great difference between that speech and the speeches of Opposition Members? The Chancellor has dealt with the practical reality of how the objectives are to be achieved and how the framework strategy is to be met. This Labour document does not put forward one idea about how to raise the money to tackle the problems that we all know are to be found in the economy. It is a false prospectus of the worst sort.
  I welcome the strategy that has been set out by the Chancellor, whose speech almost enters the record books as perhaps one of the longest Budget speeches this century. I am not very strong on the history of Budget speeches, so I cannnot be certain about that. In any case, the two-hour speech that we heard today contained a great deal of meat, which will be considered in detail during the Committee stage of the Finance Bill. My right hon. Friend addressed several key issues at the macro-economic level, some of which I wish to refer to.
  I was delighted to hear my right hon. Friend emphasise why membership of the exchange rate mechanism had been very important. Hon. Members differ as to whether the day of our departure was black Wednesday or golden Wednesday or white Wednesday. I regard it as black Wednesday, but let us not be pedantic. There can be no doubt that the Government's attempt to adjust the inflation expectations of people in this country once and for all was worth while. My hon. Friend the Member for

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  Worcestershire, South (Mr. Spicer), who is not in the House at the moment, attached too little importance to the effect of our entry into and membership of the ERM in breaking the traditional British habit of inflating our way out of difficulties, of preferring high levels of inflation to the tough decisions that are necesary to proper management of the economy. Given that there were high levels of inflation under the last Labour Government and that, by and large, high levels of inflation are associated in the long run with high unemployment, I am perplexed by the Opposition's attitude. The ERM did indeed reduce inflation expectations. At some point we shall have to look again at the whole question of managed exchange rates within the open capital market of the European Communities. However, that is not a matter for this speech, although it will undoubtedly come up at the Committee stage of the European Communities (Amendment) Bill.
  We should be cautious about the effect of our leaving the ERM on black Wednesday. That event provoked a fall in the value of sterling. The fall appeared to be very welcome in that it made our exports more competitive. However, we rely rather heavily on trad—particularly on imports, which make up one quarter of final demand. The potential danger is inflation of imports and, therefore, the return of inflationary pressures to the economy. That has yet to be seen, partly because United Kingdom manufacturers have not increased their prices. They realise that demand is still rather flat and, as overall inflation expectations are still low, wage settlements have been very modest. However, hon. Members should not believe that we have conquered the dragon of inflation. It is still there, writhing on the floor. A weak pound is not something that any Government want to see. Even if we are not in the ERM, economic policy must take into account the position of the pound vis-a-vis the currencies of our competitors.
  Nevertheless, we have witnessed an ability to adjust, to weaken monetary policy. Interest rates have fallen and the fall in the value of sterling itself has weakened monetary policy further. I am very pleased that this has given us an opportunity to tackle the problems of asset deflation. It is an opportunity that we must grasp. But the way in which some of us regard the montary aggregates as already indicating the return of a good degree of buoyancy to the economy should not be underestimated. MO is pushing at the upper end of its set range and there is quite a hidden impetus, which will be revealed in the months ahead. I know that M4 has been criticised as being rather flat on its back. I suspect that one of the Chancellor's reasons for giving slightly more buoyant figures for M4 is that he is adjusting the full funding rule by allowing the banks' and the building societies' purchases of gilts to be taken into account. If that is the case, we are witnessing an overall loosening of monetary policy. That will be welcome on one condition—that we tighten up on the fiscal side.
  On the question of balance in the economy, there is no doubt that, as we have had significantly weakened monetary policy in recent months, we should pay attention to the fiscal side of the equation. The Chancellor has very graciously set forth a long-term strategy to that end. Too seldom do Chancellors set out their intentions with regard to taxation over a number of fiscal years. My right hon. Friend is to be commended on that score. My caveat is that the incidence of tax biting has been delayed to the beginning of 1994–95. In effect, there will be a generally
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  neutral effect next year. I will not be critical of the Chancellor's endeavours because he has moved in the right direction, but I put down a marker: given that the medicine has been dangled before us, it would be better that we took it quickly. I make that point to my hon. Friend the Financial Secretary.
  Mr. Wolfson: My hon. Friend has given a balanced view, but does not he agree that if action such as he suggests had been taken sooner rather than later, it could have had a dampening effect on recovery? That is the key.
  Mr. Taylor: It is a complex argument. I do not wish to prolong my speech, but there are many factors which impinge upon confidence. If it were felt that the Government would have difficulty funding the deficit at any reasonable level of long-term interest rates and that the debt-to-GDP ratio would get out of hand, that would be damaging for confidence, in the widest sense of the word, and might snuff out a revival which, in other circumstances, monetary conditions might already have safeguarded.
  The issue is complicated. My point is that the funding of the deficit and the belief that the Government have a credible long-term strategy, including an early move to increasing taxation, would have been on balance a better judgment. Far be it from me to know whether that is likely to be the case. Time will tell. The great point about making speeches in the House is that, although very few listen at the time, plenty of people are prepared in a year's time to check on what one said. So Hansard has my fate in its hands, so to speak.
  Even the excellent recent survey on inflation by the Bank of England—the report which the Chancellor instructed it to make—indicated clearly that fiscal policy is important in influencing expectations of future monetary policy and for that reason may affect current long-term interest rates. We cannot disentangle the relationship between fiscal and monetary policy in those circumstances. Those who would like low interest rates at the short end and lower interest at the long end have to face up to the fact that they may achieve that only by a much more aggressive fiscal policy than Conservatives have been accustomed to.
  Fiscal policy covers spending and tax raising. I would welcome cuts in spending plans, and I am delighted that the Chief Secretary is studying that closely. I am not sure where I stand on that in the Conservative party; it is always confusing, but as someone who believes that there is a role for public exenditure in important parts of the economy, I must point out that 56 per cent. of all Government expenditure is represented by education, social service payments and healt—areas in which it is difficult to make dramatic cuts in the short term.
  With a public sector borrowing requirement of £50 billion, cuts would need to be dramatic. Therefore, I hesitate slightly on taking the view, "It will be all right on the night because we will cut public expenditure." I suspect that we will restrain public expenditure. One way in which we might force ourselves to do that is to take away the GDP deflator from the calculations on spending plans; in other words, we should remove the concept of increasing public expenditure for the incidence of inflation. That would be a welcome change in the way in which the

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  Government address the figures in the Red Book. I commend it to the Treasury team, but it will not save us from addressing the incidence of taxation at some point.
  It is misguided of the Labour party to criticise the introduction of VAT on domestic fuels. That is a significant fund raiser. Zero rates have always been an anomaly and would be better tackled in other ways. The Chancellor rightly mentioned that the Secretary of State for Social Services will need to review these matters in subsequent statements because of the impact particularly on the lowest paid and those in receipt of social service benefits.
  About 24 per cent. of all our goods are zero-rated or are exempt; that is an imbalanced VAT network. I have already said in the House that I favour the removal of zero rating, possibly with the introduction of a lower rate than the standard rate, which would be consistent with the rules of the European Community. I welcome the two-stage introduction of the standard rate on domestic fuels, with 8 per cent. to begin with, followed by 17·5 per cent.
  If all zero-rated items were subject to a standard rate of VAT, the standard rate might be reduced. That might be a simpler way of dealing with the matter and it would yield £5 billion or £6 billion extra to the Exchequer in a full year. I do not want to go further into such matters. I am happy to put it on the record that if we need to raise taxation, I am uncomfortable with the zero rating of VAT.
  The Chancellor hinted at something that I should like to examine more carefully. He did not imply, because no Treasury Minister would do so, that there would be hypothecated taxes, but in his comments on road fund licences, fuel taxes and road pricing there was a hint of hypothecation. I welcome that because it would give greater accountability to the Treasury. Perhaps it would not give much flexibility, but the Treasury has always been known to be as flexible as it wants. From the point of view of the public, I am happy that we get a better understanding of why taxes are being raised.
  The Budget contained welcome measures. I should disclose, because it is in the Register of Members' Interests, that I advise Commercial Union and Barclays de Zoete Wedd Investment Management. Therefore, I take particular interest in some of the measures. Perhaps in a strange order, I welcome the measures in regard to Lloyd's names. I am not a name at Lloyd's, but I attempted to raise the subject in the debate on the Finance Act 1991. The Financial Secretary is to be commended for examining the whole system of the reserving of Lloyd's. That will be welcome to an important institution in the City, regardless of the comments of Opposition Members about individual names. As an institution, Lloyd's is important to the stability of the City and to invisible earnings at the time of a balance of payments deficit.
  I also welcome the freezing in real terms of the increase in the uniform business rate. That will go down well with businesses in the south-east and elsewhere.
  The Chancellor has been clever in making more use of the 20 per cent. band in taxation. I also welcome the fact that we appear to be moving towards using the 20 per cent. rate only as an allowance. That is sensible. It will give greater justification for that rate ultimately to become the standard rate. That does not necessarily mean that I think that taxation should be reduced; I merely believe that it is
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  a better balance of the tax structure. It will benefit the Treasury if allowances are set off at the 20 per cent. rate rather than 25 per cent. So people will benefit from the level of taxation and the Treasury will benefit from the fact that allowances are not as generous.
  Many of the Budget's measures should be welcomed. Britain has a considerable problem. Our balance of trade deficit is worrying at this stage of the cycle, given our propensity to import. Our European export markets are going into or are already in recession, at a time when we are most likely to be selling to them. That has an adverse effect on us, because British manufacturers are more likely to believe that they can increase prices in the domestic market rather than in export markets. Again, we shall have to watch that from a domestic inflationary point of view.
  Although we have relaxed full funding to a small extent, our PSBR will lead to high long-term interest rates and the Government will have to fund the deficit. That is why I am concerned about the revenue-raising side of the Budget. If the PSBR for a full year is £50 billion, with interest rates on gilts at 8 per cent., the Government will accumulate an additional £4 billion debt and debts are cumulative. The net effect, therefore, of postponing revenue raising for a year means that it starts at a higher level than otherwise would apply. We must keep a close check on that.
  I hope that the Budget restores confidence in the Government's long-term strategy. I hope that it encourages unemployed people to believe that we are endeavouring to help them, and a large portion of the Budget offers assistance to industry. [HON. MEMBERS: "Where?"] Opposition Members should not shout "Where?" when they know that Governments do not create jobs out of a hat. Governments create jobs by giving other people the opportunity to expand. Unless industry flourishes, there is no long-term hope for those who are unemployed.
  That is why one of the longest sections of the Budget speech targeted help on industry, which I welcome. I may have said that the Budget was wrong to be neutral, but it is neutral because tax raising is being retargeted on industry. I hope that industry realises that it has been highlighted for particular assistance this year and I hope that the CBI, the Association of British Chambers of Commerce and the Institute of Directors will pay tribute to the Chancellor for listening to some of their requests. It is up to British industry to create the job opportunities to which we aspire and, if my judgment of the effects of monetary policy is right, the economy will probably recover slightly faster than some of the pessimistic forecasts suggest.
  I would not have raised our involvement with the European Community if it had not been mentioned by my hon. Friends the Members for Worcestershire, South and for Stafford (Mr. Cash). This is a very serious matter because all our efforts to get our economy going and to emphasise the competitive instincts of British industry and the British economy could be put out of joint if we do not make further progress on the Maastricht treaty. I have a copy of a letter dated 15 March from the Association of British Chambers of Commerce to the Prime Minister, which was released to the press. Its chairman states that it represents 240,000 businesses and that
  "those who suggest that we have gone far enough with the Single European Act are making a mistake that British businesses cannot afford… Any continuing uncertainty or delay as regards UK ratification can only undermine business

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  confidence, which will in turn endanger economic recovery… Against this background we urge you to press ahead with the ratification process which has our full support."
  The association represents the 240,000 businesses that were targeted today in the Budget. Through their national chairman, they have addressed the problem that will arise if Britain appears to isolate itself within the European Community, appears to downgrade the importance of inward investment and appears to leave other people to determine the rules of the club to which we belong and of the single market, of which we are important members.
  I appeal to Opposition Members to join the vast majority in the House, as was shown on Second Reading, who understand the importance of creating jobs and assisting British industry to damn well get on with ratifying the Maastricht treaty as soon as possible.
  8.47 pm
  Mr. John Gunnell: I understand the comments of the hon. Member for Esher (Mr. Taylor) about the need for a strategy, on which I shall comment myself, although I am not sure that I will agree with him on some aspects.
  I agree with the hon. Gentleman about inward investment. I have visited Japan several times seeking inward investment on behalf of a number of companies in the Yorkshire and Humberside region, and I have never met a company that did not see us in the context of the European Community. Our active membership of the Community is undoubtedly important to them.
  The working conditions of most Japanese companies are far better than those proposed in the social chapter. I find it hard to believe that companies that have been attracted to Yorkshire would have been put off by the social chapter. One of the unions that negotiated an agreement with Pioneer in Wakefield said that, if it could secure the same agreement for each of the companies with which it is involved, workers in almost every British firm would be a good deal better off. Conservative Members make many false points about the dangers of the social chapter to inward investment. I therefore agree with the hon. Member for Esher about the significance of our membership of the Community.
  I found the strategy employed in the Budget, so far as we got a glimpse of it, very threatening. It threatens many low-paid workers. It will increase their taxes now, in April 1994 and in April 1995. I listened to the Chancellor for 112 minutes, waiting for ideas to deal with the scale of our unemployment and with the real fear about the future of our economy. Labour Members are not anxious to see a continual decline in the economy. We are anxious to see recovery and to ensure that measures are being taken to bring about recovery. I saw some ideas which will have some effect, but I did not see those ideas that I believe will get the economy moving forward. I do not see this, I am afraid, as a Budget for jobs, even though it was boosted as such in advance.
  I was in some agreement with the hon. Member for Esher on the very curious way in which the Chancellor, in an oblique—sometimes, indeed, in a direct—fashion, referred to black Wednesday. He did not label it with an adjective, but he was referring to that day. One had the impression that he was very much on the side of those who believed that it was golden Wednesday, because he gave all sorts of illustrations of its benefits to the Government and
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  the Government's financial planning. He did not refer, as did the hon. Member for Esher, to the downside of that day.
  I remember the way that we moved up to that Wednesday, the statements made in advance and the statements made immediately afterwards when the House met on 24 September, and I contrast them with the way in which the Chancellor today used those events as having enabled him to turn around aspects of the economy. I felt that we were talking about Government by accident, and that is a matter of considerable concern.
  One aspect of the Budget is not an accident; that is the way in which, in terms of its strategy and the need to raise money, the Budget is focused. I believe that it is focused on raising funds from ordinary families in this country, and that can be illustrated very easily.
  There is in this Budget a tax reduction in terms of the 20 per cent. band that is in reality a tax increase. None of us would pretend that national insurance contributions are not a form of direct taxation. One of the points made by many hon. Members before the general election was that national insurance contributions were a form of taxation, and they wished then to treat them as such. We are right to treat them as such now.
  What benefits do people get from the 20 per cent. band changes? They are described as 50p a week and, by April 1994, £1 a week. However, allowing for the fact that people might have expected allowances in line with inflation, I believe that they will be worth only 84p a week in April 1994 to the average family. The increase in national insurance contributions, on the other hand, will cost the average family £3 a week. That is a staggering difference between what is presented to us as a benefit and what is, in reality, a penalty. There is no doubt that the increase of 1 per cent. is in effect a 1 per cent. tax increase and will have the effect on the average family of an increase of £3 a week.
  The hon. Member for Esher said that he was quite happy about the imposition of value added tax on domestic fuel. I think that it is an appalling decision. Interestingly, none of the letters that I received from constituents before the Budget referred to that, although they referred to many other aspects. For instance, there was much lobbying mail on the subject of VAT on newspapers and books, and I am very glad that there is not to be that tax on information. We also had a great deal of propaganda and pleas about VAT on public transport, and I am glad that that is not to be imposed; it would clearly be nonsense.
  Why did we not get a great deal of correspondence on the subject of VAT on domestic fuel and power? It was because people were not looking for it, and they were not looking for it because, as my right hon. and learned Friend the Leader of the Opposition made quite clear, it was a matter on which the Government had been absolutely specific prior to the general election. They said specifically that fuel would not be subject to VAT and that there would not be changes to VAT. That is why we were not lobbied on this issue. This shows that people placed completely unjustified trust in the Government. They believed what the Government said before the election about VAT on domestic fuel, but VAT has been applied; and the cost to the average family, when the full 17·5 per cent. VAT is applied to domestic fuel, will be over £2 a week.

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  Then we have to take into account the mortgage changes. The Chancellor made it clear that we are talking about £10 a month, or £120 a year, which is another £2·31 a week for the average family. We also have to take into account the freezing of the married couple's allowance and the fact that it is not to go up with inflation as has been traditional for much of the past. That amounts to another about £1·80 per family per week.
  If we add all these figures together, we find that the average family in this country will be ££8, or a bit more, worse off as a result of this Budget.
  So who will be paying for the fact that the Chancellor is rightly concerned about the £50 billion of debt? It seems to me that it will be principally ordinary families in this country. Therefore we should be very concerned about these taxes.
  I will put a question to the hon. Member for Loughborough (Mr. Dorrell), since he is here, about VAT on fuel. There has been a lot of controversy about standing charges and whether they benefit or disadvantage pensioners. I have sent pensioners in my constituency the erudite letters which the Library has on this, stating that it can be argued that standing charges are no handicap to the worse off, but help them. But people still feel that they should not be paying standing charges. I should like to know whether VAT will have to be paid not only on the cost of the fuel that is used but also on the standing charges. We are entitled to an answer to that question.
  I have been, and am, involved a lot in Yorkshire Enterprise, which is a regional venture capital company. We work with financial institutions which operate the loan guarantee scheme. I have said in the past that I would like to see changes to that scheme. Some of the changes that are made are to be welcomed, but the job has not been completed; it has been half done. It is right to extend the small firms loan guarantee scheme over a larger range and to make it possible for the borrowings to be higher than £100,000, and I am glad to see that limit extended to £250,000. I am glad to see the changes with regard to interest rates, making it possible for a smaller margin to exist between the base rate and the rate at which these loans are made.
  I am glad that there has been an increase in the guarantee, because we found that institutions do not want to operate the scheme, as their position is so uncertain at the moment. They do not want to take the 30 per cent. risk, so I am glad that it has been reduced to 15 per cent. and that 85 per cent. of the amount is to be underwritten. Will there be takers as a result of the changes? Will a small firms loan guarantee scheme have a better effect?
  To carry out investment appraisal properly—whether we are talking about lending a company £100,000 or far more—one must employ the same due diligence to ensure that the management of the company involved are capable of managing the company successfully, that the business plan is sound and that there is a market for its goods and services. In other words, one must ensure that the company is viable and that it is safe to lend it the money. The amount of work involved is not directly proportional to the size of the loan. An enormous amount of due diligence is involved even when dealing with small loans of £100,000.
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  One of the proposals by David McMeekin of the Midland bank, who has taken some responsibility for the Midland enterprise fund which operates in Yorkshire and Humberside, is that, if we want investment appraisal, which enables the small firms loan guarantee scheme to work, to take place, the companies carrying out the investigations should get tax relief on the costs of those investigations. The costs are usually extremely high in relation to the amount of the loan. That change has not been made. One can give a partial welcome to some of these loan guarantee scheme changes in the Budget, but I wish that the job had been done more thoroughly.
  It is unusual for the Chancellor's speech to be the occasion for a major announcement on the channel tunnel. Many of us have followed the progress of the tunnel for many years, and have been concerned to ensure that its benefits are national and not confined to London and the south-east. Those of us who have been concerned about northern links to the tunnel expected any announcements about the tunnel to be made in a national context. It should be made clear that any decisions about routeing, stations and termini in London are enormously important for links to the north.
  We wish to ensure that there are through passenger and freight trains on the west coast main line and the east coast main line direct to the channel tunnel. The decision announced today clearly means that there has been a change of plan. We are forced to ask what will happen to the King's Cross Railways (No. 2) Bill. We have been promised links to the north. I have received promises from successive Secretaries of State for Transport and from successive Ministers for Public Transport, including the right hon. Member for Enfield, Southgate (Mr. Portillo), who is now the Chief Secretary to the Treasury. The right hon. Gentleman and I appeared on so many platforms together talking about the channel tunnel that he called us part of a travelling circus. In answer to our questions, he always said that there would be links to the north. It is the Government's responsibility to ensure that there are. It is very disturbing to hear about changes to the King's Cross scheme, for which we have planned for a long time, being announced in anything other than the full context.
  Investment matters to the north for the regeneration of industry. All the Japanese companies interested in investing in Yorkshire ask questions about our links with the channel tunnel. They may prefer to use the Humber ports, but they still ask about the tunnel. We need to be assured that, in any transport changes announced, curiously, in the Budget, the interests of the north are taken care of. It is important that the announcement is clarified.
  We must recognise that the Budget means choosing where the money is coming from because of this country's enormous debt. In my view, the costs have been imposed to an inordinate extent on ordinary families, in the same callous way that the 13⅓ per cent. increase in prescription charges was announced last night. There have been mistakes in the Budget, which will cost families in my constituency dear, and which will, in the end, cost the Government dear.
  9.4 pm
  Mr. Mark Wolfson: I am happy to follow the hon. Member for Morley and Leeds, South (Mr. Gunnel), and I should like to focus on two points on which

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  I directly agree with him. The first is his earlier reference to the experience he had had in Japan of finding all those companies and other organisations that were interested in development in Britain, linking us with their expectation of our being full members of the European Community. That was a practical example, for the benefit of the House, of the importance of getting on with Maastricht and continuing to play a full role in Europe.
  The second point is on the hon. Gentleman's final remarks about the channel tunnel. I have an interest in the tunnel from the point of view of the south-east, but I have argued from the beginning that it was of key importance that the tunnel and the rail link should bring benefits, not just to London and the south-east but also to the north of England. I agree with the argument advanced by the hon. Member for Morley and Leeds, South that planning on the tunnel, which has been seriously delayed, should continue to take account of the importance of the north of England and the links to the north right through Europe via the tunnel.
  The hon. Member referred to the iniquities of the increased charges for national insurance, but if one accepts that national insurance is a fund and that it is currently in deficit it seems to me not to be wrong for the Chancellor to take steps to try to correct that.
  The Budget speech was long, detailed and highly technical. I pay tribute to the consultation which the Chancellor and his team of Ministers has carried out with hon. Members of his party. That was well done. One of the reasons that the Budget has been well received by our party is that prior consultation. That has not always happened. It is happening more effectively now, and that is beneficial.
  The Chancellor had a difficult task, both in personal terms and in dealing with the economic problems of the country in this Budget. The Budget is being well received because it addresses the two key issues of the economy: first, the essential need for growth now; and, secondly, in the medium term, the need to minimise the Budget deficit. It was those two factors which the Chancellor had to try to keep in balance, and he has done that effectively.
  I welcome the focus on industry, just as I welcome the Prime Minister's recent emphasis on the importance of manufacturing. That is not before time. I welcome the measures to help business because there is a positive story to tell on the record of British business which has not always been getting the headlines that it should. I welcome the measures that have been taken on employment, and I say yet again that the level of unemployment is unacceptable to me as it is to many other hon. Members on these Benches. We in no way play down the human and family cost, and the cost to the country, of unemployment, but, as other speakers have said, the argument is about how, in the longer term, one can overcome that problem.
  I welcome the measures on infrastructure projects and joint ventures. I will say something later about that and about my views on the imposition of VAT on road fuel duty and on fuel and power.
  I want to say something more about the background of this Budget and the help it gives to business. The Budget assists recovery by not increasing taxes overall on business in 1993–94. It makes recovery sustainable by laying out a strategy to reduce Government borrowing over the next three years. It increases revenue without raising income tax
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  rates. To have done otherwise would have dampened incentive, and I am relieved that such dampening has not occurred.
  The Budget raises revenue and, by increasing taxes on fuel and power, takes the Government two-thirds of the way forward on Britain's Rio commitments on the environment. That is essential because sooner or later we would have had to move on that front. We have been unreasonably criticised for not giving enough priority to environmental issues. If Labour Members claim that we have been wrong to take those measures, what steps would they have taken, bearing in mind their support for the Rio agreement?
  The Chancellor has been right to address the problem of excessive borrowing because we could not in the long term allow large borrowings to continue without action being taken. Being something of a Keynesian, I have always accepted that during a recession it is permissible to allow the PSBR to rise. It is, in any event, inevitable because much of the deficit goes to support the unemployed and those in greatest difficulty as a result of the recession.
  In trying to take a balanced approach, the Chancellor has given advance warning of the revenue increases that are to be made. It is important to keep the money markets satisfied that the Government have a medium and longer-term strategy to bring fiscal rectitude back into the Budget. We have seen the benefits of doing that, and I do not want them to be lost. Equally, in contrast to my hon. Friend the Member for Esher (Mr. Taylor), I believe that it would have been wrong to move on personal income tax at this stage in the recovery.
  The industrial picture is good. Retail price inflation has been below the EC average since August 1991, putting us in a better competitive position. Interest rates are the lowest in the EC and the lowest in Britain for 15 years. Productivity growth at the end of last year was the fastest for five years. The transformation of industrial relations is history, but it has made a significant difference to what British industrial managers can now achieve. They can concentrate on design and marketing without always having to look over their shoulders, fearing the need to put out a bush fire, as it were, in their factories.
  We would like to see more being done in the Budget about employment, but we cannot spend our way into full employment by way of Government expenditure. We must set the framework for business to create new jobs. With the continuing trend of increased technology in large industry, increased employment will come from smaller businesses, not just service businesses but smaller companies springing up to meet the demands of a buoyant economy. The new community action programme is welcome, as is the business start-up scheme and the pilot schemes to encourage employers to engage the long-term unemployed.
  This Budget provides a clear strategy. After black Wednesday, and for the weeks until the autumn statement, the Government were continually under fire for having no replacement for their strategy of membership of the ERM. I was not one of those who foresaw the damage that membership of the ERM could do when our economy was unable effectively to compete with the high interest rates of Germany, but I am now wise after the event. I do not believe that we should return to that arrangement in the foreseeable future as it would be highly dangerous.

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  British business has felt the benefit of the freedom in which we have been able to operate since we left the ERM. The turning point for me was the focus in the autumn statement on growth rather than on merely keeping down inflation.
  I was exremely glad that the Chancellor made clear his priorities after the autumn statement. He is now following through the autumn statement with further measures focusing strongly on help to business, particularly small business. He has also demonstrated that he has a policy to ensure that Government borrowing will not spin out of control. I hope that we shall have lower interest rates as soon as possible, but I understand the difficulties and the necessity of balancing various Government measures on taxation and budget deficit while still paying some attention to the standing of the pound. We should not lightly throw away the benefits that followed the freeing of the restraints of the ERM which had become extremely damaging.
  My final point concerns the infrastructure projects, in particular the channel tunnel high-speed rail link. I take some satisfaction from the fact that I have argued from the beginning, when very few hon. Members in my party argued that way, that it would be necessary for Government money to be invested in the high-speed rail link. The Chancellor told us that today for the first time. He did not give us details of the route. The fact that the route would be announced shortly was no news for those of us who have been involved in channel tunnel discussions for the past four or five years and who have gone through hell in our constituencies because of that worrying problem. The news today was the Government's clear commitment to put up some of the money in a joint venture. That is right, and I welcome it.
  9.17 pm
  Mr. Peter L. Pike: I shall make my speech in the first day's debate on the Budget in a slightly different order from the one I had originally intended because I want to question the Minister on one or two issues on which I did not fully understand the Government's position.
  I do not necessarily agree that mortgage tax relief needs to be abolished, but I accept that it needs to be addressed and considered. I hope that the Minister can assure us that today's announcement of its reduction to 20 per cent. is not the first step to phasing it out completely.
  The Government must be prepared to consider in a positive way whether the present tax relief on mortgages is the best way to use the considerable amount of money involved. I am not arguing that the money should be used to help people who are renting property, but I am not certain that the way in which tax relief is given to people buying property is the most appropriate method as the people who are most in need do not necessarily get the tax relief. We all know that the present M IRAS system was an extension of the option mortgage scheme that was introduced by the 1964–70 Labour Government.
  I welcome the increase in charitable giving through the payroll system which should be encouraged. The Minister will be aware that there has been overwhelming pressure from both sides of the House in favour of changing the system of charging VAT on charities. Outside the House,
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  there is widespread concern over the way that certain moneys are drawn off charities through the VAT system. Among all the announcements that the Chancellor made about VAT, I did not hear anything to address that problem.
  Another aspect is important to football supporters. I have a vested interest here as I support Burnley, and have done for many years, and am anxious to learn whether it has won tonight's game; I should have been at Turf Moor watching the team play. Under a concession, money from the football pools went to the Football Trust to allow ground improvements to be made to meet the Taylor report recommendations on safety. Many clubs that want to make those improvements—Burnley is one of them—are dependent on getting sufficient grant to enable them to do so. We want to know whether those arrangements will be extended so that the Football Trust can receive that money for a further period.
  The Budget speech lasted for an hour and 50 minutes. The Chancellor called it neutral, but in my view it was a long-drawn-out tinkering Budget that will achieve little or nothing. With, on the Government's figures, 3 million unemployed, and probably in reality 4 million, it is a scandal for the Government to introduce a neutral Budget. Many people will feel that the Government have failed them. With 14 years in office, the Government have had time to lay the foundations for industrial and economic recovery. I am glad that, at least, it was not called a Budget for jobs. We have had several of those over the past 14 years, but unemployment has remained unacceptably high.
  In many other Budget debates, I have spoken about the north-south divide, which is a major problem. Tonight, the Government are narrowing that divide, but are narrowing it in the wrong direction. Rather than improving the situation in the north, they are making the situation in the south worse and increasing unemployment there.
  I visited Aldershot a couple of weeks ago and went around the town centre. I was amazed to see the number of shops that have closed as a result of the recession. A new town centre has been developed, with a new precinct and a second phase in the Wellington centre. Not a single unit has been let; all are boarded up. Next to it, there is a new shopping arcade, which has been built for a fair while, with only two units let. People do not realise that because the shop fronts have been painted and it looks as though there is a florist, a hairdressers and other shops. Tory economic policy is failing, and that is a sad reflection of it.
  It took the Chancellor an hour and 37 minutes to get around to announcing any measures to tackle unemployment. He spoke of 100,000 jobs. He said that he wanted to get 10,000 people into businesses and job-start schemes at a time when we have the highest-ever rate of bankruptcies and people going out of business. We all support the objective, but it only scratches the surface of that major problem. He wants 60,000 to go into the community action programme with a scheme of payment of benefit plus £10 a week. My hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) highlighted the problem for such people, who will have to pay for fares and meals out. Who will be attracted by benefit plus £10 to go into community action? What nonsense that is.
  The voluntary sector is being asked to launch the scheme, yet in the deprived areas—the 57 urban programme authorities—urban programme money has been axed and the voluntary sector has been squeezed.

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  Difficulties are increasing. In my constituency, not only have we lost £;2 million in urban programme money, but we bid for one urban partnership scheme—that is the new scheme for which the Government are asking councils to bid—the Government turned it down, although it would have created 500 jobs. Four of our seven schemes were successful, but one that would have created 500 jobs was turned down, not because it was a bad scheme but because there was a ceiling of £20 million for all the authorities in the country.
  The Chancellor highlighted at the outset the type of speech that he intended to make when he said that the Government would never sign the social chapter. The Government's failure to accept the social chapter shows that they believe that we are a second-class nation. They are not prepared to have wage councils or a national minimum wage, and they say that the other 11 countries can have the social chapter but it will never apply to this country. That is an absolute disgrace.
  In so many places in this country manufacturing industry is hanging on by its fingertips. There was nothing in the Budget to encourage sufficient investment in training. What a waste of assets, when so many people are not contributing to the economy because they are unemployed. There were no tax incentives for industry to invest more in new equipment and machinery, or in research and development on a bigger scale. Research and development is going away from this country. It is no good simply having Japanese and other investment in this country—although we all welcome it. We want research and development to be carried out in this country, because we want to be at the sharp end, at the forefront of high technology and new industries.
  Several tax increases were announced in the Budget. There was a tax on domestic heating and other energy—first 8 per cent. and then 17·5 per cent. I have constituents who cannot afford to run their heating or to put the gas fire on at weekends, because they do not have enough money. The Government fail to recognise how many people suffer from real poverty in Britain after 14 years of Tory rule. It is a sad reflection. Let them go round London—and all our other cities—now and see the people begging on the streets. That is the scandal and disgrace of Britain after 14 years of Tory rule.
  The personal tax allowance is being frozen. That is another tax increase. National insurance contributions are to rise by 1 per cent. from April 1994. That is yet another tax increase—and it comes from a Government who were pledged not to increase taxes.
  Towards the end of his speech the Chancellor referred to the fast rail link to Heathrow as if it were something new. But it is a regurgitated scheme. Yes, we need it badly—we should have had it years ago. Anyone who travels to Heathrow realises that the Piccadilly line is totally insufficient to cope with the number of people who use the airport. The crossrail link, too, has been regurgitated after 14 years. We are not against it; it is much needed—but it is long overdue.
  As the hon. Member for Sevenoaks (Mr. Wolfson) said, at last the Government have realised that they must invest in the channel tunnel rail link to St. Pancras, and that it cannot be built by the private sector alone. But on the other side of the channel, in Calais, the rail link is nearly open and the new motorways are there. After 14 years of Tory rule we are still not ready for the channel tunnel.
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  The Tory Government have created a trade deficit of £17·5 billion this year. The public sector borrowing requirement is £35 billion this year and will be £50 billion next year. As the hon. Member for Esher (Mr. Taylor) said, the Government intend to review spending. We know what spending reviews and "better targeting" mean. They always mean cuts—and it is always the deprived and poorer sections of the community who suffer from the cuts.
  We want the Government to say that councils can use their capital receipts in a sensible and phased manner to build council houses. That would get the economy moving in the right direction. It would get construction workers back to work; people would be making windows, doors and other such things; people moving house would buy curtains and carpets. That would start things moving in the right direction. The Government's dogma will not allow them to recognise the way in which they could tackle the housing problem and the economy at the same time.
  Today's Budget was the last Budget to he presented separate from the announcement of the Government's expenditure plans. The two will be combined later this year. Time after time, the Government have revealed in their expenditure plans the sums from the sale of assets that they will use to supplement their spending. What will the Government do when there are no more assets to sell?
  We know that the Government propose to bring forward the sale of the final part of British Telecom and to sell it this year. The Government can also sell sections of National Power and PowerGen. In theory, they can sell Nuclear Electric. However, once those assets have gone, the Government will be in a cleft stick. They will either have to savage their expenditure or raise taxes. The only other route is to get the economy moving in the right direction and so achieve growth. After 14 years of Tory government, I do not believe that we will ever see that.
  9.30 pm
  Mr. Alan Duncan: At such a crucial stage in our economic fortunes, the most important judgment that my right hon. Friend the Chancellor and his team had to make in drawing up today's announcement was to assess the macro-economic context in which today's Budget has been set. At the end of several years of recession, my right hon. Friend the Chancellor had to ask himself whether it was right to stimulate demand further or whether, in anticipation of a recovery that may already be under way, it was more prudent to claw back some of the borrowing that he had already undertaken.
  To appreciate the importance of that judgment, we must appreciate the historic structural problems that have beset the United Kingdom economy since the war. Since 1946, we seem to have failed to escape from the stop-go cycle of economic activity. Whenever it has moved from stop to go, all our economic activity contained a bias towards housing and property rather than towards long-term investment in industry. We have lacked long-term finance in industry and those structural problems have for ever drawn us downwards.
  I hope that the House will allow me to flash back in history and refer to the late 1980s. As a new, green and perhaps naive young Member of Parliament, I am still able to admit that the Government are capable of making an occasional mistake. In the time available to me, I want to analyse that mistake.

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  At a crucial stage in the economy's cycle, we needed to raise interest rates. However, because that crucial decision was about to be made in the aftermath of the 1987 stock market crash, we did not take the necessary steps to raise interest rates then for fear of the slump that some predicted might follow. Indeed, that coincided with a complete surreptitious change of policy which many people did not realise was taking place: we shadowed the deutschmark and forsook monetary indicators as our guide and discipline in favour of an exchange rate regime.
  When it dawned on her that it was happening, the then Prime Minister, now Baroness Thatcher, wanted to increase interest rates. However, she did not do that because the political circumstances then raging in the House made it almost impossible for her to work with her then Chancellor and take the necessary steps.
  We are now paying the price for Baroness Thatcher's failure to take that decision. What followed was an enormous expansion of credit. For the benefit of some our critics on the Opposition Benches, I should add that that was not caused by the decision to lower the rate of personal income tax. It occurred because monetary discipline was allowed to slip. The banks wantonly allowed people to borrow something like four times their incomes. People mortgaged up. Businesses borrowed. We built a mountain of debt which individuals and companies alike are still paying off now. We were also consumed by an infectious mood which suggested that the boom would go on for ever and perhaps even that the business cycle had once and for all been abolished. But, of course, it did not.
  Something else happened, too. We joined the exchange rate mechnism of the European monetary system in October 1990. In my view, the rate at which we joined did not particularly matter. A one-off adjustment could have amended that. Indeed, I am not pathologically opposed to the exchange rate mechanism so long as it remains an adjustable system. We faced the unfortunate coincidence that Germany was reunited. Instead of showing the fiscal discipline which had dominated European economies in the decades before, Germany dramatically increased its borrowing as a result of that unification and had to adopt a high interest regime within its domestic economic management.
  When we later wanted our rate of interest to fall, our links within the exchange rate mechanism kept it high. Something else happened too. We converted an adjustable exchange rate mechanism into a fixed parity system. We believed that if we were courageous we could vest in the pound sterling the qualities, discipline and strength of the deutschmark. But it was ill-judged to believe that we had the economic muscle to sustain such a fixed parity against the deutschmark. Therefore, I fear, we created our fault lines in the exchange rate mechanism and treated it in a way which invariably led to its collapse.
  Some claim that the exchange rate mechanism brought down inflation. In many ways it did, but I contend that any regime of ultra high interest rates would have brought down inflation and that the exchange rate mechanism also contained some dramatic qualities which were to the detriment of our economic management and exacerbated our economic ills at the time. The ERM is not an independent discipline, as people hoped that it would be. It repoliticised, and we made it do so even more, every
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  movement in the exchange rate and put the focus of attention on the Chancellor of the Exchequer. An independent discipline would have removed such attention if it had been working properly.
  Our short experience of the fixed parity system, with the divergent economies which were evident at the time, showed how domestic economic management can become a perverted exercise in regional policy. It showed how economic and political control is sacrificed when there is a single currency. As you may have rumbled by now, Mr. Deputy Speaker, I am against a single currency. Indeed, I believe that the imposition, although not necessarily the evolution, of a single currency is the ultimate socialist measure.
  So where are we now? I share the view of my hon. Friend the Member for Esher (Mr. Taylor), who has left the Chamber for a moment, that we are emerging from the recession at long last. Indeed, in the same way as we thought that the boom would last for ever, we are perhaps too prone to the feeling that the recession might last for ever, too.
  The challenge which my right hon. Friend the Chancellor addressed in today's Budget is not to repeat yesterday's errors. Instead he has taken a long-term view, as I would have wished him to do. If the cycle has not been abolished, as indeed it has not, the recovery will come inevitably, but it is as well to nurture it in the best interests of everyone in Britain.
  I judge the PSBR to be dangerously high. The risks that we face in keeping it that high over several years are that we shall go straight back to the cycle of stop and go and go and stop. What we do not want is the creation of artificial demand, leading to an artificial recovery. If we were tempted to adopt such a course, we would merely suck in imports, creating illusory jobs that would soon disappear. We would return to the stop-go cycle: whenever we stopped again, the recession would become even worse and we would build an even larger deficit on our balance of trade.
  The overriding guidance offered by today's Budget is that fiscal rectitude is of the utmost importance. If we borrowed excessively over a number of years, we would succeed only in increasing the interest rate; that, I think, would be the most disastrous possible event in regard to recovery. If we are to create long-term jobs rather than jobs built on yet another burden of Government debt, we must take long-term advantage of low inflation nurtured by the present Government and of the competitive exchange rate that now allows us to export. As well as reducing the public sector borrowing requirement, we must reduce expectations. Promises of excessive growth will not be met; they will simply provide an artificial path leading to the return of economic collapse.
  At dawn today, I was in favour of reducing the PSBR—immediately, even, and by billions of pounds. My right hon. Friend the Chancellor, however, has before him many facts and figures that I do not possess. I note that my right hon. Friend has decided to allow the PSBR to remain more or less neutral this year. He has the figures and I accept what he has done. He also announced that, in 1994–95, the PSBR will be reduced by £6·5 billion and that it will be reduced by a further £10·5 billion in 1995–96. We should bear it in mind that, by then, the Treasury will be enjoying improved revenues from the tax take. Furthermore, my right hon. Friend has committed himself to putting the PSBR back into balance in the medium

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  term. I believe that we should applaud that schedule for restoring fiscal rectitude: my right hon. Friend has made the responsible decision that we need.
  I am delighted that my right hon. Friend has clarified the workings of petroleum revenue tax. Contrary to the opinion of many Opposition Members, the money that we have gained from the remarkable enterprise displayed by those who found oil in the North sea has not been squandered. If Opposition Members wish to say that spending on schools, hospitals and the needy is squandering our oil revenues, let them say it as loudly as they wish; the fact is, however, that the use of those revenues, and the stewardship of the economy, has been thoroughly responsible. The regime announced by my right hon. Friend the Chancellor will ensure that further investment takes place in the North sea and that we continue to experience flows of oil—and, indeed, tax—to the benefit of the Exchequer.
  I am pleased that my right hon. Friend has improved the conditions relating to export credit guarantees, which he improved once before in the autumn statement. I am also pleased that he has tightened the little loopholes in the business expansion scheme, which enabled it to be used to provide loans; that is long overdue.
  The hon. Member for Burnley (Mr. Pike) criticised my right hon. Friend for doing nothing about research and development. The reforms announced by my right hon. Friend in relation to advance corporation tax, however, are crucial to ensuring that large companies choose the United Kingdom for their headquarters and opt to carry out research and development here. The hon. Gentleman cannot claim that my right hon. Friend has done nothing for research and development.
  I am pleased that my right hon. Friend the Chancellor has said that companies should no longer purchase other companies in order to cash in on their recorded capital loss. That announcement marks the long-overdue closure of a loophole. For those business men at present eligible to pay VAT, my right hon. Friend has raised the threshold to £37,600, which will be of particular advantage to small businesses up and down the land. It will remove the necessity for such businesses to have to fill in a quarterly VAT form.
  One Opposition Member has today criticised my right hon. Friend the Chancellor for alleviating some of the capital gains tax provisions for those who want to sell a company. What could be more beneficial to the economy now than for someone who has been successful in one enterprise to be able to dispose of that on a fair basis of his taxable obligations, start again in another company and make a success out of that? How on earth can anyone see fit to denigrate that sensible measure?
  I was also particularly pleased that my right hon. Friend the Chancellor announced that those who conduct a business in the purchase and sale of bloodstock may now register for VAT. It is a tribute to the energy of many hon. Members, notably my hon. Friends the Members for Cambridgeshire, South-East (Mr. Paice) and for Bury St. Edmunds (Mr. Spring), and to my right hon. Friend the Paymaster General, that such a sensible agreement has now been reached to alter the tax regime for that industry, which would otherwise be facing blight.
  I am sure that everyone in the House would also want to pay tribute to the late Judith Chaplin, who quietly but diligently worked behind the scenes with great energy to ensure that the issue was properly understood in the
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  Treasury. My right hon. Friend the Paymaster General can attest to that by citing many examples of when she went to see him to argue the case for those affected by the VAT provision. Her death was sad and she will be sorely missed in the House. Those who knew her well in Newbury will not forget the work that she did on their behalf.
  To return to my original theme of the structural deficiencies in the economy, I welcome what my right hon. Friend the Chancellor has done to improve some of the structural distortions. I am pleased that he has changed the regime of mortgage interest relief so that it is given only at the 20 per cent. rate. I was also pleased that he improved both the scope and the size of the small company loan guarantee scheme for fixed rate finance. I think that that will turn out to be a major step to ensure that long-term finance is available for small and medium-sized businesses. He announced an export guarantee scheme and today announced a domestic credit guarantee scheme, which is to be applauded.
  All those proposals sit in dramatic contrast to everything that we heard from the Opposition. We have heard the incantation of platitudes about creating jobs, making promises and the insufficient support given to the constituency of Hackney, but we have not heard from the Opposition a single positive detailed policy for economic recovery which they think that they could run with and present to the electorate. Nothing that the Opposition have said has been costed—it was all words, words and no detail. In addition, they even promised not to raise taxes. They make promises that add up to billions of pounds, but somehow believe that those billions will appear from thin air. They are not prepared to show any integrity and state by what means they intend to raise those billions from the economy.
  Mr. David Shaw: No doubt, like me, my hon. Friend has been to the Library to see the Labour party proposals on the subject. No doubt, like me, he was shocked to find that nowhere in those proposals—which are designed to advise constituencies on what they should be doing to help employment—is it suggested that the workers in Labour party constituencies might start a business. Nowhere do they suggest that they might take advantage of the extension of the Government's loan guarantee scheme, which my hon. Friend the Member for Rutland and Melton (Mr. Duncan) so eloquently supported tonight.
  Mr. Duncan: I am grateful to my hon. Friend. Opposition Members do much intoning about business, but it turns out that every step they take destroys business. The hon. Member for Hackney, North and Stoke Newington (Ms Abbott) has complained that there are no businesses in Hackney. With the local authority that Hackney has, it is not surprising that business men do not wish to go there. I openly and readily accept the hon. Lady's kind invitation to visit Hackney with her. She is not present at the moment, but I can assure the House that, when I go, I shall tell her a thing or two. I hope that she will learn what could be done in Hackney to improve employment prospects and restore the economy of that sad constituency.
  Labour Members have criticised the decision to levy VAT in a staged manner on domestic fuel. This attitude sits ill with the Opposition's repeated contention that there should be a carbon tax and that the Government should

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  adopt policies that Labour Members would describe as green. They say that they want green policies, yet they do not want to pay the cost of environmental improvements. They must unravel their inconsistency. I await an announcement from them of measures to link green policies with tax policies to secure their implementation.
  In conclusion, I offer my congratulations to my right hon. Friend the Chancellor of the Exchequer and his team. My right hon. Friend continues to have my vigorous support. Indeed, I look forward to his stepping out of No. 11 Downing street on his way to the House to present his fourth Budget in November.
  9.51 pm
  Mr. Derek Enright: The hon. Member for Rutland and Melton (Mr. Duncan) is all heart. My withers were wrung by his speech about financial rectitude and structural efficiency. He really is all passion for England. It is a shame that his speech developed as it did, as he started off quite well. Having dealt with 1946, he embarked upon the story of the decline of the economy. The trouble is that he jumped from 1946 to 1988–89—a very swift transition. I should like, in the few minutes available to me, to fill in some of the history.
  Let us look first at what happened in the 1970s. Under successive Governments, including those of the right hon. Member for Old Bexley and Sidcup (Sir Edward Heath), Lord Wilson of Rievaulx and Lord Callaghan, oil prices gave rise to tremendous difficulties. Lord Wilson and Lord Callaghan had to deal also with the Barber boom—a mistake which, as has just been said by the hon. Member for Rutland and Melton, was repeated by Lord Lawson. Let us take into account the real world difficulties that existed at that time and the fact that there were none of the advantages of the tax from oil that the current Government have enjoyed and the huge sums of money that were generated by privatisation—illegal gains, in my view, but, none the less, moneys that came to the Government. I use the plural "moneys" advisedly, in its true Oxford English Dictionary sense.
  What use have the Government made of those moneys from the point of view of long-term employment? The record of 14 years of Conservative rule is one of constantly rising unemployment. The north has always been hit because the Government care very little about what happens outside the south-east. The south-east is where the strength is, where the power comes from and where the snouts are.
  I would not sit complacently on the Government Front Bench after today's Budget. If a private company had gone for a contract, had put forward a prospectus and had spoken about that prospectus in the way the Government spoke about their manifesto at the general election and then produced today's Budget, they would have been called fraudsters and hucksters. That is what the Government are.
  No matter what claims they make about VAT on energy, the Conservatives said clearly during the election campaign that there would be no rise in those taxes, "Trust us," they said; we heard from a soapbox the equivalent of
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  "Read my lips." The majority of the people did not trust them, but enough trusted them to put them in power. They trusted the statement that there would not be an increase in taxes. Yet today we have a record increase. The Government have turned round the old saying, "Jam tomorrow but no jam today." It is a case of, "You will not suffer today but, by God, you will suffer tomorrow and even more the year after."
  There are other ways of controlling pollution, as Conservative Members know if they have an atom of sense. To put VAT on fuel bills in the way proposed by the Government is outrageous. It will hit the poorest section of the community. The tragedy is that this passes for the Government's energy policy. We have been beseeching them for a long time to produce an energy policy. Suddenly they come up with one—to slap 17·5 per cent. VAT on energy costs.
  The Government have challenged us. While they have been clinging to strange little ring-o'-roses arguments about the ERM and all the factions in the Conservative party have been giving different interpretations, I will tell them what they should have been doing. They should have been putting forward in the European Community a policy for energy. The Commission has produced a paper and the subject has been talked about in the European Parliament. There is no parliamentary report on it. What response has been made by our Government? Their only response is to try to put 31 pits out of existence. That is a disgrace.
  In the short time left, I should like to refer to a gross failure of the Government in the case of Grimethorpe colliery. As we have been telling the President of the Board of Trade since last October, that colliery was making a considerable profit up to the time that it was closed. On closure the industrial firms that it supplied were nearly put out of business. They had to find alternative supplies and pay more for imported coal.
  A report was published yesterday; actually, it came out a considerable time ago but, as with everything with the Government, it was kept secret until the last minute. In clear, unequivocal terms the Government's own specialist said that Grimethorpe has a long-term future and can make a profit because there are customers for it. Why do not the Government reopen it instantly? What is the grand strategy that means that pits like Grimethorpe should close? The Government's only strategy is laissez-faire. That is no strategy in these days. It is not the sort of strategy adopted by the Japanese. The Government are fond of talking about the Japanese, so we should see how they conduct their capitalist system. They have a partnership between the capitalist institutions, the trade unions and the state under which they proceed sensibly in the long term.
  My final point is about the heedless way in which the King's Cross announcement was made. For my part of Yorkshire, the rejection of King's Cross was an absolute disaster. For Port Wakefield, to which the Government have given their permission and backing, it was appalling. The Government must reconsider their decision, otherwise it will lead not to sudden death but to strangulation by degrees.
  It being Ten o'clock, the debate stood adjourned.
  Debate to be resumed tomorrow.

Billy Harris
Motion made, and Question proposed, That this House do now adjourn—[Mr. Kirkhope.]
10 pm
Mr. John McAllion: Less than 24 hours ago, Grampian Television broadcast a TV special called "The Open (and Shut) Case" on the as yet unexplained death of Billy Harris in Glasgow on the evening of 3 August 1989. The programme was produced by Michael Mulford, who, with Billy's family in Dundee, has spent the past three years painstakingly and determinedly pursuing the truth about what happened to Billy that night.
The Minister, like me, has benefited from seeing the Grampian TV special and from discussing the case directly with Michael Mulford. I am sure that I speak for both of us when I place on record our heartfelt thanks to Grampian Television and to Michael Mulford, but above all to Benny and Marie Harris and their family, without whose courage and unfailing determination the search for the truth about what happened to Billy would have been abandoned long ago.
What little do we know about the truth of what happened to Billy? We know that he died of severe head injuries. We know that his body was found in National Bank lane, Glasgow. We know that his body was first seen on the night of 3 August but not officially found or reported until the morning of 4 August. In all honesty, after that we know very little with any certainty.
Billy's case has variously been described by the authorities as murder, potential murder, suspicious and an accident. Naturally, the family have been totally bewildered by such official inconsistency and confusion—and no no wonder, given what they have been told by the authorities.
Will the Minister confirm that Strathclyde police initially passed a message to Tayside police within hours of Billy's death, which read:
"William John Harris had this morning been found dead in a lane in city centre of Glasgow. He apparently had head wounds. No money or other valuables in his possession. Locus where he was found known for assault and robbery of homosexuals. Case is being treated as a murder inquiry although the post mortem came up with nothing helpful."
I should be grateful if the Minister would confirm that Strathclyde police passed that message to Tayside police, who in turn passed it on to the family.
In a letter dated 23 May 1990, the then Lord Advocate, Lord Fraser, wrote to my hon. Friend the Member for Dundee, West (Mr. Ross) indicating that the case in its early stages was being treated as "a potential murder". Will the Minister confirm that that was so in the early stages of the case?
The Crown Office, in various letters, has repeatedly referred to the case as "suspicious". Would the Minister say whether it still takes that view?
Strathclyde police have told the family on two occasions that it believes that Billy's death was an accident. On the first occasion, Detective Chief Inspector Val Gryzbeck telephoned Billy's mum in November 1989 to tell her that in his view it was an accident.
On the second occasion, in March 1990, two Strathclyde officers visited the Harris home in Dundee. An account of what they said was shown on the Grampian TV special, in which Billy's dad described how an officer explained to him how the accident came about. The officer
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described how Billy, who at the time had a blood alcohol count of 345 mg/ml and was very drunk, was supposed to have fallen back four or five times on to the same stairs, hitting his head in the same way.
The Minister has seen the programme and will remember how Billy's dad described the way in which the officer described the accident to him; how Billy fell over once, then twice, then three times, then four times, then a fifth time. The officer thought that it was on the fifth occasion that Billy sustained the injury that caused his death.
Does the Minister really believe that version of an accident? Does he not agree that a man as drunk as Billy was would have done well to stand up at all, never mind repeat four or five times a fall which even once would have rendered a sober man unconscious? Is it not a much more credible explanation that we are dealing with a murder, not with an accident?
How does the Minister explain the changes in the police view of how Billy died? They first of all tell Tayside police that it is a murder inquiry. They then interview potential witnesses in the local pubs in the Glasgow area, explaining that they are investigating a murder. Then, suddenly, the accident theory begins to emerge. Can the Minister suggest any reason why this should be so?
For example, the annual report for 1989 by Strathclyde's chief constable reads:
"The reduction in murder inquiries I welcomed in my last report was not sustained in 1989, with 63 murders and culpable homicides investigated, nine more than in 1988. This increase inevitably strained investigative resources, and it is therefore of considerable satisfaction that a 100 per cent. clear-up rate was achieved."
That is fine, but will the Minister therefore confirm that the official view now is that Billy's death in 1989 was neither murder nor culpable homicide, but an accident?
Detectives who investigated the case put it to the family at an early stage that Billy was homosexual. They produced no evidence whatsoever to support this allegation, which naturally shocked the family, who continue to reject this allegation. They point out that Billy was living with his girl friend, Elizabeth Lees, in Clydebank at the time of his death. Elizabeth Lees has called into question the accuracy of police judgments by confirming that on one occasion she and Billy were at home watching television when the police claimed that Billy was seen in Glasgow.
Billy was not known to the gay community who were interviewed by television researchers. There is simply no factual evidence to support the allegation of homosexuality. So will the Minister reveal whether the post mortem showed any evidence of homosexual activity? Did it show either anal or penile damage? Does the Minister not agree with the family's lawyer, Bob Vaughan, and with Carole Ewart, director of the Scottish Council for Civil Liberties, who say that the investigation could have been sidetracked unnecessarily by unsubstantiated allegations of homosexuality?
Where is the police evidence that Billy was homosexual? Will the Minister give the sources for this evidence? The family are prepared to face the truth about Billy, but they cannot be expected to tolerate unsubstantiated allegations about their son and their brother, particularly when those allegations come from the official authorities.
Then there is the suspect who was questioned at an early stage of the inquiries. This suspect was identified by a Mr. Gary Hall, a doorman at the Maison Guy's pub in

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Glasgow. He refused entry to Billy and another man at 9.45 pm on 3 August because Billy was drunk. He described the other man as 6 ft 2 in tall and of substantial build. This man has been traced by the programme makers, but they have not named him, in the interests of justice and fair play, and I agree with them.
The suspect was picked out in a police identification parade. He was remembered by witnesses because of his unusual dress on that evening of 3 August. He wore a grey suit with trousers and jacket that did not match, a tee-shirt and trainers. Gary Hall, who is an ex-soldier and a trained observer, had no problem whatsoever in remembering this suspect, because of the distinctive way in which he was dressed. Gary's sighting of the suspect with Billy was just one hour before, and 500 yards distant from, the first sighting of Billy's body in National Bank lane.
A number of questions arise out of those circumstances. Was the suspect interviewed under caution by the police? If so, for how long? Why was the suspect never charged, and did the alibi provided by the suspect's wife and male friend bear up under police examination? Is it still the Crown's position that Gary Hall was simply completely wrong in his identification of the suspect with Billy Harris on the evening of 3 August in Glasgow?
The Grampian researchers have now handed to the police and to the procurator fiscal evidence which casts doubt on the suspect's alibi. Will the Minister acknowledge that Grampian Television and Michael Mulford have acted with commendable responsibility by not publicising the evidence, and by allowing the authorities the time and opportunity to follow it up? Will the Minister say what progress the authorities have made in following up the evidence? Have the suspect, his wife and his male friend been re-interviewed? It would be very good to have such facts on the public record.
I should like to comment on the evidence of Dr. Jim Thorpe of Strathclyde university, who carried out an independent forensic examination of Billy's clothes at the request of Grampian Television. He discovered that Billy had been injured in one location and was then helped by someone else along the road to another location. He found bloodstains on the inside of Billy's jacket pocket and elsewhere on Billy's clothes. He concluded that death could have resulted from an accident if someone who was being half-carried had slumped to the ground several times. However, I shall quote from the transcript of the television special. On the record, he said
"it is of course possible that the injuries were inflicted deliberately—whoever was with Billy banged his head off the ground in pure exasperation at no longer being able to support this dead drunk person and inflicting more severe injuries than were intended. Of course I cannot exclude the possibility that the injuries were intended to kill."
Will the Minister say what the Crown concluded after examining the evidence found in National Bank lane on 3 August 1989?
Of course, we might have understood much more if the family could have been given access to the post mortem report, which so far has been denied them. Their lawyer, Bob Vaughan, made arrangements through the procurator fiscal and the Crown Office to precognose Dr. John Clarke, the pathologist who examined Billy's body. Airline
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tickets were booked to travel south to see Dr. Clark. Mr. Vaughan was practically on his way when the Crown Office banned the interview.
Will the Minister say why the Crown Office banned the interview? What secrets could justify the withholding of post mortem results from the family? Do the family not have a right to know what the post mortem results were? What were the results of the forensic tests carried out on Billy's clothes and on the suspect's clothes? Are they also to remain secret for ever?
The family have asked me to raise a serious matter relating to their interview with Mr. Tom Dysart, senior depute fiscal in Glasgow, on 8 March 1990. The family understood Mr. Dysart to have told them that the pathologist believed that Billy had been murdered, that Billy's injuries were consistent with having his head banged on the steps, that Billy was known to have frequented gay bars, that that information was confidential, and that, if they revealed it to anyone else, it would be said officially that Billy had died from an accident and the case would be closed.
Subsequent to that interview, the family granted an interview to a Sunday newspaper—they believe that it was the Sunday Mail—and, two weeks later, two Strathclyde officers appeared in Dundee to tell the family that, in the view of the police, Billy's death resulted from an accident. Was a minute kept of the meeting between the senior depute fiscal and the Harris family in Glasgow on 8 March 1990? Will the Minister make that minute public so that we know what happened at that meeting?
The family's campaign for a fatal accident inquiry has been consistently resisted by the authorities. The Crown Office has taken the view that an inquiry would substantially prejudice any future criminal proceedings, but is that credible when the police have twice claimed that Billy died as the result of an accident?
Is it credible when the Criminal Injuries Compensation Board refused compensation only last month to the Harris family because their Queen's counsel was not satisfied, on the evidence available, that the deceased Billy Harris was the victim of a crime of violence? Is it credible, three and a half years after the event, with no sign of consistent police inquiries or an arrest on the horizon, to continue to resist the family's call for a fatal accident inquiry?
The Fatal Accidents and Sudden Deaths Inquiry (Scotland) Act 1976 allows the fiscal to hold a fatal accident inquiry if a death is sudden, suspicious or unexplained, or gives rise to serious public concern. Surely the Minister will concede that Billy Harris's death meets every one of those criteria and that surely there should now, at the very least, be an announcement by the Minister that the procurator fiscal is prepared to hold a fatal accident inquiry into the events of 3 August 1989.
May I raise one or two other concerns? Does the Minister agree with Carole Ewart, the director of the Scottish Council for Civil Liberties, who says that the system has simply failed the Harris family, and who has now called for an independent inquiry into the whole criminal justice system in Scotland? Why was it that the present procurator fiscal banned Strathclyde police from appearing on the Grampian Television programme about Billy's death, when the police were prepared to consider appearing?
Why was it that Billy's body was kept for 42 days in Glasgow mortuary at temperatures that allowed his body to decompose, so that, when it was finally released, Billy's

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family were not allowed to see it and Billy Harris was buried in a disinfected body bag? Experts have said that the practice when keeping bodies at such temperatures is to do so for only three to four days at the most. Why was the body kept in Glasgow mortuary at those temperatures, not for three to four days, but for 42 days? I think that an explanation and an apology are due to the family for that.
It matters not what is said about the kind of man that Billy Harris was. He was, after all, a human being, who deserved to be treated with the same dignity as every other human being. Certainly, after his death, the authorities seem to be more concerned to defame him than to find out what happened to him. Both he and his family deserve better from those same authorities. If he died by accident, we need a fatal accident inquiry to explain how he died. If he did not die from an accident, we need a murder inquiry to find out who did it, why he did it and how.
Above all, his family cannot be left in their present state of uncertainty. They have contemplated exhuming their son's body in an attempt to discover the truth of what happened. They have decided not to erect a headstone on his grave until they know the truth about their son. All this tragic family want to know is the truth of what happened to Billy Harris. I appeal to the Minister to listen to them and to help them in any way he can, and to allow them at last to be able to lay their son Billy Harris finally to rest, and in peace.
10.18 pm
The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): I note the suggestion by the hon. Member for Dundee, East (Mr. McAllion) that a fatal accident inquiry should now be held, and I shall pass that suggestion to my noble and learned Friend the Lord Advocate.
I thank the hon. Member for passing to me the video of Grampian Television's documentary this morning. I have studied it twice and with great care. I am grateful to the hon. Gentleman for the clear and careful way in which he outlined the sad circumstances surrounding the death of Mr. Harris. I would ask the hon. Member to convey my sympathy to the Harris family.
I welcome the opportunity provided by this debate to respond to the points raised by the hon. Member, as this has obviously been a source of grave concern to the family. For Mr. and Mrs. Harris to lose their son at an early age in such distressing circumstances must, of course, have been very upsetting for them. The hon. Member has outlined in some detail the events immediately preceding the discovery of his body in Glasgow city centre in the early hours of 4 August 1989, as well as certain developments that have taken place since then. In particular, the hon. Member raised the question of the timetable for the release of Mr. Harris's body to the family for burial, as well as the question of the storage of his body at the city mortuary. I shall deal first with that matter.
By way of background, I should explain that it is, and has always been, the police view that this is a potential murder case. I fully recognise Mr. and Mrs. Harris's concern about the delay. The hon. Gentleman will bear in mind the fact that the case was, and still is, being treated as a potential murder, so the body had to be retained for a reasonable period pending the possible arrest of any person or persons in connection with the death.
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As the House may know, any person accused of murder in Scotland is entitled to have an examination of the victim's body carried out by an independent pathologist, so the body cannot be released until an independent autopsy has been conducted, or the accused indicates that he does not wish to instruct independent examination. In this case, the police inquiry did not identify any person as responsible for the death of Mr. Harris, although a man was interviewed under caution and inquiries have been on-going. In those circumstances, Mr. Harris's body was kept in the city mortuary for some six weeks, until the procurator fiscal instructed its release to the family on 7 September.
Members of the family have had the benefit of two full meetings with the senior procurator fiscal depute in Glasgow, Mr. Dysart, who dealt with the matter. At the first of those meetings, Mr. and Mrs. Harris explained that, when their son's body was released to them, the undertaker had refused to allow them to see the body because of its decomposed state. It was suggested to them that they should invite the undertaker to write to the procurator fiscal with further details about the matter so that he might pursue the issue with those responsible for the storage of bodies at the city mortuary.
The Lord Advocate has responded, making it clear that, while the retention of a body pending criminal investigations is subject to the procurator fiscal's direction, the question of the means of storage of bodies is not something for which the procurator fiscal is responsible. That matter is at the sole discretion of the mortuary staff.
I should perhaps reinforce the position by repeating what the Lord Advocate said to the hon. Gentleman, who wrote to him. He said that Dr. McLay, the chief medical officer of Strathclyde police, responsible for the mortuary, wrote to the solicitors acting on behalf of the Harris family in March explaining what had occurred. He also wrote to the hon. Gentleman.
Dr. McLay explained that Mr. Harris's body had been stored in non-deep freeze conditions because of the expectation that further examination would become necessary. In the event, such further examination was unnecessary. Dr. McLay frankly conceded that it was regrettable that the manner of storage led to certain decomposition of the body. He offered personally to meet the family to discuss matters, but, as the hon. Gentleman may know, that offer was not taken up. I am not aware that any reason for that has been given, but in view of the serious complaint that has been made, I will pass it to the chief constable for his personal consideration.
In addition, the hon. Member for Dundee, West (Mr. Ross) also wrote on behalf of the family to my right hon. Friend about the circumstances surrounding the death, and received a detailed reply. Following his untimely death, Mr. Harris's body was discovered by a young man, who immediately alerted the police. That was at about 5 o'clock in the morning of 4 August 1989. Subsequent inquiries revealed that a young couple had seen a body lying where Mr. Harris was ultimately found at about 11 o'clock the previous evening, but they had not reported the matter to the police. That fact was pointed out to the hon. Member for Dundee, West.
A casualty doctor was summoned to the scene, and Mr. Harris was pronounced dead. In accordance with normal practice at suspicious deaths, a senior member of the procurator fiscal's office was summoned to the scene. along with a pathologist and a forensic scientist. Serious

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crime officers were also in attendance, and a detailed examination of the scene, at which a series of photographs was taken, was completed. Mr. Harris's body was then removed to the mortuary, where an autopsy was carried out.
As the hon. Gentleman will know, following the post mortem examination, the pathologist concluded that injuries to the back of the head were the major factor in Mr. Harris's death, although they were exacerbated by the high level of alcohol in his system. In due course, the family were informed of the causes certified on the death certificate.
The case was treated as a murder inquiry from the outset, and a full investigation was launched under the charge of a senior detective officer. A thorough investigation of the circumstances surrounding the death of Mr. Harris was carried out by the police, which included interviewing a number of witnesses who either knew Mr. Harris or associated with him, including those in whose company he had last been seen alive.
Members of the Harris family were also interviewed to try to build up the fullest possible picture of Mr. Harris and the events which preceded his death. For reasons which will become obvious, it will not be appropriate for me to go into great detail as to what those inquiries revealed, or to name all the witnesses that were interviewed. Following the inquiries, a detailed report was submitted by the police to the fiscal's office in Glasgow.
In accordance with normal practice, after the procurator fiscal's office had carried out its own inquiries—liaising closely with the police—a full report was submitted to the Crown Office for the instructions of Crown counsel. On the basis of the information contained in the procurator fiscal's report, Crown counsel took the view that it was not appropriate to instruct a fatal accident inquiry into the circumstances surrounding Mr. Harris's death. As the hon. Member will appreciate, no one has been identified as being responsible for causing the injuries from which Mr. Harris died. However, the possibility remains that a person may yet be arrested in connection with the death and, accordingly, public disclosure of all the facts could very well prejudice any future criminal proceedings.
Mr. McAllion: Does the Minister accept that a precedent exists in the case of Mr. Sandy Drummond of Fife, who died in suspicious circumstances? The case became a murder inquiry, yet the procurator fiscal allowed a fatal accident inquiry to go ahead, and that opened up new lines of evidence that helped the murder inquiry.
Lord James Douglas-Hamilton: Yes, it is indeed a precedent, but the circumstances are not exactly the same. However, as I said, I shall pass on the hon. Gentleman's request to my right hon. Friend the Lord Advocate, and it will then be a matter for him.
I should make it clear to the hon. Gentleman that, at the meeting between Mr. Dysart and the family, the fiscal explained the position to Mr. Harris's parents. It is quite misleading to suggest that Mr. and Mrs. Harris have somehow been denied information by the authorities.
Turning to the police investigation, inquiries revealed that Mr. Harris had been drinking in bars in the Glasgow
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city centre on the evening before his body was found. He was last seen at about 9.45 pm on Thursday 3 August in 1989 in the company of another man, at which time they were refused entry to a public house which has been frequented by homosexuals.
The question whether the deceased was homosexual was a possibility to which the police felt they had to have regard, but there is no conclusive evidence either way. With regard to the hon. Gentleman's question as to whether there is any evidence from the post mortem suggesting any homosexuality, the answer is that there is none.
The hon. Gentleman asked whether a minute was kept of the meeting between Mr. and Mrs. Harris and Mr. Dysart. The answer is that there was no minute.
The hon. Gentleman asked about the terms of the post mortem report, but these are being treated as part of the evidence of the case. Given that the case is an on-going criminal inquiry, it was considered that it would have been wrong to divulge all aspects of the evidence.
As I have mentioned, the body was found in the yard behind the premises of John Smith's book shop in St. Vincent street, Glasgow at about 5 am on Friday 4 August. Mr. Harris had sustained severe head injuries, which, as I have said, were the major factor in his death. He had an extremely high level of alcohol in his blood and the pathologists were of the view that this would have worsened the effects of the head injuries and would have been a contributory factor to his death. What I think needs to be emphasised particularly is that it cannot be said at present with any certainty how William Harris sustained the injuries from which he died.
I must stress that the investigation into the death of William Harris is still open. The hon. Gentleman referred to the television programme, which I have studied. I understand that it appeared to be critical of the fact that no one had been charged. The reason for that is clear and simple; there is insufficient evidence to bring charges. I have made it clear that a suspect was interviewed under caution. In addition, the programme claimed that the Harris family may have been misled by the authorities and unfairly denied a fatal accident inquiry, and that this somehow adds to the notion that certain important details about their son's death have been kept from them.
The Harris family received a very high degree of understanding and co-operation from the authorities, not least from the police and the fiscal's office. The family continue to demand an inquiry and remain critical of the police handling of the investigation. I have to say that the programme contained little new information which is not already known to the police. No words of comfort can undo what happened, but I believe that this debate has served to highlight the fact that the case has, regrettably, not been cleared up.
William Harris's death is undoubtedly suspicious and must therefore remain a cause for serious concern. For that reason, this is a case which is still open, and I will pass on the hon. Gentleman's main request—
The motion having been made at Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half past Ten o'clock.

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  Grant-maintained Schools Centre
  Grant-maintained Schools Centre
  Somerset University
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  Education Authorities (Political Control)
  Education Authorities (Political Control)
  Teachers' Salaries
  Teachers' Salaries
TRANSPORT
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  Railway Lines, North-west
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  Free Flight Offers
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  Railways (Crimes)
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  Road Tolls
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  Road Accidents (Children)
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  Exhaust Emissions
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  Cycle Routes
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  Selby Bypass
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  Road Accidents
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  Passenger Rolling Stock
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  Jubilee Line
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ENVIRONMENT
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  City Challenge, Bradford
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HOME DEPARTMENT
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HOME DEPARTMENT
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  Drivers (Drugs)
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  Pet Animals Convention
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  Hong Kong (Passports)
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  Metropolitan Police Commissioner
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PRIME MINISTER
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  Misappropriation
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HEALTH
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WALES
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NORTHERN IRELAND
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EMPLOYMENT
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TRADE AND INDUSTRY
  Cycles
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  Proyecto Venezuela
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  Poland
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  Amateur Radio Stations
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  Astra Holdings
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  One-stop Shops
  One-stop Shops
  Manufactured Imports
  Manufactured Imports
  Cosmetics (Safety)
  Cosmetics (Safety)
  Public Bodies
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  EC Research and Development
  EC Research and Development
  "North America Now"
  "North America Now"
  Hong Kong
  Hong Kong
  Export Credits
  Export Credits
  European Coal and Steel Community
  European Coal and Steel Community
  Aerospace Industry
  Aerospace Industry
  KONVER Programme
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  Hazardous Chemicals (Transport)
  Hazardous Chemicals (Transport)
  Post Office
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  Regional Aid
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AGRICULTURE, FISHERIES AND FOOD
  Milk Marketing Board
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  Veal
  Veal
  Laying Hens
  Laying Hens
  Wildlife Diseases
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  Pigs
  Pigs
  Departmental Spending
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  Bovine Spongiform Encephalopathy
  Bovine Spongiform Encephalopathy
  Deregulation Initiative
  Deregulation Initiative
  Farmers (Regulations and Licences)
  Farmers (Regulations and Licences)
  Fishermen
  Fishermen
  Potatoes
  Potatoes
  Animal Health and Veterinary Group
  Animal Health and Veterinary Group
  Chinchilla
  Chinchilla
  Salmon
  Salmon
SOCIAL SECURITY
  Fraud
  Fraud
  Target Times
  Target Times
  Disability Payments
  Disability Payments
  Homelessness
  Homelessness
  Abandoned Children (Mothers)
  Abandoned Children (Mothers)
  Pensioners (Consumer Goods)
  Pensioners (Consumer Goods)
  Free School Meals
  Free School Meals
  Independent Tribunal Service
  Independent Tribunal Service
  Departmental Spending
  Departmental Spending
  Lone Parents
  Lone Parents
  Child Support Agency
  Child Support Agency
  Appeals Tribunals
  Appeals Tribunals
  Unemployment Benefit
  Unemployment Benefit
  Regulations
  Regulations
  Housing Benefit
  Housing Benefit
  Cold Weather Payments
  Cold Weather Payments
  Care Homes
  Care Homes
  Allowable Fees
  Allowable Fees
SCOTLAND
  Marriage Counselling
  Marriage Counselling
  TUPE Regulations
  TUPE Regulations
  Caledonian MacBrayne
  Caledonian MacBrayne
  Nursery Education
  Nursery Education
  Terrorism
  Terrorism
  Regulations
  Regulations
  Consultants
  Consultants
  Community Transport Association
  Community Transport Association
  European Regional Development Fund
  European Regional Development Fund
  Ambulance Crews
  Ambulance Crews
  Hospital Shops
  Hospital Shops
  Renaval Programme
  Renaval Programme
  Tinnitus
  Tinnitus
  Housing
  Housing
  Employment Protection
  Employment Protection
  Botanic Gardens
  Botanic Gardens
  Electronics and Offshore Oil and Gas
  Electronics and Offshore Oil and Gas
  Female Doctors
  Female Doctors
  Dental Services
  Dental Services

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Ripon.

NHS: Parliamentary Scrutiny
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
Whether they will guarantee that there will be no reduction in the level of parliamentary scrutiny of the NHS if and when regional health authorities are dispensed with.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, we have no plans to seek to reduce the level of parliamentary scrutiny of the NHS.
Lord Dean of Beswick: My Lords, I thank the Minister for that reply. Is she aware that only three or four weeks ago there were strong rumours in the press that it was a hairline decision that the Government took to keep the regional health authorities? Can she give an undertaking that, if and when the regional authorities are dispensed with, whoever succeeds them, in whatever form, will be subjected to the same parliamentary scrutiny as now, and that Members of this House will be able to put Questions regarding them to which Answers will be given by a Minister across the Dispatch Box and not by somebody who is chairman of a quango which is literally answerable to nobody?
Baroness Cumberlege: My Lords, I give that undertaking.
Lord Molloy: My Lords, can the noble Baroness give the House an assurance that, whatever changes take place, both the trusts and the directly managed units will remain responsible to Parliament, and that every endeavour will be made to fulfil the Government's obligations with particular regard to MIND and other mental health organisations?
Baroness Cumberlege: My Lords, the National Health Service is publicly funded. It is quite right that it should have direct accountability to Parliament.
Lord Dean of Beswick: My Lords, is the Minister aware that I am extremely grateful for her reply to my supplementary question and only wish that Ministers in another place who cover the same subject treated Members there with the same candour as she treats Members of this House?

M.11 Link: Effects on Housing
2.38 p.m.
Lord Jay Lord Jay asked Her Majesty's Government:
Whether they will review the M.11 link motorway project in north east London in view of the proposed destruction of occupied houses, the compulsory eviction of some 1,000 occupants, and the refusal of legal aid to those threatened.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, no.
Lord Jay: My Lords, if the Government will not review the scheme, and since in this case hundreds of ordinary citizens are threatened with forcible eviction from their homes, cannot the Prime Minister's Citizen's Charter at least help by according the victims legal aid to state a case in the courts and protection against the state machine which is bearing down on them?
The Earl of Caithness: My Lords, as the noble Lord is aware, the scheme has been the subject of extensive consultation, three public inquiries and a court case. The question of legal aid is for the Legal Aid Board. We cannot interfere.
Lord John-Mackie: My Lords, is the Minister aware that the decision to move Spitalfields to the area was based on the extension of the M.11?
The Earl of Caithness: I am sorry, my Lords. I missed the first part of the noble Lord's question.
Lord John-Mackie: My Lords, is the Minister aware that the decision to move Spitalfields Market to a location opposite the roundabout where the new section of the M.11 will join was based on the extension?
The Earl of Caithness: My Lords, I am grateful for the support that the noble Lord gives to the scheme. It will bring extensive benefits to many people in that area.
Lord Harmar-Nicholls: My Lords, is the premise on which the Question is based true?
The Earl of Caithness: My Lords, the Question is accurate in so far as there will be a link road extension to the M.11. It will not be a motorway. There are about 263 properties involved. The number of people who will be displaced is about 550. The Secretary of State owns 197 properties, which leaves 66 to be acquired. The estimated number of people seeking rehousing is about 172.
Lord Cledwyn of Penrhos: My Lords, are the Government in favour of the Legal Aid Board looking at the problems of those unfortunate people sympathetically?
The Earl of Caithness: My Lords, I can assure the noble Lord that the Legal Aid Board not only looked at their cases but that the matter then went to appeal. It is quite wrong for the Government to intervene in that legal process.
Lord Ewing of Kirkford: My Lords, is the Minister aware on this day of all days, when the Chancellor is about to introduce his Budget, that legal aid comes in many different guises? Will the Minister encourage the Legal Aid Board, against the background of the Chancellor's legal aid—£4,000 from the Treasury and a gift of £18,000 from an anonymous donor in order to evict an undesirable tenant—to look even more sympathetically at the cases of those tenants who face compulsory eviction?
The Earl of Caithness: No, my Lords.
Lord Carmichael of Kelvingrove: My Lords, is the Minister aware that this Question is one in which the late Lord Underhill would have taken an interest? It was his area and he was very much involved in the whole of that part of Essex. His death last Friday will have saddened noble Lords in all parts of the House. Reg Underhill—I can say this with experience—was a very good man to work with. He was calm, thorough, highly principled and kind. I am sure his many friends in your Lordships' House will join me in conveying to Lady Underhill and the family our deepest sympathy. Perhaps I may ask a question which he would possibly have wanted to ask. Can the noble Lord explain why there has been so much local opposition to the scheme? It amounts to more than the normal NIMBY opposition. Waltham Forest Council took the issue to the High Court. Does the Minister believe that the Government have had as wide consultation on a personal level with the local people as we would all desire?
The Earl of Caithness: My Lords, I am sure that the whole House would want to be associated with the remarks of the noble Lord, Lord Carmichael, concerning the late Lord Underhill. We shall all miss him.
With regard to the question of objections, that is the benefit of the system that we have in this country. People can object to the scheme. There have been three public inquiries and a court case. However, despite the protestations of some locally, the local council says that there is now great potential for bringing enormous relief to Leytonstone High Road and perhaps pedestrianising part of it. That, I am sure, would be welcomed in the area.
Lord Jay: My Lords, does the Minister really think it right that hundreds of people should be forcibly evicted from their homes, without any chance of rehousing in many cases, just to take six minutes off a car journey? Does that encourage home ownership?
The Earl of Caithness: My Lords, I would say that the reverse is the case. As the noble Lord knows, the environment locally will be substantially improved. There will be benefits in that the existing trunk road, which is congested, will be put in a tunnel at George Green. That has been widely welcomed by the Wanstead conservationists involved in the area. There will be better access to Epping Forest. I would also say that the houses that the Secretary of State owns have
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been leased on a short term basis which has helped the local authority to provide much needed accommodation.

NHS Prescriptions: Contraceptives
2.45 p.m.
Lord Dormand of Easington Lord Dormand of Easington asked Her Majesty's Government:
What estimate they have made of the outcome of their proposal to include the contraceptive pill in the additional categories being considered for inclusion in the extended limited list of drugs which cannot be prescribed on the National Health Service.
Baroness Cumberlege: My Lords, decisions on which oral contraceptives may no longer be available on NHS prescription will be based on advice from an independent advisory committee whose remit is to ensure that drugs to meet all real clinical needs can be provided as economically as possible under the NHS.
Lord Dormand of Easington: My Lords, in spite of that Answer, is the Minister aware that the medical profession as a whole believes that the proposed changes to the limited list will lead to an increase in unwanted pregnancies and that this view is also held by the Birth Control Trust and the Family Planning Association? Is it not true that the NHS uses the cheapest oral contraceptive pill in the European Community? Finally, do not these factors make nonsense of this cost cutting exercise, particularly when a change of pill or method can and very often does lead to ill health on the part of the individuals concerned?
Baroness Cumberlege: My Lords, we are very anxious to involve the medical profession in the decisions that are made. It is represented on the committee that is advising the Government on which brands of medicine—which oral contraceptives in this case—should be used. When the selected list was first introduced in 1985 there were great cries that there would be disastrous repercussions. Those have failed to materialise, and I suspect that this time too these fears are groundless.
Lord Renton: My Lords, is my noble friend aware that it is now 20 years since Parliament placed on the Government an obligation to give family planning advice under the National Health Service and the opportunity to provide services? Bearing in mind the large proportion of unmarried mothers, is it not essential that those opportunities should be fully used?
Baroness Cumberlege: My Lords, there will still be opportunities for family planning services both in clinics and at GPs' surgeries. I very much endorse the views expressed by my noble friend. It is important that we try to prevent unplanned pregnancies. That is why oral contraceptives are one of the very few medicines that are free to all regardless of ability to pay.
Lord Ennals: My Lords, is the Minister aware that while I fully support the proposal of a limited list, I believe that in this case it would be very unwise indeed? Does she not agree that it would be a false economy and entirely unjustified? Is she aware that the money cost of an abortion is probably nearly £300, quite apart from all the other moral aspects of the matter? Does she not agree that there is a danger that if the Government pursue this proposal there will be more unwanted pregnancies and therefore more abortions at a cost in both social and financial terms?
Baroness Cumberlege: My Lords, I do not accept that premise at all. I should like to point out to your Lordships that the purpose of the scheme that is being introduced or indeed expanded is to restrain the rate of growth in the drugs bill. The drugs bill is at its highest level ever and is expected to rise by 14 per cent. again this year. Continued growth at this rate can only be at the expense of other health care. There is no question of oral contraceptives not being available. It is simply that there will be a selected list from which GPs and women can choose.
Lord Bruce of Donington: My Lords, is the noble Baroness aware that any endeavours by the Government, their quangos or at management levels in the NHS to interfere with the clinical judgment of the doctors themselves will be widely resented in the country as a whole?
Baroness Cumberlege: My Lords, we already have a selected list and those allegations are not made. The expert committee, which is independent of government, will involve the medical profession to ensure that there is a range of medications—oral contraceptives in this case—from which a choice can be made.
Lord Desai: My Lords, can the noble Baroness tell us whether, after this change, the Government expect to meet the target set in The Health of the Nation that unwanted pregnancies among under 16 year-olds will be reduced by 50 per cent.? Is she aware that choice will be restricted? Can the noble Baroness tell us the extra saving that will be made, or is expected to be made, by this change?
Baroness Cumberlege: My Lords, it is impossible to estimate what savings are going to be made until the committee has met and decided which medications and oral contraceptives will be on the list. But we do know that the saving which was made when the original list was introduced in 1985 was £75 million, which is a considerable sum of money.
Earl Russell: My Lords, I heard with pleasure the Minister's answer to her noble friend Lord Renton. I am of course aware of the need to control costs. But in considering them, will the Minister undertake to compare the cost of oral contraceptives with that of single parenthood, even though that cost does not fall on the Minister's own department?
Baroness Cumberlege: My Lords, it is not solely contraceptives, or the lack of them, which contribute towards single parenthood.
Lord Monkswell: My Lords, is the Minister aware that at the time when the limited list was introduced there were two other mechanisms which were being discussed which would have improved the health service and also reduced costs? I am referring in particular to the concept of medical audit and of generic prescribing. Is she aware of those two aspects? Does the Minister also understand that it is not just the contraceptive element which is important with the contraceptive pill, but that different women require different formulations of the contraceptive pill to prevent damage to their health? Instead of—
Noble Lords: Order!
Lord Monkswell: —including contraceptive pills in the limited list, will she undertake an exercise of medical audit and generic prescribing to ensure the better provision of health care at reduced costs?
Baroness Cumberlege: My Lords, the principles both of generic prescribing and medical audit are well established in the health service. The Government have made great investment in medical audit and we are beginning to see the fruits of that work coming to the fore now.
Baroness Robson of Kiddington: My Lords, will the Minister assure me that clinical judgment will not be completely removed from the doctor, but that if in his opinion a patient requires an oral contraceptive which is not on the list, he will still be entitled to prescribe it?
Baroness Cumberlege: My Lords, no. There will be an element of clinical judgment —that is essential—as indeed takes place now with the seven categories of drugs which are already on the selected list. Drugs on the selected list will not be prescribable under the NHS but other drugs will be.

Commonhold Legislation
2.53 p.m.
Baroness Jeger Baroness Jeger asked Her Majesty's Government:
When they propose to introduce commonhold legislation.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, legislation to implement the commonhold proposals will be introduced when parliamentary time allows.
Baroness Jeger: My Lords, I am sure that the noble and learned Lord the Lord Chancellor has read the pretty booklet which his office has distributed to the public. I quote from it:
"commonhold should not be confused with the Government's leasehold enfranchisement scheme, the subject of other legislation at present before Parliament".
How can the noble and learned Lord help regarding the confusion which exists? Many people who are following the Bill which is at present before the House are confused and wonder whether they would be better served by waiting for the commonhold Bill. Can the noble and learned Lord say something more exact about the commonhold Bill? What advice does he give to people who take action under the present Bill but

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who decide in the future that they would have done better under commonhold? Will he please give some free legal advice on this matter?
The Lord Chancellor: My Lords, as your Lordships know, I am very happy to give any advice that I can without any additional charge. Leasehold enfranchisement, which is the subject of the Bill presently before your Lordships, is a scheme to enable long leasehold flat owners to acquire collectively the freehold interest in their blocks of flats. That is the leasehold system and the enfranchisement of it which is presently in question. Commonhold is different. That is a scheme to provide for the separate freehold ownership of units within developments and, at the same time, to provide for the communal management of the development as a whole. To create a commonhold it will be necessary to have control of the freehold of the land concerned; for example, a commonhold can be created in respect of a new block of flats being put up and developed.
In the case of flats where the long-leasehold owners have the right to enfranchise, enfranchisement—if they use it —would give control of the freehold which will then enable them to go on and set up a commonhold, if they so desire. The leasehold enfranchisement is a way of getting ownership of the freehold. The commonhold system is a way of distributing the ownership of that effectively between the flat owners and providing a scheme for the management in the interests of the whole. So there is no question of somebody doing better under commonhold than under enfranchisement. Those two are distinct. In order to get from a leasehold property at present to commonhold, one would need enfranchisement. I believe that the option which the noble Baroness has in mind is not one which requires to be considered. The two are, as it were, in succession, the one to the other.
Lord Williams of Elvel: My Lords, will the noble and learned Lord say whether, after consultation, he still takes the view that there should not be a low-rent test for long leaseholders?
The Lord Chancellor: My Lords, I believe that the noble Lord will understand that there are distinctions of responsibility for the decision of particular questions. I am seeking to explain the relationship between enfranchisement and the commonhold scheme which is the subject matter of this Question. The precise terms on which enfranchisement should be allowed are determined by your Lordships, along with the other place, in the light of the developing debate on the present Bill.
Lord Williams of Elvel: My Lords, is the noble and learned Lord aware of the debates which your Lordships had yesterday on precisely the subject of the low-rent test, and of the unsatisfactory answer which we had from the Minister in the Department of the Environment on that particular question? Given that commonhold can be achieved, as the noble and
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learned Lord said, through leasehold enfranchisement, would it not be right to make sure that leasehold enfranchisement and commonhold for long leaseholders is on the same basis?
The Lord Chancellor: My Lords, the commonhold will come along as a possibility where, as a result of enfranchisement, the leaseholders have control of the freehold. As I have explained, it will come along with a lot of other possibilities as well; for example, in relation to commercial property and new developments. It is not linked only to leasehold enfranchisement. I am aware of course of the debate that took place yesterday. I would not agree in full with the description of it which the noble Lord has given.
Lord Ezra: My Lords, will the noble and learned Lord enlighten us a little further? He will be aware of the debate on the subject of leasehold enfranchisement, and does he agree that there will be a number of long leaseholders who will not qualify? If there were to be a commonhold law, would those same leaseholders be able to qualify for commonhold?
The Lord Chancellor: My Lords, no. I fear that I have failed to explain the difference between the two. Commonhold will apply only where the people in question, seeking to make the commonhold association, have control over the freehold. Therefore, if one has only a leasehold at the moment, unless one is in a position to convert that, with others, into ownership of the freehold, there is no question of the commonhold being of any assistance. Therefore, the only way of getting from leasehold to commonhold is through the mechanisms of enfranchisement unless one can get consent from all the other people interested in the unit concerned.
Lord Renton: My Lords, is my noble and learned friend aware that yesterday my noble friend Lord Strathclyde made it clear that in dealing with the current legislation on leasehold enfranchisement it would be wrong for us to anticipate any legislation on commonhold?
The Lord Chancellor: My Lords, I am sure that that was wise advice because one does not know exactly when the commonhold legislation will come and one does not know exactly what your Lordships might do to it when it does come, so it would be very unwise to anticipate fully the terms of it. However, I hope that it is possible to anticipate that commonhold legislation will in fact come along. I am certainly seeking to do my bit to ensure that that will happen.
Baroness Jeger: My Lords, would it not be helpful to this House and to the public in general if at least the Bill could be published so that we know what it is all about? If there is not the parliamentary time to enforce it, perhaps Parliament's programme could be rearranged to make that possible.
The Lord Chancellor: My Lords, the noble Baroness expresses a wish with which I have considerable sympathy. As far as publishing the Bill is concerned, we published fairly full proposals on

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commonhold some time ago. There is a limit to the number of times that I can publish such rather tedious detail. It is quite a complicated provision. In the meantime, however, I have sought to supplement that by the booklet to which the noble Baroness referred in, I think, appreciative terms.
Lord Tordoff: My Lords, reverting to what the noble Lord, Lord Williams of Elvel, was asking and to the noble and learned Lord's reply to another question, is it not the situation that, as a result of yesterday's decision, certain people will be excluded from moving from the happy position in which they are in at the moment to commonhold?
The Lord Chancellor: My Lords, for a person who has only a leasehold, the route to commonhold is through the conditions of enfranchisement —and those conditions will have to be met whatever they are. No doubt the decision made yesterday will form part of them as the proposals stand at the moment.
Lord Irvine of Lairg: My Lords, since commonhold legislation is the responsibility of the noble and learned Lord's department, could not his department have co-operated with the Department of the Environment so that the undoubtedly related issues of leasehold enfranchisement and commonhold could have been dealt with in a single piece of legislation? Why have the Government moved so slowly on a measure—commonhold—to which they are committed by their manifesto of last year, which has the support of all parties (and almost certainly of the Cross-Benches) and which will require relatively little parliamentary time?
The Lord Chancellor: My Lords, the last part of the noble Lord's question was very welcome as far as I am concerned. I was delighted to hear it. On the first part, it was not for lack of co-operation, but the amount of parliamentary time available for dealing with the present Bill is such that, having regard to the technicalities associated with the commonhold proposals, it was thought right to distinguish between them. Therefore, your Lordships have the pleasure of considering the present proposals without the necessity of applying your minds in the meantime to the detailed technicalities of commonhold.

Business
3.3 p.m.
The Earl of Strathmore and Kinghorne: My Lords, it may be for the convenience of the House to know that the Committee stage of the Trade Union Reform and Employment Rights Bill will be adjourned at about 7.30 p.m. for about one hour and that during this adjournment the Third Reading of the Penalty for Murder Bill and a Motion to approve 14 Scottish rateable values orders will be taken.

Medical Treatment (Advance Directives) Bill [H.L.]
Lord Allen of Abbeydale: My Lords, I beg to introduce a Bill to enable persons to give directions or arrange for them to be given to their physicians regarding the withholding or withdrawal of life-sustaining treatment in a terminal condition, 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.—(Lord Allen of Abbeydale.)
On Question, Bill read a first time, and to be printed.

Trade Union Reform and Employment Rights Bill
3.4 p.m.
The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Viscount Ullswater.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [Election scrutineer to check register]:
Lord McCarthy Lord McCarthy moved Amendment No. 1:
Page 2, line 5, leave out from ("conditions") to end of line 6 and insert ("set out in subsection (3AA) are satisfied;",").
The noble Lord said: It is ironic, if nothing else, that as the Chamber steadily empties we are dealing with this issue at the same time as down the other end of the Palace they are dealing with something infinitely more important. The Government are telling us what their policy is for unemployment and for the exchange rate and what their economic strategy is. The only thing of which we are certain is that the Government know what their industrial relations policy is—it is to introduce Bills like this which restrict trade union autonomy, violate international conventions and narrow workers' rights, which brings me to the amendment.
We are now dealing with Clause 1 of the Bill in which the Government decide to add further responsibilities to those of the scrutineer. The Committee will know that this Bill does not invent the scrutineer. The scrutineer's powers are already set out in Sections 49 and 52 of the new consolidation Acts of 1992. Section 49 provides that the independent scrutineers shall scrutinise the elections and political funds of trade unions. A race of scrutineers, which this Bill further regulates, has emerged. The trade unions have to find independent persons from lists provided, authorised and agreed by the Secretary of State and the Government. The lists come from the Industrial Society, the Electoral Reform Society or Union Security Balloting Services. Those people supervise the elections. They make detailed reports showing the

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votes cast, the ballots spoiled and whether there were any contraventions, interferences or irregularities. If anybody feels that there have been any interventions, contraventions, interferences or irregularities, they can go to the only form of legal aid which is absolutely free and absolutely limitless and on which limitless money is spent—the CROTUM herself. Last year, all this provided 10 cases of assistance none of which—as far as I understand the reports of the CROTUM—actually dealt with this part of the Bill. Nevertheless, the Government tell us (and the clause stipulates) that we need to regulate further for alleged irregularities in trade union elections.
We are now going to allow the scrutineer to inspect the register as he wishes. If members wish to inspect the register, the Government have conceded that, for reasons of confidentiality, trade union registers cannot be passed around but, at the behest of a member or candidate, the scrutineer can inspect the register to see whether it is up to date and correct and whether there is any reason why he should suspect that it is not up to date or correct. That brings me to the amendment, because the face of the Bill states that a member has the right to demand the inspection of the register if he "suspects"—that is the word—that it is not up to date or accurate. No grounds have to be given for that suspicion. If the member suspects, he can invoke the intervention of the scrutineer.
The provisions also demand that the scrutineer must respond unless he has reason to believe that the suspicion of the member or the candidate is, as the face of the Bill states, ill-founded. So any suspicion, unless it can be shown on prima facie grounds by the scrutineer to be ill-founded, must be investigated. We say that that is going rather far. We introduce a modest, mild proposal. The amendment says not suspicion but,
"proof of reasonable ground to suspect".
The scrutineer should be able to say, "Well, are there are grounds for this suspicion?" We say that the suspicion must not just be ill-founded—whatever that means—but that the suspicion may itself be unreasonable. The terms "unreasonable" and "reasonable" are of course standard form in legislation. The Government have said on many occasions that they wish to use such phrases. When the union register of names and addresses was introduced in the Trade Union Act 1984, the Government answered complaints about the amount of work that that would involve by pointing to the fact that the Bill at that time was littered with phrases such as "reasonable notice", "reasonably practicable", and so on. Therefore this is not an unusual, without precedent, modification of the Bill. It is a modest one.
Instead of having unfounded suspicions, the scrutineer should ask for proof of reasonable grounds to suspect, and instead of dismissing the request on the ground of ill-founded suspicions, the scrutineer should be able to say that the suspicion is reasonable or unreasonable.
Lord Rochester: There are a good many amendments that I shall be supporting, but this is not one of them. When on Second Reading I said that a
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case could be made out for some of the proposals in Part 1 of the Bill, I had in mind the first three clauses dealing with ballots for the election of union executives and political funds. On these Benches we were in advance of the Government in advocating reforms obliging trade unions to use secret postal ballots, under independent supervision, in electing members of their principal executive committees.
I welcome the principle underlying Clause 1, and can find no fault with subsection (1) (c) that the noble Lord, Lord McCarthy, seeks to amend. The overriding consideration is that the scrutineer is an independent person who under subsection (1)(a) is authorised to inspect the register whenever he considers it appropriate and independently of any request for him to do so. A safeguard against unreasonable requests for him to make such inspections is already afforded, as the noble Lord has acknowledged, by the proviso in line 20 that he need not do so if he considers the suspicion of a union member to be unfounded.
I cannot think that the intention behind the amendment is to invite litigation. Yet if requests for the scrutineer to inspect the register are made subject to a test of reasonableness—indeed, proof of reasonableness—is that not just what could happen, and thus it would have the opposite effect to that intended? In any case, I cannot see how the test of the reasonableness of a request can be determined except by reference to the register. I wonder also at the inclusion in the second amendment—I believe that we are taking Amendments Nos. 1 to 3 together—of the words,
"so far as reasonably practicable",
because those words are already included in Section 24(1) of the 1992 Act under which trade unions have a statutory duty to secure so far as reasonably practicable that entries in their registers are accurate and up to date.
With respect to the noble Lord, Lord McCarthy, I do not believe that there is need for him to be worried about vexatious requests for the register to be inspected. The Bill already provides sufficient protection to frustrate such requests, should they be made. I hope therefore that he will not press the amendment to a Division, for if he does I shall feel bound to recommend to my noble friends that they vote against it.
3.15 p.m.
Lord Campbell of Alloway: I shall be brief because the noble Lord, Lord Rochester, has said much of which I wish to say. I shall not seek to deal with the introduction to the amendment, which was a reflection of the general attitude of total opposition of the party opposite to any type of reform. I shall deal only with the merits of the amendment.
It is difficult to imagine that if the TUC, or indeed the membership of the unions, had in any way been consulted they would have supported the amendment. If the amendment were carried, it would be a positive disadvantage to the union members and, indeed, I should have thought, with respect, to the general status of the trade union movement. The amendment

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is wholly misconceived, and to try to import proof of reasonable grounds would drag into the arena the sort of Trojan horse which could wreck the general purpose of the clause. I hope that my noble friend will not accept the amendment.
Lord Stoddart of Swindon: I think that my noble friend on the Front Bench needs a bit of support. The amendment is reasonable and mild. If I had been putting down an amendment, which I was tempted to do but did not, it would have been a stronger amendment than the one put down by my noble friend. There are occasions when trade union members, in the same way as other people—Members of this place, for example—can be vexatious. They may well have reasons for wanting to delay a poll. They might, for example, believe that if they could delay a poll by bringing into disrepute the register, they would have a better chance of winning. The candidate himself may well have friends who would wish to disrupt the election for their own purposes. Therefore the amendment is a reasonable one which would deal with that aspect of the matter.
I am worried about the type of legislation that the Government bring forward to curtail the activities of trade unions; to bind them into bureaucratic processes. When I receive from my building society a note of its annual general meeting, I see that it is going to appoint directors. I believe that the case is the same for all shareholders. They receive a notice of the annual meeting, and they are asked to appoint directors. If a person cannot attend a meeting, he relies upon the chairman to cast his vote on that person's behalf—if he wants him to, that is. There is some query.
Lord Tordoff: It may well be that the chairman casts a shareholder's proxy, but it is his proxy.
Lord Stoddart of Swindon: Yes, we have to rely on his honesty, which I am prepared to do in all the cases of which I am aware. I am trying to show the disparity of treatment. As far as I know, as a shareholder in a building society or a public company I am not allowed to approach a scrutineer to ask him to ensure that the share register is up to date. So why on earth are trade unions put in such an odd position? My noble friend has been reasonable in moving the amendment. The least that the Minister and the Government can do is to accept it in order to show their good faith and friendliness towards the trade union movement and its members.
Viscount Ullswater: The Bill is important; it provides for important reforms and important rights. I believe that Amendments Nos. 1 to 3 are unnecessary. They are apparently triggered by worries that the scrutineer will receive numerous unreasonable requests for an inspection of the register and that in acting on them he will place excessive burdens on trade unions. Those worries are unfounded. It is simply not necessary to oblige the scrutineer to test the reasonableness of grounds for a request made to him to inspect or examine the union register. The clause already provides that the scrutineer is under no duty to act on requests that are "ill-founded".
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Moreover the scrutineer's first duty is to inspect or examine the register,
"whenever it seems appropriate to him to do so",
and any other duty that he has to act on the requests of individuals or candidates is subject to this overriding condition.
Perhaps we may reflect on who the scrutineer is. He is an independent individual or organisation who must meet with the stringent requirements laid down in regulations and subject to parliamentary control. He has been given the discretion by the clause to inspect or examine the register when it seems appropriate to him to do so precisely because the very nature of his appointment requires him to be independent from the union. He will not follow up vexatious or spurious requests. The legislation does not need to specify the tests that he will apply before following up a request.
It is also inappropriate to limit the circumstances in which the scrutineer could be asked by a trade union member or a candidate to inspect the membership register to those in which the individual suspected that the membership register was not accurate,
"so far as reasonably practicable".
I understand that there may be anxiety that we are demanding higher standards of union registers in this clause than we do in Section 24 of the 1992 Act, which places unions under an obligation to secure, as far as is reasonably practicable, that the entries in their register are accurate and are kept up to date. We are not doing so. The two provisions are quite separate. New subsection (3a) (a) gives the scrutineer a particular duty to inspect or examine the register if a member or candidate "suspects"—generally a subjective matter—that the register is not accurate and up to date. This is always subject of course to the scrutineer's own judgment of whether it is appropriate to act on these suspicions.
If he does inspect or examine the register on the basis of such a complaint the scrutineer records that fact in his report on the election. He will state whether his investigations have revealed any matters which should be drawn to the attention of the trade union to assist it in maintaining its register.
The scrutineer knows what the legal obligations of trade unions are. To be a scrutineer he has had to comply with the requirements set out in subordinate legislation. A scrutineer will not carry out his investigations against a background of unreasonable or impracticable expectations of a union's membership register.
An inspection by the scrutineer or a comment on his report certainly does not imply that the union is in breach of its statutory duty under Section 24. If a union member believes that the union may be in breach of Section 24, the proper action for him to take is to make a complaint to the certification officer, or the court, who will then, and only then, form a view as to whether the union register is as accurate and up to date as is reasonably practicable.
I hope that that reassures the Committee. Clause 1 provides important new protections for the democratic rights of ordinary trade union members. I am

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pleased to note from the tenor of the amendments that have been tabled that there is agreement to that principle throughout the Committee.
Lord McCarthy: We were not surprised to hear that government reply. I understand from what was said by the government speakers and by the noble Lords, Lord Rochester and Lord Campbell of Alloway, that the objection is to the introduction of reasonability. The noble Lord, Lord Rochester, was right in saying that I was moving Amendment No. 1 and speaking to Amendments Nos. 2 and 3.
Amendment No. 2 provides for reasonability on several occasions. Reasonability is littered throughout this area of government legislation. It appears in the 1984 legislation; indeed, we were told then that we should not be anxious about the legislation because of its appearance. We are trying to insert it into this Bill. Although the noble Lord, Lord Rochester, said that he agreed with much of the clause, he believed that the reasonability test might encourage litigation. I do not know what evidence he has or why he believes that reasonability would encourage litigation any more than the terms which appear on the face of the Bill.
The noble Lord, Lord Campbell of Alloway, said that the provision would be bad for the trade unions. They were in favour of something being done about the Bill and about the clause; if they had been consulted, presumably they would not have wanted the provision because it included reasonability—
Lord Campbell of Alloway: In my book the problem is not reasonability but proof of reasonability.
Lord McCarthy: So it is all right to be unreasonable if that cannot be proved. Surely if one wants reasonability as a test one wants that test evaluated and to be used. The test of the test is whether it can be proved one way or the other. I do not find the noble Lord's argument convincing.
The Minister appeared to suggest that we are denying that the Bill is important. We do not deny that; of course it is an important Bill. When we come to deal with Part II we shall be saying that the Bill is very important and we are glad that the Government have included certain provisions. However, we are now talking about Part I. We believe not so much that it will place excessive burdens on trade unions—it may do so—but that it will place considerable burdens on scrutineers. They have considerable functions to perform and their services are not free. The average union of 100,000 members spends about £30,000 on scrutineers in relation to the present regulations and provisions. There can be no doubt that the scrutineers' duties will be considerably advanced as a result of the Bill. We believe that the Government should be reasonable and for that reason we tabled the amendment. However, I do not propose to take the matter to a Division and, therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 and 3 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 4:
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Page 2, line 27, after ("day") insert ("before the day").
The noble Lord said: This is a reasonable amendment. Indeed, it is so reasonable that it may attract Members of the Committee on the Liberal Democrat Front Bench. Although the amendment deals with a small matter, it illustrates what my noble friend Lord McCarthy put to the Committee and is important in the context in which we move such amendments; that the Bill must be seen as a further move towards heavy, strict and sometimes absolute obligations on trade unions. Those obligations are not found elsewhere, are enormously costly and will be even more costly when the promise of funds is soon retracted. If one sees the legislation as a whole, they move towards a body of law which has authoritarian tendencies which are recognised by people abroad who look at our statute book perhaps because they have known them better than we have. Indeed, Clauses 37 to 45 extend the criminal law. I hope that the Committee will look carefully at those clauses.
At first blush the point is a small one but it is an illustration of the way in which the Bill is constructed so as to cast the obligations as heavily as possible—and in this case impossibly—upon the trade unions. It concerns the relationship between the scrutineer and what we might call the "awkward squad" at the local branch or region of the union. Every organisation has its awkward squad. Members of the Committee may wish to look around to see whether the awkward squad is present today.
The scrutineer must meet the specifics of the regulations laid down by the Secretary of State. That is the first test. He must be proved to be independent and so on. When he has fulfilled all the requirements, the Bill says that he must make the report as soon as is reasonably practicable—we like that—after the return of all the voting papers. He picks up his pen and is about to finalise his report when suddenly the awkward squad appear and say, "We have some new suspicions which were not there before. They relate to matters which we have put to you". In the other place the Minister spoke of a trade union membership list which had five Donald Ducks on it. I do not know whether the Minister can produce that list. The scrutineer must look at such matters. The day passes. He must complete his report within that period after the ballot but a member can come along at any time between the date on which the candidatures are declared and ending on the day on which the scrutineer makes his report. That is another Mad Hatter structure.
Every time the scrutineer goes to write his report, a new matter appears for investigation. I do not suggest that my tiny amendment is necessarily the final answer to the problem. The amendment says that the scrutineer should be given a day on which to finalise his report, a dies non as it were, in which members cannot come along with new stories except as a different story for a new report. My amendment may or may not provide the best answer but it would allow the scrutineer to do his job whereas, as presently drafted, the Bill does not seem to do that. I believe that this is an example of how the Minister and those working with him, perhaps late at night, had the

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objective of making everything as tight as possible but went too far. They have made it impossible. I beg to move.
3.30 p.m.
Lord Campbell of Alloway: I support the amendment. The noble Lord has made out a good case and a fair argument for it. Had he omitted his reference to the Mad Hatter, I should have been able to say that I adopt most of his argument. However, I accept the substance of it. I believe that it is a fair amendment.
Lord Rochester: I too believe, on the basis of what the noble Lord, Lord Wedderburn, said, that this is a reasonable proposal. I hope that the Government may feel able to accept it.
Viscount Ullswater: I am grateful to the noble Lord for his explanation of what this amendment is intended to achieve and for the constructive intentions that clearly lie behind it. Clause 1, as the Committee will be aware, provides that when a union appoints a scrutineeer to oversee an executive election it must require him to inspect the register whenever it seems to him appropriate to do so, and, in particular, at the request of a union member or candidate, provided that the request is made during what is termed the "appropriate period".
This period is defined as the period beginning with the first day on which a person may become a candidate in the election or, if later, the day on which the scrutineer is appointed and ending with the day on which the scrutineer makes his report to the union. The purpose of the provision is to ensure that during an election union members and election candidates can, through the scrutineer, satisfy themselves that the register, which is after all the basis for the election, is maintained in a way that facilitates the democratic conduct of their election. It would clearly be unreasonable for everyone concerned, though, if such requests were to be made long after the election had taken place and even after its result had been announced. It was for that reason that we included in the provision a definition of the appropriate period during which such requests may be made to the scrutineer. The period ends with the submission of the scrutineer's report in which he comments on any requests to inspect the register that he has received.
I sympathise with the concern that has been expressed that this approach raises the possibility that requests to examine the register will be made which will come too late to be included in the scrutineer's report, or that their inclusion might delay submission of the report and the announcement of the election result. Of course, the likelihood in practice of inspection requests coming at this late stage is virtually non-existent. It is right, though, that we should take it into account.
Clause 1 introduces new and important rights for trade union members. It is clear from the spirit of the amendment that these rights are supported by Members of the Committee on the opposite Benches, and I welcome that support. I agree that it is important that trade union members should know
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when and how they can assert those rights, and it would be deeply unsatisfactory if the cut-off point for so doing was unclear or could not be recorded in the scrutineer's report.
Therefore, I am happy to give an undertaking to the Committee that I shall reflect on the arguments which have been put to me with a view to providing an appropriate amendment to the Bill at a later stage. In the meantime, I should be grateful if the noble Lord would withdraw his amendment.
Lord Wedderburn of Charlton: I am grateful to the noble Lords, Lord Campbell of Alloway and Lord Rochester, for their support. I am glad to hear what the Minister says. It is not exactly as I should have expressed the matter but I do not suppose that he would have expressed it in the way I did. I am glad to hear that he may bring forward an amendment on Report, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCarthy Lord McCarthy moved Amendment No. 5:
Page 2, line 30, at end insert:
("(3D) The scrutineer shall not transmit to an employer, or to any other person whom it is reasonable to believe may transmit to an employer, the whole or part of any information provided by the trade union, its officials or members in respect of the election, whether in the register of members, voting papers or otherwise." ").
The noble Lord said: We seem to be making progress and I hope that that can continue. In speaking to this amendment I shall speak also to Amendment No. 7, which is linked with it.
We now turn to the question of the confidentiality of the scrutineer's job. The Bill accepts that the scrutineer must respect the confidentiality of the register. Lines 29 and 30 of the Bill state:
"The duty of confidentiality as respects the register is incorporated in the scrutineer's appointment".
That is a somewhat delphic phrase. However, my amendment goes on to state:
"The scrutineer shall not transmit to an employer, or to any other person whom it is reasonable to believe may transmit to an employer, the whole or part of any information provided by the trade union".
That is what we want to see.
We propose adding to the Bill:
"The scrutineer shall not transmit to an employer",
or to any other person any information which is provided to him by the union. It seems reasonable to ask for the addition to the Bill. It is obvious why we want that. We should not want the scrutineer to allow direct access to the register. The Government have accepted that that is the case. However, the scrutineer will be put in a stronger position if he has a precise prescription of the kind which we should like to see, namely, that:
"The scrutineer shall not transmit to an employer, or to any other person whom it is reasonable to believe may transmit to an employer, the whole or part of any information provided by the trade union",
which arises from his knowledge of the election and the register. That is the substance of Amendment No. 5.
Amendment No. 7 seeks to go further. We argue that subsequently the scrutineer,
"whether he was approached by any employer or other person or body other than the trade union for information falling within"

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Section 49(1A), should be able to say,
"what action he took in regard to the matter".
Therefore, in the report of the scrutineer, any attempts to intervene or any attempts to put pressure on the scrutineer would be evident. We believe that this is a useful way of complementing what we take to be the Government's intentions regarding this clause. I beg to move.
Lord Campbell of Alloway: In principle I support Amendment No. 5 although it does seem to me to be too widely drawn. I can see what the noble Lord is getting at and I sympathise with what I think is his main concern, but I do not like the width of it. I am afraid that I am not with the noble Lord on Amendment No. 7 at all and I would need to hear what was said by my noble friend the Minister as to the problems as seen by government before making up my mind.
Lord Rochester: Again I see no need for these amendments. When a similar amendment was debated in Standing Committee in another place the Government undertook to address the matter of confidentiality, which is at the root of this amendment, on Report. That they have done by adding to the Bill new Clause 6 which requires trade unions to impose a duty of confidentiality on the scrutineers whom they appoint. Furthermore, the Government have added to Clause 1 a new subsection (3C) which makes it plain that the,
"duty of confidentiality as respects the register is incorporated in the scrutineer's appointment".
It is true that the Bill does not specifically prescribe that the scrutineer should not transmit information directly or indirectly to an employer but it must surely be presumed that as an independent and responsible person he will not so disregard the duty of confidentiality as to act in this way. By the same token I do not see why the scrutineer should be obliged to state in his report on the election whether he was approached for information falling within Section 49 of the 1992 Act, and if so what he did about it. I hope therefore that in this case too the noble Lord, Lord McCarthy, will not press the amendment to a vote.
Lord Murray of Epping Forest: When I first saw this amendment it seemed to me, as a total layman, to be rather legalistic. As one who is not very well versed in legalisms, I wondered what its purpose could be. But then I reflected on the amendment in the context of the Bill as such and took note of the way in which the Bill seeks to improve the position of employers as compared with members of trade unions, and indeed lays on the relevant authorities the obligation to inform employers of all kinds of things. It was that which led me to depart from the view expressed by the noble Lord, Lord Rochester.
The scrutineer himself, or herself, may well wonder what his purpose, duty, or responsibility is in the situation we are discussing. It may well seem right to the scrutineer that he should, perhaps in response to some request from an employer, inform him that the query has been put forward, what action is being taken and the results of that action. It seems to me that
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the amendment is quite innocuous if in fact the intention is that the scrutineer should not inform the employer. For my own purposes I cannot see what objection there can be to spelling out the matter and making it quite clear so that the scrutineer is absolutely clear as regards what is expected of him or of her in this situation.
3.45 p.m.
Viscount Ullswater: I agree with the noble Lord, Lord Rochester, that these amendments are quite simply unnecessary. I also hope to persuade my noble friend Lord Campbell of Alloway of that. Extensive protections already exist to protect the confidentiality of individuals whose names are held on membership registers, particularly when that information is computerised. In addition, and to make the duty of confidentiality in respect of union registers quite clear, Clause 6 was added to the Bill at Report stage in another place. That clause aims to ensure that disclosure is not made to any inappropriate person. There is no reason to qualify this yet further to specifically identify employers. The duty of confidentiality does not permit disclosure to an employer. After all let us not forget who the scrutineer is. He is independent. He is either an authorised body or a reputable professional. Experience shows that such individuals or organisations will not abuse the position of trust to which they are appointed.
In any case there is nothing to stop the union including in the terms on which it appoints the scrutineer an obligation which prevents him disclosing information to particular parties, or an obligation to make it known if he is approached with a view to such disclosure. Crucially, though, if an employer were to approach the scrutineer for information, the scrutineer would be obliged to refuse because of his duty of confidentiality owed to the union.
I should emphasise, moreover, that provisions in Clause 1 dealing with the scrutineer's report on an election (new Section 52(2a) inserted by Clause 1(2)) specifically state that the scrutineer's report shall not state the name of any union member or election candidate who has requested that an inspection or examination of the union's membership register be undertaken by the scrutineer. Nothing in the terms of the appointment of the independent scrutineer will be able to override this important protection of individual confidentiality. These amendments are inappropriate and unnecessary. I urge the noble Lord to withdraw them.
Lord Wedderburn of Charlton: I hope that I may ask the Minister a question before he sits down. He touched on two matters. The first concerned whether the Government intend to make any explicit statement on the matter that I believe he referred to inferentially; namely, the data protection principles and their relationship to Clause 6. Do they intend to do that before we part with the Bill? Secondly, the Minister referred to page 3 of the Bill which states that the scrutineer:
"shall not state the name of any member or candidate who has requested such an inspection".

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Why does not the Bill simply state that the scrutineer shall not state the name of any member or candidate outside his specific functions?
Viscount Ullswater: I believe that when the scrutineer is appointed, and if the register is computerised, he is effectively bound by the data protection legislation. If he does not constitute a registered body at that particular moment—of course, many scrutineers will be registered bodies—he will need to become so to operate on that basis. That, of course, will provide the confidentiality that the noble Lord seeks, or certainly the confidentiality that is imposed by the data protection legislation. I believe that we are just talking about the purity of drafting. I believe that the words as printed in the Bill are the correct words to protect the confidentiality of a member or candidate.
Lord Campbell of Alloway: My noble friend said that the union, when giving evidence to the scrutineer, could make some form of special contract that such information it gave should be treated in a certain way as regards confidentiality either under the terms of Amendment No. 5 or Amendment No. 7. In looking at the Bill I must ask my noble friend with the greatest respect whether that is really so. Could the union impose any type of terms? Is not the obligation of the union to provide information set out on the face of the Bill? Am I mistaken about that?
Viscount Ullswater: In my remarks I drew attention to Section 49(1) (b) of the consolidated Act which sets out the terms of appointment of the independent scrutineer. It is under those terms of appointment that the union can exercise the power to which my noble friend referred.
Lord McCarthy: It is probably our fault that we have not explained to the Government how strongly we feel about the amendment and the clause. The Bill adds considerably to the regulation—to use a neutral term—of trade union government, not only in Clause 1 but in many other clauses in Part I of the Bill. As my noble friend Lord Wedderburn said, many penalties have been set alongside the additional responsibilities. Some of those penalties are criminal penalties.
The Government have come very far with us on this particular issue. They now understand that it would be very disadvantageous for all concerned if the union register was freely available to all-comers—to employers, members, organisations and all kinds of people—and accepted the need for confidentiality in the register. That confidentiality should not only exist but it should be seen to exist by the unions.
There is a real anxiety that the scrutineers and certification officers who have been created by successive pieces of legislation to regulate trade unions are being transformed by the legislation into watchdogs of trade unions. There is a fear that their independence and freedom from pressure will not be as obvious as it was previously. Therefore, we say that since the Government go so far with us on this issue and recognise that there is a problem of confidentiality, they should accept that that confidentiality should be seen to be respected.
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That is all the two amendments propose. The Government do not say that the scrutineer should transmit information to an employer or any other person; they say that he should not. They even say that that is already set out in the Bill. The Minister said that if that is not the case, perhaps the union could reach agreement with the scrutineer on that point. However, the noble Lord, Lord Campbell of Alloway, was not certain about that.
With our second amendment, if the scrutineer does not transmit information which the Government do not want him to transmit, that confidentiality will be seen to exist and union members will know that if anybody approaches the scrutineer the scrutineer will not only repulse them but will inform the union in his report that he has done so. We are trying to create trust and support for an aspect of the Bill on which we believe the Government have seen our point. For that reason, I do not believe that we can withdraw the amendment.
Lord Campbell of Alloway: Having listened to the arguments, it seems to me that there is a difficulty. I do not believe that we have the right answer. I believe that the clause is too widely drawn—
The Deputy Chairman of Committees (Lord Murton of Lindisfarne): With all due respect to the noble Lord, the Question has been put by the noble Lord, Lord McCarthy, that the amendment should not be withdrawn. Therefore I shall put the Question.
3.54 p.m.
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 67; Not-Contents, 169.

Division No. 1

CONTENTS

Archer of Sandwell, L.

Llewelyn-Davies of Hastoe, B

Blease, L.

Lockwood, B.

Boston of Faversham, L.

Lovell-Davis, L.

Bottomley, L.

McCarthy, L.

Bruce of Donington, L.

McIntosh of Haringey, L.

Campbell of Eskan, L.

Mallalieu, B.

Carmichael of Kelvingrove, L.

Mason of Barnsley, L.

Carter, L.

Merlyn-Rees, L.

Cledwyn of Penrhos, L.

Milner of Leeds, L.

David, B.

Molloy, L.

Dean of Beswick, L.

Morris of Castle Morris, L.

Desai, L.

Morris of Kenwood, L.

Dormand of Easington, L.

Mulley, L.

Ewing of Kirkford, L.

Murray of Epping Forest, L.

Falkender, B.

Nicol, B.

Fisher of Rednal, B.

Parry, L.

Fitt, L.

Peston, L.

Gallacher, L. [Teller.]

Pitt of Hampstead, L.

Galpern, L.

Prys-Davies, L.

Graham of Edmonton, L. [Teller.]

Rea, L.

Richard, L.

Gregson, L.

Sainsbury, L.

Hollis of Heigham, B.

Sefton of Garston, L.

Irvine of Lairg, L.

Serota, B.

Jay, L.

Shackleton, L.

Jay of Paddington, B.

Stallard, L.

Jeger, B.

Stoddart of Swindon, L.

Jenkins of Putney, L.

Strabolgi, L.

Judd, L.

Taylor of Blackburn, L.

Kilbracken, L.

Taylor of Gryfe, L.

Kirkhill, L.

Turner of Camden, B

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Varley, L.

White, B.

Wallace of Coslany, L.

Williams of Elvel, L.

Wedderburn of Charlton, L.

Williams of Mostyn, L.

NOT-CONTENTS

Acton, L.

Hesketh, L. [Teller.]

Addington, L.

Holderness, L.

Addison, V.

Holme of Cheltenham, L.

Alport, L.

HolmPatrick, L.

Annaly, L.

Hooper, B.

Archer of Weston-Super-Mare, L

Hooson, L.

Howe, E.

Ardwick, L.

Hylton-Foster, B.

Arran, E.

Jenkins of Hillhead, L.

Astor, V.

Johnston of Rockport, L.

Astor of Hever, L.

Kinloss, Ly.

Aylestone, L.

Kinnaird, L.

Beaumont of Whitley, L.

Kintore, E.

Bellwin, L.

Knollys, V.

Bessborough, E.

Layton, L.

Blatch, B.

Long, V.

Borthwick, L.

Lucas of Chilworth, L.

Boyd-Carpenter, L.

Lyell, L.

Brabazon of Tara, L.

Mackay of Ardbrecknish, L

Braine of Wheatley, L.

Mackay of Clashfern, L. [(Lord Chancellor.]

Brookeborough, V.

Brougham and Vaux, L.

McNair, L.

Butterworth, L.

Manchester, D.

Cadman, L.

Mancroft, L.

Caithness, E.

Marlesford, L.

Campbell of Alloway, L.

Marsh, L.

Carnegy of Lour, B.

Melville, V.

Carnock, L.

Merrivale, L.

Chalker of Wallasey, B.

Mersey, V.

Charteris of Amisfield, L.

Middleton, L.

Chelmer, L.

Milverton, L.

Clanwilliam, E.

Monk Bretton, L.

Clark of Kempston, L

Monteagle of Brandon, L.

Constantine of Stanmore, L.

Morris, L.

Cox, B.

Mottistone, L.

Cranborne, V.

Mowbray and Stourton, L.

Crathorne, L.

Munster, E.

Crickhowell, L.

Murton of Lindisfarne, L.

Cullen of Ashbourne, L.

Nelson, E.

Cumberlege, B.

Nelson of Stafford, L.

Davidson, V.

O'Cathain, B.

Denton of Wakefield, B.

Onslow, E.

Donaldson of Kingsbridge, L.

Oppenheim-Barnes, B.

Effingham, E.

Orkney, E.

Elibank, L.

Orr-Ewing, L.

Ellenborough, L.

Oxfuird, V.

Elles, B.

Park of Monmouth, B.

Elliot of Harwood, B.

Pender, L.

Elliott of Morpeth, L.

Peyton of Yeovil, L.

Erne, E.

Plumb, L.

Ferrers, E.

Pym, L.

Finsberg, L.

Quinton, L.

Flather, B.

Rankeillour, L.

Forbes, L.

Reay, L.

Fraser of Carmyllie, L.

Rees, L.

Fraser of Kilmorack, L.

Renfrew of Kaimsthorn, L.

Gainford, L.

Renton, L.

Geddes, L.

Ritchie of Dundee, L.

Gilmour of Craigmillar, L.

Robson of Kiddington, B.

Gisborough, L.

Rochester, L.

Gladwyn, L.

Rodger of Earlsferry, L.

Goschen, V.

Romney, E.

Grey, E.

Russell, E.

Gridley, L.

Salisbury, M.

Haig, E.

Saltoun of Abernethy, Ly.

Hailsham of Saint Marylebone, L

Seccombe, B.

Selborne, E.

Hampton, L.

Selkirk, E.

Hanworth, V.

Sharples, B.

Harding of Petherton, L.

Shuttleworth, L.

Harmar-Nicholls, L.

Simon of Glaisdale, L.

Harris of Greenwich, L.

Stewartby, L.

Harvey of Prestbury, L.

Stockton, E.

Hayhoe, L.

Strange, B.

Henley, L.

Strathcarron, L.

1350

Strathclyde, L.

Ullswater, V.

Strathmore and Kinghorne, E. [Teller.]

Vaux of Harrowden, L.

Vivian, L.

Sudeley, L.

Wade of Chorlton, L.

Swinfen, L.

Walton of Detchant, L.

Tebbit, L.

Westbury, L.

Terrington, L.

Whaddon, L.

Thomas of Gwydir, L.

Wharton, B.

Thurlow, L.

Whitelaw, V.

Tordoff, L.

Winchilsea and Nottingham, E

Trumpington, B.

Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.3 p.m.
[Amendments Nos. 6 and 7 not moved.]
Clause 1 agreed to.
Clause 2 [Counting of election votes etc. by independent person]:
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 8:
Page 4, line 7, after ("shall") insert ("use its best endeavours to").
The noble Baroness said: Clause 2 relates to the requirement that an independent person or independent scrutineer shall be appointed to carry out counting of election votes. However, subsection (6) later states that,
"The trade union … shall ensure that nothing in the terms of an appointment under this section is such as to make it reasonable for any person to call into question the independence of the person".
Next it is stipulated that the trade union shall ensure that a person appointed under this section carries out the functions reasonably and satisfactorily. The point of the amendment is to insert that the union should "use its best endeavours to". As the clause now stands, an absolute duty is imposed on the union in situations in which it may not have absolute control.
Often in these situations unions will appoint an independent person or an organisation such as the Industrial Society or the Electoral Reform Society, or one of the organisations which have been appointed in recent years to do such work. It seems to be somewhat of a growth industry. Those organisations will handle the ballot on behalf of the union. No doubt the union will do its best to ensure that the person or organisation appointed is bona fide and qualified to do the job. It would scarcely be in the interests of the union to do otherwise.
However, in so doing, absolute control passes away from the union. If that is so it seems wrong to impose an absolute duty in the terms of the Bill. That is why we have proposed the wording in this clause and in two other clauses. The amendment has been grouped with Amendment No. 9, and Amendments Nos. 10 and 12, which deal with another aspect of the Bill. That is why we propose incorporating the wording that the union should "use its best endeavours to." Of course, it will be in the union's interest to ensure that the work is carried out as effectively, fairly and efficiently as possible. If things go wrong, the union itself may not be in a position to prevent that happening. Independent scrutineering or independent counting means what it says. It is not possible to take away from the union the job of scrutineering in the belief that it will be fairer and more independent to

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have the job done by someone else and at the same time to impose an absolute duty on the union to ensure that all goes well. The union has lost absolute control and therefore should not have the absolute responsibility envisaged in these clauses.
This is a modest and reasonable amendment. I look forward to hearing from the Minister that he will look favourably upon it. I beg to move.
Lord Marsh: I do not believe that anyone can take exception to what the noble Baroness seeks to achieve. However, the position is covered by the wording in the Bill. Whatever the organisation chosen by the trade union—I well understand that it may be a number of different people or organisations —the obligation on the union is not that that organisation shall act correctly but that nothing in the terms upon which that organisation was appointed gives it justification for behaving in that way. I ask the Minister whether or not I have that wrong. If the position is as I believe, I would be against the amendment because I do not believe that it is necessary. It seems to me that the union is protected in so far as it has only to ensure that it has not authorised misbehaviour on the part of the person or organisation which it appoints.
Lord Campbell of Alloway: With respect, I take exactly the same view as the noble Lord, Lord Marsh. I shall be corrected if I am wrong. The clause did not appear to attract any attention in another place. I believe that it is a concern which, with the greatest respect, is misconceived. I believe that the noble Lord, Lord Marsh, is right.
Lord Wedderburn of Charlton: Although I do not believe that they are different from the amendments to which my noble friend spoke, perhaps I may speak to Amendments Nos. 10 and 12. It has been suggested that they are grouped with the amendments. They perhaps illustrate the point in a different way and give some counter argument to what the noble Lord, Lord Marsh, said.
Amendment No. 9 refers to page 4 of the Bill. Subsection (6) (b) provides that,
"the trade union shall ensure that…[the scrutineer] duly carries out his functions and that there is no interference with his carrying out of those functions which would make it reasonable for any person to call into question the independence of the person appointed in relation to the union".
That is clearly a strict duty—I prefer to use "strict" as opposed to "absolute", but it is near to absolute—that the union must ensure, see to it, that the scrutineer duly carries out his functions.
It is no good the union coming along and saying, "Deary me, it wasn't our fault that he didn't carry out his functions" because the union must "ensure". We do not find that in other legislation. If the Minister would like to show me a parallel on analogous provision in some other legislation concerning the law of corporate or unincorporated associations I should be interested. This is an extravagant provision.
Nor is it an answer—and this was discussed in the other place—to say that the clause goes on to say that the test for the functions being carried out is whether it be reasonable for someone to say that he is not independent. That is to do with the result. What we
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question is the duty. You can have a result that is determined and defined by relation to what is reasonable or, as here, what is reasonable in the eye of an objective observer. But the duty is another matter. At what level of duty are you asked to bring about that result? Here it is strict. We say that it should have added to it in this amendment "so far as reasonably practicable".
If the union cannot do any more than what is reasonably practicable—and the courts interpret that phrase every day in other contexts—why on earth should they be made liable, as the Bill makes them liable? On page 4 the Committee will see:
"The trade union—
(a) shall ensure that nothing in the terms of an appointment under this section is such as to make it reasonable for any person to call into question the independence of the person".
That is the point raised by the noble Lord, Lord Marsh, which we are not questioning. Of course the terms of appointment must make it clear that there is independence. Then it goes on:
"(b) shall ensure that a person appointed under this section duly carries out his functions and that there is no interference with his carrying out of those functions which would make it reasonable for any person",
and the same words follow.
Why this is such an important point—and the Minister and I know it very well—is that if the Government make an amendment to any of these strict duties, there are many other places in the Bill where it will be questioned. This is a Bill that puts upon a voluntary organisation absolute duties to produce results which it cannot possibly produce in some circumstances, especially the circumstances of life at the workplace. This is central to the Bill. Surely the Government will not go to such extravagant lengths in their quest for liabilities of trade unions that they impose absolute duties—and later we come even to criminal liabilities—upon trade unions. This is totally unique and a special part of their step-by-step legislation.
If they intend it, let them oppose the amendment. There is no doubt whatever about this amendment, especially if we take page 7. Page 7 is the example. If the Government will not retract on that, then we shall have absolute duties on the unions, and no doubt we shall be reported again to the International Labour Organisation. No doubt yet again the committee of experts and the Freedom of Association Committee will condemn the United Kingdom—as they have done regularly now—alongside very few other culprits and none of them from Europe, in terms of freedom of association. I support my noble friend in moving this amendment and in the group of amendments taken with it.
Lord Murray of Epping Forest: Perhaps I may add a brief point. I have some sympathy with the point made by the noble Lord, Lord Marsh, on Amendment No. 8. I share with him the view that the union should not be enabled in any way, or given the opportunity in any way, to interfere with the appointment, or to fix the appointment, or what have you. That should be absolutely clear. I do, however, draw a sharp

1353
distinction between that and the next amendment as regards the carrying out of the functions. It is that point that I wish to emphasise.
Telling the union that it must police the person who is appointed, that it must stick around and make sure that nothing happens to interfere with his activities so that nobody can get at him or anything of that nature, surely is counterproductive. That is inviting the union to have a presence in the activities of the appointee; to have some responsibility for what he or she does; to have a view about what is going on. I am sure that is not the intention of the clause, but it comes near to inviting the union to police the activity whereas it should be keeping the union as far as possible away from the activity. That seems to be an additional reason for adopting Amendment No. 9 and the ones to which my noble friend Lord Wedderburn referred.
4.15 p.m.
Lord Rochester: I, too, have seen the force of the argument offered by the noble Lord, Lord Marsh, and having that in mind would not wish to support Amendment No. 8. But, like the noble Lord, Lord Murray of Epping Forest, I wonder if, in the case of the subsequent amendments—and I think particularly of Amendment No. 9 and the amendment to be moved by the noble Lord, Lord Wedderburn, Amendment No. l2—whether the Government might give further thought to this in the light of the arguments that they have advanced.
Viscount Ullswater: I believe these amendments to be unnecessary, and if implemented they would result in an inconsistency with existing comparable legislation. I shall come to that in a minute. As the Committee will be aware, we are talking about the appointment of an independent person and his duties. The independent person must satisfy certain criteria relating to independence and competence. However, this "test" need not be applied if the scrutineer is appointed to be the independent person. The reason is that the scrutineer himself is already required to comply with strict criteria. The roles of the two figures are in many ways comparable.
The noble Lord, Lord Wedderburn, asked me where the law put these, what I think he would describe as draconian, duties on any individual. I would have to ask him to refer to Section 49 of the Trade Union and Labour Relations (Consolidation) Act 1992. There he will find in Section 49 of the 1992 Act where the duties of the scrutineer are defined, and obligations placed on the union to ensure that the independence of the scrutineer cannot be called into question. Those obligations are analogous with those in this clause, and they are not qualified by any test of practicability or such like. I should perhaps draw the attention of the Committee to subsections 49(4), (6) and (7). Why should this clause be any different? Surely it is as important that the union be equally vigilant so far as concerns the appointment of the independent person. He will, after all, be the person storing and distributing ballot papers and counting votes; hardly unimportant aspects of an election.
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Amendment No. 12, which is grouped with this amendment by the noble Baroness, would similarly modify provisions in new Section 100A of the 1992 Act, as inserted by Clause 4. These provisions require the trade union to ensure that the scrutineer carries out his functions without interference which would make it reasonable for anyone to call his independence into question. The amendment would modify this duty, and require the union only to "use its best endeavours" to ensure that the scrutineer can carry out his functions without interference which might cause his independence to be questioned.
These provisions, as currently worded, are necessary to guarantee the independence of the scrutineer appointed to oversee the merger ballot which, as I am sure we are all agreed, is of fundamental importance to individual union members. I have not been persuaded by the arguments put forward by the noble Lords opposite that it would be right to dilute and obscure the union's duty in the way the amendment would, I fear, achieve. I therefore ask the noble Baroness to withdraw the amendment.
Lord Wedderburn of Charlton: May I put one question before the noble Viscount sits down? I have seen the provisions of Section 49. Most of it requires the union to ensure the independence of the scrutineer. That is indeed a strict duty. However, I acknowledge that it is true that subsection (6) goes further and requires the union to ensure that there shall be no interference. What made me forget the subsection is that I remember objecting to it, with my noble friends, in the debate when it was introduced.
Will the noble Viscount at least accept that these are cost-oriented days, not least for the trade unions? In terms of cost, in terms of insurance against liability, if we add up the number of occasions on which the Bill says that the union "shall ensure", it is a long list. Does the noble Viscount agree that a different premium will be quoted in terms of the risk of liability against the backdrop of a clause which says that the union "shall ensure" a certain result as against a provision that the union "shall use its best endeavours" to produce a certain result? It is highly likely that the insurance cost will be greatly increased. Does the noble Viscount agree?
Viscount Ullswater: I believe that that is a long way from the terms that we are discussing today. What we are discussing today, as I think I was able to demonstrate to the noble Lord, is that we wish to form consistency in the legislation. That is why the words in new subsection (6) in Clause 2 are printed in the Bill. I have been able to demonstrate to the Committee that there are similar and consistent words in the existing legislation. Therefore I believe it would be right for the noble Baroness to withdraw the amendment.
Lord Marsh: Before the noble Viscount sits down, I apologise to the Committee for speaking again, and the desire to ensure that legislation is consistent is wholly praiseworthy, but it is not necessarily an answer to the argument. I was of the opinion, in speaking earlier on, when I tried to get clarification of where we stand, that the union's responsibility, taking

1355
the words of the first amendment, was confined purely to ensuring that the terms of the appointment did not authorise what would be seen as wrongdoing. Is the Minister now saying that the union is responsible for the wrongdoing of such a person, even if it is outside the appointment?
On the question with which the Minister dealt on Amendment No. 12, can he tell me what action the union could take if such a person behaves in a way of which the union does not approve and may not even know of until some time after the wrongdoing has occurred?
Viscount Ullswater: The important point is to make certain that the independent person is independent. I believe that we all agree on that. It is an important duty that he is being asked to carry out —to count, store and distribute the voting papers. In many instances that will be done by the scrutineer himself, but he may also appoint an independent person. We see no reason why the test should be any less on the independent person than on the scrutineer. Independence is a heavy test which needs to be applied by the independent person because these are important matters that we are discussing.
The noble Lord, Lord Marsh, asked about the effect of Amendment No. 12 if it was suspected that something was amiss. The right reply would be that he should make known his concerns to the certification officer.
Lord McCarthy: The central point made by my noble friend Lord Wedderburn is not whether one can find similar extreme forms of liability and duty in legislation about trade unions in the consolidation Acts but whether one can find it anywhere else. We argue that those degrees of responsibility will not be found in legislation in other areas.
Lord Stoddart of Swindon: The noble Viscount has not answered the point which was raised by my noble friend Lord Murray, and I am still anxious about it. Clause 2, new subsection (6) (b) says that the trade union:
"shall ensure that a person appointed under this section duly carries out his functions and that there is no interference with his carrying out of those functions which would make it reasonable for any person to call into question the independence of the person appointed in relation to the union".
In the first place, I believe that the trade union might find it extremely difficult to carry that out. But, as my noble friend pointed out, it may well be that if the trade union attempted to carry it out it could then be accused of interfering in the duties of the independent scrutineer. I do not believe that the noble Viscount dealt with that important point. I should be obliged if he would do so.
Viscount Ullswater: I believe that I have dealt with it. I indicated that the independent person exists to protect the interests of the trade union members. These are very important matters—the counting of votes, the distribution of ballot papers, to ensure the independence of that person and perhaps to prescribe
1356
how the trade union should appoint him. After all, it is a matter of the relationship between the trade union and its members.
What we are trying to secure by this simple subsection in the Bill is to make certain that that independent person has the same duties imposed on him as the scrutineer.
Lord Stoddart of Swindon: I am afraid that that still does not satisfy me. The noble Viscount has still not dealt with the point that if a trade union seeks to do what the subsection lays down, it could very well be accused of interfering in the operation of the ballot. For example, the trade union might take a completely different view as to the fairness or otherwise of something that the scrutineer is carrying out, although it may well feel that it has a duty under the Bill to see that the scrutineer carries out that action. The trade union could then be accused of interfering in the independence of the independent scrutineer. That is what we are trying to get at, and I am afraid that the noble Viscount has not explained it to my satisfaction. He has certainly not satisfied me that this could not create a difficulty in the future.
Baroness Turner of Camden: We have had quite a detailed discussion on the amendments and I must say that, as concerns Amendment No. 8, there is something to be said for what the noble Lord, Lord Marsh, stated. However, there is nothing at all to be said against our Amendment No. 9. Unless the Bill is amended in the way we propose, the absolute and strict duty is laid upon the union to ensure certain matters, even though the union has no control over the organisation appointed because the work is being done elsewhere, perhaps in the offices of the organisation appointed. The union has no control over the organisation while it is doing that work. As my noble friends have pointed out, if the trade union were to attempt to have any influence over the organisation, it could well damage the appearance of independence in the eyes of its members.
I am quite dissatisfied with the Minister's response on Amendment No. 9. I do not intend to press it this afternoon, but I should like to look carefully at the points raised in the debate with a view perhaps to coming back at Report stage because the point is quite important. In the meantime, I do not wish to press the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 9 and 10 not moved.]
Clause 2 agreed to.
Clause 3 agreed to.
Schedule 1 [Political fund ballots]:
4.30 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 11:
Page 61, line 24, at end insert:
("(ab) to collect any information obtained by or reported to him concerning interference or constraint in the conduct of the ballot or with the exercise by the members of their rights in respect of the ballot by any person or body;" ").
The noble Lord said: This point has been discussed, but as it concerns the arrangement of ballots for

1357
political funds, I should like to draw attention to it and to hear what the Minister has to say. Many provisions in Schedule 1 are similar to those that have been previously discussed. However, one matter that has not been fully clarified is raised in the amendment. It concerns the appointment of the independent scrutineer and what the union and the scrutineer must do. It would add an obligation to collect any information that is obtained by or reported to the scrutineer that concerns interference or constraint in the conduct of the ballot or of the exercise by members of their rights in relation to the ballot by any person or body.
The amendment is in keeping with a tradition that I hope the Government do not wish to jettison; namely, the strong urge in the law since the 1913 Act to ensure that political fund ballots are conducted properly and that a union is protected when it has a political fund. It concerns interference or constraint by any person. That point should be put on the table because the Minister has to deal with it. The Bill speaks sometimes of interference by the union, as does the consolidation Act, and sometimes of interference where it appears to be by the union. We ask the Government to accept that the ban on interference or constraint in political fund ballots and other funds should apply not merely to the union but also to the employer or to any other person or body.
The employment relationship is not a cool, neutral, test-tube relationship. Many millions of people are very happy in their work and in their relationships with managers and employers. However, there are many situations in which an individual employee or a small group of employees feels pressurised and therefore needs protection. Almost every labour law system in Europe puts protection of the weaker party as its core. The amendment is in the same vein but only to the extent that people should have the right, which the Government have espoused in legislation on ballots, to vote freely without interference or constraint; and that must include constraint by any person or body.
Further elaboration, or litigation, may be required. I understand the condemnation of sloppy legislation, but I have never known litigation to be used as an objection to enacting a clause. I take that view not because I am a lawyer but because there is almost no way in which a clause can be devised and defined to exclude the jurisdiction of the courts so that there can be no litigation. The matter may need further thought, but the principle is clear. Do the Government accept that interference or constraint by any person is to be kept out in the political fund ballot? I beg to move.
Viscount Ullswater: I hope to explain why the amendment is unnecessary so that the noble Lord will feel content to withdraw it. I realise that the amendment arises from a concern that provisions should be seen to be fair and consistent. However, it is entirely unnecessary. Section 75(1) of the 1992 Act includes in paragraph (b) the provision that the scrutineer shall carry out such additional functions in relation to the ballot as may be specified in his appointment. Therefore, there is nothing to prevent
1358
the trade union from specifying in the terms of the appointment that it would like the scrutineer to report on interference by parties other than those connected with the union. There would be no point in the law requiring the scrutineer to collect information on interference by any person or body since it is only interference by those connected with the trade union which may be the subject of a complaint by a union member.
That is the situation as it exists, and I hope that I have been able to persuade the noble Lord that he should withdraw the amendment.
Lord Wedderburn of Charlton: I should like to thank the Minister for his reply. I refrain from commenting because the next set of amendments goes into the matter more deeply. I shall return to the subject. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Clause 4 [Ballots for union amalgamations and transfers of engagements]:
[Amendment No. 12 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 13:
Page 8, line 4, after ("constraint") insert ("whether effected by a trade union, an employer or any other person acting by themselves or by their employees or agents").
The noble Lord said: The grouping of the amendments has been difficult, but logically we come to the issue arising on page 8 of the Bill as to whether interference and constraint should include interference and constraint by any person. That is what the Minister appeared to be suggesting, although he did not say so. He stated that the Bill included only interference by the trade union, its employees and other officials. That is exactly what we object to; that the Bill should mention interference with elections and ballots and ban interference by the trade unions. That position is totally contrary to our amendment.
The point made by the Minister in relation to the last amendment is relevant here. The trade union could always say to the scrutineer, "As part of your terms of employment you had better look out and tell us if there is any interference". That is fine, but why should the matter be left to the terms of the trade union's appointment of the scrutineer? If it is done in that way, then there is no obligation on the employer not to interfere. It is the interference by the employer in some employment relationships that can be seen by those who are concerned with the situation on the ground. Therefore, to state that the trade union can put the matter in the terms of the appointment is no answer. I stress that it does not mean that the employer is under any legal duty to avoid interference other than in regard to acts that are unlawful.
Whether the constraint or interference is effected by a union, employer or other person acting by themselves, or their employees or agents, the amendment has as its secret force Amendments Nos. 272 and 273. To put it shortly, those amendments attempt to give to the union a right of action through the court by analogy to other procedures under the

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consolidation Act. Where the employer or some other person has been guilty of interference in the ballot, the union can go to the court and get an order.
Some of my friends say that it is dangerous to mention other foreign systems of labour law. People get the wrong impression. They get the impression that one wants to import that system into England. We all know that that is very silly. But one can get the feeling of certain standards if there happens to be a general level of obligation on certain matters. The Government know that very well. In the Green Paper on the issue of collective agreements which they have now withdrawn, on page 39 they refer to no less than six foreign systems. The discussion is very interesting. Perhaps it led them not to legislate upon the matter. I shall refer to only four or five of the best known labour law systems which are attractive to one kind of mind or another; and they are very different. In Germany, for example, the individual and the collective freedom of association provisions operate under a constitutional understanding and interpretation that there is a protection against interference for the worker in functions such as these. In Sweden, it is partly constitutional and comes partly under the Act of 1976. In Italy, any interference, especially by an employer, against trade union activity and the like is unlawful under the workers' statute of 1970. Even more interesting, since 1969 the United States Supreme Court has interpreted the legislation in such a way as to give rise to what is called the free speech limitations of the employer. There is a constitutional right to free speech, but limitations are imposed of a reasonable kind. One of them, as in the leading case in that year, is to tell the employer that he has acted unlawfully if, during the course of an election for the union to represent workers, he goes around saying, "If we have this sort of union, the plant will have to close".
I do not suggest that we import anything as strong as that. But the problem of limiting the employer's activity beyond the normal rules of law in a workshop situation when workers and employees are possibly bereft of any other protection if they are not unionised, is well known to all modern systems and certainly all democratic modern systems of labour law, except ours.
The amendment says that in just this little area, in this tiny place relating to ballots, perhaps we could make a start. We could say that if it is demanded that all the ballots take place, that is fine. But can we make sure that the employees will not be interfered with or constrained—not merely by the union, as the law already has it (as the Minister rightly says)—but also by the employer, or indeed by any other third party. I beg to move.
4.45 p.m.
Viscount Ullswater: I have listened with interest to what the noble Lord, Lord Wedderburn, has said in introducing this group of amendments. I am forced to conclude, however, that the case that he has made out may be based on various misunderstandings. In any case, there are strong arguments for not seeking to
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disturb the present rules, which govern mergers of both unions and of employers' associations, in the way which these amendments would do.
It is the free choice of a union, or an employers' association, to decide whether to proceed with a merger ballot. If so, however, the ballot must be conducted—by the union, or the employers' association—so as to satisfy the statutory requirements. Those requirements are designed to ensure that the vote is given to all those who should have one—that they can vote freely, as they wish.
For many years, the rules governing union and employer association mergers have required ballots to be held. By virtue of provisions in Section 1(2) (b) of the 1964 Trade Union (Amalgamations etc.) Act—an Act with antecedents—which are now in Section 100(1) (b) of the 1992 consolidation Act, all voters must be allowed to do so free from "interference or constraint".
What does the phrase "interference and constraint" mean? Clearly, we believe that it does not encompass the putting of views about the merits of voting for or against a resolution. Nor does it encompass the expression of an opinion about the consequences of a particular ballot result. I suggest that "interference or constraint" means, in essence, the exercise of some kind of constraint which might make it particularly difficult for a vote to be cast by someone entitled to do so. In effect, it is constraint attempted by the body organising the ballot.
The activities of a "third party"—that is to say some person who is not either voting in the ballot, or conducting it—should not be considered in the same way. A union ballot is a ballot of its own members, by the union. The ballots which are regulated by law share the common characteristic that they confer some "advantage" on a union —in this case, the ability to merge under the statutory arrangements where the common law was more onerous in terms of what it would require.
Our laws have always been designed to protect the voters in a ballot from "interference or constraint" by the organiser of the ballot. If the organiser of the ballot observes the requirements of the law, the ballot result will be valid, as far as the law is concerned. If the organiser believes that something has happened—perhaps because of the actions of a "third party"—the organiser has full freedom to decide whether or not anything consequential needs to be done.
It follows, therefore, that the law does not need to address the question of whether union merger ballots should be "protected" against what the noble Lord opposite chose to characterise, in his own words, as "third party interference" by means of some kind of sanction imposed on that third party. What we are seeking to do, and what the existing law in this area does, is to regulate the arrangements which are made between the organiser of a ballot and the members who are entitled to vote. There is no need, and no reason, for the law to extend beyond that primary relationship. Indeed, I suggest that it is not really meaningful to talk about a union merger ballot being subject to "interference or constraint" by anyone other than the union.
Lord McCarthy: Would the noble Viscount care to comment on an example? It was well known, and not denied, that during the amalgamation processes which ended between the NGA and SOGAT, employers in the industry had no compunction about saying that if that amalgamation went through they would cancel their agreements with SOGAT. Indeed many of them did. Many people in the course of that ballot were told: "If you vote for this merger, we shall cancel recognition". If that is not interference, what is?
Viscount Ullswater: I have sought to indicate that there was no interference with the way in which people cast their vote. It is merely a consequence of the result of the ballot; there was no interference in the way in which the ballot was conducted. Similarly, it is not meaningful to suggest that voters in a ballot about merger between employers' associations could be interfered with or constrained other than by the employers' associations organising the ballot.
The enforcement arrangements, which can be exercised if the merger balloting requirements are not satisfied, have some unique features. Section 103 of the 1992 Act provides that complaints can be made only to the independent certification officer. There is no provision for complaints to be made to the courts. That is perfectly logical since in this instance it is the certification officer's job to decide whether a merger should be allowed to proceed following a proper ballot.
Frankly, these arrangements have worked perfectly well over the years. The Bill does not propose to give union members the right to take complaints to the courts on the ground that their union has failed to satisfy the merger balloting requirements. The suggestion in the amendments that the courts should be given a role is simply misconceived. I should also point out that if there were to be a complaint under the present law about third-party interference and the certification officer upheld the complaint, the effect would be to make the ballot invalid and a merger based on a ballot result could not proceed. I feel safe in assuming that the authors of the 1964 legislation could have intended no such result.
For those reasons the amendments are unacceptable. The requirements and enforcement arrangements for merger ballots as proposed by the Bill are both adequate and appropriate. I ask the noble Lord to withdraw the amendment.
Lord Wedderburn of Charlton: I thank the Minister for making the Government's position clear, I think for the first time, on this matter. I apprehend that we have not hitherto had a clear statement that the policy of the Government has reached the point where they are against legislation in order to stop interference and constraint upon those who vote in a ballot —either for a political fund or on amalgamation or transfer of engagement. That is a proposition which I am sure Members of the Committee will want to look at in Hansard and look at very hard.
My noble friend Lord McCarthy gave an example. I wish to give the Minister another. What his law will allow is the employer to say, as it appears the Timex Corporation has said to some of its workers, "Here is
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your notice and you need not come back". In that case it was in order to recruit a separate workforce. In our case it might be that if someone votes for the bigger union amalgamation he need not come back when his notice is worked out. Is that what the Government support? Because that is what their law allows. They are against any interference by third parties —employer or anyone else. As a matter of fact these amendments give a remedy. The secret is in the fine print of the schedule where the union would have a remedy. I think that I have couched the amendments too narrowly. Should not the workers have a remedy if told that if they vote a particular way in the ballot for a merger they need not come back after their short notice is worked out? In fact, it is much more likely that they will be given money in lieu of notice. The Minister does not say to me that that is wrong.
Lord Stoddart of Swindon: I must confess that I was rather surprised by the noble Viscount's answer. The instances given by my noble friends Lord McCarthy and Lord Wedderburn are ones of intimidation and blackmail against people voting in a ballot. I wonder whether my noble friend can give me his opinion on this point. If in a general election an employer said to one of his employees, "If you vote for the Labour Party"—it could be the Conservative Party these days because employers are not very happy with the Conservative Party—"you can sling your hook; you will no longer be employed by me", would that constitute an offence?
Lord Wedderburn of Charlton: My noble friend asks me a quite difficult question at which I would want to look long and hard. I suspect that there are matters in the Representation of the People Acts which might make that very questionable. What I am saying is that there is nothing in our labour laws or employment laws which gives to workers any parallel protection. The Minister's reply was most important for another reason. We shall come to that in the next set of amendments.
The Government have suddenly begun not to like union mergers. They did not like the UNISON merger which was a triumphant success in the public sector. That explains the Bill's construction in the form that we find it. I am not saying that it is the only reason why the Government are against the law on interference. It would take a long time to tease out the precise intellectual and psychological problems which cause them to reject something at which most other legal systems of the modern age are able to look with greater care and attention.
However, I note what the Minister says. I thank him for saying it and for making it clear. Despite his strong stance, I suspect that it is something that Members of the Committee may want to think about before Report stage, because interference and constraint are behind the structure of all of the first part of the Bill. In the first 10 clauses it is there all the time, but it is usually attached only to the unions. We shall have to see what we can do with it on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 14:
Page 8, line 15, at end insert ("or by some other method approved by the Certification Officer.").
The noble Lord said: This is an associated matter. The Government have now decided that in this area of mergers there shall be postal ballots only. As a matter of fact they have also applied a number of other rules which have not been applied before. The amendment would allow for some alternatives. It would allow for an alternative only with the approval of the certification officer. What I am getting at are workplace ballots but workplace ballots according to the rules approved by the certification officer.
If we are concerned about getting the highest turnout, which on a merger of unions we should be, all the evidence is in favour of something by way of a workplace ballot or a workplace ballot with a postal voting paper being sent beforehand, which is what would be allowed under my amendment. That is what was said by the noble Earl, Lord Gowrie, in this House in 1980, when he spoke of it being clear that the workplace ballot produced the highest degree of participation. That is what Undy and Martin found in their survey in 1984. They said that no system produced all the virtues but,
"if the concern is for the highest degree of participation the workplace ballot should be encouraged".
Participation on a merger is absolutely vital. One asks therefore why the Government chose this moment to upset something which has been there since 1964; namely, the scheme of voting under the Trade Union (Amalgamations, etc.) Act 1964. That Act removed the shackles on trade union voting rules which had been there since 1876. It was not, as some think, a regulatory measure. It was a measure which removed a number of previous regulations. The basic rules were that every member had to vote or must be entitled to vote without interference or constraint on the part of anyone and with a fair opportunity to vote; the method of voting had to be a voting paper which was marked; and the trade unions had to take all reasonable steps to see that members received the notice at least seven days before the vote. Those rules were administered, and are administered, by the certification officer—the certification officer who, as we shall see later in the Bill, is now put in jeopardy in terms of such functions which he has fulfilled remarkably well and with the complete trust of the trade union movement and its members.
The Government's real aim, it seems, is to upset this arrangement. Indeed, in another place the matter was put remarkably shortly. During the Committee stage the Minister said:
"Legislation on union mergers has remained unchanged since the Trade Union (Amalgamations, etc.) Act 1964".
He went on to say:
"Since 1988, however, ballots that are similar to merger ballots—for example, those involving a large proportion or all of a union's membership—have had to be conducted by full postal voting and are subject to independent scrutiny".
Perhaps I may pause there for a moment. This amendment does not in any way remove the demand for independent scrutiny. Later, he says:
"It is important to ensure that full postal balloting takes place on proposed union mergers".
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He continues:
"During the 1980s, the impact of mergers on union membership clearly increased. The 171 mergers between 1968 and 1979 involved just under 750,000 members; between 1979 and 1989 there were fewer mergers … but they involved nearly five times as many members; over 3.5 million. That, in itself, was a compelling reason to look again at the law, to ensure that members' interests and rights were properly protected in mergers".—[Official Report, Commons Standing Committee F, 1/12/92; col. 57.]
We have two factors working on the mind of the Minister. First, the 1964 Act had been unaltered for a very long time. Secondly, more mergers were taking place in terms of the number of members involved. I can only think that someone found this situation and he or she must have said: "Minister, here is a bit of trade union law that has not been changed since 1964. Good heavens! Let's have a go at that".
The reasoning stops except for the increase in the number of mergers. The number of members involved in the mergers is not exactly the test because the certification officer reveals every year precisely what complaints are made and not made in respect of any merger that has taken place that year. We can take, for example, 1979 which involved 105 complaints; but, as the certification officer explained, that was a very unusual year in every respect, and there were very good reasons for that figure. If one takes the normal years, from 1980 to 1984 there were 26 complaints although very few succeeded. From 1985 to 1991 there were only three complaints during a period when the numbers involved were going up. All three complaints were dismissed and made no case. In recent years the figures have either been nought or one. In other words, the system has been working better than it used to. The Government have said nothing about the work of the certification officer here as the judge, conciliator, mediator and expert in union amalgamations.
The present system is that postal ballots are not demanded, although they frequently occur. In that regard, has the view of the certification officer been taken? Have the Government looked into the reasons why the number of successful complaints has been falling since the early 1980s? I should have thought that that was something of which the Government wanted to be proud except, I suppose, that it is a 1964 Act and not a Government Act.
This evidence adds up to the fact that there is, first, no evidence that the 1964 statute is failing in any way. However, sometimes there are grumbles. In passing, perhaps I may say that the Green Paper refers to certain grumbles; but they could have gone to the certification officer if a case could be established. Therefore it is the complaints to the certification officer which one needs to look at. Secondly, if we are concerned about mergers taking place and to represent the interests of the members, then the evidence is still what it was in the mid-1980s. The other day I had in my hand the 200-page index of the Department of Employment research. I did not see any piece of research which was likely to reject that evidence. If there is such evidence then we should hear it.
The evidence that I am aware of is still that the workplace ballot, properly run, is better in terms of

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getting the participation rate up. Sometimes other unions prefer a postal ballot. We are saying that the union and the members concerned should have the right to choose. They should not be dragooned by the diktat of this Bill into always having a postal ballot which may not be effective for its members. I beg to move.
Viscount Ullswater: This amendment seeks to modify in an unacceptable way an essential element of the new requirements that are to apply to union merger ballots, by virtue of the provisions in Clause 4. That is, the requirement for such ballots to be held by fully-postal voting. We believe that the law on such ballots should now be brought into line with the arrangements applied in respect of ballots on other important union decisions—that is to say, union election and political fund ballots. What the amendment seeks to do, however, is to allow for different voting methods to be used, where these are "approved by the certification officer".
It is interesting to reflect that the law actually does much to facilitate union mergers. That is, in part, a recognition of the fact that trade unions are special kinds of voluntary unincorporated associations. I mention this simply because it is argued from time to time that the same law should apply to all such associations; yet this has never, in fact, been the case. Different unincorporated associations require different legislative regimes.
The legislation on union mergers has remained largely unchanged since the Trade Union (Amalgamations, etc.) Act of 1964, a point brought to our notice by the noble Lord, Lord Wedderburn. That Act left it to unions to decide for themselves what method of voting should be used for the ballots which the law requires before such mergers could take place, though the balloting process is not wholly unregulated by the legislation.
Since 1988, however, ballots which are similar to merger ballots in many respects—for example, by involving a large proportion, or all, of a union's members—have had to be conducted by fully-postal voting and subject to independent scrutiny. These requirements for union election and political fund ballots are widely recognised to be appropriate as the means of protecting members' interests, and democratic rights.
I hope that there need be no debate between the Government and the Opposition about the proposition that fully-postal balloting, subject to independent scrutiny, is likely to afford ordinary union members greater assurance about the proper conduct of such ballots by their union than any other voting method.
Regardless of whatever claims may be made for turnout figures in ballots held by other means, the fact is that postal voting and independent scrutiny give union members proper assurance that a union ballot will be properly conducted and that votes can be considered and cast—or a decision taken by the individual not to cast a vote—away from the particular pressures that may apply in a workplace
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environment. Where trade union members care about an issue which is being balloted, they will make it their business to vote.
It may, nonetheless, be useful to the Committee for me to quote from the 1987 Green Paper Trade Unions and their Members. Paragraph 5.6 of that Green Paper pointed out that:
"Properly supervised and organised, a fully-postal system is least susceptible to manipulation, whether of an extreme or of a subtle nature. Ballot papers are dispatched from a central point against a full [electoral] roll and are less open to misappropriation than those which are distributed by other means. The members have the opportunity to vote away from possible pressures which might arise at the workplace."
Accordingly, the 1991 Green Paper proposed to extend the same kinds of protections that union members enjoy in respect of election and political fund ballots to cover union merger ballots as well. At the time of the Green Paper, it was also appropriate for us to look again at the underlying policy assumptions, since there was clear evidence that the tempo of union mergers was increasing around that time. During the 1980s the impact of mergers on union membership clearly increased. I believe that the noble Lord, Lord Wedderburn, quoted the words of my honourable friend in another place about the figures.
The amendment proposes to allow the certification officer to approve voting methods for union merger ballots other than fully-postal voting. While that might sound like useful flexibility, I am afraid that it just would not do. What criteria is the certification officer supposed to apply to making any such decision? Why, indeed, should the certification officer's judgment be allowed to deprive ordinary union members of what would otherwise be their right to a fully-postal vote on the question of the future existence of their union? No, much as we recognise the certification officer's reputation and capacity, we should not impose upon him any such responsibilities or tasks.
I am surprised—and disappointed—that the Opposition do not, apparently, share our concern to ensure that union members can depend on the law to ensure that they get the opportunity of a fully-postal vote on important issues such as the very future existence of their unions.
The Government, however, are determined to see that union members are, in future, guaranteed the right to a fully-postal ballot on union mergers. That is why I hope that the noble Lord will withdraw this amendment.
Lord Wedderburn of Charlton: In view of one of the Minister's remarks, I must say immediately that he is not able necessarily to impute my views to my noble friends. This is my amendment and I argued it as I wished. I am astonished by the Minister's reply. I advise my noble friends that this is the kind of pass which we sell at some jeopardy. There have been many of them—and this is another. The implication of the Minister's rhetoric about postal ballots being "properly conducted" was that all other ballots are not properly conducted. He referred to research. What research? The 1987 Green Paper?
The Minister said—I believe that I quote him correctly—that this set of union relationships or

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mergers is to be "brought into line" with other laws which have been passed by this Government. I dare not translate "brought into line" into German because it is too awful. Those arguments simply say, "It won't do. We have done it for that, and you must accept it for this." That is the final argument to which one cannot possibly reply.
However, I will say this for the Minister. I understand the point about having the same standards for different organisations; but what we mean by that —what I mean, at any rate—is having the same standards of fairness. We have never demanded that trade unions should have the enormous immunities which companies have; namely, limited liability. We have never demanded that. We have never demanded that unions should be able to merge in the way in which companies can operate in take-over operations. Of course not. However, there are certain standards of fairness and although we believe that they would be better met with this amendment, I see that I have no option but to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.15 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 15:
Page 8, leave out lines 16 to 23.
The noble Lord said: I shall speak briefly to this amendment because I know that the argument is covered in a later clause; but it would be useful to see where we are in relation to this amendment.
The amendment aims to leave out of the Bill what I take to be a somewhat novel doctrine in the Government's propositions which might be called the "ballot paper purity" doctrine. "Ballot paper purity" means that all the essential voting papers or notices must be in their own envelopes, and that nothing else must be placed in the envelope. On page 8, that doctrine is applied to merger ballots. Subsection (5) states that there must be nothing with the voting paper except the notice, an addressed envelope and a document containing the instructions.
It is, of course, possible to have such a rule; but I felt that that was never argued very strongly or with great conviction in the other place. Speaking from the trade unions' point of view, that provision will force the trade unions to incur a double cost. "Ballot paper purity" means that unions will have to send out mail shots to their members twice—and they will not receive any public funds now. I thought that it might be useful to move this amendment now because I should like to know the nub of the Government's demand that this must always be so. I can think of situations in which I might regard it as desirable, but we are talking about an absolute rule which runs through the proposed legislation. I should like to know from the Minister why the Government have specified that at this juncture. I beg to move.
Baroness Turner of Camden: I should like to support my noble friend on this amendment. The fact that I have not done so on previous amendments should not be taken to imply that I was not supporting
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him them. He made such good, strong arguments that I thought that there was no point in intervening from the Front Bench.
As I understand it, the Government's intention in this clause is to prevent any recommendation or guidance of a policy nature being issued with a voting paper to union members. In my view, that is an absurd requirement. It seems to me that members are entitled to know what their elected leadership is recommending. Judging from some of his remarks this afternoon, the Minister seems to think that that is some kind of constraint. On the contrary, I think that it is an individual member's right to know the exact reasons for a particular merger.
As has already been indicated, there were not many trade union amalgamations prior to 1964; but in that year legislation was introduced which made things a lot easier. The concept of the transfer of engagements was introduced whereby a small union could transfer to a larger one using simplified procedures. As a result of that legislation, a number of transfers of engagement took place, along with full amalgamations which required the balloting of both sets of members. Most sensible people (including most employers) welcomed those developments. We were always told back in the 1960s—we were told by the Donovan Commission—that there were too many unions in the United Kingdom, leading to unstable industrial relations and, for example, to the disputes at Ford, where there were 22 unions.
However, it is not easy to bring about a merger. People have strong loyalties and tend to cling to the organisations that they know, so unions do their best to carry their members with them. On the other hand, although there may be many meetings and conferences and although many pamphlets may be issued, there are still people who do not go to meetings and who do not necessarily read the union journal. Those people, however, (who are good and loyal union members) have a right to know what the elected leadership thinks or is recommending. Information may be available through the media but, as we know only too well, that information may not be reliable. It may be tainted by the views of newspaper proprietors who are not noted for their union views. It is absurd to say (as the Government apparently do) that if a union wants its individual members to know what the leadership thinks, it must go to the expense of a separate circulation. When an individual union member receives the ballot paper, he or she wants to know what the merger is all about and what the elected leadership is recommending. If this subsection remains in the Bill, it will be difficult for someone to know that.
I know that we shall be debating this issue later in relation to Clause 5; but I nevertheless support everything that my noble friend has said in relation to this subsection. I do not think that it should remain in the Bill.
Lord Boyd-Carpenter: It is perhaps significant that this is the first of many amendments which has elicited support from the Government Front Bench—
Lord Hailsham of Saint Marylebone: From the Opposition Front Bench.
Lord Boyd-Carpenter: Indeed, from the Opposition Front Bench. That makes one think very carefully about the terms of the amendment. The Bill, as it stands, inhibits the use of the ballot paper and its accompanying documents for the purpose of presenting partisan views of one sort or another on the merits of the issue on which the vote is to take place. Obviously, the Opposition Front Bench think that it might be advantageous in certain circumstances to certain unions if they could use the ballot paper machinery for putting forward their own propaganda.
My own view is perfectly simple. The ballot paper and its accompanying documents should be strictly impartial. There is nothing whatever to stop the union separately circulating its members with its views, just as there is nothing to prevent those who advocate other policies from similarly advocating their views. However, to use the ballot paper (as would be permitted if this amendment were carried) for the purpose of conveying one set of views from one side on a no doubt controversial issue seems utterly wrong. I hope that my noble friend will emphatically reject it.
Baroness Turner of Camden: Before the noble Lord sits down, in his opening remarks he said that the Opposition Front Bench had not supported the other amendments. That is not so. I made it clear that I was not speaking to them but that our names are to them. We did not speak to them because my noble friend Lord Wedderburn gave a full explanation of what the amendments stood for.
Lord Boyd-Carpenter: I hope that the noble Baroness will not feel that my observations contained any reflection on her. It seemed, however, that a certain rather agreeable detachment was being shown by the Opposition Front Bench, which I only hope may continue.
Lord Ewing of Kirkford: The debate has been opened up, so I wonder whether I may make a contribution for a few moments. I have listened to the Minister speak on a number of amendments in this part of the Bill. It seems to me that he is labouring under the misapprehension that almost the first that the membership hears of a proposed trade union merger is when the ballot paper is issued. In all sincerity, perhaps I may disabuse him of such an idea.
The two unions that I know best—the Union of Communication Workers and the National Communication Union —have been discussing merger at successive annual conferences for the past seven or eight years. There is not one member in either of those two unions who does not know the background to those discussions and what proposals are likely to come before the membership in due course.
It is misguided to suggest that when the ballot paper is issued the national executive committee of both unions should be denied the opportunity to show leadership. Throughout the years, the one consistent criticism levelled at trade union national executive committees and general secretaries, especially by
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successive Conservative governments, has been that they failed to show leadership. So when the opportunity arises for trade union national executives, general secretaries and presidents to show leadership, to express a view that such discussions have taken place at annual conferences for seven, eight, nine or in some cases 10 years and that by and large they have been endorsed by the membership representatives at those annual conferences, it is misguided to suggest that they should stand back; that all that should happen is that the ballot paper should be issued to the member at his or her home; and and that they should make the decision on a bland ballot paper. That does not happen in our parliamentary system.
A parliamentary candidate submitting himself or herself for election to the other House is entitled to six words on the ballot paper. The Representation of the People Act says that they are supposed to describe the candidate. But they often do not describe the candidate; they describe the candidate's views. Any Member of the Committee in touch with politics in Scotland will have seen a system develop over the years whereby candidates, especially Scottish National Party candidates, will describe themselves as the anti-poll tax candidate or the anti-water privatisation candidate instead of the Scottish National Party candidate. So on the ballot paper for the parliamentary election is a set of words that conveys a recommendation to the electorate. That is all we are asking in the amendment.
We shall have the ludicrous position—we have recently seen the amalgamation of the AEU and the electricians' union —where general secretaries and senior officials of both unions travel the country from Land's End to John o'Groat's recommending to the membership of both unions that they should vote for the amalgamation. Yet they are not allowed to show the leadership that they have been elected to show by placing that recommendation on the ballot paper. There is nothing wrong with that. It is a common feature of amalgamations in other parts of the trade union world. I hope that the Minister will have second thoughts about this matter, take it away and perhaps even come back on Report with a much more reasonable recommendation.
Lord Murray of Epping Forest: This provision is odd to the point of being bizarre in a Bill which, we are told, is designed to extend the rights of trade union members. That is the context in which the Bill is being offered to us: it will give trade union members some additional rights.
Members have the right to elect their representatives. That is common ground. Surely they have the right to know what those representatives are doing. They should be accountable to them. That must be common ground. Members have the right to know what those elected representatives are thinking, what conclusions they have reached and what policy issues face the union. Surely that is common ground.
There is another right that members have. They have the right to know that their elected representatives are spending their money carefully. What will a member think who receives through the post a sealed ballot form for a merger, with bits of paper, as

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prescribed by law, but which contains nothing about the union's views? That is all right because the following day another letter will arrive. It will be typed, stamped and posted separately. It will tell him —so the Government tell us—what the union leadership thinks about the previous day's letter. What will the member say about that? He will say that his union leaders are bonkers.
If I were in such a position I think I would go back to my branch and move a resolution condemning the executive for wasting money. Yet the Government tell us that it is all right for the union to send a second, separate, distinct and additional letter giving the union's views. The Bill is an odd one in many ways, but that must be the oddest provision in all anti-union legislation in the past 10 years. It does not make sense in terms of what the Government say they are trying to achieve, which is to enhance and protect members' rights at every turn so that when something comes through the post the member knows what the people who purport to act in his name have been up to. Surely the Government will have another think about this matter.
Lord Rochester: I support the amendment. As I understand it, the subsection was inserted into the Bill in another place only on Report, along with Clause 5, providing, as the noble Baroness, Lady Turner, has said, that the notice to be sent out with voting papers for union merger ballots must not make a recommendation or express an opinion about the proposed merger.
Incidentally, I am surprised that Amendments Nos. 15 and 18 are not being taken together because it seems to me that they deal with the same matter. The Minister will no doubt say that it is wrong when voting papers are sent out that they should be accompanied by one-sided views as to the merits of a merger proposal. As justification for that, the Minister may refer to the recent NALGO ballot on the merger with other unions to form the new union, UNISON, and to the few complaints that were then made about the canvassing material in favour of the merger sent out with the voting papers by NALGO.
I understand that the Government have no objection to the presentation of canvassing material but object only to its being despatched together with the ballot papers. However, the effect of the subsection and new Clause 5 is to involve unions in the additional expense of having to send out such material separately from the voting papers. However, under Clause 7 the funding of the union ballot is to be phased out.
That is an example of what on Second Reading I took leave to say savoured of a certain mean-mindedness on the part of the Government. I deplore that approach and I support the amendment.
5.30 p.m.
Lord Stoddart of Swindon: I, too, support the amendment. I do so as a former member of NALGO and as one who at present advises it. Apparently the vote in the three unions which combined to form UNISON caused the Government to introduce these
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particular provisions into the Bill. The three unions concerned have had wide democratic discussions at all their branches, regional committees, national committees and national conferences. I refer to not one national conference but many. The provision has been the subject of great discussion between the trade unions concerned.
In the last analysis the trade union executive is carrying out what it has been told to carry out by the union members, the branches, the regional organisations and national conferences. All that the trade union executive wishes to do, and it should be allowed to continue, is to tell its members what it believes is right for the trade unions. It is, after all, the national executive whose members have been elected by trade union members to give them guidance. Yet as regards the most important matter the Government wish to refuse to allow the executive to give guidance at the point when a decision is to be made by the trade union members.
That appears to me to be crazy. For the reasons which my noble friend and other Members of the Committee have given, and for the reasons which I have given, I hope that the Government will reconsider their views. Their provision is most illiberal and reeks a little of spite. I hope that the Minister will agree at least to look again at the provision. Even if we do not vote on the matter tonight we can consider it at a later stage if the Minister gives that undertaking.
Viscount Ullswater: The noble Lord, Lord Wedderburn, asked me to identify a narrow issue which he raised in moving the amendment. I shall seek to do so because I, like the noble Lord, Lord Rochester, had thought that it would be convenient to group together Amendments Nos. 15 and 18. But that was not to be and therefore we are dealing with them separately. I wish to address my remarks to the narrow issue which was raised moved by the noble Lord, Lord Wedderburn, because we shall have a fuller discussion about Amendment No. 18 later tonight.
There has always been a requirement for any union proposing to merge to prepare a notice which either sets out in full the instrument of amalgamation or transfer or gives an account of that instrument sufficient to enable those receiving the notice to form a reasonable judgment of the main effects of the proposed amalgamation or merger. That provision is made in Section 99(2) of the Trade Union and Labour Relations (Consolidation) Act 1922. The notice has always had to be approved by the independent certification officer, or the equivalent position before 1975, and has had to be supplied to members of the union.
Those arrangements are a unique feature of the requirements concerning union merger ballots and there is no equivalent, for example, in respect of union elections, political fund or industrial action balloting. The notice requirement means that voters in union merger ballots must by statute always receive basic information about the subject matter of the ballot.
The union members must have the right to a proper ballot on such matters as the future existence of their union. The law should do everything practicable to

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ensure that union leaderships do not put one-sided campaigning material to voters in a way which could unduly influence the voters' decisions. We have the chance to prevent that happening in the case of union merger balloting and the amendment seeks to undermine what is proposed.
I entirely agree with my noble friend Lord Boyd-Carpenter that the unions have every right to send to their members a separate circulation of their views. We do not seek to interrupt that at all. I shall answer more clearly the concerns of the noble Lords, Lord Ewing and Lord Murray of Epping Forest, when we come to Amendment No. 18. Perhaps we have strayed into that territory already but I have comments to make about that. I believe that I have answered the narrow interpretation of what the noble Lord, Lord Wedderburn, asked me about Amendment No. 15 and I ask him to withdraw the amendment.
Lord Wedderburn of Charlton: I am grateful to the Minister. He will have seen me in consultation with my noble friends. We are of the joint opinion that we cannot wait for Amendment No. 18 and we do not wish to withdraw this amendment.
5.37 p.m.
On Question, Whether the said amendment (No. 15) shall be agreed to?
Their Lordships divided: Contents, 84; Not-Contents, 136.

Division No. 2

CONTENTS

Airedale, L.

John-Mackie, L.

Ardwick, L.

Judd, L.

Beaumont of Whitley, L.

Kennet, L.

Blackstone, B.

Kilbracken, L.

Blease, L.

Kirkhill, L.

Bottomley, L.

Lockwood, B.

Bruce of Donington, L.

Longford, E.

Campbell of Eskan, L.

Lovell-Davis, L.

Carmichael of Kelvingrove, L.

McCarthy, L.

Carter, L.

McGregor of Durris, L.

Cledwyn of Penrhos, L.

McIntosh of Haringey, L.

Cocks of Hartcliffe, L.

McNair, L.

David, B.

Mallalieu, B.

Dean of Beswick, L.

Mason of Barnsley, L.

Desai, L.

Merlyn-Rees, L.

Dormand of Easington, L.

Molloy, L.

Eatwell, L.

Morris of Castle Morris, L.

Ewing of Kirkford, L.

Morris of Kenwood, L.

Falkender, B.

Mulley, L.

Fisher of Rednal, B.

Murray of Epping Forest, L

Foot, L.

Nicol, B.

Gallacher, L.

Ogmore, L.

Galpern, L.

Parry, L.

Glenamara, L.

Perry of Walton, L.

Graham of Edmonton, L. [Teller.]

Peston, L.

Pitt of Hampstead, L.

Grey, E.

Plant of Highfield, L.

Hampton, L.

Prys-Davies, L.

Hamwee, B.

Rea, L.

Hanworth, V.

Richard, L.

Hollis of Heigham, B.

Ritchie of Dundee, L.

Holme of Cheltenham, L.

Robson of Kiddington, B.

Howie of Troon, L.

Rochester, L.

Jay, L.

Russell, E.

Jay of Paddington, B.

Seear, B.

Jeger, B.

Sefton of Garston, L.

Jenkins of Hillhead, L.

Serota, B.

Jenkins of Putney, L.

Shackleton, L.

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Stoddart of Swindon, L.

Varley, L.

Taylor of Blackburn, L.

Wedderburn of Charlton, L.

Taylor of Gryfe, L.

Whaddon, L.

Tordoff, L. [Teller.]

White, B.

Turner of Camden, B.

NOT-CONTENTS

Aberdare, L.

Long, V.

Acton, L.

Lucas of Chilworth, L.

Allenby of Megiddo, V.

Lyell, L.

Archer of Weston-Super-Mare, L.

Mackay of Ardbrecknish, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Arran, E.

Astor, V.

Manchester, D.

Astor of Hever, L.

Marlesford, L.

Auckland, L.

Marsh, L.

Banbury of Southam, L.

Melville, V.

Barber of Tewkesbury, L.

Merrivale, L.

Bellwin, L.

Mersey, V.

Bessborough, E.

Milverton, L.

Blatch, B.

Monk Bretton, L.

Borthwick, L.

Monteagle of Brandon, L.

Boyd-Carpenter, L.

Mottistone, L.

Brabazon of Tara, L.

Mountevans, L.

Bradford, E.

Mowbray and Stourton, L.

Broadbridge, L.

Munster, E.

Brookeborough, V.

Murton of Lindisfarne, L.

Brougham and Vaux, L.

Nelson, E.

Butterworth, L.

Nelson of Stafford, L.

Cadman, L.

O'Cathain, B.

Caithness, E.

Onslow, E.

Campbell of Alloway, L.

Oppenheim-Barnes, B.

Carnegy of Lour, B.

Orkney, E.

Carnock, L.

Orr-Ewing, L.

Chalker of Wallasey, B.

Oxfuird, V.

Charteris of Amisfield, L.

Park of Monmouth, B.

Clanwilliam, E.

Pender, L.

Clark of Kempston, L

Peyton of Yeovil, L.

Cranborne, V.

Reay, L.

Crathorne, L.

Rees, L.

Crickhowell, L.

Renfrew of Kaimsthorn, L.

Cumberlege, B.

Renton, L.

Darcy (de Knayth), B.

Renwick, L.

Davidson, V.

Rodger of Earlsferry, L.

Denton of Wakefield, B.

Romney, E.

Eccles, V.

St. Davids, V.

Eccles of Moulton, B.

Salisbury, M.

Ellenborough, L.

Saltoun of Abernethy, Ly.

Elles, B.

Seccombe, B.

Elliot of Harwood, B.

Selborne, E.

Elliott of Morpeth, L.

Selsdon, L.

Elton, L.

Sharpies, B.

Ferrers, E.

Skelmersdale, L.

Flather, B.

Stewartby, L.

Fraser of Carmyllie, L.

Strange, B.

Goschen, V.

Strathcarron, L.

Gray, L.

Strathclyde, L.

Haig, E.

Strathmore and Kinghorne, E. [Teller.]

Hailsham of Saint Marylebone, L.

Sudeley, L.

Halsbury, E.

Swinfen, L.

Harrowby, E.

Tebbit, L.

Harvington, L.

Teviot, L.

Hayhoe, L.

Thomas of Gwydir, L.

Hayter, L.

Trumpington, B.

Henley, L.

Ullswater, V.

Hesketh, L. [Teller.]

Vaux of Harrowden, L.

HolmPatrick, L.

Vivian, L.

Hooper, B.

Wade of Chorlton, L.

Howe, E.

Wakeham, L. [L. Privy Seal]

Hylton-Foster, B.

Walker of Worcester, L.

Johnston of Rockport, L.

Wharton, B.

Kimball, L.

Whitelaw, V.

Kintore, E.

Wilberforce, L.

Kitchener, E.

Wise, L.

Lauderdale, E.

Wyatt of Weeford, L.

Lawrence, L.

Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.46 p.m.
[Amendments Nos. 16 and 17 not moved.]
On Question, Whether Clause 4 shall stand part of the Bill?
Lord McCarthy: The Committee will not be surprised that we wish to challenge that Clause 4 shall stand part of the Bill. We have tried to modify it in a number of ways and have been unsuccessful.
The central thrust of the clause is that it provides that ballots should exist on union mergers and must be changed to make them identical with other forms of ballot and that they should be fully postal. I do not believe that we can say, even at this late stage, that we have had a sustained and comprehensive explanation from the Government as to why they want that to be done. At one stage when he was explaining the matter the Minister said—I wrote it down—that the Government are not seeking to disturb the present rules. He must have been thinking of some other Bill. Of course the Government are seeking to disturb rules which have existed with every evidence of success and effectiveness for a long time.
Again, the Minister said—again we wrote it down and Members of the Committee will read it in Hansard —in reply to one of our amendments that the only body organising a merger which could practise interference or constraint was the body involved; namely, the trade union. I presume that the other examples do not represent interference or constraint. We must return to those issues on Report.
The Minister said also that he is sure that everybody must agree that postal voting is always cleaner. That has not been established at all. I know of no sustained research which suggests that postal voting rather than workplace voting is cleaner. What makes an election clean is how the register is operated; how comprehensive the register is; whether the people on the register are members or whether some of them are dead; whether members on the register are called Mickey Mouse; whether on the basis of that register there is no intimidation in the vote; and, most important, how the votes are counted.
If we wish to discuss one method of voting rather than another, apart from those important technical matters, the critical issue is the turnout. We all know that parliamentary elections vary according to the turnout. That applies also to trade union elections. Those of us who are concerned, and have been for a long time, to improve democracy in trade unions are absolutely committed to the philosophy of the high turnout. We believe that it is minorities in small votes with low turnouts that manipulate democracy. That of course is especially important in the case of amalgamations. Therefore I in no way accept that there is something clean and appropriate in a postal ballot, especially a postal ballot in an amalgamation. But the really fundamental change—this has been brought out in the debate in this Chamber better than in another place where this clause was rather rushed —is the change in the Government's attitude towards amalgamations.
Successive governments, not just this Government and not just Conservative governments, have on the whole had a good record—some have an excellent
1376
record—in permitting changes in the rules governing amalgamations. It was Lloyd George in 1917–1 am sure the noble Baroness, Lady Seear, would recognise this if she were present—who accepted the case for making mergers easier, for reducing the turnout and for reducing the majority. We know that if it had not been for the 1917 legislation the shape of the British trade union movement would be much more chaotic and much more fragmented than it turned out to be. The great mergers of the T and G, the AEU and the GMB which followed the 1917 legislation could not have occurred without that legislation.
Some Members of the Committee may remember the days when the Conservative Party thought it was part of its task to facilitate the merging of unions. In 1964 a Conservative Back-Bencher moved the 1964 amalgamation legislation and the Government gave that legislation time to proceed. It was a Conservative Government who introduced the present merger arrangements which, most importantly, allow for engagement transfer so that only one union—the large union—has to ballot. Nevertheless in exchange for those concessions the Act of 1964 was highly regulated. It was much more regulated than was the case in those days with trade union elections and union strike ballots.
The certification officer—he was not called that then—has to agree an instrument of transfer or amalgamation. In the instrument of transfer or amalgamation members must be provided with a reasonable judgment, or a way of making a reasonable judgment, on the main effects of the merger. The certification officer has to agree that the instrument of amalgamation enables them to make a reasonable judgment of the main effects of the merger. That is not done in the case of strikes. Every member has to have a vote without interference or restraint, as my noble friend has said. Complaints procedures to the certification officer have to be in place and the union cannot proceed to the merger for a further six weeks. There is also an appeals procedure and other measures. That complex procedure is often extremely difficult to implement and it leads, I believe, to something like a 30 or 40 per cent. failure rate in mergers.
Mr. Undy and I recently carried out a study of mergers and the problems involved in them. We consider there is a high failure rate in mergers. The average time that is required to bring about a merger of two unions of approximately equal size is between five and 10 years. As has been said, the UNISON merger took as long as that. It is a long-winded process, especially if one is trying to put together—as unions are these days—organisations with different backgrounds, outlooks and constitutions in a situation where the unions are probably losing members anyway. The 1964 legislation existed long before the legislation of the 1980s. Why is there a need for further regulation, and most particularly why is there a need to move from the present system where unions can have postal ballots if they wish? If they think, as they often do, that they can obtain higher turnouts with other methods—above all, they wish to

1377
see a high level of commitment to an amalgamation if it is to work —why should they be forced into postal ballots?
In Standing Committee F in another place Mr. McLoughlin said:
"It is important to ensure that full postal balloting takes place on proposed union mergers. Paragraph 5.6 of the 1987 Green Paper states why we believe that full postal ballots are most appropriate".—[Official Report, Commons, Standing Committee F, 1/12/92; col. 57.]
However, paragraph 5.6 of the Green Paper does nothing of the kind. It mentions full postal votes, semi-postal votes and workplace votes and it states that the argument in favour of the postal vote is that it is least susceptible to manipulation, whether of an extreme or subtle nature. However, none of that is relevant to amalgamations because when that Green Paper was published the Government were not thinking of amalgamations. The Green Paper does not deal with the central point that in amalgamations it is crucial to obtain a substantial majority in every single element in the amalgamation process so that union executives can proceed with the highest possible degree of commitment.
Mention has been made of the Undy study which showed that there seemed to be a greater vote in the case of non-postal ballots than for postal ballots. However, it must be said —this could have been said against the Undy study—that at the time the study was carried out it was not possible to compare unions which changed from workplace ballots to postal ballots. One could consider only unions that used postal ballots and other unions that used workplace ballots. It emerged that those who used workplace ballots on the whole achieved larger turnouts. In any case most of the study was not concerned with amalgamations because there are not many of them.
Recent work which Undy and others have done suggests that when one compares changes in methods of undertaking workplace and postal ballots the difference is even more marked. In the CPSA, for example, in recent years the turnout for workplace ballots was 38.2 per cent. But when that union changed to postal ballots the turnout fell to 20.5 per cent. In the GMB it fell from 40.4 per cent. on the workplace ballot to 18 per cent. on postal ballots. Similar figures could be given in relation to other unions, including the Transport and General. I suggest to the Committee that it is quite vital for the future merger activity of trade unions that they should be able to apply methods of balloting which maximise turnout. For that reason if for no other, this clause must be opposed and we oppose it tonight.
Viscount Ullswater: I really believe that we have covered this ground already this evening but in response to the noble Lord, Lord McCarthy, I should say that the current law on union mergers already requires ballots to be held but leaves it up to the unions involved to decide whether to conduct such a ballot by post and whether it is to be scrutinised in any way.
I believe that I have said before that we believe the time is now right to bring the law on the conduct of union merger ballots into line with that which applies
1378
to the conduct of ballots on similar issues of importance to all union members (that is, the election of union leaders and the establishment or continuance of political funds). This clause, therefore, requires that union ballots to approve resolutions on instruments of amalgamation or transfer must be fully postal and subject to independent scrutiny. It also applies to such ballot requirements similar to those of Clauses 1 and 2 of the Bill. In broad terms, the result of these changes to the current law is to apply to union merger ballots the same requirements for fully postal voting and independent scrutiny as apply, or are to apply, to union election and political fund ballots.
The clause substitutes for the present Section 100 —that section has the heading:
"Resolution approving instrument of amalgamation or transfer"—
of the 1992 Act six new sections, Sections 100 to 100E. The provisions of these new sections, and of related provisions in Schedule 7 to the Bill, are described in more detail in the notes which have been made available to the Committee.
We have heard again that the Opposition do not share the Government's belief in the principle of postal voting on important matters affecting trade union members. For our part, we are concerned with protecting the rights of individual trade union members and, together with other provisions in the Bill, the clause helps to meet our commitment to provide greater assurance for members about the proper conduct of union merger ballots.
Similarly, Members of the Committee opposite have expressed concern that fully postal ballots for union mergers will result in a lower turnout. However, the issue of whether one union should amalgamate with or transfer its engagements to another is of fundamental importance to trade union members. For that reason we believe that it is most important that voters can cast their vote—and decide whether to cast their vote—free from the kind of pressures which may be brought to bear in a workplace ballot. The important point is that every member is given the opportunity to vote in a properly conducted secret ballot. We believe that fully postal voting, combined with independent scrutiny, offers the best means of protecting members' interests. I ask the Committee not to oppose the Motion that Clause 4 stand part of the Bill.
Lord McCarthy: We agree with the Minister that the subject has been well debated. We shall not divide the Committee on this occasion.
Clause 4 agreed to.
6 p.m.
Clause 5 [Ballots for union amalgamations and transfers of engagements: notice and voting papers to be unaccompanied by influential material]:
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 18:
Page 11, line 24, after ("transfer") insert ("but may include the text of a resolution by the union's delegate conference or executive committee (or both) regarding the proposed amalgamation or transfer.".").
The noble Baroness said: Clause 5 specifically forbids the insertion with a notice or ballot paper of any recommendation or opinion about the proposed amalgamation or transfer. It states quite clearly:
"voting papers to be unaccompanied by influential material".
That provision was introduced at a very late stage in the progress of the Bill in the other place. We have already expressed the view that it is an absurd requirement. I referred to it at Second Reading as dotty and I believe that it is. I have yet to understand the reasons for the Government's sudden insertion of the provision at a very late stage in the other place unless, as has been suggested by one of my noble friends this evening, the Government suddenly took fright at the successful merger to form UNISON.
As we have said, mergers take a long time to bring about. Of course individual members should have the right to vote if the organisation of which they have been members and to which they have given their loyalty is about to disappear and become something else, perhaps with a different name and structure. I have been involved in a number of union mergers, and in my experience the union will do its best to ensure that all members are aware of what is involved, what the new structure will be, where individual members will fit into it and how their interests will be safeguarded in the future. Normally, as has already been said, there will be many meetings, resolutions by annual or special conferences, consultative papers, and probably articles in the union's journal.
However, there are people who for various reasons do not attend meetings and may not always read the union's journal but who are loyal members nevertheless. They are entitled to vote. They have a right to know what their leadership or annual conference thinks about the proposed merger. I do not see why having the leadership's views should be regarded as being in receipt of partisan propaganda. People have a right to know how an amalgamation will affect them. To require that they vote in the dark does not confer a right on them; it takes a right away.
I am in favour of the union being able to send out a statement with the notice and ballot paper telling everyone what the new structure is and what the benefits will be. The Minister and the noble Lord, Lord Boyd-Carpenter, have said that there is nothing to prevent the union circulating its members separately, but that adds to the not inconsiderable expense. The expense will be doubled. Moreover, the individual concerned likes to know where he or she stands when receiving the ballot paper.
We have already debated the subject with Amendment No. 15, on which we voted. Amendment No. 18 suggests a compromise. We suggest that the material may include the text of a resolution of a union's delegate conference or executive committee, or perhaps both, regarding the proposed amalgamation or transfer. It is usual for the process to be started by a motion agreed either at conference or by the national executive council. If it were possible to circulate that enabling resolution with the ballot paper it would at least provide some guidance to people who otherwise might have no notion of what the leadership
1380
of their union, and the activists within the union represented at annual conference, think about the proposed merger. I beg to move.
Lord Boyd-Carpenter: This brings us again to the issue which the Committee discussed a few minutes ago. Therefore, I hope that we shall not find it necessary to spend much time on it. However, it is important that we should establish that where a notice of a ballot is sent out it should not carry with it views having a bearing on the way in which members receiving it might vote.
Members of the Committee may like to reflect whether it would not be thought outrageous if at a parliamentary election there were attached to voting papers, particularly those circulated in advance, the views of one political party or another as to the merits of the issue.
It is important that those who vote in what in many respects is as important to union members as a parliamentary election should receive a clear, clean statement of what they are voting on and not a statement which can be construed as advising them to vote one way or the other. I hope, therefore, that the Committee will follow its earlier decision and reject this proposal.
Lord Campbell of Alloway: I support my noble friend Lord Boyd-Carpenter, as a matter of principle. This is not a question of good unions, bad unions or past practice; nor is it a criticism of the conduct of unions. I accept that the noble Baroness, Lady Turner of Camden, has experience of such matters and dealt with them perfectly properly. It is a question of principle. One simply does not put influential material with a notice for voting. In saying that I am not having a dig at the trade union movement. In my view it is a question of overriding principle.
Lord McCarthy: Would the noble Lord apply those principles to other forms of decision taking? For example, would he say that it should apply to companies' share options and that those involved should not be allowed to say which way people should vote in such circumstances?
Lord Campbell of Alloway: The noble Lord makes a fair request. I would not do so, because I can see a real distinction between any form of electoral ballot such as for local government or a general election, or for a trade union, which is not akin to a building society, as the noble Lord suggested previously. I see a world of difference between the position of a trade union and that of a building society.
Lord Ewing of Kirkford: It ought to be made clear what the ballot under discussion is all about. The ballot is not for the election of trade union officers. It concerns a recommendation for merger between two or more unions. It should be clearly understood that on many occasions the executive council which makes such a recommendation is recommending that its members vote for merger and vote that particular executive council out of a job. We are not talking about vested interest. I speak against the vested

1381
interest argument. We are talking about a rationalisation of the trade union movement. If we consider my industry, the Post Office and telecommunications industry, the argument in favour of one trade union in the Post Office and telecommunications industry has been unanswerable for years.
What the Minister, the Government and the noble Lords, Lord Boyd-Carpenter, and Lord Campbell of Alloway, are saying is that the unions in the Post Office and telecommunications industry ought not to be able to recommend to their members the best way forward not only for the trade union movement but also for the industry that that trade union movement serves. I do not believe that the position has been properly thought out. It is unreasonable to deny that executive councils from the unions involved in merger proposals may submit with the ballot paper a recommendation on how the membership ought to vote.
Lord Boyd-Carpenter: Perhaps the noble Lord will allow me to intervene. So far as I know no one has recommended that the union executive should be denied an opportunity to express its advice and views to its members. All that is being said is that that advice should not be contained in the same document that carries with it the ballot paper. That is the point.
Lord Ewing of Kirkford: Perhaps the noble Lord will accept that I added that that material should be included with the ballot paper. The noble Lord, Lord Murray of Epping Forest, has already answered the argument about sending out the material separately. The position is absolutely ludicrous. The Minister shows a great deal of common sense. He ought to take his common sense one stage further and try to knock some sense into his government colleagues to reconsider the issue.
Baroness Seear: I find it odd that the Government, who are so against being a nanny state, suddenly wish to look after union members as though they had no mind of their own. If union members believe it offensive or wrong that such propaganda should be sent out with the ballot paper, they are perfectly capable of saying so. Why can we not leave it to the union members to protest against such propaganda if they wish? Why do they have to have the law to tell them what they ought to do? It seems extraordinary that a Government who hate to interfere with private deals should wish to do that.
Lord Murray of Epping Forest: When replying to the debate, will the Minister answer a specific question and enlighten me on what might be possible under the legislation? Would it be possible for an executive committee to print this statement at the top of the ballot paper? "We are not allowed by law to print on the ballot paper the views of the executive on this merger. Nor are we allowed to print the views set forth in a resolution carried by our recent annual conference. But we shall be sending a separate communication at a cost to the union members of
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£50,000"—the union has 100,000 members —"which you should receive in the near future". Will that statement be allowed under the law?
The Earl of Harrowby: I have great difficulty in agreeing with what has been stated by my noble friends. An instance has been given about share option schemes. If any Member of the Committee is a member of Lloyd's, he will receive sheafs of paper and voting papers in the same envelope every week. I know that there is nothing in the Companies Act which forbids such joint postings. For the life of me, I cannot understand the relevance of the objections in the circumstances to which we have referred.
Viscount Ullswater: First, perhaps I may answer my noble friend Lord Harrowby by saying that unions and companies are two completely different beings. Therefore the laws which govern them are two completely different laws. That is the basis upon which we have worked for many years.
Secondly, perhaps I may deal with the point raised by the noble Lord, Lord Murray of Epping Forest. The answer to him is a straight no, that statement would not be sufficient. The noble Lord, Lord Ewing, and the noble Lord, Lord Murray, say, "Yes, there was a resolution passed at the annual conference that this merger should take place". But they do not say by how many votes it was passed, that it was very close run, or that it had taken 10 years to come about and had only just squeaked in. Therefore we are prepared to allow those recommendations to go in but not with the ballot paper.
Lord Murray of Epping Forest: Perhaps I may clarify my own mind. Is the Minister stating the contents of the law or is he expressing a view of his own?
Viscount Ullswater: I expressed what was not going to be included in the suggestion made by the noble Lord, Lord Murray. That was an expression of my own. I stated to him what I believe is the correct expression of the law. It was, no.
Lord Wedderburn of Charlton: Perhaps the noble Viscount will allow this intervention. The issue is important. Now that the Judicial Committee of this House has expressed the view that judges can consider Hansard, what the noble Viscount says is of increasing importance as time goes on.
Does he take a view on a similar series of statements placed in a second envelope attached to the first envelope? Would that be allowed?
Viscount Ullswater: I believe the law to be straightforward. It is that the voting paper must not contain any statement other than a permitted statement. That will be up to the certification officer to decide.
I believe that a key principle of this Government's reform of industrial relations and trade union law since 1979 has been our willingness to keep that law under review and to come forward with further measures for reform as and when experience shows them to be needed.

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Clause 5, and its related provisions in Clause 4 which we tabled at Report stage in another place, illustrate that principle in action. During the course of the recent NALGO ballot on merger with other unions to form the proposed new union, UNISON, the Government received complaints from several individuals who had brought the matter to the attention of their Members of Parliament that the NALGO leadership had chosen to send out its campaigning material with the voting papers. That material was quite clearly designed to influence voters to cast their vote in favour of a merger. It was one sided, and certainly did not present a balanced view of the proposals. Given the real division of opinion within the union, it is unsurprising that some members quite rightly felt anxiety that the existing law did not prevent that.
The amendment before us seeks to allow union leaderships to continue to seek to sway the votes on a crucial issue such as the very future of a union's existence by sending out with voting papers any material including material designed to influence how individuals vote. The Government do not believe, given the experience of the recent NALGO ballot, that that should be allowed to happen. We have heard it argued that voters should know the view of their union's leadership about a merger and should be aware of relevant resolutions of any delegate conference or executive committees. That is fair enough. We do not propose legislation which would prevent that happening. Such material would certainly be supplied to voters provided that it does not go out with the voting papers themselves. Union members have the right to a proper ballot on such matters as the future existence of their union. The law should do everything practical to ensure that union leaderships do not put one-sided campaign material to voters in a way which could unduly influence their decision. We have the chance to prevent that happening in the case of union merger balloting. The amendment seeks to undermine what is proposed.
As regards the amendment, the Government do not share the views of certain noble Lords opposite about the paramount significance of resolutions passed by union delegate conferences or committees on such matters. If we accepted the overwhelming significance of such resolutions, then it could reasonably be asked what need there was for unions to bother balloting their members. Why not leave it all up to the union delegate conferences and union executives to decide those issues on behalf of union members? Why bother to trouble individual members? Furthermore, what assurance could there be that the resolution, or whatever, which was included would also indicate whether it had won the votes of a significant proportion of the delegates or the executive? What if the resolution the leadership chose to include had won no more than the barest majority? Would the union also point that out?
We profoundly disagree with that sort of philosophy which seeks to accord such primacy to delegate conference resolutions or to give union leaders such a free hand to make use of them to persuade voters to cast their votes in a particular way.
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Union members must have the right to a proper ballot on matters as important as the future of their union. Where it is practicable to do so the law should ensure that the voters in such a ballot do not get voting papers accompanied by one-sided campaigning material. We have the chance to prevent that happening in the case of union merger balloting, but the amendment seeks to undermine the value of what we propose.
I am grateful for the support that I have found from my noble friends Lord Boyd-Carpenter and Lord Campbell of Alloway. We believe that union members should be able to receive voting papers for union merger ballots without anything other than objective information telling them what the ballot is about and the means of returning the voting paper. That is what Section 100C(5) in Clause 4 would provide. We find the amendment unacceptable, and I hope that the noble Baroness will withdraw it.
Lord McCarthy: Would not the noble Viscount agree that the critical issue is between the degree of regulation and the degree of abuse? The noble Viscount is fond of telling us that companies are not unions and that unions are not companies. But if unions are not companies and companies are not unions, why does that difference justify so much regulation of trade unions without the abuse? Why should he ask us to believe that Lloyd's can be trusted, that Maxwell can be trusted and that he is going to give a fair statement of why people should vote, and do it with the voting paper, but not trade unions? Why should trade unions not be trusted as well as these other people?
Viscount Ullswater: I have given the Committee some evidence of what we consider to be abuse, and this is an opportunity we take to prevent that abuse from occurring again.
Lord Wedderburn of Charlton: Will the noble Viscount put in the Library a transcript of these three alleged sets of complaints made to Members of the other place? There has been a lot of talk about them. They have never been made clear. They did not go to the certification officer. Will he put them in the Library?
Viscount Ullswater: They were complaints to Members of Parliament. They were brought to the attention of my honourable friend in another place, and he is acting upon that information.
Baroness Turner of Camden: I have listened with some dismay to the noble Viscount. He completely fails to understand the way in which unions have been operating in the past quite effectively under legislation that already exists, and without any complaint or abuse. The noble Viscount mentions three members of NALGO who complained to Members of Parliament. It is always open under present legislation for individuals who have complaints to make them to the certification officer. If there are valid complaints about the way in which the procedures have gone, the certification officer has to hold an inquiry into those

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complaints. As I understand it, this has not happened in the case of NALGO, and indeed they are very rare instances anyway.
I do not understand why the Minister seems to believe that this strange provision in the Bill somehow gives rights to members. I believe that it takes away a right. We are not talking about a parliamentary election, or an election of individuals. We are talking about a ballot probably to form a new union with a new structure. The individual who votes has a right to know what his leadership or his annual conference is recommending. He does not have to accept that recommendation.
The noble Baroness, Lady Seear, made it clear that individual union members are capable of making up their own minds, but they are at least entitled to know, before they fill in their voting paper and hand in their votes, exactly what their elected leadership thinks. After all, the Government introduced legislation during the last decade which has put constraints on the way in which leaderships are elected. They now have to be elected through postal ballots, and so on. Therefore, presumably even the Government now accept that they are representative.
There has been talk about giving unions back to their members. The Government now come along with this legislation which takes away the right of members to know what their union executive thinks and which, so far from giving extra rights, removes them. I do not accept what the Minister has said. I would like to test the view of the Committee. I put down this amendment thinking that I was going part way to meeting the Government's case, even though I do not accept the Government's case, by simply saying that the text of a motion could be included with the ballot paper. If the Government will not accept even that, I think that we have to test the feelings of the Committee.
6.25 p.m.
On Question, Whether the said amendment (No. 18) shall be agreed to?
Their Lordships divided: Contents, 63; Not-Contents, 120.

Division No. 3

CONTENTS

Addington, L.

Glenamara, L.

Airedale, L.

Graham of Edmonton, L.

Ardwick, L.

Grey, E.

Ashley of Stoke, L.

Hampton, L.

Avebury, L.

Hamwee, B.

Blease, L.

Harrowby, E.

Carmichael of Kelvingrove, L.

Hollis of Heigham, B.

Carter, L.

Howie of Troon, L.

Cledwyn of Penrhos, L.

Jenkins of Putney, L.

Cocks of Hartcliffe, L.

Judd, L.

David, B.

Kilbracken, L.

Dean of Beswick, L. [Teller.]

Kirkhill, L.

Desai, L. [Teller.]

Kissin, L.

Dormand of Easington, L.

Lockwood, B.

Elis-Thomas, L.

McCarthy, L.

Ennals, L.

McIntosh of Haringey, L.

Ewing of Kirkford, L.

McNair, L.

Foot, L.

Mallalieu, B.

Gallacher, L.

Merlyn-Rees, L.

Galpern, L

Molloy, L.

Geraint, L.

Morris of Castle Morris, L

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Morris of Kenwood, L.

Russell, E.

Murray of Epping Forest, L.

Seear, B.

Nicol, B.

Sefton of Garston, L.

Parry, L.

Serota, B.

Peston, L.

Stoddart of Swindon, L.

Pitt of Hampstead, L.

Taylor of Gryfe, L.

Prys-Davies, L.

Tordoff, L.

Redesdale, L.

Turner of Camden, B.

Richard, L.

Wedderburn of Charlton, L

Ritchie of Dundee, L.

White, B.

Rochester, L.

NOT-CONTENTS

Acton, L.

Kitchener, E.

Allenby of Megiddo, V.

Lauderdale, E.

Arran, E.

Lawrence, L.

Ashbourne, L.

Long, V.

Astor, V.

Lucas of Chilworth, L.

Astor of Hever, L.

Lyell, L.

Auckland, L.

McColl of Dulwich, L.

Banbury of Southam, L.

Mackay of Ardbrecknish, L

Belstead, L.

Mackay of Clashfern, L. [Lord Chancellor]

Bessborough, E.

Birdwood, L.

Manchester, D.

Blatch, B.

Marsh, L.

Borthwick, L.

Mersey, V.

Boyd-Carpenter, L.

Milverton, L.

Bradford, E.

Monk Bretton, L.

Braine of Wheatley, L.

Mottistone, L.

Brookeborough, V.

Mountevans, L.

Brougham and Vaux, L.

Munster, E.

Butterworth, L.

Murton of Lindisfarne, L.

Cadman, L.

Nelson of Stafford, L.

Caithness, E.

Norfolk, D.

Campbell of Alloway, L.

Norrie, L.

Carlisle of Bucklow, L.

Northbourne, L.

Carnegy of Lour, B.

Orkney, E.

Carnock, L.

Orr-Ewing, L.

Chalker of Wallasey, B.

Oxfuird, V.

Clark of Kempston, L

Park of Monmouth, B.

Colville of Culross, V.

Pearson of Rannoch, L.

Colwyn, L.

Pender, L.

Craigavon, V.

Perry of Southwark, B.

Cranborne, V.

Peyton of Yeovil, L.

Crathorne, L.

Plumb, L.

Cumberlege, B.

Prior, L.

Darcy (de Knayth), B.

Rankeillour, L.

Davidson, V.

Reay, L.

Denton of Wakefield, B.

Renfrew of Kaimsthorn, L.

Elles, B.

Renton, L.

Elliot of Harwood, B.

Renwick, L.

Erroll, E.

Rodger of Earlsferry, L.

Ferrers, E.

St. Davids, V.

Flather, B.

Saltoun of Abernethy, Ly.

Fraser of Carmyllie, L.

Seccombe, B.

Gardner of Parkes, B.

Selborne, E.

Goschen, V.

Selsdon, L.

Gray of Contin, L.

Simon of Glaisdale, L.

Hailsham of Saint Marylebone, L.

Skelmersdale, L.

Stewartby, L.

Halsbury, E.

Strange, B.

Harmar-Nicholls, L.

Strathclyde, L.

Harvington, L.

Strathmore and Kinghorne, E. [Teller.]

Hayhoe, L.

Henley, L.

Sudeley, L.

Hesketh, L. [Teller.]

Teviot, L.

HolmPatrick, L.

Thomas of Gwydir, L.

Hooper, B.

Trumpington, B.

Howe, E.

Ullswater, V.

Hylton-Foster, B.

Vaux of Harrowden, L.

Jeffreys, L.

Vivian, L.

Jenkin of Roding, L.

Wade of Chorlton, L.

Johnston of Rockport, L.

Wharton, B.

Kimball, L.

Whitelaw, V.

Kinloss, Ly.

Resolved in the negative, and amendment disagreed to accordingly.
6.33 p.m.
Clause 5 agreed to.
Clause 6 [Confidentiality of trade union's register of members' names and addresses]:
Viscount Ullswater Viscount Ullswater moved Amendment No. 19:
Page 11, leave out lines 39 to 42.
The noble Viscount said: This technical amendment removes a subsection from Clause 6 which has proved to be otiose. Clause 6, as the Committee will be aware, was added to this Bill at Report stage in another place, in response to points made by the Opposition and accepted by the Government. Opposition spokesmen had argued that, although the integrity of the scrutineer (or independent person) was not to be questioned, the issue of confidentiality could be of such vital importance to some individuals—the example of prison officers in Northern Ireland was cited—that a provision should be ensured in primary legislation to reinforce its importance.
That is what Clause 6 achieves. It acts as an essentially preventive measure by ensuring that trade unions impose a duty of confidentiality on any scrutineer or independent person whom they appoint.
Clause 6 inserts a new Section 24A into the 1992 Act. Subsection (3) of that new Section 24A provides that the duty of a union to impose a duty of confidentiality on a scrutineer or independent person whom it appoints may be discharged by the parent union in the case of a branch of a union which is also a union in its own right.
As the Committee will be aware, this is a standard provision in industrial relations legislation which prevents the unnecessary duplication of tasks in certain circumstances. However, it is not applicable in this case, and therefore in this technical amendment we seek its removal.
Any union branch which is also a union and which holds a ballot to which the provisions in Clause 6 apply—that is, an executive election, merger or political fund ballot—will necessarily appoint its own scrutineer and independent person to oversee that ballot. Where the ballot is being held by the parent union, then the parent union will appoint the scrutineer and make available its register. The situation will not arise where a parent union could discharge this duty on behalf of a branch.
This amendment therefore removes what has demonstrated itself to be a redundant provision. I commend it to the Committee.
Baroness Turner of Camden: I thank the Minister for explaining what the amendment is about; I was not clear until I heard his explanation. I should like to read what he said in Hansard tomorrow because it struck me as being fairly complicated. In the meantime, we offer no objection to the amendment.
On Question, amendment agreed to.
Viscount Ullswater Viscount Ullswater moved Amendment No. 20:
Page 12, line 10, leave out ("required") and insert ("requested by the Certification Officer").
The noble Viscount said: In moving Amendment No. 20, it may be for the convenience of the Committee if I speak also to Amendments Nos. 21 and 22 in my name. Again, Amendment No. 20 is little
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more than a technical amendment. Clause 6 requires a trade union to place a scrutineer or independent person appointed to oversee certain ballots under a duty of confidentiality with regard to the union's register of members. That duty of confidentiality is defined as a duty not to disclose, and to take steps to ensure that no one else discloses, any name or address on the register, except in certain permitted circumstances—those circumstances being where it is required for the purposes of the discharge of any of the functions of the certification officer.
The use of the term "required" restricts the provision to those situations where statute enables the certification officer to require information from a union. That is where he has a sanction if the union does not do so: for example, in the exercise of his new investigatory powers under Clause 10 of this Bill. It would not cover situations where statute provides him with no power to require information, but he might nonetheless need to request it in the exercise of his duties: for example, in the investigation of a complaint that a union had not properly conducted an executive election. It is equally important in either case that the scrutineer or independent person, if he feels it right, should be able to supply the certification officer with the information that he needs.
Where the certification officer has the power to require that information be provided, he will obviously as a first step have to request that the union provide the information. The term "requested" is therefore more appropriate in this provision as it covers both those situations where he may require information and those where he may only request it.
The certification officer will only appoint an inspector when he has a corresponding power to investigate and require the production of information. The clause therefore retains the term "require" in the case of an inspector who seeks information.
These technical amendments will make Clause 6 more workable for all those concerned. I commend them to the Committee.
Baroness Turner of Camden: I should like to thank the Minister for his explanation of these technical amendments. We should like to consider the explanation tomorrow and in the meantime we offer no objection to the amendment.
On Question, amendment agreed to.
Viscount Ullswater Viscount Ullswater moved Amendment No. 21:
Page 12, line 11, leave out from second ("or) to ("or") in line 12 and insert ("his functions").
On Question, amendment agreed to.
Viscount Ullswater Viscount Ullswater moved Amendment No. 22:
Page 12, line 12, after ("or") insert (" it is required for the purposes of the discharge of any of the functions").
On Question, amendment agreed to.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 23:
Page 12, line 25, after ("person") insert ("and, in the circumstances of paragraph (b) of subsection (5), on the Certification Officer or his inspector,").
The noble Lord said: I should like to speak also to Amendment No. 25. Both amendments concern the certification officer, the subject of the Minister's amendments.
The first amendment inserts an obligation of confidentiality on the part of the certification officer. The second amendment raises the question of confidentiality and the functions of the certification officer in the trade union law that the Government are intent on making in the Bill.
The first point is simply stated. I apprehend that the certification officer still has the trust of the major part of the trade union movement. The post was created in 1975 out of the ashes of the registrar of friendly societies. He has gradually acquired a number of functions. Nothing that I say is intended to criticise the certification officer; rather I should like to suggest that the very fact that one has to consider his position as stated on page 12 in relation to the doctrine of confidentiality in Clause 6 and the proposal that he should carry out a variety of functions, means that his relationship with the trade union movement will be put in jeopardy. Such loss of confidence would be a loss for the trade union movement and the country.
If there is to be a doctrine of confidentiality, there are situations where it has to be applied to the information gathered by the certification officer or his inspector, especially when one bears in mind that Clause 24A(5)(b) includes any functions of an inspector that can be required.
I should like to suggest that noble Lords look at the amendment in the context of the certification officer's functions. It is extraordinary—and this is not necessarily a criticism—that, in this pragmatic and constitution-free country, here is someone who has functions which are judicial, administrative and executive, and which are now to be investigatory. The absence of a separation of powers would not be harmful, however, so long as new powers did not damage what the institution can accomplish.
There are four main headings of the functions of the certification officer that have been acquired in a higgledy-piggledy fashion since 1975. It is the introduction of the fourth strand that may make the garment unravel. First, he is an administration officer. He certifies the instrument of amalgamation and transfers. It is often not observed by commentators, but a most important function is the granting of exemptions to trade union superannuation funds from certain regulatory conditions. There is no appeal because those functions are administrative. He acts for the Secretary of State in granting funds for ballots. That is a function that will be wound up if the Government have their way. He gives information to trade unions about other bodies. He is issued with a guide on the CROTUM. He is the controlling process of the annual return of trading. Those are all administrative functions.
He carries out a mixture of administrative and judicial functions. He keeps a list of trade unions and determines independence of trade unions. There can be an appeal to the employment appeal tribunal in relation to judicial functions.
Purely judicial functions include hearing complaints about trade union elections, political funds and amalgamations. In some cases concerning elections he has a jurisdiction parallel to that of the High Court. In regard to political fund ballots there can be an appeal to the employment appeal tribunal.
I have always stated that it would be dangerous to add to those functions because one function might be spoilt by the addition of another. The Bill adds a fourth heading of investigatory functions. In Clauses 10 and 11 there is a right to appoint inspectors. I am sure that the Minister will agree that those provisions parallel the Companies Acts; they are word for word of the Companies Acts, with one very important difference, which is something that the Government did not dare to do. In the Companies Acts the inspectors are appointed by the Secretary of State for Trade. The logical parallel, had the Government dared to do it, would be for the inspectors to be appointed by the Secretary of State for Employment. However they are appointed by the certification officer who is dragged in like a special machine to solve the Government's problem of how to get investigatory functions in place against trade unions. The Minister may not agree with me but that is how the situation appears. There is more to follow.
When there is to be a prosecution of the enlarged offences under Section 45, who decides in Scotland whether there is enough evidence for a prosecution? It is the Procurator Fiscal. By parallel, who should it be in Britain? It should be the Crown Prosecution Service or the Attorney General or some other legal officer; but, no, it is the certification officer. He is given the task not only of appointing inspectors with Companies Act powers but also of deciding whether or not to justify a prosecution.
The number of problems that would arise is enormous. Does the certification officer have to do what it is said institutions in the City do when different functions are performed in one bank or clearing house—that is, does he build a Chinese wall so that information known to some parts of the enterprise is not known to the other? Suppose that the staff of the certification officer acquire information that is reported to the certification officer and at the same time a member brings a case, for example under the election processes. Is the certification officer allowed to know of those facts? We must receive an answer to that question. The Government must have thought about the situation. Is the certification officer allowed to know everything that has been acquired for one function in his offices for the purpose of the others? If that is the case, I submit that the matter has gone too far.
It has been difficult to deal with the situation in the amendment. Amendment No. 25 is a probing amendment, even though it is technical. I have tried, rather clumsily, to divide up the certification officer's tasks under two headings and to ensure that there is some confidentiality between functions. I am asking specifically for a requirement of confidentiality to be stated in the Bill.
A broader and more important question is whether the Government will respond to the situation that they

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alone have created. I assume that they will get their way and make the certification officer the maid of all work for trade union law; judicial, administrative, investigatory, prosecuting and executive. Having done so, what are the Government going to do about information which the certification officer receives about different functions? I beg to move.
Baroness Turner of Camden: I rise to support my noble friend lest it should be thought that the amendment does not have the support of our Front Bench. It does. I think that he has made some very important points. He is quite right to say that currently the certification officer is held in reasonable regard by the trade union movement and the relationship is a good one. But if the certification officer also has investigative functions and prosecuting functions, that is another matter altogether and it may give rise to the kind of difficulties to which my noble friend has referred. For those reasons, we support the amendment.
Viscount Ullswater: I am afraid that these amendments although eloquently moved by the noble Lord, Lord Wedderburn, are unacceptable to the Government, as they misunderstand the essential nature of the office of the certification officer. I have already set out the purpose that Clause 6 is designed to achieve. It responds to the concerns expressed when Clause 1 was debated in another place lest there might be a risk to the confidentiality of individual union members if their membership details were passed to a third party, in the shape of the scrutineer. The same concern applies to the independent person, who will also have access to the union register, not only in the case of election ballots, but also in the case of union merger and political fund ballots.
I must emphasise that no one was questioning the probity of the scrutineer in voicing this concern. It was simply that in certain cases—such as that of a member of the Prison Officers' Association in Northern Ireland—the security of personal information is of the utmost importance. We were asked, therefore, to amend the Bill to ensure that the importance of confidentiality was emphasised in law, in order to prevent even inadvertent breaches of confidentiality.
That was done at Report stage in another place, where the new clause was accepted with thanks but no other comment. Against that background, I must confess to some surprise that amendments such as these should be tabled at this stage.
The duty of confidentiality is defined in the provision as a duty not to disclose, and to take all reasonable steps to ensure that no one else discloses, any name or address on the register except in permitted circumstances. The permitted circumstances include where disclosure is required or requested by the certification officer, or by an inspector appointed by him, in the execution of any of his functions.
It is obviously essential that the certification officer should not be prevented from acquiring information that he might need in the course of his duties, for those duties are important and serious ones. The certification officer is appointed by the Secretary of
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State and has administrative and quasi-judicial functions to regulate and adjudicate on various activities of trade unions and employers' associations. His activities are significant enough to require him to report annually to Parliament.
The certification officer does not need to be placed under a duty of confidentiality when he acquires union membership data from the scrutineer or independent person, as suggested by Amendment No. 23. He is by virtue of his appointment discreet and will inevitably have due regard to confidentiality. He will be aware that the register will be impressed with a duty of confidentiality. I must strongly resist any implication to the contrary. He has after all been entrusted with significant volumes of confidential union data over the years, with no suggestion that he has treated them with anything other than due confidentiality. Nor, I note, is there in the amendment any suggestion that information supplied direct to the scrutineer by the union should be covered by a formal duty of confidentiality. That is right, for none is necessary.
Amendment No. 25 is equally, if not more, undesirable. The certification officer has a number of functions and activities. These are not compartmentalised, nor is there any reason why they should be. There is no good reason why, if he acquires information in the course of one investigation which proves to be germane to another, he should not make the necessary use of it. In doing so he will, after all, be acting in the best interests of trade unions and their members. To prohibit the use of information—which might, after all, be beneficial to the union concerned—could only hinder the valuable work undertaken by the certification officer. For those reasons, I hope that the noble Lord will be persuaded to withdraw his amendment.
Lord Wedderburn of Charlton: I wish I had more time to read the Minister's interesting statement. The idea that the amendments have come improperly at this stage is something which, as Lord Justice Asquith once said, I must bear with such fortitude as I can muster. But I think that we shall have to look again at some of the other statements. If this House is to do what it should do, we must look at this matter—because nobody has looked at it before. That is always a good starting point.
What does the Minister mean when he says that the certification officer will be all right because everything is covered "by virtue of his appointment"? Can we put that in the Library? I have not seen it. Can we have a look at the terms of his appointment? He says that I misunderstand the essential nature of the certification officer and that he is to be allowed to make use of any information which he has acquired in any of the functions for all of his functions, one of the reasons being—if I do not misrepresent the Minister, and I hope that I do not—that it might be beneficial to the trade union.
Where is the individual? I am talking about the case where an individual has brought a case against the union under the elections or perhaps political fund jurisdiction, which is a judicial hearing. He will not expect the certification officer at the end of the hearing to go into the backroom and be given additional

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information by way of evidence from one of his investigators who was on the job on the same union on the same matter. It is quite absurd for the Government to take that posture. I say that sincerely to the Minister. I know that it is not his fault. He has a pretty rum brief on this one. We are talking of a man whom we appoint to a judicial office. Some of them are all mixed up—I make no bones about the fact—and that is why it is so dangerous. He is a judicial character put there with an appeal to another body, perhaps the EAT (the Employment Appeals Tribunal), the Court of Appeal, and so on. When it comes to look at his case, the Court of Appeal says: "Oh, I see. He has decided it this way because the inspector in the backroom told him what it was all about after he had heard the hearing in which the individual complainant was listened to and sent away". I cannot believe that the Government mean that.
Let us be blunt about it. The Government have got themselves into an almighty morass by trying to use the certification officer again. It is easily done; he has been used so often in the past for other functions. But, by trying to use him here—as well as in the three functions he has had—in administrative and judicial capacities, by putting him in the position of an investigator with a pack of inspectors and in the position (in England of all places) of the Procurator Fiscal, the Government have got themselves into a terrible mess. I beg the noble Viscount to have urgent discussions with those who finally control such matters and to let us think about it by Report stage, by which time we shall have read his statement here and have been able to think about it.
I believe that the noble Baroness wishes to intervene before I withdraw the amendment. I will let her interrupt me if that is the correct procedure.
Baroness Seear: The Government ought to take the matter away and look at it. The noble Lord, Lord Wedderburn, has made a point which has simply been overlooked. If one has a judicial function, it can very easily come into conflict with one's administrative function. A man cannot have Chinese walls in his own mind. That is just not possible. Sometimes there may be two jobs which cannot be combined in one person. I do not have evidence of that, but it seems to me very plausible that it may be true. But I ask the Government not simply to turn down the amendment but to take it away, have discussions with the noble Lord, Lord Wedderburn, and think about it again.
Lord Henderson of Brompton: Perhaps the Minister could help the Committee, or at least a Member of the Committee, by telling us the qualifications of the certification officer. It would be very interesting to know that.
Viscount Ullswater: Perhaps I may answer the concerns of the noble Baroness, Lady Seear, and touch on the point of the Chinese walls mentioned by the noble Lord, Lord Wedderburn. The whole purpose of Chinese walls is to safeguard different and differing interests. What we are concerned about here is a single interest—the best interests of the trade
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union members. It is therefore not necessary or appropriate to separate the certification officer's function. The information concerned here is union register information. It is hard to see how this could be relevant or harmful to an investigation.
I understand that the certification officer is appointed by the Secretary of State. I would need to inquire of the relevant facts of the appointment and write to the noble Lord. I shall place a copy of that letter in the Library.
7 p.m.
Lord McCarthy: In answer to that question, the noble Lord, Lord Henderson, might like to know, with regard to the qualifications of the certification officer, that the certification officer is a Balliol man who read PPE.
Lord Henderson of Brompton: Do I have to assume that he has no legal qualifications?
Lord McCarthy: That is quite right.
Viscount Ullswater: Perhaps I may help the Committee while we are on this point. The certification officer is appointed by the Secretary of State in consultation with ACAS, the tripartite body. It is a personal appointment. The individual is appointed to execute the functions set out in the statute.
Lord Wedderburn of Chariton: Perhaps I may preface my request to the Committee about the fate of the amendment by saying that I have obviously failed to get the point through to the Minister about what the problem is. When he tells us, as a good corporatist doctrine, that the only problem is the interests of the trade union members, that is no doubt true as far as concerns the administration functions. But when there is a judicial function there are two interests because the individual is complaining that the union has got it wrong. The certification officer is then a judge. He cannot say that all he has to do is to look to the interests of the union. He has to settle the issue according to law and according to the evidence in front of him.
Let us look with this in mind. If the certification officer looks at evidence which is not before him—evidence he has acquired or his investigators have acquired—on which he has launched a prosecution perhaps which is not known to the individual in the judicial hearing ("judicial hearing" in the sense of a complaint about elections, the political fund and the like), it is highly likely, unless the Government try to exclude the jurisdiction, which these days is almost impossible, that most of these cases will be dealt with by judges under judicial review. I do not think that they would tolerate it. However, that is just a guess.
Viscount Ullswater: Perhaps I may reflect further on the words of the noble Lord and the noble Baroness. Whereas I make no commitment at all to bringing anything back, I should like the opportunity, afforded by the noble Lord if he would care to withdraw the amendment, to examine very closely what he has said and what he has continued to say.
Lord Wedderburn of Charlton: I am grateful to the Minister. I will simply speed him in that direction by saying that at the moment the certification officer with mixed judicial and administrative functions is three-into-one, and three-into-one is okay. But four-into-one will not go. That is the thought he should have in his mind. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton had given notice of his intention to move Amendment No. 24:
Page 12, line 28, leave out from ("application") to end of line 34 and insert ("to the court, either—

(a) under section 26 of this Act, or

(b) by way of proceedings for a breach of confidence or breach of fiduciary duty, or

to an industrial tribunal which may award such compensation as it considers just and equitable in all the circumstances of the case.".").
The noble Lord said: This amendment also relates to the certification officer. I say that much in order to have it on the record, but I think it would be wrong of me, after the debate we have just had and the Minister saying what he has said, to move it.
[Amendment No. 24 not moved.]
[Amendment No. 25 not moved.]
Clause 6, as amended, agreed to.
Clause 7 [Ballots: repeal of provisions for financial assistance and use of employers' premises]:
Lord McCarthy Lord McCarthy moved Amendment No. 26:
Page 12, line 35, after ("115") insert ("(2) (a)").
The noble Lord said: In moving this amendment perhaps I may say that we do not intend to move Amendment No. 27. We are now on the infamous Clause 7 which repeals financial assistance for ballots. The objective of the amendment is to narrow down the area in which the money ceases to come so that the money only ceases to come to those ballots which are concerned in effect with industrial action. It exempts that part of Section 115 which deals with strike ballots so that the money does not go on strikes but remains to be given, for example, for union elections, for rule changes, for political funds, for amalgamations and for other purposes specified by the Secretary of State. We argue this on grounds of equity and on the grounds that the Government have, in so far as they have given reasons for taking this money away, given the reason that it would be improper to give money to support anything which might end up with industrial action.
On 16th February 1993, the Minister of State in another place said:
"In December, we announced our intention to phase out public subsidy for trade union ballots. The reasoning behind that decision was made clear—with the aim of ballot funding achieved and now that postal balloting on major issues affecting union members is widespread and well accepted, the scheme does not merit continued public subsidy".— [Official Report, Commons, 16/2/93; col. 162.]
Naturally enough the explanation advanced by the Minister of State produced somewhat of an uproar in another place. As a result he was challenged by the Member for Renfrew, West and Inverclyde, who said that surely the Minister could think of a better reason. The Minister replied:
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"I know that the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) works hard on behalf of his constituents and promotes many causes involving public expenditure".
Here it comes:
"If we have to decide between using public funds to subsidise ballots on strike action or using them on the many other worthy causes that the hon. Gentleman draws to the attention of the House, I am sure that he will agree that we are right to consider that the continued funding of the scheme is no longer a priority".—[Official Report, Commons, 16/2/93; col. 163.]
That is the only real argument that I have managed to uncover as to why the Government have done this thing. It is a bad year for the PSBR; we all have to make cuts; and now we have imposed postal ballots, particularly in relation to strikes, we cannot really be expected to give the money. This despite the fact that in another part of the Bill, as the Committee knows only too well, the Government have considerably increased the cost of these things by making strikes necessarily made lawful by a postal ballot. The unions do not have the alternative of having some other form of balloting; they have to have a postal ballot.
We are saying that this is not a justifiable argument. We are saying that there may be some case for the Government suggesting that they find it difficult to provide money to have a ballot which might end up producing a strike. That to them, I suppose, would be a subsidy for strikes—a public subsidy ending up in a strike. But that has absolutely nothing to do with the vast flow of this money—£4.2 million of this money—which does not go in strikes at all. In fact it has been estimated that around 80 per cent. of this money, which pays for somewhat less than 50 per cent. of the overall cost of the balloting process that has now been compulsorily imposed on trade unions, goes in union elections. A moment's reflection reveals that that would be the case. A small union of about 100,000 members spends about £200,000 a year on elections. About half this money is paid out of the fund. The election costs for a union are now very considerable.
There is another point which the Committee must take on board. Most people feel that the Government's decision to cancel this provision with effect from 1st April 1996 means, as it were, that trade unions will be able to go on using the money and having available to them the ballot provision until 1st April 1996. That is not so. The Government intend to cut the overall payments made by the certification officer by a quarter if the date of the ballot falls after 31st March 1993 and before 1st April 1994. So before this Bill is law—a statute—or has completed its passage through this House presumably, the Government will begin to implement the consequences of their decision. They will cut the figure by a half for a ballot which falls on 31st March 1994 but before 1st April 1995 and by three-quarters if the date of the ballot falls after 31st March 1995. The scheme is abolished with effect from 1st April 1996.
We say that that is quite simply a breach of faith and that unions are being placed between the upper and the nether millstone. Throughout this and previous Bills the Government are legislating to raise the cost of running trade unions. The increases which will come about as a result of the new duties of the

1397
scrutineer and other people will be very significant for trade unions. But while in Clauses 3, 4, 5, 7, 19, and so on, clearly expenditure increases are imposed on trade unions, income reductions arise in Clause 14. Yet the argument of the Government—in so far as there is an argument—relates so far exclusively to strike ballots. That is the point of the amendment; namely, that the Government exclude strike ballots and leave the rest of the money in place. I beg to move.
Lord Rochester: In moving this amendment the noble Lord, Lord McCarthy, has clearly described the history of the funding scheme and the large amounts refunded to trade unions in the past few years. I believe that the figure in 1991 totalled more than £4 million. That is to enable them to meet the increasingly burdensome legal obligations on balloting following the 1988 Act.
It must be acknowledged that when the funding was first introduced some unions were unwilling to accept it. However, the situation today is very different from what it was then. At the same time as the unions now learn that funding is to be phased out, under this Bill they are being obliged to spend even more on ballots, for in future virtually all ballots will be postal and subject to independent scrutiny.
Even at the time of the 1988 Bill I recall saying that, because independently supervised postal ballots would prove to be very costly for trade unions, my noble friends and I considered that the Government were being parsimonious and shortsighted in refusing to allow public funds to be used to help finance the cost of employing independent scrutineers. Now financial assistance is to be withdrawn altogether and I deplore that. I also greatly deplore the fact that Clause 7 was introduced at Report stage in another place out of the blue and without any consultation beforehand.
As regards the amendment, as the noble Lord, Lord McCarthy, has said, it is limited in scope. Its object is to confine continuing funding, as I understand it, to ballots other than those concerned either with proposals made by an employer in relation to contractual terms of employment or with the calling or the ending of a strike or other industrial action. Funding would thus still be available particularly for elections which unions are under a statutory duty to hold for certain offices. As the noble Lord has said, those have to take place at regular intervals and would thus incur the great bulk of expenditure on ballots. I hope that the Committee and the Government will consider it reasonable that they continue to give this limited financial support to organisations required to implement legislation that the Government themselves have introduced.
7.15 p.m.
Viscount Ullswater: This amendment is not acceptable to the Government. Clause 7 repeals Section 115 of the Trade Union Reform and Labour Relations (Consolidation) Act 1992 in its entirety. The
1398
provision is being repealed because it will become completely redundant in 1996 when the trade union ballot funding scheme has been phased out.
The effect of this amendment would be to repeal only one small part of Section 115, as the noble Lord, Lord McCarthy, has outlined. It would result in a power for the Secretary of State to establish by regulations a ballot funding scheme which would be remarkably like the scheme that is currently in operation, save only that it would no longer provide refunds for ballots which were concerned with employers' offers on terms and conditions or the calling for or ending of industrial action.
The amendment would achieve nothing more than that. The trade union ballot funding scheme will be phased out regardless of this clause. The statutory instrument which sets out the phasing out arrangements has been laid before this House and will come into effect on 1st April.
I say to the noble Lord, Lord Rochester, that the decision was made in the wake of the public expenditure settlement when consultation was neither necessary nor appropriate and our priority was to announce the decision at the earliest opportunity to enable trade unions to plan for their future in the full knowledge of the facts.
The scheme is not being abolished in order to prevent unions from holding strike ballots. It is being abolished because it was created as an incentive to postal balloting when the practice was not a statutory obligation. There is no case to continue that now. I believe that the noble Lord, Lord Rochester, drew attention to the fact that initially it was not welcomed by the TUC. I believe that during the course of its history it has never been supported by that body.
However, I believe that the noble Lord, Lord McCarthy, is quite right. I believe that he and the noble Lord, Lord Rochester, said that over £4 million was the amount used last year in support of ballots. However, given the claims on public expenditure, funds for union ballots just cannot be justified any longer.
I believe that we have made our decision clear. We are ending the public subsidy for trade union ballots because there is no case for continuing to devote public money to ballots which should be financed by the unions themselves. Balloting is well established, and continued public money can no longer be justified.
Against that background, we have no need of the power to run the scheme. We have no intention of reintroducing the scheme. We most certainly have no need of a power to run a slightly different scheme, for we have no intention of introducing a new scheme. For those reasons, we cannot accept this amendment.
Lord McCarthy: The Government are quite amazing. The Minister said that he could not accept the amendment because they have done the regulations. If they have done them they can undo them. He has phased in his regulations. He could phase them out. Most of us did not know whether the regulations had been phased in or out. If the Government wanted to be reasonable and to accept the argument which lies behind the amendment, it

1399
would be perfectly easy for them to say to us at this time: "Withdraw your amendment. We shall find a way of dealing with the matter and we will come back at Report stage". All this nonsense of phasing in and out had nothing whatever to do with it. They are the Government and they can bring in or take away regulations. They can do what they like.
The Minister said that the subsidy for ballots must now be ended because this was introduced as an incentive. In other words, the Government have said, "Come into my parlour. Come this way and we will pay you for it. Don't worry about what we are doing. Accept it. Participate—and when you have all participated, we'll cut you off at the knees". That is the Government's policy. What a fine way of carrying on. The very fact that people have been persuaded to come into the parlour by that process means that they can now be done out of the money.
In any case, if that was the Government's argument, why have they only just thought of it? The Government could have done this in 1984. All the requirements became compulsory in 1984, but the Government have let things go on. What an amazing waste of money. Just think of all the money that has gone down the drain since 1985 and 1986.
What is happening now is a function of two things. First, as I have said, it is because the poor old PSBR is in a very dangerous state this year—so the Government are acting in this way to save four million quid. Secondly, in every year and in every way the Government find ways of annoying, antagonising and running down the trade unions and that is why we intend to divide the Committee.
7.21 p.m.
On Question, Whether the said amendment (No. 26) shall be agreed to?
Their Lordships divided: Contents, 42; Not-Contents, 84.

Division No. 4

CONTENTS

Acton, L.

Lockwood, B.

Airedale, L.

McCarthy, L.

Ashley of Stoke, L.

McIntosh of Haringey, L.

Avebury, L.

McNair, L.

Blease, L.

Meston, L.

Carmichael of Kelvingrove, L.

Monson, L.

Dean of Beswick, L.

Morris of Castle Morris, L.

Desai, L. [Teller.]

Murray of Epping Forest, L.

Dormand of Easington, L.

Nicol, B.

Eatwell, L.

Perry of Walton, L.

Galpern, L.

Peston, L.

Geraint, L.

Pitt of Hampstead, L.

Graham of Edmonton, L.

Prys-Davies, L.

Grey, E.

Rochester, L. [Teller.]

Hamwee, B.

Russell, E.

Henderson of Brompton, L.

Seear, B.

Hollis of Heigham, B.

Sefton of Garston, L.

Houghton of Sowerby, L.

Taylor of Gryfe, L.

Howie of Troon, L.

Tordoff, L.

Judd, L.

Turner of Camden, B.

Kilbracken, L.

Wedderburn of Charlton, L.

NOT-CONTENTS

Allenby of Megiddo, V.

Bessborough, E.

Arran, E.

Blatch, B.

Astor, V.

Borthwick, L.

Astor of Hever, L.

Boyd-Carpenter, L.

Auckland, L.

Braine of Wheatley, L.

Belstead, L.

Brookeborough, V.

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Brougham and Vaux, L.

Lyell, L.

Butterworth, L.

Mackay of Ardbrecknish, L. [Lord Chancellor.]

Cadman, L.

Caithness, E.

Manchester, D.

Carnegy of Lour, B.

Marlesford, L.

Carnock, L.

Mersey, V.

Chalker of Wallasey, B.

Monk Bretton, L.

Clark of Kempston, L.

Mottistone, L.

Colville of Culross, V.

Mountevans, L.

Colwyn, L.

Murton of Lindisfarne, L.

Cork and Orrery, E.

Norfolk, D.

Cranborne, V.

Oxfuird, V.

Crathorne, L.

Park of Monmouth, B.

Cumberlege, B.

Pearson of Rannoch, L.

Denton of Wakefield, B.

Pender, L.

Dilhorne, V.

Perry of Southwark, B.

Elles, B.

Plumb, L.

Elliot of Harwood, B.

Reay, L.

Elliott of Morpeth, L.

Renton, L.

Ferrers, E.

Renwick, L.

Flather, B.

Rodger of Earlsferry, L.

Fraser of Carmyllie, L.

St. Davids, V.

Goschen, V.

Seccombe, B.

Gray, L.

Selborne, E.

Gray of Contin, L.

Simon of Glaisdale, L.

Halsbury, E.

Skelmersdale, L.

Hayhoe, L.

Slim, V.

Hayter, L.

Stewartby, L.

Henley, L.

Strange, B.

HolmPatrick, L.

Strathclyde, L.

Hothfield, L.

Strathmore and Kinghorne, E. [Teller.]

Howe, E.

Hylton-Foster, B.

Thomas of Gwydir, L.

Jeffreys, L.

Trumpington, B.

Jenkin of Roding, L.

Ullswater, V.

Kitchener, E.

Vivian, L.

Long, V. [Teller.]

Wade of Chorlton, L.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendments Nos. 27 and 28 not moved.]
Clause 7 agreed to.
Viscount Goschen: I beg to move that the House be now resumed. In moving this Motion, I suggest that the Committee stage on the Bill be resumed again at
8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Penalty for Murder Bill [H.L.]
7.30 p.m.
Lord Ashley of Stoke: My Lords, I beg to move that the Bill be now read a third time.
My main purpose this evening is to thank those noble Lords who spoke in the debate on 8th February in what I believe was one of the finest debates that I have heard in either place. There were some valuable and distinguished speeches. I appreciated them greatly. Every noble Lord who spoke from all sides of the House applauded the Bill. I should also like to thank the noble and learned Lord the Lord Chief Justice for his message of support for the Bill. That was warmly appreciated.
I do not intend to keep the House by repeating the arguments that I used on Second Reading. It would be impossible to improve upon the speeches made by so many distinguished noble Lords, some of whom held senior posts in the judiciary. My main purpose in bringing forward the subject was to help those

1401
battered women who were so provoked by domestic violence that they reacted and killed their spouses in the heat of the moment, and not to sentence those people, and, let us say, mercy killers—a man perhaps driven to kill his wife, who is in great pain and who begs to be released from a terminal illness—to the same sentence as a calculated assassin. That is wrong.
The issue of the mandatory life sentence goes much wider than those groups. It is one of tremendous significance in all cases of murder. I should emphasise that I am not against life sentences. In fact, I favour them strongly, but I want them reserved for especially outrageous murders.
The Bill does not remove the power of the courts to impose a life sentence. It releases the courts from the obligation to impose the life sentence when it is inappropriate. If there is any debate, I shall be more than delighted to speak at greater length and to try to answer any points raised. I am grateful to noble Lords for listening to my speech. I beg to move.
Moved, That the Bill be now read a third time.—(Lord Ashley of Stoke.)
Lord Boyd-Carpenter: My Lords, I am bound to say that I am not at all happy, as the noble Lord, Lord Ashley of Stoke, knows, about the substance of the Bill or the way in which it has been handled. By that I mean no reflection whatever on him. I feel that the machinery of the House has not operated sensibly in respect of what I believe the noble Lord will agree is an important measure.
As your Lordships may recall, it was originally suggested on 9th March that Second Reading should go on the nod and the Committee stage should be dispensed with. It was only the fact that I objected to that procedure that caused the matter then to be debated.
Lord Graham of Edmonton: My Lords, will the noble Lord reflect that on 9th March we had the Report stage? Second Reading had taken place some weeks before.
Lord Boyd-Carpenter: My Lords, the noble Lord is wrong. The attempt to have Second Reading was on 9th March. I am sorry, I have Hansard here. The noble Lord is not often wrong, but he is wrong now. There was an attempt to get the Second Reading through on the nod and to have the Committee stage dispensed with. I am sure that he will agree with me—the fact that he has seen fit to intervene suggests that—this is an important matter for your Lordships' House, with its ultimate responsibility for law and order.
It is an important measure. We did not have an opportunity to discuss it on Second Reading. An attempt was made to have the Committee stage dispensed with. That was fortunately frustrated. We then had an extraordinary discussion which the noble Lord, Lord Ashley of Stoke, will recall, during which a number of noble Lords admitted that the Bill had not been discussed as a Bill; but they said that that did not matter because the issue of whether the penalty for murder should automatically be life had been discussed.
1402
Indeed, the noble and learned Lord, Lord Morton of Shuna, who I do not think is in his place, seemed to suggest that because the matter had been discussed in 1988, there was no need to debate it in 1993. That seems to be treating a serious measure without the seriousness it demands. So I am glad that we can have some discussion now; although, here again, having this important measure slanted into the dinner interval for the convenience of those who manage the affairs of the House, is probably not the most appropriate way of dealing with it.
Having said that, I should like to come to the merits of the subject. Some of us believe that murder is a uniquely serious crime, and that it should be marked always by having a penalty of imprisonment for life imposed automatically, and no matter whether the circumstances are serious or whether there are seriously mitigating circumstances. When a life sentence is imposed, it is rarely served. It is a matter of some criticism—but perhaps that does not arise so much this evening—that most people convicted of murder and sentenced to life imprisonment are released after 20 years or so.
Your Lordships will be aware that that has been the case in some serious murders, including murders of policemen, and that the police are deeply agitated and worried about the Bill. People convicted of murder, and sentenced properly to life imprisonment for murder, find themselves released after 20 years or so in a great many cases. That is due to a certain laxity in the Home Office which, again, perhaps is a matter which is not appropriate to carry further this evening.
What is important, and it will be regarded as important when the Bill goes to another place, is that murder should be marked as a uniquely serious crime. It is not, as I said, a question of whether life imprisonment is always served, but the fact that if the penalty is automatically imprisonment for life, that marks out murder as being an offence of peculiar seriousness. It is a pity that we should seem to be tackling the Bill in the strange way that it has been tackled. If it is to be tackled, it should be done in a serious criminal law reform Bill which would cover also penalties for some other offences, and would enable the whole issue to be seen in proportion.
It is a pity to dig out this issue as a separate one merely because—I know this as a fact, and the noble Lord, Lord Ashley of Stoke, is an example of it—some noble Lords dislike the idea of the automatic life sentence for murder. I do not believe the Bill will progress far in another place. It will be dealt with, if it is dealt with, in a serious criminal law amendment Bill. I should like to put my voice on record as saying that it is a great mistake to suggest that there has been any diminution in the seriousness with which society regards the crime of murder. That is a dangerous and foolish attitude to take.
Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Boyd-Carpenter, is entitled to his views about the merits of the Bill. However, he is not entitled to say that the Bill has proceeded in your Lordships' House in anything other than an entirely proper way. The First Reading was moved formally, as is normally the case. The Second Reading took place on Monday,

1403
8th February 1993 and the debate took 1 hour and 50 minutes. There were nine speakers, taking up 25 columns in Hansard—
Lord Boyd-Carpenter: My Lords,
perhaps the noble Lord will allow me to intervene. Is it correct that the length of the debate was due only to the fact that a noble Lord objected to the Bill going through on the nod in Committee?
Lord McIntosh of Haringey: My Lords, not at all. There was a Second Reading debate, for which there was a speakers list. If at that stage the noble Lord had wished to express his views in opposition to the Bill, he would have been fully entitled to put his name down to speak or, if he had been unable to do so, to speak in the gap. The noble Lord did none of those things. I was there present but I am not aware whether the noble Lord, Lord Boyd-Carpenter, was present.
I can assure the noble Lord that the debate was entirely proper. It was publicly announced, minuted and appeared on the Orders of the Day. It took place, as my noble friend Lord Ashley said, without a single speaker giving evidence of the kind of dissent to which the noble Lord has referred.
Perhaps I may return to the procedural issue. After an entirely proper Second Reading debate there was an opportunity for the House to consider the Bill in Committee. Again, my noble friend Lord Ashley behaved entirely properly. He rose when the Committee stage was called and announced that no amendments had been tabled and that no noble Lord had indicated a wish to submit a manuscript amendment. He therefore asked the leave of the House for the Committee to be discharged. Again, in accordance with the procedures of the House, any noble Lord, including the noble Lord, Lord Boyd-Carpenter, would have been free to challenge that request and his view would have prevailed—
Lord Boyd-Carpenter: My Lords, is the noble Lord aware that he has the facts wrong, as will be confirmed by his noble friend Lord Ashley? I informed the noble Lord, Lord Ashley, that there would be objection to discharging the Committee stage and taking the Bill on the nod. Therefore, the noble Lord, Lord Ashley, properly did not seek to have the Committee stage dropped and made a perfectly adequate speech on the subject. The noble Lord, Lord McIntosh, was wrong in what he said.
Lord McIntosh of Haringey: My Lords, the point which the noble Lord sought to make at the beginning of his speech was that something improper had been done in that Second Reading had been avoided. In view of what I have said, will he now acknowledge that there was an entirely proper Second Reading debate?
Lord Boyd-Carpenter: My Lords, I never said that something improper had been done. However, I did say, and I repeat, that it was a great mistake that a serious criminal reform Bill was handled in that way. It was a great mistake that it was handled on the basis that an attempt was made to dispense with the Committee stage. Equally, it is wrong to take it now in the dinner interval.
Lord McIntosh of Haringey: My Lords, the Committee stage takes place only if amendments have been tabled or if noble Lords wish to table amendments. That is what a Committee stage is for. The noble Lord in his original speech suggested that there was something—if he did not use the word "improper" I shall not use it—
Lord Boyd-Carpenter: My Lords, no, I did not.
Lord McIntosh of Haringey: My Lords, perhaps I may say "something unusual", in that the noble Lord was clear that there had not been a proper Second Reading. I have produced adequate evidence to show that there was a proper Second Reading. Will the noble Lord acknowledge that?
Lord Boyd-Carpenter: My Lords, I shall certainly acknowledge that I said, and maintain, that there was something, to use the noble Lord's phrase, unusual about treating a serious criminal reform Bill in this way.
Lord McIntosh of Haringey: My Lords, when the noble Lord reads Hansard he will realise that he criticised the absence of a Second Reading debate. After I have challenged him with that and produced complete proof that there was a proper Second Reading debate, the noble Lord has failed to withdraw the accusation that there was something unusual about the lack of a Second Reading debate. I find it extraordinary that the noble Lord should resist the opportunity which he has been given on more than one occasion to apologise to the House and to my noble friend Lord Ashley.
Lord Boyd-Carpenter: My Lords, I have no reason to apologise to the House. I certainly have no reason to apologise to the noble Lord, Lord Ashley, for whom I have the highest regard. What is clear is that the procedure followed on this Bill was unique in respect of a serious criminal reform Bill, and I notice that the noble Lord has not disputed that.
Lord McIntosh of Haringey: My Lords, I certainly dispute that; the procedure was not unique in any way. The procedure went from First Reading, through a full debate on Second Reading, to an opportunity for Committee, and now to Third Reading. There is nothing unique about that, as I am sure the Government Front Bench will confirm.
7.45 p.m.
Earl Russell: My Lords, I hope that the House will bear with a few comments on the merits of the Bill. The noble Lord, Lord Boyd-Carpenter, had only one significant point to make; he argued that murder is a uniquely serious crime. The noble Lord and I were in the House when the issue was debated on the Commons amendments to the Criminal Justice Bill. I have not forgotten the comment made on that occasion by the noble and learned Lord, Lord Ackner, about precisely this point, which was outlined by the noble Lord, Lord Waddington. The noble and learned Lord said, "This is what in the business we call a good jury point", which means that it does not have much substance.

1405
The noble and learned Lord, Lord Hailsham of Saint Marylebone, who on that occasion made a memorable speech, elaborated precisely on this point. The noble and learned Lord asked us to consider two cases. The first was of someone who helped to bring forward slightly the death of a cancer patient in great pain. The second case was that of someone who set fire to a tenement block in which many people lived but in which, by the grace of God, no fatality resulted. The noble and learned Lord, Lord Hailsham, invited the House to consider which of those two cases was truly the most heinous. I do not have much difficulty in reaching an answer.
On that occasion the noble and learned Lord, Lord Ackner, made what is the key point in the argument. In this country we do not have degrees of murder and therefore it is extremely difficult to insist on one single mandatory sentence for every type of murder. However much horror we express at murder—and I agree that every criminal code in every country of which I have heard has done so—it is the case, and has always been recognised, that one murder is not necessarily as heinous as another.
The noble Lord, Lord Ashley, referred to some of the cases involving battered women. In the case of Mrs. Ahluwalia a substantial mischief would have resulted from the mandatory life sentence had we not been saved from that by the ingenuity of the noble and learned Lord, Lord Taylor of Gosforth, whose judgment on the subject deserves a great deal of study. On behalf of Members on these Benches I say that we wish the Bill well and hope that it will fare well and go forward in another place.
Lord Simon of Glaisdale: My Lords, the speech of the noble Lord, Lord Boyd-Carpenter, fell into two parts. The first part was largely a repetition 'of what he said on the Motion discharging the order of commitment. The point he then made was that the matter was too serious for the omission of a Committee stage. On that point he was answered conclusively by my noble and learned friend Lord Morton of Shuna, who pointed out that the matter had been discussed over and over again in this House on the occasion mentioned by the noble Earl and in connection with the Select Committee. In so far as the noble Lord, Lord Boyd-Carpenter, unfortunately went rather further this evening, he has been answered conclusively by the noble Lord, Lord McIntosh.
The second part of his speech canvassed again the merits which have been debated, as I and my noble and learned friend, Lord Morton, pointed out, on a number of occasions in your Lordships' House. The noble Earl has again rehearsed some of those arguments. The testimony of the Lord Chief Justice and his predecessor the noble and learned Lord, Lord Lane, should be added to that of the Select Committee.
This Bill should pass now on Third Reading in accordance with the usual practice. I expect that the Government will seek to kill it in the other place. I can only say that that is so much the worse for the
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Government and for the other place and it is so much the better for your Lordships' House that the noble Lord, Lord Ashley, has piloted through this Bill.
7.50 p.m.
Viscount Astor: My Lords, your Lordships will not be surprised to hear that the Government's position on the Bill remains as it was on the two previous occasions when we have debated it in your Lordships' House.
The Government fully understand the strong feelings which some of your Lordships hold about the retention of the mandatory life sentence for murder. We also acknowledge the view which was expressed by your Lordships' House on occasions such as the passage of the Criminal Justice Bill 1990 that the mandatory nature of the sentence should be abolished so that the courts could consider any aggravating or mitigating circumstances of the particular offence of murder and impose a sentence tailored to the specific case.
I have to tell your Lordships that the Government's position has not changed. We believe that the life sentence should at present remain. We are not persuaded that it is necessary or appropriate to abolish this unique penalty, which has for a long time applied to the offence of murder.
Your Lordships spoke with a degree of eloquence and with great determination and put forward arguments with which we are all familiar. But they were not, in the view of the Government, arguments which pointed quite as conclusively towards adopting the measure put forward in the noble Lord's Bill as some of your Lordships urged.
One argument was that murder could not be considered a unique offence and should not, therefore, merit a different penalty from other serious offences.
Of course, there can legitimately be said to be cases of offences other than murder, such as the worst rapes, woundings, and other abuses which might be considered to be more serious than the case of the battered wife who takes the life of her brutal husband and about whom the noble Lord, Lord Ashley, always speaks so eloquently.
I agree that there is force in that argument. It is open to the courts to pass a sentence of life imprisonment for some offences other than murder; for example, those which I have just mentioned. It is, therefore, possible to find those who have served less time in prison as part of a life sentence imposed for murder, than offenders who have committed other crimes.
Our approach to the crime of murder sends a simple and readily understood signal to the country as a whole about the sanctity of human life. There can be no more important or central an issue in the law. The fact that the penalty for murder is always life imprisonment ensures, as I said before, that someone whose deliberate action has resulted in the loss of another person's life will always—even if released from prison on licence—be liable to imprisonment for the rest of his or her life.
My right honourable friend the Home Secretary has made it clear that he will continue the policy of his

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predecessors of requiring that those convicted of the most serious murders—including police killers and sexual and child murderers—will serve at least 20 years in prison. The mandatory life sentence has, since its introduction in 1965 meant that the time spent in prison has varied from six months to, to date, 40 years. The Government do not, therefore, accept the argument that the abolition of the mandatory life sentence is necessary to provide the flexibility to deal with every situation which might result in a conviction for murder. That flexibility already exists in the present system.
Anyone who has read a newspaper at almost any time, but particularly over the last month, will be aware that public confidence about crime and the fear of crime is something which can be affected very immediately by a whole range of factors.
Unlike the noble Lord, Lord Ashley, we, the Government, have to think very carefully what message we would be sending to the public if we were to abolish the mandatory sentence for murder at this time. To say that we were going to abolish the mandatory life sentence for this very grave offence would, in the Government's view, send the wrong message to the public about our determination to deal with violent crime and about the sanctity of human life and would, I believe, risk undermining the faith of the public in the criminal justice system as a whole.
I have set out the reasons why the Government remain committed to the mandatory life sentence for murder. We shall, of course, continue to reflect upon whether this sentence remains the most appropriate response to those who commit such a grave crime. We are not, though, as yet persuaded that the arguments put forward in support of this Bill outweigh those in favour of retaining the mandatory life sentence and that is why the Government are unable to give their support to the aims of the Bill.
7.56 p.m.
Lord Ashley of Stoke: My Lords, I am grateful to those noble Lords who have spoken in the debate but I must begin by correcting the noble Lord, Lord Boyd-Carpenter, on a number of misleading points which he has made.
As regards procedure, he has been answered in great detail by my noble friend Lord McIntosh who was right when he spelt out the procedure which has been followed. I see no point in taking that argument any further.
The noble Lord, Lord Boyd-Carpenter, said that I had not told the House what I had in mind and that was one reason that he objected to the Bill. As I have already said, I dealt in great detail with what I had in mind in the Second Reading debate on 8th February. I do not wish to repeat all the points that I made but in essence I said that:
"It is quite nonsensical to give precisely the same sentence to a brutalised woman driven beyond the brink by sustained violence as to vicious, sadistic murderers".—[Official Report, 8/2/93; col. 481.]
As regards the alternative, I said:
"With determinate sentences for murder the judiciary, not the executive, gives a public verdict on the seriousness of the crime. By ending mandatory life sentences, we can avoid the
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anomalies, false impressions and injustices that now exist—and We can win public support for our judiciary". —[Official Report, 8/2/93; col. 482.]
That is a short extract from a long speech which I made outlining precisely what I had in mind.
The second point on which I should like to correct the noble Lord is that he complained that I suggested that the Second Reading debate was late in the evening. That is quite wrong because it began at 6.33 p.m. and ended at 8.23 p.m. That is by no means late at night.
The third point on which I wish to correct the noble Lord is that he said that the debate was too important to be allowed to go through on the nod as I had proposed. I never suggested that that should happen. Perhaps the noble Lord will check Hansard. The last thing that I wanted was for the Bill to go through on the nod. I love debate and was delighted to hear the noble Lord put forward his views which he did extremely eloquently. However, I disagree with those views. I love debate and I dislike matters going through on the nod. Therefore, the noble Lord is quite wrong to suggest that I suggested that the Bill should go through on the nod or that the Committee stage should go through on the nod.
The fourth point on which I should like to correct the noble Lord is that he said that the proposal should properly be part of a larger Bill dealing with the law. In point of fact in the Second Reading debate the noble Lord, Lord Windlesham, explained that there was an amendment to a large Act, the Criminal Justice Act 1991, in which this clause was moved. So it has formed part of a larger debate. Regrettably the Government did not accept it. I wished to correct the noble Lord on those points. As regards the substance of his argument, I do not know what the noble and learned Lord, Lord Ackner, and the noble Lords, Lord Wigoder and Lord Windlesham, would make of the points he has made because he spoke as if he had not followed their brilliant speeches which were made on Second Reading. Their speeches tackled all the points far better than I can as they have a wealth of experience and legal expertise.
In essence what they were saying, and what I am trying to say, is that the life sentence is fine and admirable, but a mandatory life sentence for all murderers regardless of how heinous their crimes is perhaps ridiculous. In many cases the life sentence is imposed on someone who does not deserve it, for example, a mercy killer or a victim of domestic violence. All we are asking is to drop the term "mandatory". We are happy that the life sentence itself should be maintained. To impose the mandatory life sentence in all cases of murder is to bring the law and the courts into disrepute. That step is opposed by the noble and learned Lord the Lord Chief Justice, many judges and noble Lords on both sides of the Chamber.
I apologise if I have repeated some of the arguments that were made on Second Reading. However, I am glad of the opportunity to express my great appreciation to all noble Lords who have spoken in this debate. I am grateful to the noble Lord, Lord McIntosh, for backing me up on this matter. I hope that this House will give the Bill a Third Reading.

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On Question, Bill read a third time.
Lord Ashley of Stoke: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Ashley of Stoke.)
On Question, Bill passed, and sent to the Commons.
Scottish Nuclear Ltd. (Rateable Values) (Scotland) Order 1993
Mercury Communications Ltd. (Rateable Values) (Scotland) Order 1993
Lochaber Power Company (Rateable Values) (Scotland) Order 1993
British Railways Board (Rateable Values) (Scotland) Order 1993
British Gas plc (Rateable Values) (Scotland) Order 1993
British Telecommunications plc (Rateable Values) (Scotland) Order 1993
Electricity Generators (Rateable Values) (Scotland) Order 1993
Glasgow Underground (Rateable Values) (Scotland) Order 1993
Industrial and Freight Transport (Rateable Values) (Scotland) Order 1993
Scottish Power plc (Rateable Values) (Scotland) Order 1993
Oil Related and Petrochemical Plants (Rateable Values) (Scotland) Order 1993
Mines and Quarries (Rateable Values) (Scotland) Order 1993
Water Undertakings (Rateable Values) (Scotland) Order 1993
Scottish Hydro-Electric plc (Rateable Values) (Scotland) Order 1993
8.3 p.m.
The Minister of State, Scottish Office (Lord Fraser of Carmyllie)The Minister of State, Scottish Office (Lord Fraser of Carmyllie) rose to move, That the draft orders laid before the House on 15th February be approved [21st Report from the Joint Committee.]
The noble and learned Lord said: My Lords, the 14 draft orders standing in the Order Paper in my name relate to matters of valuation for rating in Scotland. Two prescribe the industrial derating for 1993–94; 11 deal with the rateable values of the so-called formula-valued industries, and one provides for the enhanced derating of certain oil and petrochemical properties.
Two of the orders continue derating in Scotland for the coming financial year for industrial and freight transport lands and heritages and for mines and quarries but at a lower level than that in place for the current year; namely, 17.5 per cent. The higher level of derating of 58.75 per cent. for mines and quarries complements the level of derating that applies south of the Border for similar properties.
As regards formula valuation, the formula-valued industries are mainly public utilities which are not valued for rating by the regional assessors in the usual way, but for which the rateable values are prescribed. The draft orders before your Lordships today simply revise the rateable values prescribed for this year to take account both of the new level of industrial derating of 17.5 per cent. and also of material changes affecting the value of each industry's property holdings.
As regards oil-related and petrochemical derating, the final order supplements the Oil-related and Petrochemical Plants (Rateable Values) (Scotland) Order 1992 by extending its provisions to lands and heritages which are partly used for the prescribed purposes and honours a government commitment made in relation to the 1992 order. The level of derating proposed for the relevant elements is 45 per cent. with retrospective effect to 1st April 1992 in line with the effective date of the 1992 order.
These orders in the main update 1993–94 existing provisions which apply in respect of this financial year. I commend the orders to your Lordships.
Moved, That the draft orders laid before the House on 15th February be approved [21st Report from the Joint Committee]. —(Lord Fraser of Carmyllie.)
Lord Carmichael of Kelvingrove: My Lords, I am grateful to the Minister for his explanations. I have received no representations as yet on any of these orders either from the organisations that are involved in this matter or from any local authorities. The Minister's explanations may stimulate some action from them but in the meantime I am happy to accept the explanations that he has given.
On Question, Motion agreed to.
The Earl of Strathmore and Kinghorne: My Lords, I beg to move that the House do adjourn during pleasure until 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.6 to 8.30 p.m.]

Trade Union Reform and Employment Rights Bill
House again in Committee.
Clause 8 [Annual return to contain additional information]:
The Deputy Chairman of Committees (Lord Airedale): In calling Amendment No. 29, I have to point out that, if it were agreed to, I should not be able to call Amendment No. 30.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 29:
Page 13, leave out lines 4 to 10 and insert:
(" "() for the period to which the return relates,

(i) the aggregate amount of emoluments paid to members of the executive, the president and the general secretary;

(ii) the amount of any such emoluments waived;

(iii) the emoluments of either the general secretary or the president, whichever is greater (or both where they are the same);

(iv) if the emoluments of any other persons mentioned in paragraph (i) exceed that entered under paragraph (iii), the greatest amount of those emoluments;

(v) the number of those persons mentioned in (i) whose emoluments fell within each of the following bands:

—not more than £5,000

—more than £5,000 but not more than £10,000

—more than £10,000 but not more than £15,000, and so on, and

in this section "emoluments" bears the same meaning as in paragraph 5 of Schedule 6 to the Companies Act 1985, and").
The noble Lord said: The amendment, in a sense, takes the Government at their word. The Government rightly insist that there is no natural parallel between trade unions and companies in respect of the matters which are peculiar to each of those entities. However, in regard to matters where a common standard can be found, the Government immediately reach for the analogy. That is apparent in respect of the appointment of inspectors, where they use the precise words of the Companies Act, section after section, because they regard the parallel as correct. Therefore, there is no point in talking about trade unions not being companies and companies not being trade unions. The question is whether, on a particular issue, there is an analogy and, if there is not, what is the reason.
On page 13 of the Bill we are concerned with the question of disclosure. I immediately stake a claim, if not an interest, in having argued for further disclosure in all kinds of bodies, especially companies and the like, in particular in regard to those who constitute the controlling group in the entity. In any body that group is nearly always the committee of directors or the executive committee with the important officers. Company law specifies the chairman, but I am not sure that that is correct in company practice. In trade union law it is naturally the president and general secretary.
In this amendment I have transposed, with a few differences —president or general secretary for chairman and so on—the company law standards, the standards which are now thought right for a wide

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range of bodies. When we speak of a company we may be speaking of a very large public company, a large private company or small bodies. There are small divergences, but Schedule 6 to the Companies Act 1985 lays out a pattern of disclosure which is largely similar to that which the amendment contains. The important points are: the disclosure of what the chairman obtains by way of emoluments, including, as indicated in paragraph (1) of Schedule 6 to the Companies Act, fees and percentages; sums paid by way of expenses that are chargeable to income tax; contributions and the estimated money value of any other benefits received otherwise than in cash. Those must be revealed by the chairman in person. Beyond that the sums are recorded by means of bands, set out in the statute £5,000 apart, except in the case of any directors who receive more than the chairman. I have included those three basic points in the amendment. One could argue about the precise sums.
In the Bill we find that, even though the Government have taken a direct analogy in terms of company law for their inspectors, there is a very different requirement of disclosure for trade union members of the executive. Each and every member of the executive committee has to disclose salary and benefits. My noble friend will take up the question of what benefits means. In broad terms this is a pattern of individual disclosure.
I remember very well arguing in 1967 the case for individual disclosure. I was not then a Member of this Chamber, but I remember that even the body I addressed dissolved into anxiety and shock at the idea that each individual director should be made to disclose. Directors are not required to do so.
My first question to the Government is: what is the ground upon which the individual disclosure doctrine for this particular body displaces the bands philosophy which has operated for a long time in company law? If it is said that the difference is caused by the number of proven decisions or cases of misfeasance—and there is always misfeasance in every type of body—then, if one adds up the company law map of coloured regions in this country, in the City one would not put company law disclosure so far below that of other bodies such as trade unions. What are the factors which make the Government say that disclosure for other associations should be more stringent than for companies? It seems to me that there is no ground in terms of the history of the matter.
If one wants to find trade union movements which have been riddled with real racketeering one has only to look at labour union history in the United States. If there were such a background one could legislate much more strictly. However, there is no such scene here and there is no justification for saying that each and every person on these bodies should disclose. I do not wish to keep matters secret; I merely say that there is a pattern elsewhere which the Government acknowledge and ask what is the reason for diverging from it now.
Every time in connection with company law any of us has tried to argue that company directors should
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disclose at least a little more information than now, it has always been argued that those are matters which are subject to some rule of privacy. I do not argue that everything should be kept hugger-mugger. I am perfectly prepared to accept a pattern of this sort for all bodies. All I ask is: why is there a discrepancy? My interpretation of what has been said in the other place is that the intention is to make trade unions more difficult to administer. That is a pattern which can be seen very easily. I beg to move.
Baroness Turner of Camden: I support my noble friend's amendment. It bears some resemblance to a similar amendment moved in Committee in another place. However, on that occasion the response of the Government was not convincing, at least to me. I am grateful to my noble friend for giving us the opportunity to debate the merits again today.
My noble friend has made the point that no one, certainly not on this Front Bench, quarrels with the notion that union members have the right to know what is paid to the officials whom they employ, including the general secretary, and that they should also be informed of any emoluments accruing to members of the national executive council.
However, I cannot help feeling that the Government are under the impression that senior trade union officials and members of the executive receive large sums of money by way of emoluments. That is not the case. If they do not think that, why have the Government put requirements on unions in the Bill which are certainly not requirements on companies?
When I worked as a very senior official I earned considerably less than many of the members on whose behalf I negotiated. It is true that my union organised among managerial staff, but I refer to middle managers rather than top managers. Of course I worked much longer hours than they did. The previous general secretary of my union received a salary very much lower by commercial standards than he would have received had he been a chief executive in a major company. One has only to consider some of the salaries paid in private enterprise to understand that there is no comparison with top directors. Salaries of £300,000 are not uncommon. The best paid director of Whitbread's receives £330,000 a year; at Allied Lyons it is £369,000. There are plenty of other examples too numerous to mention.
My noble friend has made it clear in moving the amendment that he seeks to bring unions into line with the provisions of the Companies Act under which it is permitted to show persons within bands of entitlement. He referred to that as the "band philosophy". I do not believe that the Government's response in another place was adequate to deal with the point that unions should not have more onerous demands placed upon them than companies. I do not believe that the case has been made out. I do not know of any large examples of fraud by members of the executives or by chief officials of unions. I therefore support the amendment.
8.45 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield): I am delighted that the dinner break allowed the voice of the noble Lord, Lord Wedderburn, to recover a little.
I believe that it is now widely accepted that trade unions should provide information to the certification officer and to their own members about the salary paid and benefits provided to all of their leaders. Those salaries and benefits come from subscriptions paid by ordinary union members, and the leaders are subject to election to office by those members. It should no longer be necessary for members, or indeed the public, to depend on what information about these matters can be gleaned from details which union leaderships may choose to make available.
The Government resist Amendment No. 29—I understand that Amendment No. 31 is being considered in conjunction with it —because it would amount to a significant modification of the information about salaries and benefits provided to union leaders which the Bill proposes should be made available in a union's annual return. As proposed by the amendment, there could be no assurance that the salary and benefits provided to each union leader would be identifiable as such. Indeed, the noble Lord made that quite clear. There would be no way of knowing, for example, which particular member of the executive was covered by which of the bands proposed by the amendment since there could be several listed as being in any one particular band.
The provisions of the new subsection (aa) of Section 32 derive directly from the proposal in the 1991 Green Paper. Paragraph 7.25 of that consultation document proposed that:
"unions' annual returns to the certification officer should in future, as a matter of course, identify the salary or other remuneration (including loans and benefits in kind) provided out of union funds to each member of a union's principal executive committee, to its president and to its general secretary, in the period covered by the return".
The new information requirements relate to union offices which are subject to the statutory election requirements, and to those offices alone. Accordingly, an attempt to make a distinction between the offices of union president/general secretary, on the one hand, and a member of the executive, on the other, as the amendment proposes, would introduce an unwarranted distinction. We believe that union members should, without undue difficulty, be able to identify the salary paid and benefits provided to each of the union's leaders who has been elected to office.
The measures in the Bill represent what the Government believe are necessary measures to reform trade union law. Attempts to make comparisons between company law and trade union law are neither apt nor useful. As my noble friend has already stated, unions and companies are different organisations, with a different legal status and different relationships with their members or shareholders.
The argument that there is any real analogy between the situation of a company shareholder and a union member is difficult to understand. People invest in companies in order to make profits on that
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investment, and often make their investments in substantial lump sums. Individuals join unions for a variety of reasons, but their subscriptions are membership payments and not investments. It is quite unsurprising therefore that the law should differ, and should continue to differ, according to the different circumstances of shareholders and of union members. That seems to me a very firm ground on which to make that distinction. I hope in view of that response that the noble Lord will withdraw the amendment.
Lord Stoddart of Swindon: I listened carefully to what the noble Baroness said. She stated that it is not apt to make comparisons between a trade union member and a shareholder of a company. I believe that it is apt. In both cases the funds of individuals are being managed and used by another group of individuals who have been elected, one way or another, to manage and look after those funds.
The noble Baroness states that of course companies and unions are different. People invest their money to make a profit. I suggest that trade union members invest their money to ensure that they are treated fairly: that they have people to look after their interests because they are in a weak position generally in relation to their employers. On the one hand, therefore, one has a group of people working in industry who elect and pay a group of people who are prepared to look after their interests, their conditions of service, their wages, whether or not they are dismissed fairly or unfairly and a range of benefits which they may receive. On the other hand, the shareholder invests his money in a business. He does so in the knowledge that he can elect people to the board who will look after his interests. It is still an interest similar to that of the trade unionist. The shareholder wishes to ensure that he has a group of people who will invest his money so that he obtains the best return. I see no reason why the group of people looking after the shareholder's money and interests should have to make a lesser declaration than the people who look after the trade unionist's interests. Although not identical, in many ways the interests are the same. I hope that the Government will reconsider the issue and that the noble Baroness will reconsider what she said.
As the noble Baroness knows, I am a reasonable person. I like to listen to argument, and I like to put the other side of the argument. But they are giving the impression in this legislation, and indeed in previous legislation, that what they want of the trade unions is bodies which, in themselves, have little or no power to affect and look after the interests of their membership, but, as I said at Second Reading, are more administrative bodies which are useful on certain occasions to the employers. When they are not, then of course the Government take a dim view of them, and would like to get rid of them.
They are giving that impression. I urge the noble Baroness to listen to my noble friend, who is a great expert on these matters. My Front Bench colleagues are great experts on these matters. They are academics or they have worked in the trade union movement, as indeed in a voluntary capacity I have. I urge the Government to listen to the arguments being used.

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They would find that people out in the country, trade unionists, would warm to them if they took their point of view into account, and could believe that the Government had some concern and consideration for their interests.
Baroness Seear: I do not understand why the Government think that they have to have such detailed information about individual people. What the ordinary member wants to know is that there is not a racket going on in the payment of the officials. They want to know that there is not somebody going off with £100,000 a year and somebody else getting £10,000, or something. They can do this if they have bands along the lines suggested here. That is all they want to know.
They do not want to know—and it seems to me they are not entitled to know—that Mr. X or Miss Y is getting £5,000 a year more than somebody else. That is not their business. They want to know that they are not being ripped off by the executive being paid excessive amounts. That is all they need to know. The amendment is adequate for that. You do not have to have these identifiable rates for individual people that many people would just love to argue about and make great nuisances of themselves.
Lord Blease: There is one point that has not been mentioned. In the modern trade union movement they require to bring in academics who have been professionally trained and educated in terms of work study, job evaluation and economics—in some cases even philosophy—to steer their union in the right direction. In many cases, these persons need to be of the top calibre. They come in at a wage level sometimes above that of the general secretary, and there is nothing as demeaning as someone having to administer to people who are getting enhanced salaries far above theirs.
If the trade union movement is to do a job in the interests of industry throughout the United Kingdom, it must have people of high calibre, and people who will come into the trade unions and not be streamed off into industry. It is a terrible anomaly to have the general secretary sometimes working for a salary which is thousands of pounds below an assistant employed in an economic research capacity.
Baroness Denton of Wakefield: The noble Lord, Lord Stoddart, misses no opportunity to assure me of his reasonableness, and I take great note of that. Perhaps I may also say that I would not dispute for one moment the great expertise on the opposite Benches to which he drew attention. But I believe that we are not discussing company law here; we are discussing trade union law.
The argument to which the noble Lord and the noble Baroness, Lady Seear, drew attention was that they have a right; that these are membership payments. Union leaders are paid from funds provided through members' subscriptions. We are talking about elected officers. We are not talking about the executive. The noble Lord, Lord Blease, and the noble Baroness, Lady Turner, drew attention to
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the fact that many elected officers work for considerably less than the staff they employ. Ministers well understand that situation, too.
Members have a right to know these details. I believe that we have common ground on openness in many areas here. I am aware that in the past allegations made against NUM leaders indicated that there could be confusion about the total remuneration provided to union leaders, and about whether particular remuneration they received came out of union funds. I am afraid that I cannot see that there is a reasonable objection to this, and I hope that the noble Lord, Lord Wedderburn, will withdraw his amendment.
Lord Wedderburn of Charlton: I wanted to welcome the noble Baroness in putting her first toe into this ocean, this morass, of trade union law, but she caught me unprepared in some of the reasons she gave for opposing this amendment about disclosure. She mentioned that trade unions have to give information to the certification officer. They have had to give information to a public officer since 1876. Not as much, but of some considerable kind, which lasted for a century. The noble Baroness said that trade union leaders have to be elected. They have had to be elected in one form or another since 1871. These curious historical explanations do not give us much to go on.
The Government will go on saying it because it is in all the briefs; but we must insist that it is absurd to say that this belongs to company law, and that belongs to labour law or trade union law, or however you like to define it. Of course there are some things that are special to particular bodies. I take two examples. First, the Government have taken over the whole structure of inspectors from company law into trade union and association law in this Bill. I did not say, "Oh, dear, that is a structure for companies, and we had better not touch that." There are vast streams of case law which belong equally to company, trade union or indeed association law. The venerable precedent of Foss v. Harbottle in 1843 is a basic case in company law, of which the most useful illustrations are in cases concerning trade unions.
There is a flow of law about associations, and of course it syphons off into particularities for particular bodies. The Government cannot tell us that they are doing a particular thing for trade unions merely by saying that they are not companies. Nor does it do much to help the argument for the Government to rely—and the noble Baroness was not the first to do it; it is a repetitious theme for the Government—on their own Green Paper of 1991. I know what the Green Paper says, and it is possibly even worse than the Bill.
The investment of people in their companies, as my noble friend Lord Stoddart said, is easily matched. People invest their lives in their jobs, when they have not lost them, and they join a trade union to try to keep the job and do as well as they can. The shareholder is different in certain respects; but he is investing part of his life in a company or companies into which he puts his finance. There you have two groups of people whose resources are being managed by other people on their behalf.

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Do the Government say that the doctrine of fiduciary duty which applies to company directors does not apply to executive officers or senior officers of a trade union? Of course, it does. There is precedent after precedent. One could go on with a long list of things that apply to all associations. Fiduciary duties apply to all associations. One would have thought that in this House the Government could have done better. There was simply a repetition that "these are trade unions, not companies". We expected a little better.
I suggest to the Government, as the noble Baroness, Lady Seear, said—and whose intervention I greatly welcome—that they must go away and think about this again and not rely upon some slogan about one set of propositions for companies and one for trade unions. The insistence upon individual disclosure looks rather odd. It looks as though it has some purpose other than the perfectly genuine one of the need of the membership for disclosure.
I do not think that the noble Viscount would have a covert purpose; I would not think that of him. But look at the Bill: the provision does not rate a good measure of approval because, as the noble Baroness, Lady Sear, said, it is not what is required in the situation. If it is not required in that situation nor in the company situation which has some analogy, what is it there for? We suspect, as the noble Baroness suggested, that its purpose is that it would be useful to make trouble on a few occasions. That is the level to which we have descended. The noble Viscount looks astonished. I have the greatest respect for him, but he may not be clear what the legislation is about. I say that quite honestly and straightforwardly. Many others have not seen the drift of the legislation over the past five years.
This legislation dislikes collective bargaining—it wants to push it into a corner. If one pushes collective bargaining into a corner, one pushes trade unions into a corner and leaves them as weak as one can. One deprives them of funds which they thought they would receive and one makes them disclose matters beyond a level which is reasonable for anyone to demand, because it will help a little fragmentation here and there. No such thought crossed the mind of the Minister, but I suspect that that is the real aim and purpose of the legislation which we shall see in a few years' time.
I know that I have to withdraw the amendment, but I feel that this has been a productive debate. No doubt the Government would like to consider the amendment to see whether we could at least come back to parts of it on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9 p.m.
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 30:
Page 13, line 4, after ("benefits") insert ("excluding expenses directly incurred in work on behalf of the union").
The noble Baroness said: It is a pity that the previous amendment was taken late in this evening's proceedings because I believe that it is an issue to which we shall have to return at Report stage. I
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understand that, had the amendment been carried, I should not now be in a position to move this amendment.
In this proposal I seek to exclude under the heading of "benefits" expenses directly incurred in work on behalf of the union. There was some discussion in Committee in the other place about expenditure which union officials must quite legitimately incur in the course of their duties for the union. The response from the Government on that occasion did not strike me as being satisfactory, and in my view showed no understanding of what the job of an official is really like in practice.
For example, in my union it was customary to provide officials with cars. The general secretary was provided with a car and a driver. In my view, that was a quite proper use of funds. It was necessary for him to go to many evening meetings, and to drive home late, and tired, by oneself, is not a good idea for anyone. The provision of a driver was seen as a sensible measure by our executive. The same attitude is taken, I think, with many companies as regards their senior executives.
The rest of the union officials were provided with cars which they drove themselves—not, I may say, very expensive models, in case the Government should think that unions are in the habit of throwing their members' money about. I drove then, as I drive now, a Ford Orion or its equivalent. A car was and is regarded as a tool of the job. It was intended to ensure that the official was able to make the best use of his or her time and to visit sites on the occasions when it was felt that he or she needed to be there. Of course, there is the provision of offices, telephone, secretary, support staff and so on, without which no modern organisation can effectively function.
It was not at all clear from the discussion in the other place that the Government fully appreciated that there are expenses which are quite legitimately incurred in the course of carrying out duties on behalf of members. They in no sense represent any kind of benefit. They are what it costs to do the work properly. Of course, in all unions expense claims of that kind are checked by internal administration, as they would be in any organisation.
Thus it is necessary, in my view, to separate from benefits, legitimate expenditure incurred in pursuance of the job. That is the aim of the amendment and I hope that the Government will give it favourable consideration. I beg to move.
Baroness Denton of Wakefield: I am grateful to the noble Baroness for explaining the reasons for her amendment, which is important. I hope that I shall be able to explain to her why we feel that it is unnecessary. To insert the words proposed by the amendment would risk creating a real confusion between the concepts of a "benefit" and of an "expense". Frankly, there really is and should be no such confusion. An expense cannot be a benefit because, to put it simply, there is no benefit to the individual recipient. No one suggests that the expenses of people in situations where those are required in the pursuit of their duty are a benefit.

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As concerns the need to provide details of all actual benefits, there would be little point in setting up arrangements which meant, for example, that a union could legitimately avoid detailing valuable benefits provided out of union funds to the holder of an office. The present proposed provisions of Section 37 ensure that this cannot happen.
The key principle is that if a benefit such as the use of a car, payment towards a pension or the use of a flat or house is provided out of union funds for the personal use of an individual, then its value or description should be given.
At present, the nature of the new requirement is clear enough. A union must give details of all salary payments (expressed as a cash amount) and all "other benefits" (which could either be expressed in terms of a cash equivalent figure, or in terms of an adequate description of the benefit concerned, if that is more appropriate or practical).
It is not the intention that if the union does its best to provide those details it should fall foul of the law. There will, I am quite sure, be no question of prosecuting a union for a criminal offence in those circumstances. It is worth while bearing in mind that it is the criminal law that provides the sanction against failure in this area.
I hope that the noble Baroness will accept that the result of the amendment would be to introduce an unnecessary ambiguity and confusion into the proposed requirements. I hope that she will not pursue it.
Lord Wedderburn of Charlton: I should like to ask a question for a response either now or at a later stage.
I understood the noble Baroness to say that the words "other benefits provided to or in respect of" did not include benefits which were necessary for the job. Have Ministers taken advice from the Inland Revenue as to whether that situation would appear obvious to a tax expert? I think that it would not be obvious. Under another statute of 1985 which I dare not mention, persons who have to disclose their salary and, in general terms, benefits, must disclose sums paid by way of expenses allowance so far as they are chargeable to income tax, and the estimated money value of any other benefits; that is to say, expenses which are chargeable to tax, excluding benefits necessary for the job, for example, and any benefits received otherwise than in cash.
It was thought necessary to spell those matters out in Schedule 6 to the Companies Act 1985. It is always felt that companies Acts should spell out the exact meaning of expenses and benefits. I doubt, in the absence of authority against the argument, whether the phrase "salary paid to and other benefits provided" does not mean salary paid, because salary means taxable salary. It is "salary paid to" as well as other benefits in full. Then one has to explain what is needed for the job.
My noble friend on the Front Bench has made a cast-iron case that at first blush everything is included. If the noble Baroness, Lady Denton, states that it does not include all benefits and does not include the kind of thing that the amendment seeks to take out, she
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must, give some authority for that proposition. Such statute as I know is against that suggestion and the question is what the tax authorities would say in the light of the tax statutes, which I am sure Ministers must have looked at.
Baroness Denton of Wakefield: The noble Lord is leading us back down the avenue of comparing company law with other areas. We will note his words very carefully and take them into account.
Lord McCarthy: I should like to ask the Minister about a related point. I understood her to give an undertaking that there would be no prosecutions. Is that what the noble Lady said?
Baroness Denton of Wakefield: Yes.
Lord McCarthy: How can the noble Baroness say that?
Baroness Denton of Wakefield: I stated that, if a union does its best to provide the details, it will not fall foul of the law.
Lord McCarthy: If it does its best, but its best is outside the law, how can the noble Baroness say that there will not be prosecutions, even though the union did its best?
Baroness Denton of Wakefield: One must bear in mind that it is the criminal law that provides sanction against failure to do what the law requires in that area. I was trying to be helpful to the noble Baroness.
Lord Stoddart of Swindon: I am puzzled as to the question of company law and benefits in kind. We are not dealing merely with a question of company law. Benefits in kind affect individuals. If one has a company car or even a car allowance, one is required to account to the Inland Revenue for that benefit. Part of it is taxable. A benefit in kind is not only a question of company law; it is also a matter of individual taxation and, therefore, is relevant in this case.
Baroness Denton of Wakefield: We appear to be going down two different avenues, one regarding Inland Revenue matters and one regarding the amendment. The clause to which I am speaking relates to the provision of information to the certification officer as part of the union's annual return.
Lord Stoddart of Swindon: Does the noble Baroness not understand that, in relation to individual taxation, part of the benefit can apply to work done and part can be considered by the Inland Revenue to be a benefit in kind, so that there can be a split benefit? One part of the benefit is necessary for the conduct of the work and the other part is a personal benefit. That is the matter that concerns me.
Baroness Denton of Wakefield: It is possible that the noble Lord is more knowledgeable than I am in the area of tax law but we are not dealing with tax law in this instance; we are dealing with trade union law, under which the rules and enforcement are different.
Lord Wedderburn of Charlton: With great respect to the noble Baroness, we are discussing a serious point. Noble Lords should ask Ministers to look at the

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matter again. We are concerned with the meaning of the Bill; whether "other benefits" includes all benefits or, as my noble friend on the Front Bench contends, benefits other than those that are necessary for the job.
The noble Baroness says that it is just a question of a return to the certification officer. Yes, it is under Section 32. But under Section 45(1) failure—wilful failure at any rate; and there is some argument about what that might be—to fulfil that obligation is a crime. It is an offence. It is rather serious for Ministers to give us assuredly an interpretation which some of us find rather odd about what might constitute the base for the criminal offence without, with the greatest respect, any authority, without a case, a statute or an argument which seems quite clear. I believe that the Committee would not be doing its duty on this occasion if we did not ask the Government—Ministers may refuse if they wish—to look at the point again because the whole of the beginning of Clause 8(a) begins to unwind. It is a most unsatisfactory clause, which could form the basis of criminal liability.
9.15 p.m.
Baroness Denton of Wakefield: I repeat what I said to the noble Lord earlier. We will take into account very seriously, and obviously with our colleagues, the matters he has raised this evening.
Baroness Turner of Camden: I am grateful for the last remarks of the noble Baroness. I would not anyway have pressed the amendment at this time. But I look forward to hearing what she has to say at Report stage. I very much support what my noble friends have said. This is an important question. I believe that we have had a very confusing response from the noble Baroness. I believe that we are entitled to know because, as has already been said, this clause puts us into the realm of criminal law. This would be a criminal offence if it were wrongly interpreted as a result of a part of the statute which is not at all clear and as a result of assurances which have been given which a number of us find rather difficult to follow. In those circumstances, and against the assurances given that there will be further examination of the issue and that we shall hear further about the matter when we come to Report stage, I shall not press the amendment this evening.
Amendment, by leave, withdrawn.
Clause 8 agreed to.
Clause 9 [Statement to members following annual return]:
[Amendment No. 31 not moved.]
The Deputy Chairman of Committees (Lord Airedale): In calling Amendment No. 32, I have to say that were it agreed to I could not call Amendment No. 33.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 32:
Page 14, line 5, leave out ("anything inconsistent with") and insert ("something materially different from").
The noble Lord said: In moving Amendment No. 32, perhaps I may also speak briefly to Amendment No. 33, although I know that my noble friend will wish to speak to it as well.
It is a very simple matter and I am sure it will not detain us long. The Bill speaks of "anything inconsistent" (page 14, line 5) in respect of the requirements of the section on statements that are made. A statement must not specify:
"anything inconsistent with the contents of the [annual] return".
It is a simple point. The phrase "anything inconsistent" appears to include anything due to a misprint or some other mistake of a minor kind. Usually in statutes saying this kind of thing one would expect to find something different in a material respect or, as my amendment suggests, something materially different. My noble friend has a similar suggestion. Surely "anything inconsistent" should not stand by itself. There should be some relation to a material difference, which should then bring the clause into effect. I beg to move.
Lord McCarthy: There is nothing much for me to say about the amendment—everything has been said —except to say that we did have Amendment No. 33 which inserts after "anything" the word "substantially", so that we are talking not about "something materially different from" but about something substantial. We are indifferent to which of those two forms of words the Government find acceptable. If they could tell us whether they find either of them acceptable, that would be very helpful.
Baroness Denton of Wakefield: As currently drafted, the proposal in Section 32A requires the trade union to provide its members with a statement following its annual return to the independent certification officer. Subsection (4) provides that that requirement will not be satisfied if the statement to members specifies anything inconsistent with the contents of the return to the certification officer.
I appreciate the concern that, for example, a simple misspelling or a printing error might mean that a union failed to satisfy the requirements. Indeed, such concerns were fully expressed during the consideration of the clause in another place. Perhaps I may reiterate some of the comments that were made there about this provision. First, the provision gives trade unions the opportunity to use information which they have already compiled for the purpose of their annual return to the certification officer. That is a factor which would be welcomed by trade unions. Secondly, it is important to ensure that the information which a trade union gives to its members is consistent with that in the annual return. I believe that the provisions as currently drafted will ensure that such important consistency is maintained.
Finally, I hope I can reassure the Committee that an offence would not be committed if a minor or inconsequential inconsistency such as I have mentioned occurred. I do not believe that a court would consider that an offence had been committed on the strength of a simple mistake of the kind I have just described. Again I would say that a trade union which has every intention of honestly informing its members about its financial affairs has nothing to

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worry about with the provisions as drafted. I hope therefore that there is no need to press the amendments and that they can be withdrawn.
Lord Wedderburn of Charlton: We shall not press the amendments, but what is so curious about the Minister's position is that either form of the words we suggest, or indeed other forms, would make her argument secure. She prefers to rest on an uncertain definition in the clause. It is uncertain, however much she may assure us that there would not be an offence. It is less sure than either of the forms proposed. The Government have done that before, and we have lived with it, I suppose. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 33 not moved.]
Baroness Robson of Kiddington Baroness Robson of Kiddington moved Amendment No. 33A:
Page 14, line 48, at end insert:
("() The Certification Officer may authorise a trade union to modify the statement in subsection (6) (a) above, to the extent he considers it desirable to do so in the case of that particular union.").
The noble Baroness said: I am moving this amendment at the request of the Chartered Society of Physiotherapy, of which I am president. I should explain that the chartered society, as well as being a professional body incorporated by Royal Charter, is a registered trade union and is therefore subject to this legislation.
The Committee will appreciate that the way the statement is drafted at the moment permits of no amendment to reflect the individual circumstances of a particular organisation. It may well, therefore, involve a union in giving misleading advice to its members. For instance, the chartered society, along with other special registered bodies such as the occupational therapists—I am sorry that the noble Lord, Lord Ennals, who has put his name to the amendment, is unable to be present this evening—has no trustees and yet it is to be required to tell its members to complain to non-existent trustees. It is also not in the habit of referring to itself as "the union". It quite rightly prefers to use the title which has been granted to it by Royal Charter. The statement would prevent it from doing so.
What I am therefore proposing is that the certification officer should have power to allow trade unions to modify the general statement. Obviously, he will have to ensure that the general principles of the requirements in the statement are observed, but what is proposed would permit an organisation to delete any clearly irrelevant material, such as a reference to trustees when it does not have any, or to insert its own proper name in the statement.
In correspondence the Minister of State at the Department of the Environment suggests that,
"provided that the required form of words appears in the statement to members, the Society … will be free to take reasonable steps to help ensure that its inclusion does not confuse or antagonise members. This could include, as the Society suggests, making it clear that the mandatory form of words appears in the statement in order to satisfy particular requirements of the law".
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That, would mean that the chartered society would put out a statement including the words, "You can complain to the trustees of the society" and then having to have a subsidiary clause saying, "Sorry, but we have not got any trustees". It seems to me that that is too stringent a demand. Therefore, I am proposing that the certification officer should have power to allow trade unions to modify the general statement. In general, the demand for inclusion in the statement of trustees is inflexible. My amendment is focused on at least making the statement realistic and honest in the particular case of individual organisations.
I hope that the Government are able to accept this amendment because it does not alter the meaning of the statement; it just enables it to be true to the facts of the case. I beg to move.
Lord McCarthy: This is the most silly thing that we have had so far. I hope that the Government can correct it. It is Gilbertian and Pythonesque. It is the action of a Ministry of Silly Words that an organisation is told, as a way out of the situation that the Government have created, that it has to print the words, but underneath it has to say, "Don't worry, this is all rubbish". If ever there was a way of bringing the law into disrepute and if anything was ever completely daft, it is this provision. Surely the Minister can accept the amendment.
Lord Wedderburn of Charlton: Before my noble friend sits down, will he suggest to the Government Front Bench that they allow another document in a separate envelope?
Lord McCarthy: That may be giving the certification officer yet another task.
Baroness Denton of Wakefield: Perhaps the noble Lord will accept that, for the main part, I address my answer to the noble Baroness, to whom I listened with interest. I well understand the points that she raised. I know that she has been involved in discussions with my honourable friend the Minister concerned with this matter. The new statement which unions will be providing to members about the conduct of their financial affairs should certainly include the form of words set out in Section 32A(6) (a). Without requiring that, I fear that unions might not give their members sufficient information to help them identify the possible route by which they can pursue worries about the conduct of their union's financial affairs.
However, as has been remarked, we recognise that a mandatory form of words could not be expected adequately to cover the circumstances of all unions. That is why we have the provisions in Section 32A(6)(b), which allow a union to,
"include such other details of the steps which a member may take for the purpose … [which] the trade union considers appropriate".
In addition, it will be open to a union to comment on the mandatory form of words in any way that it sees fit. I do not share the noble Lord's conviction that this is a way of adding something unfortunate. These freedoms, used properly by a responsible trade union, should easily enable it to avoid any risk, no matter how remote, that the form of words may confuse its members. So, if a union was, for example, one of the

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special registered bodies which uniquely are allowed to be trade unions while not being unincorporated associations, it could certainly tell its members that the form of words was being included to satisfy the statutory requirements but that it had no trustees if that was the case.
The idea of giving the certification officer some discretionary power to modify the form of words to be used by particular unions would be very problematic. By what criteria would the certification officer be expected to decide on whether any particular change would produce a result that was more desirable than the form of words sanctioned for use by Parliament? Could the certification officer completely change the form of words so that it became virtually unrecognisable? How would he deal with requests (which might be made by many unions) for him to exercise his discretion?
I know of no precedent in employment law for giving the certification officer the power to modify the use in documents of a form of words which has been enacted by Parliament. I am far from sure that he would want any such power. I certainly cannot see any good case for the particular discretionary power that the amendment proposes.
The noble Baroness said that members of the Chartered Society of Physiotherapy are not used to the society being described as a trade union, but the fact remains that the society has that status in law. Indeed, the society has applied for and holds a certificate of independence issued by the certification officer, and appears as a trade union in the list of such bodies published each year by the certification officer. As a trade union, the society gets certain benefits that are available only to such bodies, for example, the limitation on the amount of damages which can be awarded against it in certain tort proceedings and the right to enforce rules that would otherwise be deemed to be in restraint of trade. There are also tax advantages. Its members are also protected against dismissal and actions short of dismissal on grounds of union membership because the society is an independent trade union.
For those reasons, although I well understand why the noble Baroness tabled this amendment, I cannot be sympathetic to the argument that the form of words should be modified or modifiable for special registered bodies such as the society. I hope that the noble Baroness will accept that we have given very careful attention to the concerns which prompted this amendment. I hope also that, having heard my explanation, she will find it possible to withdraw it.
9.30 p.m.
Lord McCarthy: Before the noble Baroness sits down, she asked for an example. She does not know of an example, but the most precise example is in the instrument of amalgamation. The certification officer himself has powers. The legislation sets out in broad terms what the instrument of amalgamation must contain. The certification officer has issued guidelines to unions telling them what needs to be described in detail in an instrument of amalgamation. The unions send the words in and the certification officer agrees
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them, corrects them or modifies them. We are talking about long statements, all based on a series of principles, embodied in a statute and interpreted by that very officer.
Baroness Denton of Wakefield: I thank the noble Lord, Lord McCarthy, for that information. However, the Government still feel that we are taking the right path on this matter.
Baroness Robson of Kiddington: I find it absolutely staggering that a mandatory statement has to be included which contains an untruth, which is the situation here. The Chartered Society of Physiotherapy has no trustees, but in a mandatory statement it is supposed to send out to its members the notice, "Please complain to the trustees if you have anything to complain about". I cannot for the life of me understand why the certification officer should not have the right to alter that mandatory statement to comply with the facts of life. It is completely incomprehensible to me, but it is much to late to press the subject. I shall come back to it on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 34 not moved.]
Clause 9 agreed to.
Clause 10 [Investigation of financial affairs]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 35:
Page 15, line 18, leave out ("Certification Officer") and insert ("Commissioner for the Protection of Trade Union Members").
The noble Lord said: I feel the need to trouble the Committee with the amendment which the Committee will see is somewhat odd. It relates again to the certification officer. Its purpose is to remove the certification officer as the officer who appoints inspectors. It does not challenge the structure that the Government want. It raises the question of who should appoint and deal with inspectors. I have inserted the Commissioner for the Protection of Trade Union Members. I put that in just once, but if the amendment were carried that officer would have to be the subject of a substitution for the next few pages. I was advised that that was the right way to raise the issue in principle.
We have discussed the certification officer. I am conscious that the Minister has kindly said that he will reconsider his functions. I move the amendment because it raises further issues germane to the reflection into which he is now entering.
I shall try to summarise the points under two headings. The first relates to the issue that I raised previously, but it is in a new form here. When the certification officer is made the organiser of inspectors and the central point to which the inspectors report, he is in the middle of a most important area not just of civil but of criminal law. Without going through them, if the Committee will look at Section 37A(7) and Section 37B(6) it will find that the right to silence and the right to refuse to produce documents are raised. The person who is the counterpart to the union, or it may be officials, is the certification officer. So here I raise my previous point in a new form. Is it right that

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the person who is the administrative organiser of trade union lists and so forth, and is also the first instance judiciary in certain trade union litigation, including disputes about elections, political funds and amalgamations, should be in that position? That is a link with what went before.
The second point is a new one. In our curious constitution, of which when I look at written constitutions I become usually more fond, we appoint an inspectorate, and we make it responsible to a Minister. The Health and Safety Executive has taken over factory inspectors and, although they do not speak much about it, the last point of responsibility is the Secretary of State for Employment. The Wages Inspectorate, although the Government are phasing it out, is, in the last resort, similarly responsible. Similarly—I do not know whether I dare mention them, but I will—company inspectors, for investigations under the Companies Act, for many years have been appointed by the Secretary of State for Trade and Industry. Ultimately he or she bears the responsibility.
In all those cases, and in a number more, the Minister can be asked a Question in this place. It is a democratic responsibility which is ultimately at stake. I know of no precedent for inspectors appointed with powers which are equivalent to those of company inspectors under the Companies Act. The noble Lord may have a precedent but I know of none which is parallel to this case. I know of no inspector who is appointed by another functionary with statutory powers who, I apprehend, is not—although the matter is cloudy—a person for whom in this and in every respect the Minister would be answerable in the Chamber.
Perhaps, if I can engage the Minister's attention, I may give an example of why that may not always be the case. At a critical point the certification officer must decide whether a prosecution should be launched on the basis of an investigation. That is not a matter for which a Minister would normally be responsible in the Chamber. It is a decision more like that of an Attorney-General—indeed, we know that it is, because in Scotland the Procurator Fiscal and not the certification officer is involved. That is not a matter for which the Minister would be answerable in the Chamber. There are other examples in the clauses which are not so clear but which are questionable.
This is an extremely important matter. The Government have the place of the certification officer in trade union law so wrong that it bursts out of every seam of the Bill. We are dealing with a Bill which will set up a series of inspectors. Members of the Committee will notice that, because they are the counterpart of company law, I make no complaint about their powers. Inspectors of this kind seem a little over the top: nevertheless, here they are. But they are not responsible to any Minister. The Government dared not have them appointable by the Secretary of State. If they dare, why did they not have them appointable by the Secretary of State just as company law inspectors are appointable by the Secretary of State for Trade and Industry? Why? I suspect that
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there, are two reasons. The first is because the Government knew that that would kick up a fuss and that people would ask what they were doing. That really would be state control of trade unions and it would be on the face of the Bill instead of being merely a line under it. The second reason is because the Government believed that they had made the most wonderful discovery in the certification officer, who appeared to be able to do anything. In previous Bills he has done such a great deal that they thought they would include him in this Bill. I prefer the second explanation but I believe that we have an example of slovenly drafting.
Many other points are raised in connection with Amendment No. 35. However, I hope that the Minister will take the point about responsibility with him into the journey in the night which his reconsideration of the place of the certification officer will lead him. We hope that he will come back on Report with an answer which is better than the Bill. I beg to move.
Baroness Denton of Wakefield: The noble Lord, Lord Wedderburn, acknowledged that, in speaking to a previous amendment, my noble friend said that he would take away the issue of the role of the certification officer. However, perhaps I may explain why the Government believe that the amendment is inappropriate but acknowledge that the overall issue will be examined. The certification officer is a natural point of contact for individual union members anxious about possible financial irregularities. The independent certification officer is well placed to decide whether to exercise those powers. It appears to us that in those respects he is much better placed than would be the commissioner for the rights of trade union members.
We do not believe that the availability of the new powers need in any way damage the ability of the certification officer to fulfil the other important functions of his office. The certification officer already hears complaints from union members against their unions about a variety of matters. He is and has always been the enforcing authority who can prosecute unions for particular offences and has done so. I am pleased to say that none of those tasks has damaged the certification officer's independence, nor has it jeopardised his reputation among trade unions.
There is no reason to assume that the availability of those new powers for the certification officer need be detrimental to either his reputation or his ability to perform his present functions. Indeed, I am sure that his reputation will be enhanced, not least among trade union members to whom he will now offer significant assistance if they have justifiable concerns.
Indeed, we are fortunate to have in the certification officer an independent authority who is both well established and well regarded. His office has contacts with and knowledge of the trade union world which enable him to exercise these proposed powers effectively and independently.
As regards one small point which arose, the Health and Safety Executive is responsible to the Health and

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Safety Commission and not to Ministers. That point should be clarified. However, I hope that the noble Lord will not press the amendment this evening.
9.45 p.m.
Lord Wedderburn of Charlton: I shall not press the matter because the Minister is to reconsider it. However, I hope that two points in particular will be reconsidered carefully. First, the factory inspectors who are now in the general inspectorate are responsible to the Health and Safety Executive. In certain respects, the Health and Safety Executive is responsible to the Health and Safety Commission. However, I hope that the noble Baroness is not saying that the Secretary of State is not answerable for the actions of those bodies down the line. That would be an astonishing doctrine. The matter is not as clear as that, and it appears to be clear otherwise that in this case the Secretary of State would not be able to be pressed as regards any responsibility for the inspectors.
I hope that when we return to the matter on Report we can take the central point and examine it further; namely, whether the Secretary of State is ultimately answerable for the actions of those inspectors. The noble Baroness did not answer that question. I did not expect her to because this is to be reconsidered. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 36:
Page 16, line 27, leave out ("members of his staff or other") and insert ("competent members of his staff or other competent").
The noble Baroness said: This is a fairly simple amendment. The present clause which we seek to amend says that:
"The Certification Officer may appoint one or more members of his staff or other persons as an inspector or inspectors to investigate the financial affairs of a trade union and to report on them in such manner as he may direct".
The Minister is to return to the question of the functions of the certification officer. However, the amendment seeks simply to ensure that anybody appointed as an inspector will be suitably qualified. In fact, we say that they should be:
"competent members of his staff or other competent persons".
At present the Bill states that he may appoint one or more members of his staff. However, an inspector will deal with the financial affairs of the union, which can be a fairly complex and specialised matter. It seems to me important to ensure that the people so appointed are appropriately qualified and competent to do the job. For that reason we tabled the amendment. I beg to move.
Baroness Denton of Wakefield: I fully appreciate the concern of the noble Baroness that those appointed to carry out an investigation into a trade union's financial affairs must above everything else be competent to do so. I am glad we have common ground over this issue. However, let me reassure the noble Baroness that the provisions of new Section 37B, as currently drafted, already address this point. The proposed new Section 37B will give the
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independent certification officer the power to appoint one or more persons to investigate the financial affairs of a trade union. This provision gives the certification officer discretion to decide whom to appoint to conduct such investigations. He is, therefore, already making a judgment about the capacity of the appointed person to carry out the investigation.
I believe it is unnecessary to question the certification officer's ability to decide such matters. We must remember that the certification officer is independent, but his activities are funded by public money, and he is accountable in the normal way for his use of that money. If the certification officer knowingly appointed an incompetent person to conduct such an investigation he would be acting improperly in discharging his duties. The normal sanction for misuse of public money would therefore apply. Indeed, the threat of investigation by the Public Accounts Committee would surely deter the certification officer from appointing persons whom he did not consider to be competent.
We believe that the provisions of new Section 37B, as drafted, will ensure that any investigation of a trade union's financial affairs will be properly conducted by those competent to do so. I hope I have been able to reassure the noble Baroness.
Baroness Turner of Camden: I have made a careful note of the final sentence of the noble Baroness when she said that new Section 37B, as drafted, will ensure that people who are appointed will be properly qualified and competent to carry out investigations. I do not intend to press the amendment at this stage, but I am grateful for the opportunity to raise the point and to have the assurance that has just been given. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 agreed to.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 37:
After Clause 10, insert the following new clause:
("Power of court to grant relief in certain cases
After section 43 of the 1992 Act there shall be inserted—
"Power of court to grant relief in certain cases.
43A.—(1) If in any proceedings for negligence, default, breach of duty or breach of trust against an officer or official of a trade union or a person employed as an auditor by the trade union it appears to the court that that person is Or may be liable in respect of the negligence, default, breach of duty or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case (including those connected with his appointment) he ought fairly to be excused for the negligence, default, breach of duty or breach of trust, that court may relieve him, either wholly or partly, from his liability on such terms as it thinks fit.(2) If any such person has reason to apprehend that any claims will or might be brought against him in respect of any negligence, default, breach of duty or breach of trust, he may apply to the court for relief; and the court has the same power to relieve him as if it had been the court before which proceedings had been brought." ")
The noble Lord said: This matter was discussed in another place but not very satisfactorily in my view or, I believe, in my noble friend's view. The nub of the issue is simply the following. Given that a number of

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new liabilities, and in particular criminal liabilities, are created in the Bill, I believe there should be here something which one finds elsewhere in a number of different forms; namely, a provision which allows the court, when it thinks that the official concerned or the union concerned has acted reasonably and ought fairly to be excused—I take the key words from the amendment—to excuse him or the union either wholly or partly. Those four final words also appear in the amendment. The liability would be construed on such terms as the court thought fit.
This is a simple type of clause. I have based it on a form of words taken from other legislation. I should have thought it was clear that, when one is increasing the area of criminal liability, a provision of this kind was necessary so that the courts did not always have to try desperately to reflect—courts sometimes have to do this with legislation which is insufficiently flexible —in what appears to be an inadequate sanction or penalty an offence which appears to be absolute. It is a useful device and I do not know of many complaints about it in the areas in which such provisions have operated.
The only reason for going further in moving the amendment, which I had hoped would receive a fair wind, is the possibility of receiving the same reply as was given in the other place. The nub of the Government's reply in the other place was that it was inconceivable that any such provision could possibly apply to any provision under the Bill. If I have not put that correctly the noble Baroness will correct me, but that is what I understand to be the nub of the Government's position.
Apart from the danger of ever stating anything for ever or never, which is always a very dangerous position to take in all affairs in life, it is also not true that under the Bill there is no conceivable case. For example, under the new Sections 37A and 37B there could be a situation in which someone refuses to produce documents which an inspector requires or does not do other things which the inspectors, in their investigations and under their powers, want him to do.
I accept that it is true that in all such cases most of the offences in the Bill relate to lawful refusals, or even occasionally fraudulent design. Those are not likely to be cases to which the amendment would ever apply. However, there are cases to which it could apply. It would be of benefit to the statute book and the courts to be able to measure the particular circumstances of an offence against criminal provisions by relation to flexible powers of this type. I beg to move.
Baroness Denton of Wakefield: I am grateful to the noble Lord for his explanation of the amendment. I share his horror of the word "never". However, I must tell the noble Lord that the effect of the new clause would seem to be either to confuse and distort the intended and proper operation of employment law or to create a novel and unjustifiable special protection for individuals who happen, for one reason or another, to have a particular relationship with a trade union.
As far as concerns employment law the new clause could mean that, where a court found that a union
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officer or official had breached a duty giving rise to an offence under Section 45 of the 1992 Act, it would then have to consider yet further issues about that person's motivation. However, Section 45(1) and (4) offences are already expressed with reference to motivation.
Thus Section 45(1) offences relate to circumstances in which a union "refuses or wilfully neglects" to perform certain duties. The Section 45(4) offences similarly refer to "wilfully" altering a document "with intent to falsify". So the new clause could distort the intended effects of the law by setting an impossible task. Its terms would require consideration of any plea of mitigation based on the proposition that the person concerned nonetheless acted honestly and reasonably.
As regards the new offences to be added to Section 45 by Clause 11, they already contain the appropriate protections to ensure that individuals should not be prosecuted (or convicted) where that should not happen. By way of example: first, Section 45(6), which provides that it is a defence against charges of contravention of requirements imposed by new Sections 37A(3) and 37B(4) for a person to prove that relevant documents were not in his possession and that it was not reasonably practicable for him to comply; and, secondly, Section 45(7), which provides that it is a defence for an official or agent of a union charged with destruction, and so on, of relevant documents to prove that,
"he had no intention to conceal the financial affairs of the trade union or to defeat the law".
As expressed, however, the provisions of the new clause would be of even wider application. Proceedings for "negligence, default, breach of duty or breach of trust" could be brought against the classes of person described in the new clauses in a number of ways.
Such proceedings could be brought against a union official by a member of the union who claimed that some duty owed to him by that official, under the union's rule book, had been breached. It could also be quite possible that a union auditor might be the subject of proceedings for negligence brought by the union itself.
I remain unconvinced that there is any sound basis for concluding that, in such cases, the kind of special arrangements the new clause proposes would be justified.
Is there real evidence that the courts have not had proper regard to the circumstances of any particular case before reaching a decision in such proceedings? Is there an instance where the courts did not relieve from an individual a liability from which they concluded that he ought to be "fairly excused"? I quote from the new clause.
I understand that the noble Lord believes that there is indeed a case for a new clause. However, we are unconvinced. We should only enact such special privileges and protections where they can be fully justified; and nothing that we have heard today provides such justification. I hope that answer will give the noble Lord more satisfaction than the reading of the proceedings in another place. I hope that he will consider withdrawing the amendment.
10 p.m.
Lord Wedderburn of Charlton: The response is different from that in another place. I am not sure, with great respect, that it is any better. I understand that there are the offences to which the noble Baroness referred. I said that a number depend upon intention or even fraud to which the new clause might not apply. I referred—the noble Baroness did not—to offences such as refusing to produce documents to the inspector. Someone who was rather resolute in the wrong quarter might commit an offence in that respect. He might have got the position wrong.
The noble Baroness stated that one would have to consider the provision at a separate stage of the proceedings. The amendment provides that the court "may" relieve that person wholly or partly. It is purely a discretionary power. The provision is partly based upon the Companies Act. To listen to the noble Baroness one might think that administration of the Companies Act must be completely distorted and confused by such provision. That provision has existed for decades and no one has regarded it as improper. In fact, the courts regard it as useful. As I understood the noble Baroness, she said that the courts might have to deal with a few of the cases on their merits, taking into account all the circumstances. The court often has to do that when it passes sentence or imposes a sanction. Sometimes if one's offence is too absolute it is awkward because it looks as though a sentence is being imposed which is not up to the breach of such an absolute offence.
I simply seek to introduce a tiny bit of flexibility. I hope that the fact that it is novel in trade union law would not be a barrier in this Chamber. Most good ideas are novel. It is a good idea to use this provision as it is used elsewhere.
Perhaps I may say this to my noble friends on these Benches. This is a tiny matter which would help the administration of justice but, it is true, might sometimes allow a trade union official to be exculpated from a crime which might also apply to a director of a company or other officer. But the Government take up distorted postures of logic in order to resist the provision. They are prepared to argue throughout the night. I am not. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 agreed to.
Clause 12 [Disqualification of offenders]:
The Deputy Chairman of Committees (Lord Cocks of Hartcliffe): Clause 12, Amendment 38. Before calling Amendment 38, I should point out that if it is agreed to I cannot call Amendments Nos. 39 to 42 inclusive because of pre-emption.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 38:
Page 22, leave out lines 10 to 20 and insert:
("45B.—(1) Where a person holding a position in a trade union to which this section applies is convicted of an offence under section 45, the court may in its discretion disqualify him from holding any such position
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(a) where he is convicted under subsection (1) or (5) of that section up to a maximum of two years, or

(b) where he is convicted under subsections (4), (7), (8) or (9) of that section up to a maximum of 10 years.

(1A) A trade union shall use its best endeavours to ensure that a person convicted of any such offence shall not hold any such position during the period in which he is disqualified.").
The noble Lord said: It is in a way a shame that this important matter comes at this point of the evening. But I am sure that that will not stop the Committee considering it carefully, because it involves an important matter of human or civil rights. When a statutory provision says that someone should be automatically disqualified from a post or a position, or from some benefit which would otherwise be his or hers, it is doing something important. When it does it, as this provision does in the Bill, by way of an automatic disqualification, saying that given certain criminal offences someone will be disqualified automatically —and I accept that here we have a relationship with the previous amendment; it is the same thought—for five years or 10 years according to the criminal offence, I should like to ask the Ministers whether there is a precedent in any other area of the law (it certainly is not in company law, but it can be anywhere in history) in English legal history of automatic disqualification of this character in the Bill?
If a trade union official were convicted, the court might think that there were mitigating circumstances to some degree. Under the previous amendment, which we can put aside, it could still say, "Well, we will amend and modify the penalty". But it cannot do that here. If it convicts, the disqualification is automatic. Suppose the court gave a suspended sentence, the disqualification would still be automatic.
Of course this is legislation by reference, about which we are all now experts, but it is misleading. For example, it refers to Section 45(1), but Section 45(1) includes an enormously wide area of offences relating to accounts, refusal to produce rules, and indeed superannuation schemes. Then again we have the refusal of the demands of the inspectors. The offences are wide, and the automatic disqualification is not justified, because there can be cases—I put it no higher than that, but as high as that —where someone who is convicted of one of these offences does not deserve, and the court may say does not deserve, to be disqualified from taking any part in a trade union executive for 10 years.
I am not sure how the Government justify to themselves that imposition of 10 years. I now quote the Company Directors Disqualification Act 1986 because it is relevant on this point. In that Act the maximum disqualification for the most heinous fraud, which will have brought about loss far more than any possible fraud under this Bill, is 15 years, with a minimum of two years. Most of the others are five year offences. Here I have said that surely the more minor offences should have a disqualification of two years, and very well, if the Government must, up to a maximum of 10, although that seems to me a long time in respect of these offences. But I accept that the subsection (4) (7) (8) or (9) offences, as in my

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amendment and as set out in the Government's Bill, are serious offences, and so I have left the Government with that 10 year maximum.
The main point is that there must be a way—and here I speak in respect of my noble friends' amendments which follow mine—there must be the possibility for the court to have discretion in respect of disqualification from a civil position in an organisation, especially where it decides that the defendant is guilty but that the right penalty is a short sentence, a small fine or a suspended sentence. I beg to move.
Baroness Turner of Camden: I support the amendment moved by my noble friend. As he indicated, I put down a similar amendment, but his does rather better and more comprehensively what my noble friend Lord McCarthy and I sought to do in our amendments. Amendment No. 38 seeks, as ours do, to ensure that the court has discretion about disqualification and should have such discretion for periods of up to a maximum of two and, in the more serious cases, up to a maximum of 10 years. I share his view about the length of time: 10 years seems a long time, but the amendment would provide for up to a maximum of 10 years in the more serious cases.
If we do not have an amendment on these lines, it will mean that the court has no flexibility at all when it considers those offences which may be of various kinds, some perhaps not large at all. Some of the minor offences certainly do not justify the period of two years which is provided for without any flexibility. It seems sensible to me that, if the issues are to go before a court, flexibility should be available to that court when judging them.
I also like the last paragraph in my noble friend's amendment, which states that:
"A trade union shall use its best endeavours to ensure that a person convicted of any such offence shall not hold any such position during the period in which he is disqualified".
The use of the term "best endeavours" is reasonable in the circumstances. Unions are large organisations and it is conceivable that someone could slip through the net and stand for election and even be elected, particularly if there is a long period of disqualification like 10 years. Therefore, simply to say that the trade union should use its best endeavours in such circumstances seems to be reasonable and suitable, in view of the provisions of the legislation. I support my noble friend's amendment.
Baroness Denton of Wakefield: Perhaps I may reassure the noble Lord, Lord Wedderburn, that we recognise that he has raised a very serious issue and, whatever the hour of the evening, we would not treat it lightly. However, perhaps I may also say that I note that, when he brings forward a new proposal, he takes credit for it being novel; when we bring something forward, we have to provide a precedent.
The amendments would produce a quite unworkable and inappropriate system for the application of disqualification from union office. Conviction for a Section 45 offence is a matter for the criminal law courts—specifically, magistrates' courts (in England and Wales). Such courts are properly equipped to deal with prosecutions for such offences and to determine
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when they have been committed. They are, however, not best placed to make decisions about whether a person should be disqualified from holding any of the offices to which the new disqualification penalty will relate.
In passing, I point out that in practice offences under Section 45 are prosecuted by the certification officer, and his record shows that he will not prosecute for any trivial or technical offence.
All the offices are ones which the law requires to be filled through election by union members and it is to the civil courts, not the criminal courts, that a member would complain if, for example, he believed that his union had not satisfied its statutory duties in respect of such elections. The idea that it should be up to any court at its own initiative to impose disqualification from union office on any person would be fundamentally inconsistent with the present law on election to union office. Under that law, it is up to members to bring complaints to the courts if they believe that their union has breached its duties in respect of election to union office. The proposed provisions in Clause 12 are consistent with that principle. The provisions in the amendments are not.
Establishing fixed periods for disqualification, as opposed to the variable system envisaged by the amendments, has important advantages. The proposed fixed periods of five and 10 years achieve three things.
First, they distinguish between the relative gravity of the offences which result in disqualification from office. Secondly, they relate the disqualification period to the statutory election requirements, since the latter provides for election to union office at intervals of no greater than five years. Thirdly, they avoid the need for a court to address the question of what period of disqualification is appropriate in any given set of circumstances. That, in turn, will also give a member who is contemplating such proceedings greater assurance as to the nature of the outcome.
I understand the reason behind the noble Lord's amendment and I hope that he will understand that we do not reject it lightly.
Lord Wedderburn of Charlton: That reply shows no concept of how disqualification works in other areas. I understand the opposition of the noble Baroness to the amendment. My amendments have often been called misguided and, more frequently, wrong, but it is quite another thing for them to be called unworkable. I defy the noble Baroness to show that the amendment is unworkable. One of the reasons why it is not unworkable is that precisely that kind of discretion, which is what the noble Lady seemed to dislike most, operates under the Company Directors Disqualification Act 1986. Under that Act the court has a discretion in regard to disqualification.
Noble Lords will note that it is a proper, general principle of the law of associations—namely, that, if someone is to be disqualified and is to lose his civil rights, then it is a sensible idea to give the courts some kind of discretion as to the period of disqualification.
I hope that I did not hear the noble Baroness correctly. She appeared to state that, because the officials concerned were elected, it was fundamentally

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contrary to the system of election to have a system of discretionary disqualification. However, the Bill states that it is permissible to disqualify the same people so long as it is an automatic disqualification. What do the Government mean by saying that there cannot be disqualification at discretion because the officials are elected, but that there can be automatic disqualification?
I accept that we are not discussing trivial crimes. The prosecution would be under Section 45 for the most part. It is not true to say that members would always go to the civil courts in respect of disagreements with their unions. One knows of cases where members have tried to interest the prosecuting authorities in matters concerning particular officials. The Government have not taken on board the kind of frontier that the Bill crosses. The Bill illustrates that, wherever a choice has to be made, the choice is made against the trade union; it is an attempt to break down the trade union, to make the union lose funds and its capacity to operate strategically for its members. That is why the proposal is for automatic disqualification. There is no reason otherwise not to have a discretion in the court.
I have often criticised members of the judiciary but I would be very sympathetic to them or to magistrates in trying to operate such a provision. They will see someone in front of them and say, "We are very sorry, but you wilfully refused to produce the document for the inspector, and, therefore, we have to find you guilty; we shall fine you £100". He or she will say: "But that means that I am disqualified for five years". And they will say: "We're very sorry. We can't do anything about it". One will not get much respect for this law on that basis except among those who want to do down trade unions.
Lord Hacking: Before the noble Lord withdraws the amendment, perhaps I may briefly intervene. I speak as the only Back-Bencher who is left on this side
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of the Committee, and almost the sole Back-Bencher, apart from the noble Lord, Lord Wedderburn, in this Chamber at all.
The point raised comes as somewhat of a surprise to me, though I have been practising law for nearly 30 years; and that may be of particular surprise to the noble Lord, since he instructed me in law before that period of 30 years had started. It has been my experience time and time again that mandatory sentences in which the courts do not have discretion are unsatisfactory. Indeed, it usurps the essential role of the court, and that is to mete out justice according to each case in front of it according to what it believes to be the right standards of justice for that case. For that reason, I am disturbed to hear my noble friend's answers to Amendment No. 37 and now to Amendment No. 38. I rise to my feet only to express an anxiety. I hope that my noble friend will hear it from me, and indeed from other Members of the Committee.
Lord Wedderburn of Charlton: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 39 to 42 not moved.]
Clause 12 agreed to.
Viscount Goschen: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Cardiff Bay Barrage Bill
Reported from the Select Committee with amendments, and recommitted to a Committee of the Whole House.
House adjourned at twenty-two minutes past ten o'clock.

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