Sitting of 12 May 1993

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

    Eritrea
    Mr. Barnes: To ask the Secretary of State for Foreign and Commonwealth Affairs what is his policy on the recognition of Eritrea; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mark Lennox-Boyd): We warmly welcome the outcome of the referendum on Eritrea's status. We plan to announce our decision on diplomatic recognition by the time the Eritreans formally declare their independence.
    Mr. Barnes: Immediately after recognition, should not Eritrea be given massive economic aid from the world community? It has suffered considerably from the civil war which has destroyed its infrastructure, it suffered from a drought last year and it has half a million refugees to absorb from the Sudan. In those circumstances, is not our proposal for £500,000 worth of aid for the coming year inadequate, given that the economic recovery plan will cost $2.5 billion?
    Mr. Lennox-Boyd: As the hon. Gentleman knows, we have given terrific humanitarian assistance to Eritrea— some £12 million worth of aid since January 1992. We are proposing a new bilateral programme of £500,000 worth of assistance a year for that part of the world. With regard to the rehabilitation of displaced persons, the United Nations department of humanitarian affairs will visit Eritrea shortly and make a report. We wish to reserve judgment until we know the outcome of that report before considering any further matters.
    Mr. Bowis: Is my hon. Friend aware that the message that I and the hon. Member for Leeds, West (Mr. Battle) bring back from Eritrea is that the people there are in remarkably good heart after 30 years of war and devastation and now need to face the next 30 years of economic war, which they will win with world support. Will he examine the possibility of supporting the World bank's initiative on its recovery programme, as well as the United Nations Development Programme for returnees and access to the Lom. IV convention, and also see whether Britain can do something to help with the necessary reforms of the civil service, support for the police and especially the improvement in literacy, given that Eritrea has chosen English as its second language?
    Mr. Lennox-Boyd: All those matters will certainly be examined—I can say no more than that to my hon. Friend or the hon. Member for Leeds, West (Mr. Battle), both of whom attended the referendum as observers. The British Government warmly welcome the referendum result, wish to help Eritrea in the future and will consider their relationship with Eritrea on a positive basis from now on.
    Mr. Battle: I thank the Minister for his warm welcome for the referendum result. It was a privilege to be present at the referendum on 23 and 25 April. It was a free and fair vote that represented liberation of the Eritrean people after 30 years of war. Can the Minister ensure that some substantial bilateral and multilateral aid goes immediately to the reconstruction of the vital port of Massawa, which was devastated by bombing and recently revaged by a rare hurricane? That port is central to movements of food aid and the reconstruction of the whole country.
    Mr. Lennox-Boyd: There are enormous demands in Eritrea for all sorts of assistance. We are concentrating on the priorities for English language training and agriculture, but we are examining the whole situation.

    United Nations Peace Operations
    Dr. Goodson-Wickes: To ask the Secretary of State for Foreign and Commonwealth Affairs in how many United Nations peacekeeping or peace monitoring operations the United Kingdom plays a part.
    The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hogg): The United Kingdom contributes military personnel to five United Nations peacekeeping operations, including 600 to the force in Cyprus, 15 to the force on the Iraq-Kuwait border, 15 in western Sahara, 122 to the force in Cambodia and 2,500 to the United Nations protection force in former Yugoslavia.
    Dr. Goodson-Wickes: The House will be impressed by the extent of that list, representing as it does the country's commitment to peacekeeping in the post-cold war period and, above all, the high regard in which British troops are held worldwide. However, does my right hon. and learned Friend agree that we have reached the point in history at which the whole concept and mechanism of United Nations peacekeeping, and possibly peacemaking, should come under review? In that context, will my right hon. and learned Friend give an assurance that, given Britain's permanent membership of the United Nations Security Council and our reputation and abilities, we will maintain the capability to play a full and prominent part?
    Mr. Hogg: My hon. Friend is right to stress the ever-increasing nature of the peacekeeping operations conducted by the United Nations. He is also right to say that British forces should make a significant contribution to those operations. We do so especially in the present operations in Bosnia to convey humanitarian supplies. However, I think that my hon. Friend would also agree that we cannot participate in every peacekeeping mission: we have to determine priorities.
    Mr. Rogers: I am sure that the Government, with all of us in the House, view with great concern the decision of the Russians to veto the reform of the United Nations financing of the peacekeeping force in Cyprus. Combined with the withdrawal of the Canadian contribution some

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    time in June, that will inevitably put an added burden on this country. In view of the present poor state of our defence forces and the Treasury-driven cuts in the "Options for Change" process, will we be able to fulfil those commitments, which are limited at present?
    Mr. Hogg: The hon. Gentleman was right to draw attention to the Russian vote last night. That is a matter which must be considered. But I return to the point that I made. We cannot participate in every peacekeeping force. We have to make choices. Our contribution to peacekeeping forces is recognised as among the most effective made by any member of the United Nations.
    Mr. Colvin: If we participate in the number of peacekeeping activities that my right hon. and learned Friend said, that means that there are another 12 in which the United Kingdom is not involved with the United Nations. There are a further eight civil wars going on around the world where the United Nations is not involved and another 25 flashpoints where war could break out at any time, so the role of the United Nations is bound to increase.
    My hon. Friend the Member for Wimbledon (Dr. Goodson-Wickes) has a good point. The United Nations must convene, deliberate and determine how it will reach agreement on keeping the peace throughout the world and implementing the Secretary-General's "Agenda for Peace", and how it will enforce Security Council resolutions which it passes.
    Mr. Hogg: My hon. Friend is right to draw attention to the many parts of the world and operations in which we could make a contribution. That rather emphasises the point that I have already made. One must make choices about where the priorities lie. It is also worth reminding my hon. Friend that, for example, the Conference on Security and Co-operation in Europe can operate in a peacekeeping role, sometimes under the direct authority of the United Nations and sometimes free standing. Therefore, it is a question of making priorities and seeing whether regional organisations can sometimes take some of the strain.
    Sir David Steel: Does the Minister accept that the number of forces required for peacekeeping operations would be smaller if they could be deployed in a more timely manner? Does not that underline the importance of the Secretary-General's report "Agenda for Peace", in which he talks about member nations ascribing and allocating forces on a permanent basis to the United Nations? Is that now part of Her Majesty's Government's official policy and, if so, what are the implications for "Options for Change"?
    Mr. Hogg: The right hon. Gentleman is right to say that sometimes timely action can prevent a more substantial contribution later. There is rather a good example of that in Macedonia where, as the right hon. Gentleman knows, there is now a battalion of United Nations authorised troops in a pre-emptive role. I suspect that over the years we shall see rather more of that.

    Hungary
    Mr. Jenkin: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on relations with Hungary in the light of his recent visit to Hungary.
    The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): I accompanied Her Majesty the Queen on part of her highly successful state visit to Hungary last week. I have had talks with the President, the Prime Minister and the Foreign Minister. Our relations are in good shape. The Hungarians know that we support their wish to become full members of the European Community when practicable and that meanwhile we are working to make a success of the Community's association agreement with them, particularly by opening the Community's market increasingly to their goods. British investment in Hungary and trade with Hungary are growing and there is scope for plenty more of both. The British know-how fund is an acknowledged success, with many good projects coming forward.
    Mr. Jenkin: Does my right hon. Friend agree that the early accession of Hungary and other states like it to the European Community is at the core of our relations with that country? Can he say when that might be? As the European Parliament's consent is required for the accession of new members to the treaty of Rome, will existing member states be required to give up more power in order to obtain that consent?
    Mr. Hurd: I do not think that my hon. Friend's second point is very strong. The treaty of Rome provides under article 237 that the Parliament must agree to new accessions. That is not changed under the proposed treaty of Maastricht. Any change in the powers of Parliament is a matter for treaty. But my hon. Friend is right on his first point. Full membership of the Community is one of Hungary's main objectives and we are in favour of its achieving that as soon as practicable. It knows and we know that it is not possible to set an exact date at present.
    Dr. Howells: Did the Secretary of State make it clear to the Hungarian Government that the British Government would take a dim view of any encouragement that might be given to the ethnic Hungarians who live in Transylvania and to the secessionist groups that are beginning to surface there?
    Mr. Hurd: The Hungarians expressed the view clearly to me that they do not seek a change in the international borders of Romania, but they are understandably anxious that the Hungarians in Transylvania should be given a proper degree of autonomy.

    Yugoslavia
    Mr. Ancram: To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has received on achieving a long-term solution to the political problems in the former republic of Yugoslavia.
    Mr. Malcolm Bruce: To ask the Secretary of State for Foreign and Commonwealth Affairs what measures he assesses to be the most effective in bringing to an end the fighting in Bosnia Herzegovina.
    Mr. Winnick: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the latest United Kingdom position over the conflict in former Yugoslavia.
    Mr. Connarty: To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions have taken place with other United Nations countries regarding the conflict in former Yugoslavia; and if he will make a statement.
    Mr. Hurd: Despite the intransigence of the Bosnian Serbs, we continue to regard the Vance-Owen plan as an indispensable lead into peace in Bosnia. Our policies are directed towards getting the Bosnian Serbs to accept the plan, carry it out in good faith and desist from further attacks. That means increasing the pressure on them by stepping up still further the growing effectiveness of sanctions and testing the declared will of President Milosevic to carry out his intention to cut off supplies to the Bosnian Serbs and allow international monitoring of the border. In case the Bosnian Serbs cannot be persuaded to comply, we are considering with our partners and allies the possibility of using stronger measures, not excluding military options. We also agreed in the Foreign Affairs Council on Monday on the need to express to the Government of Croatia our dismay at recent actions by Bosnian Croats in central Bosnia and around Mostar.
    Mr. Ancram: I thank my right hon. Friend for that reply and welcome the fact that he has not been driven off his sensible dual-track approach by ill-judged insults from certain safely distant American politicians during the past few days. In that context, will my right hon. Friend welcome the constructive statement from the American Government today that deployment of United States ground troops in Macedonia is being considered, particularly as it will give the American public a better appreciation of the complexities of what is happening on the ground throughout the former republic of Yugoslavia?
    Mr. Hurd: I am obliged to my hon. Friend. I do not thing that it serves any purpose to start exchanging accusations across the Atlantic. I do not think that some of those remarks would have been made if those concerned had seen the exchanges that have taken place between the allies in recent days, or if they had understood the nature of the effort and the risks which some of us, including Britain, are making in Bosnia at the present time. I agree with my hon. Friend's second point. If the United States were to decide to reinforce the Nordic battalion in Macedonia already referred to, that would be welcome from our point of view.
    Mr. Malcolm Bruce: Does the Foreign Secretary accept that it is more than ever important that aggression, wherever it comes from, is not seen to be rewarded? As more and more ground is gained by that aggression, with the loss of Srebrenica and Zepa, it becomes more difficult to secure the peace. Can the Foreign Secretary therefore say what measures he will recommend to the allies to ensure that Gorazde does not suffer the same fate?
    Mr. Hurd: The Serbs have not, of course, occupied either Srebrenica or Zepa. In my main answer I dealt, I think, with the hon. Gentleman's point. We believe that so long as the Bosnian Serbs continue to push forward in eastern Bosnia, the pressures against them must be built
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    up. The new element in the last few weeks is the declared intention of President Milosevic to put pressure on the Bosnian Serbs. That is being partly carried out. It needs to be tested. What we and the Americans have recently agreed, and what is now being carried forward in the Security Council, is that we should propose and agree that there should be monitors along the border between Bosnia and Serbia so as to prevent the flow of illegal traffic.
    Mr. Winnick: Is the Foreign Secretary aware that there is bound to be much disappointment that the leading western countries have not—so far at least—been able to get their act together in dealing with Serbian aggression and vile ethnic cleansing? As for the Foreign Secretary's reference to Belgrade, is not it a fact that if the Belgrade leadership appears to be—I emphasise "appears to be"—dissociating itself from the Bosnian Serb warlords, it is because of the fear of armed intervention? Should not that lesson be carefully learnt, be it here in western Europe or in the United States?
    Mr. Hurd: The allies are agreed on the effort which we are carrying forward. That is to say, the Europeans, the Americans and the Russians are agreed on the need for a political process—I have mentioned the Vance-Owen plan—on the need for effective sanctions, with the Americans and the Europeans working together, and on the need for the humanitarian effort: our troops on the ground, a big United Nations effort and the United States and other air drops. All that is agreed and is going forward. There is consultation on further measures. As for the hon. Gentleman's second point, one can never be sure what moves people to change their policy. It may be the undoubtedly growing effectiveness of sanctions. It may be, as he suggested, the hints of possible military action, which we are not excluding. One cannot be sure. Nor is it certain that the change is a substantial and permanent one. That is what now has to be tested.
    Mr. Connarty: Is the Foreign Secretary aware of the perception outside the House of the lowering cloud of shame over the Governments of Europe and America because of the lack of military intervention? That does not include, obviously, the troops we have put there who are giving humanitarian aid. Is the Foreign Secretary aware that at a meeting in this very House the Bosnian Foreign Secretary and the Bosnian UN envoy said that we are keeping their people alive until the Serbs come to kill them? Is not it time to end the delay, to stop buck-passing to the Americans and to commit ourselves to military intervention to deal with ethnic cleansing and create a safe haven now for those Bosnians who are left in their own country?
    Mr. Hurd: The hon. Gentleman is the first I have heard in the House, throughout many months of debate, to propose a military intervention on the ground to impose a particular solution. No Government whom I know of, and certainly not the Government of the United States, propose that. The House debated this matter on 29 April. I carried away from that debate the very strong feeling from all parts of the House, although not from all individuals, that hon. Members were in favour of the pressures that we are building up and of the line that we are taking and that they were also in favour of substantial prudence before going into further types of involvement

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    without calculating the consequences. The kind of phrases that fell from the hon. Gentleman's lips are a little bit easy for those who do not carry the responsibility for the result.
    Mr. Cormack: Is my right hon. Friend aware that the situation in and around Mostar is becoming increasingly critical? Is he further aware that President Izetbegovic has asked for Mostar to be declared a protected zone? Will he give his support to that request?
    Mr. Hurd: I had not heard of that request. The situation in Mostar is serious, but the Spanish troops—the European troops who are escorting humanitarian convoys in that area—have done their best to calm things down. Ceasefires have been negotiated and I believe that there has been some dying away of the fighting, although it comes and goes. We take the matter very seriously and I know that the German Foreign Minister is going to Zagreb. The presidency of the Community, as a result of our meeting on Monday, will express our deep concern to the Croats about the matter, as there is no doubt that the main responsibility is theirs.
    Sir Geoffrey Johnson Smith: I understand my right hon. Friend's reluctance to avoid trading insults across the Atlantic, but is not there support in the Senate, and possibly in the Administration of the President, for arming the Bosnian Muslims? Is it still the Government's view that that would seriously jeopardise the humanitarian relief that we give the Bosnian Serbs, Muslims and others and that were we to agree to such an American request that work would have to be abandoned and other initiatives that have already taken would be jeopardised?
    Mr. Hurd: The House discussed this subject on 29 April and the right hon. Member for Copeland (Dr. Cunningham) and other hon. Members supported our reasons for having reservations about this option, not the least of which is the one that my hon. Friend mentioned. It is hard to imagine how the humanitarian effort and the troops escorting the convoys could continue—at least in their present form—if that option were taken. No option has been excluded, because the situation may change, but our position on that particular option has not changed.
    Dr. John Cunningham: Is not one of the tragic lessons of the middle east that pouring armaments into areas of instability and conflict does not lead to early political solutions or to peace? Should not we emphasise that point to those who want the United Nations arms embargo on Bosnia to be ended?
    Will the right hon. Gentleman reconsider what he said a few moments ago about the Croatians? Is not an expression of dismay a slap on the wrist for the Croatians? Should not we take the same attitude to the Croatians as we take to the Bosnian Serbs and is not the time long overdue for the Security Council to make explicit its ultimatum to the Serbs and the Croatians that, if they do not sign the ceasefire and uphold it, limited air strikes will be used against them?
    The right hon. Gentleman should support, as he has hitherto, the urgent need to strengthen the United Nations presence in Macedonia and significantly to increase the presence of Conference on Security and Co-operation in Europe monitors in Kosovo to make it clear to President Milosevic that we need convincing of his good faith in respect of Kosovo and Macedonia.
    Mr. Hurd: I have sketched out again our position on air strikes and the arms embargo, which has not really altered since our debate on 29 April. There was some discussion in the Foreign Affairs Council on Monday about whether we should begin to think of sanctions against Croatia. We reached the conclusion that that was not justified at this stage, but the Croatians should have no doubt that, if the kind of incident that occurred in central Bosnia and has now occurred again in Mostar continues, they cannot expect to have the kind of relationship with the European Community or the international community that they expected.
    I have already answered the right hon. Gentleman's point about Macedonia, where a Nordic battalion is in place. If it were strengthened—for example, by an American decision to put ground troops into Macedonia —that would be welcome. As the right hon. Gentleman knows, we have recognised Macedonia; it is a member of the United Nations and Lord Owen and Cyrus Vance are trying to sort out the detailed implications. I agree with the right hon. Gentleman's point about strengthening the CSCE presence in Kosovo.
    Sir Michael Neubert: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next expects to meet his European Community counterparts to discuss developments in former Yugoslavia.
    Mr. Douglas Hogg: Former Yugoslavia will be discussed at the next General Affairs Council in Luxembourg on 8 June.
    Sir Michael Neubert: I pay full tribute to the humanitarian contribution made by British forces in Bosnia, but is not the painful reality that it has saved thousands from being starved to death at the price of thousands of others being shelled to death and that Cambodian-type atrocities will continue unless effective deterrent action is taken? Does not relevant 20th century experience tell us that for defending freedom from ruthless aggressors there is no substitute for a strong Anglo-American alliance, compared with which an attempt to secure agreement and joint action among 12 European nations is little more than a mirage?
    Mr. Hogg: It is right to be absolutely clear that many thousands of people in Bosnia are now living who would have been dead, but for the delivery of humanitarian supplies over many months, and that much credit for that goes to the British troops now in Bosnia and to the Royal Air Force. We must also recognise that what we face in Bosnia is essentially a civil war. It is true that it has been supported by men and munitions from Serbia and, as has been made plain by many hon. Members, from Croatia too. In essence, however, it is a civil war and we need to reinforce the pressure now on Serbia to get President Milosevic to put yet more pressure on the Bosnian Serbs to subscribe to a peace agreement.
    Mr. Jim Marshall: Does the Minister agree that we must learn lessons from the tragedy now occurring in Yugoslavia, one of which is that the precipitate recognition of the new republics by the European Community exacerbated the problems there? Does the Minister further agree that if there is recognition in other parts of Europe in the coming months and years, hand in hand with recognition there must be an agreement

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    recognising the rights of minorities both within the state with which they reside and in any neighbouring state with which they may have linguistic or other relations?
    Mr. Hogg: It is true that the British Government were more cautious about recognising Croatia than were a number of our European colleagues, but by the time we recognised Croatia we all judged that the grounds for refusing recognition no longer existed. The same applied in the case of Bosnia. The hon. Gentleman will keep in mind that there was a referendum, and an independent report commissioned by the EC, in the light of which it would have been difficult to withhold recognition of Bosnia. The hon. Gentleman makes a fair point about minority rights, and it is certainly true in the context of the entirety of former Yugoslavia that the preservation of minority rights within the frontiers is of key importance to any peace settlement.
    Mr. Fry: When my right hon. and learned Friend talks to our European partners, will he point out that although the British people are anxious to play their part in resolving the problems in Bosnia, they would appreciate greater assistance from other members of the Community in terms of sending their forces to be shot at and put into danger? If there is to be a general Community solution to the problem, it should not be left mainly to the British and French forces to carry out the peacekeeping in the name of the European Community. I believe that if that were achieved, my right hon. and learned Friend would find much greater agreement about the way forward, and perhaps rather less resistance to the effective use of British forces.
    Mr. Hogg: My hon. Friend makes a point of substance. He was right to pay tribute to the French Government for their very substantial contribution. The Spanish Government, too, have contributed. There are also countries which, by reason of their history or their constitutions, or both, would find it rather difficult to make a contribution in what was Yugoslavia.
    On the question of peacekeeping, which is a different matter from what is currently happening in the former Yugoslavia, we look for a substantial contribution from outside the European Community. Naturally, I have in mind the deployment of substantial numbers of ground troops by the United States if a peacekeeping force were organised to underpin an agreement.

    South Africa
    Miss Lestor: To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with representatives of the South African Government following the murder of Chris Hani; and if he will make a statement.
    Mr. Lennox-Boyd: We have made every effort to help minimise the effect of the tragic assassination of Chris Hani on the negotiating process in South Africa, including the provision of a senior police officer to help with the investigation.
    Miss Lestor: Following the distinguished and dignified address given by Mr. Nelson Mandela during his recent visit to this country, as well as the death of Chris Hani and the revelation of the alleged plots against other people involved in the constitutional process, will the Minister
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    press on Mr. de Klerk and all others the urgent need to secure an early settlement in the constitutional discussions so that the next stage may be reached? Will the Government also make it perfectly clear to Chief Buthelezi that they will provide no support at all for his proposals concerning separatism, which at best would delay the constitutional talks and at worst could create in South Africa the sort of tragedy now engulfing Yugoslavia?
    Mr. Lennox-Boyd: I wholly endorse the hon. Lady's words about Nelson Mandela's visit last week, which was interesting and remarkable to us all. With regard to the constitutional process in South Africa, the hon. Lady will be aware that negotiations reopened on 26 April—a week after Chris Hani's dreadful assassination. The negotiating council has now agreed that a date for the election should be set before June and that the election should be held before the end of April 1994. Substantial progress has been made. The constitutional process is, of course, a matter for and between the various parties in South Africa. That is all that I can say about that aspect of the matter.
    Mr. John Carlisle: While my hon. Friend is right to offer the South African Government support for their move towards multiracial democracy, may I ask him to urge on them some caution with regard to the pace of reform? Does he agree that until all parties—including the Inkatha Freedom party and, despite current circumstances, members of the Conservative party—are involved in the decision-making process and the discussions, any move towards an early general election would be fatal for South Africa?
    Mr. Lennox-Boyd: As I have already indicated, the negotiating council has tentatively agreed arrangements for setting a date for a general election in South Africa. Clearly it is for the negotiating council to proceed at such pace as it collectively judges would be wise in all the circumstances facing that country.
    Dr. John Cunningham: Was not Nelson Mandela's persistence in calling for peace and reconciliation quite remarkable, and should it not be applauded, especially in the light of the assassination of his colleague Chris Hani and the known assassination threats faced daily by other leading members of the African National Congress? Would it not be beneficial to all parties in South Africa to move quickly to the formation of a transitional executive council, thus allowing all-party supervision of the defence and police forces in South Africa? Would not that, in turn, help to batten down the violence—if not end it, at least in the beginning contain it—and thereby hasten the achievement of non-racial democracy?
    Mr. Lennox-Boyd: I am happy to endorse the hon. Gentleman's comments about Mr. Nelson Mandela, whose call for calm and measured reactions in the light of what must be dreadful provocation for so many people in South Africa is greatly to be applauded. The security situation in South Africa is primarily the responsibility of the South African Government, but it behoves all other people of influence to seek to restrain emotions which must be running high. As to the transitional executive council, I agree that its establishment will be beneficial. It will also enable the lifting of all sanctions to take place, as recommended by the ANC.

    EC Foreign Policy
    Mr. Knox: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next proposes to have discussions with his European Community partners concerning the development of common European Community foreign policies.
    Mr. Hurd: I meet our European Community partners regularly to discuss the strengthening of intergovernmental co-operation on foreign policy.
    Mr. Knox: Does my right hon. Friend agree that this country can exert much more influence in the world when we work in unison with our European Community partners than when we operate on our own? Does he further agree that the Maastricht treaty will greatly facilitate that process and enable this country to exert more influence in the world?
    Mr. Hurd: On a good many subjects, what my hon. Friend says is true. The principle on which we operate today, and which will be strengthened in the Maastricht treaty, is that where we can reach common positions we can take joint action. Where we cannot, or where specific national interests are to be pursued, individual member states must be free to do that.
    Mr. Ernie Ross: Before the Foreign Secretary meets his European partners, will he take time to study the important report in Al Wasat of an interview between President Hafiz Al-Assad of Syria and Patrick Seale? In that interview President Assad recognised publicly for the first time, so far as I can recall, that both Israelis and Palestinians have to live in Palestine, and that the Syrians are for full peace with full withdrawal. He also recognised the growing opinion in Israel for peace. Will the Foreign Secretary recommend to his European partners that they support the statements made by President Assad in that interview?
    Mr. Hurd: We have throughout given strong support to the discussions under the peace process. That includes discussions between Israel and Syria, and, of course, Israel and the Palestinians.
    Sir Jim Spicer: Does my right hon. Friend accept that while all our attention is naturally directed towards events in Yugoslavia, other wars and civil wars are raging in what was the Soviet Union? Will he give an assurance that there will always be time to discuss those dreadful events and killings, and in particular the awfulness of the war that is developing between Armenia and Azerbaijan?
    Mr. Hurd: Yes, indeed. It is the Conference on Security and Co-operation in Europe rather than the European Community which is attempting to provide a political framework for an agreement between Armenia and Azerbaijan over Nagorno-Karabakh, and we strongly support that process.
    Mr. Grocott: When the Foreign Secretary next meets his European counterparts, will he draw to their attention the important resolution of the European Parliament on 22 April, drawing attention to the tragic position in Angola where, because of the colonial legacy, Europe has a special responsibility? In particular, will he draw attention to the way in which the will of the international community is constantly being flouted by the UNITA
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    forces? Will he take note of the contents of that resolution, which draws attention to the crucial importance of isolating the forces of UNITA from support from outside, particularly from South Africa and Zaire, and of seeing that the United States recognises and supports the Angolan Government, who represent the democratic will of the Angolan people?
    Mr. Hurd: I am not sure about what the hon. Gentleman says about the colonial legacy—that was some time ago—but I believe that UNITA and Savimbi have lost, and deserved to lose, a good deal of international sympathy for failing to accept the results of the recent election in Angola. There is no alternative to discussion between the MPLA Government and UNITA, and it should be the task of all, particularly those who gave strong support to UNITA, to make sure that those discussions take place and succeed.

    Sweden
    Mr. Spring: To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the Swedish Foreign Minister to discuss Sweden's future relationship with the EC.
    Mr. Hurd: I met Mrs. Af Uglass on 26 April in Stockholm and the Prime Minister, Mr. Bildt, the following day. I confirmed our strong support for a successful conclusion to Sweden's negotiations now going on to join the Community.
    Mr. Spring: Can my right hon. Friend confirm that it is very much in Britain's interest that the membership of the European Community is enlarged and open to countries that are suitable for membership? Does he agree that the accession of Sweden, a country with which we have many links, will strengthen the EC's economic base and open up further opportunities to Britain in an expanding single market'?
    Mr. Hurd: Yes, indeed. We look forward warmly to the day when Sweden joins the Community. We want the negotiations with the four applicants—Sweden, Finland, Austria and Norway—to press ahead as soon as possible so that, preferably, they go through all the processes and become full members by 1995.
    Mr. Spearing: Does the Foreign Secretary agree that before any question of accession by Sweden to the EC, there is the matter of the European Economic Area, and a 550-page treaty, which is now under discussion? Since the Swiss have decided not to go ahead on that for the time being, can the Foreign Secretary tell us about the position of Sweden? Is it not a fact that accession to this treaty would mean considerable economic, commercial and legal obligations for Sweden? Have they been fully understood in Sweden, and would it have to have a referendum before acceding?
    Mr. Hurd: The arrangements that have been made between the European Free Trade Area countries since the result of the Swiss referendum on the EEA are freely entered into by Sweden and fully understood by it. So the process of EEA is going forward and, at the same time, negotiations are making progress between Sweden and the European Community on its full accession.
    Mr. Fabricant: Does my right hon. Friend agree with me that the rapid accession of Sweden and the other EFTA countries to the EC would result in a far more pragmatic and financially advantageous view of the expenditure within the EC?
    Mr. Hurd: I think that they would all be net contributors, if that is what my hon. Friend is hinting at. There are wider and more political reasons why we in this country—and, I believe, most of the Community now —would warmly welcome the arrival as full members of the Community of those four countries. They are all well qualified and they would all, as far as we are concerned, be warmly welcomed.

    United Nations Peace Operations
    Mr. Win Griffiths: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the role of the United Nations Organisation as a peacekeeper.
    Mr. Hurd: Article 1.1 of the charter of the United Nations states that the purpose of the United Nations is
    "to maintain international peace and security and to that end to take effective collective measures for the prevention and removal of threats to the peace."
    We fully support the United Nations and the Secretary-General in these endeavours.
    Mr. Griffiths: Will the Secretary of State admit that so far, unfortunately, the record of the United Nations has in no way lived up to what is contained in the charter? Will he accept that, while we are now seeing some improvement in the role of the United Nations, we need the following: first, a very rigorous regime of arms control to try to end the possibilities of the sort of wars that we are seeing all over the world; secondly, a permanent structure to react quickly to events such as those occurring in Yugoslavia, where, because everybody was at sixes and sevens, we have seen a tragedy unfolding before our eyes and have been virtually powerless to do very much that is effective about it?
    Mr. Hurd: We are all in favour, and have taken initiatives in making, more transparent and open the criteria for the sale of arms, particularly among the permanent five. However, I ask the hon. Gentleman to live in the real world in which arms, particularly small arms, are plentiful and cheap in almost every country.
    We are now seeing disorder within countries. It is not realistic to suppose that, even if the whole international community were united, for example, on what should be the future of Nagorno-Karabakh or the regime in Angola or Somalia, simply by forming a view from outside we will be able to impose solutions on the internal affairs of those countries. We can be more willing to try, not by putting in troops but by making diplomatic efforts to show people ways in which they can live together. However, I ask the hon. Gentleman not to arouse too many hopes in that respect.
    At the beginning of 1992 there were 10,000 United Nations peacekeeping troops; at the beginning of 1993 there were 60,000; and when the planned deployments in Mozambique and Somalia happen there will be 100,000 in 12 separate operations. That is the measure of the growth of this problem and of the efforts of the United Nations to deal with it.
    Sir Michael Marshall: Does my right hon. Friend agree that one of the most important ways of ensuring the peacekeeping process of the United Nations, particularly after a period of civil war, is through the organisation of free and fair elections? In that context, will my right hon. Friend take the opportunity to send good wishes to all those who will be involved in the process in Cambodia, including hon. Members and local government officials who, with other international representatives, will be leaving for Cambodia next week?
    Mr. Hurd: My hon. Friend is quite right. Cambodia is one example where the United Nations has, for the moment, brought most of the fighting to an end and set up a framework in which there can, and should be, relatively free elections later this month. The situation is fragile, however, and my hon. Friend is right that all those concerned need our help and good wishes.
    Rev. Martin Smyth: I welcome the Secretary of State's comment that the situation in Cambodia is fragile. Can he enlighten us as to how far the peacekeeping efforts of United Nations are impeded by the lack of finance from one of its largest participants? Does he accept that in Yugoslavia, where our troops are now changing over, humanitarian efforts were being hindered by those who were seeking to use the convoys bringing in aid for the purpose of supplying munitions? It would be worse if the United Nations were arming the participants there.
    Mr. Hurd: It is true that one of the handicaps that the Secretary-General has suffered and draws attention to in his "Agenda for Peace" is financial uncertainty. Unfortunately, both former super-powers have in the past contributed to that uncertainty. I hope that both are removing that uncertainty. That is certainly the intention of President Clinton, but I am not encouraged by the Russian veto in the Security Council yesterday on financing peacekeeping. I agree with the hon. Gentleman's second point: we want to continue the humanitarian effort while it is needed.

    Russia
    Mr. Peter Ainsworth: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the effect on United Kingdom policy of the result of the recent referendum in Russia.
    Mr. Douglas Hogg: We have warmly welcomed the outcome of last month's referendum in Russia. Our policy remains one of firm support for the continuation of economic and democratic reforms. This policy has now been endorsed by the Russian electorate.
    Mr. Ainsworth: Does my right hon. and learned Friend agree that the sheer scale of the support shown by the Russian people for Boris Yeltsin and the programme of reforms gives a tremendous boost to international confidence in the long-term future of Russia? Does he also agree that in the near term substantial aid will be necessary to help the difficult process of economic transformation? Will he therefore comment on the quantity and quality of Britain's aid to Russia?
    Mr. Hogg: My hon. Friend is right. He will know that last month my right hon. Friend the Foreign Secretary announced a doubling of United Kingdom direct bilateral

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    grant aid, together with a doubling of Export Credits Guarantee Department cover. Our total commitment to Russia is of the order of $1.7 billion. Referring to the quality of the aid, the United Kingdom's know-how fund is second to none as a mechanism for the delivery of technical know-how.
    Mr. Cryer: If the Minister welcomes a referendum in Russia to clarify the position, why does he not take the same view of a referendum in the United Kingdom on the Maastricht treaty? It would clarify the position, and involve the people of the United Kingdom in determining whether to go ahead with this wretched treaty or reject it. If the people of Russia can have a democratic vote, why not the people of the United Kingdom?
    Mr. Hogg: I have always known that the hon. Gentleman has a personality difficulty when it comes to judging things in relation to other things. He obviously equates the congress in Russia, which was elected under the Gorbachev regime, with this place. I do not, and I am sorry that he does.

    BBC World Service
    Mr. Bates: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the BBC World Service.
    Mr. Lennox-Boyd: The World Service is an institution of great influence and prestige throughout the world. The substantial real increase in resources that we have provided, and are providing again this financial year, has enabled it to improve audibility, expand output and enhance programme quality.
    Mr. Bates: I am grateful to my hon. Friend for that answer, and for reaffirming the Government's priority in maintaining the strength and position of the BBC World Service as the leading international broadcaster. Does my hon. Friend agree that in times of international conflict and uncertainty the need for an independent and unbiased news service around the world is greater than ever? Does he further agree that this can sometimes be best achieved by placing special emphasis on developing new language services so that the programmes broadcast become more widely accessible to the people whom they seek to serve?
    Mr. Lennox-Boyd: I am happy to agree with my hon. Friend about the leading role that the World Service plays in the world of international broadcasting and its tremendous achievements. It is due to Foreign and Commonwealth Office recognition of those achievements, which have been followed by substantial assistance and funding that the World Service has been able to do so well
    800
    in recent years. In the past three year funding period, for example, broadcasts were increased by more than 10 per cent. and two new languages in areas of tension—Ukrainian and Albanian—were introduced.
    Mr. George Robertson: Is the Minister aware that his views on the World Service, and those of the hon. Member for Langbaurgh (Mr. Bates), are shared throughout the House? The service is held in the highest esteem throughout the globe, not just in terms of the quality of its broadcasting but in terms of its reliability. It is widely regarded as the most reliable broadcasting service on the planet. Does the Minister recognise that there is genuine concern about the future funding of the World Service, given that it has been warned that it may well face substantial cuts in the Treasury spending blitz that is ahead of us? If it were to share in those cuts and its service were cut back, that would be not just a disgrace but hugely counterproductive to Britain's national interest.
    Mr. Lennox-Boyd: I am fully aware of the widespread acclaim for the World Service in all parts of the House and I emphasise that the funding increase for the World Service from the Foreign Office budget over the past 10 years or so has been 40 per cent. in real terms. This year, the increase has been £10 million, which is way above the rate of inflation. What has happened—this is what the hon. Gentleman is referring to—is that the Foreign Office has been in touch with the World Service and said that, depending on the outcome of the public expenditure survey, we shall have to have discussions and if the Foreign Office is unable to meet the aspirations of the World Service, its funding will be put on the same footing as the rest of the Foreign Office budget when it comes to reviewing expenditure.
    Sir Peter Tapsell: Does my right hon. Friend recall that, on a previous occasion when the Treasury required economies to be made in the foreign service budget, one of the economies made was to close down Spanish broadcasts to Latin America a few weeks before the Argentines invaded the Falkland Islands? Will he make absolutely certain that this immensely valuable institution, which does more for British influence and prestige throughout the world than probably any other activity of the Foreign Office, is protected from the next round of economy cuts?
    Mr. Lennox-Boyd: I am grateful to receive the message of my hon. Friend in the spirit of support for the World Service. I do not believe that there are any cuts in prospect in terms of languages from the World Service. My hon. Friend has referred to an earlier occasion when there were threats; it is since then that the World Service has expanded in such a tremendous way.

Swan Hunter
3.30 pm
Mr. Robin Cook by private notice): To ask the President of the Board of Trade and Secretary of State for Trade and Industry if he will make a statement on what help he will offer Tyneside in the wake of the loss of the naval contract by Swan Hunter.
The Minister for Industry (Mr. Tim Sainsbury): The Government deeply regret that Swan Hunter has been unable to secure orders, including that for the new helicopter carrier for the Ministry of Defence. We are well aware of the potential loss of jobs both at the yard and among suppliers. The company will need to take decisions in the light of the failure to win orders and these decisions are likely to involve early job losses.
In the event of substantial job losses, the Government are considering a number of measures to help the area. We would intend to designate a new enterprise zone in the area and will urgently examine possible sites. This would be subject to European Commission agreement. English Estates would implement an important £2.5 million industrial development at Walker Riverside in conjunction with the city council and Tyne and Wear development corporation. The Tyneside training and enterprise council and employment service locally would offer an enhanced range of labour market help to those affected by the closures.
In addition, I can confirm now, ahead of the results of the assisted area map review, that both Newcastle and south Tyneside travel-to-work areas will retain their development area status, subject to agreement with the European Commission. Availability of regional selective assistance will be important in attracting new investment and new jobs. We are putting into immediate effect the Tyneside TEC plan for dealing with the closure of Westoe colliery, which is designed to help the whole area and not just those leaving the colliery. A further £2 million will be available to Tyne and Wear development corporation from the additional £20 million recently made available for coal regeneration measures for increased provision of new industrial sites in the area.
The area already benefits from support from many regional and urban schemes. The Government will be examining urgently how priorities can be focused within these schemes to help the area. I have asked my Department's regional director in the north-east, with colleagues from the Departments of the Environment and Employment, to co-ordinate all those concerned locally with regional regeneration to advise on how they can target resources most effectively to have an early impact in attracting new employment.
We do not in any way underestimate the importance that shipbuilding and Swan Hunter in particular have had for Tyneside. I hope that all concerned will co-operate to build on the measures that I have announced today.
Mr. Cook: Will the Minister confirm that last November he was warned by the constituency Members that Swan Hunter would be at risk of closure if it lost the naval contract? Are we to understand from the measures that he has just announced that the Government have not a single proposal to try to keep open the last remaining shipbuilding yard on Tyneside? Does he appreciate that, if they intend to do anything to save the yard, the situation
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is now urgent, and that even as we discuss the matter the directors of the company are meeting the bankers? Surely the Government can announce something that they will do to continue shipbuilding at this yard, a yard which has already secured two export orders which could be lost if it were to close?
Does not the crisis at Swan Hunter provide a clear example of why we must plan ahead for conversion of defence industries that are losing defence orders?
Will the right hon. Gentleman confirm that Swan Hunter cannot get help from the European intervention fund to diversify because the Government agreed at the time of privatisation that British warship yards would be excluded? Will he return to Brussels and get that changed after today?
Will the right hon. Gentleman confirm that every part of the yard we are discussing is within the boundary of an urban development corporation which is appointed by the Government and accountable to the Government? What extra resources will it receive to cope with any extra need?
In the light of the right hon. Gentleman's statement about enterprise zones, will he give us an undertaking that, if Swan Hunter falls, the Government's own urban development corporation will use its planning powers to stop those high-tech facilities in the yard being demolished to make way for service industries, for warehousing or for supermarkets? Will it then try to find another operator to bring work to one of the most modern shipyards in Europe, with some of the most skilled people in Europe?
Already in the shipbuilding yards on both banks of the Tyne one in three men is out of work. If Swan Hunter closes, one in two could be on the dole. It is not just Tyneside, but the nation, that will have its eyes on the Government to see whether they can rise to the gravity of the crisis and match it now with help on the same scale as the blow they have just delivered to the local community.
Mr. Sainsbury: The hon. Member for Livingston (Mr. Cook) asked a number of questions. Underlying many of those questions appeared to be an attitude that belittled the achievements of enterprise zones and of urban development corportions. I wonder whether the hon. Gentleman is aware that the Tyne and Wear urban development corporation has already created 10,000 jobs. Is he not aware of the success of other enterprise zones in job creation? Is he suggesting that Tyneside should spurn those offers of help? That seemed to be underlying what he said.
The second thing that seemed to underlie the hon. Gentleman's questions was the suggestion that the yard should stay open regardless of the market for its products. If that is his attitude, I fear he must be the only person in the House who is not aware of the excess capacity in shipbuilding and, in particular, in warship building. I wonder why he does not recognise the advantage to that area of a transition from excessive dependence upon the old industries of coal, shipbuilding and steel to a more diversified economy, with vehicles, pharmaceuticals and electronics providing employment that will last and provide opportunities in the future.
Mr. Neville Trotter: My right hon. Friend must be well aware that the announcement that Swans has lost by a very large margin is a cruel blow for Tyneside. We welcome the steps taken today, but it is absolutely essential

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that the local initiative that will come from Tyneside, the local effort, be matched on a sustained basis by national Government. [Interruption.]
May we have a promise that every Government—[Interruption.]
Madam Speaker: Order. Hon. Members must desist.
Mr. Trotter: May we have a commitment that every Government Department and agency will have its resources harnessed to this task?
Will my right hon. Friend pay an early visit to Tyneside to hear of the problem for himself? Does he agree that we have on Tyneside a very valuable asset in the labour force at Swan Hunter, who are highly trained, very skilled, hard working and flexible? Is not that an attraction for new industry?
Mr. Sainsbury: I am happy to confirm what my hon. Friend said about the skill of the work force and, even more importantly, about the commitment of the people of Tyneside to build on the opportunities that they are given through the measures that I have announced and through the programmes that are already in place there. They have the opportunity to build a more diversified and prosperous industrial future for a region with a very great past in industries that, sadly, are now fading.
I am also happy to confirm to my hon. Friend that I shall make early arrangements to visit the region this month.
Mr. A. J. Beith: Does not the Minister realise that all the measures, many of which we have already, are not enough even to replace the mining jobs that we are losing in the north-east, let alone to replace the jobs of all the skilled shipyard workers who will be put out of work as a result of a devastating decision for Tyneside? Does not the Minister also realise that the most useful thing that he could do would be to tell the Secretary of State for Defence to bring forward orders for type 23 frigates now so that there would be some shipbuilding work for the yard?
As a Minister whose Department is responsible for monopoly policy, will the right hon. Gentleman investigate and ascertain whether the order that was placed was in any way subsidised by the profits from the Trident contract? If that were so, it would mean that a monopoly supplier was buying its way into another monopoly.
Mr. Sainsbury: I am assured that there is no question of underbidding. The price tendered by the successful bidder was broadly in line with the expectations of the Ministry of Defence. I hope that the right hon. Gentleman recognises that, if the order had gone the other way, it would have been very bad news for two other areas of the United Kingdom.
I find it rather surprising that the right hon. Gentleman, who is a member of a party that has on a number of occasions and in a number of documents called for more substantial and earlier reductions in defence expenditure, now seems to be calling on the Ministry of Defence to order ships for which it has no immediate requirement.
Mr. Peter Atkinson: I welcome the package of measures that my right hon. Friend has announced today, although I am bound to say that the House and my
804
constituents who work in the Swan Hunter yard would have preferred to celebrate today the placing of the order for ships with that yard. We await fuller details of the tender so that we can be satisfied that like was compared with like in awarding the contract.
Will my right hon. Friend join me in congratulating the work force and the management of Swan Hunter on their valiant efforts in the past months? They have done their utmost to secure the order—sadly, only to fall at the last fence.
Mr. Sainsbury: I am happy to join my hon. Friend in that and to recognise the skills and commitment of the work force. We all wish to see those skills and that work force find job opportunities, if not in that yard then elsewhere, and we wish them to build on what I have announced and on the schemes already in place.
The tender, of course, is a matter primarily for my right hon. and learned Friend the Secretary of State for Defence and my hon. Friend the Minister of State for Defence Procurement. I am assured that the tender was awarded on a like-for-like basis and that it was genuinely won with a substantial price difference by Vickers Shipbuilding and Engineering Ltd. and its partner Kvaerner.
Mr. Stephen Byers: Tyneside does not want ministerial day-trippers; it wants positive action from the Government. The sense of despair and disappointment felt yesterday on Tyneside as a result of the announcement will turn today to anger and a sense of betrayal as a result of the Minister's complacent statement. The Government stand condemned for doing nothing to help the thousands of workers who depend on Swan Hunter.
Is the Minister aware that there is a widely held view that the announcement to award the hull to the Clyde, which would mean thousands of Tyneside jobs being sacrificed, was rushed forward to yesterday so that the Chancellor of the Exchequer could take some good news to the Scottish Tory party conference which starts today in Edinburgh? Will the Government, even at this late stage, take positive steps to preserve and protect shipbuilding at Swan Hunter, or will they simply do nothing and stand to one side to witness the end of shipbuilding on the Tyne?
Mr. Sainsbury: I hope that, on reflection, the hon. Gentleman will realise that his suggestion is unworthy of him. The Labour Front Bench has been pressing for the decision on this order to be brought forward.
Mr. Michael Jopling: Does my right hon. Friend understand that all those with roots in the north of England warmly support the measures that he has announced today and those measures that the Government have already announced and implemented to help that part of the country? Does he also understand that, while there is quiet satisfaction and pleasure in and around Barrow, the order which has been placed on the basis of technical excellence and value for money will help that part of Cumbria where many of my constituents work? There are massive and continuing problems in Barrow as a result of the end of the cold war and the collapse of communism and the rundown in submarine building. My right hon. Friend will need to pay attention to the continuing problems in Barrow in the months ahead.
Mr. Sainsbury: I thank my right hon. Friend for his welcome—and, indeed, that of other hon. Members—for

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the measures that I have announced. They will bring further practical help and job creation opportunities to the region.
My right hon. Friend is right about what he said about Barrow. I am well aware of the difficulties there, both by reason of the peripherality of the area and the rundown of jobs in the Trident building programme. I know how welcome yesterday's announcement will be in Barrow and, indeed, on the Clyde.
Mr. Nicholas Brown: The Minister has just lectured the House on the recognition of achievement. Perhaps he will tell us where, in his announcement today, there is a recognition of the achievements of the directors and work force of Swan Hunter shipyard since privatisation in 1986. He supported that privatisation. How have the people of Tyneside been rewarded for all their work?
Many of the things that my constituents would like me to say to the Minister would not be allowed in the House, so I simply ask him a question that the whole of Tyneside wants to be asked: is it the Government's intention that Swan Hunter should remain in existence as a shipyard? If so, what orders will go into that yard? Orders will need to be committed by the end of the week or the yard will go into receivership.
Mr. Sainsbury: I hope that there is no hon. Member who does not recognise the difficulties, the regrets and, indeed, the sorrow and bitterness that may be felt because of the long history of shipbuilding on the Tyne, especially by Swan Hunter. We owe it to the work force and management of Swan Hunter to be practical and realistic. There is excess capacity in warship building. We all know the reasons why there is a cut in defence orders not simply in the United Kingdom but worldwide. We would not be helping that management or work force if we were to suggest that orders could be conjured out of nowhere. The measures that I have announced today will provide practical help to an area which has suffered a severe blow.
Mr. James Hill: I am sure that my right hon. Friend will agree that the House has heard many sad stories about yards that did not get defence orders. There was always a three or four-corner argument on who should get the latest frigate order, and so on. My firm of Vosper Thornycroft, in Southampton, which is privatised, has made great efforts. The opportunities that my right hon. Friend is showing today to this area could be something for the future because Vosper Thornycroft, after going worldwide to get orders and doing everything that it could to cut back its work force and ensure that it had a substantial order book, now valued at about £700 million, could be an example to Swan Hunter. I am sure that, with my right hon. Friend's help, this will not be a disaster story but something for the future.
Mr. Sainsbury: I certainly join my hon. Friend in congratulating Vosper's shipyard in his area on its success in building up a substantial export order book. It is another privatised yard that is expanding and taking on staff. As my hon. Friend recalled, it is inevitable that, when there are orders to be placed, the Ministry of Defence, on behalf of the taxpayer, should seek value for money. Seeking value for money inevitably means on occasion that there are losers of orders as well as winners. That is the inevitable result. It is obviously a matter of great regret
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for those who lose, but it is not realistic to suggest that one should simply place twice as many orders so that there are no losers.
Mr. David Clelland: Is the Minister aware that, far from the impression that he gave of an outdated industry, Swan Hunter is one of the most modern facilities in the world? Is he further aware that, during the term of office of the Government, companies such as Plessey and Marconi—companies at the forefront of technology—have also closed facilities at Tyneside? Having destroyed our mining industry, now destroyed our shipbuilding industry, decimated our manufacturing industry and undermined our local democracy, can he explain to the people of Tyneside, particularly in Tynemouth, why any of them should ever contemplate voting Tory again?
Mr. Sainsbury: The hon. Gentleman would do his constituents and British industry a better service if he recognised its achievements, as my hon. Friend the Member for Southampton, Test (Mr. Hill) did, in winning record export orders, record manufacturing output and unsurpassed increases in manufacturing productivity.
Mr. Christopher Gill: In view of the strategic implications of losing a shipyard, will my hon. Friend discuss with the Secretary of State for Defence what scope there might be within the Royal Navy for ordering ships of a lesser specification? I am thinking particularly of those ships which are badly needed to replace our amphibious warfare ships, which are essentially ships which transport rather than fight. It would be possible to design ships which would serve their purpose with the lower specification and would serve the purpose of creating orders which are badly needed in British shipyards.
Mr. Sainsbury: I know that my right hon. and learned Friend the Secretary of State for Defence and my hon. Friend the Minister of State for Defence Procurement will both have noted what my hon. Friend said. I refer him to what my hon. Friend the Member for Thanet, South (Mr. Aitken) said last week, but I can also confirm that the order that has been placed for the helicopter carrier is by no means for a ship that is gold-plated. It will be a practical vessel which will meet the requirements of the Navy for the task that it has been given.
Mr. Doug Henderson: Does the Minister understand that the great sense of anger among workers in the shipyard community and the whole of Newcastle is born out of a sense of betrayal? The Government have told workers that they believe in an industrial policy, yet it is clear that a decision has been made on defence procurement which does no more than set one industrial area against another, without regard to the regeneration of two industrial communities in the north.
Is it not time that there was much closer liaison between the Ministry of Defence and the Department of Trade and Industry? Is it not also time that a more long-term approach was taken to defence procurement? Does the Minister accept that an urban development corporation is wholly inadequate to deal with a situation in which 3,000 direct jobs and 6,000 or 7,000 indirect jobs are at risk? Does he not believe, as his boss used to believe, in the need for a strategic economic development body on Tyneside?
Mr. Sainsbury: I can assure the hon. Gentleman that there is the closest possible co-operation between my Department and the Ministry of Defence. The wider issues to which he referred were fully taken into account. But surely he can recognise that we were ordering not two helicopter carriers but one, and that one yard or the other, sadly, had to be the loser.
As I said earlier, I am sure that we can all appreciate the feelings of those on the losing side, but we must be realistic. That is why I have announced a package of measures that can be taken and are being taken by the Government which will genuinely help to attract employment and provide better training and relocation opportunities to the work force of Swan Hunter.
Mr. Roger Knapman: Would the order have been available to either yard if we had initiated the cuts in the defence budget advocated by either of the Opposition parties?
Mr. Sainsbury: My hon. Friend makes, clearly and simply, an effective point. If the Opposition parties' proposals on defence expenditure had been followed, there would have been no order for either yard.
Mr. John Evans: Does the Minister accept that his announcement today, which means the virtual closure of Swan Hunter, is a sad occasion for someone like me who served his apprenticeship as a marine fitter in that shipyard? Is he aware that, when I entered the House in March 1974 after handing in my notice at the Hawthorn Leslie shipyard, there were six yards on Tyneside building ships—the Walker naval yard, the Swan Neptune yard, Hawthorn Leslie, Clelands of Wallsend and Redheads of South Shields, as well as Swans. All the yards that I have named have closed during the past few years. The Tory Government have stood back and done nothing, while thousands of skilled shipyard workers have been thrown on the dole queue.
Is it not time that the Minister accepted that it is in Britain's national interest to retain shipbuilding on Tyneside where some of the finest ships that have ever sailed the seven seas have been built? Is not it incumbent upon him and his Government to provide work and orders to maintain shipbuilding on Tyneside?
Mr. Sainsbury: We all appreciate that the failure to win the order was a bitter blow not just to persons such as the hon. Gentlemen who are involved with that shipbuilding area but to those working at the yard and those who have worked at the yard and their families. But it is surely impractical and unrealistic to suggest that we should conjure up orders for warships which the Ministry of Defence does not want in order to keep warship building going when there is excess capacity for warship building.
Is not the hon. Gentleman aware of the scale of the reductions in shipbuilding, both merchant and warship, not just in Britain but throughout Europe and the rest of the world? There is no point in trying to prop up a yard to build ships for which there are no orders. There is point in doing what the Government have announced today, which is to provide better opportunities for attracting employment and training for the work force.
Mr. Keith Mans: Does my right hon. Friend agree that it is sad for Tynesiders that the decision has gone against them, but the fact remains that had the decision gone the other way the job implications on
808
Clydeside, and particularly in Barrow, were likely to be even worse because of the geographical nature of that area? Does he further agree that the way in which the tender was set out and won by VSEL clearly demonstrates the good value for money that the taxpayer is getting from this method of providing warships for the Royal Navy?
Mr. Sainsbury: My hon. Friend makes an important point about value for money for our defence expenditure. I fear that he is right to draw attention to the fact that, if my hon. Friend the Minister of State for Defence Procurement had awarded the contract to Swan Hunter, I might have been hearing much the same comments that I have heard today but from a different group of Members. That brings us back to the fact that there is not a need for two ships, but two yards were bidding and one had to be a loser.
Mr. Ronnie Campbell: Is the Minister aware that in the past three or four months 5,000 jobs have gone in the mining industry, that after last night's decision on fishing thousands of fishing jobs will go, and that thousands upon thousands of jobs will be lost on the closure of Swan Hunter? When will the Minister realise that he is not setting up enterprises in the north-east but closing them down? Where shall we find enterprises that will put 10,000 people back to work? When will the Minister get off his backside and get something done in the north-east?
Mr. Sainsbury: I hope that the hon. Gentleman will pay tribute to the excellent work that has been done by all those—
Mr. Campbell: What about the miners, the fishermen and the shipyard workers?
Mr. Sainsbury: If the hon. Gentleman will pause for a moment, I was saying that I hope that he will recognise the excellent work that has been done by all those people on Tyneside in the local authorities, by business men in the chamber of commerce, and by the training and enterprise council. In the urban development corporation, 10,000 jobs have been created, jobs have been created in the enterprise agencies and we have achieved success in the measures that we have taken in Sunderland. Let us look forward and try to build on the industries of the future, not try to prop up the past.
Mr. Bill Olner: I have never heard a Minister so complacent in all my time in the House. I am sure that the House will regret the fact that a great shipbuilding industry is going, not temporarily but for good, and when there is a dire need for the British merchant fleet to be modernised and replaced. When we lose the capacity for building ships at Swan Hunter on Tyneside, any orders will go to foreign countries, to our competitors.
The Minister's talk about enterprise zones is slightly flawed and hollow. Swan Hunter has the ability to make good quality ships that our merchant fleet could use, and we should be using it.
Mr. Sainsbury: Again, I have to say that, if we are to provide practical help, we must recognise that there is a great excess capacity of shipbuilding in the world, not just warship building but merchant ship building. To be realistic, it was most unlikely that Swan Hunter would be able to win merchant ship orders against the competition

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that is around, even were there such orders waiting to be placed. I suspect that the hon. Gentleman knows that there are no such orders. That is why I emphasise again that the measures that we have announced are devoted to attracting new industries and to providing premises for those new industries, which will create employment in the vehicle, pharmaceutical and electronics industries, for which there is a promising future and where great success has already been achieved on Tyneside.

Scottish Water Services
4 pm
Mr. Andrew Welsh: On a point of order, Madam Speaker. May I draw to your attention Government press briefings and press reports of a major policy statement about the privatisation of Scottish water services that is being made in Edinburgh today? Will you repeat your view that Government policy statements should be made in this House, especially when they concern services that affect every family in Scotland and more that 6,000 jobs?
Madam Speaker: If a statement of the nature of which the hon. Gentleman speaks has been made, of course I deprecate it. I am always anxious that information should be made available to this House in the first instance. As the hon. Gentleman says, it seems at present to be speculation. He should really have the facts before he raises such a point of order with me.
Mr. Welsh: Further to that point of order, Madam Speaker. I have the press release here, which is headed.
"Tories' Water U-turn—Sell-off Plan Dumped."
It quotes a speech by a Government—
Madam Speaker: Order. I am not arguing with the hon. Gentleman, but what he is holding up appears to be a press report, not a press release.

Voluntary Personal Security Cards
4.1 pm
Mr. David Amess: I beg to move,
That leave be given to bring in a Bill to provide for the introduction of a system of voluntary personal security cards; and for connected purposes.
Every Member of Parliament already enjoys the protection of his own personal security card. I hope that that principle can be extended throughout the country. There is much talk at the moment in all quarters about the fact that the Government should listen to what people are saying. I have no doubt in my mind that the Government are doing that already, but I do not believe that it is either good or sensible government automatically to develop policy, regardless of whether or not there is a strong belief in what people are saying. After all, Governments are elected on the basis of legislative proposals and a set of deeply held beliefs. I hope that on this occasion the Government will listen carefully to what both I and other law-abiding citizens are saying on this issue. If the Government agree, I very much hope that they will support the scheme.
One of the planks of the party to which I have always belonged is free choice, but that has never meant the freedom to choose which law to obey and which law to break. Both I, and many other citizens of this country, are appalled by the general level of criminality. The laws that we make in this place must be obeyed, but at the moment it seems to me, and to many other people, that the civil liberties of law-abiding citizens are fast being eroded. Even now, over 90 per cent. of the population are law-abiding. The country is therefore crying out for action to halt the millions of crimes that are being committed, which are costing the country an enormous amount of money.
Nothing, and no one, forces a person to break the law. It is very much a matter of individual responsibility or, should I say, lack of responsibility. That is why I believe that people should be allowed voluntarily to obtain a personal security card.
The Bill accepts in essence the recommendation that the Home Affairs Select Committee made in July 1990, when such a voluntary scheme was recommended to the Home Office. I am well aware of the arguments that are advanced against a compulsory scheme and I understand entirely the outrage that there would be if a law was passed, for instance, to make it an offence not to carry such a card. However, many parts of our lives in modern society require us to prove identity, so what could be more attractive to citizens than for them to take full advantage of the technology that is now available and to obtain voluntarily a personal security card?
The card could be used, for instance, to satisfy shopkeepers about identity when cashing cheques, or by landlords when querying drinkers' ages. It could be used for banking purposes or for recording information about organ donor status. It could also be used as a voluntary identification document to facilitate travel within the European Community and could become a model for a Community-wide card.
I have no doubt that a voluntary personal security card would help to combat fraud, illegal immigration and terrorism. The police would not have the powers to
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demand production of the card, and the concerns that have been expressed about oppressive demands on minorities would not, I believe, arise. Nevertheless, when people are stopped by enforcement authorities for various reasons, they might see the advantage of holding a card to prove their identity.
Proper safeguards would be necessary to ensure data privacy and the Data Protection Registrar, the many other agencies and the associated authorities would need to be involved in the process. Citizens would have the right to have independent access to data contained on their cards and to challenge its accuracy.
I have complete confidence that many companies throughout the United Kingdom have the skill and sufficient technological imagination to produce a machine-readable security card at a very reasonable cost and I am sure that people would not mind purchasing them for a small price. My goodness, the general public pay enough money through the public purse to try to control the level of criminality.
Like the Home Affairs Select Committee, I believe that personal security cards, which use modern technology to incorporate information about the holder, could be a positive enhancement of liberty. Nothing could be more invasive than the exposure of someone's private credit card transactions, yet it has never been suggested on civil liberty grounds that we should abolish credit cards as a result of the exposure of people's lending limits.
British citizens are already well used to carrying cards and to identifying themselves before cashing cheques or borrowing library books, let alone crossing national boundaries. One card—a smart card—which allowed all that to be done and which contained data on the holder's medical records in case of emergency and for banking purposes would be of enormous benefit.
I believe that now is precisely the time to react positively to the widespread and deeply felt concern among the general public about the level of criminality. The voluntary scheme that I am proposing has many benefits for the individual and for the state. I am not aware of any objection to the principles and laws behind registering someone's birth or death. Why, then, can we not allow the period between those two points to be clearly identified? I hope that the Bill will start the necessary process towards the implementation of a scheme that could be another weapon in the serious war against crime in which we all, as citizens, have a part to play.
Question put and agreed to.
Bill ordered to be brought in by Mr. David Amess, Mr. Jacques Arnold, Mr. David Ashby, Mr. Roy Beggs, Mr. James Hill, Lady Olga Maitland, Dame Jill Knight, Sir John Hunt, Dame Elaine Kellett-Bowman, Mrs. Angela Knight, Mr. Ralph Howell and Sir John Wheeler.

VOLUNTARY PERSONAL SECURITY CARDS
Mr. David Amess accordingly presented a Bill to provide for the introduction of a system of voluntary personal security cards; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 2 July, and to be printed. [Bill 196.]
Orders of the Day

  Finance (No. 2) Bill
  Considered in Committee [Progress, 11 May]
  [MR. MICHAEL MORRIS in the Chair]

  Finance (No. 2) Bill
    Clause 52

      PERSONAL AND MARRIED COUPLE'S ALLOWANCES
      4.11 pm
      Mr. Nicholas Brown: I beg to move amendment No. 48, in clause 52, page 30, line 34, leave out 'sections 257 and' and insert 'Section'.
      The Chairman of Ways and Means (Mr. Michael Morris): With this, it will be convenient also to discuss the following amendments:
      No. 49, in page 30, line 34, leave out 'personal and'.
      No. 50, in page 30, line 35, leave out 'allowances' and insert 'allowance'.
      No. 51, in page 30, line 35, leave out 'amounts' and insert 'amount'.
      No. 12, in page 30, line 37, after '1993–94', insert
      'in respect of the married couple's allowance only'.
      No. 52, in page 30, line 38, after '1993–94', insert
      'so far as relates to section 257A of that Act.'.
      No. 13, in page 30, line 38, at end add
      'in respect of the married couple's allowance only'.
      Mr. Brown: The amendments tabled by the Labour party would have the same effect as those tabled by the Liberal Democrats—although I see that no Liberal Democrat is here to speak to those, so it would probably be for the convenience of the Committee if I spoke to their amendments as well as ours. Fortunately, the amendments have been grouped together.
      Mr. Tim Smith: Where are they?
      Mr. Brown: The hon. Member for Beaconsfield (Mr. Smith), who I understand will not be with us in the Standing Committee—that is a source of enormous regret to the Opposition—asks me to explain where the representative of the Liberal Democrats is. As the right hon. Member for Berwick-upon-Tweed (Mr. Beith) has just entered the Chamber, I can say, "There he is," or, "He is there, he is there," as the Prime Minister would point out in that inimitable style that he has made his own.
      The other inimitable element of style that the Prime Minister has made his own is, of course, concealed tax increases, which we are discussing today. In case anybody has overlooked it—I am sure that no one in the Chamber has—I must explain that what is before the House is a massive increase, but a back-door increase, in direct taxation. [Interruption.] The Financial Secretary to the Treasury giggles at that idea. I do not know whether he giggles nervously or out of sheer physical exhaustion; after all, he has had to deal with the Maastricht legislation as well as with the Finance (No. 2) Bill.
      I should be a great deal more sympathetic to the Government's concealed tax increases if some of them were being spent on procuring the landing platform helicopter vessel from Swan Hunter. I understand that the Treasury is taking the credit for the fact that the order has
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      gone to Barrow-in-Furness rather than to Swan Hunter. If that is an opening shot in the negotiations, it is not a worthy one.
      The tax increases before us are of substantial significance. The changes that the Budget invites us to make in personal allowances are designed, as the hon. Member for Dover (Mr. Shaw) will be well aware, to bring in an extra £2.5 billion for the Exchequer in 1994–95 and an extra £2.7 billion in the following year. Those are substantial sums.
      That Tory trick has been tried before. In 1981, the then Chancellor froze all the allowances and gained an extra £2 billion. What I think will anger the electorate—last week's election results show the extent of public anger with the Conservative party—is not just the breaking of pre-election pledges about tax increases but also the sneaky way in which the Chancellor has gone about the increases. It is clear that Treasury files have been scoured for tried and tested ways of raising taxes that at least the Chancellor hopes the taxpayers will not notice. Clearly, however, they have noticed.
      Let us take the obvious example. Although an increase of a penny in the pound in income tax would have been more progressive than a I per cent. increase in employees' national insurance contributions, the Chancellor chose the latter. This is not because such a move provides more help for the poor—obviously it does not—but because the Chancellor clearly believes that it does not look so much like a tax increase.
      Mr. Tim Smith: Will the hon. Gentleman give way?
      Mr. Brown: When I finish this point, I shall of course give way to the hon. Gentleman, who is a firm favourite of mine and of other Labour Front-Bench Treasury spokespersons.
      Exactly the same sort of thinking as that to which I have just referred applies to the extension of valued added tax to domestic fuel and charities. It is pretty clear that the electorate have seen through these devices and are even more angered at the attempted deceit than at the tax increases themselves. What the Treasury team has given us are the methods of Arthur Daley, used by those who clearly regard Alan B'Stard as a role model.
      I give way to the hon. Member for Beaconsfield (Mr. Smith), without the obvious implication.
      Mr. Smith: I am sure the hon. Gentleman knows that the principal reason for increasing national insurance contributions is that the national insurance fund is now in substantial deficit. Indeed, it will still be in substantial deficit after the increase. I imagine that the hon. Gentleman supports the contributory principle on which it is based. Contributions must be increased when outward payments are rising.
      Mr. Brown: It would have been more helpful if the hon. Gentleman had reminded us which party had scrapped the Treasury's contribution to the national insurance fund. If his case is based on hypothecation, why, a few years ago, did not the Government think that that was a very strong argument? The Standing Committee will miss the hon. Gentleman, as he brings to the arguments a quality that one does not necessarily find in all his hon. Colleagues. In making that comment, I do not intend to cast aspersions.
      I should like to move on to the real topic of this debate— not just tax rises, but sneaky tax rises. Taken together,

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      the Government's changes in allowances and the change to the lower rate band, which, in fairness, has also to be considered, will result in a net gain to the Exchequer of £2.7 billion by 1995–96. Of course this is significant. We should discuss the lower rate band as a reform, as a means of giving back to taxpayers more of their own money, alongside the freezing of the personal allowances, which is a means of taking from taxpayers more of their own money.
      Let me state the brutal arithmetic. In 1995–96, the Chancellor will gain about £96 million from freezing all the personal tax thresholds, and another £1,170 million through further restriction of the married couple's allowance. On the last point, hon. Members will recall how thoroughly the Labour party was denounced during the 1987 general election campaign for proposing to do something similar. The present Prime Minister denounced our proposals, and then adopted them. To offset the substantial inflows to the Exchequer that I have just described, it is right to consider the cost of about £850 million to which it is said the lower rate band will give rise in the same financial year. That money goes back to the taxpayer.
      However, the changes to mortgage tax relief gain an extra £870 million for the Exchequer. Here again, the Chancellor probably hopes that people will not notice or will not mind so much, as mortgage interest rates have come down following his spectacular policy of leaving the ERM and reducing interest rates. However, long-term interest rates are rising, and are certainly higher than short-term rates. We all know what that probably means for the future, although I am not sure that I agree with the Chancellor that letters to him urging rises in interest rates are a lead indicator.
      Mr. David Shaw: As one of the more sensible members of his party, does not the hon. Gentleman think that it is sensible for the Government to raise revenue to reduce a deficit which has been caused by a recession, not just in the United Kingdom, but worldwide? As he has raised the issue of the long-term rate of interest, surely he recognises that, by reducing the deficit, we will secure a better future, with a reduced long-term rate of interest. Does he not feel, in the national interest, that raising additional revenue in that way is good?
      Mr. Brown: The hon. Gentleman certainly knows how to launch a wounding attack. Being described as one of the more sensible members of the Opposition Front Bench by the hon. Gentleman is designed to do me enormous damage on Tyneside, or at least among those who follow the debates in Committee on the Finance Bill.
      The hon. Gentleman has obviously been following my speeches, including my reply to the Second Reading debate and my earlier speech on economic affairs, when I drew attention to the deficit and to the dangers inherent in it. The deficit is a problem. It would be a problem for us in government, as it is for the Government, but let us not forget how it came about. It was the Government who said before the general election that it was safe to reduce taxes and who say that recovery is happening, but yet have had to reduce, rather than increase, their growth forecasts.
      Above all, it was the Government who in 1988 said that it was right to cut the top rate of income tax. The Labour
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      party voted against that, after a huge fight about it during the passage of the legislation that year. I think that the hon. Gentleman served on the Standing Committee, so he will recall the events with some affection. It would be better if he showed sorrow and repentance, although those emotions and characteristics are not normally associated with him.
      Moving to the Chancellor's tax hike, obviously he thinks that he can slip through this substantial tax increase —clearly that is what it is—without people noticing or objecting. He has allied to the changes on mortgage tax relief changes to car tax allowances, which will bring in an extra £370 million in 1995–96, and changes to the tax treatment of relocation expenses, which we will examine in detail in Committee, which will bring in an extra £206 million, not an insignificant amount.
      When we add the gains from freezing all the tax thresholds and eroding personal allowances, and deduct the much smaller cost of the lower rate band, we arrive at a net gain to the Exchequer for the financial year 1995–96 of £2.7 billion. Expressed as a proportion of all revenues for the Government, that is an increase of 4 per cent. It is significant because of the way it is constructed. Particularly seriously for the Opposition, it is significant because it is also regressive.
      The very poorest are not affected. One fifth of all adults do not pay income tax, even at the 20 per cent. rate, because they are too poor. They way to target help on the poorest is not through the tax system but through the social security system. However, I suspect that the Chancellor and the Chief Secretary were even less receptive to that point than usual when they came to construct this year's Budget. Of course, on past form it is not a point that one would expect the Secretary of State for Social Security to have raised or pressed with them.
      The Institute for Fiscal Studies, in its green budget for this year, draws attention to the gains and losses from restricting allowances and from expanding the reduced rate band. For its calculation, it used a figure of £1,000 rather than the Chancellor's £500—the broad flow gives a similar distributional effect. The institute's work shows that the very poorest are not affected, because they are too poor to be affected by any change in the construction of the tax allowance system. The next poorest—those in the third, fourth and fifth deciles, who have below ordinary or medium means—are adversely affected by the change. People in the sixth, seventh, eighth and ninth gain slightly from the change, and the wealthiest 10 per cent. are also slightly adversely affected because they come into a higher rate band.
      We are concerned, of course, about the regressive effect of the change—particularly the way in which it will impact upon those who are not the poorest in our society, but next to them. They are typically persons in work but earning £100 a week or less. The freezing of allowances and the expanding of the lower rate must cumulatively have a regressive effect.
      Single people with incomes of £3,535 up to a level of £5,535 are £18 worse off because of the changes, but everyone with an income of less than £5,895 must be worse off with the lower rate band than they would have been with the indexation of personal allowances.
      Because of this, the parliamentary Labour party has tabled an amendment whose intention is to restore allowances. By this means, we wish to help those in our society who are on poor wages. We object very strongly to

      817
      the dishonesty of the construction of the Government's tax policies. We also object very strongly to the use of the lower rate band and the freezing of allowances to make changes which are demonstrably regressive.
      Mr. Tim Smith: It is a matter of considerable regret to me that I shall not be serving on the Finance Bill Standing Committee and shall not have the opportunity of hearing the entertaining words of the hon. Member for Newcastle upon Tyne, East (Mr. Brown).
      It is worth recalling the background to any debate on the indexation of personal allowances, especially as the hon. Member for Birmingham, Perry Barr (Mr. Rooker) is present in the Chamber. Hon. Members will recall that in the 1970s there was no obligation on the Government of the day to index personal allowances. When inflation reached 25 per cent., in 1975, there was pressure, not only from the Opposition of the day but also from the hon. Member for Perry Barr and his colleague who is now the hon. Member for Preston (Mrs. Wise), to change the law.
      This was successful, and that change has been one of the most important and radical changes to tax law in the last 20 years. It is now incumbent on the House, if it does not want to index, to make a positive decision in that sense. The change was more important in those days, the late 1970s, when inflation was running at an average of about 15 per cent. per annum, than it is today. None the less, it is important even today.
      A decision not to index these allowances should not be taken lightly. I would be the first to recognise that, if one does not index allowances, one is increasing the tax burden on those people on the lowest incomes. That was precisely the concern of the hon. Member for Perry Barr when he pursued this issue so assiduously, and ultimately so successfully, in the late 1970s. I am very glad that at that time the Conservative Opposition supported him in that endeavour, because it was a very important change.
      The Financial Secretary to the Treasury (Mr. Stephen Dorrell): I agree with what my hon. Friend is saying, and he is making an important point. I wonder whether he is aware of the statistical background against which this argument is taking place. Over the five years between 1974 and 1979, the Labour party cut the real value of the single person's allowance by 21 per cent. In the period since we have been in office, including this year's proposals, the single person's allowance has risen by 25 per cent. in real terms.
      Mr. Smith: I am grateful to my hon. Friend for reminding the Committee of the background to the decision, but I was not surprised at what he had to say.
      The concern of hon. Members at that time was not only that there had been substantial increases in tax rates in the Budget of March 1974—when Denis Healey had increased the standard rate of income tax from 30 per cent. to 33 per cent.—and in the following year's Budget of March 1975, when the standard rate was increased again from 33 per cent. to 35 per cent. In addition, we had 25 per cent. inflation and no indexation of tax allowances. As a result, not only was there a massive increase in the tax burden for every income tax payer, but his bore down particularly heavily on people on low incomes. That was the concern of the hon. Member for Perry Barr. By that time, much of the damage had been done, because changes were not made until the Finance Act 1977.
      Mr. Jeff Rooker: It was 14 June 1977.
      4.30 pm
      Mr. Smith: It was 14 June, 1977. The hon. Gentleman has that date etched on his memory—rather as I do 28 April 1977 when, partly as a consequence of the huge changes in taxation, I was elected to the House for the first time. I remember the miners of Ashfield showing me their pay slips and telling me of the massive increase in the tax burden they had suffered under Denis Healey, the most unpopular Chancellor ever in Britain. We will never again have such an unpopular Chancellor because of such a massive increase in the tax burden.
      Mr. Rooker: Will the hon. Gentleman give us a forecast of when he thinks the tax burden will once again be reduced to the level that it was left by Denis Healey?
      Mr. Smith: At that time, people were concerned about direct taxation. Funnily enough, and it is a rather strange thing, most people have a good idea how much tax they pay—for example, in local taxation. My post suggests that people have a pretty good idea of how much council tax they pay. It is a tax with a high profile, as it should be. So is income tax. People get a pay slip every week and they can see how much income tax and national insurance is being deducted. However, if the average person in a pub was asked how much tax he had just paid on a round of drinks, fortunately, he would probably have no idea.
      Mr. Alan Milburn: Fortunately.
      Mr. Smith: It is extremely fortunate, and it is true for all Governments.
      There is no doubt that some ways of raising tax are less painful than others, simply because they have a lower profile. Some taxes have the advantage of being buoyant, some do not. There are many different considerations when one is deciding on the most sensible tax structure, but all those factors need to be taken into account.
      At that time, people were concerned about direct taxation, and they are still concerned. They are concerned principally, but not exclusively, about tax rates, but they are also concerned about tax allowances and the point at which their income starts to be taxed. The minimum amount that one can earn before one has to pay tax is an important question, and we are considering it this afternoon. It is not a decision to be taken lightly to decline to increase the tax thresholds. One needs to give that serious consideration, and it is precisely what we are doing in the debate.
      The hon. Member for Newcastle upon Tyne, East referred to the 1981 Budget. I am probably right in saying that it was the last occasion on which such a decision was taken. That may not be so, but it certainly involved a large increase in taxation. He referred to a figure of £2 billion, and I believe that was the figure by which taxes were increased in 1981.
      Although the circumstances were not the same in 1981, they were similar in some ways. There is no doubt that the Budget in 1981 was extremely unpopular—of course it was; no one likes having their taxes increased, it is as simple as that—but it was also a very courageous Budget, which established the foundations for economic recovery throughout the 1980s, because it tackled the problem of the public sector borrowing requirement. The Chancellor,

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      Lord Howe—Sir Geoffrey Howe, as he then was—made a clear commitment to sound finances on the part of the Conservative Government.
      We had to deal with the difficult problem of the PSBR, and my right hon. Friend the Chancellor has done the same this year. This, too, is not a popular Budget, and we do not have to look far to see why. If we look at page 6 of the Red Book, we find that taxes are to rise by nearly £500 million in the current financial year, by more than £6.5 billion next year and by more than £10 billion the year after. Of course such measures are never likely to be popular.
      Mr. Nicholas Brown: It would help my understanding of these matters if the hon. Gentleman could explain why —if the Government were as committed as he said to sound finances in 1981—the situation has since deteriorated to such an extent that it is necessary to have tax rises to reaffirm the same commitment that was given then? What has happened over the last 10, 11 or 12 years? Why have matters deteriorated in such a way that we need to hear the same speech?
      Mr. Smith: I do not want to leap about like a grasshopper in what is a carefully prepared and thought out discourse. I will come to why we now face such a large PSBR, to which the hon. Gentleman referred in his speech.
      The decision not to index personal allowances must be seen in the broader context of the important need to raise revenue to tackle the PSBR. The point that I was making is that Sir Geoffrey Howe in his 1981 budget did exactly that. It was extremely unpopular at the time, but it established a basis for economic recovery throughout the 1980s. It will not be long before we think the same about the 1993 Budget.
      Mr. David Shaw: My hon. Friend says that this is not a popular Budget. Will he consider that very carefully? It has been popular with overseas holders of sterling, who have seen that the pound is worth supporting and that the Government have been running the finances well; it has been popular with overseas purchasers of gilts; the Government's borrowing requirement has been well met by support from overseas purchasers; it has been popular with business men, who feel that it is the basis on which recovery can be built; it is clearly popular with overseas investors, who still intend, as far as one can see, to locate their businesses here; it is clearly popular with the people who can help us create jobs in this country. Perhaps my hon. Friend will consider that it is a popular Budget with all the people who count, but what we must do is explain it to the people better—
      The Chairman: Order. The hon. Gentleman is not being popular with the Chair. We are supposed to be discussing personal and married couples' allowances.
      Mr. Shaw: I understand your point, Mr. Morris, but if I can make the key point—
      The Chairman: Order. No.
      Mr. Smith: I have to say that I was taking a rather narrow view of popularity: I was referring to the voters in my constituency. I accept what my hon. Friend says—he makes an important point—because, in the long run the Budget did appeal to the people he is talking about. They
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      too recognise that the decision not to increase the personal allowances was not an easy decision to take. It was a difficult decision, but the right decision in the circumstances. In the long run, it will have very great benefits. There are two different contexts.
      Mr. Clive Betts: The hon. Member is comparing the 1993 and 1981 Budgets, and he is saying that the latter laid the foundations for what he seems to think was a recovery in the 1980s, and that the former will do the same for the 1990s. But surely in 1981 it was unnecessary for the Government to freeze the uprating of personal allowances in line with inflation. Why then is it necessary in 1993, given that he has drawn the comparison between the two Budgets?
      Mr. Smith: I think that I am right in saying that the Government did exactly that in 1981. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) also confirmed that that was the case. That is why I was drawing a parallel with 1981. I was saying that on both occasions difficult decisions had to be made in order to provide a sound basis for economic recovery.
      I want briefly to deal with a point raised by the hon. Member for Newcastle upon Tyne, East. He asked why the Government did not increase the standard rate of income tax, rather than, for example, increasing national insurance contributions. It is an important point that needs to be addressed. I suggested to him that it was because the national insurance fund is a separate fund. Some people tend to trivialise the matter and say that it is of no consequence, but I attach importance to this and to the contributory principle, for many reasons that it would be wrong to go into in the present debate. I accept what the hon. Member says about the Treasury supplement. I would like to see us get back to a national insurance fund which is properly funded.
      What I wanted to say about the decision not to index the tax allowances was that it needed to be looked at in two contexts. The first is that of increasing taxes overall. That is what will happen. I have already quoted the figures to the Committee. It is one of a number of different measures, some of which could be described as more progressive than others. We could have some debate about which taxpayers will be hit hardest by this. I think that the figures that the hon. Member for Newcastle upon Tyne, East quoted earlier, from the Institute for Fiscal Studies, were prepared before the Budget. At least, it sounded like it to me, because he referred to an increase in the 20 per cent. band of £1,000 whereas, as I understand it, the 20 per cent. band will be increased by only £500.
      Mr. Nicholas Brown: That is what I said.
      Mr. Smith: Yes, the hon. Gentleman made that point, but I was suggesting that, as the figures from which he was quoting referred to £1,000, they must have been prepared before the Budget, or, if they were prepared after the Budget, they must have been prepared by someone who had not read the Budget properly.
      Mr. Brown rose—
      Mr. Smith: Whichever it was, they were not very helpful figures, because they did not refer to what had actually happened.
      Mr. Brown: The hon. Gentleman knows perfectly well that I said that I was quoting from the IFS's green budget,

      821
      which was prepared in advance of the Budget. It is a document with which he is perfectly familiar. The graph on the distributional effect was prepared on the basis of £1,000, and I acknowledged that the band had been expanded by only £500. But it does not affect the broad distributional effect, the fact that the poorest neither gain nor lose because they do not pay tax, the next poorest lose and the people who are slightly better off may gain a little, but not a lot.
      Mr. Smith rose—
      Mr. Dorrell: My hon. Friend might like also to ruminate on the fact that, although the hon. Member for Newcastle upon Tyne, East quoted from an IFS report on what might happen on the basis of its green budget, he very noticeably did not quote from the IFS analysis of what will happen as a consequence of the Government's actual Budget. It has analysed the distributional effect of the Budget, and the evidence that it has produced shows almost precisely the same tax take all the way up the income scale. Decile by decile, the effect of the Budget is the same, according to the IFS.
      Mr. Smith: I am very grateful to my hon. Friend for confirming what I was about to say, which was that the hon. Member for Newcastle upon Tyne, East had, first of all, quoted from a document prepared before the Budget and, secondly, had looked at two measures in isolation rather than looking at all the Budget measures together.
      Let me take one example, the taxation of company cars. We all know that the amount of benefit in kind which is subject to taxation if one has a company car has been increased year by year for the past five years or so, and has now reached the point—I fully support this, I may say —at which taxpayers are now required to pay tax on the full economic benefit of having a car. We also know that most people who drive company cars are on higher salaries, and we must take account of that in assessing the overall distributional effects of the Budget.
      I am therefore most grateful to my hon. Friend the Financial Secretary for confirming what I believe—that it is important to look at all these cases together, although we are just debating the one change at the moment, the decision not to index tax thresholds. If we do that, we find that the effect is reasonably fair for everyone. We must all bear a bit of pain, and all income tax payers must pay a bit more.
      One of the more important of the difficult decisions made by the Government to raise more revenue was not to increase the tax rate. Some people have said that it would have been more straightforward to do so, and they have asked why the standard rate or the higher rate of income tax was not increased. I believe that it would have been a mistake to do so.
      4.45 pm
      To increase either of the tax rates would have been a major disincentive for people, a step backwards. What my hon. Friends at the Treasury have done is to take another major step forward to a tax rate of 20p in the pound. That is very good news indeed. It is our ultimate objective, and we have taken another small but important step towards it in this Budget. In the long run, it will be a very popular decision. At the time of last year's Budget, the decision was derided by some. They said that the Chancellor had got it wrong, but only a few weeks later, the electorate decided
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      that the Chancellor had got it right. It was the right decision to introduce a 20p tax band. It was a decision that I supported, and I very much welcome the present decision to increase the tax band.
      I want to have a look not just at the need to fund the public sector borrowing requirement, although I feel that it is incumbent on Opposition Members, if they object to every tax increase, to say where they would get the money from. It was noticable in Monday's debate that the hon. Member for Peckham (Ms Harman) consistently refused to say how a Labour Government would increase taxes. That is not a responsible action. With a large PSBR, some decisions to increase taxes are necessary, and we should be told what the Labour party's alternatives are. But I do not suppose that we will hear anything about that in this debate. [Interruption.] Does the hon. Gentleman wish to say something? If so, it is normal practice here to stand up.
      Mr. George Howarth:: If the hon. Gentleman is trying to tempt my hon. Friend the Member for Peckham into responding, perhaps he could say how he thinks the Chancellor should fund the PSBR next year. If he cannot do so—and I suspect that the Chancellor cannot —how can he expect my hon. Friend to say how she would do it in two or three years' time?
      Mr. Smith: There are published proposals that take us through to March, 1996, three years away. They are projections, but what else could they possibly he? They cannot be statements of faith.
      I will tell the hon. Gentleman something. The Treasury has been widely criticised for failing to forecast what the PSBR is likely to be, but I refer the hon. Gentleman to a table in the Red Book—which I will probably be unable to find now because of the size of the Red Book and the fact that I need to keep on talking while I look for it. Because we now have a panel of independent advisers, somewhere in the Red Book—my hon. Friend the Financial Secretary may be able to find it for me—is a very interesting table which shows that each of the independent forecasters has made a separate forecast for the PSBR, and that in 1995–96 the discrepancy, if I remember rightly, is between £20 billion and £50 billion.
      That demonstrates the difficulty of forecasting a figure which is itself the difference between two very large figures. It is like trying to forecast the balance of payments. So what the hon. Member for Knowsley, North (Mr. Howarth), who keeps intervening from a sedentary position, should appreciate is that forecasting is an extremely inexact science.
      While the Treasury has got it wrong, so has every other economic forecaster. The table, which I now learn from my hon. Friend the Financial Secretary is on page 54 of the Red Book, shows that Mr. Wynne Godley has the highest forecast of PSBR, at £60 billion, in 1994–95. It is only next year that we are talking about, less than a year away. Mr. Godley is forecasting £60 billion, whereas Mr. Congdon is forecasting £38 billion, a difference of £22 billion in the forecast of the PSBR for next year. That illustrates the difficulty in forecasting the PSBR.
      Mr. Robert Ainsworth: Would the hon. Gentleman care to make a few comments on the forecast immediately before the last election of tax decreases year on year, made by the Chancellor—and the Prime Minister, I think?
      Ms Harriet Harman: That was not a forecast; it was a promise.
      Mr. Smith: Unfortunately, I do not have last year's Red Book with me, so I cannot say what tax decreases were forecast. But, of course, the main tax decrease that was proposed in last year's Budget was the introduction of the innovative 20p tax band to which I have already referred, which was opposed by Opposition Members but was widely supported by the electorate only a month later in a general election.
      Mr. Jim Cunningham: I accept what the hon. Gentleman said about the 20p or 20 per cent. tax band, but does he not agree that that was offset last year and this year—last year by the increases in VAT and this year by the proposed increases in VAT?
      Mr. Smith: I have already said that increases in taxes are unpopular, but Governments have to make unpopular decisions sometimes, in the national interest. That was an unpopular decision that will form the basis for sound economic recovery.
      Mr. David Shaw: My hon. Friend is talking to an amendment on revenue raising and the issue whether we should be raising additional revenue. He drew attention to the fact that the Opposition spokesman, the hon. Member for Peckham (Ms Harman), refused to detail how alternatively she would raise additional revenue. Does he conclude that, if she proposes to keep the PSBR the same, she now really wants to reduce public expenditure? Is that not a major change for the hon. Lady and the Labour party? Does the Labour party now want to cut public expenditure significantly, if it will not raise additional revenue?
      Mr. Smith: I am very sorry to disillusion my hon. Friend, but I recall that, in her speech on Monday, the hon. Lady's solution to the PSBR was to cut taxes and increase spending. She said "Let's have more spending on education and training, and let's have more investment allowances for companies." That means lower business taxes and higher public spending. I am only a simple accountant, but if one cuts taxes and increases spending, I think I am right in saying that one adds to the PSBR. So I do not think that the hon. Lady's solution is the right one.
      My hon. Friend the Member for Dover (Mr. Shaw) is entirely right. There are only two possibilities: one has either to increase taxes or to cut public spending. Those are both difficult and unpopular decisions that Governments have to take.
      The second yardstick by which this matter should be considered is the decision in the Budget to devote what help was available to business ensuring that the tax cuts that could be made went to business. That was the right balance, I think, at the present point in the economic cycle.
      As my hon. Friend the Member for Dover said, as a result of that, this Budget was widely welcomed by business. If we look at the table on page 6 of the Red Book, we can see why. The decision not to increase business rates by more than indexation will cost the Exchequer £370 million this year, but that decision has been widely welcomed by business, as has the decision debated last night to improve VAT relief on bad debts. That will cost £150 million in the current year, but it will bring immediate relief to many companies that have cash flow difficulties.
      824
      There is an important balance here between business taxes and personal taxes. I believe that the Government have that balance right, too, so it was right in the Budget to make some increases in personal taxation, and that is why I support the clause.
      Mr. A. J. Beith: The trouble with the small, but important, steps towards the 20p band to which the hon. Member for Beaconsfield (Mr. Smith) referred is that individually they often have the effect of not helping the poorest and lowest earners. That is a point to which I shall return in a moment. To be in favour of a general objective is not necessarily the same as supporting proceeding to it by steps which do not in themselves help the people it is supposed to help.
      We have on the Order Paper two amendments with the same objective as the amendments that the Labour party has put forward today. They would stop the Government from failing to increase the personal tax allowance, but continue the freezing of the married couple's allowance. By a neat bit of gazumping, the Labour party in the course of the past three days put down more amendments, thus widening involvement in this debate.
      The freezing of the personal income tax allowance brings more people into tax. I remember speech after speech by Chancellor after Chancellor and Financial Secretary after Financial Secretary saying how many people the Government were taking out of tax. If one freezes personal income tax allowances, one brings more people into tax, and they are by definition people at the lowest levels of income.
      The married couple's allowance is not in the same category. Some people regard it as an anomaly because it is not related to whether there are children in the family. Freezing it seems to have become quite a common practice and to enjoy reasonably widespread support, but we would support that only so long as child benefit continues to be uprated annually, at least by the rate of inflation.
      The Government are selling their 20p tax rate as if it is helping those on low incomes and is in some way a better measure than indexing the tax allowance. That is patent nonsense. The small steps taken towards the 20p tax rate, such as the one taken in this Budget, are not a significant way of helping those on the lowest incomes. It is, indeed, a kind of deception of the British people.
      If steps to the 20p rate are paid for by not indexing the basic rate, one hurts the people the policy is supposed to assist. Every person with income above £3,445 will lose £18 a year, because the personal allowance should have been uprated by 2.6 per cent.—using the December 1992 RPI—to £3,535, which is £90 higher, and since they would have paid tax at 20p on that £90, the loss is £18.
      Instead of uprating the allowance, the Chancellor has widened the 20p band, but this applies only to people with incomes above £5,445, so the income tax deduction from the new wider 20p band begins to offset the tax increase from not indexing only for people who have annual incomes above £5,445. It is only at incomes above £5,805 that the income tax cut from the wider band offsets the increase from not indexing the allowance, so from the point of view of those on the lowest incomes it is a poor bargain; they would have been much better off if the tax allowance had been indexed. The Chancellor continues to boast that the extension of the 20p rate is assisting the poorest in society, but in fact it does not have that effect.

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      The Budget shows the real reason why the 20p band method appeals: it can bring in more revenue by sleight of hand than it costs. The cost of extending the 20p rate by £1,000 will be £710 million in 1994–95 while the revenue raised from restricting mortgage tax relief to 20p in 1994–95 will be £820 million. The revenue raised from restricting the married couple's allowance to 20p in 1994–95 will be £910 million while the revenue raised from restricting the taxation of dividends to 20p will eventually be nearly £1 billion in a full year. So the gain to the Exchequer is larger than the cost. One begins to smell a rat when one sees that happening; one discovers that it is not a measure to help the lowest paid and it is also a revenue-raising measure.
      The Chancellor, nearer the next election, will announce that he is widening the 20p band yet again. I use the word "Chancellor" in the way in which the Prime Minister now uses it, to denote whoever happens to hold that office. I say that advisedly because I have been passed a note saying that the Chancellor, speaking elsewhere, is announcing at this very moment that he does, after all, have some regrets. I have no information about which matters he regrets—we shall discover that on another occasion.
      When his successor, whoever that may be, announces that he is widening the 20p band again to give millions of people a tax cut, will he point out that that 20p band has cost people money? The numbers will work out in favour of what the Chancellor claims to be his policy only if he fully replaces the 25p rate by the 20p rate. Given the PSBR forecast, there cannot be any serious possibility of that happening.
      5 pm
      The hon. Member for Beaconsfield (Mr. Smith) referred to the basic decision in the Budget not to increase the standard rate, but instead to use the national insurance contribution as the means of raising the equivalent of a penny, or somewhat less than a penny, on the standard rate of income tax. The hon. Gentleman justified that by reference to the national insurance fund and to the fact that the insurance fund will be in deficit if that is not done. But it will still be in deficit even if that is done. This action is not a balancing act or an actuarial balancing of a contributory national insurance fund, but the Government raising a penny on income tax without breaching the doctrinal objection to raising a penny on income tax which their election commitments represent.
      As the Government have broken so many of their other election commitments in the tax area, I think that we, as Opposition parties, could now absolve them from any further commitment or responsibility at all. Nobody believes that the Government are bound by any of those promises any more, so they are entitled to start assessing what might be good for the country as opposed to which of their promises they are prepared to break and which they are not prepared to break.
      If the Government are to raise the equivalent of a penny on the standard rate, they should do it by the standard rate system and not by a system which fails to tax higher levels of income, fails to tax benefits and perks and fails to tax investment income. That is not a sensible route to take.
      Mr. Tim Smith: Will the right hon. Gentleman confirm that it is Liberal Democrat policy to increase the standard rate of income tax?
      Mr. Beith: We are in a rather different position from that of the hon. Gentleman's party. At the general election, we told people that in some circumstances we would raise the standard rate of income tax, and we defined those circumstances. The hon. Gentleman, who said that he would never raise the standard rate, can hardly criticise me when he now represents and appears to support the actions of a Government who have done so, and who have done it through the national insurance route and have used a quite spurious argument for doing so.
      Mr. Dorrell: Would the right hon. Gentleman make it clear that he is distinguishing his position from that of the Labour party by saying that he is still bound by the commitments that he gave to the electorate at the general election?
      Mr. Beith: That is an odd question from a member of the Government: I cannot fathom its intricacies, particularly in reference to the Labour party. I shall seek to uphold the policies and ideas that we put forward at the election. I hope that the Conservatives, like most political parties, will have the sense to notice if they are occasionally wrong. The Chancellor has announced that he now has some regrets, but so far I see no reason to change any of the policies that we advanced at the election.
      Mr. Thomas Graham: The right hon. Gentleman will remember that, just weeks before the general election, the Conservatives were accusing the Labour party of proposing a £36 billion PSBR. Yet the Conservatives are now introducing proposals similar to those advanced by the right hon. Gentleman. After one year of this Conservative Government, the country is in an economic mess. I am sure that if we had a good look at the books any one of us could do a better job than the Government are doing.
      Mr. Beith: It is nice to have such robust help in Committee. The hon. Gentleman makes a fair point.
      I wanted to argue the merits of being straight about using the standard rate rather than disguising standard rate increases through national insurance increases which do not bear fairly on people and do not raise so much revenue. The reason for that is that they do not apply to levels of income above £420 per week, they do not apply to benefits and perks, and they do not apply to investment incomes. We have proposed ways in which we could move from the present system to the wholesale amalgamation of national insurance with the income tax system. If the Government propose to add to the tax take, they should at least do so by using the standard rate income tax system.
      There are huge costs to the Government and even greater costs to business from our persistence in running the two systems side by side. I do not share the belief of the hon. Member for Beaconsfield that we can somehow resurrect the contributory system which, in effect, has been destroyed. There is no actuarial balance in the fund; it is all a myth. The hon. Gentleman knows that perfectly well; otherwise, he would tell me that there was not a £2 billion deficit in the national insurance fund and that it was all covered. He knows perfectly well that it is not covered and that the fund is not in balance.
      Mr. Tim Smith: Entitlements to benefits depend on contributions. That is a good thing. Is the right hon. Gentleman saying that he would sweep all that away as well?
      Mr. Beith: The hon. Gentleman must also know that most of what is paid out in the form of benefits is not based on contribution entitlements. The contribution side now plays a small part. The hon. Gentleman should reflect sometimes on the extraordinary position in which people such as his constituents find themselves. As Members of Parliament, we have to give them a letter which explains that their failure to make two contributions in 1956, of which they were unaware at the time, has left them unable to claim a benefit now. The whole system is creaking and groaning, and it is time for it to be replaced by one which streamlines the two measures. However, that takes us wide of the clause.
      I am arguing that the Government are trying to use a variety of other devices to avoid doing what they would otherwise be doing in the circumstances. They would be saying, "We got it wrong; the economy was in far worse off a mess than we said; the PSBR is appalling and will continue to be appalling; we must raise more tax and we shall therefore raise the standard rate." That is what the Conservative Governments might have done in previous years, but they do not do it now because they have made a fetish of never raising the standard rate of income tax.
      When we think about the allowances, we are bound to reflect on the strange perks and loopholes which still exist in the system. At the moment when the Government are exacting from people the extra costs of not indexing the allowance, Ministers appear still to enjoy the perk of having cars to drive them from their homes to their Departments. They still appear—I say "appear" because I get very evasive answers from Ministers—not to be paying tax on a benefit which is taxable for anyone in an equivalent position.
      All sorts of mysterious perks and hidden benefits are still tucked away in the tax system. Such perks never work to the benefit of people at the lowest levels of income. Those people are hit by the full force of the pay-as-you-earn system, and if they are at the bottom of the scale they are hit far more forcefully than those at higher levels of income who do not have to bear the higher cost of national insurance contributions.
      Mr. Milburn: The right hon. Gentleman says that he receives evasive replies from Ministers. I do not know whether he had an opportunity to read The Guardian this morning. The Financial Secretary is quoted there and I thought that his reply was far from evasive. He made it clear that, if he had to pay the full tax that was due on the perk, he would get up and walk.
      Mr. Beith: Not only did I read the article, but there is a quotation from me in it, as the hon. Gentleman may recall. I do not remember those words being attributed directly to the Financial Secretary. A number of other interesting comments were attributed to other Ministers, or were said to have been made by unnamed Ministers.
      In the course of the day, it has been drawn to my attention that, when the basis on which the concession appears to exist was introduced—it was part of a change made by Denis Healey when he was Chancellor which was intended to bring all journeys to work within the tax system—Ministers were told that it would not affect them and that it might be a good idea if they occasionally gave their civil servants a lift because that would help to emphasise the fact that the car was for business use and not a perk.
      Mr. Tim Smith: Did Denis Healey say that?
      Mr. Beith: I do not know who gave the advice, but I believe that such advice was given.
      The clause and the amendments relate to those at the bottom of the tax scale who get none of the little let-outs and loopholes. They bear the full brunt of tax, and in a number of respects they will be disadvantaged by the small steps towards a 20p band if those small steps are financed by tax allowances not being indexed.
      The work done by the hon. Members for Preston (Mrs. Wise) and for Birmingham, Perry Barr (Mr. Rooker) in the famous amendment was an important part of tackling poverty. It was a measure to ensure that the Government did not continue without statutory or parliamentary authority to scoop tax from those least able to bear additional tax burdens. In any year in which the Government fail to abide by the Rooker-Wise principles, they deserve to be challenged and tested, because the case that they have advanced for gaining extra tax income to deal with the PSBR is not improved when elements of that tax income seem to be earned unfairly from those least able to bear it.
      The case is undermined by the fact that the failure to spend money on various investments has prolonged the recession and, therefore, increased the PSBR. If the Government want to come to the House and say, "Yes —we made a mess, we have a problem and we have a huge public sector borrowing requirement; as the Red Book shows, we shall have a huge public sector borrowing requirement even if we get growth; yes, we need to raise tax revenue to get that growth," why do they not use known, fair and trusted parts of the tax system to raise that revenue instead of raising it by the back door?
      Mr. Milburn: My hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) described the freezing of personal allowances as a sneaky measure. He is absolutely right, because the freezing of personal allowances is a tax rise in all but name. The measure will hit both ends of the income scale. It will bring more people on middle incomes into paying tax at the higher rate. It will have a serious impact on poorer families in my region—hon. Members will know that my region has the greatest concentration of low-paid people in the country. It will ensure that they pay a hefty price for the Government's economic mismanagement.
      I was taken by the speech of the hon. Member for Beaconsfield (Mr. Smith), who managed to dig himself into a substantial hole by arguing that, in 1981, it was necessary to do exactly what is being done now, in the hope that it would never be done again. However, 12 years later we have more unemployed people, a bigger public sector borrowing requirement and graver economic circumstances than ever before. Who was in charge during that period? It was certainly not the Labour party. The Minister and his hon. and right hon. Friends got us into the current mess. Frankly, the poorest people in the country are now paying the price for that mess.
      The measure before us today is not only a tax on the poor—it is a tax on my region in the north. Across the country, 300,000 people who do not pay tax at present will be brought into the tax net for the first time. The 4.5 million people who are low-paid and who pay tax at the 20p rate at present will also lose. They will not gain a penny from the extension of the 20p band, but will lose

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      from the freezing of allowances. They will be asked to contribute to the £700 million tax bill that the freeze on allowances will cost taxpayers.
      As usual, the Red Book is fairly categorical. We are talking about enormous sums of revenue that will be raised by this back-door tax rise. Inevitably, the measure will penalise those who are least able to pay. That is in keeping with the Government's record of switching the tax burden from the rich to the poor in the 1980s. The poor were certainly not invited to the tax-cutting party of the 1980s, but they are now being asked to clear up the mess. The hon. Member for Beaconsfield and his hon. Friends are to blame for that situation.
      Mr. Tim Smith: Did the hon. Gentleman not hear the figures that my hon. Friend the Financial Secretary gave to the House? Under this Government, the personal tax allowance has risen substantially in real terms, whereas it fell under a Labour Government. If the Labour party is so committed to the eradication of poverty, why did a Labour Government so furiously resist the Rooker-Wise amendment?
      Mr. Milburn: If the hon. Gentleman has read this Red Book and previous ones, he will know that the tax system has changed over the past 14 years, from one in which the rich paid more tax than the poor to one in which the poor paid more tax than the rich. It is a Robin Hood in reverse —and the figures are categorical. As the Financial Secretary knows, between 1978–79 and 1992–93, a typical family on average earnings has seen its tax burden rise from 35.2 per cent. to 36.7 per cent. of its income. Between 1979 and 1990, the poorest 20 per cent. of households saw their tax bill rise from 30.7 per cent. to 39.7 per cent. of their income, while the top 20 per cent. saw their tax take a fall from 37.3 per cent. to 33.5 per cent.
      Mr. John Butcher: I refer the hon. Gentleman to some questions tabled by the then Labour Front-Bench spokesman, the Member for Blackburn (Mr. Straw), about the effect on the tax take of reducing the top income tax rate from 60p to 40p. What he discovered in hostile questions was that not only the cash amount from the richest section of the community increased but the proportion which the richest section of the community contributed to the total tax take increased as well. The supply side effect was real.
      5.15 pm
      Mr. Milburn: The hon. Gentleman must have read my speech, because I am coming precisely to the effect of the top rate tax cuts and the contrast between the 1988 giveaway Budget under Chancellor Lawson and the current Budget.
      The shift in the tax burden from the rich to the poor has been achieved by deliberate Government policy instruments. For the poor, it has been achieved by shifting the burden of taxation from direct to indirect taxes.
      At the same time, a growing number of people on low incomes have been drawn into paying tax through fiscal drag, as their tax-free income has shrunk in relation to average earnings. For the rich, the shift has been achieved by huge cuts in the top tax rate. I shall refer to that point in a moment.
      Mr. Robert Ainsworth: We repeatedly hear the point made by the hon. Member for Coventry, South-West (Mr.
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      Butcher). The issue is that, by putting the tax burden on the rich, we are getting more tax from them. Is it not the case that that is a deception, and that the real reason why we are getting extra taxation is that many more people pay it because the indexes have not been raised in line with inflation in the way that they should be? Is that not something that the Government repeatedly try to get away with?
      Mr. Milburn: As always, my hon. Friend is absolutely right. It is yet another case of the Government trying to perpetrate a con on the British people. The information that I have from the Financial Secretary is clear—vast sums of money were given away in the top rate tax cuts. According to his parliamentary answers, £9.5 billion has been given away to the richest people since 1988.
      Mr. Dorrell: So that we are proceeding on the basis of facts rather than assertions, I must point out that the top 5 per cent. of taxpayers in 1978–79 contributed 24 per cent. of the total yield of income tax. In 1993–94, that same top 5 per cent. is expected to contribute 32 per cent. of the yield of income tax. That is the top 5 per cent. of income tax payers.
      Mr. Milburn: The Financial Secretary obviously wants to bandy statistics—I am happy to do that. Perhaps he would like to tell us how many people are in the top 5 per cent. and what the spread is in the benefits of top rate tax cuts. According to his parliamentary answers, almost 60 per cent., or £5.5 billion, of the £9.5 billion handout and giveaway went to top rate taxpayers in one region of the country—the south-east.
      It is no wonder that there was a huge fiscal stimulus to the economy in the south-east but, of course, we are now suffering the consequences of overheating, shortage of skilled labour, pressure on the green belt and a huge explosion in house prices. The brakes had to be slammed on, as they were two or three years ago, and we are now paying the price. We are shivering as a consequence of a countrywide recession, which is the result of the sort of measures that were implemented in 1988 by the Minister and his predecessors.
      Mr. Jim Cunningham: My hon. Friend referred to what the top 5 per cent. paid in taxation. Does he agree that their income also rose in that period?
      Mr. Milburn: We have seen an explosion in the incomes of the very richest people. I described earlier how the top 20 per cent. have done so well, while the bottom 20 per cent. have done so poorly. There is no doubt that families on average earnings are, as a consequence of the Government's fiscal policy during the past 14 years, paying more of their income in tax than ever before. Those are the stark facts: the Financial Secretary cannot argue with them.
      I give one example. A top rate taxpayer in the south-east of England is on average at least £10,000 better off as a consequence of top-rate tax cuts. The south-east has not been the biggest regional gainer. The south-west takes the lead in the top-rate tax cut league. It is interesting to examine which parts of the United Kingdom do least well out of top-rate tax cuts. Not surprisingly, Northern Ireland and my region, the north, received the smallest benefits as a consequence of the cuts in top-rate income tax.

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      What a contrast between 1988 and the Finance Bill that we are debating today. In 1988, there was an enormous handout and a tax bonanza for the rich. As a consequence of the measures presented by the present Chancellor in his Budget this year, there will be tax increases of £6.5 billion in 1994–95 and £10.5 billion in 1995–96.
      The cost of imposing VAT on heating alone will mean £950 million in higher bills next year and £2.3 billion in the following years. The whole country is paying the price for the Conservatives' tax bonanza for the wealthy in 1988. What they gave away with one hand to the very rich, they are taking back with the other from pensioners, families, the low-paid and those on middle incomes. It is an odd reversal of the Robin Hood story when the poorest end up subsidising the richest in our community.
      Mr. Graham: The other day I spoke to a woman in my constituency who told me that she had looked at her diary for 1979. It was faded, but she noticed that her husband was working, her two sons were working and she was going on holiday to Benidorm. Now she is not going on holiday to Benidorm, her son is not working, her other son is on low pay and her man is almost crippled with illness.
      In 1979, at least they were all working and they could afford to pay tax. Now 4 million people are desperate and 3 million people are unemployed. The other night we passed a measure which will mean that 9 million pensioners will have to pay through the nose to heat their homes. The Government are proud of that record. The crisis is one of their own making. My hon. Friend has elaborated on that well tonight.
      Mr. Milburn: My hon. Friend is right. He graphically describes the problems that the Government have imposed on millions of people in Britain. It is not merely a question of complacency. It is a question of the Government's inability to apologise to the British people. We saw that most graphically in the private notice question just before this debate. I will not go into that, Mr. Morris, because I can see that you wish me to move on. I will take that hint seriously.
      So we are now all paying for that tax bonanza. By freezing personal allowances, the Government will force the tax burden of low and middle-income families through the roof. Rightly, people will feel betrayed by a party which in its general election manifesto just one year ago loudly declared:
      "we are the only party that understands the need for low taxation."
      The Conservatives' tax-cutting credentials have been shot through by this measure and other measures in the Finance Bill. In just one month next year—April—the British people will feel the effect of the cuts in mortgage interest relief at source and the married couple's allowance, the increase in national insurance and the introduction of the fuel tax. Ministers might not be so complacent then. Certainly the crisis of confidence which the Government face will not go away, because too many people are paying through the nose for the mistakes that have been made.
      Mr. David Shaw: The Government have had a difficult Budget to prepare when we are, as we have now discovered, at the end of a recession. As we reach the end of the recession, sadly, unemployment—the lagging
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      indicator—increases and the deficit continues to rise for some time after one has hit the bottom. There is no doubt that we are having to raise additional finance because we have an excessive budget deficit.
      There are not many ways in which one can deal with an excessive budget deficit. Indeed, my accountancy career has taught me that there are only three: we can borrow, if someone will lend to us, but if the deficit is excessive, people do not want to lend to us; or we can raise additional revenue; or we can cut expenditure.
      It is clear that no one in the Conservative party wanted major areas of expenditure to be cut. They did not want pensioners, invalids, or those on disability benefits to suffer and they did not want cuts in health service or education expenditure. Consequently, the Government have chosen the course of raising some additional revenue and they should be applauded for taking that courageous decision.
      Mr. Robert Ainsworth: If the Government decided that the right course of action was to raise revenue, why did not they seek to raise it from the very people who gained from the tax cuts that they introduced a few years ago? Why are the Government seeking revenue increases from the bottom part of the earnings structure when they gave those tax breaks to the top?
      Mr. Shaw: As my hon. Friend the Financial Secretary said, the hon. Gentleman and his colleagues are living in a mythological world. In many instances, the top 5 per cent. who received the reduction in the rate of taxation have increased their earnings and the wealth that they have brought into the country. As a result, they have paid an increased proportion of the income tax bill. That is a major achievement and we must encourage that expansion.
      I want the top rate of tax to come down lower. It is sad that we wish to cut only the basic rate from 25 to 20 per cent. We should consider how to reduce the top rate from 40 per cent. We are now competing in the world to bring the wealth creators to Britain. If we could encourage more of them to come here, more revenue would be raised from income tax at lower rates. That is the great achievement of the Government.
      I return to my key point. We must either raise revenue or cut expenditure. The Opposition argue that we might be in a different world if they were in office. They say that the deficit would be considerably less. They are trying to con the electorate into believing that if they were in office, we would be in a make-believe world. That is the only world that would be different. One cannot say that if Labour was in office there would be no German recession, no French recession and no American recession. We live in this world. We do not live in the make-believe world that the Labour party would like to exist if it was in office.
      So revenue had to be raised in the Budget. Clause 52, with which the amendment deals, is the right clause and the right measure to raise additional revenue.
      Public finances have to be prudently managed. Reference has been made to the Labour manifesto's proposals which we costed at some £37 billion. I commend the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) for remembering that figure. That £37 billion was not what the deficit might have been; it was additional to any deficit that we now have. If Labour had been in office and the recession had continued—I am talking about the recession in America, Germany and France, which are

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      key export markets—we would be looking at a deficit not of £50 billion but of £50 billion plus £37 billion; a deficit of at least £87 billion, approaching £100 billion.
      Mr. Jim Cunningham: Will the hon. Gentleman give way?
      Mr. Shaw: I shall give way to the hon. Gentleman, who no doubt wants to explain how a Labour Government would have financed such a deficit.
      5.30 pm
      Mr. Cunningham: I shall not explain that aspect. I should have liked the hon. Gentleman to have gone on to say that the difference between the Labour party and the Government at the time of the general election was that Labour borrowing would have been used for investment, whereas the money that you have borrowed is to pay your debts. That is the fundamental difference between you and us.
      The Second Deputy Chairman of Ways and Means (Dame Janet Fookes): Order. I remind the hon. Gentleman that he is addressing me when he says "you", and I am not responsible.
      Mr. Cunningham: I apologise, Dame Janet.
      Mr. Shaw: I disagree with the hon. Gentleman because I, like many people, studied the Labour party manifesto carefully. More significantly, I made a number of interventions in the speeches of Labour Front-Bench spokesmen in the year or two before the general election asking if the commitments that they were annoucing at the Dispatch Box were firm commitments. I started to add them up on the back of an envelope and on my calculator. They were not capital commitments to invest in Britain's future. Many of them were revenue commitments to invest in more pay, more salaries and more bureaucracy. They were the sort of commitments that would have to be funded with increased borrowing. As an accountant, I know that to fund wages and salaries with borrowing is the worst sort of deficit financing.
      Mr. Graham: I take the point that the hon. Gentleman did his sums on the back on an envelope. I am pretty sure that everyone in the Committee and in the country will agree that the Government, too, have done their sums on the back on an envelope. The hon. Gentleman has a fond interest in Scottish affairs. In Strathclyde we have lost more than 50 per cent. of our manufacturing jobs since 1979–166,000 jobs. The Labour party planned an investment and training programme. That was what part of the sum was intended for. That was welcomed by the people of Scotland and, I am sure, by the people of Britain who wanted Scotland once again to be the engine of recovery. The £36 billion of public sector borrowing would clearly have been welcomed. It would have provided a basis from which to build on in the future and we might not have had this recession, which has clearly been created by the Government.
      The Second Deputy Chairman: Order. The hon. Gentleman's intervention is becoming a speech.
      Mr. Shaw: I recognise the hon. Gentleman's contribution. As he rightly says, I have a great interest in Scotland and some Scottish affairs. I am sure that he will recall that under Labour, between 1974 and 1979, not just
      834
      in Scotland but in the country as a whole, manufacturing output fell and we had a record number of industrial disputes and a major problem in getting enough investment in British manufacturing.
      Yesterday, the Select Committee on Social Security heard from managers of the British Coal pension fund about its problems. It was notable that the deficits from the fund's investments occurred under a Labour Government who made generous contributions to compensate. The surpluses that have improved pensioners' benefits have come since the Conservative Government have been in office. Those surpluses have been earned from the success of British business and British industry, so there has been a major transformation.
      We might well ask why some areas of Scotland, for which the hon. Gentleman and I share an interest and concern, have not benefited. I am concerned, even as the Member of Parliament for Dover, that some of the benefits in our economy are not filtering through into the Scottish economy. The only possible explanation is that too much of the Scottish economy is managed by Labour-controlled local authorities.
      If we could shift the resource base from the Labour-controlled local authorities in Scotland into the private sector, my constituents in Dover would benefit from a better managed economy. The Government might not even have had to introduce clause 52. Public finances overall would be better managed because we would be spending less money in the public sector and getting more profitable investment and more profitable resource development in the private sector.
      Mr. Graham: The hon. Gentleman mentioned Scotland, but he must realise that the Scottish public have rejected the Government for decades. I wish that the Scottish people could have a wee turn at giving the Prime Minister a bloody nose like the English and Welsh voters. I am sure that they would give him a real belt in the belly if they had the chance of a referendum.
      Mr. Shaw: I do not want to stray too far from the subject, but the hon. Gentleman must accept that the problems that are developing in Monklands, East and a number of other key Labour areas show that a unique opportunity is developing for the Conservative party in the 1990s in Scotland. There is no question but that, when the people of Scotland see how much employment in the public sector is taking job opportunities from the private sector in Scotland, there will be a transformation in the Government's political fortunes in Scotland. That is already occurring, as can be seen from the improved results in Scotland at the general election.
      But to return to my main point, if Labour had been in office we would not be sitting here today talking about whether we can afford to index personal allowances or other allowances. We would be talking about how to deal with a major deficit of enormous proportions—potentially £100 billion.
      Dr. Roger Berry: Does the hon. Gentleman recognise that the rate of growth under this Government has been the worst of any post-war British Government and far worse than that of the previous Labour Government, that as a result unemployment is far higher and that that is the major reason for the high level of public sector borrowing?
      Mr. Shaw: I just happen to have a graph here which I have produced on my computer. However, graphs cannot be recorded in Hansard, so I shall have to talk about it. I assure the hon. Gentleman that the real prosperity clearly existed in the 1980s. The only significant cuts in public expenditure where the line on the graph falls below zero took place under a Labour Government in 1975, 1976 and 1977. Since then, public expenditure and the nation's prosperity have continued to improve. Therefore, I cannot accept what the hon. Gentleman says.
      The Second Deputy Chairman: Order. Before the hon. Gentleman continues, I should point out that he is going wide of the amendment. I have given one or two warnings already and if the hon. Gentleman or any other hon. Member persists, they will have to resume their seat.
      Mr. Shaw: Thank you, Dame Janet. I desperately wanted to get back to the main point, but I was diverted into Scotland and some of the wider issues of the economy. I appreciate that you are being your usual firm self, but I realise, as I am sure do many, that a better balance in many areas of the economy, of which Scotland is one, between the public and private sectors, would mean that the private sector would create more jobs and there would be less deficit and consequently less need to restrain the increase in personal allowances in the way in which the clause does. That is the key point. The real issue raised by the Opposition in this debate is whether we should curtail allowances or raise the rates of income tax. The Opposition have not lost their old clothes. They have dusted them down again, having found them in the closet. They want to raise the rates of income tax. I cannot support that view.
      Mr. Nicholas Brown: That is not so.
      Mr. Shaw: The hon. Gentleman says that that is not so. If he does not want to increase revenue by raising the rates of income tax, either he must want to cut expenditure or he must want to borrow more. If not, I do not see how he will be able to meet the deficit which, as I said earlier, occurs not just in the United Kingdom but worldwide.
      Mr. Brown: I made this point to the hon. Member for Beaconsfield (Mr. Smith), but perhaps the hon. Gentleman was not paying his usual attention. In 1988, the Labour party voted against the Government's top rate tax cuts. That is still our position. We should not have a deficit if the top rate of tax had not been cut, for it amounts to a substantial sum of money.[Interruption.] The Financial Secretary laughs, but cumulatively that extra sum of money would have been available to the Government since 1988. The purpose of our amendment is not to increase income tax. Its purpose is to restore the allowances that the Financial Secretary and the Chancellor of the Exchequer are trying to freeze.
      Mr. Shaw: I know that the hon. Gentleman uses a wide base when he studies these issues. He has heard of the Laffer curve. If the rate of taxation is too high, the amount of revenue raised goes down. The Financial Secretary has produced the figures and has shown that, by reducing the top rate of income tax, we have increased the revenue take from the top earners. That, surely, is the key point.
      Mr. Brown: But the hon. Gentleman must acknowledge that now there are 1 million more of them.
      Mr. Shaw: The point that I acknowledge is that the top 5 per cent. are paying more as a proportion of the total income tax take.
      Mr. Dorrell rose—
      Mr. Shaw: Does my hon. Friend wish to confirm that point?
      Mr. Dorrell: Yes. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) is completely wrong. The group of people about whom I was talking numbered 1.3 million in 1978–79. In 1993–94, it numbers 1.2 million, so, for what it is worth, there has been a fractional reduction, not a big increase in the number of individuals concerned. What has increased is the share of the income tax burden that those 1.3 million or 1.2 million people contribute. That share has increased sharply, from 24 per cent. to 32 per cent. of the total yield of income tax.
      Mr. Shaw: What my hon. Friend has said shows that it is a truism that, if we reduce the rate of income tax, we increase revenue. That must be a very important lesson. I know that the hon. Member for Newcastle upon Tyne, East wants to rise and confirm that those who sit on the Opposition Front Bench have now learnt that lesson.
      Mr. Brown: We are talking, I think, about different groups of people. If I heard him aright, the Financial Secretary is talking about the top 5 per cent. of high earners, to whom he referred earlier, whereas I am referring to all those who pay tax at the top rate. The hon. Gentleman's argument is absurd. If one received more revenue by reducing the tax rate, the logical assumption is that even more revenue would accrue to the Government if one reduced the tax rate yet further, but that obviously is not the case.
      Mr. Shaw: The hon. Gentleman knows how the graph works. He also knows how the calculation works: that at a tax rate of 100 per cent. there is zero revenue, because there is no point in going out to work. The hon. Gentleman must also know that if one reduces tax rates to too low a level, the Government will not raise the maximum amount of revenue. The key point of the Laffer curve as it is computed is that the optimum tax rate is of the order of 15, 20 or 25 per cent., depending upon which country one is in and depending also upon the financial base that one uses. It is clear that, even at 40 per cent. tax rates, there may be the opportunity to lower still further the top tax rate and increase revenue.[Interruption.] The hon. Member for Newcastle upon Tyne, East told me off for not paying attention, so he should not converse with the hon. Member for Birmingham, Perry Barr (Mr. Rooker), but perhaps he suffers from my weakness from time to time.
      The key point is that the Government have made the decision not to change allowances, thereby increasing revenue, instead of attempting to raise additional revenue by increasing the rate of income tax. That would have been a disincentive. It would not have been the right thing to do as we come out of the recession. It would have put on the motor car's brakes; it would have stopped the engine; it would have taken away the fuel that can help us to get out of the recession. The Government have done the right thing and it was a sensible decision to make.
      Mr. Tim Smith: Is not it clear from these exchanges that the Opposition have learnt nothing from the experience of

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      the past 14 years? Some people may think it incredible that my hon. Friend should suggest a tax rate of 100 per cent., but there was a tax rate of 98 per cent. in 1979. That was the rate that we inherited.
      5.45 pm
      Mr. Shaw: I agree with my hon. Friend. If ever there were a case for a "quickie" general election, it would be on the basis of what we have heard from those who sit on the Opposition Front Bench today. The Opposition have no new taxation policy to present to the British electorate. All they want to do is to tax the British electorate more and more and to employ more and more civil servants and bureaucrats. The Opposition still have the wrong policies for tackling the economic issues that face us as we come out of the recession. The fact of the matter is—
      The Second Deputy Chairman: Order. How does this relate to the amendment under consideration?
      Mr. Shaw: You are right, Dame Janet. Again I have been taken slightly away from the point. I was carried away by my enthusiasm for increasing our majority and having another term in government.
      The key point is that we are still wedded to reducing the rate of income tax over a period of time. That was featured consistently in our successful, election-winning manifestos. The Opposition want to tackle the tax issue differently. They want to raise tax rates and change the way in which taxes are raised. Our policies contain the right balance. The Budget was skilfully constructed in the middle of a worldwide recession that is causing great difficulties. The Budget deficit continues to increase and the lagging indicator—unemployment—is inevitably at a higher level than one would like.
      Clause 52 reflects the fact that both the foreign and the domestic financial markets have given the Government a considerable vote of confidence. The British electorate should recognise the fact and consider giving a further vote of confidence to the Government in any future by-elections. That vote of confidence should be based on the difficult decision that is reflected in the clause we are debating.
      Mr. Rooker: What we are debating today, if we cut through the bull and the smears on Opposition policies by Conservative Members today, is a tax increase on the low-paid. At least 300,000 people, who would not otherwise have to do so, will now have to pay income tax. Furthermore, those at the bottom end of the tax threshold —4.5 million people—will not enjoy the benefits that they ought to receive. We shall no doubt hear the Financial Secretary refer to what happened between 1974 and 1979. That point has already been made clear in interventions.
      My conscience is clear. My record is okay. The same cannot be said of the Government's record. In 1993, the tax burden on the British economy is greater than it was in 1978–79. Compared with this Government's record, the last Labour Government have nothing to apologise for when it comes to the tax burden on the British economy. I freely admit that the burden is shared differently—hence the steps that I took as an individual hon. Member in 1977. Earlier, I interrupted from a sedentary position to remind the hon. Member for Beaconsfield (Mr. Smith) of the date —14 June.
      If the Finance Bill had not been amended in 1977, we would not be able to hold this debate today. We can debate
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      this proposed tax increase on the low-paid because of what happened in Committee on 14 June 1977, when I and my hon. Friend the Member for Preston (Mrs. Wise), then the Member for Coventry, South-West, moved amendments on indexation. It is not the fault of the right hon. Member for Berwick-upon-Tweed (Mr. Beith), but that night we did not enjoy the support of the Liberal party. John Pardoe was upset because, as part of the Lib-Lab pact, he was obliged to vote with the Government. He was very distressed because indexation was Liberal policy.
      I want to consider the obnoxious tax increase on low-paid people, and in doing so I shall give a couple of statistics on the tax burden. Between 1978–79 and 1992–93, as a share of income, the tax burden—income tax and national insurance—declined for single people, married couples and people on average earnings or above who had children. In the same period, the tax burden for people on less than average earnings also fell, with the glaring exception that the share of income that family units—couples with children—on less than average earnings pay in tax and national insurance, taking into account child benefit, is greater now than in the last year of the Labour Government. The share paid by the poorest families—those on three quarters or half average earnings—is higher than under the previous Labour Government. They are a unique group.
      It is tedious to keep repeating statistics, but I will give the figures for a family with two children and 50 per cent. of average earnings. Hon. Members might regard 50 per cent. of average earnings as irrelevant or unrealistic, but average earnings are alleged to be £340 a week. When I say that, most of my constituents say "Don't talk silly—our wages are nothing like that," and that is true of the majority of people because the average is not the majority.
      The share of income that a couple on 50 per cent. of average earnings with two children paid in income tax and national insurance, minus child benefit, in 1978–79 was 2.4 per cent. whereas in 1992–93 it was 6.3 per cent.
      Mr. David Shaw: Will the hon. Gentleman give way?
      Mr. Rooker: No.
      The share of income paid by a couple on 75 per cent. of average earnings has increased from 14.6 per cent. to 15.5 per cent. In other words, whatever changes have occurred in that period, couples on less than average earnings with children have suffered uniquely and their position will be made worse by the freezing of tax allowances, which is why the clause is so objectionable.
      Mr. Dorrell: I have made a calculation for a married man with two children—a single earner in the household —on half average earnings. Will the hon. Gentleman confirm that, since 1979 and at today's values, the real take-home pay of that person has risen by £67.30p a week?
      Mr. Rooker: Absolutely—I am coming to that. I am talking about the income share that such a family pays in tax and national insurance. The share that they pay from their household earnings has gone up, whereas it has gone down for everybody on more than average earnings. It has gone down for single people, married couples and families on more than average earnings. It has gone down for single people on less than average earnings. It has gone down for married couples on less than average earnings without children. It has, uniquely, gone up for couples on less than

      839
      average earnings with children. What a record—low-earning families with children are the poorest-paid and the hardest stressed group in the country.
      The important point is the share. We are talking about the community kitty for the country. That is the purpose of taxation—for people according to their means to pay into the community kitty. Why are the lowest-paid families on less than average earnings with children paying a larger share of their income than in the last year of the Labour Government? Why should their share of the community kitty have gone up when everyone else's has gone down?
      Mr. Dorrell: Does the hon. Gentleman believe that the changes in the totality of the tax system which have been made since 1979 may have led to the enhanced rate of improvement in the take-home pay of every group in the community, including the group that he is talking about?
      Mr. Rooker: Exactly, but relative to everybody else the share of the burden that they are asked to bear has gone up. The Minister cannot deny that. No one denies that their absolute earnings have gone up. Earnings kept ahead of inflation in the 1980s, which caused some of our present difficulties, but why has their share of the community kitty increased when everybody else's has gone down? Why has the share of income that the hon. Member for Dover (Mr. Shaw), as a Member of Parliament, perhaps with outside earnings, has to pay gone down? Why should the poorest paid families on less than average earnings with children, uniquely, be asked to pay more? The Minister argues that their earnings have gone up, but the share of earnings that they are asked to pay has gone up while everyone else's has gone down.
      That is the reality of the debate and not what the hon. Member for Dover was saying. An increase in taxation is being proposed for the poorest people in the country. They are being asked to pay a bigger share of their income in tax than anybody else. I was opposed to that in 1977 when I proposed amendments in Committee and I am opposed to it now.
      I do not deny that the spending power of all families and sectors has increased, but those on less than average earnings have done substantially less well than the better off. That is my argument. My argument is one of fairness between groups in society—those on low incomes and those on high incomes. I believe that people who have high incomes should pay a bigger share, and indeed they will pay a bigger share this year, but during this Government's term of office their share has gone down while the share taken from the poorest paid families has gone up. That needs to be emphasised and constantly repeated. That is why we oppose the clause, which stops indexation.
      Mr. David Shaw: I believe that at one stage, the hon. Gentleman referred to household income rather than individual income. The average household income increasingly includes the incomes of two people—husband and wife—because more women work today under this Government than when Labour was in office. As a result, a higher rate of income tax may often be paid in a two-income household, because when the two incomes are added together more taxation is paid at the higher rate. That can often account for the phenomenon that the hon. Gentleman has identified.
      6 pm
      Mr. Rooker: I used the term "household income" as a figure of speech, but I was talking about earnings, and the figures that I cited related to earnings. Generally speaking, when figures are produced for a married couple with two children, it is assumed that there will be one earner and one non-earner. the wages earned by some of the women in the families affected are so low that they would not make any difference to the tables, which are produced by the research staff in the Library on the basis of parliamentary answers.
      I have been talking about low pay, so by definition I have been talking about earnings, and about people who have jobs. We must not forget that the unemployed are also subject to taxation at certain periods. During the year in which they cease to be employed and during the year in which they obtain another job, unemployment benefit is part of their annual taxable income. The impost does not fall only on people with a low-paid full-time or part-time job; the unemployed are also caught in the tax net now. Some of them are also subject, at the margins, to the effects of the clause and the freezing of personal allowances.
      The Minister may say, "What is all the fuss about? It is only £18 a year."
      Mr. Dorrell: At the maximum.
      Mr. Rooker: Yes, that is the maximum—or rather, it is £22 a year for the average family but £18 for a single person. People will say, "Eighteen pounds? That is chicken feed." Hon. Members may pay that much for their lunch or their supper, or even leave that much as a tip after their supper. But I have met constituents—my hon. Friends have met such people, and I know that Conservative Members have met them, too—who could not raise that sum at any stage in their yearly existence.
      I thought of a couple of examples today involving unemployed constituents seeking to get back into work, who had used the opportunity of unemployment to further their education. But they could not pay the exam fees. One person could not pay the £10 assessment fee for nursing training. When people are that low down the income scale they do not have the money. That is why it is wholly unfair to ask those people to pay an increased share of taxation. It is immoral—there is no other word for it.
      I do not accept the argument that the sum is small, because I consider that sum not in isolation but in the context of the generality of what other taxpayers are asked to pay. There should be fair shares. The well-off should pay their fair share, but the clause freezes allowances in such a way that they will not pay as fair a share as they would otherwise have done.
      One of the long-running advantages of the 1977 indexation measures—although they have subsequently been amended, the kernel of them remains—is that these days at Budget time the Treasury publishes tables which make a good comparison with what the figures would have been like if there had been indexation. Indeed, I was amazed at the brass face of the Budget press release dated 16 March, with its illustrative tables on income tax rates and allowances. Every hon. Member has an average of 500 constituents who will now pay tax at 20p in the pound although they did not pay tax before the Budget. The average number is 500, so some hon. Members will have many more constituents in that position.
      The Treasury tables showing the annual effects of the income tax changes in the Budget, compared with what

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      indexation would have provided, has to assume an increase in incomes. When comparing one year with another one must not assume that incomes will stay the same; one must assume an increase in earnings. I thought that the Treasury would assume an increase of 1.5 per cent., but not on your life—the Treasury assumed an increase of 4 per cent.
      Why did the Treasury assume that incomes would increase by 4 per cent. between 1992–93 and 1993–94 when there is a 1.5 per cent. pay freeze in the public sector which also runs through the low-paid part of the private sector? What brass face the Treasury and Ministers must have to approve the use of 4 per cent. as an illustrative figure when they have introduced a pay freeze of 1.5 per cent. That is outrageous. When the Financial Secretary winds up the debate, I should like him to tell us why the figure of 4 per cent. was approved. That figure does not represent reality for most people.
      I shall finish soon, because the point has been well made that the effect of the clause is a massive tax increase for the low-paid. The burden is greater for the low-paid—especially if they have children—than for the rest of the country, and to that extent it is extremely unfair.
      Because of the increased burden of taxation on the low-paid, we are creating in this country an underclass of citizens who are bewildered by the system and who struggle to make ends meet from one week to the next. Hon. Members all know this from what they hear in their constituency surgeries, and from the letters and telephone calls that even Conservative Members mention. In a debate not long ago, a Conservative Back Bencher referred to the people who shuffled into his surgery with a haunted look in their eyes, the down-beaten and downtrodden who could not cope because of the increased tax burden and the cuts in benefits that his own Government had brought about. I shall not cause that Conservative Member any more trouble than he is already in by reminding the Committee of his name.
      According to the average figure, 500 constituents of mine will pay tax at 20p in the pound rather than paying nothing as, because they are so low-paid, they would otherwise have done. I am speaking for those people tonight, as my hon. Friends have spoken for their constituents. No Conservative Member has said, "Well, that is it. I have some low-paid constituents, and it is tough, but they will just have to pay more tax." Conservative Members will not have the courage to say that.
      Instead they will say that the budget has to be balanced and extra revenue is needed. Nobody denies that, but why take from people on lower than average earnings a greater share of their income than is taken from people on higher than average earnings? That is wholly unfair, and we shall certainly pin it on the Government.
      What will the money pay for? The Government were open about that. The brief published on Budget day gave a little summary of the measures for 1993–94:
      "The Chancellor proposes that there should be little net change in …1993–94. Certain taxes are reduced: there is help for business and the housing market".
      There certainly is help for business. Some of the extra taxation brought in by the clause—brought in off the backs of people so low paid that they were not paying tax at all—will help to fund businesses such as the Heron corporation so that money can be forked out for the Ronsons of this world.
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      The idea is outrageous. It is beyond belief that that is the sort of business that the Government are supporting. They will raise taxes on the low-paid and say, "Yes, we want to get business going," but they give no directions and no special incentives to ensure that that money is put into real investment to create real jobs, now factories and new businesses. No—businesses will be able to do exactly what they like.
      Mr. Tim Smith: I understand what the hon. Gentleman is saying, but the Red Book shows that the main factor was the decision not to increase business rates by more than the rate of inflation. Had that decision not been made, many businesses might have been pushed over the brink and jobs would have been lost. There is a balance between jobs and income tax. Which would people prefer to have—a job, with earnings on which they had to pay income tax, or no job?
      Mr. Rooker: For my sins, I was the Opposition local government spokesman in 1987–88 when the Bill introducing the poll tax was in Committee. It took 200 hours. We were dealing with the business rate, the poll tax for business, and we shot the Government's arguments to pieces. The rates that business pays as an overall proportion are minuscule. I do not accept the argument that to help businesses we have to impose more taxes on the low-paid. That is what I cannot justify. We cannot consider one small provision of the Bill in isolation.
      This provision will raise money on the backs of the low paid. What will it be used for? It will be used to reduce the tax burden on businesses. It is unfair to expect people whose earnings are 50 per cent. of the average to pay a bigger share than the average Member of Parliament or the Gerald Ronsons of this world for the purpose of reducing the taxes paid by businesses. Nobody is on lower pay than those who until now were below the tax threshold.
      There must be no taxation by stealth. In this regard, the hon. Member for Beaconsfield was quite honest and open. As I look at the Strangers Gallery, to which I am not supposed to refer, I expect that very few people realise that what we are debating here is a big increase in taxation. What is being done is not being done by stealth, as in the past. The Committee has an opportunity to debate and to vote. When I found out in 1977 how the system worked I objected strongly. The roof came in on my hon. Friend the Member for Preston and myself for what we were doing. We were criticised by the press and by the leadership of our own party. But then the penny dropped as messages came in from pensioners' groups and trade union branches. It is much fairer to have things done in the open.
      The tax burden on the poor is too great, and the Government are reverting to the previous process. Next year they will say that the rate of inflation this year was only 2.6 per cent. and that the forecast figure for the following year is 3.6 per cent.—nowhere near the level of the late 1970s. They think that if they get away with freezing allowances in one year, they will get away with it again. We are returning, step by step, to the old system of taxation by stealth.
      This process must be opposed at every turn. In 1981 I came to the Chamber and opposed what was being done. I will act similarly today, and I will continue to do so. I do not take any pleasure in this. It takes time, and it is not

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      easy to explain to people outside. What members of the public do know, however, is that under the Budget taxes on the low-paid have increased.
      I should like to make again a point that I made at the end of the Second Reading debate, when between the end of the Financial Secretary's winding-up speech and the Division I used the procedure of the House for a couple of minutes without upsetting everyone. In the course of a visit to Hereford and Worcester that day, I was asked what I was doing about the Rooker-Wise amendment. The person concerned, having been sucked back into the tax system many times, understood how it worked. He was so close to the margin that he knew he would be in the system for half of the year and out of it for the remainder.
      I understood the mechanics. He realised that the Budget would result in freezing—that, having been sucked into the tax system, he would stay there. He regarded that as wholly unfair. I told him that, having been on the Opposition Benches for 14 years, I did not have much responsibility for the situation but that I would go to the House of Commons at the first opportunity and raise the point.
      Mr. David Shaw: This is why the hon. Gentleman is in opposition.
      Mr. Rooker: Far from it.
      The point that I am making illustrates the unfairness of freezing allowances. By definition, as everyone knows, the burden on those with less than average earnings is disproportionately great. The Government will not increase income tax by a penny in the pound, because that would have the reverse effect. They do not want to attack the well-off. Tory Governments are bound to adopt this attitude. They talk about tax cuts, but they raise taxes. They talk about decreasing the tax burden, but they increase it—not only the overall burden on the economy but also the burden on the lowest-paid.
      We shall nail the Government with this. It will not be easy, as was demonstrated in 1987 and 1992. It is not easy to get this message across, even during general election campaigns. The Conservatives always quote the 83 per cent. and 98 per cent. tax rates under the last Labour Government, as in the ebb and flow of politics they are quite entitled to do, but nobody ever paid at those rates. The average rate was far less. It was stupid of the last Labour Government to have high tax rates that were not actually used. They were warned that those rates would be used against them. At the other end of the scale, the system was such that tax revenue could be raised from the low paid.
      Then the Tory party thought that it would be a good idea to introduce some truth into the tax system. The get-out clause was introduced by a former Chancellor, now Lord Lawson. At the back of the noble Lord's mind was the idea that a Tory Government needed a get-out. The Financial Secretary appears not to know what a get-out is. Perhaps I will have an opportunity to explain to him later.
      Our original amendment on indexation was cut and dried. There would have been no get-out, but for an amendment tagged on at the end by a specific vote in the House. That is how the tax law was left at the time. Today we are at least guaranteed a debate, and some of us are
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      able to demonstrate that it is very unfair to put this extra tax burden on the low-paid. I invite the Financial Secretary to defend disproportionately great tax increases for those people: he cannot do it.
      6.15 pm
      Mr. Dorrell: Members of all parties agree that the hon. Member for Birmingham, Perry Barr (Mr. Rooker) takes a serious interest in these issues. Indeed, the Committee is indebted to him for the part that he played in 1977 in ensuring that we could have this debate today. He has said that at that time everybody was against him. As he would be the first to acknowledge, our parliamentary system does not work in quite that way.
      Far from everybody being against the hon. Gentleman, the Conservative party of the time, of which I think my hon. Friend the Member for Beaconsfield (Mr. Smith) is the only representative present today, supported him. The Rooker-Wise amendment that has been referred to is, in fact, the Rooker-Wise-Lawson amendment. The action of the hon. Gentleman and his hon. Friend the Member for Preston (Mrs. Wise) was supported by the Tory party.
      We do not resile at all from the decision that the Government took then. We believe that, as the hon. Gentleman has said, changes in the real level of allowances should be the subject of debate in the Chamber. That is precisely why we are having this debate. Thus far, at least, I go along with the hon. Gentleman. I shall refer later to some of his arguments that I found to be substantially less convincing.
      I should like to start with something that ought to be obvious. My hon. Friends the Members for Dover (Mr. Shaw) and Beaconsfield said that this element of the Bill is part of the total package that my right hon. Friend the Chancellor introduced to deal with the budget deficit. It is most remarkable that a constant in the debates we have had on this Bill is the assertion—made sometimes in almost accusatorial tones by the Opposition—that these are revenue-raising proposals, as though we had somehow stumbled over them almost in a fit of absence of mind. It is true that many of the changes made in the Bill are put together as a revenue-raising package.
      The reason for that should not be surprising or unfamiliar to any hon. Member. It is that my right hon. Friend the Chancellor faced the need to do something about the Budget deficit. The Government take the budget deficit seriously. As these debates proceed, it is becoming abundantly clear that the Labour party does not share our commitment to a policy of seriously addressing the deficit. Over the past few weeks and months, we have seen several examples of that lack of firmness of purpose. The hon. Member for Dunfermline, East (Mr. Brown) has been anxious to rule out options which may help deal with the budget deficit. In January, on the radio, he said:
      "I'm not talking about raising income tax or national insurance or VAT."
      That was said by the shadow Chancellor, who acknowledges that the budget deficit is too high but is anxious to rule out the three key tax weapons available to do something about it. In March, just before the Budget was delivered, he said on television.
      "I think at this particular point in time to raise income tax or national insurance or VAT would be a mistake."
      So all three major sources of revenue available to the Government were explicitly ruled out twice, on the record, by the hon. Member for Dunfermline, East.

      845
      While the hon. Gentleman has been busy telling the world what he would not do to address the budget deficit, his hon. Friend the Member for Peckham (Ms. Harman) has been going round telling the world what she would do to make the budget deficit worse. She has been committing the Labour party to extra expenditure on training and, as my hon. Friend the Member for Beaconsfield said, to more generous capital allowances. So, on the one hand, the Labour party says that the budget deficit needs attention: on the other, it either forecloses options for doing anything about it and opposes all proposals that are put to the House, or it comes forward only with proposals which would make the deficit worse.
      The first thing that we have to be clear about in addressing the question is that we face a budget deficit that demands attention. The Government have a package of proposals to address the deficit. All the arguments from the Opposition Benches come from a party which has been anxious to foreclose as many options as possible for dealing with the deficit.
      The hon. Member for Newcastle upon Tyne, East (Mr. Brown) was generous enough, as were other hon. Members, to acknowledge the second element: that the proposals for changes to allowances and thresholds have to be seen in the context of other proposals for changes to the income tax system, particularly the introduction of the lower rate band. The interrelationship between changes to allowances and changes to the lower rate band is a key element of the Budget package.
      What the Committee would not have gathered from the speeches so far in the debate, particularly from the Opposition Benches, is that, for the single person who is a basic rate taxpayer, it is not a coincidence that the effect of the freezing of the allowances and of the widening of the basic rate band is precisely the same: they net out. For the single person on basic rate tax the freezing of allowances costs him £22.50 this year; the widening of the lower rate band benefits him to the tune of £22.50 this year. There is a statistical equivalent.
      The married couple basic rate payer is £12.50 a year worse off as a consequence of the changes. Taking particularly the single person basic rate taxpayer, he is in precisely the same position after the changes as he would have been if the indexation proposal of the hon. Member for Perry Barr had been allowed to run its course in respect of both the lower rate band and the basic rate band.
      There are differences. All higher rate taxpayers are losers as a consequence of the changes because the effect of freezing allowances is to ensure that the benefit available from the changes to the higher rate taxpayer is exactly the same as to the basic rate taxpayer. The hon. Member for Perry Barr was right to say that those who are marginal payers within the lower rate are to a varying degree losers in absolute terms, although I would argue strongly that they are also gainers in the sense that the marginal rate of income tax which they are paying is lower than at any time since the Government came to power.
      The changes that we are introducing in the package are part of the progress that we can make to introduce a wider lower rate band which will have important positive benefits in dealing with the poverty trap, the unemployment trap and the sharpening of incentives, which must be an important priority for those on lower incomes.
      Mr. Graham: Does the Minister realise that, for 14 years, we have been told that, once the Conservative
      846
      Government got to grips with the economy, things would go well? For the past three years, we have been told that the end of the recession is round the corner. We have been told that by the Chancellor until he was blue in the face. The Minister is telling us that low wage earners will benefit. In God's honest truth, that is not the case. If we can prove that he is not right, will the Minister come back and reverse what he has said?
      Mr. Darrell: The hon. Gentleman suggests that people on average earnings, or the majority of people, have not benefited from the logic of the changes which we have been introducing for the past 14 years. As I said in an intervention in the speech of the hon. Member for Perry Barr, that is not true. Those who are on half average earnings have benefited in their take-home pay from the economic record of the Government to the tune of £67.50 a week in real terms since 1979. In the period 1974–79, the same group saw their real take-home pay increase by just over £8 a week.
      People on average earnings are more than £80 a week better off than they were in 1979. Their income grew in real terms over the five years of the Labour Government by just over £1 a week. So there was an increase of £80 a week under the Tories and £1 a week under Labour; that is the contrast that answers the point made by the hon. Member for Renfrew, West and Inverclyde (Mr. Graham).
      I have said that we cannot consider the changes in allowances in isolation from the rest of the changes to the income tax system. Nor can we consider them in isolation from the other changes contained elsewhere in the Budget. I discussed that point with my hon. Friend the Member for Beaconsfield in an intervention based on the analysis of the Institute of Fiscal Studies. It took the Budget package as a whole and looked at the distributional effect of the increase in the tax burden which my right hon. Friend introduced in his Budget.
      The institute—an independent organisation—concluded that the average loss as a percentage of net income was virtually the same right across the income scale, from the poorest 10 per cent. of households to the richest 10 per cent. All of them, to within a very narrow range of variance, contribute roughly 2.5 per cent. of their net income to the deficit reduction programme which my right hon. Friend introduced in his Budget.
      Of course, if the Budget is addressing the deficit by means of revenue raising, there will be by definition an average loss in resources available to taxpayers. Those figures show that that loss is shared fairly across the income scale. We cannot consider it in isolation from other income tax changes, nor in isolation from other changes elsewhere in the Budget. Nor, most important of all, can we consider it in isolation from the history of the past 20 years. That is where the record of the Government bears very favourable comparison with the record of our predecessors.
      The hon. Member for Perry Barr is entitled to mark himself out in regard to his responsibility for what happened to personal allowances under the Labour Government. The effect of his action on what happened during those years is extremely marked in the figures. The year in which he rebelled was the only year of the Labour Government's period of office in which personal allowances increased in real terms. Over their total period

      847
      of office, the single personal allowance fell in real terms by 21 per cent. In the period since 1979, it has risen by 25 per cent.
      6.30 pm
      We will not accept any lectures from members of the Opposition Front Bench on the subject of the indexation of personal allowances; nor will we accept lectures from any member of the Labour party, even including the hon. Member for Perry Barr, on the subject of the living standards of people right across the income scale.
      Mr. Graham rose—
      Mr. Dorrell: I said in answer to the previous intervention of the hon. Member for Renfrew, West and Inverclyde, who is encouraging me to give way to him again, that the effect of this Government's policies taken as a whole has been to deliver a substantial increase in real take-home pay and living standards right across the income scale, benefiting the average wage earner by £81 a week, at today's values, this year, and benefiting the group on which the hon. Member for Perry Barr was focusing by just over £67 a week.
      Mr. Graham: Anyone who thinks that the 3 million unemployed, the pensioners and disabled people have benefited under this Government is living in cloud cuckoo land. I want to ask the Minister what the Government have done with the money that they got from oil. How did they fritter that away? Why should we expect a pensioner to pay VAT on fuel and power when we had billions of pounds' worth of oil in the north of Scotland and in other places? How did the Government absolutely squander that?
      Mr. Dorrell: One of the things that we have done is to increase by more than 50 per cent. the amount of money spent on the national health service as a result of the improved economic performance. Since 1979, we have seen a substantial improvement in Britain's economic performance, and this has been delivered to the British people by improving real take-home pay and social services. That was the commitment that we gave in 1979, 1983, 1987 and again in 1992. We have been delivering it for 14 years, and we will go on delivering it.
      Mr. Jim Cunningham: I could not believe my ears when the Chief Secretary to the Treasury said that over the last 14 years Britain's economic performance had improved. If that is the case, why are we talking about borrowing, and funding deficits? The Chief Secretary has fallen into the trap of believing his own rhetoric. Last week showed that the Government listen to themselves and nobody else, and live in a totally different world from the rest of Britain.
      The tragedy of this Budget is that, once again, the burden has been put on those who can ill afford to pay. As the Chief Secretary said, we cannot look at allowances in isolation from the rest of the Chancellor's package. If we look at the burden imposed by the lack of action in relation to tax easement from the lower-paid, add to that such things as VAT, and then start to work out what inflation will be 12 months hence, we can see this tremendous burden unfold.
      If I were the Chief Secretary to the Treasury, or any other member of the Government Front Bench, I would be
      848
      ashamed to be a member of a party that, after 14 years, has brought a great country like ours to such a state that we have to borrow tremendous sums of money and raise money to pay it back.
      One or two have to be answered. Two or three times today, hon. Members have alluded to these, and once again we have to take them up. The Chief Secretary, for example, referrred to issues that he must talk about that have arisen over the last 20 years. If we go back 20 years, we are talking about the Heath Government.
      Has the Chief Secretary forgotten, when talking about industrial relations, the three-day week and the fact that prices rose considerably, particularly petroleum prices? The members of the Organisation of Petroleum Exporting Countries decided to put prices up, that led to inflation, and the 1974 Labour Government had to pick up the pieces. Let us remember a few facts when we talk about the improvement in Britain's economic position and start to compare records. I do not think that the Government have anything to be proud of.
      The Chief Secretary talks about packages, and the Budget is a package, but nothing has been said during the debates or in anything that I have heard over the last few weeks about the balance of payments deficit. I wonder how much planning has gone into that. I wonder what taxes are in the pipeline for the future—or will it be higher interest rates, or perhaps a combination of the two?
      Those are the things that the Government should start to think about, because we certainly do not want the stop-go situation again. The Government said 14 years ago that they would bring that sort of thing to an end. They were also elected on the slogan of lower taxation, but in reality we have had sneaky tax, hidden tax, and now taxation has been expanded through VAT. So, if they have not got on top of the deficit next year, will we see further expansion of VAT—for example, to newspapers, children's clothing, and so on?
      Again, nothing has been done to help old-age pensioners or one-parent families. Instead, the burden on them has been increased.
      That is a sorry indictment of this Government. They may try to find excuses, but the answer is that they have run out of alibis for their stewardship of this country over the last 14 years. The Chief Secretary must be very careful when he talks about improvements in Britain's economic performance, because the ordinary people in the street rejected his Government's policies last week. They are paying a terrible price for their tremendous efforts to put this country on its feet.
      I welcome some of the initiatives to help businesses—I do not think that anybody who is concerned about unemployment could fail to do so—but we must ensure that small businesses get the benefits intended for them, and that sums of money in the form of grants are spent wisely.
      This is a sorry Budget, a tragic Budget. The former Sir Geoffrey Howe's Budget in 1981 was supposed to set Britain in a new direction, on a new economic course, yet in 1993, we are looking at the same issues as we looked at in 1981. Those in the Government who call themselves accountants play ducks and drakes with figures, but the people of the country can do their homework; they can see the price that they have to pay for the follies of this Government. The Government may defend the highest 5 per cent., but we are very proud of the fact that we defend the lower-paid and people in the middle-income bracket.

      849
      The Government's recommendation must, I submit, be rejected tonight.
      Dr. Berry: I had not intended to speak in this debate, but I want to respond briefly to a number of comments that have been made.
      The proposal before us today is effectively to increase the tax burden on lower income groups, and we have been given some extraordinary reasons why this is appropriate. One extraordinary argument was that the tax burden had to be increased and it could not possibly be increased for those on higher incomes, who have benefited substantially from previous tax cuts.
      Even good old Professor Laffer has been invoked, as if it is generally accepted that a little graph that the Professor scribbled on the back of a serviette in a restaurant in the United States a long time ago is somehow gospel and can be used to talk sensibly about tax policy.
      I have to say that it cannot. The point is a very simple one. The argument rests on the proposition that, if we reduce people's taxes, they will work harder, so their incomes will he higher, and therefore they will pay more taxes. Ministers have given no evidence whatsoever that if, as has happened, the direct tax burden on higher income groups is reduced, they will work more overtime and consequently pay more income tax. The reason that they have not offered that evidence is that no such evidence exists. Exhaustive studies, not least by Professor C. V. Brown, have shown that income tax cuts on high income groups do not encourage greater efforts to pay even more income tax. It really is nonsense.
      The Minister said that the budget deficit has to be corrected, but he did not recognise that it is so high precisely because of the Government's economic performance. I repeat my earlier point: that the Government have the worst record on economic growth of any post-war Government—1.9 per cent. per annum. The Government responded by saying, "No, you misunderstand. Living standards have improved".
      Of course they have. If the Government had achieved the remarkable feat of negative growth, no doubt average living standards would have fallen, but even the present Government have managed to secure some economic growth over the past 14 years. It is the natural order of things. However, they have managed to reduce that rate of growth.
      Living standards have improved for some people, because they have borrowed extensively in the financial regime created in the late 1980s. I advise the Government to worry as much, if not more, about the scale of private sector debt as they do about public sector debt. If they honestly believe that our economy is capable of sustaining increased living standards in the way that they have suggested, they are deluding themselves.
      The clause is part of a tax package that in one sense is perfectly consistent with everything the Government have done. They have increased the tax burden over the past 14 years. It may be a useful device to tell people that they have not, but it is dishonest.
      The Government have shifted the tax burden from the higher income groups to the lower. Not one person who has seriously examined the statistics would attempt to deny that charge. It is a charge, an accusation and a criticism. How can anyone conceivably support a tax
      850
      regime that, year by year, is being geared to ensure that those on higher incomes get more and those on lower incomes get less?
      Apparently, in order to encourage those on higher incomes to work harder, they have to pay less tax. Those on lower incomes are encouraged to work harder by paying more tax. That is the nonsense of the Government's position and I hope that the amendment will be supported in the Lobby.
      Mr. Thomas Graham: The Minister told us about the regime that will operate, but he made no apologies for the fact that the wealthy people in Britain will become more wealthy as a result. The rich are getting richer and the poor are getting poorer. Quite clearly, the Treasury had an opportunity to redress the balance and tax the rich people in Britain substantially more and reverse the trend that the Government have been applying for a long time.
      I was amazed to hear the Minister's glib reply to me about how the Government frittered away billions of pounds of North sea oil revenue. I wonder what happened to North sea gas, as the gas from the Government is quite stinking. We have the sickest geriatric Government ever. They are so old-fashioned that they are not just getting grey hairs; they are dying on their feet.
      6.45 pm
      Last week, the English and the Welsh consigned them to the bin and left them with just one council. That is no wonder, because they are utterly mismanaging the economy. There is no way they will get away with that anywhere in Great Britain. I would love the folk of Scotland to have an opportunity to register their protests, which would swing the boot at the Government. Perhaps the Government would then take a responsible attitude, instead of putting VAT on fuel and power, and at least folk would be able to live in a wee bit of comfort.
      Will the Treasury Minister think about one issue that I have looked at recently? One of my constituents wrote to me and said, "Tommy, do you remember the hated poll tax, when the Minister came up with a rebate to get us out of the hole that we were in?" The people of Britain went bananas, they wanted rid of the poll tax.
      Now the Government are committed to the council tax, and they have had to decide how to cover it. They increased VAT to 17.5 per cent. to provide an acceptable form of local government taxation because of the Government's absolutely massive blunder on local council finance.
      The Treasury is producing these ways of balancing the revenue because they clearly got it wrong. They increased VAT to 17.5 per cent. VAT when the poll tax was abolished. Now the Minister expects elderly, disabled and unemployed people to pay 17.5 per cent. more for fuel and power.
      I shall be glad to hear the Minister's reply in summing up. I find it amazing that VAT has been increased from 15 per cent. to 17.5 per cent. to cover the council tax. Now they expect 9 million elderly folk, 3 million unemployed folk and all the sick and disabled folk to pay extra. It is absolutely incredible. I am delighted to give way to the Minister.
      Mr. Dorrell: I have summed up. I have certainly said all I have to say on the subject, but I should like to correct one wrong figure I used in my speech and in an intervention in

      851
      that of the hon. Member for Perry Barr—and I apologise to him for that. I flattered the record both of the Government and our predecessors in terms of the effect on the real take-home pay of those on half average earnings. The figures should be that, between 1974 and 1979, those people saw their real take-home pay rise by just over £3 a week, and since 1979 by just over £25 a week.
      Mr. Graham: When the Labour Government were in power, some folk in the House of Commons were still in primary school. I do not need a history lesson from any Minister. I remember the days when I started work. There was a Labour Government and I was employed in an apprenticeship. When I finished my apprenticeship, I went to work. I had a good job with good pay and could afford to go on holidays and buy my clothes: I definitely did not need to go to jumble sales and bag sales. That is what the Government have inflicted on the low-paid, the unemployed and the disabled. The Minister should come with me and see the result of his economic plan.
      Mr. Brian H. Donohoe: Will my hon. Friend tell me how many charity shops there are in his constituency? If it is anything like mine, he will find that in the past five years the only expanding industry is charity shops. What is the situation in his constituency?
      Mr. Graham: I am grateful for my hon. Friend's intervention. I can see the Minister's face getting whiter, but it is not as pale as some pensioners will be in the winter, when they cannot afford heating because of the Government's VAT policy.
      My hon. Friend is right. In my area, there has been a tremendous boom in charity shops. The Government have cut charity funding so much that they have had to open shops while folk have a wee bit of money. It is not the wealthy people who make contributions to charity; it is folk like mothers, aunties, brothers and sisters who do not have a lot of money, but will not go by the tin can.
      I make this point to the Minister, and I will make him an offer. I would love the whole Cabinet to come with me on those visits. It would probably help them to make a bit more sense of their taxation regime. I would love them to come to the jumble sales, the boot sales and the charity shops. I would like to take them on a Friday and Saturday night to some of the supermarkets, where they will see the elderly women scurrying about to try and buy goods which are near their sell-by date at half-price. They will see something that I never thought I would see again—the queues for the second-hand clothes and all the women scrabbling for something that costs 50p. That is what the Government taxation system has created for our folk; it has got them begging.
      My offer is a sincere one. I notice that the local Conservatives in my constituency have jumble sales, and do very well. They occasionally go along and buy the boots that the lords have thrown in—or even Tory Members have thrown in. We do very well; we may buy a pair of boots for 50p that will give us a couple of weeks more wear. Then they announce in the local paper that the local Conservative fete made a few hundred pounds this week.
      Then, in the next couple of weeks, we notice that they are asking local Conservative Members if they will donate old clothes—there is a great need for old clothes in my constituency—so that they can sell them to make a few
      852
      bob in order to return a regime which imposes a taxation system on the low-paid and which cripples and kills the elderly behind their doors in winter.
      Already the price of fuel—coal, gas and oil—is so high that pensioners are dying behind their doors. This is absolutely genuine—I am not conjuring up a fairy tale. I can see from all hon. Members' faces that they know I am telling the truth. The taxation system has been wrong for the last 14 years. For 14 years, the Government have plundered this country's resources; they have squandered the money raised by privatisation and thrown it into the bin—the dustbin of unemployment. They have wrecked the economy by squandering North sea oil and gas.
      I only wish that we could have a general election tomorrow. I am sure that a general election tomorrow would not just produce a change of Government, but would enable the elderly folk, the disabled and the unemployed to walk with pride again. They could look forward to a future with jobs, to where the grass grows green and is not made dry and arid by this barren Government. They are a hopeless Government; they have had their day. Let us give them a real knuckleduster. If they are so confident of their tax regime, let us have a general election now.
      Mr. Nicholas Brown: During the excellent speech of my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham), I distinctly heard Conservative Members shout, "Tommy for Chancellor." I know that they are desperate to get rid of the present incumbent; nevertheless, I urge my hon. Friend not to cross the Floor to take over the job.
      I also understand my hon. Friend's desire to take Conservative Members to charity shops, but he would probably get more for their suits than he would for their Government. I believe that the consumers in his constituency are a fairly discerning bunch: while they might purchase, at a knockdown price, suits that Conservative Members can clearly afford, I doubt that they would purchase a Government whom the country clearly cannot afford.
      Let us not obscure the main point of today's debate —that the Government hope to raise an extra £2.7 billion in the financial year 1995–96. That is an awful lot of money. Of course the Government are trying to obscure the way in which it will be done; of course their proposals are not set out bluntly in the form of direct tax increases, as a number of my hon. Friends have pointed out. None the less, that will be the effect of the freezing of these allowances.
      Interestingly enough—as my hon. Friend the Member for Kingswood (Dr. Berry) pointed out—the recession is affecting people with savings and people with private-sector debt in a similar way. Those with savings are trying to hold on to them, because they are frightened of spending and uncertain about their future. Labour believes that the only way to weather the present crisis is to deal with unemployment first: it is the core issue, and the Government should concentrate on it first.
      Of course the public sector borrowing requirement, and indeed the revenues available to Government, are affected by growth rates. Of course, if the Government were able to restore economic growth to the point at which it should now be, more revenue would be available and they would be able to reduce the deficit. That, however, is not the history of recent years: we have experienced 10 successive

      853
      quarters of negative economic growth. That affects not only the PSBR, but the tax burden required to service or even reduce it.
      I agreed with the Financial Secretary when he cited the work of the Institute for Fiscal Studies about the distributional effect of the whole of the Chancellor's Budget—although, of course, that same distributional effect does not apply just to the details of the allowances that we are discussing.
      However, although what the IFS said about the distributional effect of the totality of this year's measures was correct, that does not apply to the whole range of tax changes that the Government have made since 1979. The main change has been the substantial shift from direct to indirect taxation, particularly through VAT increases: that has had a regressive effect on the poor.
      The Financial Secretary's favourite line seems to be that real take-home pay has increased throughout the Conservatives' period of office. They are proud of that. The hon. Gentleman, however, is talking about—I believe —58 per cent. of our fellow citizens, who are in work. What about the other 42 per cent.—the unemployed, and pensioners? What has happened to their real earnings since 1979? They have not been as well off under the measures promoted by the present Government.
      If we take the lower rate band alongside the freezing of allowances, it is clear that those earning below median earnings will be adversely affected by the Government's proposals—not the very poor; not those who do not pay income tax, and therefore are not affected by the positioning of allowances in lower-rate bands; but those on low earnings. As if that were not enough, I believe that there is widespread public resentment about the way in which the Government have gone about raising the taxes they need in order to deal with the current deficit.
      Before the election, we were told that the Conservative party was committed to reducing taxation; then, in the Budget, we are told that VAT must be extended to domestic electricity and to charities. That is probably the most regressive single VAT adjustment that could have been made. We are told that employees' national insurance must be increased, not just for those earning above average incomes—the Labour party's proposal before the general election—but for everyone. That was after the Conservative party promised at the election that they would do no such thing. Moreover, we now have the adjustment of allowances proposed in the Bill.
      What is done is regressive. It is a substantial increase in tax—£2.7 billion. I do not think that the Financial Secretary has made the case against the amendment, so I urge hon. Members to vote for the amendment standing in my name.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 236, Noes 277.

      Division No. 266]

      [7 pm

      AYES

      Abbott, Ms Diane

      Austin-Walker, John

      Adams, Mrs Irene

      Barnes, Harry

      Ainger, Nick

      Barron, Kevin

      Ainsworth, Robert (Cov'try NE)

      Battle, John

      Allen, Graham

      Bayley, Hugh

      Alton, David

      Beith, Rt Hon A. J.

      Anderson, Donald (Swansea E)

      Bell, Stuart

      Anderson, Ms Janet (Ros'dale)

      Benn, Rt Hon Tony

      Armstrong, Hilary

      Benton, Joe

      Ashdown, Rt Hon Paddy

      Berry, Dr. Roger

      Ashton, Joe

      Betts, Clive

      854

      Blair, Tony

      Hill. Keith (Streatham)

      Blunkett, David

      Hinchliffe, David

      Boateng, Paul

      Hoey, Kate

      Boyce, Jimmy

      Hogg, Norman (Cumbernauld)

      Boyes, Roland

      Hood, Jimmy

      Bradley, Keith

      Hoon, Geoffrey

      Bray, Dr Jeremy

      Howarth, George (Knowsley N)

      Brown, N.(N'c'tle upon Tyne E)

      Howells, Dr. Kim (Pontypridd)

      Bruce, Malcolm (Gordon)

      Hoyle, Doug

      Burden, Richard

      Hughes, Kevin (Doncaster N)

      Byers, Stephen

      Hughes, Simon (Southwark)

      Callaghan, Jim

      Hutton, John

      Campbell, Mrs Anne (C'bridge)

      Illsley, Eric

      Campbell, Menzies (Fife NE)

      Jackson, Glenda (H'stead)

      Campbell, Ronnie (Blyth V)

      Jackson, Helen (Shef'ld, H)

      Campbell-Savours, D. N.

      Jamieson, David

      Canavan, Dennis

      Janner, Greville

      Cann, Jamie

      Jones, Ieuan Wyn (Ynys Môn)

      Carlile, Alexander (Montgomry)

      Jones, Jon Owen (Cardiff C)

      Chisholm, Malcolm

      Jones, Lynne (B'ham S O)

      Clark, Dr David (South Shields)

      Jones, Martyn (Clwyd, SW)

      Clarke, Eric (Midlothian)

      Jones, Nigel (Cheltenham)

      Clarke, Tom (Monklands W)

      Jowell, Tessa

      Clelland. David

      Kaufman, Rt Hon Gerald

      Clwyd, Mrs Ann

      Keen, Alan

      Cohen, Harry

      Kennedy, Charles (Ross, C&S)

      Cook, Frank (Stockton N)

      Khabra, Piara S.

      Corbett, Robin

      Kinnock, Rt Hon Neil (Islwyn)

      Corston, Ms Jean

      Leighton, Ron

      Cousins, Jim

      Lestor, Joan (Eccles)

      Cryer, Bob

      Lewis, Terry

      Cunningham, Jim (Covy SE)

      Livingstone, Ken

      Cunningham, Rt Hon Dr John

      Lloyd, Tony (Stretford)

      Dafis, Cynog

      Llwyd, Elfyn

      Darling, Alistair

      Lynne, Ms Liz

      Davidson, Ian

      McAllion, John

      Davies, Bryan (Oldham C'tral)

      McAvoy, Thomas

      Davies, Rt Hon Denzil (Llanelli)

      McCartney, Ian

      Denham, John

      Macdonald, Calum

      Dewar, Donald

      McFall, John

      Dixon, Don

      McKelvey, William

      Dobson, Frank

      Mackinlay, Andrew

      Donohoe, Brian H.

      McLeish, Henry

      Dowd, Jim

      Maclennan, Robert

      Dunwoody, Mrs Gwyneth

      Madden, Max

      Eagle, Ms Angela

      Mahon, Alice

      Eastham, Ken

      Mandelson, Peter

      Enright, Derek

      Marek, Dr John

      Etherington, Bill

      Marshall, David (Shettleston)

      Ewing, Mrs Margaret

      Marshall, Jim (Leicester, S)

      Fatchett, Derek

      Martin, Michael J.(Springburn)

      Field, Frank (Birkenhead)

      Martlew, Eric

      Fisher, Mark

      Maxton, John

      Flynn, Paul

      Meacher, Michael

      Foster, Rt Hon Derek

      Michael, Alun

      Foster, Don (Bath)

      Michie, Bill (Sheffield Heeley)

      Foulkes, George

      Michie, Mrs Ray (Argyll Bute)

      Fraser, John

      Milburn, Alan

      Fyfe, Maria

      Miller, Andrew

      Gapes, Mike

      Mitchell, Austin (Gt Grimsby)

      Garrett, John

      Morgan, Rhodri

      George, Bruce

      Morley, Elliot

      Gerrard, Neil

      Morris, Rt Hon A.(Wy'nshawe)

      Gilbert, Rt Hon Dr John

      Morris, Estelle (B'ham Yardley)

      Godsiff, Roger

      Morris, Rt Hon J.(Aberavon)

      Golding, Mrs Llin

      Mowlam, Marjorie

      Gordon, Mildred

      Mudie, George

      Gould, Bryan

      Mullin, Chris

      Graham, Thomas

      Murphy, Paul

      Grant, Bernie (Tottenham)

      Oakes, Rt Hon Gordon

      Griffiths, Nigel (Edinburgh S)

      O'Brien, Michael (N W'kshire)

      Griffiths, Win (Bridgend)

      Olner, William

      Grocott, Bruce

      O'Neill, Martin

      Gunnell, John

      Parry, Robert

      Hall, Mike

      Pendry, Tom

      Hanson, David

      Pickthall, Colin

      Harman, Ms Harriet

      Pike, Peter L.

      Harvey, Nick

      Pope, Greg

      Henderson, Doug

      Powell, Ray (Ogmore)

      Heppell, John

      Prentice, Ms Bridget (Lew'm E)

      855

      Prentice, Gordon (Pendle)

      Steel, Rt Hon Sir David

      Prescott, John

      Steinberg, Gerry

      Primarolo, Dawn

      Strang, Dr. Gavin

      Purchase, Ken

      Taylor, Mrs Ann (Dewsbury)

      Quin, Ms Joyce

      Taylor, Matthew (Truro)

      Raynsford, Nick

      Tipping, Paddy

      Reid, Dr John

      Turner, Dennis

      Rendel, David

      Walker, Rt Hon Sir Harold

      Robinson, Geoffrey (Co'try NW)

      Wallace, James

      Roche, Mrs. Barbara

      Walley, Joan

      Rogers, Allan

      Warden, Gareth (Gower)

      Rooker, Jeff

      Wareing, Robert N

      Rooney, Terry

      Watson, Mike

      Rowlands, Ted

      Welsh, Andrew

      Ruddock, Joan

      Wicks, Malcolm

      Salmond, Alex

      Wigley, Dafydd

      Sedgemore, Brian

      Williams, Rt Hon Alan (Sw'n W)

      Sheerman, Barry

      Williams, Alan W (Carmarthen)

      Sheldon, Rt Hon Robert

      Wilson, Brian

      Shore, Rt Hon Peter

      Winnick, David

      Short, Clare

      Wise, Audrey

      Simpson, Alan

      Worthington, Tony

      Skinner, Dennis

      Wray, Jimmy

      Smith, Andrew (Oxford E)

      Wright, Dr Tony

      Smith, C.(Isl'ton S & F'sbury)

      Young, David (Bolton SE)

      Smith, Llew (Blaenau Gwent)

      Soley, Clive

      Tellers for the Ayes:

      Spearing, Nigel

      Mr. Gordon McMaster and Mr. Alan Meale.

      Spellar, John

      NOES

      Ainsworth, Peter (East Surrey)

      Clappison, James

      Aitken, Jonathan

      Clark, Dr Michael (Rochford)

      Alison, Rt Hon Michael (Selby)

      Clifton-Brown, Geoffrey

      Allason, Rupert (Torbay)

      Coe, Sebastian

      Amess, David

      Colvin, Michael

      Ancram, Michael

      Congdon, David

      Arbuthnot, James

      Conway, Derek

      Arnold, Jacques (Gravesham)

      Coombs, Anthony (Wyre For'st)

      Arnold, Sir Thomas (Hazel Grv)

      Coombs, Simon (Swindon)

      Ashby, David

      Cope, Rt Hon Sir John

      Aspinwall, Jack

      Couchman, James

      Atkinson, Peter (Hexham)

      Cran, James

      Baker, Rt Hon K.(Mole Valley)

      Currie, Mrs Edwina (S D'by'ire)

      Baker, Nicholas (Dorset North)

      Curry, David (Skipton & Ripon)

      Baldry, Tony

      Davies, Quentin (Stamford)

      Banks, Matthew (Southport)

      Davis, David (Boothferry)

      Bates, Michael

      Day, Stephen

      Batiste, Spencer

      Deva, Nirj Joseph

      Bellingham, Henry

      Devlin, Tim

      Bendall, Vivian

      Dickens, Geoffrey

      Beresford, Sir Paul

      Dicks, Terry

      Biffen, Rt Hon John

      Dorrell, Stephen

      Blackburn, Dr John G.

      Dover, Den

      Body, Sir Richard

      Duncan, Alan

      Bonsor, Sir Nicholas

      Duncan-Smith, Iain

      Booth, Hartley

      Dunn, Bob

      Boswell, Tim

      Dykes, Hugh

      Bottomley, Peter (Eltham)

      Eggar, Tim

      Bottomley, Rt Hon Virginia

      Elletson, Harold

      Bowis, John

      Emery, Rt Hon Sir Peter

      Boyson, Rt Hon Sir Rhodes

      Evans, David (Welwyn Hatfield)

      Brandreth, Gyles

      Evans, Jonathan (Brecon)

      Brazier, Julian

      Evans, Nigel (Ribble Valley)

      Bright, Graham

      Evans, Roger (Monmouth)

      Brooke, Rt Hon Peter

      Evennett, David

      Brown, M.(Brigg & Cl'thorpes)

      Faber, David

      Browning, Mrs. Angela

      Fabricant, Michael

      Bruce, Ian (S Dorset)

      Field, Barry (Isle of Wight)

      Budgen, Nicholas

      Fishburn, Dudley

      Burns, Simon

      Forman, Nigel

      Burt, Alistair

      Forth, Eric

      Butler, Peter

      Fowler, Rt Hon Sir Norman

      Carlisle, John (Luton North)

      Fox, Dr Liam (Woodspring)

      Carrington, Matthew

      Fox, Sir Marcus (Shipley)

      Carttiss, Michael

      Freeman, Roger

      Cash, William

      French, Douglas

      Channon, Rt Hon Paul

      Fry, Peter

      Chapman, Sydney

      Gale, Roger

      Churchill, Mr

      Gardiner, Sir George

      856

      Garel-Jones, Rt Hon Tristan

      Merchant, Piers

      Garnier, Edward

      Milligan, Stephen

      Gill, Christopher

      Moate, Sir Roger

      Gillan, Cheryl

      Moss, Malcolm

      Goodlad, Rt Hon Alastair

      Needham, Richard

      Goodson-Wickes, Dr Charles

      Nelson, Anthony

      Gorman, Mrs Teresa

      Neubert, Sir Michael

      Gorst, John

      Newton, Rt Hon Tony

      Greenway, Harry (Ealing N)

      Nicholls, Patrick

      Greenway, John (Ryedale)

      Nicholson, David (Taunton)

      Griffiths, Peter (Portsmouth, N)

      Nicholson, Emma (Devon West)

      Grylls, Sir Michael

      Norris, Steve

      Gummer, Rt Hon John Selwyn

      Onslow, Rt Hon Sir Cranley

      Hague, William

      Oppenheim, Phillip

      Hamilton, Rt Hon Archie (Epsom)

      Ottaway, Richard

      Hannam, Sir John

      Page, Richard

      Hargreaves, Andrew

      Paice, James

      Harris, David

      Patnick, Irvine

      Haselhurst, Alan

      Patten, Rt Hon John

      Hawkins, Nick

      Pattie, Rt Hon Sir Geoffrey

      Hawksley, Warren

      Pawsey, James

      Hayes, Jerry

      Peacock, Mrs Elizabeth

      Heald, Oliver

      Pickles, Eric

      Heath, Rt Hon Sir Edward

      Porter, David (Waveney)

      Heathcoat-Amory, David

      Portillo, Rt Hon Michael

      Hendry, Charles

      Powell, William (Corby)

      Hicks, Robert

      Redwood, John

      Higgins, Rt Hon Sir Terence L.

      Renton, Rt Hon Tim

      Hill, James (Southampton Test)

      Richards, Rod

      Hogg, Rt Hon Douglas (G'tham)

      Riddick, Graham

      Horam, John

      Rifkind, Rt Hon. Malcolm

      Hordern, Rt Hon Sir Peter

      Robathan, Andrew

      Howard, Rt Hon Michael

      Roberts, Rt Hon Sir Wyn

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

      Robinson, Mark (Somerton)

      Howell, Rt Hon David (G'dford)

      Roe, Mrs Marion (Broxbourne)

      Hughes Robert G.(Harrow W)

      Rowe, Andrew (Mid Kent)

      Hunter, Andrew

      Rumbold, Rt Hon Dame Angela

      Jack, Michael

      Ryder, Rt Hon Richard

      Jackson, Robert (Wantage)

      Sackville, Tom

      Jenkin, Bernard

      Sainsbury, Rt Hon Tim

      Jessel, Toby

      Scott, Rt Hon Nicholas

      Johnson Smith, Sir Geoffrey

      Shaw, David (Dover)

      Jones, Gwilym (Cardiff N)

      Shaw, Sir Giles (Pudsey)

      Jones, Robert B.(W Hertfdshr)

      Shephard, Rt Hon Gillian

      Jopling, Rt Hon Michael

      Shepherd, Colin (Hereford)

      Kellett-Bowman, Dame Elaine

      Shepherd, Richard (Aldridge)

      Key, Robert

      Shersby, Michael

      King, Rt Hon Tom

      Sims, Roger

      Knapman, Roger

      Skeet, Sir Trevor

      Knight, Mrs Angela (Erewash)

      Smith, Tim (Beaconsfield)

      Knight, Greg (Derby N)

      Soames, Nicholas

      Knight, Dame Jill (Bir'm E'st'n)

      Spicer, Sir James (W Dorset)

      Knox, David

      Spicer, Michael (S Worcs)

      Lait, Mrs Jacqui

      Spink, Dr Robert

      Legg, Barry

      Spring, Richard

      Lennox-Boyd, Mark

      Sproat, Iain

      Lester, Jim (Broxtowe)

      Squire, Robin (Hornchurch)

      Lidington, David

      Stanley, Rt Hon Sir John

      Lightbown, David

      Steen, Anthony

      Lilley, Rt Hon Peter

      Stephen, Michael

      Lloyd, Peter (Fareham)

      Stern, Michael

      Lord, Michael

      Streeter, Gary

      Luff, Peter

      Sumberg, David

      Lyell, Rt Hon Sir Nicholas

      Sykes, John

      MacGregor, Rt Hon John

      Tapsell, Sir Peter

      MacKay, Andrew

      Taylor, Ian (Esher)

      Maclean, David

      Taylor, John M.(Solihull)

      McLoughlin, Patrick

      Taylor, Sir Teddy (Southend, E)

      McNair-Wilson, Sir Patrick

      Temple-Morris, Peter

      Madel, David

      Thomason, Roy

      Maitland, Lady Olga

      Thornton, Sir Malcolm

      Malone, Gerald

      Thurnham, Peter

      Mans, Keith

      Townsend, Cyril D.(Bexl'yh'th)

      Marland, Paul

      Trend, Michael

      Marlow, Tony

      Trotter, Neville

      Marshall, John (Hendon S)

      Twinn, Dr Ian

      Marshall, Sir Michael (Arundel)

      Vaughan, Sir Gerard

      Martin, David (Portsmouth S)

      Viggers, Peter

      Mawhinney, Dr Brian

      Waldegrave, Rt Hon William

      Mayhew, Rt Hon Sir Patrick

      Walden, George

      857

      Waller, Gary

      Wilshire, David

      Wardle, Charles (Bexhill)

      Winterton, Mrs Ann (Congleton)

      Waterson, Nigel

      Winterton, Nicholas (Macc'f'ld)

      Watts, John

      Wolfson, Mark

      Wells, Bowen

      Wood, Timothy

      Wheeler, Rt Hon Sir John

      Yeo, Tim

      Whitney, Ray

      Young, Sir George (Acton)

      Whittingdale, John

      Widdecombe, Ann

      Tellers for the Noes:

      Wiggin, Sir Jerry

      Mr. Timothy Kirkhope and Mr. Andrew Mitchell.

      Wilkinson, John

      Willetts, David

      Question accordingly negatived.
      Clause 52 ordered to stand part of the Bill.

    Clause 67

      DONATIONS FROM COMPANIES AND INDIVIDUALS
      Ms Harriet Harman: I beg to move amendment No. 46, in page 46, line 14, leave out '£250' and insert ' £200'.
      The Temporary Chairman (Mr. John McWilliam): With this, it will be convenient also to discuss amendment No. 47, in page 46, line 17, leave out '£250' and insert '£200'.
      Ms Harman: We have chosen the question of the tax treatment of charities for this debate for three reasons. First, the demands on charities are growing. Secondly, donations to charities are falling. Thirdly, the effect of the tax changes in the Budget will be that the Government themselves take more money in tax away from charities.
      The demands on charities are growing, first, because of the cuts in social services, which mean that more people are having to turn to charities for services previously provided by local authorities and the health service, and, secondly, because of the growth in unemployment and the growth in debt. There are also demographic reasons—in particular, the growing number of elderly people.
      There is a pattern to the development of charitable services which shows that where the welfare state is being cut back and where it is failing to meet the growing demand resulting from demographic trends, including the growing number of elderly people, charities are increasingly expected to step in and provide the services that I think in general most people would agree should be a basic part of the welfare state.
      7.15 pm
      We support the work of charities and think that they are vital. That is why we have tabled amendments to this clause for debate. But what we do not think—and the charities are absolutely in agreement with us on this—is that the charities should replace the welfare state and take up basic services.
      The role of the charities is very specific. I should like to give two examples of a particular role that they can play. In my constituency a club developed to provide day centre services for black elderly people. That was pioneering work. It was about developing a new way of providing services. It was a sort of gadfly role of the charities to show the social services that there was a different way in which they could provide such services.
      There is also, for example, the work in relation to health services of organisations such as the Family Planning Association, where there has clearly been a need for services that have not been sufficiently provided by the mainstream health service.
      858
      So the demands on charities are growing, but increasingly the Government expect charities to step in and provide where the welfare state is retreating.
      Sir Jim Spicer: May I pursue the hon. Lady's train of thought? Does she feel that, for example, the Macmillan nursing service and the hospice service—which we all know are a growth area, where so much is being poured in, because people want to do this work—should now be taken over by the state and administered by the state, or does she believe that they should go on? In Dorset we have just raised £3.5 million for our own hospice. That was a community effort; people wanted to do it on their own. Surely the hon. Lady is not suggesting that that should be taken over by the state.
      Ms Harman: I think that the role that the hospice movement played was to show the national health service that there was a whole area of unmet need. The charities stepped in to meet that need. Increasingly, the demand has been that hospices, which are a vital service, should not simply be left to charities, but that the national health service should recognise that it has an important role in the care of the dying. That does not mean that the charities do not then have a role in relation to the terminally ill, because what they have done is provide services for the terminally ill at home; they have then moved their pioneering work into another area.
      It seems to us that that is what the role of the charities should be—showing the way, developing new services, seeing what works. Then the social services and the national health service should learn from the work of the charities and move in. That is a very important role that the Macmillan nurses, the Crossroads care attendance scheme and the hospices, for example, have played.
      If one talks to organisations such as the Crossroads care attendance scheme, they say "We've shown the need for these services. We have shown how they should be provided, but don't leave it to us to try to meet all this unmet need on a charitable basis."
      At the same time as there is a growing demand for services, a demand that the social services and the health service are failing to meet, we have seen donations to charities falling, because of the recession. Because we are concerned about the work of charities, I was interested to hear the Chancellor say in his Budget statement on 16 March:
      "Since 1979, the Government have done an enormous amount to help charities … I now have two further changes to propose."
      He announced proposals for increased tax relief on gift aid and payroll giving. He then said:
      "Taken together, they will boost tax relief on donations to charities by some £30 million in a full year."—[Official Report, 16 March 1993; Vol. 221, c. 192.]
      Those of us who were listening carefully to hear about the new measures for charities took that to mean that there would be an overall increase from the Treasury in assistance to charities. I am sure that my hon. Friends took it to mean that there would be increased assistance for charities.
      I therefore looked in detail at the figures in the Red Book and at the figures in Treasury press releases. I also asked further written questions. When I received the answers, I was horrified to discover that there would not be an increase in tax assistance to charities as a result of the

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      Budget. Quite the opposite is the case. The effect of the Budget proposals on charities will be to take money away from them.
      I hope that the Paymaster General will admit that the impression that the Chancellor clearly intended to create —that there was extra help for charities in the Budget—was wholly misleading. There is no extra help for charities in the Budget. In fact, the Government will take more money from charities to help them to fill the growing hole in public finances. That is the first point that I look to the Paymaster General to answer. I hope that he will admit that the tax changes in the Budget, taken together, take more money from charities than they give back.
      On the one hand, charities will gain from payroll giving and from gift aid. That is on the plus side of the charities' balance sheet under the Budget. On the minus side are VAT on fuel bills for charities and the reduction in the tax credits on dividends which are affected by the changes in advance corporation tax. We need to consider the effects of the changes over a period of three years, which is the best way to consider the matter. Whichever set of years we take, we find that charities will lose more than they gain. I am not trying to do some numerical trick here. It is fair to consider the effects over three years because the Government will phase in the ACT changes and the changes in VAT.
      On the Government's own estimates—I ask the Paymaster General to confirm the figures—the charities will gain £83 million over the next three years as a result of the changes in payroll giving and in gift aid. That is the plus side on the charities' balance sheet under the Budget. On the minus side, on the Government's estimate, VAT on fuel will cost charities £60 million over the next three years. I am grateful for an answer to a parliamentary question which said that, in the first year, VAT will be £10 million and that in the second year it will be £25 million. I presume that it will be £25 million in the following year as well.
      On the minus side of the charities' balance sheet is the tax credit on dividends and the effect of the changes in advance corporation tax. According to the Government's own estimates—again, I am grateful for an answer to a parliamentary question which arrived on 11 May—the loss to charities as a result of the ACT changes over the next three years will be £45 million. Over the next three years, the Budget will give charities £83 million, but over the same period it will take away £105 million.
      The Paymaster General should apologise to the House for the misleading impression, which the Chancellor clearly intended to create, that the Budget would help charities. The charities will lose on the Government's own figures. The charities believe that they will lost out by more than £22 million in the Government's figures. The charities estimate that they are likely to lose out by more than £62 million as a result of the Budget. They believe that their losses as a result of the changes in advance corporation tax will be more than the £45 million over the next three years in the Government's estimates.
      I know that the Paymaster General had a meeting with the Wellcome Trust about the issue. The trust has told me that it told him last week that it would lose £10 million as a result of the ACT changes because of the effect on its dividend income. The trust said that that would be 200 jobs gone in British universities. There is an important
      860
      point here about medical research, much of which depends on dividend income. We look to charities to provide pioneering medical research; they also provide nurses to back up clinical research. The changes will affect not only posts in universities, but nurses and hospital beds.
      Mr. Nigel Evans: I am the chairman of Marie Curie Cancer Care in my local area, so I am keen to ensure that the charity is encouraged to raise as much money as it can for the good work that the Marie Curie nurses do throughout Britain. Has the hon. Lady taken into account in the figures some of the money that will be distributed by the national lottery? It is estimated that more than £200 million will go to local charities. Has she also taken into account the changes since 1979? Despite the recession, which we all recognise, charities are in a far healthier state today than they were in 14 years ago.
      Ms Harman: I hope that the Paymaster General will clarify for the House the point that the national lottery was supposed to be additional money. It was not supposed to be a national lottery that would finance charities which do the work that the welfare state should be doing but is no longer able to do. That is an important point.
      The hon. Gentleman said that charities were now in a far healthier position. We and the charities do not think that they are in a healthy position. We do not want to move back to a time when basic welfare services were provided through individual donations because the Government had abdicated their responsibility to provide care for the vulnerable and the elderly in our society.
      Miss Emma Nicholson: Is the hon. Lady misleading herself and, inadvertently, the Committee by not recognising the way in which funding from charities has been used over the years? With the readers of Woman's Own, I raised money for the bone marrow transplant unit at the Westminster children's hospital. That money came from individual, personal donations.
      The national health service union at the time wanted to reject that £1.1 million because it was not public purse funding. That is the reality for charities that have endeavoured to step in. Because of the inbuilt horror of private funding, the NHS unions, for example, and others like them have tried to reject such funding. The Committee should think of how many children would have died if we had not managed to overcome that block.
      Ms Harman: Whatever point the hon. Lady is making, it certainly has nothing to do with the point that I am making and bears no relationship to the case that I am arguing. I have been associated with many charitable appeals relating to social services and the health service. Appeals for extra cots for premature babies, extra research and so on have always asked people to help charities to raise money to plug the gap left by the Government's failure fully to fund our national health service.
      7.30 pm
      Ms Tessa Jowell: My hon. Friend shares with me the privilege of being a patron of the elimination of leukaemia fund which is based at King's College hospital. That charity has recently raised more than £200,000 to open a state-of-the-art leukaemia treatment suite at King's College hospital—an integrated part of that hospital. The sting in the tail came when the fund had to

      861
      pay about £25,000 to meet the VAT requirement of the conversion. It is absolutely clear, not that there is any reluctance to receive charitable giving, but that there will soon be a reluctance from people who stand on windy street corners with collecting cans to raise money to make good what this Government have failed to do. People do not shake collecting cans to raise money for the VAT man.
      Ms Harman: A great army of charitable workers are prepared to give hours of their time to raise money. There is a sense of justifiable resentment on two grounds. Not only are they raising money—the position will be made worse as a result of the Budget changes—to pay net contributions to the tax man; they will need to raise money because the Government are cutting back on services that many people believe should be provided by the welfare state.
      Ironically, this blow will mean that many charities will have to cut their services to meet the VAT bills and compensate for the drop in income as a result of the ACT changes. Many of those charities are in areas formerly controlled by Conservative county councils because those councils failed to develop the necessary welfare services —they simply left it to the charities in those areas.
      Barnardos say that the changes in the tax dividends credit will cost them £200,000 in lost income, the Royal National Lifeboat Institute says that it will cost it £250,000 and the Royal National Institute for the Blind says that it will cost it more than £100,000. As I said, the Wellcome Trust says that it will cost it more than £100 million. There is no doubt that the cut in income will mean that charities will have to pay the Chancellor £105 million over three years, together with the VAT on fuel.
      Miss Emma Nicholson: It is kind and generous of the hon. Lady to give way to me twice—I appreciate it. I suggest that the figures which she has quoted with compassion and thoughtfulness reflect the top 400 charities. The figures for those charities are published by the Charities Aid Foundation. There are 185,000 charities in the United Kingdom and, therefore, the picture of charities that has been put forward by the hon. Lady is limited.
      The charities referred to by the hon. Lady receive substantial central and local government funding. In other words, to suppose that the totality of Barnardos' income—a wonderful charity—comes from people shaking tins on windy street corners is nonsense. For many years, it has received more than 50 per cent. of its income from the Government. That gives a different picture when we talk about that charity giving back in value added tax in terms of central funding.
      Does the hon. Lady agree that the projected figures that she quoted will not be correct because they reflect a tiny minority of the charities in the United Kingdom" The Government's effort on lowering the threshold on gift aid and the tax on payroll giving will enable further fund-raising to take place and, therefore, the incomes of charities will probably increase.
      Ms Harman: I will not give way to the hon. Lady again because she has completely missed my point for the third time. I mentioned Barnados, the Royal National Institute for the Blind and the Wellcome Trust as illustrations—I was illustrating the Government's figures. The Government have not plucked their figures from the top ten charities. The figures are the Government's estimate of
      862
      the effect of the changes on all charities. I note that the hon. Member for Torridge and Devon, West (Miss Nicholson) did not dispute those figures, and I hope that the Paymaster General will not dispute them. I remind him that the figures come from the Red Book, the Inland Revenue press release and written answers to parliamentary questions that I tabled.
      Let us be absolutely clear. The figures are not simply projections from charities in general or the top ten charities; they are the Government's estimate of the amount that charities will lose as a direct result of the Budget measures. Over the next three years, the Chancellor will receive from charities £600 million from the VAT on fuel and £45 million from the changes to tax credits on dividends. Overall, the Chancellor will gain £105 million from all charities over the next three years.
      I should be grateful if the Paymaster General could confirm those Government figures, although the hon. Member for Torridge and Devon, West, who has not looked at them clearly, disputed them. Charities believe that the Government's figure for the amount that they will lose on the ACT changes had been under-estimated—they think that they will lose much more. Of course, I have taken into account the phasing over the next three years.
      As for the amount that charities will allegedly gain as a result of the Budget—the plus side of their balance sheets —the Government's answer to a parliamentary question was that the tax change for payroll giving would mean that charities will benefit to the tune of an extra £1 million a year. We then examine the Government's estimate that charities will gain as a result of the change to gift aid.
      The Government estimate that the additional income on the changes to gift aid and its taxation treatment will be £80 million every three years—first £20 million, then £30 million and then £30 million. Even if one accepts those figures, charities will still lose about £22 million over three years. Charities think that that figure for gift aid is wildly optimistic.
      A survey carried out by the Charities Aid Foundation shows that, between January 1991 and December 1992, 64 per cent. of charities experienced a real decrease in total income because of the recession, 67 per cent. reported a fall in new donations, and 61 per cent. said that there had been a fall in corporate donations. The income for charities from individual and company donations has fallen, yet the Government say that an £80 million tax credit will be available to charities as a result of the Budget change for gift aid. How do they work out that figure? They have assumed that there will be a spectacular increase in donations to charities from individuals and companies. It simply cannot be right that the Government can assume such an increase. Where is the evidence to justify that assumption? The evidence simply does not exist.
      The charities do not believe that there will be an upsurge in charitable donations. If they are to benefit to the extent that the Paymaster General and the Government say from gift aid changes in the Budget, they must attract 45 per cent. more donations than last year. They cannot see how they will do that. Charities will have to receive £60 million more in donations of between £250 and £400 to attract the £20 million of extra tax relief in the Government's first estimate. Thereafter, they would have to receive an extra £90 million per year to attract the £30 million of relief next year and the year after in the Government's estimate. So when receipts from donations to charities have fallen, the Government offer an estimated

      863
      benefit from gift aid, which has at its heart an assumption of huge increases next year, the year after and the year after that.
      I hope that the Paymaster General will tell us how on earth he justifies what we regard as wildly over-optimistic figures for gift aid. Even if he is not prepared to accept that he has made an over-optimistic assessment—we believe that he should—he must not wriggle out of the argument that, even on his own figures, charities will lose significantly as a result of the Budget.
      The work of charities is important. I would be important in any circumstances, but it is even more important when the Government are drawing back the welfare state and increasingly people are having to rely on charities. I hope that the Paymaster General will at least have the courage to admit that the Budget makes charities worse off. I hope that he will explain how he justifies making charities worse off in the next three years. I hope that he will also justify saying that charities will benefit to the extent that he says when the figures assume an increase in donations which charities simply cannot envisage in the next and ensuing years.
      The Paymaster General (Sir John Cope): It might be helpful if I intervene now and respond to any points made later in the debate if that is necessary. I am not sure whether it is strictly necessary for me to declare an interest. In a formal capacity as the Paymaster General, I am a trustee of the Royal Hospital Chelsea and hence of some of the related chairities. I am also treasurer of the Royal Patriotic Fund Corporation. I am also, in a personal capacity, trustee of a small charity which helps a children's clinic in east Jerusalem and of a church restoration charity. I hold a non-executive office in several other local charities.
      The hon. Member for Peckham (Ms Harman) did not speak much about the clause. She widened the debate considerably. I shall first say a word about the clause and the amendment and then deal with some of the general points that she made.
      The clause reduces the minimum limit for gifts to charities which qualify for tax relief under the gift aid scheme from £400 to £250 for gifts made by individual donors and close companies on or after 16 March 1993. I emphasise that date for reasons which will become apparent a little later in my remarks.
      7.45 pm
      The gift aid scheme was widely welcomed when my right hon. Friend the Prime Minister introduced it in 1990 when he was Chancellor of the Exchequer. It has already given substantial help to charities. The figures for the latest quarter have been published today. They show that during the tax year 1992–93 charities claimed tax relief repayments of some £73 million on gift aid donations of £218 million. That means that, over the whole period from October 1990 to the end of 1992–93, charities claimed tax repayments of £138 million on donations of £414 million.
      As the House will be aware, the minimum donation was originally £600. It was then reduced to £400 and is now £250.
      Mr. David Hanson: Does the Paymaster General have a breakdown of the figures for gift aid donations between charities? We have heard about the top 400 charities. Before I was elected to this place I was the
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      director of a small charity. We had limited gift aid resources simply because the infrastructure needed to generate gift aid and payroll giving cost the charity money. That expenditure would have been speculative because we might not have obtained a return from it. I should be interested to know whether the wealth generated by gift aid and payroll giving schemes goes to the largest charities, which often do not need the money as much as the smaller charities in order to survive.
      Sir John Cope: That is arguable, to say the least. The figures that I gave were for all charities of all sizes. I am afraid that I do not have a breakdown of them. It is not known how the figures break down between charities of different sizes. However, gift aid goes to charities of all sizes. Some small charities as well as large ones benefit. It depends to an extent on how much charities seek gift aid donations as opposed to other types of donation. Every charity has a different pattern of giving which it has built up historically and by which it lives.
      The figures which the hon. Member for Peckham kindly gave the House were an estimated cost to the Exchequer as a result of the changes that we propose in the clause of £20 million this year and £30 million next year. I readily accept that that is not a precise estimate. The cost depends on the take-up of the relief by donors from year to year and on other factors. However, I hope that donors will take full advantage of the relief.
      The hon. Member for Peckham implied that charities would need to receive £60 million more in donations to attract £20 million this year and an equivalent figure next year. But the relief will also apply to existing donations of £250 to £400 which might have been made in any case. So they would not necessarily all have to be new donations. They would be new to tax relief, but not necessarily new donations. The figure is not entirely inexplicable. I readily accept that it is an estimate. No one can be sure. We shall not be sure even when we see the figures at the end of the year exactly how much came from the Budget change. But that is the best estimate that our officials were able to make.
      Sir Jim Spicer: The hon. Member for Peckham (Ms Harman) delighted in painting a doom and gloom scenario that was completely unjustified. Our new hospice, the small charity that I mentioned, had great difficulty in obtaining £600 donations. We then had a second crack at obtaining £400 donations. Now we are going out for the third time to obtain donations of £250 and we expect an enormous amount to flow in during this year. I should love to know how many hon. Members contribute through the payroll giving scheme, because I should have thought that there was considerable scope for an increase on that front alone.
      Sir John Cope: I am not sure about other hon. Members, but I make a small payroll donation to one charity. Payroll giving relief has not been exploited as fully as it might have been. I hope that it will be developed more by charities in future, as my hon. Friend suggests. That would be a good thing because, as has been made clear —we shall come to this upstairs on clause 68—it is a small scheme in comparison with gift aid or other areas of tax relief in the amount of tax relief that it gives to charities, so it is capable of development from charities' point of view.

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      That makes the point that gift aid is only one of a range of measures. The amendment suggests that we should have brought the relief down to £200 instead of £250. The hon. Member for Peckham did not specifically address that in her remarks. But part of the reason why we did not is that we were anxious not to undermine regular giving by covenants and by the payroll giving scheme.
      Many of the smaller charities to which the hon. Member for Delyn (Mr. Hanson) referred, such as churches, rely quite heavily on covenanted income. It gives them the assurance of a regular income, which they like from a planning point of view. Too large a reduction in the gift aid minimum donation could have had a substantial impact by reducing that income. That point has been made to us by the Charities Tax Reform Group among others and it is one that we took seriously.
      That is why, when we examined the level of the minimum donation, we took the figure of £250 as providing a balance between encouraging more donors to take advantage of the gift aid scheme while at the same time safeguarding the interests of those charities that depend heavily on covenant income. Therefore, we do not recommend the amendment. However, the hon. Lady did not press it strongly, so she may have some sympathy with that part of my remarks.
      The hon. Lady said that the role of charities was basically pioneering. I do not agree. That is part of the role of charities and it is a perfectly legitimate element of the activities of some charities, but many charities also have a continuing basis.
      Charities cover a wide range of activities and are tremendously different. Some charities are large with big staffs and operations at home and overseas. Others are extremely small and run entirely by volunteers and the arrangement of their income differs a great deal. It is difficult to talk sometimes about charities except in terms of averages, which can be considerably misleading.
      The hon. Lady accused my right hon. Friend the Chancellor of the Exchequer of being inaccurate or misleading in what he said in his Budget speech. But he was entirely accurate in what he said specifically about what has turned into this clause and clause 68, which was the passage that she read out, and also in what he said about advance corporation tax and charities in another part of his speech when he was talking about the changes that were being made at that point.
      The hon. Lady also attempted a calculation based primarily on our figures in the Red Book and in answer to parliamentary questions to show the possible effect on charities of the Budget as a whole, taking the first three years. I hope that she will forgive me for pointing out that she was slightly inaccurate in the way that she put the figures together. On the giving side, as I said earlier, the provisions for relief on gifts apply immediately from the time of the Budget. The hon. Lady was correct in saying that we do not expect that payroll giving will involve more than about £1 million a year from the Exchequer and gift aid will be £20 million, £30 million and £30 million. That calculation was correct at £83 million.
      However, I immediately add he caveat that I gave earlier. These are broad-brush estimates. I entirely accept that they are not and cannot in their nature be precise estimates of exactly what will happen. They are the best estimates of the likely effect of which I and my right hon. Friend have been advised.
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      The hon. Lady correctly identified the items that cost charities money, but she seemed to forget that VAT on fuel and power does not apply until next year and does not apply in full for two years. Dividends have a small implication this year. We estimate that it will be about £5 million on charities in 1993–94, £15 million in 1994–95 and £20 million in 1995–96. Again, that is a broad estimate, not a precise figure. I am not sure that we shall ever be able to give a precise figure in that respect.
      If one accepts the estimate of VAT, the cost of that for charities is nil this year, 1993–94, because it does not apply at all, approximately £10 million in 1994–95 and £25 million in 1995–96. Those, taken together, total £75 million. The net effect of the Budget on charities during the first three years is a positive benefit of about £8 million. Therefore, the hon. Lady's point is not nearly as strong as she made it out to be. However, of course it is correct that there are items in the Budget that cost charities money, or reduce their income. We readily accept that that is the case and have acknowledged that throughout.
      In part, it is true, too, that when we have reduced income tax the relief goes down. That has always been true. The traditional reliefs, as well as the gift aid and the other new reliefs that we have introduced, are less valuable if there is less income tax to refund to a charity on its income.
      Nevertheless, because of the extra giving that has been encouraged, in part because of the extra money that people have in their pockets when they pay less income tax, for example, and because of the changes over the years, in 1979–80 direct tax relief for charities amounted to £175 million. In 1992–93, the year just gone, despite the reductions in income tax, and hence the reductions in money going in reliefs in that kind of way, the total had risen to £779 million in direct tax reliefs alone. There are also some special reliefs on VAT, both those that have been more recently introduced and those of longer standing. I do not believe that the reduction in income tax rates has damaged the income of charities.
      These arguments are relevant when trying to calculate what the effects might be of Budget changes, including these changes. I believe that my right hon. Friend was right to introduce into his Budget the provision that is embodied in this clause. It was right to set the limit at £250 for gift aid and to make the payroll giving improvements which come under another clause. It would not be right, therefore, to accept the amendment.
      8 pm
      Ms Liz Lynne: I agree with the amendment. The Government have made certain concessions, but they do not go far enough. Furthermore, the amendments do not go far enough. The gift aid and payroll giving concessions do not make up for the present shortfall, especially after the implementation on 1 April of community care. Many charities and voluntary organisations will have to pick up the pieces, because local authorities will no longer be able to provide various services. They will be unable to do so because the Government have not provided them with sufficient money to meet their community care commitments.
      Charities will face tremendous problems in the present economic climate. People are in difficulties over giving money to charities. The result of unemployment in Rochdale and elsewhere in the country is that people are

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      cutting back on their charitable giving. If there is an increase in gift aid and payroll giving, there is bound to be a decrease in other charitable giving. People have only so much money that they can afford to give to charities.
      Charities do a worthwhile job. I have been the sponsor and patron of various charities for a number of years and I welcome the work that they do, but they should not do what health authorities and local authorities ought to be doing. For charities to receive an additional £30 million in gift aid, as the Government have suggested, would mean a staggering 83 per cent. increase in giving. No hon. Member can imagine for one moment that anyone will increase their giving by 83 per cent.
      The change in the tax system introduced by the Budget will lead to charities receiving only 20p in the pound on investments. The Chancellor has admitted that over a number of years that will lead to a reduction of £50 million a year in dividend income. I have not plucked that figure out of the air, but that is not what the charities say: they say that their dividend income will probably be reduced by £100 million.
      The Government's concessions will not meet the present shortfall. Charities are extremely worried about the future. I spoke this evening to representatives of one charity who fear the effects of a decrease in charitable giving. The hospice movement, which does a very good job, is in great difficulties. It is competing against other charities. I support my local hospice, but I am told that it will be unable to attract the amount of money that it needs because VAT on fuel and power will hit so hard. The fact that there is no VAT exemption for charities is despicable.
      The Government say that they want to help charities, but they have done nothing to help them in this Budget. I hope that they will do more in the autumn statement than the feeble attempt that they have made to help charities in this Budget.
      Mr. Alan Howarth: I welcome clause 67, which will lower the minimum limit for gift aid from £400 to £250. This is the second time in the short history of gift aid that the Government have sought to lower the limit. As my right hon. Friend the Paymaster General has just told the Committee, gift aid has already proved itself to be a most valuable instrument for raising money on behalf of charities. This reform is a modest improvement to the scheme, but it needs to be seen in a larger context—the progressive development of fiscal support for charities throughout the life of this Government.
      In 1980, Sir Geoffrey Howe doubled the capital transfer tax exemption on bequests to charities to £200,000. He also exempted charities from development land tax and reduced the minimum period for covenants from seven to four years. Year after year since then, in Budget after Budget, in Finance Bill after Finance Bill, we have seen the development of fiscal incentives and tax reliefs to encourage charitable giving and to support charities.
      Mr. David Hanson: Did not Lord Howe also double VAT to 15 per cent. which, as the hon. Member for Rochdale (Ms Lynne) said, cannot be claimed back by charities and is a heavy burden upon them? Whatever the tax concessions given by the Government may be, was not
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      the doubling of VAT to 15 per cent., and its extension to 17.5 per cent., a greater burden than any tax concessions by the Government could offset?
      Mr. Howarth: It is true that VAT was raised substantially at that time, but the purpose was to enable income tax to be brought down. Lower levels of income tax have made a huge difference to people's capacity to make their own decisions as to how to spend their money. That is one of the reasons for the substantial growth in charitable giving in the past 14 years.
      Sir Terence Higgins: Is it not the case that when value added tax was first introduced it proved impracticable to give complete VAT relief to charities and in the early 1970s concessions were made to charities which were sufficient to offset that tax? Subsequently, time and again there have been further reliefs for charities. There cannot be the slightest doubt that if one took away all the concessions that have been made to offset the effect of VAT and got rid of the VAT problem itself, charities would be a great deal worse off. Is it not a fact that the measures taken to offset VAT are far more beneficial to charities in relation to the impact of VAT?
      Mr. Howarth: My right hon. Friend speaks with particular authority on these matters. He was, indeed, the father of VAT—a title of which he is justly proud. I acknowledge the force of my right hon. Friend's argument.
      Ms Lynne: According to the Government's statistics, there will be a loss of £22 million over the next three years. The figures provided by charities suggest that the loss will be even greater than that, so I do not understand the point made by the right hon. Member for Worthing (Sir. T. Higgins).
      Mr. Howarth: The hon. Lady diverts me from the development of my argument. If she will allow me to do so, I shall try to make progress. We shall no doubt return to this issue at a later stage of the debate.
      What I hope to demonstrate is that the reforms, albeit modest, that the Budget makes in the interests of charities have to be set in the longer-term context. Under the 1983 Budget, the wages of staff seconded to work for charities were made allowable against tax for their employers. In 1984, tax relief on family cars which had been substantially adapted for use by disabled people was extended. In 1986, the tax treatment of close companies was reformed in the interests of charitable giving and payroll giving was introduced. The Bill marks the fifth occasion on which the Government have sought to develop and improve the payroll giving scheme. We have seen VAT concessions, such as that in 1989 on fund-raising events.
      Taking all those measures and many others together, the value of charitable tax reliefs is now about £900 million. There is therefore no doubt whatever about the Government's commitment to support charities and the consistency with which the strategy has been developed. I know that my right hon. Friend the Minister's personal commitment and his sensitive awareness of the needs of charities are well appreciated in the charitable world.
      The history that I have briefly related has made eminently good sense. It is appropriate that a Conservative Government should nurture a tradition of charitable giving which dates back at least to the Elizabethan Statute

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      of Uses of 1601. Government have an indispensable, bedrock role in the relief of poverty and in the provision of care for people in need, but it is essential that we also build local and personal responsibility, that we mobilise the generosity of society and that we encourage the better parts of human nature.
      In the words of Sir William Beveridge in 1942, what is needed is a
      "comprehensive policy of social progress."
      Beveridge always preferred to talk in terms not of a welfare state but of a welfare society, and it is always necessary to improve both the welfare state and the welfare society. They are part of each other. It is always necessary to think anew about how we can better match the resources of society to the developing challenges that we face. I put it to the hon. Member for Peckham (Ms Harman) that state bureaucracies are a necessary but insufficient means to this end.
      Let us recollect that the origins of the welfare state are twofold. It derives from 19th century paternalism and from 20th century egalitarianism. Its origins are political and its manner of operation is bureaucratic. It is magnificent, but it is limited. It is powerful, but it is inevitably crude. People's needs vary infinitely. No one's needs conform to any standard and the problems of individuals are not susceptible to remedy by standard means. The state must provide basic guarantees—indeed, it must provide more than basic guarantees—but charities are an essential complement to the state. I was sorry that the hon. Member for Peckham was unwilling to see charities in that role. She spoke of charities as gadflies and as pioneering. She is right on both points, of course, but I should like her to acknowledge that charities are indispensable and valuable permanent partners to the state in its undertakings.
      Charities, after all, have qualities that I would term entrepreneurial. The hon. Lady may feel that that is a term imported from an alien culture and that it is inappropriate. But at their best, charities are motivated to find out and meet demand, and to respond to changing needs. They work from the bottom up, not from the top down. They have a depth of local knowledge and a sensitivity to local circumstances. They are animated by the enthusiasm of their staff and their voluntary workers and not by direction from on high in big organisations. They sit loosely to convention. They are willing to experiment and innovate. They are energetic. They have a delicacy and a precision that the broad brush of bureaucratic provision inevitably lacks. They respond to individual needs and not to the abstractions of policy.
      I do not mean to idealise charities. Too many charities are hidebound, timid, amateur and incompetent, but the best are creative in the senses that I have described arid we need them more than ever. Clause 67 is right and necessary because it builds on the support that the Government have given to charities.
      Charitable and voluntary work meets the needs not only of the recipients but of the givers. To help one's fellow men and women has a profound appeal to many people. I think, for example, of retired people looking for outlets for their energies and talents. I think of those for whom the ordinary routines of getting and spending are simply not sufficiently satisfying in their personal lives. I think, too, of unemployed people, and in this regard this week's Incomes Data Services report offers us all matter for reflection.
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      8.15 pm
      It is, of course, very encouraging that unemployment among women had fallen to about 5.6 per cent. at the start of the year. But unemployment among men remains high at 14.1 per cent. We cannot realistically hope that the gap will quickly close, and the important challenge to policy makers is to help those men find a role in our society. Through voluntary work, many people can feel needed, they can contribute and they can recover a sense of belonging. Through voluntary work, their self-esteem and self-confidence can be restored. They can develop practical skills, after which they will find new opportunities for themselves.
      I agree very much with my right hon. Friend the Prime Minister, who said in a speech at the beginning of February:
      "I believe we must do more to recognise, support and encourage the habit of volunteering, which cements together our society and is one of the great glories of our national life."
      That means strengthening volunteer bureaux such as the excellent one in Stratford-on-Avon, and although it is a delicate and sensitive task for Government, they must do what they can to assist the development of neighbourhood networks of volunteering. If we can do that, we shall provide opportunity for many people for whom we ought to find opportunity, and we shall strengthen the bonds of our society. It is interesting to note that, a month after my right hon. Friend the Prime Minister's speech, President Clinton announced his scheme for national voluntary service in the United States.
      On 2 March, I asked my right hon. Friend the Prime Minister whether the Government would
      "look systematically to identify and eliminate obstacles which at present discourage voluntary work and charitable activity, including aspects of eligibility for both unemployment benefit and invalidity benefit". [Official Report, 2 March 1993; Vol. 220, c. 135]
      Shortly after that, I was glad to be one of the sponsors of an all-party early-day motion, No. 1597, which asks the Government to change the availability-for-work regulations to allow a volunteer seven days in which to give up a voluntary position, to alter the regulations for out-of-pocket expenses, to allow unemployed people to attend voluntary work camps throughout the European Community as well as in the United Kingdom, and to require those who advise benefits claimants to use discretion to encourage volunteering and not to limit it.
      I do not have in mind—nor, I believe, do the other signatories to the motion—a scheme of compulsory workfare. What we are thinking of is encouraging those who want to give back to society in exchange for the support that they have received. I put it to my right hon. Friend the Minister that that is complementary in its spirit to the citizens charter, which properly insists on the rights of individuals. We need equally new emphasis on the obligations of the citizen.
      In reality, we have no option but to proceed towards decentralisation, to diversification, to partnership and to enhancement of the role of voluntary work and charities. The age of centralised bureaucratic government is passing. We live in a society in which information is disseminated instantly and in which our citizens are educated, confident and insist on their independence. In any case, we are driven in this direction by a fiscal imperative: it is no longer possible, if ever it was, for Government simply to raise more and spend more.

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      We are all aware at the same time of the growing demands in our society for better quality services and for new varieties of services, such as the hospices that my hon. Friend the Member for Dorset, West (Sir J. Spicer) mentioned. We therefore have no option but to find new ways of meeting social need. The role of Government is to mobilise the resources of society, to empower and to provide incentives.
      In that process, I have no doubt that local government must play a major part and must be welcomed in its role. If we ask for neighbourliness we must certainly respect and encourage the sense of local community. For the purposes of my argument it does not matter whether local government is controlled by the Conservative party, the Labour party or the Liberal Democratic party, but I am sure that we need flourishing local communities able to express themselves and to pursue their aspirations through the institutions of local government.
      That sense of local community will be expressed not only through local government but through an abundance of local voluntary organisations and local enterprises all working in partnership. What I advocate certainly does not entail any abandonment of responsibility by central Government, who should use their leverage to shape local and private decisions so as to enable us better to pursue our social goals.
      Much of what I have described is already happening. Care in the community is a conspicuous instance. The Government have been right to entrust the lead responsibility for care in the community to local authority social services departments, but it is also right that social services departments should not seek to do everything directly themselves through bureaucratic provision. Central and local government are taking charities into a new and much more formal partnership in social provision. That makes it incumbent upon us to think clearly about the role of charities and about what the impact on them of this new dispensation may be.
      For example, before 1 April 1993, residential care was frequently provided by charities and paid for by residents subsidised by public funds from the Department of Social Security. Since that date, when funding was transferred from the Department to local authorities, charities have been contracted to become part of a publicly provided service. I accept that change, but let us be clear that it is a change of profound and far-reaching importance to charities. We will need to observe carefully the impact of the new dispensation on the nature of charitable activity and motivation.
      That makes it all the more important to distinguish between funding charities through grant or fee to perform contractual functions, and supporting charities through fiscal relief to enable them to use their own initiative for the betterment of society. Both those roles for charities are essential. However, the latter—the encouragement of charities to use their own initiative and entrepreneurial energy for the betterment of society—needs sensitive consideration, given the difficult financial climate that they have had to face. The difficulties are well documented in the Charities Aid Four-illation report, "Charities in Recession".
      As other hon. Members have said, during the recession there has been a decline in voluntary giving and a falling away of the income of charities. Public expenditure constraints have meant that local authorities are less well placed to direct funds towards charities. We must also
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      consider what the impact of the Government's decision on the urban programme may be. There are further uncertainties about the future of city challenge. I hope that city challenge will have an important part to play in future policy because it seems to be one of the most creative means of mobilising the resources of the community that we have yet seen deployed in this country.
      I welcome the clause, and the proposed improvements to the gift aid scheme and to payroll giving. There is an argument, to which my right hon. Friend the Paymaster General referred, that if the limit of gift aid is reduced there will probably be a falling off in the number of covenants made. That is a valid fear, but it is also fair to note that for many years charities lobbied for what was called the single-year covenant, so perhaps they do not have absolute grounds for complaint.
      I have to say—and I say it with sadness—that on balance this Budget disadvantages charities. It might be said that that is no great surprise. Charities are a huge presence in our national life and in our economy. In 1990, there were 171,434 registered charities with income in the order of £17 billion or more than 3 per cent. of gross domestic product. Charities employ at least 200,000 paid staff and there are about 1 million charitable trustees in our society. Perhaps, therefore, it is inevitable that, in a year when the Government are bound to raise taxes, charities will have to bear some of the brunt. Indeed, it would be difficult to exempt them entirely. All the same, I greatly regret the fact that charities are being asked to face an increased VAT burden, and I regret that the impact of the change in advance corporation tax, notwithstanding the transitional relief, seem certain to be so detrimental.
      I ask the Government to stand back and consider the overall, net impact of their policies. It is worth asking whether, even at a time when general taxation has to increase, it is appropriate to increase the burden of taxes on charities. Charities should not be compared with private individuals or companies. As I have said, the Government are asking them to play an increased role in social provision. For all the reasons that I have sought to explain, the Government need charities, and my right hon. Friends should consider carefully the consequences of simultaneously reducing the resources available to them.
      We must contemplate not only the measures in the Bill but, for example, the impact of the council tax on certain charities. Most residential homes run by charities have in the past been exempt from rates, but charities are not entitled to an exemption from the property element which represents 50 per cent. of the council tax. Transitional relief is being provided, but the Leonard Cheshire Foundation estimates that after the transition the change will cost it £210,000 a year. That aspect of the council tax will also be a disincentive to charities to subdivide their larger homes into smaller, homelier residential units, which would otherwise be desirable for care in the community.
      We must also bear in mind the impact of the national lottery, which will inevitably divert some money from charitable giving. Although it is not properly the subject of today's debate, I hope that my right hon. Friend will be willing to contemplate an amendment to the Bill so that instead of a 12 per cent. tax being imposed on lottery ticket sales, winnings would be taxed so as to enable a larger proportion of the money spent on the lottery to go to good causes.

      873
      It is important to examine the overall impact on the charitable sector of the policies simultaneously being pursued by the Government.
      I would not vote for the amendment and I am not even sure whether the hon. Member for Peckham will invite me to do so. None the less, it has provided a useful opportunity for debate, although we all know that, if carried, its practical effect would be relatively trivial in the context of the larger issues that we have discussed.
      I ask my right hon. Friends in government to develop in the range of their policy making a clearer and more consistent concept of what they are asking of charities, and to ensure that an appropriate range of supportive fiscal policies is in place.
      8.30 pm
      Miss Emma Nicholson: My hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) made a splendid, wide-ranging speech about the impact of charities on people who give, on people who help and on people who receive help. That veritable tour de force by the chairman of the all-party group on charities was a wonderful speech to listen to and I am grateful to be allowed to follow it, although I shall employ a slightly different mode of thinking.
      We are debating how charities are funded and where the funds are found. As a derivative of that discussion, we have strayed into the subject of what work charities perform. We have also talked a little about what we believe charities should contribute to our society's social welfare and educational structure. The two small planks on which the whole discussion has been built are the ways of giving to charity —gift aid and payroll giving. I refer to them as small planks because the enormity of charitable giving outstrips them by far.
      I am glad that a number of hon. Members have commented on various ways of giving. I stress that payroll giving can never be the largest source of income for a charity. Opposition Members who have talked about payroll giving as if it were something that could transform a charity's income may have been misleading themselves. That was never the intention.
      Payroll giving was started in 1947 by a Jewish charity called Children and Youth Aliyah—the British arm of a Zionist movement. The charity was set up to raise funds to settle Jewish children from various countries in Israel. It was formed by people who had small factories. In order to get their staff and their families—these were often family businesses—to contribute, payroll deductions were started.
      There was a link-up with the Save the Children Fund at about that time and the two charities ran the scheme together. For many years they were the only charities to do this. It was a combined operation. Why only two charities? Because it is a very labour-intensive scheme to run. A very large number of people are being asked for small sums of money. To make payroll giving effective at that time, a factory's entire work force had to agree to give. Otherwise it would not have been worth the effort of the payroll clerks, cost accountants and finance directors. This was a very difficult type of fund-raising to run. It depended heavily on organisers going in and persuading people on the shop floor to give.
      Now that the Government have stepped in, the situation is much easier. Payroll giving has been
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      transformed into an eminently possible source of funding, albeit still on a relatively small scale. It is on a small scale because people are being invited to contribute regularly from their pay. They have to make a personal commitment. However, the system is infinitely easier now that the Government have stepped in and made it possible to do things which we in the Save the Children Fund did with such difficulty for so many years.
      Gift aid is wonderful, but it will never be the largest source of charitable giving. By far the largest source of charitable giving in this country is events to raise money. Indeed, I hate to tell hon. Members that the preferred United Kingdom means of raising funds is jumble sales. People love to give a little while they enjoy some activity. British people give with a sense of fun and merriment to causes that meet needs which are sometimes of deep social and personal significance. This is particularly true of overseas causes.
      Some years ago the classic model of a charitable giver was a middle-aged lady—a churchgoer or someone who attended the synagogue regularly or went to the mosque. One would encounter a high proportion of widowed people and quite a high proportion of professional people. Those who went to church tended to give to one special charity, with two runners-up; those who went to the synagogue gave regularly to 25 charities; those who went to the mosque were involved in quite a wide spread of charitable giving.
      I do not wish to attribute to the Government a greater impact upon the charity world than has taken place, but, from my own substantial experience in this field, I have to suggest that the Government have transformed the donor profile. Consider Comic Relief and the way in which younger people are now contributing so much more. There is a wider variety of options for giving, and this year's Budget reflects two small but significant methods that the Government have pioneered. A much broader section of the population is now involved in charitable giving.
      Contrary to what several Opposition Members have said, the United Kingdom is exceptionally generous in its giving. The generosity is shown both by individuals and by the Government. We are tenth in the league of donors internationally, and as individuals we are second or third. Britain has always been a profoundly generous nation. It has always been generous to people in need, both at home and overseas. In the recession the income of some charities has indeed gone down, but it should be borne in mind that the income of some has increased. That applies to many overseas aid organisations.
      It is not too far-fetched to suggest that British givers put their money where they see the greatest need. Perhaps they have not been giving quite so generously to some charities that operate in the domestic field as they are aware of the greater state provision. Despite all the talk about cuts, I am aware that some national health service figures are going through the ceiling. The same thing applies to social services provision—what Opposition Members refer to as the welfare state. Is it possible that British donors believe that their money is better targeted to areas where there is little or no state provision? Is it possible that they wish to leave to the state those areas where the state is making full, rich and complex provision?
      It is difficult for the Opposition—particularly for the Labour party, with its desire for total state provision—to accept that charities have a real and continuing part to play. I do not for one moment doubt the generosity of

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      many individual Opposition Members. Indeed, some of them have assisted my own small initiatives to help the helpless. I know how tough the situation is. Opposition Members talk about a pioneering role for charities. A pioneering role is one thing, but the continuation of provision is surely also a proper function of charities in our most modern of welfare states. There are many actions in which the state should not get involved.
      Take Relate as an example. People who are helped by that organisation do not say that the Government should take it over, that provision should be made by the state, and that the welfare state should be tampering with their marital breakdowns or personal-relationship difficulties. What the public ask is that the Government continue to fund Relate generously and regularly so that this voluntary, or quasi-voluntary, organisation may continue its work. I am referring not to its pioneering work but to its continuing work. Meals on Wheels is much more old-fashioned, but is still valuable. The Government fund it, but nobody suggests that they should take it over and deliver the meals, depriving people of the love and care that come with the service.
      I suggest that charities have a continuing role, woven into the weft and warp of our social services and our health and education provision.
      I am one of the two founders of a charity called Cities in Schools. It is an odd title which came about because Mrs. Carter read it back to front; it was meant to be "Schools in Cities". It is a new initiative, based on a United States model which we have converted to a United Kingdom perspective. It is non-political, as is proper for charitable efforts, and targets truancy.
      I do not believe that we will have a pioneering role which will enable us to work ourselves out of a job. We are helping children back into mainstream education in Cardiff, Bethnal Green, Tower Hamlets and other places. Our uniqueness is that we are not a Government body but a voluntary organisation. Cities in Schools involves a mixture of volunteering, enthusiasm and professionalism, and is backed by the local community, the educational system and local businesses.
      That brings me to another point about charitable giving. It is measurable not just in money, although that is a terrible thing to say with the Financial Secretary sitting in front of me. Cash is an enabler, but there are other forms of giving. Burger King assists Cities in Schools in the provision of buildings. Other companies give major gifts in expertise, management and work experience. The Opposition do not much like business involvement in charities, but that is the way to turn young lives away from truancy and bring them back into the main stream. Why do I think that our work will continue? Because I do not believe that truancy will stop tomorrow or that the heavy hand of the state can have the same effect on those youngsters as we can.
      Charitable effort is a continuation of the work that so many of our forebears did historically before the welfare state came into existence. The United Kingdom has a wonderful inheritance of charitable work. We heard a reference to 171,000-plus registered charities, but there must be just as many which are not registered and which
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      carry on a great deal of work. Many of them are very small and have no staff. Many are funded completely voluntarily and do not obtain money from Government.
      How very different their perspective is from that of the larger charities, the top 400, which are so often quoted as the charitable world because the Charities Aid Foundation takes their income, expenditure and style of activity as the norm. It is not the norm. Their expenditure on advertising, salaries and cars, for example, is beyond the norm. Most charities are run very economically and are very much smaller. In most cases their efforts are overlooked.
      We have strayed a long way in the debate from gift aid and payroll giving, but that straying has been thoughtful and should encourage the Government to continue thinking of ways to assist the work of voluntary organisation. I make no apology for talking around the profile of the giver and the way in which the work of charities enlarges the work of the state. Those points were raised by the hon. Member for Peckham (Ms Harman) in her criticism of the initiative by the Government. It is right and proper that we should respond to her.
      I pay tribute to the great generosity of the British people in their giving. I thank the Government for the many ways in which they have made giving more attractive for donors in recent years. In the past couple of years, I have raised £3 million to £4 million and I never fail to be astonished at the imagination and sensitivity of people in recognising need and in giving time, professionalism, expertise and money. Again I thank the Government for making it easier for donors to be generous.
      Amendment negatived.
      Clause 67 ordered to stand part of the Bill.

    Clause 115

      FIRST YEAR ALLOWANCES: MACHINERY AND PLANT
      8.45 pm
      Sir Giles Shaw: I beg to move amendment No. 37, page 84, line 15, leave out 'subsection', and insert 'subsections'.
      The Temporary Chairman (Mr. John McWilliam): With this, it will be convenient to discuss amendment No. 38, in page 84, line 23, at end insert—
      "'(3C) This section applies to so much of any expenditure as is incurred by a person carrying on a trade, on the provision of a ship.".'.
      May I remind the Committee, because it is a Committee, that charity is finished with and that the Chair resumes normal service? Hon. Members must speak to the amendments before the Committee.
      Sir Giles Shaw: The amendment is not unworthy. On the contrary, those who have taken an interest in the extremely gloomy and prolonged decline in the British marine fleet and the shipping industry are bringing the issue correctly to the centre of the Government's policy making, which is the Budget. I am glad that my hon. Friend the Financial Secretary is in his place because these issues must be addressed carefully, urgently and in a constructive and effective way.
      It is common knowledge in the Committee that the decline in the shipping industry has been profound. The purpose of tabling the amendment was, first, that the industry is in a parlous position and requires specific action. Secondly, it is to increase capital allowances to

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      100 per cent. so that there may be some encouragement for the building and replacement of ships. Thirdly, through my hon. Friend the Financial Secretary, I point out to the Government and particularly the Department of Trade and Industry that time is fast running out, and that unless the Government act in fairly short order it will be too late to make any constructive and long-lasting change to the irreparable decline.
      As to the shipping industry itself, the United Kingdom maritime fleet is No. 33 on the world list. That of itself is a miserable statement. I understand that on the latest register there are only 425 vessels, with a gross registered tonnage of only 3.4 million tonnes. The decline has been steady, protracted and virtually unerring in ratio, so that one can reasonably plot that by 2010 the British shipping industry will have disappeared. It was because of that order of magnitude of decline that we decided to table the amendment. It is essential that action is taken now. That is particularly so when the demand for shipping is growing at 4 per cent. per annum. One cannot complain that there is not a market in which to compete and a need for good, efficient and effective shipping.
      The need for a British shipping industry has been firmly established; no words of mine are needed to add to the good causes which we should now pray in aid. It is essential for a trading nation to have an effective shipping and marine industry. It is essential for an international trading nation to have it on a scale that allows international competition to be met. It is essential for a nation that has significant overseas committments and has had the capacity in recent times to require logistic support for defence needs to maintain that capacity.
      The second area of need relates to the fact that the British marine shipping industry and ships are now aging rapidly. The average age of British ships is about 16 years. With that increased life comes not only the need to repair and restore, but increased inefficiency. Modern technology being what it is, it is now posible to find engines which are much more effective, run on less fuel, provide more power and are more mobile and useful in every possible way. So with the decline and ageing come higher costs through inefficient operating levels. Thus it is that, according to the Chamber of Shipping, it is a requirement that some three quarters of the British fleet be replaced by the year 2000. The need is established in fairly clear terms.
      The requirement of replacment brings with it a consequential benefit for British shipbuilders. I need hardly remind my hon. Friend the Financial Secretary, on a day which has seen a question and answer on the subject of Swan Hunter, of the vital importance of providing for increased orders for shipbuilders. Certainly, at least half the orders required to modernise the fleet up to the standards required will be placed with British suppliers.
      Having set out the need and the background of decline, let me come to the specifics. What should be done? My hon. Friend the Financial Secretary will note that the amendment deals with capital allowance—a well-accepted system, widely practised and clearly a Government favourite, because in the Budget there is increased provision for capital allowance for industrial investment. There is no doubt that this is, in the Government's view, a satisfactory mechanism through which to deal with investment, and investment in the industry is certainly required.
      It therefore does not seem illogical that, if there is an industry that needs special care and attention—not
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      charity, but special care and attention—the instrument of capital allowance is a reasonable one to select. That is the purpose of the amendment. The Government are committed to produce, through this Budget, a budget for industry. The British shipping industry, which is surely within that compass, also requires special care and attention.
      Over the years, the Government have been extremely generous in providing a wide range of assistances—if I can use that word—to various industries. If businesses come from outside this country, grants are available if they locate in certain places. Regional grants are available in some areas and in areas of decline substantial grants are available through various measures introduced by the Government and applied through the Treasury or the Department of the Environment. Regional aid, relocation grants and development grants come into this. There is the Urban Development Corporation, for example, introduced to provide special initiatives using Government funds to help establish new industries.
      There are also enterprise zones, introduced, as I recall it, to provide a zone in which there would be significant tax relief for the establishment of certain industries. On the grand scale, this Government, as many predecessors on both sides of the Committee would agree, have been hugely supportive of agriculture and of major public industries, into which the coal industry assuredly fits, with the massive support that it has enjoyed over the years in connection with its indebtedness.
      So there is no shortage of information that leads us to believe that the Government have looked at industrial problems and used taxpayers' money to help relieve them.
      It is against that background, therefore, that I claim that the amendment is relevant to the kind of policy that the Government should be adopting at this time for the industries which they select. If there is to be a significant improvement in the profile for British shipping, it is vital that the Government find the appropriate mechanism to ensure just that.
      One idea that the industry has is the creation of a maritime enterprise zone in which a scheme would be provided which might be attractive to my hon. Friend because it would be ring-fenced. He often finds that simple additions of aid or altering the tax allowance on the capital grant is difficult to operate. The maritime enterprise zone, however, would be unique to the needs of British shipping and could provide a formula worth looking at and applying.
      If, through the capital investment proposal that we lay before the Committee or the maritime zone, there were a significant improvement in the industry's prospects, what benefit would that bring? The answer is significant economic return. There is little doubt that the amendment, if applied, could, according to the Chamber of Shipping, stabilise the position of the fleet within five years. And, if it were accompanied by investment over a period of time in new and more effective and competitive ships, the fleet could be stabilised in five years and the average age could probably be reduced from 16 to 10 years. Over 10 years, perhaps, the fleet could be increased by some 40 per cent. by volume.
      All this would bring huge benefits to our economy. Overseas trading and earnings and the international commitment to shipping which this country has for

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      generations established would grow and with them the marine engineering industries and many related industries would flourish.
      The case is made out for taking some action to assist the industry at a point at which it would appear to be entering a phase of decline that will be terminal unless action is taken.
      Ms. Joan Walley: Does the hon. Gentleman agree with the estimate of the British Chamber of Shipping that unless the Government take urgent action there will be no merchant fleet left by the time of the next general election?
      Sir Giles Shaw: Had the hon. Lady heard my opening remarks, she would have heard me say that by the year 2000 the merchant fleet will have declined to virtually nothing.
      Ideally, I hope that my hon. Friend the Minister will accept the amendment for action now as it would be consistent with the mechanism of the investment allowance and the measures in the Budget for industrial investment in general. If my hon. Friend is not so minded, I press him to consider the matter and, with the agreement of the industry, work out a plan which, in his eyes, will be effective to do the job, because it has to be done.
      If simple allowances are not satisfactory, we must come back to the House with a scheme that will provide for recovery, refurbishment and reinvestment to produce a greater, more competitive and more efficient maritime service than that which we presently enjoy.
      The clause is of real and crucial importance to the industry, which does not in its own right require any charitable treatment, but which is a quintessential industry. It is one of the few industries that one can isolate and say that an island nation demands an adequate, properly staffed and efficient merchant marine.
      9 pm
      Mr. John Hutton: I support the amendments because they will help the shipping industry and the shipbuilding industry. I should like to concentrate on their possible impact on the shipbuilding industry.
      The economic arguments in favour of the amendments are convincing and the hon. Member for Pudsey (Sir G. Shaw) put them effectively. He referred to many strong economic and commercial arguments in favour of the clauses, and I shall not detain the Committee by repeating them.
      I was not in the Chamber at the beginning of the hon. Gentleman's speech, and I apologise for that, but I assume that he has also made the strategic case for increasing the size of the United Kingdom merchant fleet, which has a significant role in commercial activities and in the security and defence of the nation.
      The hon. Gentleman spoke about the significance of the shipping industry to the commercial health of the nation. The Committee should be aware of the major contribution that the industry has made over many years. However, in the past five or six years the situation has become extremely serious. The number of United Kingdom registered ships has halved in the past seven years and our merchant fleet now ranks 33rd in the world, behind countries such as Cyprus and the Bahamas, as hon.
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      Members will be surprised to discover. That is serious for Britain's strategic place as a maritime nation that relies heavily on the activities of its merchant fleet.
      I want to mention the importance of these measures to the health of Britain's shipbuilding industry. In the past few days, there has been a major threat to one of the finest shipyards in the country. It is incumbent on the Government to take a strategic overview of Britain's shipbuilding industry.
      The hon. Member for Pudsey drew attention to the importance of renewing Britain's merchant fleet. I speak for all my hon. Friends when I say that that is an urgent imperative.
      It is no longer an option for the Government to do nothing about what is happening to our maritime industry. As a country we depend on our maritime industry, in particular the British shipbuilding industry, which has been decimated in the past three years by the Government's failure to consider the importance of those industries to the health or the nation.
      I find it depressing when Conservative Members, although there are not many present tonight, talk about the shipbuilding industry as representing yesterday's technology. That is a completely bogus contention. I invite any Conservative Member who wants to experience at first hand the strength of the technological base of Britain's shipbuilding industry to come to my constituency and see the investment that has been made in the shipyard in Barrow and the quality of the engineering work that is carried out.
      There is evidence of that high-quality work in every shipyard in the country, on the Clyde and on the Tyne. If hon. Members want to see the quality of the work on the Tyne, they had better get there quickly, because the decisions that the Government have taken have left the shipbuilding workers on the Tyne cruelly exposed to a decimating future of unemployment.
      I should like a sign that Conservative Members will show some imagination, which is rather a lot to expect from some of them, about the growing scale of the problem faced by many shipbuilding workers who have served the nation incredibly well over many years and deserve better.
      The shipbuilding industry, in particular, looks to the Government to give some indication that they are aware not only of the contribution that the industry has made in the past, but of the contribution that it can and should be allowed to make in the future. The merchant fleet lies at the core of the argument. We accept that the volume of naval work will inevitably decline, but the same cannot be said of our Merchant Navy.
      Although we face stiff competition from the far east and the Pacific rim—with which we need to deal—we should not simply throw up our hands and say that we can make no decision to help the British shipbuilding industry to survive into the next century. We can make such decisions, but we must recognise that inaction is not an option: failure to act would decimate employment opportunities all over the country.
      The hon. Member for Pudsey spoke of the importance of the merchant fleet, and rightly drew our attention to the increasing age of that fleet. The average age of British merchant vessels is now over 16 years. The need for replacements is urgent, and the best way of providing them is to place orders with British shipyards. Perhaps the most excellent contribution that our British shipyards can make

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      is in the design and building of clever, high-tech cargo vessels—vessels that will be needed in the future to carry specialised products around the world. The hon. Member for Pudsey mentioned the expectation that world trade will continue to increase. We need to ensure that British shipbuilding, and the British shipping industry, can contribute to and share in that increase.
      I urge the Committee to support the amendment, on which I hope we shall be able to vote. We need to test the backing of the Committee not only for the future of Britain's shipping industry—which has made a strong contribution to the commercial health of the nation over many decades—but for the desperate need to alleviate the chronic mass unemployment that now affects many shipbuilding communities.
      Sir Terence Higgins: I spent the first seven years of my working life in the shipping industry, and qualified as a member of the Institute of Chartered Shipbrokers. At that time, the British shipping industry was at the forefront of world trade in terms of both liner trade and tramp shipping. Since then, there have been massive technological changes in the form of roll-on/roll-off ships, the development of container vessels and so forth; but—alas —there has also been a huge decline in the size of the British register and the scale of British shipowning.
      I believe that, at an early stage, British ship owners were too confident of their own abilities. They thought that they could compete regardless of whether other countries' owners were receiving huge subsidies from their Governments. That went on for some time, and the British register declined. By the time British ship owners had realised that they could not win such an unfair contest, it had become difficult to obtain Government support.
      Across the world—here I differ somewhat from the hon. Member for Barrow and Furness (Mr. Hutton)—Governments subsidised shipbuilding rather than ensuring that they had competitive shipowners. The result was massive over capacity, with ships being mothballed and —in some cases—being built and then never going to sea before finally being scrapped. The balance between shipowning and shipbuilding has been unfair and wrong—although, as the hon. Gentleman pointed out, the amendment would help both to some extent.
      My right hon. Friend the Chancellor of the Exchequer is very keen on talking about level playing fields. It should be recognised that some playing fields are very difficult to level; that certainly applies to international subsidies, especially shipowning subsidies. The Chamber of Shipping has made it clear that it is behind the Government in seeking to get rid of subsidies across the board; meanwhile, however, something must be done to help those involved. That is the reason for the amendment on which my hon. Friend the Member for Pudsey (Sir G. Shaw) has expounded so eloquently.
      The fact is that, when it comes to level playing fields, the Chancellor has already conceded that there are some situations in which it is necessary to have special help, as exemplified by enterprise zones and the 100 per cent. investment allowance which, in essence, is what my hon. Friend the Member for Pudsey argues ought to be extended to the shipping industry. So there is no great point of principle here which has not already been conceded by the Treasury.
      There is, however, as I know from my own experience, always some danger, as far as the Treasury is concerned,
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      that this will open the floodgates and that further appeals of this sort will be made. The Treasury will ask whether it is possible to ring-fence the particular thing for which hon. Members are putting forward a case. It is clear to me that the shipping industry is more an international market than any other that one can think of and that it is different from petroleum refining or the chemical industry which, we are told, would immediately apply for this kind of grant.
      It is particularly appropriate that my hon. Friend should have moved the amendment in the way that he did, because much of the problem with shipping is that one must invest in a very large lump of equipment at one go and this makes it difficult to raise the necessary amount of money in one go. That is why it is so much easier to do so if one has a front-end-loaded investment allowance.
      It is not necessary for me to go into the importance of invisible earnings, but despite their importance they too have been declining, particularly with regard to the insurance industry, for example, and to the role of the City generally. Much of the strength of the City, however, has always been based on the fact that we have been a major shipping nation, so this measure will help not only the shipping industry but also the position of London as an international centre.
      Mr. Cyril D. Townsend: I have listened to my right hon. Friend's comments with interest and in total agreement. He has covered the strategic aspects of shipping. Can he find time to say a word about the important defence implications? We are an island nation with responsibilities worldwide and we rely on having our own merchant fleet to carry out some of those responsibilities.
      Sir Terence Higgins: My hon. Friend is absolutely right. This matter has been debated in the House on a number of occasions and it is exemplified particularly by national defence, which is very important, so I agree very much with what he says.
      Turning to the question of cost, there seems to be considerable confusion about the figures. The effect of this amendment is entirely to work through cash flow. The cost to the Government will simply be the cost of financing the reduction of the tax revenues in the early years until such time as the tax revenues increase in the later years of the asset's life. There is no grant as such—merely a cash flow problem—and the cost of financing that cash flow in the intervening time. That profile is very desirable in some ways in the first years because we are at present in a deep recession and the need for raising revenue will increase as the recession ends and the economy is eventually in danger of overheating.
      Over the kind of time scale that we are talking of in this amendment, that pattern of cash flow could be quite appropriate. Eventually, if the level of investment is maintained, the cash flow reaches equilibrium and one would not see any great variation over time.
      The crucial point, therefore, is what the cost is, and this is where I have some trouble. I have discussed the matter with my hon. Friend the Economic Secretary and, more briefly, with the Chancellor. The figures that they are bandying around of the cost of the amendment seem to be far in excess of those that the Chamber of Shipping is estimating. We must take the question of costs into

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      account and it is very important that we should sort out this contradiction and, if necessary, return to the matter on Report so that we can go into it in greater depth.
      These figures still seem unresolved, but my understanding from the Chamber of Shipping is that the average cost for each year of investment over, say, five years is likely to be £20 million or £30 million. That is not at all unrealistic for the Treasury, given the benefits which are likely to accrue. As I have already said, it is effectively what is the discounted cash flow, the net present value of the interest forgone over the period when the tax will work its way through. It is not, of course, on the whole of the investment, because we already have an investment allowance of 25 per cent., as I understand it. It is the difference between 25 per cent. and 100 per cent.
      9.15 pm
      I hope that my hon. Friend the Economic Secretary will either accept the figures that the Chamber of Shipping has put forward, which I believe to be correct, or give a very clear undertaking that he is prepared to reconcile them and discuss the matter in much greater depth with a view to accepting the proposals made once this point has been sorted out. But, of course, I am talking of the gross cost.
      The net cost to the Exchequer is likely over time to be much less, because we have here an investment in new ships. The British register is getting very old. It is inefficient in comparison with newer vessels. Consequently, if it changes from old vessels to new, that in itself, with no change in the level of demand worldwide, is likely to increase the profitability of the companies concerned and in turn the revenue that the Treasury derives. Therefore, there is a net increase in the revenue that the Treasury is likely to get over time with regard to this series of assets.
      I understand that, if the register goes on declining at the present rate, it will disappear altogether by 2010. But the ships on the British register may disappear even by the time of the next general election, which we hope is a long way off. Therefore, this is something that cannot be deferred indefinitely, even if some time is needed to sort out the precise figures and exactly what needs to be done, because it is abundantly clear that something needs to be done with regard to the British shipping industry.
      I believe that the proposals the industry puts forward to limit this arrangement for, say, a five-year period while negotiations on reducing unfair competition worldwide can continue are in essence very moderate. The cost anyway depends only on there actually being investments, except in a very trivial amount; it is only if the companies invest that there is any deferment, even, of taxation.
      Surely more investment is fundamentally what we need. Certainly, for the balance of payments it is very important. As the economy recovers, the balance of payments will clearly become an increasing rather than a diminishing problem.
      For all those reasons, I hope that my hon. Friend the Economic Secretary can give a sympathetic response. I believe that I am right in saying that in the past he has made some speeches not dissimilar from the one that I am now delivering, and therefore it is not unreasonable to hope that we shall receive a sympathetic response from him this evening and that at the very least we shall return to this matter very soon—as soon as we can sort out the
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      figures. I believe that the Chamber's figures are right and that the case for the amendments and assistance for the industry is very strong.
      Mr. Nick Harvey: I shall speak briefly in support of the amendment, which was moved strongly by the hon. Member for Pudsey (Sir G. Shaw), who told us that the scale of decline of the British shipping industry was such that we were now 33rd in the world. The right hon. Member for Worthing (Sir T. Higgins) recalled a time when we were first and foremost in the world. Even as recently as 13 years ago we ranked fourth in the world, so the decline has been very speedy.
      Over the same period, the shipping industry's contribution to the balance of payments has halved. The Chamber of Shipping has said that in the past two years over 17 companies have crewed out, flagged out or folded.
      I underline the comments about the need for the Government to act urgently now. Whatever the precise date of the ultimate collapse—whether by the next general election, by the year 2000 or even by the year 2010—there is clearly a desperate worry which is closing in on us quickly. We can all agree that thousands of jobs would go, that there would be an implication for the balance of payments and that there would be knock-on effect on the shipbuilding industry and on many other industries. The hon. Member for Barrow and Furness (Mr. Hutton) spoke with an obvious constituency interest in the future of shipbuilding. On a very much smaller scale, I have constituents who cross the River Torridge to work at the Appledore shipyard.
      The relative decline in the British shipping industry must have something to do with the unequal tax treatment of the shipping industry in various countries. I echo the words of the right hon. Member for Worthing (Sir T. Higgins). The Liberal Democrats would like there to be a concentration on getting other countries to remove the advantages that they are giving. However, we must be realistic. That process will take time. Even within the European Community, decision-making is slow, and we must remember that many of the key players are not members of the European Community.
      We must be realistic about the time that the process will take, and we must see the matter in the context of the urgency of our problem. In the meantime, it is essential for the Government to do someting about the problem. If they act too late, the whole industry will be gone. It must be appropriate for the Government to intervene. When other countries have done so, their shipping industries have responded and have improved—America and Japan being two of the most recent examples.
      I have no way of knowing whether the Government's estimates of what the proposal would cost are right, or whether the estimates by the Chamber of Shipping are more likely to be right. We must cost the proposals and the benefits that would accrue from them. We have already heard that the shipping industry internationally is expanding.
      In the context of the widespread concern in the industry and among the public about the practice of flags of convenience, especially in the wake of the Braer disaster, the shipping industry in Britain must be in a strong position, with its reputation for being modern, efficient and safe. It needs the aid that the amendment offers to take advantage of that opportunity. The fleet could easily

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      double if it was given such assistance. Whatever the cost, there would surely be a long-term gain, even to the Revenue.
      As has been said, the Government recognise various areas as needing special help, one example being regional enterprise initiatives. The right hon. Member for Worthing was right to point out that the enormous outlay on the purchase of a ship which must be made in the first year should be addressed through capital allowances at the same time, rather than being forced to be written off over nine years, as is the present arrangement. The Government may wonder whether they can afford to accept the amendment. I simply ask whether they can afford not to. The impact on industry would be immediate and dramatic. In five years, the average age of the fleet could have halved. Earnings would have increased, employment would have expanded and the Government would have benefited through an improved contribution to the balance of payments.
      The right hon. Member for Worthing was too modest in his anticipation of what the proposal might mean in terms of tax revenue. If we forecast far enough forward, we can see that it would bring a gain to the Revenue and that it would also make a contribution to our defence capability, as other hon. Members have said. The amendment is well measured and I have pleasure in pledging my colleagues' support for it.
      Mr. Nigel Waterson: I am delighted to have the opportunity to speak in support of the amendments. I declare an interest as a solicitor who has practised for many years in maritime matters. In my time as a maritime lawyer, I have witnessed a steady decline in the British merchant fleet and in its position in the world. Other colleagues, notably my hon. Friend the Member for Pudsey (Sir G. Shaw) and my right hon. Friend the Member for Worthing (Sir T. Higgins), have eloquently explained the importance of British shipping to this country. The industry contributes £2.3 billion net a year. It employs about 20,000 seafarers and a further 30,000 ashore.
      It is important to have this debate again this year because, as has been explained with great detail and eloquence, it will be unnecessary and academic in a few years' time because the British merchant fleet will no longer exist. If one takes a straight line extrapolation, at its present rate of attrition, the fleet will effectively have disappeared by the year 2010.
      The shipping industry is emphatically not a smokestack industry that is simply looking for handouts. We have already heard at some length about the level playing field difficulty, which applies to this industry more than most others, and the extent to which other countries, including some notable shipping nations in the European Community, provide favourable but unfair fiscal regimes for their ship owners and operators. As my right hon. Friend the Member for Worthing said, my hon. Friend the Economic Secretary is not unsympathetic to the British shipping and shipbuilding industry. If my hon. Friend feels that the amendments do not achieve the purpose for which they are intended, the Chamber of Shipping and other groups representing the British shipping industry will be more than happy to continue discussing other options.
      The 40 per cent. first-year allowance is welcomed, but it is not enough. We must do everything that we can to give our shipowners the sort of competitive edge that other
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      countries have given their shipowners. The intent of the amendments has been explained, as one might expect, with great skill by a former Treasury Minister, my right hon. Friend the Member for Worthing. He said that the benefits could end up as more or less self-financing and the real net cost for each year of investment would range between possibly £20 million and £30 million.
      If there is a genuine difference of opinion between Treasury officials and Chamber of Shipping officials about those figures, let them continue the discussion and debate. Naturally, the figures are based on certain assumptions. Essentially, they expect the current level of ordering—about 34 ships—to double. That also takes into account another possible amendment to the Budget relating to roll-over relief, but I will not refer to that amendment in this debate.
      There are many arguments why the British merchant fleet needs help. We have heard the important arguments about the balance of payments and the strategic and defence issues. I shall concentrate on only one argument on which I can speak with considerable personal knowledge—the contribution of related activities to shipping, especially in the City of London.
      Apart from the contribution made by British shipping in carrying not only our goods but those of other nations across the seas, the other activities to which I refer earn a further £1.5 billion net for the balance of payments. In the City of London, we take care of more than half the world's marine insurance, protection and indemnity coverage, chartering and cargo broking, ship finance and management, arbitration, law and consultancy services, the classification societies and so on.
      Recently, we have had debates in the House about the importance of the commercial court in London in terms of attracting litigants from abroad. A substantial part of the business of that court derives from London's reputation as the prime maritime centre in the world. I know from personal experience that other centres, such as New York, Piraeus and so on, cannot come close to challenging the pre-eminence of London in this field.
      One of the most dramatic statistics is that the number of British seafarers is shrinking alarmingly—there may be only 5,000 active officers by the year 2000. We need 1,300 new officer cadet entrants a year, yet we took only 343 in 1992. That means that fewer and fewer in due course will come ashore either to pass on their expertise to others or to enter the support and service sectors that I have described.
      In other words, inevitably the shrinking of our national fleet will sooner or later have a knock-on effect on other important parts of the economy. How can we remain a leading maritime and financial centre when we are no longer truly a significant maritime nation? To take one example, how can we expect to influence the new international rules drawn up to combat the possibility of another Braer disaster around our shores if we are no longer a major player in the maritime world?
      I urge my hon. Friend the Economic Secretary to continue a dialogue with the British shipping industry and seize the unprecedented opportunity of two Budgets in one year to put the matter right—if not today, later this year.
      9.30 pm
      Mr. Geoffrey Hoon: I support amendments Nos. 37 and 38, to which my name is attached. The amendments are designed to encourage the purchase of new ships by allowing those who order ships to take advantage of 100 per cent. capital allowances. I believe that the amendments can help to stimulate a much-needed renewal and expansion of the British maritime fleet, perhaps to the extent that the present level of ordering of about 34 new ships each year could be doubled.
      The right hon. Member for Worthing (Sir T. Higgins) talked about the costs to the Revenue. It is obviously right that we should concentrate on that to some extent. I shall return to the figures that he mentioned later. It might assist the Economic Secretary in assessing the likely cost of the measures to the Revenue if he worked with the figure that I suggested—which the hon. Member for Eastbourne (Mr. Waterson) also suggested. An assumption that the measure might double the ordering of ships—another 30-odd ships each year—is a reasonable basis on which the Economic Secretary might calculate the cost to the Revenue.
      The hon. Member for Pudsey (Sir G. Shaw) set out in some detail the arguments for amendments Nos. 37 and 38. I shall endeavour to avoid repeating the statistics that have been set out clearly already. I might try to add one or two of my own.
      It is clear that there has been an inexorable decline in both the United Kingdom-registered and United Kingdom-owned fleet. The figure that I find significant is that, in 1975, we had about 9 per cent. of the world total. That figure had declined by 1991 to a mere 1 per cent. Clearly, if that decline continues at that rate, the alarming conclusions which others have reached this evening that the fleet will disappear fairly quickly is inevitable.
      The disappearance of the British merchant fleet was well discussed in a report by the Transport Select Committee as long ago as 1987. It set out several arguments for maintaining a United Kingdom-registered fleet, which follow on from the various speeches that have been made this evening.
      The Select Committee talked about the impact on trade of a serious reduction in the fleet. It talked about the danger in both defence and economic terms of being entirely dependent on others to move the United Kingdom's imports and exports. That matter was referred to in an intervention. It has not so far been discussed in detail in the debate, but we should have regard to it.
      The Select Committee referred also to the contribution made by shipping to the balance of payments. The Chamber of Shipping estimates that British shipping contributes some £4 billion gross to the United Kingdom's foreign earnings and £2.4 billion net. It comments that British shipping underpins the City maritime services, which earn more than £1.2 billion net abroad. That, obviously, was the observation made by the hon. Member for Eastbourne (Mr. Waterson).
      The figures for the balance of payments are a matter of great concern to the Committee at this stage in our deliberations. Clearly, we are looking at the Chancellor's proposals against the background of a serious balance of payments difficulty. If, in the context of these measures, we can improve that situation, even if it is a modest improvement, surely it should be welcomed.
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      Without repeating the various statistics that have already been given about the decline in the maritime fleet, it might be worth asking why that decline has taken place when other countries seem to have been able to stabilise their fleets and, in some cases, to increase them
      All our major European competitors appear to have been able to establish attractive fiscal regimes that have encouraged investment in shipping. That is certainly the case in Denmark, Germany, Greece, Norway and Sweden. There has been a judicious use of tax incentives—not grants but a favourable fiscal environment, by means of which those countries have been able to reverse the decline in size of their fleets.
      Not only have they been able to reverse the decline in size of the fleets—the numbers of ships—but, more importantly, with regard to the present problems of the United Kingdom maritime fleet, they have significantly improved the aid profile of their fleets. That is crucial where new technology is increasingly used, particularly to reduce operating costs for shipping.
      It has been clearly said that one of the key problems faced by owners in the United Kingdom is that, as they are competing in a world market with higher technology vessels, they are caught in a situation in which their high operating costs and consequentially relatively low revenue means that they are, in effect, forced either to sell or to scrap their existing ships. The idea of the amendments is clearly to allow those fleets to be developed, to purchase new ships, so that we can more effectively compete in what is clearly a vigorous and competitive world market.
      I said that I would return to the question of costs, which has already been covered in some detail by the right hon. Member for Worthing. I simply want to endorse the figures that he gave. The Chamber of Shipping has suggested that the scheme might cost about £70 million gross in the first year. Obviously, the cost of the scheme will depend on how successful it is, but if the net costs that the Chamber of Shipping has set out are between £20 million and £30 million a year, it is difficult to see how the Government can resist such a sensible approach for the United Kingdom shipping fleet.
      When we are considering those costs, I invite the Economic Secretary to the Treasury and the Government to put on the scales the benefits to the Revenue that are likely to arise from the economic advantages that the country will derive from a renewed and expanded British maritime fleet. Clearly, if we have a more competitive fleet —that is the argument—a fleet that is newer, more effective and based on the use of high technology, it will contribute higher tax revenues to the Exchequer. It would be a consequential benefit to our balance of payments.
      My hon. Friend the Member for Barrow and Furness (Mr. Hutton) talked about the prospect of increased orders for ships and maritime equipment within the United Kingdom, and that clearly would be a consequence of the proposals. In addition, the hon. Member for Eastbourne talked about strengthening the United Kingdom's maritime services, particularly in the City of London. For all those reasons, we should support amendments Nos. 37 and 38 as a significant contribution to Britain's economic well-being.
      Mr. Mark Wolfson: I am grateful for this opportunity to make a brief contribution to the debate, which could not be described as anything other than thoroughly thoughtful and measured. I hope that my right

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      hon. and hon. Friends on the Treasury Bench will take into account the concern, interest and determination of the Committee for a change in present policies.
      When I last spoke on the issue in July, the debate focused on the defence implications of the decline in the British merchant fleet. As part of the justification for these amendments, hon. Members have already made that point. Nevertheless, I want to emphasise it again.
      We are coming very close to the time when our defence strategy could be gravely at risk due to our inability to sealift our forces to where they are required in the world, because we do not have British flag vessels for that purpose. This argument has gone on for more than a decade.
      My hon. Friend the Member for Pudsey (Sir G. Shaw) asked for a sympathetic reaction to the amendment from those who sit on the Treasury Bench. I, too, ask for a sympathetic reaction. I have little sympathy For the Government's position because of their inaction on this issue, despite repeated warnings from many hon. Members for many years about the dangers of the inexorable decline of the British merchant fleet.
      I shall not re-emphasise how dangerous that decline is, other than to make the point that 10 years ago, on the eve of the Falklands war, the British flag fleet was 10 times larger that it is today. There has therefore been a dramatic drop over a decade. It must not continue. If it is not to continue, we need a change of policy. I am giving away no secrets when I say that the recently retired First Sea Lord has flagged up, as other senior naval officers have done over many years, the dangers, from the defence aspect, of allowing the decline to continue.
      On that aspect, and as justification for the amendment, which we support, my view is that this is a classic case of pass the parcel between different Departments of State. The Ministry of Defence is concerned about the sealift issue. That was confirmed last summer by the Minister of State for Defence Procurement. The Department of Transport is the sponsor Department for the industry, and the key to any resolution of the issue is the Treasury. It is Treasury Ministers whom I have firmly in my sights tonight. They hold the key to the resolution of this problem. They are friendly sights, but they are quite beady.
      My right hon. Friend the Prime Minister has made it clear that part of our policy for recovery is to give a higher profile to manufacturing industry. That is the Prime Minister's commitment, but action has to follow words. Many other hon. Members suggested that this amendment would also have a beneficial effect on the shipbuilding industry, but in a thoroughly sensible way. It would not, as happened in the past, result in over-capacity. That point was made by my right hon. Friend the Member for Worthing (Sir T. Higgins).
      I emphasise, too, the key importance of what was said by my hon. Friend the Member for Eastbourne (Mr. Waterson) about the effect on invisibles that the rundown of the merchant fleet will have. As he said —I could not make this point more strongly in support of his argument —we cannot expect to maintain a viable City-linked, City-based shipping service if we do not have a shipping industry: the two go together. Many people who are involved in shipping in the City are effective in their jobs because they have seagoing experience, and we cannot have one without the other.
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      I want to be brief, and I do not want to labour points that have already been made. I emphasise to my hon. Friend the Economic Secretary that I am looking for a commitment from him on a minimum of three things: first, that the Treasury is at last seized of the need to arrest the decline in the British merchant fleet; secondly, that he will give further consideration to the arguments that have been deployed tonight, and that we shall return to the issue on report; thirdly, that he and my right hon. Friend the Chancellor will meet representatives of the industry to discuss these issues between now and Report. That is what I look for; it is the minimum that can give me satisfaction as I speak in support of the amendment so clearly moved by my hon. Friend the Member for Pudsey.
      9.45 pm
      Mr. David Shaw: I begin by congratulating my hon. Friend the Member for Eastbourne (Mr. Waterson) on, I believe, his maiden shipping debate speech. Hon. Members who advocate the cause of British shipping welcome his joining our debates and the expertise and experience of the shipping industry that he will bring to bear on the issue.
      I have, as many hon. Members will know, a strong constituency interest, and over the years my name has been attached to a number of amendments similar to this one. Indeed, I have had the honour of moving amendments to previous Finance Bills, and I advanced the case in an Adjournment debate last year.
      The United Kingdom shipping industry is of much importance to this country; we cannot let it deline. Its recent decline accelerated under the previous Labour Government. We all recall Labour's subsidies for Polish ships and its support for the United Nations Conference on Trade and Development code, which resulted in the British shipping industry not getting its fair share of the market. We also recall the Labour Government of 1974–79 trading with socialist countries that subsidised their shipbuilders. Indeed, my right hon. Friend the Member for Worthing (Sir T. Higgins) spoke of the socialist countries that had subsidised their shipping and shipbuilding industries.
      The Government and the Conservative party saved the United Kingdom's car industry. We transformed the car industry, which was in terminal decline under Labour. Why cannot we now tackle the shipping industry? We rescued and rebuilt the car industry, and the time has come to rebuild British shipping.
      Many jobs are at stake—not only the direct jobs on the ships and, in my constituency, on the ferries, but jobs in ports, in legal services, in ship brokers, in insurance, the lawyers, accountants and all the many other jobs that are directly and indirectly dependent on the industry. The Government could use this issue to show that they intend to tackle unemployment in London and the south-east. Unemployment in London is high compared with the rest of the country, and many of the jobs involved in the shipping industry are based in London and the south-east.
      The amendment may call for 100 per cent. allowances, and the Government may be nervous that 100 per cent. would be excessive, but the answer is that surely we should go for some improvement on the present 25 per cent. writing-down allowance. The purpose of the amendment is to draw attention to the plight of the industry. Hon.

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      Members have already mentioned the age of the fleet, and that problem is getting worse. If nothing is done, there will be a significant reduction in the size of the fleet.
      The Government have always had to recognise that there is a problem with the balance of payments if we have fixed exchange rates. We may now have floating exchange rates, but we still have a significant import bill, and shipping could play a major part in reducing the effect of those imports on our balance of payments. The importance of defence, and the fact that we still need a good merchant marine for defence purposes, have also been mentioned.
      Why must we change capital allowances above all else? I have answered that question before and I shall answer it again. The Treasury must read the report of the Federal Reserve Bank of New York following the 1988 changes to capital allowances, which makes it clear that the United Kingdom is most competitive in many areas—that is why we get foreign investment here—but that capital allowances are the one factor on which we are not competitive.
      The shift in capital allowances went too far in the wrong direction, and it is now necessary to reverse it. In his autumn statement, the Chancellor did reverse it, but for one year only. The shipping industry needs that change to be made permanent.
      As my right hon. Friend the Member for Worthing (Sir. T. Higgins) said earlier, a ship represents enormous capital expenditure which, compared with expenditure in other industries, is out of all proportion in terms of the revenue earned. A ship is a very expensive item. The new ferries that P and O has introduced in my constituency cost nearly £100 million apiece. If we are to invest in such shipping and to create the jobs that result, we must recognise that the capital costs and the capital risks, that a businessman is asked to take are enormous.
      We must recognise that the cash expenditure and the tax allowances are out of synchronisation. The cash expenditure is incurred on day one, whereas the tax allowances can take ten or twenty years to come into play. Even after four or five years there are significant tax allowances that are still not available. We must bring about a much fairer position—
      Mr. Bowen Wells: Is my hon. Friend asking us to subsidise the shipping industry?
      Mr. Shaw: We are not asking for subsidies. What I ask for is not a subsidy; it would simply bring the risk/reward ratio into line with what it should be. I shall show my hon. Friend the graph and the statistics, and the report of the Federal Reserve Board of New York, and he will see that there would be no subsidy. Risk and reward would simply be brought back into better balance.
      Mr. Wells: Let my hon. Friend admit to the Committee that he is asking for competitive subsidy for the shipping industry. That is what he is arguing for; let him be honest about it. That is not the right way in which to conduct a shipping industry in this world. Surely he must admit that?
      Mr. Shaw: I reject that suggestion. If I insisted that a 100 per cent. allowance was the only solution, perhaps such a measure might reach a point at which it amounted to a subsidy, but I do not believe that that is the only
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      solution. I ask only that it be recognised that the shipping industry has to invest more money in capital risk, recovery of which probably takes a longer time than recovery in any other industry, and that the ratio of labour costs to capital costs is vastly different.
      Because there is a different risk/reward ratio, it must be accepted that there should be different tax treatment. One hundred per cent. of labour costs are written off in the year in which they are incurred; it is only capital costs in the industry that are written off over a long period.
      As has already been said, when we compare the United Kingdom with the rest of Europe, we realise that there is not a level playing field in the shipping industry. I accept that we are in danger of having to go down the subsidy route because other nations are subsidising their industries out of all proportion to what is required. That is why I say that it may be necessary to have a 100 per cent. allowance for a short term so that we may have a level playing field where we can compete with the rest of Europe.
      I should prefer an allowance structure that reflects the risk/reward ratio. I do not believe that, in the long term, it will be necessary to go to 100 per cent. However, we need more than the 25 per cent. writing down allowance, which does not reflect the risk/reward ratio. The report of the Federal Reserve Board makes it clear that it does not work.
      I know that the Government are listening to this case as, within the past month, I took representatives of the Chamber of Shipping to see the Secretary of State for Employment. My right hon. Friend was immensely sympathetic. She listened to the problems and is making sure that her civil servants work with the shipping industry to see if a solution is possible.
      I have asked for a meeting with the Chancellor. I hope that the Economic Secretary is aware of my request, that he can confirm that the meeting is to take place in the near future, and that he will attend. Such a meeting is necessary. We must put across the case for the shipping industry, and action must be taken. I hope that my hon. Friend will confirm that he is on line to take in the information that we want to bring to him. I look forward to his comments, and I commend the amendment to the Committee.
      Mr. Nicholas Brown: We have had an excellent and very well informed debate on the British shipping industry and on the two amendments that Conservative Members have tabled. The case had been made in very similar terms by the Liberal party, the Conservative party and the parliamentary Labour party. Assistance for the British shipping industry would help our balance of payments. It would improve our invisible earnings and increase tax revenues. Hon. Members have stressed the unique trading position of British shipping as an industrial sector. It trades internationally and operates in a very competitive and highly vulnerable market.
      We have heard about the steady decline of the British fleet. My hon. Friend the Member for Ashfield (Mr. Hoon) drew attention to the report of the Select Committee on Transport, which says that the decline in the British fleet is damaging trade. Hon. Members taking part in this debate have pointed out the importance to the Ministry of Defence of ships taken up from trade. Such ships were, of course, available at the time of the Falklands conflict, but if they were needed today they would not be available.
      The scale of the problem facing the country today is shown by the fact that, of the approximately 19,000 people

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      serving in the merchant marine, about 8,500 are officers. It takes four to 10 years to train a Merchant Navy officer. The average of officers is rising. This is a feature not of stagnation in the industry but of quite dramatic decline. It has important implications for the long-term future of the industry and for the future defence of the country.
      The hon. Member for Pudsey (Sir G. Shaw) knows something about these issues. As a Minister in the Department of Trade and Industry, he dealt with them. He has said that the decline could be terminal by the year 2000. In the Select Committee, estimates have varied, but only by 10 years either way. There is not much of the industry left. The case for doing something now to help it is overwhelming.
      I represent a community that has long-standing connections with the shipping and shipbuilding industries. Indeed, South Shields and North Shields have provided both ships and seamen for centuries. Sadly, their association with those industries has paralleled the industries themselves in their decline. Every hon. Member representing a shipbuilding community will remember how, at the time of the Falklands war, their constituents worked all the hours they possibly could to defend the interests of their country. That was in 1982. Some of those shipyard workers even went to sea with the fleet and served in this conflict. What happened to them? When they returned to this country, most of them were made redundant. A similar fate has befallen merchant seamen. There has been a steady decline.
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      As my hon. Friend the Member for Barrow and Furness (Mr. Hutton) pointed out, the quality of engineering work, and the computerisation and high technology aspects of the shipbuilding industry are often misunderstood. Nevertheless, they are important.
      Enormous efforts have been made in the shipbuilding industrial sector, yet yesterday the Government effectively closed Swan Hunter on Tyneside. There are no orders, no work and no future for it. There was a management buy-out in 1986. Probably it is impossible for management buy-outs to compete with companies like GEC and VSEL in the industrial sector. Certainly it is impossible for them to compete with the Government in the form of Harland and Wolff.
      I remind the House of the bewilderment, the bitterness and the anger felt on Tyneside because of what has happened to its shipbuilding industry. It is also right to assert that the Government should do something now to help, not our shipbuilding industry because that has gone, but the shipping and shipbuilding industry which could be helped by the amendments. The Government should accept the amendments, or there should be a vote.
      In the past, we have been sceptical about 100 per cent. capital allowances, because we have been worried about the artificial manipulaton of losses and the offsetting of losses against other obligations to the Exchequer. Those issues are dealt with elsewhere in the Bill, so we need not have quite the same fear.
      Conservative Members have hinted at discussions with the Treasury team. Some want discussions before returning to the matter on Report; others want discussions before returning to it perhaps in November. Discussions are likely to be protracted, in view of the attitude of the Chancellor of the Exchequer to such amendments.
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      If we want to concentrate the Government's mind on the amendments, the way to do so is to insert them into the Bill as an aide memoire. If the Government have better suggestions, they tan put them before the House on Report. We could then consider their suggestions on their merits and compare them with the amendments, which I urge my right hon. and hon. Friends to support.
      The Economic Secretary to the Treasury (Mr. Anthony Nelson): May I start by congratulating my hon. Friend the Member for Pudsey (Sir G. Shaw) on the able way in which he moved the amendment and on the compelling and thoughtful debate that has ensued? There is no doubt about the strength of feeling on both sides of the Committee about the importance of the British merchant fleet, and of sustaining it for the future and recognising the serious difficulties and problems through which it has sailed in recent years. Tonight I am charged with the difficult responsibility—[Interruption.]
      The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse): Order. The Chair is having great difficulty in hearing the Minister. If we could have a little quiet, it would be helpful.
      Mr. Nelson: I am charged with the difficult responsibility of recognising and sympathising with those real concerns, but also of setting out clearly to the Committee the primacy of dealing with the state of public finances which underlies the Budget strategy. I shall return to that in a moment. I shall also deal briefly with the contributions of all hon. Members, but I wish first to put on record a few statements about this important issue which has become something of a hardy annual in Finance Bill debates.
      The amendment would introduce one leg of the industry's proposals, namely, 100 per cent. first year allowances for money spent on ships. We previously made it clear that we recognised the important contribution which shipping makes to the economy and the central role which industry can be called upon to play —[Interruption.]
      The First Deputy Chairman: Order. I have just appealed for Members to give the Chair and the Committee an opportunity to listen to what the Minister is saying. If Members beyond the Bar want to have discussions, will they please leave the Chamber?
      Mr. Nelson: The Government have, over successive years, done things to help the British Merchant Navy. They are doing things in this Budget and they have an open mind for the future, as and when the opportunity arises, to continue to sustain and help the industry. Let me set out the facts.
      Since 1979 we have introduced a number of measures, including some on the tax front, to help the industry. First, in 1985 we brought forward the point at which allowances for machinery and plant could be claimed by businesses. Since then, shipping companies have consequently been able to claim relief for new ships from the date when the money was spent rather than from the time when the vessel is brought into use. This is particularly valuable to ships which take time to build.
      Secondly, we have specifically helped shipping companies by giving greater flexibility in the use of writing down allowances. Before 1985, allowances for new ships could be postponed and taken in later years whenever it suited the shipowner to do so. In 1985, following

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      representations from the shipping industry, we extended this important concession to cover purchases of second-hand ships. No other industry receives such concessions.
      Thirdly, we have twice loosened the requirements which seafarers must meet to be able to claim exemption from United Kingdom tax. They need now spend only six months abroad to qualify for this concession—an arrangement which is more generous than that enjoyed by any other United Kingdom citizen working overseas.
      Fourthly, on corporation tax, we have greatly reduced the rates of tax on company profits, from 52 per cent. in 1984 to 33 per cent. We have also introduced very generous arrangements enabling the carrying back of profits to be set against losses over the previous three years.
      As for non-tax measures, we have put in place a succession of changes aimed at helping shipping businesses to compete internationally: grants towards the cost of merchant officer training; the funding of the Merchant Navy reserve; and financial assistance with the cost of transporting British crews to and from distant waters. As the Committee will know, next week a very important Bill —the Merchant Shipping (Registration) Bill—will come before the House of Lords which will substantially complete the implementation of the measures agreed by the 1990 joint Government-industry working party.
      That list demonstrates the help that we have given to all businesses, and the additional further assistance that we have given to shipping. What we have not been prepared to do is to give concessions at an unjustified level. This amendment, clearly in our view, is just such a measure. There are a number of reasons which I must enunciate for saying that. The arguments so ably presented by my hon. friends deserve the response of the Government, and I will seek to put the Government's arguments.
      First, the Government argue that the amendment would be very expensive, costing, on the Chamber of Shipping's own figures, between £80 million and more than £100 million each year in terms of tax revenue forgone—and this of course would fall in the years when finances were at their tightest and taxes generally were having to be raised.
      Secondly, the extent to which it would achieve the industry's objective of stimulating increased levels of investment is highly questionable. It is worth remembering that when 100 per cent. first year capital allowances were previously available for investment in shipping, between 1970 and 1984, they did nothing to prevent a significant decline in the size of the United Kingdom merchant fleet—from 32.2 million gross registered tonnes in 1975 to 13.3 million in 1985.
      Since our changes to the business tax regime in 1984, we have seen an increase in investment in ships by United Kingdom-owned companies. It is very important to appreciate that. We hear a great deal about the rundown of the British merchant fleet, but on the money side the fact is that in 1988 investment in the shipping fleet was some £45 million, but it rose to £402 million in 1991. This suggests that the remedy for the industry's difficulties must lie outside the fundamental changes to the tax treatment which the industry is seeking.
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      Thirdly, the amendment would do nothing to stop flagging out. That is because tax allowances are tied to ownership and not to registration, so there would be nothing to stop United Kingdom companies taking the subsidy and continuing to operate the ships from offshore registers. Moreover, such a measure would clearly run counter to the thrust of general tax policy.
      Tax breaks for shipping alone would distort the market and resources would be diverted from inherently more profitable investment, which, taking the economy as a whole, might not be a sensible use of the limited financial resources available.
      Other countries may choose to subsidise their shipping industries, although it has to be said that none of those countries does so to the extent of giving 100 per cent. first year allowances for capital investment. Our priorities are to ensure that the tax system is fair, that it provides a favourable climate for all businesses to operate in, and that profitable investment is properly rewarded.
      Even under the current system, the United Kingdom has a particularly generous system of capital allowances. When the first year allowance for machinery and plant reverts to 25 per cent. in November, expenditure can be written off for tax purposes over seven to eight years, and will still be significantly higher than the rate of economic depreciation for most business assets, particularly for ships, which generally last for much longer than the tax system allows.
      The industry, therefore, is already getting a particularly good deal from the present system, and the tax it pays on its profits is the lowest in Europe; it is also lower than that in Japan and the United States.
      I turn briefly but specifically to the contributions of my hon. Friends. My hon. Friend the Member for Pudsey said that time is of the essence. He and my hon. Friend the Member for Bexleyheath (Mr. Townsend) stressed the defence implications and the importance of the shipbuilding industry, a point emotionally and justifiably made by the hon. Member for Newcastle upon Tyne, East (Mr. Brown) on behalf of his constituency and the official Opposition.
      The hon. Member for Barrow and Furness (Mr. Hutton) called for a strategic overview. I acknowledge the importance of the industry in his constituency, which I know well, and point out the help that is available through the home shipbuilding credit guarantee scheme and the shipbuilding intervention fund to assist the industry.
      The hon. Gentleman and the House should acknowledge that there are three related but quite separate issues: the shipbuilding industry, the shipowning industry, and the British register of shipping.
      Dame Elaine Kellett-Bowman: On a point of order, Mr. Lofthouse. It is utterly impossible to hear a word that is being said.
      The First Deputy Chairman: Order. I have appealed to the Committee twice to give the Minister the opportunity to be heard. My appeal appears to have fallen on deaf ears. Once again I appeal to all hon. Members, especially beyond the Bar. If they want to talk, they should leave the Chamber. Those on both Front Benches are not setting a great example.
      Mr. Nelson: I am anxious to address with expedition but with courtesy the points raised by those who contributed to this important debate.

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      My right hon. Friend the Member for Worthing (Sir T. Higgins) rightly referred to the high initial capital cost of ships. We have a generous system of writing down tax allowances, especially with the 40 per cent. enhanced tax allowance introduced in the clause. It will enable people to claim back more than 60 per cent. over two years and, in any case, the writing down allowance of some 25 per cent. is much faster than the rate of depreciation of the real value of the ships.
      With regard to the difficulties that my right hon. Friend and others flagged up about differences between the computations of the Chamber of Shipping and the Government, our assessments of the yields forgone and the cost of the measures are based on the figures presented by the Chamber of Shipping which suggested to us that the net cost per annum would be about £30 million to £45 million a year over five years. That is on a net basis. taking account of the guesstimate assessment of income that would accrue from the investments that were made discounted back to a present value basis. If that is not done, the yield cost rises to between £80 and £115 million a year. I believe that the Chamber of Shipping would agree those figures.
      The measure adds up to a significant cost, about £380 million over and above the £700 million relief which the Government are providing.
      I am the Treasury Minister whose prime responsibility is to sell gilt-edged securities and raise funding through the Department of National Savings. Given the size of this year's PSBR, I have a big enough job on my hands without adding to it significantly. We are providing some £700 million of relief; an additional cost of some £380 million over the next five years would be difficult to sustain.
      The hon. Member for North Devon (Mr. Harvey) said that we must act. Like others, he spoke of foreign competition and the balance of payments. I acknowledge that the balance of payments, and the gross inflows of money that have been so important to us in the past, provide the basis of one of the most persuasive arguments in favour of the amendment.
      10.15 pm
      My hon. Friend the Member for Eastbourne (Mr. Waterson) spoke of the shipping industry's importance to the economy, reminding us that some 30,000 people were indirectly employed in it. He and others pointed to its association with professional industries in the United Kingdom; but they, too, rely not only on indirect capital allowances to the British merchant fleet, but on the health and vibrancy of the British economy—on low tax rates and sensible management. They rely on Government to provide a climate in which they can prosper and attract professional business from all over the world.
      The hon. Member for Ashfield (Mr. Hoon) also spoke of international competition. He asked why the British fleet had declined. I can provide no better reference than the speech of my hon. Friend the Member for Dover, who cited some of the reasons for that decline.
      My hon. Friend the Member for Sevenoaks (Mr. Wolfson) said that the country's defence strategy would be gravely at risk unless we acted now by providing enhanced capital allowances to help the industry. As was pointed out during a debate in July in which my hon. Friend took part, Operation Granby in the Gulf was extremely successful: we were able voluntarily to charter some 109 foreign vessels, and only five United Kingdom vessels. My hon.
      898
      Friend the Minister of State for Defence Procurement has made it clear on behalf of the Government that we can mount such operations, that we have been successful, and that we believe that, if necessary, we could do so again.
      My hon. Friend said that, nevertheless, the industry had declined over 10 years, and that that must not be allowed to continue; and he asked me for a commitment that I would listen. I hope I have shown that I have done that. He also asked me for a commitment that I would be prepared to speak to the Chamber of Shipping about the matter in the immediate future. I am more than happy to extend such an invitation, and to meet the Chamber of Shipping.
      It is not for me to determine what issues come up on Report, but I am more than willing to concede that it is my responsibility to listen, learn and pay attention to consultations, as I have done during the debate.
      For all those reasons and more, I urge all my hon. Friends to understand that we must concentrate on tackling the state of our public finances to ensure that the deficit is tackled without hindrance to recovery. We cannot do that if, in clause after clause, we add to the amount that we must borrow: that is to put off until tomorrow problems with which we must deal today. Although we may not be able to go as far as some would like in helping the industry today, we have a creditable record.
      Sir Giles Shaw: I have listened carefully to the speech of my hon. Friend the Economic Secretary. He has agreed to meet the industry. Will he agree to examine the question of the maritime enterprise zone and other measures to see whether they are acceptable? Provided that he discusses a wide range of issues with the industry, the meeting will be helpful. That is what the industry wants.
      Mr. Nelson: I shall be more than happy to entertain any suggestions and ideas that are presented. The Treasury's doors are open. I must point out, however, that, according to our estimates, the three elements of the maritime enterprise zone package would cost between £300 million and £500 million, of which the 100 per cent. allowance would be by far the largest part. It would be quite improper to raise hopes. I must be straight with the Committee, but I will listen to sensible proposals. There may be other times and possibilities. Certainly I give the undertaking that my hon. Friend seeks.
      Sir Giles Shaw: I am glad that my hon. Friend recognises that this issue is of extreme importance and one that requires extreme care, good listening and good discussion. In view of the urgency of the matter, I hope that he will agree to do that quickly. If it is possible to make a further statement on Report, or to bring further proposals before the Committee, I hope that he will so do.
      In view of these assurances, I beg to ask leave to withdraw the amendment.—[Interruption.]
      Mr. Nicholas Brown rose—
      The First Deputy Chairman: No.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 244, Noes 279.

      Division No. 267]

      [10.20 pm

      AYES

      Abbott, Ms Diane

      Allen, Graham

      Adams, Mrs Irene

      Alton, David

      Ainger, Nick

      Anderson, Donald (Swansea E)

      Ainsworth, Robert (Cov'try NE)

      Armstrong, Hilary

      899

      Ashdown, Rt Hon Paddy

      Gilbert, Rt Hon Dr John

      Ashton, Joe

      Godsiff, Roger

      Austin-Walker, John

      Golding, Mrs Llin

      Barnes, Harry

      Gordon, Mildred

      Barron, Kevin

      Gould, Bryan

      Battle, John

      Graham, Thomas

      Bayley, Hugh

      Grant, Bernie (Tottenham)

      Beggs, Roy

      Griffiths, Nigel (Edinburgh S)

      Beith, Rt Hon A. J.

      Griffiths, Win (Bridgend)

      Bell, Stuart

      Grocott, Bruce

      Benn, Rt Hon Tony

      Gunnell, John

      Benton, Joe

      Hain, Peter

      Bermingham, Gerald

      Hall, Mike

      Berry, Dr. Roger

      Hanson, David

      Betts, Clive

      Harman, Ms Harriet

      Blair, Tony

      Harvey, Nick

      Blunkett. David

      Henderson, Doug

      Boateng, Paul

      Heppell, John

      Boyce, Jimmy

      Hill, Keith (Streatham)

      Boyes, Roland

      Hinchliffe, David

      Bradley, Keith

      Hoey, Kate

      Bray, Dr Jeremy

      Hogg, Norman (Cumbernauld)

      Brown, Gordon (Dunfermline E)

      Home Robertson, John

      Brown, N.(N'c'tle upon Tyne E)

      Hood, Jimmy

      Bruce, Malcolm (Gordon)

      Hoon, Geoffrey

      Burden, Richard

      Howarth, George (Knowsley N)

      Byers, Stephen

      Howells, Dr. Kim (Pontypridd)

      Callaghan, Jim

      Hoyle, Doug

      Campbell, Mrs Anne (C'bridge)

      Hughes, Kevin (Doncaster N)

      Campbell, Menzies (Fife NE)

      Hughes, Simon (Southwark)

      Campbell, Ronnie (Blyth V)

      Hutton, John

      Campbell-Savours, D. N.

      Illsley, Eric

      Canavan, Dennis

      Jackson, Glenda (H'stead)

      Cann, Jamie

      Jackson, Helen (Shef'ld, H)

      Carlile, Alexander (Montgomry)

      Jamieson, David

      Chisholm, Malcolm

      Janner, Greville

      Clark, Dr David (South Shields)

      Jones, Ieuan Wyn (Ynys Môn)

      Clarke, Eric (Midlothian)

      Jones, Jon Owen (Cardiff C)

      Clarke, Tom (Monklands W)

      Jones, Lynne (B'ham S O)

      Clelland, David

      Jones, Martyn (Clwyd, SW)

      Clwyd, Mrs Ann

      Jowell, Tessa

      Cohen, Harry

      Kaufman, Rt Hon Gerald

      Cook, Frank (Stockton N)

      Keen, Alan

      Cook, Robin (Livingston)

      Kennedy, Jane (Lpool Brdgn)

      Corbett, Robin

      Khabra, Piara S.

      Corston, Ms Jean

      Kilfoyle, Peter

      Cousins, Jim

      Leighton, Ron

      Cryer, Bob

      Lestor, Joan (Eccles)

      Cunningham, Jim (Covy SE)

      Lewis, Terry

      Cunningham, Rt Hon Dr John

      Livingstone, Ken

      Dafis, Cynog

      Lloyd, Tony (Stretford)

      Darling, Alistair

      Llwyd, Elfyn

      Davidson, Ian

      Lynne, Ms Liz

      Davies, Bryan (Oldham C'tral)

      McAllion, John

      Davies, Rt Hon Denzil (Llanelli)

      McAvoy, Thomas

      Denham, John

      McCartney, Ian

      Dewar, Donald

      Macdonald, Calum

      Dixon, Don

      McFall, John

      Dobson, Frank

      McKelvey, William

      Donohoe, Brian H.

      McLeish, Henry

      Dowd, Jim

      Maclennan, Robert

      Dunwoody, Mrs Gwyneth

      McMaster, Gordon

      Eagle, Ms Angela

      Madden, Max

      Eastham, Ken

      Mahon, Alice

      Enright, Derek

      Mandelson, Peter

      Etherington, Bill

      Marek, Dr John

      Ewing, Mrs Margaret

      Marshall, David (Shettleston)

      Fatchett, Derek

      Marshall, Jim (Leicester, S)

      Field, Frank (Birkenhead)

      Martin, Michael J.(Springburn)

      Fisher, Mark

      Martlew, Eric

      Flynn, Paul

      Maxton, John

      Foster, Rt Hon Derek

      Meacher, Michael

      Foster, Don (Bath)

      Meale, Alan

      Foulkes, George

      Michael, Alun

      Fraser, John

      Michie, Bill (Sheffield Heeley)

      Fyfe, Maria

      Milburn, Alan

      Gapes, Mike

      Miller, Andrew

      Garrett, John

      Mitchell, Austin (Gt Grimsby)

      George, Bruce

      Morgan, Rhodri

      Gerrard, Neil

      Morley, Elliot

      900

      Morris, Rt Hon A.(Wy'nshawe)

      Skinner, Dennis

      Morris, Estelle (B'ham Yardley)

      Smith, Andrew (Oxford E)

      Morris, Rt Hon J.(Aberavon)

      Smith, C.(Isl'ton S & F'sbury)

      Mowlam, Marjorie

      Smith, Llew (Blaenau Gwent)

      Mullin, Chris

      Soley, Clive

      Murphy, Paul

      Spearing, Nigel

      Oakes, Rt Hon Gordon

      Steel, Rt Hon Sir David

      O'Brien, Michael (N W'kshire)

      Steinberg, Gerry

      O'Hara, Edward

      Stott, Roger

      Olner, William

      Strang, Dr. Gavin

      O'Neill, Martin

      Straw, Jack

      Parry, Robert

      Taylor, Mrs Ann (Dewsbury)

      Pendry, Tom

      Taylor, Rt Hon John D.(Strgfd)

      Pickthall, Colin

      Taylor, Matthew (Truro)

      Pike, Peter L.

      Tipping, Paddy

      Powell, Ray (Ogmore)

      Trimble, David

      Prentice, Ms Bridget (Lew'm E)

      Turner, Dennis

      Prentice, Gordon (Pendle)

      Vaz, Keith

      Prescott, John

      Walker, Rt Hon Sir Harold

      Primarolo, Dawn

      Wallace, James

      Purchase, Ken

      Walley, Joan

      Quin, Ms Joyce

      Wardell, Gareth (Gower)

      Radice, Giles

      Wareing, Robert N

      Raynsford, Nick

      Watson, Mike

      Reid, Dr John

      Wicks, Malcolm

      Rendel, David

      Wigley, Dafydd

      Robertson, George (Hamilton)

      Williams, Rt Hon Alan (Sw'n W)

      Robinson, Geoffrey (Co'try NW)

      Williams, Alan W (Carmarthen)

      Roche, Mrs. Barbara

      Wilson, Brian

      Rogers, Allan

      Winnick, David

      Rooker, Jeff

      Wise, Audrey

      Rowlands, Ted

      Wolfson, Mark

      Ruddock, Joan

      Worthington, Tony

      Salmond, Alex

      Wray, Jimmy

      Sedgemore, Brian

      Wright, Dr Tony

      Sheerman, Barry

      Young, David (Bolton SE)

      Sheldon, Rt Hon Robert

      Shore, Rt Hon Peter

      Tellers for the Ayes:

      Short, Clare

      Mr. John Spellar and Mr. Andrew Mackinlay.

      Simpson, Alan

      NOES

      Ainsworth, Peter (East Surrey)

      Butcher, John

      Aitken, Jonathan

      Butler, Peter

      Alison, Rt Hon Michael (Selby)

      Carlisle, John (Luton North)

      Allason, Rupert (Torbay)

      Carrington, Matthew

      Amess, David

      Carttiss, Michael

      Ancram, Michael

      Cash, William

      Arbuthnot, James

      Channon, Rt Hon Paul

      Arnold, Jacques (Gravesham)

      Churchill, Mr

      Arnold, Sir Thomas (Hazel Grv)

      Clappison, James

      Ashby, David

      Clark, Dr Michael (Rochford)

      Aspinwall, Jack

      Clifton-Brown, Geoffrey

      Atkinson, Peter (Hexham)

      Coe, Sebastian

      Baldry, Tony

      Congdon, David

      Banks, Matthew (Southport)

      Conway, Derek

      Bates, Michael

      Coombs, Anthony (Wyre For'st)

      Batiste, Spencer

      Coombs, Simon (Swindon)

      Bellingham, Henry

      Cope, Rt Hon Sir John

      Bendall, Vivian

      Couchman, James

      Beresford, Sir Paul

      Cran. James

      Biffen, Rt Hon John

      Currie, Mrs Edwina (S D'by'ire)

      Blackburn, Dr John G.

      Curry, David (Skipton & Ripon)

      Body, Sir Richard

      Davies, Quentin (Stamford)

      Bonsor, Sir Nicholas

      Davis, David (Boothferry)

      Booth, Hartley

      Day, Stephen

      Boswell, Tim

      Deva, Nirj Joseph

      Bottomley, Peter (Eltham)

      Devlin, Tim

      Bottomley, Rt Hon Virginia

      Dickens, Geoffrey

      Bowis, John

      Dicks, Terry

      Boyson, Rt Hon Sir Rhodes

      Dorrell, Stephen

      Brandreth, Gyles

      Dover, Den

      Brazier, Julian

      Duncan, Alan

      Bright, Graham

      Duncan-Smith, Iain

      Brooke, Rt Hon Peter

      Dunn, Bob

      Brown, M.(Brigg & Cl'thorpes)

      Dykes, Hugh

      Browning, Mrs. Angela

      Eggar, Tim

      Bruce, Ian (S Dorset)

      Elletson, Harold

      Burns, Simon

      Emery, Rt Hon Sir Peter

      Burt, Alistair

      Evans, David (Welwyn Hatfield)

      901

      Evans, Jonathan (Brecon)

      Hughes Robert G.(Harrow W)

      Evans, Nigel (Ribble Valley)

      Hunter, Andrew

      Evans, Roger (Monmouth)

      Hurd, Rt Hon Douglas

      Evennett, David

      Jack, Michael

      Faber, David

      Jackson, Robert (Wantage)

      Fabricant, Michael

      Jenkin, Bernard

      Field, Barry (Isle of Wight)

      Jessel, Toby

      Fishburn, Dudley

      Johnson Smith, Sir Geoffrey

      Forman, Nigel

      Jones, Gwilym (Cardiff N)

      Forth, Eric

      Jones, Robert B.(W Hertfdshr)

      Fowler, Rt Hon Sir Norman

      Jopling, Rt Hon Michael

      Fox, Dr Liam (Woodspring)

      Kellett-Bowman, Dame Elaine

      Fox, Sir Marcus (Shipley)

      Key, Robert

      Freeman, Roger

      King, Rt Hon Tom

      French, Douglas

      Kirkhope, Timothy

      Fry, Peter

      Knapman, Roger

      Gale, Roger

      Knight, Mrs Angela (Erewash)

      Gardiner, Sir George

      Knight, Greg (Derby N)

      Garel-Jones, Rt Hon Tristan

      Knight, Dame Jill (Bir'm E'st'n)

      Garnier, Edward

      Knox, David

      Gill, Christopher

      Lait, Mrs Jacqui

      Gillan, Cheryl

      Lamont, Rt Hon Norman

      Goodlad, Rt Hon Alastair

      Lawrence, Sir Ivan

      Goodson-Wickes, Dr Charles

      Legg, Barry

      Gorman, Mrs Teresa

      Lennox-Boyd, Mark

      Gorst, John

      Lester, Jim (Broxtowe)

      Greenway, Harry (Ealing N)

      Lidington, David

      Greenway, John (Ryedale)

      Lightbown, David

      Griffiths, Peter (Portsmouth, N)

      Lilley, Rt Hon Peter

      Grylls, Sir Michael

      Lloyd, Peter (Fareham)

      Gummer, Rt Hon John Selwyn

      Lord, Michael

      Hague, William

      Luff, Peter

      Hamilton, Rt Hon Archie (Epsom)

      Lyell, Rt Hon Sir Nicholas

      Hannam, Sir John

      MacGregor, Rt Hon John

      Hargreaves, Andrew

      MacKay, Andrew

      Harris, David

      Maclean, David

      Haselhurst, Alan

      McLoughlin, Patrick

      Hawkins, Nick

      McNair-Wilson, Sir Patrick

      Hawksley, Warren

      Madel, David

      Hayes, Jerry

      Maitland, Lady Olga

      Heald, Oliver

      Malone, Gerald

      Heath, Rt Hon Sir Edward

      Mans, Keith

      Heathcoat-Amory, David

      Marland, Paul

      Hendry, Charles

      Marlow, Tony

      Heseltine, Rt Hon Michael

      Marshall, John (Hendon S)

      Hicks, Robert

      Marshall, Sir Michael (Arundel)

      Hill, James (Southampton Test)

      Martin, David (Portsmouth S)

      Hogg, Rt Hon Douglas (G'tham)

      Mawhinney, Dr Brian

      Horam, John

      Mayhew, Rt Hon Sir Patrick

      Hordern, Rt Hon Sir Peter

      Mellor, Rt Hon David

      Howard, Rt Hon Michael

      Merchant, Piers

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

      Milligan, Stephen

      Howell, Rt Hon David (G'dford)

      Mitchell, Andrew (Gedling)

      902

      Moate, Sir Roger

      Spring, Richard

      Montgomery, Sir Fergus

      Sproat, Iain

      Moss, Malcolm

      Squire, Robin (Hornchurch)

      Needham, Richard

      Stanley, Rt Hon Sir John

      Nelson, Anthony

      Steen, Anthony

      Neubert, Sir Michael

      Stephen, Michael

      Newton, Rt Hon Tony

      Stern, Michael

      Nicholls, Patrick

      Streeter, Gary

      Nicholson, David (Taunton)

      Sumberg, David

      Nicholson, Emma (Devon West)

      Sweeney, Walter

      Norris, Steve

      Sykes, John

      Onslow, Rt Hon Sir Cranley

      Tapsell, Sir Peter

      Oppenheim, Phillip

      Taylor, Ian (Esher)

      Ottaway, Richard

      Taylor, John M.(Solihull)

      Page, Richard

      Taylor, Sir Teddy (Southend, E)

      Paice, James

      Temple-Morris, Peter

      Patnick, Irvine

      Thomason, Roy

      Patten, Rt Hon John

      Thompson, Patrick (Norwich N)

      Pattie, Rt Hon Sir Geoffrey

      Thornton, Sir Malcolm

      Pawsey, James

      Thurnham, Peter

      Peacock, Mrs Elizabeth

      Tracey, Richard

      Pickles, Eric

      Tredinnick, David

      Porter, David (Waveney)

      Trend, Michael

      Portillo, Rt Hon Michael

      Twinn, Dr Ian

      Powell, William (Corby)

      Vaughan, Sir Gerard

      Redwood, John

      Viggers, Peter

      Renton, Rt Hon Tim

      Waldegrave, Rt Hon William

      Richards, Rod

      Walden, George

      Riddick, Graham

      Waller, Gary

      Rifkind, Rt Hon. Malcolm

      Wardle, Charles (Bexhill)

      Robathan, Andrew

      Waterson, Nigel

      Roberts, Rt Hon Sir Wyn

      Watts, John

      Robinson, Mark (Somerton)

      Wells, Bowen

      Roe, Mrs Marion (Broxbourne)

      Wheeler, Rt Hon Sir John

      Rowe, Andrew (Mid Kent)

      Whitney, Ray

      Rumbold, Rt Hon Dame Angela

      Whittingdale, John

      Ryder, Rt Hon Richard

      Widdecombe, Ann

      Sackville, Tom

      Wiggin, Sir Jerry

      Sainsbury, Rt Hon Tim

      Wilkinson, John

      Scott, Rt Hon Nicholas

      Willetts, David

      Shephard, Rt Hon Gillian

      Wilshire, David

      Shepherd, Colin (Hereford)

      Winterton, Mrs Ann (Congleton)

      Shepherd, Richard (Aldridge)

      Winterton, Nicholas (Macc'f'ld)

      Shersby, Michael

      Wood, Timothy

      Sims, Roger

      Yeo, Tim

      Skeet, Sir Trevor

      Young, Sir George (Acton)

      Smith, Tim (Beaconsfield)

      Soames, Nicholas

      Tellers for the Noes:

      Spicer, Sir James (W Dorset)

      Mr. Sydney Chapman and Mr. Nicholas Baker.

      Spicer, Michael (S Worcs)

      Spink, Dr Robert

      Question accordingly negatived.
      Mr. Nicholas Brown: I beg to move amendment No. 53, in page 84, line 20, leave out "1993" and insert "1994".
      It was our original intention to construct this debate in such a way as to allow us to have a general debate on general allowances and perhaps accommodate the debate on shipping as well. However, there was so much interest in the shipping allowances—the Chancellor has taken a deep, long and sustained interest in this matter—that we thought it right to have the debate in the manner which we have done. Many Labour Members wish to debate the matter covered by this amendment—that is, a general debate about capital allowances. Equally, Conservative Members are eager to take part in this debate, and I am sure that there will be an equivalent number of Labour Members. It is good that the Chancellor is here to listen to a debate on what is left of our nation's manufacturing base.
      The parameters for the debate are well known to every Member of Parliament who represents a constituency with large manufacturing interests. Indeed, I represented such a constituency until yesterday, although I am not sure that that will be the case next week. The decline in economic growth for 10 consecutive quarters has taken its toll. Throughout that period, we have managed to have a balance of payments deficit. We have had a balance of payments deficit even in recession. The deficit now acts as a constraint on recovery. In 10 of the past 13 years since 1979, net investment in new machinery has taken place at less than the rate at which old machinery has been scrapped. Until 1982, the United Kingdom enjoyed trade surpluses in manufactured goods. Since 1983, we have suffered deficits in the same area. Since 1979, two out of every five jobs in manufacturing industry have disappeared, and the Government's response has been feeble in the extreme.
      It is the Labour party's contention that some certainty of intervention is required from the Government. Our amendment, as well as being a vehicle for debate, is modest. It simply seeks to extend the time period for the concessions contained in the Bill. That is not a concept that the Chancellor will find difficult—indeed, he has applied the same concept to many other areas of taxation in the Budget.
      The amendment is modest, but it will provide some certainty for those who would like to rely on the concessions. I commend it to the Committee.
      Mr. Gary Waller: The short-term encouragement of investment in plant and equipment which was provided by the Chancellor's announcement on capital allowances last year was welcome. There are good grounds for believing that it has contributed to the recovery which has clearly begun in manufacturing industry. However, we need a longer-term programme to encourage investment in the United Kingdom, especially investment by small and medium-sized enterprises which are rightly described as crucial to our economic success.
      I shall make a brief declaration of interest. My constituency has not only a great deal of manufacturing industry but a number of machine tool companies and I am an adviser to the Machine Tool Technologies Association. It goes without saying that the machine tool industry would like to see a major improvement in capital investment in the United Kingdom. However, it does not seek specific support directed at its own sector. Rather, it
      904
      looks to the Government to develop fiscal policies which encourage more smaller companies to invest in the type of equipment which will provide tomorrow's growth.
      It is often pointed out that a significant proportion of the largest companies in Europe are located in the United Kingdom. A major proportion of the work force here is employed by those companies. But at the same time relatively few small and medium-sized enterprises develop to become manufacturing giants in their own right. It seems likely that one factor which holds them back is a marked reluctance to invest in high technology modern equipment compared with many of their overseas competitors.
      I suggest that that is regrettable, not only because of the opportunity forgone to generate additional employment opportunities, but because smaller companies are particularly important in driving forward innovation. The most modern advanced equipment is often expensive. I believe that we need a strategic policy to help small and medium-sized companies to re-equip and put themselves at the leading edge of technology. That is what the Japanese and others who have enjoyed considerable success have done in the past. It is not called intervention, but it is a policy which encourages investment. It is directed specifically towards smaller firms, which happen to be those which are often placed at a disadvantage because they are more vulnerable than many of their customers and suppliers in matters such as cash flow and because they are reluctant to take risks which might leave them at the mercy of their bankers.
      Although Japan, like other countries, has suffered in the recession, it is notable that in recent years Japanese companies have invested twice as much as many others in capital equipment. If we are to get on the same track, we need to follow suit. The Confederation of British Industry national manufacturing council has said that Britain needs to double its level of investment in capital equipment by the end of the decade in order to match our industrial competitors.
      In terms of investment, the United Kingdom has remained bottom of the G7 countries and low down among the Organisation for Economic Co-operation and Development countries. In Europe, German economic performance has been particularly notable in recent years. The National Institute of Economic and Social Research has identified low levels of investment in capital as a major deficiency among British firms compared with their German counterparts.
      A choice between more generous capital allowances and higher corporation tax is often put. My experience is that, offered that choice, a substantial proportion of companies would be willing to pay a higher rate of corporation tax, provided that it was combined with more positive allowances to encourage investment.
      The debate has provided an opportunity to air the issue. I suggest that we need a more focused incentive to investment than the amendment implies. Capital allowances should be more generous than those which currently exist, but they should bring special benefits to smaller and medium-sized enterprises. Above all, they should he targeted to bring about the investment in the type of high technology which is more widely available to some of Britain's most successful competitors and which is becoming increasingly essential. I hope that my right hon. and hon. Friends will therefore consider the need for an appropriate strategy.
      Mr. Beith: There are broadly two views about corporation tax allowances and the rate of corporation tax and the hon. Member for Keighley (Mr. Waller) has just advanced one of them. The Chancellor has embraced both of them during the past two years. One view is that we should try to keep the corporation tax rate down and, therefore, not grant a wide range of capital allowances. The other is that capital allowances for investment are more likely to bring about investment and that many business men—I know that this is true—would be willing to accept such a trade-off. They would risk a higher rate of corporation tax, or at least no further reduction, if they could get higher investment allowances.
      Those who favour allowances include those who believe that those allowances should be selective or targeted. The hon. Member for Keighley advanced that view. The Labour party has advanced that view from time to time by seeking a restriction to manufacturing industry. It is one thing to target certain things which seem to be for the general good and should be the subject of allowances, such as environmental improvements; it is another to draw a broad distinction between manufacturing industry and services. That cannot reasonably be done. It does not make sense. I say that despite wishing to see British manufacturing industry revived. To impose an artificial division between manufacturing and services would not help British industry.
      10.45 pm
      In the aftermath of the recession the Government were forced to look for a way to stimulate the economy, and so departed from their previous strong line against more generous capital allowances. In doing so, they probably reflected the views of many business men. Certainly in the consultations that I have had recently with business men, the majority have argued for the allowance route rather than the lower corporation tax route.
      If one tells business men to bear in mind the fact that Britain has lower corporation tax than Germany, they say, "Yes, but look at the use that German manufacturers are able to make of their investment allowances, the level of investment and the quality of German manufacturing plant compared with ours". That is a persuasive argument. It leads one to consider the merits of the amendment, which argues for extending the time scale.
      Perhaps we can have a sort of Newbury extension to the capital allowances in the light of the fact that there is clearly greater public dissatisfaction over the recession than the Government first allowed. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) said that the Chancellor had readily taken up the concept of extending the time scale into other aspects of tax policy. He carries it also into his view of his job. He is extending the time scale of that as much as he possibly can against all those who are trying to get rid of him.
      There probably would be merit in extending the time scale. The Government may have in mind the fact that a cut-off date is sometimes in itself a useful way of stimulating investment, as Lord Howe found out when he was Chancellor. But industry is looking for longer-term encouragement.
      Despite my belief that we do not want to get to the point where the Government are choosing what is industry's best investment, trying to run industry and having such a complex system of investment allowances that they are pretending to know better than industry what
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      is a sensible investment, we must listen, particularly in the face of all the signs of the decline of our manufacturing industry, to the pleas of manufacturers for investment allowances.
      There was a case for the Government's decision in the Budget to go back on their previous rather hard line on the issue and there may be a case for keeping it going a bit longer.
      Mr. Mike O'Brien: When I spoke recently with local business men and with Coventry and Warwickshire CBI at its annual meeting with local Members of Parliament, two issues emerged that were central to their decision to invest in manufacturing. The first was the need for better incentives, particularly capital allowances, over the longer term to encourage manufacturing investment. The second was the need to have confidence in the Chancellor's management of the economy so that they could have confidence that the Government knew what they were doing and had some sort of long-term strategy which would allow them to invest in their industry. The Budget and the Bill provide neither of those.
      My constituency and my region have been hard hit by the recession. In north Warwickshire, unemployment has risen by 135 per cent. since the Prime Minister took office. Federal Express, Burlingtons and Coventry pit have all closed. Daw Mill pit has sought to make redundant 587 men, half its work force. In the west midlands as a whole, manufacturing industry has been devastated. In the past couple of months 640 jobs were lost at Rolls-Royce in Coventry, 100 jobs at British Rail in Walsall, 75 at Courtaulds in Coventry, 227 at Leyland DAF and 160 at Sandwell Contract Services. The list goes on.
      Once, local people in the west midlands were proud to see "Made in the west midlands" on products. Unfortunately, that is now all too rare. Britain's manufacturing heartland now has 42 people chasing every job. Indeed, "Made in Britain" is not only on fewer products these days, but more products are imported into Britain having been made in Hong Kong, the United States, France or Taiwan, than we export with "Made in Britain" on them.
      Manufacturing investment fell by 13 per cent. between 1989 and 1991. In 1992 it fell by 2 per cent. and it is expected to grow only marginally this year. The decline in manufacturing industry, resulting from the lack of a clear industrial strategy, is the major cause of our balance of trade problems.
      Manufacturing activity is now barely above the levels of 1979, while our performance relative to most of our competitors has seen Britain slipping further behind. Many business men see the Conservative attitude to manufacturing investment as that expressed by a recent Chancellor of the Exchequer, who said:
      "I am at a loss to understand the selective importance attached…to the manufacturing sector."—[Official Report, 9 February 1984; Vol. 53, c. 1009.]
      The present Chancellor's recent conversion to the need to give some support to manufacturing industry is an example of too little, too late. The damage has been done. Determined action is needed for recovery and the Bill does not provide that action.
      Manufacturing is a key sector of the economy, because it is the engine of growth and the purveyor of technical progress. As a nation, two thirds of our earnings from foreign currency come from manufactured goods. With

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      the decline in North sea oil, the manufacturing sector is the essential ingredient for solving the balance of payments problem. Failure to support manufacturing investment in the 1980s has resulted in a trade deficit in the middle of a recession for the first time in post-war history. Import penetration is growing. As recovery comes, imports are likely to increase, making the deficit even worse.
      If we are to avoid a balance of payments crisis and a collapse of the pound, we must begin to act. Labour's call to extend capital allowances is an important element in an overall package. It recognises the need to boost manufacturing as recovery takes place. Business men know that the Government's deferred tax increases, planned for next year, will hit demand at the very time that they expected to invest more in order to create recovery. They will be concerned about too great a commitment of their companies' finances and resources at the very time when the recovery, such as it is, may be damaged by the Government's deferred tax increases.
      It seems that this is the first recovery in history where action has been taken to damp it down before it has really got started. Business men need greater encouragement over the longer term to invest, both now and over the next few years, to ensure that British manufacturing industry can recover and create the goods to meet any new demand that may be created in Britain, rather than allowing that demand to suck in imports. That is why capital allowances are so important.
      Capital allowances, however, must be seen as only part of an overall strategy for manufacturing industry. That strategy must include improving the skills of our current work force and improving the education of our young people, our future work force. We must create a highly educated, highly skilled new work force that is able to adapt to the changing demands of business and the international economy.
      One set of figures is interesting in this connection—that 27 per cent. of British workers have technical qualifications, whereas 53 per cent. in Germany, 57 per cent. in the Netherlands and 40 per cent. in France have technical qualifications. If we do not increase our skills, we shall be unable to compete on quality. If we cannot compete on the quality of our products, we shall be forced to drive down wages and overheads so as to be able to compete on price. We do not want to see British salaries and working conditions decline to third-world levels. Until Ministers remove the low-skill shackles from workers, Britain will not have a long-term competitive future.
      Other key needs include improved infrastructure, particularly the transport infrastructure. We also need to target high technology and high-growth new businesses, with tax allowances for new investment. We need, too, financial institutions that look to the long term, that invest in the long term and that small business men can rely upon to see them through the troughs of recession. It is the lack of a clear industrial strategy to complement capital allowances that is missing in Government policy.
      At the moment, business men cannot see any strategy in place. That brings us back to the central issue that business men in my area have relayed to me—a lack of confidence. Business men need a Government who have direction and leadership. The current Chancellor does not inspire confidence in his judgment. He was the Chancellor who
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      hallucinated about the green shoots that were not there and who promised no devaluation, no leaving the exchange rate mechanism, no VAT rises and no tax rises. How can the country have confidence in the economic judgment of a Chancellor who changes his policies so readily, so quickly and so easily? The Chancellor explained away his U-turns—his S-bends—by saying during the last election campaign that he had no plans to raise taxes: he did not foresee the problems or the length of the recession.
      Even if that were entirely true, does not the Chancellor see that that undermines the confidence of business men in his judgment about how the country and the economy should develop? We have a Chancellor whose judgment is unsound and a Prime Minister who took us into the ERM at too high an exchange rate. That suggests that both men at the helm of Britain's economy are quite capable of taking us on to the rocks. Business men know that the judgment of the Chancellor is unsound and that the Budget will do nothing to restore confidence.
      Business men know that, if there is any recovery, it will be, in a sense, by accident rather than as a result of the success of Government policy. Britain is now in a more competitive position because of its withdrawal from the ERM, and that withdrawal was a failure of Government policy. Therefore, any possible recovery will be the result not of success of a policy that was pursued over a long period but of the Government's failure to follow their stated policy. In pursuing that policy, which was initiated by the current Prime Minister, more than 10 per cent. of the work force lost their jobs.
      Britain needs a long-term policy aimed at full employment, supply side policies directed at skills, infrastructure and investment in plant and machinery. That is needed particularly to boost our manufacturing exports to tackle the balance of payments deficit. Without such policies, the United Kingdom economy cannot increase its productive capacity, competitiveness or growth and unemployed people in my constituency will not find the jobs that they so very much need.
      Mrs. Anne Campbell: I do not intend to detain the House very long, but I want to deal with the appalling results of the Government's lack of an industrial strategy in the past 14 years.
      The Government's strategy has been based on one simple numerical indicator—getting down inflation. As a result of their rather bungled attempts to reduce inflation we have lost a huge part of our manufacturing industry.
      Manufacturing's share has fallen by 6 or 7 per cent. of GDP since 1979. I am sure that, in time-honoured fashion, the Minister will say that it has fallen in other countries and that it is due to the world recession, increased productivity and so on, but it has fallen by only 3 per cent. in Germany and by only 2 per cent. in France. Those figures are not comparable with Britain's huge deficit.
      The Government should have looked carefully at the industrial strategy that the Labour party proposed before the last election. By the end of this Parliament, they will have come round to our view, and probably will adopt many of our ideas.
      We said that more investment should be made in capital equipment, in training and education and especially in industrial research and development. Such investment is sadly lacking in this country. A comparison of capital spending per employee in other countries shows clearly what that lack of investment is doing. If we take the United

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      Kingdom's base line as one, the United States and Germany spend about one and a half times as much. France spends 1.6 times as much per employee on capital equipment, and Japan 2.7 times as much. That is why they have better equipped factories, better motivated workers and better management.
      11 pm
      It is important to explain that, as my hon. Friend the Member for Warwickshire, North (Mr. O'Brien) said, everything is linked, and the lack of training sometimes deters managers from introducing new machinery. It is true that the poor level of training of the average British worker means that in British factories it takes longer to train workers when new equipment is installed than it does in Germany or France. That is due not to an inherent lack of skill in British workers but to a lack of training, and it often makes it difficult for managers to install new machinery.
      Incentives are therefore needed. It is right that the time limits should be extended, and I hope that Ministers will consider that idea carefully. We now have an enormous trade deficit in some extremely important goods, such as electrical goods, motor vehicles, textiles, footwear and clothing—all of which are categories in which Britain used to reign supreme, certainly in Europe and probably in the world.
      It may seem curious that I, as the hon. Member of Parliament for Cambridge, should speak about manufacturing industry, although most of the companies in my constituency are small high-tech firms. However, several firms in my constituency supply machinery to larger manufacturing industries, and that is the cause of my concern. If the Government provided some incentive for firms to equip themselves better with plant and machinery, the businesses in my constituency would benefit, as they would supply the equipment.
      Mr. Roger Evans: Does the hon. Lady accept that the logic of her argument would prejudice software houses in her constituency at the expense of the manufacturing industries to which she referred? What conceivable economic rationale could there be for doing that?
      Mrs. Campbell: That is a curious piece of logic, which I am at a loss to understand. Perhaps the hon. Gentleman would like to explain it to me in detail at some stage. Of course I do not accept that investment in manufacturing industry necessarily means that the Government have to do something crazy such as refraining from investing in the computer industry.
      Firms in my constituency could supply equipment such as scanning electron microscopes—which few firms in the world make—television transmitters and industrial motor vehicles. We need a thriving manufacturing industry, and the amendment would help that industry, so I hope that Conservative Members will accept it.
      Mr. Nelson: The brevity of this debate has been no reflection on its profundity. I have been fascinated by the varied in-depth contributions which have been made on the back of the thoughtful amendment moved by the hon. Member for Newcastle upon Tyne, East (Mr. Brown). I shall dispose of—or rather, deal with—the amendment by saying that it seeks to extend from one to two years the period over which allowances are available, which
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      would have two important effects. First, it would increase the cost of the new relief by about £700 million over the next couple of years, at precisely the time when we can least afford it. The Committee will be aware that the increase in writing-down allowances provided for in the clause will already give rise to a yield cost of some £700 million over a couple of years, and the amendment would add a further £720 million in the period up to the year 1995–96.
      Mr. Nicholas Brown: It would help the debate if the Economic Secretary could tell us how the figures are calculated.
      Mr. Nelson: Of course, they have to be guestimates. We hope that they are accurate. It is inevitable that any assessment of the value of a written-down allowance relief has to be based on speculation as to the level of investment that will take place. We can gain some indication from trends—and we have, goodness knows, enough well-qualified people working in the Central Statistical Office and in the Treasury to come forward with a good idea. If it is different, I invite the hon. Gentleman to explain why it would be a lesser cost. Even if it were £200 million less, it would be a considerable addition on top of the substantial relief that the Government have already given.
      Secondly, relaxing the time limit would severely weaken the incentive to bring investment forward. It is the case with all time-limited concessions that the peak of activity is concentrated in the period immediately before the measure is due to be withdrawn. Putting back the expiry date clearly defers the incentive to invest quickly before the relief runs out. For the medium term, our view remains that our policy of low rates of tax levied across a broad base is the right one for business. Once confidence is restored, special tax incentives should no longer be required. We therefore see no case for extending the period over which the allowances are to be made available on the basis of the amendment.
      My hon. Friend the Member for Keighley (Mr. Waller) spoke about the importance of the machine tool industry. I was most interested in what he had to say. He called for a strategy of more generous capital allowances for small and medium-sized enterprises. That is precisely what we have sought to do in extending the allowance to 40 per cent. I should also mention that in another clause we are increasing the up-front allowance for industrial and agricultural buildings.
      he right hon. Member for Berwick-upon-Tweed (Mr. Beith) welcomed the additional relief but called for more. Like my hon. Friend the Member for Keighley, he suggested that some people liked to pay lower corporation tax while others liked enhanced capital allowances. Depending on the circumstances of a firm, one or other will be to its advantage. It is not surprising that there are different views. Our judgment remains that which we made in the mid-80s—that it is better to have much lower levels of corporation tax on the stream of profit and income than to have the special selection and second guessing which belie capital allowance policy.
      Mr. Tim Devlin: Unlike some hon. Members who have spoken, I represent a manufacturing constituency. In all the factory visits that I make in the course of my rounds in Teesside, I have never heard any business suggest that it would be happier if corporation tax went up, even if there were an allowance. Firms which

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      address me on the point want the allowance and the lower rate of tax. They do not want a higher rate of tax and an allowance. They are in favour of the Government's broad strategy of bringing corporation tax down and a little help as well. What has done far more than capital allowances to enhance investment in north-east industry has been Japanese inward investment into the region and the greater emphasis on quality and total quality management.
      Mr. Nelson: My hon. Friend is a champion in the House for manufacturing industry in his constituency. He has proved yet again the importance that he attaches to those matters. His words speak for themselves.
      The hon. Member for Warwickshire, North (Mr. O'Brien) spoke about recession in manufacturing industry in the midlands. He referred to the importance that he attaches to quality and competitiveness—something on which we agree entirely.
      The hon. Member for Cambridge (Mrs. Campbell) spoke eloquently about the small, high technology firms in her constituency and also called for improved capital equipment incentives. We believe that an industrial strategy should rest not just on the delivery of low inflation and low interest rates, but crucially on their longevity. It is vital that we have a period of stability in which low interest rates and low inflation are sustained. If we can add low taxation and deregulation, and if we can build on the special help provided in the autumn statement and the Budget for the automotive industry, that should help many of the areas represented in this short debate.
      For all these reasons, I hope that the Committee will agree that what we have brought forward is what the hon. Member for Islington, South and Finsbury (Mr. Smith) has moved for two successive years and called for on behalf of the Opposition. The Government have delivered that—to acclaim, I hope, from both sides of the Committee. It is an expensive relief, and we do not feel able to go further tonight.
      Mr. Nicholas Brown: There is a very large audience—supporters of the Government party—here tonight for this important discussion and I know that they will welcome the fact that I have copious notes with which to reinforce the arguments already put in this debate. I know that they will also welcome the fact that I have with me a copy of the Labour party's new document, "Making Britain's Future" —a document which clearly would inform a debate on capital allowances. Given the distinguished nature of the audience, I think it would be right to read the whole document into the record. However, I will not.
      I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clause 115 ordered to stand part of the Bill.
      Bill (Clauses 42, 48, 52, 67, 115 and 183) reported, without amendment; to lie upon the Table.

      Teesside International Airport
      Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chapman.]
      11.11 pm
      Mr. Michael Bates: I am delighted to have this opportunity to raise the future of Teesside international airport and its development and opportunities for development. In this debate I will seek to outline why the development of the airport goes hand in hand with the privatisation of the airport.
      There are three reasons why this issue has taken on a new sense of urgency and vigour in recent days. First, at 11 am on Monday 10 May 1993—a date and time that will go down in history—an announcement was made by the Local Government Commission proposing the abolition of Cleveland county and the removal of Darlington from the county of Durham for administrative purposes.
      The significance of this announcement is that Teesside international airport is owned jointly by Cleveland county council, with a majority stake of 60 per cent., and Durham county council, with a 40 per cent. stake. Hence, assuming that the Local Government Commission's proposals are accepted, the airport is heading for an uncertain period of transition as discussions take place with the new Durham authority and Darlington, Middlesbrough, Hartlepool, Stockton and Langbaurgh authorities to see whether they wish to take over the shareholding in the airport or to sell, and, if the latter, to whom.
      The second reason stems from the decision of my right hon. Friend the Chancellor in his autumn statement to allow proceeds from capital assets disposed of in the current year by local authorities to be used for other capital projects in the county.
      Call me an old-fashioned capitalist, Mr. Deputy Speaker, but I think that county councils such as Cleveland and Durham seem to find it difficult enough to maintain our schools and roads, and look after the police and the fire brigade, without dabbling in what is a highly sophisticated and competitive business of running an international airport. Indeed, how often do I receive a clarion call from those local authorities that they are starved of resources. Many of my constituents and council tax payers in Cleveland and Durham may therefore be bewildered as to why these councils wish to retain £20 million of their assets and money tied up in an airport when they have failed to see a dividend on those assets in the past 20 years, and when schools and roads remain in a state of disrepair. The Chancellor's window of opportunity will not be open for long. That is why I am calling on Cleveland and Durham to put the interest of the airport and their council tax payers first by commencing discussions that will lead to the immediate sale of the airport.
      Mr. Tim Devlin: The control tower and the runway are in my constituency, whereas the reception buildings are in the neighbouring constituency of Sedgefield. The division between the two local authorities has been deleterious to the development of the airport which has amazing opportunities for developing the regional airport network around Europe, particularly with the growth of inter-regional links and the developing

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      northern arc within the European Community as markets develop directly between different parts of the nation states without going through the south-east of England.
      The other opportunity open to us in the north-east is provided by the over-capacity of the London airports which are unable to service the aircraft and provide the incoming transatlantic routes with the capacity they need and could be serviced equally well by regional airports such as our excellent one in Teesside. We are missing that opportunity because of the short-sightedness of the blinkered socialist directors of the airport authority that we are saddled with.
      Mr. Bates: My hon. Friend has taken an interest in the development of Teesside airport and has long supported its privatisation, and I am grateful for his comments tonight.
      Having mentioned privatisation, let me explain what I have in mind. The indecision and uncertainty which are bound to result from changes in the ownership of the airport could not come at a worse time for the 140 management and staff at Teesside airport who, under the leadership of Bob Goldfield, their new managing director, have brought the airport back from pre-tax losses of £240,000 in the financial year to March 1992 to a modest pre-tax profit of £134,000 in the year to March 1993.
      Although the profit has to be placed in context as it does not take account of debt charges and includes a substantial amount as a result of NATO exercises based at the airport last year, I believe that the management of the airport should be given the chance to take full financial control of the enterprise—in other words, a management buy-out. Such a move would end a period of uncertainty, allow access to the financial markets for development capital and would present the management and staff with a golden opportunity which I have every confidence in their ability to exploit outside the fetters of municipal control.
      The third reason why the airport should be privatised is so that capital can be available for the development of the airport to ensure that it can take full advantage of the opportunities thrown up by the liberalisation of EC aviation through the European Community's historic aviation package which came into effect on 1 January 1993 and which will establish a single market in aviation.
      Mr. William Hague: I congratulate my hon. Friend on raising a matter which is or great interest to my constituents as well as to his. On EC liberalisation, does he agree that the end of the transitional arrangements of the liberalisation package will open up new opportunities for the airports to have routes from Belfast to Teesside and on to Brussels and that great opportunities are provided by the great demand for flights to the continent and that these opportunities can best be taken up if his proposals are put into effect in future?
      Mr. Bates: I am grateful to my hon. Friend for raising that important point. It has long been the view of many of us who have taken an interest in the development of the airport. Of a passenger throughput of some 345,000, some 200,000 was due to the British Midland service to Heathrow. Clearly, if the airport is to have a prosperous future, it will have to diversify and expand its European routes. It is beginning to happen already with British Northern developing services to Brussels and the package tours which will be introduced from next year.
      Mr. Nigel Evans: Does my hon. Friend recognise that he is arguing not only for Teesside airport but for a principle? My area in the north-west contains Manchester airport—a leading regional airport which, even recently, has been given a second terminal following a £250 million investment. If released from local authority control, it too could take advantage of the liberalisation of the airways: it could expand far more, and serve people in the north-west—and even those further afield—better than it does now.
      Mr. Bates: My hon. Friend makes a valid point. Nothing that I have said this evening applies exclusively to Teesside; it could apply equally to many regional airports. Indeed, it applies to every local authority, not just to Cleveland and Durham. Airports such as East Midlands and Leeds are currently going through the process that I am advocating. Air traffic competition could be liberated.

      I believe that Teesside has the potential to rival Newcastle as the north-east's major airport. Indeed, that was the recommendation of the Stratford report, commissioned by the then Minister for Aviation and Shipping, Mr. Clinton Davis, in 1978. The report went into great detail about which of the three regional airports—Teesside, Newcastle and Carlisle—should be designated the growth airport. That was in the days when the Labour party still believed in a centrally planned economy. We have been denied the opportunity to find out whether they still do; the Opposition Benches are empty.
      The Stratford report recommended Teesside airport because of the scope for extending the 7,500 ft runway to carry the new Boeing 747s; because it was less likely to be fog bound, which is why it was used by the RAF as a base for Vulcan bombers until 1962; because the majority of potential passengers lived nearer to Teesside than to Newcastle or Carlisle; and because it benefited from more available air space than either of its rivals. However, when the report was published, its recommendation was overturned, and the prestigious category B status was given to Newcastle. Teesside was banded in category C.
      It is interesting to consider the fortunes of the two airports since 1978, when that decision was made. In 1978, Newcastle airport had 880,000 passengers; the figure for Teesside was 321,000. Last year, Teesside airport had a passenger throughput of 345,000—an increase of just 7.5 per cent. In contrast, Newcastle airport's throughput had increased to 2 million—an increase of 127 per cent., almost 17 times the growth in passenger numbers at Teesside. That is why Newcastle was able to deliver a £1.5 million dividend to its owners last year, which I do not resent.
      I am pleased to see that my hon. Friend the Member for Hexham (Mr. Atkinson) is present, as I am sure that he takes a considerable interest in the matter. I do not begrudge that money to his authority; none the less, it will be a long time before Cleveland and Durham receive anything in return for their investment in Teesside airport. They have said that the prospect of a dividend remains "a long-term goal".
      Another aspect of the airport that must be mentioned is the 250 acres of prime development land on the site. That land could be developed as a business or technology park were it not for planning restrictions which insist that any development should be airport related. Airport related! My only prerequisite is that any investment should be related to prosperity and jobs. If the councils will not make the decision to remove that restriction, Teesside

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      development corporation should be allowed to expand its area of operation to cover the airport and ensure that planning decisions are not political decisions, just business decisions.
      Here we have an airport that has been a victim of 1970s-style central planning whose resources for development have been limited by local authorities but which serves a dynamic and developing area. Its management have the skills to turn the airport into a profitable venture within a year. The Chancellor has provided a golden opportunity for local authorities to sell their stake in the airport and to use the proceeds to benefit the communities that they serve. We have the third European Community aviation package which gives huge potential for the development of air traffic.
      Our plea this evening is clear. For stability, for success, for Teesside, we appeal to Cleveland and Durham county councils to release this venture from the dead hand of municipal government and allow the professionals and private capital to develop the airport into a fitting gateway to the most dynamic industrial area in the country, Teesside.
      11.24 pm
      The Parliamentary Under-Secretary of State for Transport (Mr. Steve Norris): May I congratulate my hon. Friend the Member for Langbaurgh (Mr. Bates) on bringing forward this important subject this evening. I recall that he and I were denied a breakfast-time rendezvous on the Consolidated Fund Bill just before Christmas to discuss this issue and I fully recognise his concern about the airport and its future. I am delighted to see my hon. Friends the Members for Stockton, South (Mr. Devlin) and for Richmond, Yorks (Mr. Hague). My hon. Friend the Member for Richmond and I are somewhat of an endangered species these days as probably the only two living Tory by-election victors in existence or, should I say, not in captivity. Perhaps that is inappropriate. Perhaps I should have said "in captivity". Nevertheless, I am delighted to see him here and to welcome his contribution and also to see my hon. Friends the Members for Hexham (Mr. Atkinson) and for Ribble Valley (Mr. Evans), not forgetting the presence of my hon. Friend the Member for Chipping Barnet (Mr. Chapman) who, I know, takes a tremendous interest in all these matters.
      Teesside airport operates as a public airport company, Teesside International Airport Ltd. The company acquired the airport undertaking, property and certain other assets and liabilities from Cleveland and Durham county councils on 1 April 1987 under part II of the Airports Act 1986. The company is therefore, as my hon. Friend says, wholly owned by the two county councils and it is very much a public sector entity.
      Our general attitude towards regional airports is that we want them to develop and prosper, handling all the traffic that they can attract, not only for the benefits that they can bring for those who live in the regions but for the contribution that they can make to relieving pressure on the London airports.
      The area in which Government are uniquely well placed to help is in international negotiation. For nearly a decade the United Kingdom has put the opening up of new routes
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      high on the agenda and major changes have been delivered, especially within the European Community. Since 1 January this year traffic rights have been available for all Community air carriers to operate air services on virtually any route within the Community, whether scheduled or charter, passenger or cargo. Complex procedures for approving fares have been swept away. We have created a climate in which air services and fares can become more competitive and more responsive to what the customer wants.
      I am very proud of the role that my right hon. Friend the Secretary of State played during the time of the British presidency in pressing these important issues to the stage where the third liberalisation package represents a major advance in the progress of the single market and is an issue in which Britain has consistently been in the lead.
      Coming closer to home, I wonder if I may detain my hon. Friends with just a word about the concern that I know the managers at Teesside airport feel over what they see as a risk to the continuation of services to London, particularly to Heathrow. I understand the desire of airports like Teesside to maintain strong air services with the capital—at the moment, Teesside has five flights to Heathrow each weekday—and I have no doubt that the local community, especially businesses, will do all that it can to support this provision of services. The management of the airport also has a role to play through the provision of good quality airport services for people to enjoy as they connect with their flights. But I am bound to say that I agree with the recent Civil Aviation Authority report which said that those sorts of service, although clearly important for the regions that they serve, must stand up commercially and that there are no grounds for distorting the air services market to "protect" those regional services to congested airports.
      I want to make a number of points in the debate and I will, of necessity, cover them only briefly. First, the decision on which routes to serve is now very much one for the commercial decision of airlines. The present system of take-off and landing slot allocation and regulation at our busiest airports means that airlines can continue to operate their existing services for as long as they wish to, because the slots they hold and operate carry historic rights, sometimes referred to as "grandfather rights". I can assure my hon. Friend that British Midland can therefore continue to operate the service between Teesside and Heathrow for as long as it wishes. I have no reason to believe that British Midland has any intention of withdrawing that service.
      Although some of our regional airports have seen their services to London cut, there is none the less a healthy market in the provision of air services between London and the regions. It must be for the providers of those services, the airlines themselves, to decide whether it is in their commercial interest to continue to do so. Certainly, it would not be right for me to dictate from Marsham street what level of services should be provided to each point or, as the Teesside airport managers suggested to the CAA, what level of subsidy should be paid to airlines to maintain those services. We have been down that path before and, frankly, it does not work. Unnecessary, artificial market constraints or supports inevitably lead to artificial and unsustainable markets. In a market-led air transport industry geared to meeting passenger needs carriers must retain the ability to adjust their services and schedules in response to changes in consumer demand.
      Mr. Nigel Evans: Does my hon. Friend agree that it is important not only to maintain the links between the regional airports and London, but to establish and reinforce the links between regional airports and the international airports? I am thinking of Manchester here. There are many people who do not wish to travel from the regions down to London to take international flights. They would far prefer to take their flights from the areas in which they live to the destination to which they wish to go.
      Mr. Norris: My hon. Friend is right. As I said at the beginning, the Government's attitude is very clear. First, passengers should dictate where air services are provided. I agree with my hon. Friend that there is a great deal of good sense in avoiding the congestion around the major London airports. Heathrow is not the only airport that serves London. None the less, my hon. Friend is entirely right that where there is an opportunity for passengers to travel via Manchester, and it is in the operators' interest therefore to provide those services, the present Government would certainly see no difficulty whatsoever in encouraging that and in a sense providing a regime in which British Midland or any other operator can build on those services and offer to service local businesses.
      On that question—this is related somewhat to that issue—I know of suggestions that we should use article 9 of the EC regulations effectively to ring-fence slots for airports such as Teesside at Heathrow. I do not believe that that would be valuable. First, I do not believe that it could ensure the survival of a particular service. One can ring-fence the slot, but ring-fencing the slot in no sense guarantees that the service itself can continue. That must be a matter for the commercial decision of the operators. In any event, ring-fencing slots for specific services introduces the kind of rigidity into the slot allocation system that we believe would be wholly unwelcome.
      I suspect that many regions would want the slots for their Heathrow services ring-fenced. My right hon. Friend the Secretary of State has already had representations from places other than Teesside wanting ring-fencing. Incidentally, ring-fencing relates to slots at particular, specified times and not just an overall daily total. Clearly, if we were to respond to all those demands we would impose an intolerably restrictive regime at Heathrow.
      One point that I often make when we consider this subject is that British Midland, for example, has managed to increase the proportion of slots that it holds at Heathrow from 3 per cent. in 1979 to 14 per cent. now. That has happened despite the existence of grandfather rights. Grandfather rights, however much they may seem to entrench existing users of slots, none the less provide a regime in which there is a regular changeover of operators, as individual operators respond to where they think market opportunities are and withdraw capacity from certain routes to make it available to others. The less we do to make rigid slot allocations the better. That will ultimately help airports such as Teesside, which will not be disadvantaged.
      Teesside is not an especially isolated area. I always point out that there is an excellent train service which takes only two and a half hours to King's Cross on the east coast main line which, as my hon. Friend will know, has recently been improved through electrification at a cost of £550 million. In addition, both Newcastle and Leeds-Bradford
      918
      airports are within 60 miles by road of the Teesside area and offer flights not only to Heathrow, but to other European destinations, such as Amsterdam or Paris.
      It is too easy and too tempting to focus on Heathrow to the exclusion of all the facilities around London. Heathrow, as I said, is not the only London airport. Gatwick, Stansted and London City airport, which I always mention when I can, are excellent airports which offer excellent connecting flights to many international destinations.
      My hon. Friend referred to the proposals for the demise of Cleveland county council—[HON. MEMBERS: "Hear, hear."] That is clearly a popular proposition in the House this evening. As my hon. Friend said, the Local Government Commission's draft recommendations for Cleveland and for Durham were put out to public consultation earlier this week. My right hon. Friend the Secretary of State and other Transport Ministers have foreseen some complications for transport if shire counties are abolished, although their retention is not necessarily the best solution. I understand that Teeside airport is not specifically mentioned in the draft recommendations. I anticipate that my right hon. and learned Friend the Secretary of State for the Environment will draft regulations to cover issues such as the transfer of property rights and liabilities of any authorities that cease to exist. There are well-tried arrangements for transfers to successor local authorities. Meanwhile, if the airport company has any views, it should make them known to the Local Government Commission as part of the public consultation process.
      My hon. Friend spoke about privatisation. The thrust of what both he and our hon. Friends asked was why we did not require local authorities to dispose of their airport interests. I know that my hon. Friend is an assiduous reader of Hansard, so he will know that I answered a question tabled by our hon. Friend the Member for Bournemouth, East (Mr. Atkinson) on precisely that subject earlier this week. We have made no secret of the fact that we want to encourage local authorities to sell their airport interests. We believe that privatisation would bring benefits to local authority airports, as it has brought benefits elsewhere. We believe that it would encourage enterprise and efficiency and that it would enable airports to build on the advantages that the creation of the public airport companies provided. We believe, too, that the private sector has the resources and the willingness to invest in local authority airports on a far greater scale than we have seen so far. The British Airports Authority was privatised in 1987 and it has gone from strength to strength since. It has maintained a high level of investment, not just in the south-east, but in Scotland, too.
      The Government have helped Teesside airport over the years by issuing borrowing approval to its controlling authorities for operational investment in the airport. However, with the increasing pressure on public expenditure, we are simply unable to maintain our support for investment in local authority airports on anything like the scale of recent years. My right hon. Friend the Secretary of State made it clear, in his announcement following the autumn statement, that the amount of public expenditure provision available for local authority airports in the future will be limited—only £12 million this year—and that his first priority will be to enable airports to make necessary safety and security-related investment.

      919
      My hon. Friend the Member for Langbaurgh referred to development proposals for the unused land at Teesside. My Department has not seen any development proposals involving opening access to the south side of the airport, and I can well understand that the cost of roads and other infrastructure there could be substantial. I know that the airport company is discussing with the county councils the possibility of their providing the access road and services. For the sort of scheme which the airport company is thinking about, the best course may be for a joint venture project to be established with the private sector to take that development project forward. In any event, there is no prospect of development of that sort being funded through supplementary credit approvals for the airport company.
      We believe that it is for the local authorities which own airports to decide whether to dispose of their interests, taking into account the needs of those who live in the areas involved and the customers who use the airport. In taking those decisions, local authority shareholders will be aware that, if they want their airports to continue to develop, they will need to use internal resources or look to the
      920
      private sector to fund major expansion. We have talked on many occasions about joint venture companies. In other cases, the private sector may be able to provide a specific facility, instead of the airport company. In many cases, the best approach will be simply the sale of majority holdings in public airport companies.
      My hon. Friend made the important point that there is the temporary relaxation in the rules for the use of capital receipts which applies to the proceeds of the sale of shares in public airport companies. That provides a particular attraction to them in selling now. We greatly welcome the fact that the major shareholders in East Midlands airport have decided to test the market for their shares.
      I have a great deal of sympathy—as I know my hon. Friends have—with what my hon. Friend the Member for Langbaurgh said about Teesside airport. I pay tribute to the concern that he has expressed on this subject over a long period. I hope that Teesside and other airports will recognise the considerable opportunities and advantages that are available to them from pursuing the sort of policies which my hon. Friend has outlined this evening.
      Question put and agreed to.
      Adjourned accordingly at twenty minutes to Twelve midnight.

ATTORNEY GENERAL

  Serious Fraud Office
  Mr. Stephen
  To ask the Attorney-General when he expects to lay before Parliament and publish the annual report of the Serious Fraud Office for the year 1992–93.

  The Attorney-General
  The annual report for the SFO for 1992–93 was laid before Parliament at 11 am today and then published. Copies have been placed in the Libraries of both Houses.

TRANSPORT

  Reduced Child Fares
  Mr. Mackinlay
  To ask the Secretary of State for Transport what proposals he has to guarantee the reduced fares scheme for children following bus privatisation and deregulation in Greater London.

  Mr. Norris
  Bus privatisation will have no effect on the availability of child fares in London because bus operators will continue to provide services for London Transport, at the fares set by London Transport.

  After deregulation, fares—including those for children —will be a matter for individual operators. However, we intend to extend to London local authorities the power already available to authorities outside London to offer travel concessions for children under 16 years, and school children under 18 years.

  A21
  Mrs. Lait
  To ask the Secretary of State for Transport when he expects to announce the way forward for the improvements to the A21 between Flimwell and Robertsbridge; and if he will make a statement.

  Mr. Kenneth Carlisle
  I am pleased to announce that the three programmed schemes in preparation along this stretch of A21 in East Sussex are being replaced by one comprehensive improvement between Flimwell and Robertsbridge. The improvement will include the Salehurst roundabout at Robertsbridge and the section of road between Flimwell and Hurst Green.

  This announcement will be welcomed by the many local people and local authorities which made representations to me for a more strategic approach to the improvement of this length of the A21.

  Railway Privatisation
  Mr. Wilson
  To ask the Secretary of State for Transport how many applications he has received from rail operators to provide international services over British Rail tracks under the Railway Regulations 1992.
  462
  Mr. Freeman
  None. The channel tunnel is not yet open.

  Rail Freight
  Ms Walley
  To ask the Secretary of State for Transport if he will set out the procedures for ascertaining that the weight of freight per rail wagon does not exceed British Rail restrictions, and conforms with the requirements of the Health and Safety Executive.

  Mr. Freeman
  Primary responsibility rests with British Rail. The Health and Safety Executive does not set or check weight limits for wagons. The design, construction and designated use of wagons prevent them from being loaded beyond their maximum capacity.

  Ms Walley
  To ask the Secretary of State for Transport what is the maximum weight of a wagon for the carriage of freight on the railways.

  Mr. Freeman
  The maximum axle weight is 25·5 tonnes. The largest freight wagons in normal use are mineral wagons and large oil tankers mounted on two bogies with two axles, which weigh 102 tonnes fully laden.

ENVIRONMENT

  Energy Saving Trust
  Mr. Dalyell
  To ask the Secretary of State for the Environment what funds he has given to the Energy Saving Trust.

  Mr. Maclean
  I have nothing to add to the answer I gave the hon. Member for Islington, South and Finsbury (Mr. Smith), on 19 February 1993,Official Report, column 382.

  Mr. Dalyell
  To ask the Secretary of State for the Environment if he will make a statement on the objects of the Energy Saving Trust.

  Mr. Maclean
  The directors of the Energy Saving Trust have set out the objects of the trust in a mission statement. This declares that the trust will encourage the efficient use of all forms of energy in the United Kingdom, leading to an overall reduction in total energy consumption and its consequent environmental impact. The trust will seek to sponsor initiatives that also provide long term economic benefits to the nation.

  The trust aims to promote a broad awareness and understanding of the benefits of energy efficiency and conservation and will also promote training in energy-saving practices and technology.

  Environmental Damage
  Mr. Dalyell
  To ask the Secretary of State for the Environment what notional additional environmental costs his Department assigns to(a) gas, (b) coal and (c) nuclear generation.

  Mr. Maclean
  The Department does not assign costs in the way that the hon. Gentleman suggests.

  A report recently produced by the Economic and Social Research Council-sponsored centre for social and economic research on the global environment for the Department of Trade and Industry on the social costs of

  463
  fuel cycles has produced some estimates of "externality adders". The numbers produced in this report should be seen as indicative rather than authoritative.

  Mr. Dalyell
  To ask the Secretary of State for the Environment what proposals he has had from Professor David Pearce on the problems of assigning money values to environmental damage; and if he will make a statement.

  Mr. Maclean
  I have sought no specific proposals. Professor Pearce is leading a team of researchers who have been commissioned by my Department to estimate the external, including environmental costs and benefits, of landfilling and of incinerating waste. I have referred to Professor Pearce's report of fuel cycle costs in reply to the previous question.

  Loft Insulation
  Mr. Dalyell
  To ask the Secretary of State for the Environment what study his Department has made of the reasons why people apply for grants to install insulation in their loft.

  Mr. Maclean
  We have made no study of the reasons why people apply for grants to install energy efficiency improvements. It is assumed that people do so in order to benefit from the increased energy efficiency which such improvements bring.

  Standard Spending Assessments
  Mr. Barry Field
  To ask the Secretary of State for the Environment what further information he has made available to local authorities about the standard Spending assessments for 1993–94.

  Mr. Robin Squire
  A publication "Standard Spending Assessment Handbook 1993–94" has been produced to provide details of the standard spending assessments (SSA) of each local authority. Copies have today been placed in the Libraries of both Houses. Copies are being sent to every local authority in England and to the local authority associations.

  EC Emissions Directives
  Mr. Hinchliffe
  To ask the Secretary of State for the Environment if he will list all the occasions, in the last five months, when European directives on smoke, sulphur dioxide, nitrogen dioxide and lead have been exceeded; where this has taken place; and if the information was released to the public.

  Mr. Maclean
  [holding answer 10 May 1993]: The air quality standards in these directives are set on the basis of compliance with limit values over 12-month periods. The standards for nitrogen dioxide and lead were not breached in 1992. Data for smoke and sulphur dioxide for the period April 1992 to March 1993 are not yet available, but provisional figures indicate that these standards have also not been breached. The public can obtain information about air quality, based on measured concentrations of sulphur dioxide, nitrogen dioxide and ozone, from daily bulletins on the Government's freephone 0800 556677, on CEEFAX page 404, on Teletext page 187 or from certain newspapers.

NATIONAL HERITAGE

  Children's Play
  Mr. Vaz
  To ask the Secretary of State for National Heritage what progress has been made on discussing Sports Council funding for the national children's play and recreation unit; and what measures will be implemented to fund children's play after March 1993 pending the completion of these tasks.

  Mr. Brooke
  [pursuant to his reply 28 January 1993, Official Report, column 853]: The Sports Council has now taken over the national play information centre and the play unit's work on playwork education and training along with seven of the unit's staff. An eighth officer will be employed on a consultancy basis. The Council's budget for play for 1993–94 is £300,000, which includes financial support for the four national centres for playwork education. In addition, the Sports Council's trust company has agreed to give a grant of £25,000 to the National Voluntary Council for Children's Play. I am delighted with these decisions which show the serious way in which the Sports Council is tackling its new responsibilities.

HOME DEPARTMENT

  Emergency Planning
  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department what lessons his Department has drawn from the 1990–91 Gulf war for emergency planning of local authority involvement; and if he will make a statement.

  Mr. Peter Lloyd
  Local authorities were involved in the planning for the reception of possible casualties arising from the 1990–91 Gulf conflict. The principal lesson learnt was the importance of involving local authorities in the making of such arrangements from as early a time as possible.

  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department (1) what criteria were used in deciding future allocations of Home Office emergency planning grant aid to local authorities; and what consultations were undertaken with local authorities over the allocation;

  (2) what plans he has to issue new guidelines to local authorities on the use of civil defence and emergency planning grant aid following the changes in international relations since 1989; and if he will make a statement.

  Mr. Peter Lloyd
  The Home Office wrote to the local authority associations and to individual local authorities in December 1992 to seek their views on a new method of distributing the total available civil defence grant to individual authorities.

  We have proposed a system based on a formula reflecting the needs of the emergency planning process and, where appropriate, the number of districts in the county or metropolitan are concerned.

  Comments have been received on these proposals and the proposed allocations for 1994–95 onward will be announced shortly.

  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department (1) what consultations have been
  465
  held since November 1989 regarding the length of the period of warning the civil defence system assumes for planning purposes before the outbreak of a major conflict in Europe; and if he will make a statement;

  (2) what assessment his Department has made since November 1989 of the threat to the United Kingdom from the use of chemical or biological weapons, in respect of civil defence issues.

  Mr. Peter Lloyd
  The threat to the United Kingdom is kept under constant review. The process of integrated emergency management which is promoted by the Home Office calls for the development of plans based on the mitigation of effects and the continued delivery of service in an emergency, whatever the cause. Officials are considering the question of warning times within this context.

  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department if he will list for the period from November 1989(a) the dates of, (b) the subjects discussed at and (c) attendances at any meetings Ministers have had with the relevant Ministers responsible for civil defence and emergency planning in other North Atlantic Treaty Organisation countries.

  Mr. Peter Lloyd
  No such meetings have taken place. Regular contact with other NATO countries on these subjects is maintained at official level.

  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department what plans he has to recruit qualified or experienced emergency planners to his Department(a) to replace the local authorities' adviser and (b) to oversee the use of civil defence and emergency planning grant aid.

  Mr. Peter Lloyd
  There are no plans to replace the local authorities' adviser. Emphasis will be placed upon visits by Home Office officials to local authorities and regular meetings with the local authority associations.

  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department what effect reorganisation of local government in(a) England and (b) Wales will have on arrangements for grant-aided local authority emergency planning.

  Mr. Peter Lloyd
  The precise effect of local government reorganisation on local authority grant-aided emergency planning arrangements will have to be determined area by area.

  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department what consultations he has had since April 1992 over improving the responses of the emergency services to peace-time emergencies; and if he will make a statement.

  Mr. Peter Lloyd
  Part of the work of the civil emergencies adviser, Mr. David Brook, is to assist the emergency services in preparing their response to peace-time disasters. He is in regular contact with and has meetings with the emergency services, local authorities and others who have a role to play in preparing for and responding to disasters. In August 1992 the Home Office publication "Dealing with Disaster" was issued which contained guidance compiled by Mr. Brook aimed at assisting the provision of an effective response.
  466
  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department what arrangements have been made for the disposal of obsolescent message switch equipment installed at(a) regional Government headquarters, (b) United Kingdom warning and monitoring organisation control centres and (c) local authority emergency centres; and if he will make a statement regarding the overall cost of installing, maintaining and disposing of the message switch equipment at these locations.

  Mr. Peter Lloyd
  The message switch equipment at the regional government headquarters and at the United Kingdom Warning and Monitoring Organisation control centres was the subject of a combined rental and maintenance agreement with British Telecom. This agreement covered the repayment of capital cost, installation, maintenance and subsequent removal.

  The total cost of the agreement over the 10-year period, during which the equipment was installed, amounted to just under £3·5 million in respect of equipment at regional government headquarters and £3·75 million in respect of equipment at the United Kingdom Warning and Monitoring Organisation.

  The message switch equipment, which was installed at local authority emergency centres, was purchased by the Home Office at a cost of £2·1 million including installation. Annual maintenance costs, in the final year, amounted to £1·5 million.

  The total cost of the disposal of equipment installed at local authorities is estimated at £20,000. Where a local authority has indicated an interest in retaining a message switch network within its area, the Home Office has transferred ownership of the equipment to that authority with a proviso that it should not be resold.

  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department what funding his Department is making available to(a) the BBC and (b) independent broadcasters in respect of his Department's proposals to rely on the broadcast media to issue national warnings of possible air attacks.

  Mr. Peter Lloyd
  Precise costs will depend on the outcome of discussions which are now taking place with the BBC.

  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department whether local proposals to retain parts of the air-raid warning siren network for use in peacetime emergencies will be eligible for grant aid from his Department.

  Mr. Peter Lloyd
  No.

  Mr. Austin-Walker
  To ask the Secretary of State for the Home Department what proposals his Department has made for the future securing of a reserve fire-fighting capacity for use in time of war and national emergency; and if he will make a statement.

  Mr. Peter Lloyd
  The Government continue to maintain a stockpile of emergency fire service appliances and equipment. Maintenance of the stockpile was contracted out to the private sector in 1991. The contract is for 10 years with a breakpoint after five.

  Crime Statistics
  Mr. Cousins
  To ask the Secretary of State for the Home Department if he will publish a table based on the 1992 reported crime figures showing the total number of crimes reported in each police authority area in 1992, and also showing these figures as a rate per 1,000 population in those areas and as a rate per uniformed officer in those areas.

  Mr. Jack
  The information requested is given in the table:

  Notifiable offences recorded by the police 1992 (1) England and Wales

  Police force area

  Offences per 1,000 population

  Offences per police officer

  Avon and Somerset

  122

  55

  Bedfordshire

  110

  51

  Cambridgeshire

  98

  51

  Cheshire

  79

  39

  Cleveland

  145

  53

  Cumbria

  87

  35

  Derbyshire

  89

  45

  Devon and Cornwall

  76

  38

  Dorset

  79

  38

  Durham

  104

  44

  Essex

  77

  38

  Gloucestershire

  113

  52

  Greater Manchester

  141

  51

  Hampshire

  89

  45

  Hertfordshire

  69

  34

  Humberside

  147

  61

  Kent

  102

  49

  Lancashire

  83

  35

  Leicestershire

  107

  52

  Lincolnshire

  81

  39

  Merseyside

  100

  30

  Metropolitan Police District(2)

  124

  31

  Norfolk

  89

  46

  Northamptonshire

  101

  48

  Northumbria

  142

  56

  North Yorkshire

  73

  37

  Nottinghamshire

  157

  67

  South Yorkshire

  102

  43

  Staffordshire

  93

  44

  Suffolk

  68

  35

  Surrey

  71

  31

  Sussex

  83

  39

  Thames Valley

  99

  50

  Warwickshire

  92

  44

  West Mercia

  72

  37

  West Midlands

  123

  45

  West Yorkshire

  145

  58

  Wiltshire

  73

  32

  Dyfed-Powys

  56

  27

  Gwent

  89

  39

  North Wales

  73

  35

  South Wales

  125

  51

  Total

  106

  42

  (1) Excluding criminal damage of value £20 and under.

  (2) Including City of London.

  Passport Agency
  Sir John Wheeler
  To ask the Secretary of State for the Home Department what performance targets he has set for the United Kingdom Passport Agency in 1993–94.

  Mr. Kenneth Clarke
  During 1993–94, I shall expect the Passport Agency to continue to provide a high standard of service to the public while seeking further efficiency savings in its operations.

  I have set the agency the following key targets:
  468

  (i) to process properly completed straightforward applications within a maximum of 20 working days in the periods of peak demand between January and June, 15 working days in July and August, and 10 working days at other times,

  (ii) to process such applications within an overall average of nine working days for the year as a whole, and

  (iii) to reduce unit costs by a further 3 per cent. in real terms in comparison with the outturn for 1992–93.

  The chief executive will remain directly accountable to me for the performance of the Passport Agency. An advisory board, including two private sector members with experience of delivery services to the public, will continue to provide me with an independent assessment of the agency's performance.

  Metropolitan Police
  Mr. Cox
  To ask the Secretary of State for the Home Department how many(a) men and (b) women of an ethnic minority background are serving as police officers in the Metropolitan police force as of 1 May.

  Mr. Charles Wardle
  There were 476 men and 147 women officers of an ethnic minority background.

  Fire and Civil Defence Authorities
  Mr. Redmond
  To ask the Secretary of State for the Home Department if he has any plans to confer new duties or powers upon those fire and civil defence authorities other than the London FCDA.

  Mr. Peter Lloyd
  Draft civil defence regulations were published last December and comments received are being considered. There are no plans to confer new duties or powers upon any of the fire and civil defence authorities.

  Hosni E. Farhat
  Mr. Bennett
  To ask the Secretary of State for the Home Department if the decision regarding the recommended minimum length of sentence to be served in the case of Hosni E. Farhat was made by the then Home Secretary; and if he will make a statement.

  Mr. Jack
  It is assumed that by "recommended minimum length of sentence", the hon. Member refers to the punitive element of a discretionary life sentence which must be served to satisfy the requirements of retribution and deterrence. This period was previously known as the "tariff".

  Following advice from the trial judge and the then Lord Chief Justice, the Secretary of State decided in 1985 that the first review of Mr. Farhat's case by the parole board should take place after 17 years in custody. From that, Mr. Farhat will have concluded that the punitive element of his sentence was at least 20 years.

  Under the transitional provisions in schedule 12 to the Criminal Justice Act 1991, the Secretary of State issued a certificate to Mr. Farhat in August 1992 notifying him that the relevant part of his sentence—as the punitive element is now known—is 20 years.

  Mr. Bennett
  To ask the Secretary of State for the Home Department what representations he has received regarding the case of Hosni E. Farhat.

  Mr. Jack
  My right hon. and learned Friend and his predecessors have previously received a number of
  469
  representations alleging that Mr. Farhat was wrongfully convicted. These were fully considered but they brought to light no grounds for intervening in the case. Further representations have recently been received from Mr. Farhat and these are now being considered.

  Mr. Bennett
  To ask the Secretary of State for the Home Department what review has been undertaken of the intelligence information relating to the case of Hosni E. Farhat.

  Mr. Jack
  I do not know what specific information the hon. Member has in mind, but in considering the latest representations about the safety of Mr. Farhat's conviction, my right hon. and learned Friend will take account of any relevant information which is available to him.

  Attempted Murder
  Mr. Bennett
  To ask the Secretary of State for the Home Department how many persons convicted of attempted murder left prison in each of the last five years; and what was the average length of detention in each year.

  Mr. Peter Lloyd
  Responsibility for this matter has been delegated to the director general of the Prison Service, who has been asked to arrange for a reply.

  Letter from Derek Lewis to Mr. Andrew F. Bennett, dated 10 May 1993:

  PERSONS CONVICTED OF ATTEMPTED MURDER AND DISCHARGED WITHIN THE LAST FIVE YEARS
  The Home Secretary has asked me to write to you directly in reply to your Parliamentary Question about the number of persons convicted of attempted murder who have been discharged from prison in each of the last five years. I am sorry to tell you that the information could be provided only at disproportionate cost. This is because in prison statistics prior to February 1991 attempted murder was recorded within the "other homicide" offence classification and not recorded separately. As a result, it would involve checking a large number of cases with prison service establishments.The readily available information relates to the length of sentence imposed and is published annually in "Criminal Statistics, England and Wales", Supplementary tables volume 2 (tables S2.7 of the issue for 1991, Cm 2134), copies of which are held in the Library. A copy of the relevant page from the 1991 publication is attached.
  Mr. Bennett
  To ask the Secretary of State for the Home Department what has been the average recommended minimum length of sentence to be served in cases of attempted murder in each year since 1979.

  Mr. Jack
  On the assumption that the question relates to the punitive element—now known as the relevant part—of a discretionary life sentence imposed for attempted murder, the information is as follows:

  Year

  Number of cases

  Actual or average punitive element (years)

  1979

  1

  15

  1980

  2

  7·5

  1981

  4

  12·9

  1982

  1

  6

  1983

  1

  10

  1984

  5

  9·7

  1985

  1

  10

  1986

  2

  9·5

  1987

  4

  13

  470

  Year

  Number of cases

  Actual or average punitive element (years)

  1988

  1

  7

  1989

  2

  8

  1990

  3

  7·3

  1991

  3

  8

  1992

  4

  7·5

  Mr. Bennett
  To ask the Secretary of State for the Home Department how many foreign nationals are currently serving sentences for attempted murder in United Kingdom prisons; and what is their average length of sentence.

  Mr. Peter Lloyd
  Responsibility for this matter has been delegated to the director general of the Prison Service, who has been asked to arrange for a reply.

  Letter from Derek Lewis to Mr. Andrew F. Bennett, dated 10 May 1993:

  FOREIGN CITIZENS SERVING SENTENCES FOR ATTEMPTED MURDER
  The Home Secretary has asked me to write to you directly in reply to your Parliamentary Question about the number of foreign citizens currently serving sentences for attempted murder. The latest available provisional figures are for 28 February 1993. They show 23 foreign nationals serving sentences for attempted murder in prison service establishments in England and Wales. Of these 5 were serving life sentences. The lengths of sentence of those serving determinate sentences varied from 5 years up to 30 years; their average sentence was about 12·4 years.

  Libyan Prisoners
  Mr. Bennett
  To ask the Secretary of State for the Home Department how many Libyan citizens are(a) currently serving sentences and (b) awaiting sentencing in United Kingdom prisons.

  Mr. Peter Lloyd
  Responsibility for this matter has been delegated to the director general of the Prison Service, who has been asked to arrange a reply.

  Letter from Derek Lewis to Mr. Andrew F. Bennett, dated 10 May 1993:

  LIBYAN CITIZENS IN PRISON SERVICE ESTABLISHMENTS
  The Home Secretary has asked me to write to you directly in reply to your Parliamentary Question about the number of Libyan citizens currently serving sentences and the numbers on remand. The latest available provisional figures are for 28 February 1993. They show that eight prisoners serving sentences in prison service establishments in England and Wales had their nationality recorded as Libyan. There were no remand prisoners recorded as having Libyan nationality.

  Overseas Domestic Workers
  Mrs. Wise
  To ask the Secretary of State for the Home Department if he will ensure that people coming from overseas to do domestic service work in Britain are given the right to change employers and other rights enjoyed by similar workers recruited in the United Kingdom.

  Mr. Charles Wardle
  Each case involving a domestic worker who wishes to remain in the United Kingdom after having left his or her employer is carefully considered
  471
  before any enforcement action is taken, and account is taken of any compassionate circumstances. Domestic workers are entitled to the protection of our criminal and employment law.

  Juvenile Crime
  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department what assessment has been made of the relationship between the level and nature of his Department's support for youth work and the change in the level of juvenile crime; and if he will make a statement.

  Mr. Jack
  No such assessment has been made. Except for certain projects which are supported under the safer cities initiative, the Home Office does not directly fund youth work; but the Home Office research and planning unit is currently involved in an evaluation of a number of local projects which have deliberately targeted young people at risk of offending.

PRIME MINISTER

  Non-fossil Fuel Obligation
  Mr. Cash
  To ask the Prime Minister what arrangements have been made to ensure co-ordination between Government Departments on non-fossil fuel obligation 3.

  The Prime Minister
  The responsibility for making orders imposing a non-fossil fuel obligation on public electricity suppliers in England and Wales lies with my right hon. Friend the President of the Board of Trade. He consults other Ministers as appropriate.

NATIONAL FINANCE

  Bank Loans (Small Businesses)
  Mr. Barnes
  To ask the Chancellor of the Exchequer what proposals he has to encourage the banks to increase their loans to the small businesses sector for capital investment; and if he will make a statement.

  Mr. Nelson
  My right hon. Friend the Chancellor of the Exchequer announced proposals to improve the small firms loan guarantee scheme in his Budget on 16 March. The changes will take effect on 1 July.

  Council Tax
  Mr. Tipping
  To ask the Chancellor of the Exchequer if he will list by district council in Nottinghamshire the number of appeals presently notified to valuation officers by property owners against council tax bandings; and how long he expects it to take for these appeals to be dealt with.

  Mr. Nelson
  [holding answer 10 May 1993]: As at 6 May, some 5,398 appeals have been made by taxpayers in Nottinghamshire, against their council tax bandings. Of these 277 are in Ashfield, 453 in Bassetlaw, 327 in Mansfield and 685 in Newark and Sherwood. The remaining 3,656 are in Broxtowe, Gedling, Nottingham and Rushcliffe for which individual statistics are not yet available.

  As the total number of appeals which will be made in Nottinghamshire cannot yet be predicted, it is not possible to determine the length of time it will take to deal with these appeals.

  Company Cars
  Mr. Beith
  To ask the Chancellor of the Exchequer, further to his answer of 27 April,Official Report, column 379, if he will list the circumstances when home-to-work travel in a car made available by an employer is not regarded as private use.

  Mr. Dorrell
  [holding answer 11 May 1993]: Home-to-work travel in a car made available by an employer is not regarded as private use:

  where the employee has a travelling appointment;

  where the employee travels from home to a temporary place of work and the distance travelled is less than the distance between the normal place of work and the temporary place of work;

  where, exceptionally, the home qualifies under tax law as a place of work and the employee travels from home to another place of work in the performance of his duties.

  There are also circumstances where home-to-work travel in a car provided by an employer is regarded as private use but is ignored for tax purposes. These are:

  where a disabled person is provided with a car from home-to-work travel and there is no other private use; where a car is provided for home-to-work travel when public transport is disrupted;

  where a car is provided for late night journeys from work-to-home, within the terms of Inland Revenue extra-statutory concession A66;

  where the car is a pooled car and any home-to-work travel is merely incidental to its business use.

WALES

  Welsh Language
  Mr. Llwyd
  To ask the Secretary of State for Wales how many(a) general receptionists and (b) telephone receptionists are employed within each of his Department's offices; and how many are Welsh speaking.

  Sir Wyn Roberts
  The numbers of reception staff employed by the Department are:

  Number

  Receptionists

  Gwydyr House

  2

  Cathays Park

  3

  Telephonist and Receptionists

  Brunel House (Cadw)

  1

  Trawsgoed

  2

  Caernarfon

  2

  Llandrindod Wells

  1

  Carmarthen

  2

  Colwyn Bay

  1

  Those at Trawsgoed and Caernarfon are Welsh speaking.

  Mr. Llwyd
  To ask the Secretary of State for Wales if he will make it his policy to place all public advertisements produced by his Department either(a) bilingually in the Welsh language and English language or (b) in the Welsh language only.

  Sir Wyn Roberts
  The Department is fully committed to providing for the needs of Welsh speakers and English speakers alike. As a matter of policy, all official notices appear bilingually, and it is the Department's objective that public advertisements should be bilingual.

  Holiday Play Schemes
  Mr. Morgan
  To ask the Secretary of State for Wales what competitive tendering procedures were used for the selection of Acorn Nursery as provider of holiday play schemes for children of Welsh Office staff; what financial evaluation was made of competing bids; what consultation with different grades of staff was carried out; and if he will make a statement.

  Mr. David Hunt
  The Welsh Office holiday play scheme contract was advertised in the local press. Tenders were evaluated on the basis of the cost benefit to the Department and the value for money to parents—who meet the major part of the cost. Two tenderers came within the Department's cost limit and satisfied its quality criterion. They were interviewed.

  As the cost benefit to the Welsh Office was the same with either provider, consultations took place with a representative sample of users in a range of grades including junior clerical grades. Staff were unanimous in preferring the Acorn hid and the selection was made on that basis.

  Child care forms an important part of my Department's policy to promote equality of opportunity, help staff combine a career and family responsibilities, and maximise the contribution of skilled and experienced staff.

  Disabled People
  Mr. Win Griffiths
  To ask the Secretary of State for Wales what measures he intends to take to encourage people with disabilities to become teachers, nursery nurses or teachers' aides.

  Sir Wyn Roberts
  The teaching as a career unit, funded by the Welsh Office and the Department for Education (DFE), promotes and publicises teaching. It has not undertaken any special targeting of the disabled.

  The DFE is in consultation with disabled teachers' interest groups prior to the revision of its circular 1/88 "Physical and Mental Fitness to Teach of Teachers and of Entrants to Teacher Training". This will continue to stress that disability in itself does not mean that a person is medically unfit to teach, but that the paramount consideration should be the health and welfare of pupils.

  EC Funding
  Mr. Morgan
  To ask the Secretary of State for 'Wales, pursuant to his answer of 28 April,Offical Report, column 412, if he will specify what the projects in the Betws and Taff Merthyr areas are; and what was the commencement date of those projects.

  Mr. David Hunt
  The information is as follows:

  Project

  Start Date

  Betws Catchment Area

  Pontardawe Access Improvements

  May 1992

  Innter Link Road Ammanford (Phase I)

  January 1991

  Block B, Capel Hedre Industrial Estate

  January 1993

  Environmental Improvements, Meadows Road, Cross Hands

  March 1991

  Cross Hands Business Park Workshop Units

  March 1993

  Cross Hands Business Park Landscaping

  February 1992

  Taff Merthyr Catchment Area

  Trelewis Community Centre

  February 1991

  Cwm Cynon (South) Infrastructure

  December 1992

  474

  Project

  Start Date

  Nixons Institute Mountain Ash

  April 1993

  Cwm Cynon Business Centre

  December 1992

  Penrhiwceiber Colliery Leisure Facility

  June 1992

  Deep Duffryn Colliery Leisure Facility

  August 1992

  Salmon
  Mr. Richards
  To ask the Secretary of State for Wales what measures are being taken to protect and enhance the number of spring salmon that are entering Welsh rivers.

  Mr. Gwilym Jones
  The National Rivers Authority is proposing new byelaws designed to improve spring salmon runs on the Dee, Wye and the Usk.

  Children Leaving Care
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Wales how many children and young people under the age of 17 years have left care in Wales in each of the last five years; and how many of them(a) left school with no qualifications, (b) remain unemployed, (c) are currently estimated to be sleeping rough and (d) are in goal or other corrective institutions.

  Mr. David Hunt
  The information requested is not held centrally.

  Denbighshire
  Mr. Hanson
  To ask the Secretary of State for Wales if he will list the representations he has received in regard to the inclusion of the communities of Nercwys, Nannerch, Gwernymynydd, Gwernaffield, Cilcain, Mostyn, Halkyn, Whitford, Brynford, Trelawnydd and Gwaerysgor, Llanasa, Ysaefivy and Cherwys in the proposed Denbighshire authority following the publication of his local government White Paper.

  Mr. David Hunt
  Since publishing my White Paper on 1 March 1993, I have received 42 written representations regarding the inclusion of these communities within the proposed unitary authority for Denbighshire.

TRADE AND INDUSTRY

  Krypton Gas
  Ms Jowell
  To ask the President of the Board of Trade if he will place in the Library copies of the results of research commissioned since 1978(a) by his Department and (b) by British Nuclear Fuels Ltd. on the possible health effects of the discharge of krypton gas into the environment.

  Mr. Eggar
  Neither the Department of Trade and Industry nor its predecessor, the Department of Energy, has commissioned research into the possible health effects of krypton gas. Questions about any research commissioned by British Nuclear Fuels plc are matters for the company.

  British Nuclear Fuels Ltd.
  Mr. Salmond
  To ask the President of the Board of Trade if he will list the names of the members of the board of BNFL and state which of them have a management role or a business interest in Touche Ross.
  475
  Mr. Eggar
  This is a matter for British Nuclear Fuels plc. Appropriate information on the directors of the company is given in BNFL's report and accounts, copies of which are placed in the Library of the House.

  Inward Investment
  Mr. Battle
  To ask the President of the Board of Trade in which publications in other European countries advertisements have been placed by Government Departments in the current financial year promoting inward investment into the United Kingdom; what was the cost of the advertisements; and if he will place copies in the Library.

  Mr. Sainsbury
  During the 1992–93 financial year the Department of Trade and Industry spent £190,000 on advertisements in Europe promoting inward investment into the United Kingdom. In Germany advertisements were placed in Hadelsblatt, Top Business and Wirtschaftswoche, together with chamber of commerce magazines in Freiburg, Stuttgart, Mannheim, Karlsruhe and Reutlingen, while in Switzerland advertisements appeared in Bilanz, Basler Zeitung and Neue Zuercher Zeitung. The 1993–94 campaign has yet to be commissioned.

  Copies of the advertisements have been placed in the Library.

  Hydrocarbons Programme
  Mr. Dalyell
  To ask the President of the Board of Trade (1) what plans he has to allow overseas counterparts of the British Geological Survey to bid for responsibility for United Kingdom oil and gas archives or to undertake surveys;

  (2) pursuant to his answer of 27 April, Official Report, column 336, which types of organisations in the United Kingdom he has identified as potentially suited to the work under the hydrocarbons programme mentioned in his answer.

  Mr. Eggar
  In considering which organisations may be invited to submit competitive bids for work under the hydrocarbons programme, the Department is taking account of the requirements of the relevant legislation and commercial sensitivity.

  Renewable Energy
  Mr. Dalyell
  To ask the President of the Board of Trade if he will make a statement on the work of the Renewable Energy Advisory Research Group.

  Mr. Eggar
  In December 1992 the report of the renewable energy advisory group to my right hon. Friend the President of the Board of Trade was published. The report's findings will be taken into account in the Government's renewable energy strategy document due to be published later this year.

  Manufactured Exports
  Mr. Barry Jones
  To ask the President of the Board of Trade what action he has taken to ensure that British exports of manufactured goods to the United States of America do not face tariffs.

  Mr. Needham
  My Department takes every opportunity to press the United States and other countries to reduce 476
  existing tariff barriers and to oppose the introduction of new ones, both in general terms in the context of the general agreement of tariffs and trade and in instances of specific concern. For example, my right hon. Friend the Prime Minister has made clear our strong opposition to the US auto industry's request that the US Treasury reclassifies sports utility vehicles as trucks to secure massive added tariff protection to the detriment of our Land Rover exports. We also support the EC in its efforts to seek an all-round tariff reduction in the Uruguay round negotiations.

  THORP
  Mr. Simpson
  To ask the President of the Board of Trade if he will list the specific products and by-products of thermal oxide reprocessing at Sellafield, with their respective levels and life of radioactivity, and volume produce; and if he will indicate the proposed purpose or use of each of these products and by-products.

  Mr. Eggar
  [holding answer 5 May 1993]: The thermal oxide reprocessing plant at Sellafield will recover uranium and plutonium from spent nuclear fuel. These materials can be recycled in civil power stations. British Nuclear Fuels plc expects that over 6,000 tonnes of uranium and some 40 to 50 tonnes of plutonium will be separated during the first 10 years of THORP's operation.

  Following recovery of the uranium and plutonium, the residue, amounting to around 3 per cent. by weight, consists of waste. The long-term radiological content of the waste is lower than that of the spent fuel because the uranium and plutonium have been removed. For the estimated volumes of wastes involved and details of their contents, I refer the hon. Member to the 1991 United Kingdom radioactive waste inventory, a copy of which is in the Library of the House.

EMPLOYMENT

  Work Permits
  Mr. Nigel Evans
  To ask the Secretary of State for Employment how many work permits for overseas workers have been granted in each year since 1987.

  Mr. McLoughlin
  The number of work permits issued by the Department since 1987 is as follows:

  Year

  Number of work permits issued

  1987

  26,965

  1988

  33,021

  1989

  37,865

  1990

  43,619

  1991

  37,989

  1992

  37,917

  Mr. Nigel Evans
  To ask the Secretary of State for Employment if she will list the top 10 countries whose citizens received work permits to pursue employment in Britain in 1992; and if she will give the number of applications accepted from each of these countries.

  Mr. McLoughlin
  The top 10 countries whose citizens received work permits in 1992 and the number of applications approved are given in the table:
  477

  Country

  Work permits approved

  USA

  11,617

  Japan

  2,030

  India

  1,660

  Australia

  1,067

  Canada

  916

  Sweden

  568

  South Africa

  472

  Peoples Republic of China

  458

  Poland

  374

  USSR

  356

  These figures do not include permits issued under the training and work experience scheme.

  Employment, Durham
  Mr. Steinberg
  To ask the Secretary of State for Employment what information her Department has on how many women in the Durham area have initiated legal challenges against their employers since 1990 on the grounds on sexual offences, and on the results of such cases.

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

  Mr. Steinberg
  To ask the Secretary of State for Employment what information is held on how many people living in the Durham area have been denied unemployment benefit since 1990 because they are not available for work because they have an adult or child to care for during working hours.

  Mr. McLoughlin
  Responsibility for the subject. of the question has been delegated to the Employment Service agency under its chief executive. I have asked him to arrange for a reply to be given.

  Letter from M. E. G. Fogden to Mr. Gerry Steinberg, dated 12 May 1993:
  As the Employment Service is an Executive Agency, the Secretary of State has asked me to write to you direct to respond to your Parliamentary Question requesting information on how many people living in the Durham area have been denied unemployment benefit since 1990 because they are not available for work because they have an adult or child to care for during working hours. This is something which falls within the responsibilities delegated to me as Chief Executive of the Agency.Unfortunately, the information is not available in the form you have requested and it could only be obtained at disproportionate cost. Statistics on the number of people whose claims for unemployment benefit have been disallowed because they are not available for work do not identify, separately, the number of people disallowed because they have caring responsibilities.Adjudication statistics are compiled quarterly, for each Employment Service Region, and published in the "Analysis of Adjudication Officers' Decisions". Information about claims disallowed because people are not available for work for any reason are recorded under the heading of "Availability". The figures for Durham are contained in the statistical return for Northern Region. Copies of this document can be obtained from the House of Commons Library.As decided by the Administration Committee of the House of Commons, Chief Executive replies to written Parliamentary Questions will now be published in the Official Report. I will also place a copy of this letter in the Library of the House.478
  Mr. Steinberg
  To ask the Secretary of State for Employment what is the current number of job vacancies in the Durham area.

  Mr. McLoughlin
  In March 1993, the latest date for which figures are available, the number, not seasonally adjusted, of unfilled vacancies at the jobcentre which covers the city of Durham was 229. Jobcentre vacancies do not represent the total number of vacancies available.

  Electrical Equipment
  Mr. Galbraith
  To ask the Secretary of State for Employment what legislation would be necessary and what legislation would need to be amended to privatise(a) the Electrical Equipment Certification Service and (b) any other part of the Health and Safety Executive.

  Mr. Michael Forsyth
  Primary legislation would be needed in either case.

DUCHY OF LANCASTER

  Current Affairs Survey
  Mr. Llew Smith
  To ask the Chancellor of the Duchy of Lancaster what was the most recent(a) national and (b) international circulation of the Central Office of Information publication "Current Affairs—A Monthly Survey"; what benefits accrued to the United Kingdom from its publication; and for what reasons its publication is being stopped.

  Mr. Waldegrave
  The most recent circulation figure for "Current Affairs—A Monthly Survey" was 714 copies. About three-quarters went to United Kingdom addresses. The publication was designed to enable readers of the annual "Britain Handbook" to be kept up to date with developments in British affairs.

  Efforts to increase circulation have not been successful and production costs outweigh income from subscriptions.

  HIV and AIDS
  Mr. Galloway
  To ask the Chancellor of the Duchy of Lancaster how much money has been given by Her Majesty's Government to the Medical Research Council since 1988 for AIDS and HIV research.

  Mr. Waldegrave
  Between the years 1988–89 and 1992–93, Her Majesty's Government have allocated £68 million to the Medical Research Council for AIDS and HIV research.

  Mr. Galloway
  To ask the Chancellor of the Duchy of Lancaster if he will place in the Library details of all Medical Research Council grants for HIV and AIDS research, together with the published and completed papers presented to the Medical Research Council as a consequence of this grant-aided work.

  Mr. Waldegrave
  A list of research grants supported by the MRC through its strategic and directed programmes have been placed in the Library. A list of published and completed papers could be obtained only at disproportionate cost.

  Medical Research Scientists (Shares)
  Mr. Galloway
  To ask the Chancellor of the Duchy of Lancaster if he will introduce legislation to bar medical research scientists from holding shares in drugs companies whose products they are researching.

  Mr. Robert Jackson
  No. I can see no need to introduce legislation aimed specifically at medical research scientists. The Company Securities (Insider Dealing) Act 1985 already restricts improper share dealing by a company's employees or by public servants. The Criminal Justice Bill, which is progressing through the House and will replace the existing legislation, contains provisions with a similar effect. Holdings of shares may also be subject to further restrictions under a scientist's terms of employment or contract.

HEALTH

  AZT
  Mr. Galloway
  To ask the Secretary of State for Health what are the present clinical criteria for having AIDS; what were the clinical criteria for having AIDS in 1987; how those criteria have changed; and what effect the criteria have on eligibility of patients to be prescribed AZT.

  Dr. Mawhinney
  In the United Kingdom, the current clinical criteria for AIDS are those set out by the US Centers for Disease Control in 1987. Copies will be placed in the Library. The 1987 AIDS case definition revised the 1985 definition by addition of non-infectious, non-cancerous HIV-associated conditions and by widening the diagnostic critieria for certain AIDS indicator diseases.

  Zidovudine, or, AZT, is currently licensed in the United Kingdom for the following indications:

  asymptomatic disease in adult patients showing signs of immune suppression, i.e., CD4 counts repeatedly below 200 per cumm or between 500 and 200 and falling rapidly

  early symptomatic HIV disease in adults with CD4 counts below 500 per cumm

  advanced disease, i.e., AIDS and AIDS Related Complex, in adults and children

  HIV related symptons or asymptomatic disease with markers indicating significant HIV-related immune suppression in children over the age of three months.

  Mr. Galloway
  To ask the Secretary of State for Health how many(a) civil servants within her Department, (b) consultants sitting upon any of the advisory committees since 1977 or (c) other individuals involved organisationally in the Concorde trials have received money in royalties or grants, or had career positions, or directorships or consultancies, with the Wellcome Foundation, the Wellcome Trust or any of the Wellcome Foundation's subsidiary companies.

  Dr Mawhinney
  No civil servants within the Department have received money in any form from the Wellcome Foundation or the Wellcome Trust. Membership of the Committee on Safety of Medicines is published in the Medicines Commission annual report, which includes a comprehensive list of members' interests in the pharmaceutical industry. Information is not available for outside experts who sit on other Departmental advisory committees. The Concorde trial 480
  was organised by the Medical Research Council, which receives its grant-in-aid from the office of my right hon. Friend the Chancellor of the Duchy of Lancaster.

  Mr. Galloway
  To ask the Secretary of State for Health if she will place in the Library the full results of the Concorde trials; and if she will make a statement on the results.

  Mr. Jackson
  I have been asked to reply.

  The full report of the trial is still in preparation and is due to be published within the next few months. A copy of the letter to The Lancet summarising the preliminary results is available in the Library.

  Mr. Galloway
  To ask the Secretary of State for Health is she will place in the Library all the relevant research data prior to the start of the Concorde trials in 1988, which showed that AZT was of benefit to HIV antibody positive asymptomatic individuals.

  Mr. Robert Jackson
  I have been asked to reply.

  Prior to the start of the Concorde trial one paper had been published which indicated a potential benefit of AZT treatment in asymptomatic HIV-infected individuals, and this reported data on a very small number of subjects. A copy is available in the Library. (Lancet (i) 1988: pages 373–376).

  Mr. Galloway
  To ask the Secretary of State for Health what arrangements are being made for those Concorde trial subjects who were given the drug AZT: how many are still being prescribed the drug; and who is bearing the cost.

  Mr. Robert Jackson
  I have been asked to reply.

  All patients in the Concorde trial will have the opportunity to discuss their future treatment with their doctors in the light of the results of the trial and their own clinical status and will be told whether they received AZT or placebo during the blinded phase of the trial, if they wish to know. For those deciding to continue treatment with AZT and who fall within the currently licensed indications, the cost of the drug will be met by the national health service. There is no information available on the number of patients still being prescribed the drug.

  Mr. Galloway
  To ask the Secretary of State for Health when the Concorde trials relating to AZT were completed; when the results were announced; and if she will make a statement about the way in which the preliminary results were announced.

  Mr. Robert Jackson
  I have been asked to reply.

  Analysis of the data from the Concorde trial collected up to 31 December 1992 was completed in March 1993; limited follow-up information will continue to be collected on the patients, in an unblinded fashion, so the trial is not completely finished. Preliminary results were published in a letter to The Lancet on 2 April 1993, having been announced to doctors and other staff involved with the trials at participating clinical centres at a meeting on 1 April 1993. The trial co-ordinating committee considered it important for the key data to be made available to an international readership in a preliminary report through the scientific press as soon as possible, to avoid the spread of inaccurate rumours among patients and their doctors.

  Pegasus Drug Abuse Project
  Mr. Gapes
  To ask the Secretary of State for Health what is the current state of plans for the Pegasus drug abuse project proposed by the North East Thames regional health authority.

  Dr. Mawhinney
  An application for funding for the Pegasus project proposal was considered recently by North East Thames regional health authority and the hon. Member may wish to contact the chairman, Sir William Staveley, for details. An application was also made to the Department of Health by the Association for the Prevention of Addiction under section 64 of the Health Services and Public Health Act 1968. This was unsuccessful.

  Children in Care
  Lady Olga Maitland
  To ask the Secretary of State for Health what plans she has to ensure that children who might abscond while in care are properly escorted while outside the home.

  Mr. Yeo
  Advice on physical intervention to prevent a detained child from running away from an open children's home, or while being escorted outside a secure accommodation care unit, is included in the guidance on permissible forms of control in children's residential care published by the Department on 28 April 1993. It is the responsibility of management to interpret this guidance and develop policies and procedures within which to operate. A copy of the guidance is available in the Library.

  FHSA

  Number of GPs

  Number of medical practices

  Number of fundholding practices

  Number of fundholding GPs

  Cheshire

  512

  143

  47

  236

  Liverpool

  240

  104

  18

  54

  St. Helens and Knowsley

  176

  76

  12

  40

  Sefton

  141

  55

  13

  52

  Wirral

  178

  68

  11

  41

  Total for Mersey RHA

  1,247

  446

  101

  423

  Information on GP numbers is collected by family health services authorities; the data are for 1 October 1992. Fundholding figures are for 30 April 1993.

  Complaints (Evidence)
  Mr. Boyce
  To ask the Secretary of State for Health, pursuant to her answer of 22 April,Official Report, column 169, what action she takes to ensure that evidence presented to her by the Medical Advisory Committee is complete; and by what process a complainant may raise objections to the material before the committee.

  Dr. Mawhinney
  The Medical Advisory Committee gives advice to my right hon. Friend the Secretary of State on any penalty which should be imposed on a general practitioner who has been found in breach of his terms of service. There is no provision under the regulations for the involvement of the complainant in this consideration.

  Back Pain
  Mr. David Atkinson
  To ask the Secretary of State for Health when she expects to receive the report from her Department's clinical standards advisory committee inquiry into back pain; and if she will make a statement.

  Mr. Sackville
  The group expects to report in the summer of 1994 to my right hon. Friend the Secretary of State, my right hon. Friends the Secretaries of State for Wales and Scotland and my right hon. and learned Friend the Secretary of State for Northern Ireland. Clinical standards advisory group reports are normally published along with a Government response within three months of receipt.

  Male Circumcision
  Mr. Bennett
  To ask the Secretary of State for Health what was the cost to the NHS of male circumcision operations in the last 15 years for which figures are available; and what was the cost of comparable operations in the private sector.

  Mr. Sackville
  This information is not available centrally.

  GP Fund Holders
  Mrs. Jane Kennedy
  To ask the Secretary of State for Health if she will list for each district health authority within the Mersey region the total number of(a) general practitioners and medical practices and (b) general practitioners and medical practices that are fund holders.

  Dr. Mawhinney
  The information available is shown in the table.

  Drugs
  Mrs. Lait
  To ask the Secretary of State for Health, pursuant to her answer of 22 April,Official Report, column 169, how many of the preparations listed as drugs acting on the skin (a) do not require a product licence under the Medicines Act 1968, (b) are available for purchase without a doctor's prescription at pharmacies and other retail outlets and (c) attracted fewer than 20 prescriptions a year met by the NHS in each of the years 1990, 1991 and 1992.

  Dr. Mawhinney
  The number of products within this list which attracted fewer than 20 prescriptions was 788 in 1991 and 822 in 1992; figures for 1990 are not available. The remaining information could be provided only at disproportionate cost.

  Health Centres
  Mr. Stern
  To ask the Secretary of State for Health when she expects to announce the results of the working group on the financing of health centres.

  Dr. Mawhinney
  We intend to announce the results, and our proposals, shortly.

  Dementia
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Health whether dementia is included within the ambit of the specific grant for mental illness.

  Mr. Yeo
  Yes.

  Home Care Services
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Health if she will make it her policy to bring forward legislation to enforce the registration and inspection of private individual home care services.

  Mr. Yeo
  We have no plans to do so.

  Junior Doctors
  Ms Primarolo
  To ask the Secretary of State for Health if she will give average figures for(a) hours contracted, (b) duty hours and (c) hours on feet of junior hospital doctors in each year since 1971.

  Dr. Mawhinney
  Information on the average contracted hours of junior hospital doctors and dentists, at 30 September for each year, is as follows:

  Hours

  1971–1975

  Not available

  1976

  92

  1977

  91

  1978

  90

  1979

  90

  1980

  89

  1981

  89

  1982

  88

  1983

  87

  1984

  86

  1985

  85

  1986

  85

  1987

  82

  1988

  81

  1989

  81

  1990

  79

  1991

  79

  199

  Not yet available

  Information on duty hours and on "hours on feet" is not available centrally.

  NHS Management Review
  Mr. Congdon
  To ask the Secretary of State for Health if she will announce the terms of reference and membership of the NHS management functions and manpower review; and if she will make a statement.

  Mrs. Virginia Bottomley
  The continuing development of the national health service reforms requires the structure of the NHS above the level of local purchasers and providers to be examined. I have set up a review to 484
  consider what management processes and organisational structures will best deliver measurable improvements in health and effective and efficient services, through the operation of the NHS internal market, while minimising management costs and ensuring proper public accountability. I have asked the review team to complete its work in July.

  The review team's terms of reference are as follows:

  1. To carry out an organisational analysis of the main work and functions required to:

  Ensure that the Government's reforms of the NHS are fully effected.

  Ensure effective oversight of purchasers and providers operating in the NHS internal market.

  Ensure that the Secretary of State is able to discharge her statutory responsibilities for the management of the NHS. Ensure that the proportion of NHS expenditure devoted to direct patient care is maximised.

  2. In the light of the above:

  To determine the statutory responsibilities and the core functions which must continue to be discharged by bodies which are part of, or directly accountable to, central Government.

  To make recommendations on the organisational structure required for this.

  To consider possible future changes to the configuration of NHS purchasers—including DHA mergers, joint DHA/ FHSA working and the development of the GP Fundholding scheme.

  To make recommendations on the discharge of other essential functions, e.g., Estates Management and Information Management and Technology.

  To determine the financial and manpower consequences, for the NHS and the Department of Health (including the NHSME), of conclusions reached.

  3. The review team should take particular account of:

  The need to achieve a balance between the benefits of decentralisation and the essential requirements of public accountability.

  The need for an internally consistent regulatory framework to support the operation and development of the internal market. The need for the development of effective purchasing in the NHS.

  The conclusions of the Cadbury Report on corporate governance.

  Ms Kate Jenkins, a member of the NHS policy board, will chair the review's steering group and lead the review team itself. The other members of the review team are:

  Mr. Alan Langlands—(Deputy Chief Executive, NHS Management Executive)

  Mr. Peter Griffiths—(Formerly Chief Executive, Guy's NHS Trust)

  Mr. Ian Carruthers—(Chief Executive, Dorset Health Commission)

  Mr. John Sherring—(Regional Director—West Midlands, Audit Commission)

  Dr. Carol Propper—(NHS Management Executive on secondment from University of Bristol)

  Members of the review team providing professional advice on specific areas are:

  Professor Andrew Pettigrew—(Centre for Corporate Strategy and Change, Warwick Business School, University of Warwick)

  Dr. Graham Winyard—(Medical Director, NHS Management Executive)

  Mrs. Sue Williams—(Deputy Director of Nursing, NHS Management Executive)

  Other sources of professional advice will be identified as necessary.

  Clinical Services
  Mr. Nigel Evans
  To ask the Secretary of State for Health what is her Department's policy on the use, by health authorities or trusts, when all other clinical indicators are equal, of age as a criterion for access to clinical services.

  Dr. Mawhinney
  It is the responsibility of clinicians to establish the need for and priority of medical treatment.

  Caledonian MacBrayne Ltd.

  Scottish Office

  European Regional Development Fund

  Kennacraig

  299,000

  161,000

  120,000

  Port Ellen

  10,000

  —

  —

  Port Askaig

  70,000

  —

  —

  379,000

  161,000

  120,000

  Council House Sales
  Mr. Home Robertson
  To ask the Secretary of State for Scotland, pursuant to his answer of 18 March,Official Report, column 383, if he will now make a statement on the evidence that he has received from East Lothian district council on 18 February, and also on 26 April, about abuses of the right to buy council houses with discounts; and if he will introduce amendments to the Housing (Scotland) Act 1987 to prevent such abuses.

  Lord James Douglas-Hamilton
  My right hon. Friend has considered the information provided by East Lothian district council about certain right-to-buy sales in East Lothian. Our conclusion on the basis of this information is that it does not appear that anything has happened which is contrary to the right-to-buy provisions in the Housing (Scotland) Act 1987.

  Tenants who are buying their homes should be free to make whatever financial arrangements they think desirable to suit their particular circumstances. A tenant who has bought a house is also free to dispose of it as he or she wishes, subject to the provisions for the repayment of discount if the disposal takes place within three years. We do not propose to amend the legislation to constrain these freedoms.

  It is important that tenants should understand the financial implications of any agreement they might enter into. It is advisable for tenants to take independent legal advice before entering into any agreement, and we will emphasise this in revising the leaflet "Buy Your Home" later this year.

  Forestry
  Mr. Chris Smith
  To ask the Secretary of State for Scotland, pursuant to his answer of 20 April,Official Report, columns 89–90, if he will give biographical details of the members of the forestry review group.

  Sir Hector Monro
  All the members of the forestry review group are serving civil servants and have responsibilities, knowledge and experience, relevant to its remit and work. I see no benefit in publishing further biographical details.

SCOTLAND

  Piers
  Mrs. Ray Michie
  To ask the Secretary of State for Scotland, pursuant to his answer of 29 April,Official Report, columns 538–39, if he will give a full breakdown of the cost of adapting the piers at Kennacraig, Port Ellen and Port Askaig per agency involved in the project.

  Lord James Douglas-Hamilton
  The breakdown of the estimated cost of adapting the piers at Kennacraig, Port Ellen and Port Askaig by source of funding is as follows:

  Mr. Chris Smith
  To ask the Secretary of State for Scotland what steps he is taking to ensure that the work of the forestry review group does not jeopardise the Forestry Commission's existing policy and practice of allowing free public access to its land.

  Sir Hector Monro
  The remit of the forestry review group expressly includes the request that it should make proposals for changes which would improve the effectiveness of the delivery of the Government's forestry policy objectives, having regard to the Government's other economic and environmental policies.

  Such objectives and policies clearly include the Forestry Commission's practice of encouraging public access to woodlands as stated in its "Forestry Policy for Great Britain", copies of which are in the Library.

  Mr. Chris Smith
  To ask the Secretary of State for Scotland how many individual Forestry Commission land holdings there are.

  Sir Hector Monro
  It is estimated that there are about 5,000 individual Forestry Commission land holdings, excluding individual housing plots and other small areas.

  Mr. Chris Smith
  To ask the Secretary of State for Scotland if he will estimate the total amount of public expenditure generated since 1981 by former Forestry Commission land passing into the private sector and becoming eligible for agricultural grants and subsidies.

  Sir Hector Monro
  The amount of public expenditure generated in these circumstances has been negligible.

  Woodlands sold by the commission are rarely converted to agricultural use as, under the felling licensing procedures, there is a general presumption against this. Existing agricultural land sold by the commission will normally have been attracting agricultural grants and subsidies before sale.

  Mr. Chris Smith
  To ask the Secretary of State for Scotland if he will list(a) the total area of land disposed of, (b) the number of individual sales, (c) the income generated by the sales, (d) the total area of land disposed of over which public access has been formally protected and (e) the number of individual access agreements made on land disposed of, regarding land disposed of by the Forestry Commission since 1981.
  487
  Sir Hector Monro
  [holding answer 11 May 1993]: Between 27 July 1981 and 31 March 1993, the Forestry Commission sold 173,000 hectares of land, including woodlands and other land such as agricultural land and residential properties.

  The sales included over 2,000 individual areas of forest land which are identified in lists held in the Library of the House; no central record is kept of the number of sales of agricultural land and residential properties.

  The total income from all sales was £174 million.

  The arrangements for securing continued public access to commission woodlands after sale, by way of prior agreements entered into between the Commission and local authorities, were introduced in October 1991. Most of the sales concluded since then were too far advanced in October 1991 to be considered for an access agreement, while most of the areas brought forward for disposal since that date have still to be sold. Access agreements have now been made with local authorities for five areas of commission land, one of which, covering 21 hectares, has been sold.

  Mr. Chris Smith
  To ask the Secretary of State for Scotland, pursuant to his answer of 20 April,Official Report, columns 89–90, what steps he has taken, or proposes to take, to publicise the name and address of the secretary to the forestry review group; and if he intends to encourage or invite the submission of expert evidence to the group from outside.

  Sir Hector Monro
  [holding answer 11 May 1993]: Many individuals and organisations have already submitted useful comments and thoughts to the secretary to the forestry review group, whose name and address have been given coverage in the Official Report and the media.

  Further submissions will continue to be welcomed and, as the work of the group progresses, there may be issues on which specific comment is invited; publicity will be arranged for these, as appropriate.

  Mr. Chris Smith
  To ask the Secretary of State for Scotland, pursuant to his answer of 17 March,Official Report, columns 276–78, to the hon. Member for Glanford and Scunthorpe (Mr. Morley), if he will place in the Library a list by county and region of Forestry Commission land holdings greater than 1,000 hectares, giving the name, location and area.

  Sir Hector Monro
  [holding answer 21 April 1993]: The Forestry Commission is preparing a list of its landholdings greater than 1,000 hectares and I shall arrange for the hon. Member to receive a copy as soon as possible and for further copies to be placed in the Library.

  Cockburnspath Bypass
  Mr. Kirkwood
  To ask the Secretary of State for Scotland when he expects to receive the Strathclyde university study monitoring the wind levels over the newly

  Scottish Tourist Board

  Name

  Occupation

  Annual Remuneration £

  Chairman

  Ian Grant CBE FRAgs

  Farmer

  34,510

  488
  constructed Cockburnspath bypass; and if he will make it his policy to publish the results when they are known in full.

  Lord James Douglas-Hamilton
  [holding answer 10 May 1993]: The report of the Strathclyde university study of wind speeds on the new Cockburnspath bypass is expected to be submitted by the end of this year. The results will be made public.

  Mr. Kirkwood
  To ask the Secretary of State for Scotland what proposals he has for diversion of vehicles from the route of the newly constructed Cockburnspath bypass during abnormally high wind conditions; and what alternative roads would be used in any such diversion.

  Lord James Douglas-Hamilton
  [holding answer 10 May 1993]: In common with other exposed section of trunk road, the embankment section of the new Cockburnspath bypass now has signs warning drivers of high-sided vehicles of the danger of crosswinds. A comparative study of the pattern of wind speeds and directions at this location and the nearby section of A1 at Thorntonloch is being undertaken by Strathclyde university and the results will determine a strategy for the use of automatically triggered diversion signs. In the event of their use, the diversion route will be along the former trunk road through Cockburnspath.

  A1
  Mr. Kirkwood
  To ask the Secretary of State for Scotland if he will list the currently identified parts of the A1 between Newcastle and Edinburgh which are identified as being subjected to abnormally high winds; and what the wind velocities are in such cases.

  Lord James Douglas-Hamilton
  [holding answer 10 May 1993]: Sections of the Al between Newcastle and Edinburgh which have been identified and signed as being subject to abnormal winds which can cause difficulties for drivers of high sided vehicles are:

  (a) River Coquet Bridge, Felton Bypass;

  (b) River Tweed Crossing, Berwick Bypass;

  (c) Cockburnspath Bypass;

  (d) Thorntonloch, north of Dunglass; and

  (e) Dunbar Bypass.

  The study of wind speed at Cockburnspath and Thorntonloch is ongoing and meaningful results are not yet available. Wind velocities have not been measured at the other locations.

  Appointments
  Mr. McLeish
  To ask the Secretary of State for Scotland if he will list for the Scottish Tourist Board, the Higher Education Funding Council and the Scottish Sports Council the names of the chairman and board or council members, their occupation or profession and the allowances and remuneration payable in each case.

  Mr. Lang
  [holding answer 10 May 1993]The information requested is given in the tables.
  489

  Name

  Occupation

  Annual Remuneration £

  Board Members (6)1

  Ian Milton

  Managing Director

  6,320

  David D Stevenson CBE

  Chairman and Managing Director

  6,320

  John F Loughray

  Company Director

  6,320

  Scott Grier

  Managing Director

  6,320

  Mrs. Philippa Grant

  Company Director

  6,320

  1 One vacancy at present.

  Scottish Higher Education Funding Council

  Name

  Occupation

  Annual Remuneration £

  Chairman

  Professor Jack Shaw, CBE

  Deputy Governor, Bank of Scotland

  25,000

  Council Members

  Professor John Sizer, CBE (Chief Executive)

  165,000

  Professor Michael Bond

  Vice Principal, University of Glasgow

  4,000

  Dr. Chris Carter

  Vice Principal, Duncan of Jordanstone College of Art

  4,000

  Professor John Darby

  Assistant Principal, Napier University

  4,000

  Mrs. Eilleen Dunning, OBE

  Former Headteacher, St. Augustine's School

  4,000

  Professor Robert Jack, CBE

  Retired Senior Partner, McGrigor Donald Solicitors

  4,000

  Mr. John McClelland

  UK Director of Manufacturing and Hardware, IBM

  4,000

  Mr. Ronald Miller, CBE

  Executive Chairman, Dawson International

  4,000

  Professor Janet Sprent

  Professor of Plant Biology, Dundee University

  4,000

  Professor David Wallace

  Professor of Mathematical Physics, University of Edinburgh

  4,000

  Mr. Ian Wood, CBE

  Chairman and Management Director, John Wood Group

  4,000

  Mr. James Wright

  Vice-Chancellor, University of Newcastle-upon-Tyne

  4,000

  In addition, Council members are reimbursed expenses arising from attendance at meetings of the council and council subcommittees.

  1 The chief executive is eligible to receive additional performance-related payments of up to 10 per cent. of his gross salary.

  Scottish Sports Council

  Name

  Occupation

  Annual Remuneration £

  Chairman

  Mr. Graeme M. Simmers, OBE

  Businessman

  12,468

  Council Members

  Mr. G. Malcolm Murrary (Vice Chairman)

  Chief Executive (Insurance Company)

  4,465

  Mr. Michael Barron

  Chief Executive (Local Government)

  Nil

  Mr. Alan Blackshaw

  Business Consultant

  Nil

  Mr. Peter Jim Fairlie

  Company Director

  Nil

  Miss Lesley Grant

  Retired Headteacher

  Nil

  Mr. Alan Grosset

  Solicitor

  Nil

  Mr. John Loughray

  Director and Consultant

  Nil

  Mr. Fred Nelson

  Engineer

  Nil

  Dr. Myra Nimmo

  Senior Academic Faculty of Education Strathclyde University

  Nil

  Mr. John N. M. Frame

  Stockbroker

  Nil

  Mrs. Alison Ramsay

  Solicitor

  Nil

  All council members are entitled to claim expenses incurred as a result of their attendance at council meetings or SSC sponsored.

  Mr. McLeish
  To ask the Secretary of State for Scotland if he will give for each of the newly incorporated further education colleges the names of the chairman and board members, their occupations or professions and the level of allowances or remuneration payable.

  Lord James Douglas-Hamilton
  [holding answer 10 May 1993]: I shall arrange for the information held centrally on
  490
  members and chairmen of boards of management to be sent to the hon. Member. A copy will also be placed in the Library of the House.

  Membership of a board of management does not attract remuneration. Boards of management may pay allowances and expenses to members within such criteria as the Secretary of State may determine. The criteria which have been set are the same as those applicable to members of local authorities.
  491
  Mr. McLeish
  To ask the Secretary of State for Scotland if he will give for Scottish Homes and for each of the new town development corporations the name of the

  Name

  Occupation

  Salary (£)

  Scottish Homes

  Sir James Mellon, KCMG, (Chairman)

  Former Diplomat

  36,350

  John Richards, CBE, PPRIAS, (Deputy Chairman)

  Architect, John Richards Associates

  16,515

  Mrs. Frances McCall, MBE

  Member, Management Committee, Calvay Co-op

  6,310

  Professor Duncan Maclennan, MA, MPhil, FRSA

  Professor of Economics and Director, Centre for Housing Research, Glasgow University

  6,310

  Dr. Tom N. A. Begg, OBE, JP, BA, PhD

  Lecturer in Economics, Queen Margaret College Edinburgh

  6,310

  Mrs. Heather Sheerin, OBE

  Co-Director family owned retail carpet business

  6,310

  Mrs. Daphne M. W. Sleigh

  Freelance Market Researcher

  6,310

  Cameron H. Parker

  Non-executive Vice-Chairman, Lithgows Ltd.

  6,310

  Professor John R. Small

  Deputy Principal Heriot Watt University and Professor of Accountancy and Finance

  6,310

  Peter McKinlay (ex-officio member)

  Chief Executive Scottish Homes

  70,527

  Glenrothes Development Corporation

  Professor C. Blake, CBE (Chairman)

  Former Chairman of William Low & Co. plc

  21,540

  David B. B. Smith (Deputy Chairman)

  Director and Chief Executive of Dunfermline Building Society

  9,790

  Mrs. Frances Havenga

  Exports Director

  4,420

  John MacDonald, JP

  Leader of Fife Regional Council

  4,420

  Douglas C. Mason

  Freelance Journalist

  4,420

  Iain A. McCrone, CBE

  Chairman and Managing Director of McCrone Farmers

  4,420

  James A. G. Fiddes

  Senior Partner, Ryden Property Consultants and Chartered Surveyors

  4,420

  Mrs. Jane Buchanan, JP

  Travel Agent

  4,420

  Robert J. Taylor

  Lecturer in Industrial Studies

  4,420

  East Kilbride Development Corporation

  J. Allan Denholm, CBE (Chairman)

  Company Director

  21,540

  Harley Marshall, JP (Deputy Chairman)

  Company Managing Director

  9,790

  Mrs. Elaine McDonald

  Chartered Accountant

  4,420

  James R. Mowat

  Engineer

  4,420

  Iain J. A. Dyer

  Lecturer, Glasgow University

  4,420

  John A. A. Spiers

  Chartered Accountant and Chartered Surveyor

  4,420

  Stewart Crawford

  East Kilbride District Councillor: Provost

  4,420

  Colin Robb

  Leader of East Kilbride District Council

  4,420

  Dr. David M. Sanderson

  Convener of Strathclyde Regional Council

  4,420

  Cumbernauld Development Corporation

  David Mitchell, CBE (Chairman)

  Joint Managing Director M & N Norman Timber Ltd.

  21,540

  Tom M. Barrie, JP (Deputy Chairman)

  Member, Strathclyde Regional Council

  9,790

  John A. Dawson

  Professor of Marketing, Edinburgh University

  4,420

  Mrs. Rose Mary McKenna, JP

  District Councillor

  4,420

  James M. Burnett

  Chartered Surveyor

  4,420

  John S. Moreland, OBE

  Director, Scottish Nuclear

  4,420

  P. G. Lockett

  Chartered Accountant

  4,420

  Robert R. C. Taylor

  Chairman and Managing Director Robert Taylor Holdings Ltd.

  4,420

  Ian R. Young

  Managing Director, Archibald Young (Brass Founders) Ltd.

  4,420

  Livingston Development Corporation

  R. S. Watt, CBE (Chairman)

  Computer Systems Consultant

  21,540

  Brian A. Meek, OBE, JP (Deputy Chairman)

  Vice President, Scottish Conservative and Unionist Association

  9,790

  Mrs. Isobel Brydie, JP

  Member, West Lothian District Council

  4,420

  William R. V. Percy

  Member, Lothian Regional Council

  4,420

  John S. Young

  Former Chairman of Berkley Computer Systems

  4,420

  Ian Ivory

  Investment Manager

  4,420

  Keith Geddes

  Lothian Regional Councillor

  4,420

  492
  chairman and board members, their occupations or professions and the salaries, allowances or other type of remuneration payable.

  Lord James Douglas-Hamilton
  [holding answer 10 May 1993]: The information requested is set out in the table:
  493

  Name

  Occupation

  Salary (£)

  Gordon S. Milne

  Retired Managing Director of Scottish Metropolitan

  4,420

  Charles A. Boyle

  Former Director of Manchester Ship Canal Co.

  4,420

  Irvine Development Corporation

  Maurice Crichton (Chairman)

  Retired Chartered Accountant

  21,540

  Mrs Jeannette M. Mason

  Former member of Strathclyde Regional Council

  9,790

  Jack Carson, JP

  Convener of Cunninghame District Council

  4,420

  David Jerdan

  Chartered Surveyor

  4,420

  Alan Jones

  Vice President and Area Manager, Beechams

  4,420

  Archibald G. O. Walker

  Chartered Accountant

  4,420

  William B. Miller, OBE

  Chairman, Prestwick Holdings plc

  4,420

  Thomas H. Colyer

  Member of Strathclyde Regional Council

  4,420

  Charles Maclean

  Company Director

  4,420

  All the above appointments, except the chief executive, Scottish Homes, are held on a part-time basis. For Scottish Homes, the estimated time commitment is half a day per week for members, one and a half days per week for the deputy chairman and three days per week for the chairman. For the new town development corporations, the expected time commitment is half a day per week for members, one day per week for the deputy chairman and two days per week for the chairman.

  Fords
  Mr. Home Robertson
  To ask the Secretary of State for Scotland how many fords there are in Scotland where public roads cross watercourses; how many fatal or serious accidents have occurred in each of the last 10 years as a result of vehicles failing to negotiate water on fords on public roads; if he will list fords which have been closed to traffic following such accidents; and what is his Department's policy towards fords and the provision of warning to motorists when water conditions may be dangerous.

  Lord James Douglas-Hamilton
  [holding answer 6 May 1993]: Information is not held centrally as to the number of fords in Scotland on public roads, the number of fatal or serious accidents at fords, nor the number of fords closed to traffic following such accidents.

  Roads authorities have a duty to manage and maintain the roads for which they are responsible, including any fords on these roads, to allow for the safe and convenient movement of traffic.

  There are prescribed signs to warn of the existence of a ford and of the depth of water. Roads authorities are at liberty to instal such signs without seeking the Secretary of State's consent. Where it is felt that particular circumstances require further warning signs to be erected, roads authorities may seek the Secretary of State's authorisation for non-standard signs.

  Examinations
  Mrs. Ray Michie
  To ask the Secretary of State for Scotland what plans there are to introduce a more comprehensive system of moderation of the internal elements of examination under the auspices of the Scottish Vocational Education Council and the Scottish Examination Board; and if he will make a statement.

  Lord James Douglas-Hamilton
  [holding answer 7 May 1993]: The Scottish Vocational Education Council and
  494
  the Scottish Examination Board both give a high priority to the quality of external and internal assessment, and to moderation of their awards. They have in place quality assurance and review procedures to ensure that acceptable standards are maintained.

  The Howie committee included in its report proposals for a quality assurance system to underpin the validity of the new Scottish upper secondary awards which it has recommended. The proposals contained in the Howie committee's report and all the comments received upon these propopals are under consideration.

  Mrs. Ray Michie
  To ask the Secretary of State for Scotland what plans there are to alter the continual assessment element of ScotVec qualifications; what representations he has had regarding the quality and acceptability of ScotVec modules; and if he will make a statement.

  Lord James Douglas-Hamilton
  [holding answer 7 May 1993]: ScotVec qualifications are evolved in consultation with all interested parties and an independent review conducted by the Scottish Council for Research in Education in 1991 reported that employers favoured the assessment techniques used in ScotVec national certificate modules.

  The success of the Scottish wider access programme in enabling students to enter higher education is evidence of acceptance of ScotVec's assessment methods and quality assurance. The Scottish Universities Council on Entrance, along with other national bodies, has also recently recognised groupings of ScotVec modules for entrance to higher education.

  Local Government Reform
  Mr. Davidson
  To ask the Secretary of State for Scotland, pursuant to his answer of 14 April,Official Report, column 587, what plans he has to improve the structures and systems of accountability to elected local authorities by non-elected agencies and non-governmental organisations following his proposed reforms of the local government system in Scotland.

  Mr. Stewart
  [holding answer 11 May 1993]: There are no plans to amend the present arrangements for ensuring the accountability of non-departmental public bodies in the context of the Government's proposals for local government reform in Scotland.

EDUCATION

  Testing
  Mr. Alfred Morris
  To ask the Secretary of State for Education what was the total cost, at the latest date for which figures are available, of(a) materials used or to be used in the scheduled standard assessment tasks for 1993 and (b) advertisements relating to testing and commending these tests to parents.

  Mr. Forth
  The total cost of producing and distributing all the materials for this year's tests of seven and 14-year-olds is estimated at £6·5 million. This is borne entirely by the School Examinations and Assessment Council. There is no direct cost to schools.

  It is estimated that the cost of advertising the leaflet "How is Your Child Doing at School?" which provides information to parents about this summer's tests is £415,000.

  Mr. Alfred Morris
  To ask the Secretary of State for Education by what date he expects his policy in regard to standard assessment tasks to be fully operational.

  Mr. Forth
  I refer the right hon. Member to the statement my right hon. Friend made to the House on 11 May,Official Report, columns 651–60.

  Mr. Spearing
  To ask the Secretary of State for Education what representations he has received from secondary schools in Abingdon concerning the operation of his system of national testing of school pupils.

  Mr. Forth
  My right hon. Friend has received various oral and written comments from secondary schools in Abingdon. These have concerned various aspects of the tests for 14-year-olds. The review being conducted by Sir Ron Dearing will consider such comments about the tests, with the aim of improving the assessment and testing arrangements in the future.

  Teachers' Dispute, Wandsworth
  Ms Walley
  To ask the Secretary of State for Education what was his response to the letter of 23 April from the National Association of Schoolmasters/Union of Women Teachers requesting a meeting to discuss the dispute between the union and the London borough of Wandsworth.

  Mr. Forth
  My right hon. Friend's private secretary replied on his behalf on 30 April. She advised the NASUWT that it should make its concerns and views known to Sir Ron Dearing who is conducting a review of the national curriculum and assessment arrangements. She said that meanwhile there was no justification for abandoning this summer's tests or for a boycott of the tests, which would damage pupils' education and hamper the achievement of a more streamlined curriculum and assessment framework.

  Number of pupils and boarding pupils in maintained and non-maintained special schools for each LEA in England (including hospital special and general hospital schools).

  January 1992

  Maintained

  Non-maintained

  All pupils

  Boarders(1)

  All pupils

  Boarders(1)

  Corporation of London

  0

  0

  0

  0

  Camden

  372

  62

  0

  0

  Greenwich

  742

  56

  0

  0

  Higher Education
  Mr. Nigel Evans
  To ask the Secretary of State for Education if he will list the number of students entering higher education for each year since 1979; and if he will make a statement.

  Mr. Boswell
  The table gives the number of first-year students on higher education courses at publicly funded higher education institutions in Great Britain from 1979 onwards. It includes both UK and overseas domiciled students.

  Academic Year

  Student numbers (000s)

  1979

  327·4

  1980

  340·4

  1981

  355·4

  1982

  356·9

  1983

  365·4

  1984

  370·3

  1985

  391·2

  1986

  410·3

  1987

  415·4

  1988

  438·3

  1989

  473·2

  1990

  511·5

  1991

  587·3

  The number of students in higher education has
  expanded even faster than the rate of growth envisaged in the 1991 higher education White Paper. Over one in four young people were entering higher education in 1992. Government spending plans provide for an increase of 104,000 or 13 per cent. in higher education student numbers during the next three years. This will allow the current record levels of participation to be maintained and give institutions a period during which to consolidate their recent achievements.

  Special Schools
  Mrs. Gorman
  To ask the Secretary of State for Education (1) how many pupils in(a) England and (b) each local education authority are educated in (i) local authority-maintained special schools, (ii) non-maintained special schools and (iii) independent special schools;

  (2) how many pupils in (a) England and (b) each local education authority have boarding places in (i) local authority-maintained special schools, (ii) non-maintained special schools and (iii) independent special schools.

  Mr. Forth
  The information requested for maintained and non-maintained special schools is shown in the table.

  Information on independent special schools can be provided only at disproportionate cost.
  497

  Maintained

  Non-maintained

  All pupils

  Boarders (1)

  All pupils

  Boarders(1)

  Hackney

  651

  150

  0

  0

  Hammersmith

  436

  55

  0

  0

  Islington

  335

  26

  0

  0

  Kensington and Chelsea

  87

  86

  0

  0

  Lambeth

  843

  98

  0

  0

  Lewisham

  466

  59

  0

  0

  Southwark

  491

  61

  0

  0

  Tower Hamlets

  511

  41

  0

  0

  Wandsworth

  715

  195

  0

  0

  Westminster

  168

  29

  0

  0

  Barking

  161

  0

  0

  0

  Barnet

  365

  50

  0

  0

  Bexley

  272

  0

  0

  0

  Brent

  353

  0

  0

  0

  Bromley

  358

  0

  44

  41

  Croydon

  515

  14

  0

  0

  Ealing

  459

  0

  0

  0

  Enfield

  429

  0

  0

  0

  Haringey

  342

  0

  0

  0

  Harrow

  220

  0

  0

  0

  Havering

  225

  0

  0

  0

  Hillingdon

  402

  0

  89

  34

  Hounslow

  391

  0

  0

  0

  Kingston upon Thames

  231

  0

  0

  0

  Merton

  249

  0

  0

  0

  Newham

  342

  0

  0

  0

  Redbridge

  382

  0

  9

  0

  Richmond upon Thames

  149

  0

  0

  0

  Sutton

  311

  0

  0

  0

  Waltham Forest

  777

  20

  0

  0

  Birmingham

  3,015

  222

  0

  0

  Coventry

  820

  65

  0

  0

  Dudley

  571

  0

  0

  0

  Sandwell

  819

  43

  0

  0

  Solihull

  277

  0

  0

  0

  Walsall

  575

  25

  0

  0

  Wolverhampton

  501

  8

  0

  0

  Knowsley

  625

  53

  0

  0

  Liverpool

  1,585

  94

  147

  80

  St. Helens

  470

  0

  0

  0

  Sefton

  428

  0

  165

  97

  Wirral

  772

  0

  69

  32

  Bolton

  483

  9

  37

  12

  Bury

  298

  23

  0

  0

  Manchester

  1,849

  106

  0

  0

  Oldham

  593

  0

  0

  0

  Rochdale

  503

  28

  0

  0

  Salford

  451

  0

  0

  0

  Stockport

  448

  37

  323

  102

  Tameside

  422

  0

  0

  0

  Trafford

  398

  0

  0

  0

  Wigan

  868

  66

  0

  0

  Barnsley

  158

  0

  0

  0

  Doncaster

  710

  36

  308

  244

  Rotherham

  628

  0

  0

  0

  Sheffield

  878

  133

  0

  0

  Bradford

  962

  7

  0

  0

  Calderdale

  199

  0

  54

  54

  Kirklees

  645

  74

  30

  22

  Leeds

  1,019

  16

  113

  81

  Wakefield

  635

  16

  0

  0

  Gateshead

  364

  24

  0

  0

  Newcastle upon Tyne

  792

  69

  156

  96

  North Tyneside

  439

  0

  121

  20

  South Tyneside

  346

  0

  0

  0

  Sunderland

  695

  0

  0

  0

  Isles of Scilly

  0

  0

  0

  0

  Avon

  2,065

  228

  0

  0

  Bedfordshire

  1,143

  81

  0

  0

  Berkshire

  1,649

  79

  239

  234

  Buckinghamshire

  1,582

  275

  0

  0

  Cambridgeshire

  984

  77

  0

  0

  Cheshire

  1,505

  333

  171

  163

  Cleveland

  1,415

  58

  0

  0

  Cornwall

  298

  57

  0

  0

  Cumbria

  306

  0

  0

  0

  Derbyshire

  1,356

  97

  98

  48

  498 499

  Maintained

  Non-maintained

  All pupils

  Boarders(1)

  All pupils

  Boarders(1)

  Devon

  1,787

  185

  344

  250

  Dorset

  1,104

  57

  76

  35

  Durham

  1,068

  127

  0

  0

  East Sussex

  1,366

  65

  438

  324

  Essex

  2,609

  147

  160

  73

  Gloucestershire

  1,320

  108

  65

  33

  Hampshire

  3,688

  178

  279

  279

  Hereford and Worcester

  1,260

  38

  172

  172

  Hertfordshire

  1,911

  275

  63

  63

  Humberside

  1,240

  121

  0

  0

  Isle of Wight

  252

  0

  44

  42

  Kent

  3,346

  559

  514

  418

  Lancashire

  3,258

  218

  159

  112

  Leicestershire

  1,104

  165

  0

  0

  Lincolnshire

  1,145

  159

  0

  0

  Norfolk

  896

  83

  0

  0

  North Yorkshire

  1,007

  197

  202

  170

  Northamptonshire

  1,158

  17

  28

  26

  Northumberland

  488

  62

  0

  0

  Nottinghamshire

  1,718

  80

  93

  65

  Oxfordshire

  839

  48

  130

  127

  Shropshire

  550

  14

  77

  77

  Somerset

  609

  23

  61

  43

  Staffordshire

  2,222

  181

  0

  0

  Suffolk

  792

  123

  0

  0

  Surrey

  1,783

  325

  636

  578

  Warwickshire

  1,301

  148

  0

  0

  West Sussex

  1,233

  123

  90

  58

  Wiltshire

  753

  175

  22

  15

  England

  92,101

  7,442

  5,826

  4,320

  (1) Boarders are included in total pupils figures.

  Mrs. Gorman
  To ask the Secretary of State for Education what is the average annual cost of(a) boarding and (b) day places in (i) local authority-maintained special schools, (ii) non-maintained special schools and (iii) independent special schools.

  Mr. Forth
  This information is not collected centrally.

  Grant-maintained Schools
  Mrs. Gorman
  To ask the Secretary of State for Education how many applications for grant-maintained status have been approved since 1 December 1992(a) without modification and (b) with modification in respect of (i) admission numbers, (ii) admission policy and (iii) incorporation date.

  Mr. Forth
  Since 1 December 1992, 70 applications for grant-maintained status have been approved without modification, and 118 with modification. Of this latter group, 26 applications were approved with modification in respect of admission numbers, 95 in respect of admission policy, and 10 in respect of incorporation date. Some applications were approved with more than one modification.

  Disabled People
  Mr. Win Griffiths
  To ask the Secretary of State for Education if he will list by local education authority the number of(a) teachers, (b) nursery nurses and (c) teachers' aides employed who are disabled.

  Mr. Boswell
  The information requested is not centrally recorded.

FOREIGN AND COMMONWEALTH AFFAIRS

  Mongolia
  Mr. Flynn
  To ask the Secretary of State for Foreign and Commonwealth Affairs what new proposals he has to improve relations with Mongolia.

  Mr. Goodlad
  Relations with Mongolia are very good. January marked the 30th anniversary of the establishment of our diplomatic relations. This year has seen the introduction of a bilateral aid programme for Mongolia of £2·7 million over the next three years. This is aimed at helping the Mongolians with their economic reform programme, being carried out in the face of considerable hardship. A bilateral round table meeting is scheduled for this October in London.

  Somalia
  Mr. Rowlands
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the prospects for Somalia.

  Mr. Lennox-Boyd
  The deployment of foreign troops has radically improved the relief situation, although security remains a major problem. Somali military factions have agreed to a ceasefire, disarmament and the formation of a transitional government.

  Yugoslavia
  Mr. Macdonald
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about developments in Bosnia and the Balkans.

  Mr. Harry Greenway
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the situation in former Yugoslavia.
  501
  Mr. Llwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the current situation in Bosnia.

  Mr. Salmond
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with his European Community counterparts on the conflict in Bosnia; and if he will make a statement.

  Mr. Bayley
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about Government policy on Bosnia.

  Mr. Douglas Hogg
  The rejection of the Vance-Owen peace plan by the Bosnian Serb Assembly is a serious set-back but should not be seen as the last word on the agreement. We are pursuing a twin-track policy: to continue planning for implementation of the plan, while at the same time increasing pressure on the Serbs to accept and implement the peace plan and to desist from further attacks. We are already intensifying sanctions, and are consulting closely with our partners and allies on the possibility of stronger measures if the Serbs do not comply.

  A political settlement in Bosnia would ease tensions in the region and reduce the risk of possible spillover into other parts of the former Yugoslavia.

  Mr. Tony Banks
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the effectiveness of sanctions against Serbia.

  Mr. Douglas Hogg
  Sanctions are having an increasingly harsh effect on the Serbian economy. Inflation is running at over 225 per cent per month. Over 70 per cent of the work force are unemployed or idle.Per capita gross domestic product has fallen to the 1969 level and severe shortages are apparent in all sectors of the economy. The provisions of United Nations Security Council resolution 820 and the tighter enforcement measures being taken will have a major impact on the effectiveness of the sanctions regime.

  Ms Lynne
  To ask the Secretary of State for Foreign and Commonwealth Affairs what action the Government have taken to ensure the release of the women held in Bosnian rape camps; if he will initiate steps to have rape classified as a war crime; and if he will make a statement.

  Mr. Douglas Hogg
  I refer the hon. Member to the reply given to the hon. Member for Sherwood (Mr. Tipping) on 27 April Official Report, column 372. Rape is already a war crime since it is specifically prohibited by article 27 of the fourth Geneva convention.

  Middle East
  Mr. Spellar
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the latest developments in the middle east peace negotiations.

  Mr. John Marshall
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the middle east peace process.

  Mr. Carrington
  To ask the Secretary of State for Foreign and Commonwealth Affairs what progress is 502
  being made towards a peace settlement between the Palestinians and the Israeli Government; and if he will make a statement.

  Mr. Douglas Hogg
  The bilateral negotiations between Israel and the Arab parties resumed in Washington on 27 April. We welcome the resumption. We continue to urge the parties to negotiate seriously to produce early visible progress towards lasting settlement on the basis of United Nations Security Council resolutions 242 and 338.

  Denmark (Referendum)
  Mr. Austin Mitchell
  To ask the Secretary of State for Foreign and Commonwealth Affairs what proposals he has for avoiding the isolation of Denmark in the event of a second no vote in its referendum.

  Mr. Hurd
  We do not expect the Danes to vote no.

  Japan
  Mr. Robert Banks
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on United Kingdom/Japanese relations.

  Mr. Goodlad
  As my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs confirmed during his visit to Japan on 6 to 7 April, relations between the United Kingdom and Japan are excellent. We are maintaining a high level of ministerial contact so as to develop our co-operation in all fields including political dialogue, trade, investment, science and technology and broader cultural and educational exchanges.

  Mr. Hague
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the Japanese Foreign Minister to discuss bilateral relations.

  Mr. Goodlad
  My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs met the new Japanese Foreign Minister, Mr. Kabun Muto, on 7 April during his visit to Tokyo. He had also met on 6 April the
  acting Foreign Minister, Mr. Yohei Kono, and had with him a fruitful discussion on how to develop further the excellent bilateral relationship between the United Kingdom and Japan.

  Cyprus
  Mr. Cox
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he last discussed the Cyprus issue with the Turkish Government; and if he will make a statement.

  Mr. Goodlad
  When my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs met Mr. Cetin in London on 23 November, he made clear our expectation that Turkey would use her significant influence to encourage the Turkish Cypriot community to work actively towards a settlement to the dispute. We use every opportunity to reiterate to the Turks our desire for a solution to the Cyprus problem and will do so again in the run-up to the resumed intercommunal talks in New York on 24 May.

  Iran
  Mr. Fabricant
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent meetings he has had with members of the Government of Iran concerning hostages and detained persons in the middle east; and if he will make a statement.

  Mr. Douglas Hogg
  My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs last met the Iranian Foreign Minister, Dr. Velayati, in New York on 25 September 1992. He met the Iranian charge d'affaires in London on 26 January 1993 and I met him on 5 May 1993. The Iranian Government are well aware of our views on hostages.

  Open Government
  Dr. Wright
  To ask the Secretary of State for Foreign and Commonwealth Affairs what contribution he expects to make to the open government initiative.

  Mr. Lennox-Boyd
  As my right hon. Friend the Chancellor of the Duchy of Lancaster told the House on 12 March, we will be publishing a White Paper on openness during the present Session. I have no wish to anticipate its recommendations.

  Sudan
  Mr. Simon Hughes
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Government policy on the current troubles in Sudan.

  Mr. Douglas Hogg
  A root cause of the misery in Sudan is the civil war. We welcome the reconvening of peace talks under the auspices of the Nigerian Government and are discussing with our EC partners, the US and others what further the international community can do to alleviate the suffering.

  We shall maintain strong pressure on the Government of Sudan to improve their performance in areas of concern to us, especially human rights and the alleviation of the humanitarian crisis. We were one of the first to respond at the outset of the present crisis in November 1990, and have since then committed over £63 million in humanitarian aid. This makes us one of the leading donors to Sudan.

  Eritrea
  Mr. Bowis
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his policy towards Eritrea following its referendum.

  Mr. Lennox-Boyd
  We warmly welcome the outcome of the referendum on Eritrea's status. United Nations observers have confirmed their satisfaction with the process. This opens the way for recognition of Eritrea. The Eritreans have announced that their independence will be formally declared on 24 May. Accordingly, we plan to announce our decision on recognition by that date.

  Cyprus
  Mr. Waterson
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent steps Her Majesty's Government have taken to encourage an amicable resolution on the island of Cyprus; and if he will make a statement.
  504
  Mrs. Roche
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the present situation in Cyprus.

  Mr. Garel-Jones
  The United Nations Secretary-General held a formal meeting with the leaders of the two Cypriot communities in New York on 30 March. The two leaders expressed their willingness to resume talks in New York on 24 May and to use the "Set of Ideas" for the purpose of reaching a mutually acceptable overall framework agreement. We continue to give vigorous support to the United Nations initiative.

  Mr. Cox
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Turkish Government, and when this was last done, regarding the number of settlers from mainland Turkey now moving to northern Cyprus; and if he will make a statement.

  Mr. Goodlad
  The questions of settlement and property rights in Cyprus are intrinsic to the UN "Set of Ideas", endorsed by the Security Council as the basis of a settlement. My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs last urged Turkey at the highest level to support the "Set of Ideas" when he met Mr. Demirel and Mr. Cetin on 23 November. We keep in close touch with the Turkish Government, and make our views clear, through Her Majesty's ambassadors in Ankara and elsewhere.

  Mr. Cox
  To ask the Secretary of State for Foreign and Commonwealth Affairs when ministers or officials of his Department last met opposition leaders of political parties operating in northern Cyprus; when such meetings took place; and what issues were discussed.

  Mr. Goodlad
  There have been 13 meetings between officials and Turkish Cypriot "opposition" leaders in the last three months, including a guest of Government visit by Mustafa Akinci in London on 24 March. Discussions included the negotiations towards a settlement of the Cyprus problem and the situation in north Cyprus.

  Mr. Cox
  To ask the Secretary of State for Foreign and Commonwealth Affairs what is his Department's estimate of the number of people who have migrated from Turkey to northern Cyprus in each of the last 10 years.

  Mr. Goodlad
  We do not compile such statistics.

  Russia
  Mr. Wareing
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the Foreign Minister of the Russian Federation to discuss the current political situation in Europe.

  Mr. Douglas Hogg
  My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs discussed European political issues with Mr. Kozyrev when he met him in Moscow in April. They have since discussed these issues by telephone.

  UN Peace Operations
  Mrs. Lait
  To ask the Secretary of State for Foreign and Commonwealth Affairs in how many countries, and in which, there are currently United Nations peacekeeping or peace monitoring operations.
  505
  Mrs. Angela Knight
  To ask the Secretary of State for Foreign and Commonwealth Affairs in how many countries United Nations peacekeeping or peace monitoring units are operating.

  Mr. Douglas Hogg
  There are 12 current United Nations peacekeeping or monitoring missions:

  UNTSO—The UN Truce Supervision Organisation

  UNDOF—The UN Disengagement Observer Force

  UNIFIL—The UN Interim Force in Lebanon

  UNMOGIP—The UN Monitoring Organisation India/Pakistan

  UNFICYP—The UN Force in Cyprus

  ONUSAL—The UN Missions in El Salvador

  UNAVEM—The UN Angola Verification Mission

  MINURSO—The UN Referendum Monitory Mission in Western Sahara

  UNIKOM—The UN Iraq/Kuwait Observer Mission

  UNTAC—The UN Transitional Authority in Cambodia

  UNPROFOR—The UN Protection Force (Former Yugoslavia)

  ONUMOZ—The UN Operation in Mozambique

  A deployment is also underway to UNOSOM II which will take over from UNITAF—the Unified Task Force —in Somalia.

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

  Mr. Lennox-Boyd
  Talks between the Government of Angola and UNITA continue under United Nations auspices in Abidjan. We continue to support the UN in its efforts to bring the two parties to agreement on a ceasefire, full implementation of the Bicesse peace accords, and free access throughout the country for much-needed humanitarian aid.

  Brazil
  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Brazilian Government about their 1988 constitutional commitment to demarcate lands for their Indian population within a five-year period.

  Mr. Lennox-Boyd
  We are in regular touch with the Brazilian authorities about the rights of the indigenous peoples of Brazil. They are fully aware of our concern. In February this year, the Brazilian Minister of Justice publicly reconfirmed his intention to complete the demarcation of the lands of Brazil's indigenous peoples by October 1993 in compliance with Brazil's 1988 constitution.

  Human Rights
  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make it his policy to raise the rights of indigenous peoples in Brazil at the United Nations conference on human rights in Vienna.

  Mr. Lennox-Boyd
  The aims of the United Kingdom delegation at the United Nations conference on human rights in Vienna will be to promote universal adherence to existing standards, to explore ways to improve their implementation and to examine the relationship between human rights, democracy and development. The rights of the indigenous peoples in Brazil will be for consideration 506
  under item 11 of the agenda: "Consideration of contemporary trends in and new challenges to the full realisation of all human rights of women and men, including those of persons belonging to vulnerable groups".

  European Treaties
  Mr. Spearing
  To ask the Secretary of State for Foreign and Commonwealth Affairs what are the proposed names for the treaties comprising(a) the current treaty of Rome, as amended, with the contents of titles II, III and IV of the treaty on European union signed at Maastricht and (b) titles I, V, VI and VII of the treaty on European union signed at Maastricht.

  Mr. Garel-Jones
  Following the entry into force of the treaty on European union, four treaties will be in force:

  (a) the treaty establishing the European Community ("The EC Treaty") i.e., the present treaty of Rome as amended by title II of the treaty on European union;

  (b) the treaty establishing the European Coal and Steel Community ("The ECSC Treaty") as amended by title III of the treaty on European union;

  (c) the treaty establishing the European Atomic Energy Community ("The EURATOM treaty") as amended by title IV of the treaty on European union;

  (d) the treaty on European union itself, in its entirety.

SOCIAL SECURITY

  Disabled People
  Mr. Llew Smith
  To ask the Secretary of State for Social Security what liaison has taken place between the Benefits Agency and organisations representing the disabled in(a) Wales and (b) England.

  Mr. Scott
  The operation of the Benefits Agency is a matter for the chief executive, Mr. Michael Bichard. He will write to the hon. Member and a copy will be placed in the Library.

  Letter from M. Bichard to Mr. Liew Smith, dated 11 May 1993:
  As Chief Executive of the Benefits Agency, it is my responsibility to answer questions about relevant operational matters. I am therefore replying to your recent Parliamentary Question to the Secretary of State for Social Security asking what liaison has taken place between the Benefits Agency and organisations representing the disabled in (a) Wales and (b) England.The Agency is committed to an equal opportunities policy. For our customers with disabilities, this means that wherever possible we will ensure that their dealings with us should not be limited by reason of their disabilities.In Wales, our staff have had a good deal of contact with organisations representing people with disabilities, much of it at local level. A review of our customer service across Wales was held in October 1992, attended by many organisations (including several representing the needs of people with disabilities in Wales). We have also run a one day seminar jointly with the Wales Council for the Blind, aimed at carers and people with disabilities. With the introduction of the new disability benefits last year, a bilingual English/Welsh cassette was produced for blind customers, and was distributed through talking newspapers and to all Social Service Departments in Wales.A series of "roadshows" using our own Benefit Bus and the Wales Council for the Disabled WCD advice and information bus took place during February of this year, at 10 locations throughout Wales. Following this, a series of one day seminars, organised jointly by the Agency and by the council,

  507
  have been held. They were attended by our own customer service staff in Wales, and by representatives from relevant organisations. A member of our staff was seconded to the council last year for 10 months.Nationally, we liaise and meet regularly with a number of organisations representing the needs of people with disabilities. These include the Royal National Institute for the Deaf, the Royal National Institute for the Blind, People First, and the National Schizophrenia Society. We are looking at a number of their services with a view to publicising them through our network of District Information Officers and Customer Service Managers in local benefit offices. We also liaise regularly with a number of other customer organisations, including the National Association of Citizen's Advice Bureau (NACAB).I meet senior staff from NACAB six monthly.As the Agency's customer charter makes clear, we are committed to providing a service which is accessible for all our customers. We recognise that disabled people may have particular needs and we will continue to look for ways to make our services easier to use. One way in which we intend to meet this commitment is through a national forum to enable organisations representing or comprising people with disabilities to contribute to the Agency's ongoing work to improve services for disabled customers. The first meeting took place last September. That first, very informal meeting, was mainly, but not exclusively, about the disability benefits. A second meeting took place on 5 May this year. The forum will continue twice yearly whilst there is the demand.A small group of organisations have also met with the Agency to discuss how to improve access to our public areas. The outcome is that we are redrafting and improving accommodation guidance for District and Unit Managers.I hope you find this reply helpful. A copy will appear in the Official Report and a copy will also be placed in the Library.

  Young People, Durham
  Mr. Steinberg
  To ask the Secretary of State for Social Security how many 16 and 17-year-olds living in the Durham area are not in full-time education and are not entitled to benefit.

  Mr. Burt
  The administration of social security benefits is a matter for Mr. Michael Bichard, the chief executive of the Benefits Agency. He will write to the hon. Member with such information as is available and a copy will be placed in the Library.

  Letter from Mr. M. Bichard to Mr. Gerry Steinberg, dated 11 May 1993:
  As Chief Executive of the Benefits Agency it is my responsibility to answer questions about relevant operational matters. I am therefore replying to your recent Parliamentary Question to the Secretary of State for Social Security how many 16 and 17 year olds living in the Durham area are not in full-time education and are not entitled to benefit.

  1991–92

  April 1992 to 31 December 1992

  Hospital

  OBS

  GP Maternity

  OBS

  GB Maternity

  Ards

  25

  —

  20

  —

  Belfast City

  64

  —

  64

  —

  Downe

  20

  —

  20

  —

  Lagan Valley

  33

  —

  27

  —

  Mater

  24

  —

  23

  —

  Royal Maternity

  74

  —

  72

  —

  Ulster

  44

  —

  43

  —

  Ballymena Cottage

  20

  16

  10

  16

  Robinson Memorial

  —

  14

  —

  14

  Mid Ulster

  26

  —

  26

  —

  Moyle

  19

  —

  19

  —

  Route

  19

  —

  18

  —

  Waveney

  25

  —

  25

  —

  Craigavon Area

  61

  —

  61

  —

  Daisy Hill

  52

  —

  52

  —

  South Tyrone

  31

  —

  29

  —

  508 This information is not available in the format requested except at a disproportionate cost. This is because the Benefits Agency does not keep statistics relating to disallowed claims by age of applicant. However, I have appended information relating to the number of successful applications for Severe Hardship payments made in the Benefits Agency's North Durham and South Durham Districts during February and March 1993. This information does not equate exactly to the number of individuals in receipt of a Severe Hardship payment, since an individual may have made more than one application during the period. Additionally, directions to make Severe Hardship payments normally last eight weeks, so some of these directions may not now be current.I hope you find this reply helpful. A copy will appear in the Official Report and a copy will also be placed in the Library.

  Successful Severe Hardship claims in the Benefits Agency's North and South Durham districts; February and March 1993

  February 1993

  March 1993

  North Durham

  32

  43

  South Durham

  34

  32

  Mobility Allowance
  Mr. Cousins
  To ask the Secretary of State for Social Security in what circumstances compensation is payable in respect of delays in handling claims for mobility allowance; and how many times these have arisen between 31 October 1992 and 31 March 1993.

  Mr. Scott
  I refer the hon. Member to the reply to the hon. Member for Fulham (Mr. Carrington) on Tuesday 4 May, at column 10.

  Between 31 October 1992 and 31 March 1993, around 50 cases have been dealt with as a result of the delays in handling mobility allowance claims.

NORTHERN IRELAND

  Maternity Services
  Ms Primarolo
  To ask the Secretary of State for Northern Ireland if he will list the hospitals in Northern Ireland which had consultant obstetric and/or general practitioner maternity beds in 1991–92 and 1992–93, with the numbers of beds of each type in each hospital in each year.

  Mr. Hanley
  The average numbers of available beds in the obstetrics and general practitioner maternity specialities in Northern Ireland in 1991–92 and the period from 1 April 1992 to 31 December 1992 are as follows:
  509

  1991–92

  April 1992 to 31 December 1992

  Hospital

  OBS

  GP Maternity

  OBS

  GB Maternity

  Altnagelvin

  68

  —

  61

  —

  Erne

  30

  —

  25

  —

  Tyrone Co.

  31

  —

  31

  —

  Total

  666

  30

  626

  30

  Housing Construction, Newtownards
  Mr. John D. Taylor
  To ask the Secretary of State for Northern Ireland when planning application No. X/92/0120 by Braemar Construction for seven dwellings at the rear of Beverley Court, Newtownards was received; when neighbour notification notices were issued; why no neighbour notification notice was issued to the occupier of 3 Beverley Court; what opinion Ards borough council expressed; when planning approval was issued; when work commenced on site; when the planning officer received a letter of 24 February from Mr. Robert Groves of 3 Beverley Court about this; and when a full reply to the letter will be issued.

  Mr. Atkins
  The application was received on 13 February 1992. Neighbour notification notices were issued on 18 February 1992 and the Department's records show that a notice was sent to "The Occupier of No. 3 Beverley Court". The application was presented to Ards borough council at its meeting of 22 June 1992 with an opinion to approve. The council agreed with this opinion and approval issued on 19 July 1992; the divisional planning office has no record of when work started. Mr. Groves' letter of 24 February 1993 was received by the divisional planning office on 26 February 1993. The matters raised required a site survey and a reply was issued on 6 May 1993.

  Actions successfully defended under Fair Employment (Northern Ireland) Act 1989

  Applicant

  Respondent

  FEC supported

  (i) Government Departments Maguire

  Northern Ireland Civil Service Commission

  No

  (ii) Education and library boards Black

  Belfast education and library board

  No

  (iii) Health and social services boards

  No cases

  (iv) Local authorities

  Little

  Fermanagh district council

  No

  McCausland

  Dungannon district council

  Yes

  Robinson

  Belfast city council

  No

  (v) Other public bodies

  Meek

  Fire Authority for Northern Ireland

  No

  Tierney

  Fire Authority for Northern Ireland

  Yes

  Park

  Post Office

  No

  Gilbride

  Post Office

  No

  McKeown

  Local Enterprise Development Unit

  No

  Equal Opportunities
  Mr. Trimble
  To ask the Secretary of State for Northern Ireland if he will list the actions under(a) fair employment legislation and (b) equal opportunities legislation, which have been successfully defended by (i) Government Departments, (ii) education boards, (iii) health boards, (iv) local authorities and (v) other public bodies, indicating in each case whether the unsuccessful applicant was supported by the Fair Employment Agency or Fair Employment Commission or Equal Opportunities Commission and the costs incurred by the successful respondent in cases where there was such support.

  Mr. Atkins
  Information on discrimination legislation prior to I readily available and could be disproportionate cost.

  Individual complaints of religious discrimination before 1 January 1990 were brought under the procedure in the Fair Employment (NI) Act 1976 and were not defended as such or prosecuted by either party; instead the Fair Employment Agency acted as an impartial investigator. Under the 1976 Act a total of 593 findings were made on foot of individual complaints, of which 496 were findings of no unlawful discrimination. Details as to the respondent in these cases could be obtained only at disproportionate cost.

  Information relating to actions brought since 1 January 1990 under the Fair Employment (NI) Act and the Sex Discrimination (NI) Order 1976 is as follows:
  511

  Actions successfully defended under Sex Discrimination (Northern Ireland) Act 1976

  Applicant

  Respondent

  EOC supported

  (i) Government Departments

  Burnim

  Northern Ireland Civil Service

  No

  Cowley

  Inland Revenue

  No

  (ii) Education and library boards

  Fenton

  Belfast education and library board

  Yes

  Beanie

  Belfast education and library board

  Yes

  Lisk

  North Eastern education and library board

  Yes

  Hood

  South Eastern education and library board

  No

  (iii) Health and social services boards

  McNearney

  Eastern health and social services board

  No

  Young

  Eastern health and social services board

  No

  Jess

  Eastern health and social services board

  Yes

  (iv) Local authorities

  McKinney

  Belfast city council

  Yes

  McDonald

  Newtownabbey borough council

  Yes

  Moore

  Lisburn borough council

  No

  Kemp

  Belfast county council

  No

  (v) Other public bodies

  Devlin

  Northern Ireland Electricity

  No

  No information is available about the costs incurred by respondents in successfully defending cases.

  Civil Servants
  Mr. Trimble
  To ask the Secretary of State for Northern Ireland how many civil servants currently in the Northern Ireland Office have been seconded or transferred from(a) the Foreign Office, (b) the Home Office and (c) the Ministry of Defence; and what their rank was before such move and their current rank.

  Mr. Mates
  Four have been seconded on loan or transferred from the Foreign Office, 18 from the Home Office and 10 from the Ministry of Defence.

  Their grades are as follows:

  Current Grade

  Grade before joining Northern Ireland Office

  1 Grade 1

  1 Grade 2

  2 Grade 2

  2 Grade 3

  2 Grade 3

  1 Grade 3, 1 Grade 5

  1 Grade 4

  1 Chief Information Officer

  4 Grade 5

  3 Grade 5, 1 Administration Trainee

  1 Grade 6

  1 Grade 6

  9 Grade 7

  6 Grade 7, 1 Senior Executive Officer

  1 Higher Executive Officer,

  1 Executive Officer

  5 Higher Executive Officer

  3 Higher Executive Officer,

  1 Executive Officer,

  1 Administration Officer

  1 Information Officer

  1 Information Officer

  1 Administrative Officer

  1 Photo-printer

  1 Senior Personal Secretary

  1 Personal Secretary

  3 Personal Secretary

  3 Personal Secretary

  1 Typist

  1 Typist

  Transport Holding Company
  Mr. David Atkinson
  To ask the Secretary of State for Northern Ireland if he has any plans to privatise the Northern Ireland Transport Holding Company; what estimate of asset proceeds he has made; and if he will make a statement.
  512
  Mr. Atkins
  There are no plans to privatise the Northern Ireland Transport Holding Company.

  School Pupils
  Mr. Peter Robinson
  To ask the Secretary of State for Northern Ireland what has been the number of pupils at each of(a) maintained primary schools, (b) maintained secondary schools, (c) maintained grammar schools, (d) controlled primary schools, (e) controlled secondary schools and (f) controlled grammar schools, in each of the education and library board areas in Northern Ireland for the last five years.

  Mr. Hanley
  The information requested is as follows:

  1988

  Area board

  Primary

  Secondary

  Grammar

  Belfast

  Controlled

  13,168

  6,535

  1,747

  Maintained

  16,707

  9,335

  —

  Voluntary

  206

  —

  13,307

  Western

  Controlled

  10,445

  5,267

  2,178

  Maintained

  25,322

  12,087

  —

  Voluntary

  —

  —

  7,310

  North-eastern

  Controlled

  26,397

  13,931

  3,968

  Maintained

  13,345

  7,430

  —

  Voluntary

  5

  —

  8,696

  South-eastern

  Controlled

  23,398

  11,444

  3,110

  Maintained

  11,514

  4,957

  —

  Voluntary

  160

  —

  6,789

  Southern

  Controlled

  15,766

  9,058

  1,929

  Maintained

  26,066

  12,490

  —

  Voluntary

  —

  —

  7,247

  513

  1989

  Area board

  Primary

  Secondary

  Grammar

  Belfast

  Controlled

  13,295

  6,032

  1,750

  Maintained

  17,063

  9,455

  —

  Voluntary

  —

  —

  13,475

  Western

  Controlled

  10,571

  5,140

  2,208

  Maintained

  25,634

  12,076

  —

  Voluntary

  —

  —

  7,476

  North-eastern

  Controlled

  26,418

  13,178

  4,054

  Maintained

  13,428

  7,237

  —

  Voluntary

  4

  —

  8,668

  South-eastern

  Controlled

  23,536

  10,928

  3,150

  Maintained

  11,817

  4,829

  —

  Voluntary

  158

  —

  6,820

  Southern

  Controlled

  15,890

  8,738

  1,998

  Maintained

  26,427

  12,355

  —

  Voluntary

  —

  —

  7,282

  1990

  Area board

  Primary

  Secondary

  Grammar

  Belfast

  Controlled

  13,472

  5,659

  1,723

  Maintained

  17,431

  9,420

  —

  Voluntary

  —

  —

  13,459

  Western

  Controlled

  10,615

  4,981

  2,229

  Maintained

  25,860

  11,906

  —

  Voluntary

  —

  —

  7,458

  North-eastern

  Controlled

  26,445

  12,619

  4,091

  Maintained

  13,592

  7,047

  —

  Voluntary

  —

  —

  8,583

  South-eastern

  Controlled

  23,639

  10,547

  3,142

  Maintained

  11,944

  4,827

  —

  Voluntary

  166

  —

  6,919

  Southern

  Controlled

  15,994

  8,535

  1,985

  Maintained

  26,609

  12,273

  —

  Voluntary

  —

  —

  7,289

  1991

  Area board

  Primary

  Secondary

  Grammar

  Belfast

  Controlled

  13,769

  5,335

  1,748

  Maintained

  17,553

  9,431

  —

  Voluntary

  —

  —

  13,858

  Western

  Controlled

  10,471

  4,763

  2,242

  Maintained

  25,983

  11,936

  —

  Voluntary

  —

  —

  7,636

  North-eastern

  Controlled

  26,278

  12,235

  4,149

  Maintained

  13,529

  6,983

  —

  Voluntary

  —

  —

  8,712

  South-eastern

  Controlled

  23,697

  10,262

  3,194

  Maintained

  12,110

  4,984

  —

  514

  1991

  Area board

  Primary

  Secondary

  Grammar

  Voluntary

  93

  —

  7,048

  Southern

  Controlled

  15,966

  8,496

  2,022

  Maintained

  26,435

  12,242

  —

  Voluntary

  —

  —

  7,534

  1992

  Area board

  Primary

  Secondary

  Grammar

  Belfast

  Controlled

  13,857

  5,130

  1,736

  Maintained

  17,818

  9,614

  —

  Voluntary

  —

  —

  14,326

  Western

  Controlled

  10,435

  4,750

  2,307

  Maintained

  26,019

  12,257

  —

  Voluntary

  —

  —

  7,818

  North-eastern

  Controlled

  26,171

  12,137

  4,199

  Maintained

  13,604

  7,034

  —

  Voluntary

  —

  —

  8,866

  South-eastern

  Controlled

  23,717

  10,245

  3,214

  Maintained

  11,899

  5,155

  —

  Voluntary

  —

  —

  7,181

  Southern

  Controlled

  15,841

  8,683

  2,012

  Maintained

  26,447

  12,520

  —

  Voluntary

  —

  —

  7,784

  Ulster Young Militants
  Mr. Barnes
  To ask the Secretary of State for Northern Ireland if he will proscribe the Ulster Young Militants; and if he will make a statement.

  Sir Patrick Mayhew
  The question of whether certain organisations should be proscribed is kept under review. The fact that a particular organisation may not be proscribed confers no immunity from prosecution in respect of substantive criminal acts which it or its members may commit.

DEFENCE

  Nuclear Weapons Transport
  Mr. Cohen
  To ask the Secretary of State for Defence whether the truck cargo heavy duty II vehicles used by his Department comply with the International Atomic Energy Agency Safety Series No. 6 Regulations 1985, as amended in 1990.

  Mr. Aitken
  The International Atomic Energy Agency Safety Series No. 6 Regulations 1985, as amended in 1990, apply primarily to the containers or packaging used for the safe transport of radioactive material. In formulating safety procedures for nuclear warhead transport, full account is taken of national and international civil regulations on transport of radioactive materials, where relevant.

  Biological and Chemical Weapons
  Mr. Cohen
  To ask the Secretary of State for Defence (1) what prior warnings of the hazard and effects of the incapacitating agent BZ were given to service personnel who were tested with this agent by his Department; in which years these tests were carried out; how many service personnel were tested with the agent; and which regiments or branches of the United Kingdom armed services these personnel were from;

  (2) on what date information about CR gas was first passed from the United Kingdom Ministry of Defence to the United States Department of Defense; in what form this information was passed; and if this information was passed under the terms of the technical co-operation programme;

  (3) on what date the United Kingdom Ministry of Defence received the last quantity of nerve agent VX from the United States Department of Defense; which United States Department of Defense establishment supplied the quantity of nerve gas; what safety precautions were taken during the transfer of the nerve agent; and which United States safety authorities, British safety authorities and British local councils were informed beforehand of the transfer of this nerve agent;

  (4) how the workings of the basic standardisation agreement between the British, American and Canadian armies were affected by the British decision to give up offensive work on chemical and biological weapons;

  (5) how often the United Kingdom, the United States of America and Canada have met under the terms of the 1980 memorandum of understanding on chemical and biological defence; and what were the dates and locations of each of these meetings;

  (6) what tests and studies his Department has carried out using the organism pasteurella tularensis; when and where these experiments took place; and if the results of this scientific activity were exchanged with the United States of America, Canada or Australia;

  (7) how many scientific papers co-authored by scientists from the chemical and biological establishment at Porton Down and their counterparts in the United States of America military have been published since 1979; what were the dates of these papers; and in which scientific journals they were published;

  (8) what experiments his Department has carried out on the chemical agent phencyclidine; when and where the experiments were carried out; and if the results of the experiments were exchanged with the United States of America, Canada or Australia;

  (9) what stocks of toxins have been transferred from the United States of America Department of Defence to the Ministry of Defence or British scientific research institutions since 1979; from which United States of America Department of Defence establishments these toxins have been transferred; and under which international defence agreements these toxins have been transferred.

  Mr. Archie Hamilton
  These are matters for the Chemical and Biological Defence Establishment (CBDE) under its framework document. I have asked the chief executive of CBDE to write to the hon. Member.

  Letter from G. Pearson to Mr. Harry Cohen, dated 12 May 1993:
  516
  1. Your Parliamentary Question to the Secretary of State for Defence asking him what prior warnings of the hazard and effects of the incapacitating agent BZ were given to service personnel who were tested with this agent by his Department; in which years these tests were carried out; how many service personnel were tested with the agent; and which regiments or branches of the United Kingdom armed services these personnel were from (Question 2, Order Paper 4 May 1993) has been passed to me to reply as Chief Executive of the Chemical and Biological Defence Establishment.
  2. The role of the Chemical and Biological Defence Establishment at Porton Down is to ensure that the UK Armed Forces have effective protective measures against the threat that chemical or biological weapons may be used against them. This work includes the evaluation of the potential hazard of possible agents such as the incapacitating agent BZ.
  3. The Service volunteers in the studies involving BZ came from all branches of the Armed Services in response to a request for volunteers to participate in studies at the then Chemical Defence Experimental Establishment. The volunteers were informed that the purpose of the tests was to assess the effects of a potential agent which might affect their behaviour. Volunteers were screened for normality by a resident Army Psychiatrist on arrival at Porton Down and checked again after the study. These studies were carried out in the mid 1960s. It would involve a disproportionate amount of effort to determine which regiments or branches of the Armed Forces these personnel were from.

  Letter from G. Pearson to Mr. Harry Cohen, dated 12 May 1993:
  1. Your Parliamentary Question to the Secretary of State for Defence asking him on what date information about CR gas was first passed from the United Kingdom Ministry of Defence to the United States Department of Defense; in what form this information was passed; and if this information was passed under the terms of The Technical Co-operation Programme (Question 5, Order Paper 4 May 1993) has been passed to me to reply as Chief Executive of the Chemical and Biological Defence Establishment.
  2. The role of the Chemical and Biological Defence Establishment is to carry out research to ensure that the UK Armed Forces are provided with effective protective measures against the threat that chemical or biological weapons may be used against them. As part of that programme evaluation is carried out of chemicals that may be used by an aggressor. Research into CR gas at the then Chemical Defence Establishment at Porton Down commenced in 1962. The information gained in the research programme during the subsequent years has formed part of the chemical and biological defence programme which has been the subject of information exchange and collaboration with the United States Department of Defense on a continuing basis. This information was exchanged under the aegis of the defence agreements referred to by the Minister of State for the Armed Forces, the Rt. Hon. Archie Hamilton, MP, in his reply of 21 May 1992, Official Report, Columns 255–256 which include the Technical Co-operation Programme. A report written in 1962 was provided to the United States Department of Defense under the terms of this Programme. It is not possible to be more precise about the form in which the information was exchanged and when as we do not maintain records in a way that enables us to readily access this information.

  Letter from G. Pearson to Mr. Harry Cohen, dated 12 May 1993:
  1. Your Parliamentary Question to the Secretary of State for Defence asking him on what date the United Kingdom Ministry of Defence received the last quantity of nerve agent VX from the United States Department of Defense, which United States Department of Defense establishment supplied the quantity of nerve gas; what safety precautions were taken during the transfer of the nerve agent: and which United States safety authorities, British safety authorities and British local councils were informed beforehand of the transfer of this

  517
  nerve agent (Question 6, Order Paper 4 May 1993) has been passed to me to reply as Chief Executive of the Chemical and Biological Defence Establishment.

  2. The role of the Chemical and Biological Defence Establishment is to ensure that the UK Armed Forces have effective protective measures against the threat that chemical or biological weapons may be used against them. In order to carry out this work, it is necessary to have available small quantities of the materials which may be used as chemical or biological warfare agents by a potential aggressor.

  3. The last transfer of VX from the United States of America took place in June 1967 for a collaborative trial at Porton Down on downwind hazard evaluation and the material was provided and shipped by Edgewood Arsenal, Maryland, The transfer took place by US military aircraft into Mildenhall, Suffolk. The material was shipped in a sealed container as a Class A poison under the regulations prescribed by the interstate Commerce Commission and the Administrator of the Federal Aviation Agency. The shipment was escorted by a 3 man escort equipped with protective clothing and detection and decontamination equipment. It was then transferred to the then Chemical Defence Establishment, Porton Down by road convoy in accordance with the regulations in force at the time in the United Kingdom. These would have included notifying the relevant Police Forces of the operation and the provision of additional escorts, including a police vehicle. Safety precautions were applied to this transfer in accordance with the appropriate standards at that time.

  Letter from G. Pearson to Mr. Harry Cohen, dated 12 May 1993:
  1. Your Parliamentary Question to the Secretary of State for Defence asking him how the workings of the Basic Standardisation Agreement between the British, American and Canadian armies were affected by the British decision to give up offensive work on chemical and biological weapons (Question 8. Order Paper 4 May 1993) has been passed to me to reply as Chief Executive of the Chemical and Biological Defence Establishment.2. The Basic Standardisation Agreement between the American, British and Canadian armies promotes cooperation and interoperability through standardisation amongst the armies of the three Nations. As the agreement is a broad one and is not specific to chemical and biological aspects, the effect of the UK decision to give up offensive work on chemical and biological weapons was that such UK information ceased to be produced and could not be exchanged.
  Letter from G. Pearson to Mr. Harry Cohen, dated 12 May 1993:
  1. Your Parliamentary Question to the Secretary of State for Defence asking him how often the United Kingdom, the United States of America and Canada have met under the terms of the 1980 Memorandum of Understanding on Chemical and Biological Defence; and what were the dates and locations of each of these meetings (Question 9, Order Paper 4 May 1993) has been passed to me to reply as Chief Executive of the Chemical and Biological Defence Establishment.
  2. The aim of the Memorandum of Understanding (MOU) on Chemical and Biological Defence is to integrate the programmes of the three countries to the maximum possible extent. The Steering Group under the MOU meets annually whilst the Programme Officers and Requirements Officers meet at six monthly intervals. In addition, experts from the three countries meet under the aegis of the MOU to address specific topics on an as required basis.
  3. The Steering. Group meets in rotation usually at the headquarters of the respective Departments of Defence. The Group has met twelve times as follows:
  518

  Date

  Location

  30 June 1981

  United States of America

  23 March 1983

  United Kingdom

  11 April 1984

  Canada

  24 September 1984

  United Kingdom

  21 November 1985

  United States of America

  5 June 1986

  Canada

  24 September 1987

  United Kingdom

  18 November 1988

  United States of America

  6 October 1989

  United Kingdom

  12 October 1990

  Canada

  25 October 1991

  United States of America

  24 November 1992

  United Kingdom

  4. The Programme Officers and Requirement Officers (PRO/RD) of each of the three countries meet at six monthly intervals in one of the countries in turn. These meetings usually take place at the respective chemical and biological defence establishments ie. the Chemical and Biological Defence Establishment at Porton Down, the Defence Research Establishment at Suffield, Canada, and the United States Army Chemical and Biological Defense Command at Edgewood, Maryland. The dates of these meetings were as follows:

  Date

  Location

  17 December 1980

  United Kingdom

  21–22 October 1981

  United Kingdom

  United States of America/

  3–8 June 1982

  Canada

  13–14 October 1982

  United Kingdom

  21–23 March 1983

  United Kingdom

  26–27 May 1983

  United States of America

  9–10 April 1984

  Canada

  11–12 September 1984

  United States of America

  11–13 March 1985

  United Kingdom

  1–3 October 1985

  Canada

  17–19 March 1986

  United States of America

  29 September-1

  October 1986

  United Kingdom

  27–29 April 1987

  Canada

  9–11 September 1987

  United States of America

  22–24 March 1988

  United Kingdom

  27–29 September 1988

  Canada

  3–5 April 1989

  United States of America

  19–21 September 1989

  United Kingdom

  30 April-2 May 1990

  Canada

  18–20 September 1990

  United States of America

  19–21 March 1991

  United Kingdom

  10–12 September 1991

  Canada

  24–26 March 1992

  United States of America

  15–17 September 1992

  United Kingdom

  23–25 March 1993

  Canada

  Letter from G. Pearson to Mr. Harry Cohen, dated 12 May 1993:
  1. Your Parliamentary Question to the Secretary of State for Defence asking him what tests and studies his Department has carried out using the organism pasteurella tularensis; when and where these experiments took place; and if the results of this scientific activity were exchanged with the United States of America, Canada and Australia (Question 10, Order Paper 4 May 1993) has been passed to me to reply as Chief Executive of the Chemical and Biological Defence Establishment.2. Tests and studies on the organism Pasteurella tularensis (now known as Francisella tularensis) have been carried out since the early 1950s by the then Microbiological Research Department, subsequently by the Microbiological Research Establishment, Porton Down until its closure in 1979 and since then by the Chemical Defence Establishment, now the Chemical and Biological Defence Establishment at Porton Down. Whilst some of the initial work had relevance to the feasibility of a retaliatory biological warfare capability, all

  519
  offensive work ceased in the late 1950s and since then work on this organism has been in support of the programme to ensure that the UK Armed Forces are provided with effective protective measures against the threat the biological weapons may be used against them.3. The information gained has been the subject of information exchange and collaboration with the United States of America, Canada and Australia on a continuing basis. This information was exchanged under the aegis of the defence agreements referred to by the Minister of State for the Armed Forces, The Right Hon. Archie Hamilton, MP, in his reply of 21 May 1992, Official Report, columns 255–256.
  Letter from G. Pearson to Mr. Harry Cohen, dated 12 May 1993:
  1. Your Parliamentary Question to the Secretary of State for Defence asking him how many scientific papers co-authored by scientists from the Chemical and Biological Defence Establishment at Porton Down and their counterparts in the United States of America military have been published since 1979; what were the dates of these papers; and which scientific journals they were published (Question 11, Order Paper 4 May 1993) has been passed to me to reply as Chief Executive of the Chemical and Biological Defence Establishment.2. Our records show that the following scientific papers have been co-authored by scientists from the Chemical and Biological Defence Establishment at Porton Down and our counterparts in the United States of America defense establishments since 1979;

  a. Identification of encapsulated and non-encapsulated Yersinia pestis by immunofluorescence tests using polyclonal and monoclonal antibodies.

  Epidem Ire nf. 101, (1988), 59–73

  b. An investigation of possible models for the production of progressive pulmonary fibrosis in the rat. The effects of repeated intratracheal instillation of bleomycin.

  Toxicology, 51, (1988), 101–110.

  c. A model for carbamate and organophosphate-induced enemiis in humans.

  Neuroscience and Biobehavoural Reviews, Vol.15, (1991), pp 179–184.

  d. Identification of Bacillus anthracis by polyclonal antibodies against extracted vegetative cell antigens.

  Journal of Applied Bacteriology, 66, (1989), 419–432.

  e. Detection of Spores of Bacillus anthracis using the Polymerase Chain Reaction.

  Journal of Infectious Diseases,/65 (1992), 1145–8.

  Letter from G. Pearson to Mr. Harry Cohen, dated 12 May 1993:
  1. Your Parliamentary Question to the Secretary of State for Defence asking him what experiments his Department has carried out on the chemical agent phencyclidine; when and where the experiments were carried out; and if the results of the experiments were exchanged with the United States of America, Canada or Australia (Question 12, Order Paper 4 May 1993) has been passed to me to reply as Chief Executive of the Chemical and Biological Defence Establishment.2. The role of the Chemical and Biological Defence Establishment is to carry out research to ensure that the UK Armed Forces are provided with effective protective measures against the threat that chemical or biological weapons may be used against them. As part of this work the potential hazard of possible chemical and biological warfare agents is assessed and the effectiveness of British protective measures evaluated.3. Research into phencyclidine at the then Chemical Defence Establishment at Porton Down started in 1963 with a study to assess the behavioural effects of phencyclidine in rats and to compare the results with other Psychotomimetics including LSD. The information gained has formed part of the chemical and biological defence programme which has been the subject of information exchange and collaboration with the United States Department of Defense on a continuing basis. This information was exchanged under the aegis of the defence
  520
  agreements referred to by the Minister of State for the Armed Forces, The Rt. Hon. Archie Hamilton, MP, in his reply of 21 May 1992, Official Report, columns 255–256.
  Letter from G. Pearson to Mr. Harry Cohen, dated 12 May 1993:
  1. Your Parliamentary Question to the Secretary of State for Defence asking him what stocks of toxins have been transferred from the United States of America Department of Defense to the Ministry of Defence or British scientific research institutions since 1979; from which United States of America Department of Defense establishments these toxins have been transferred; and under which international defence agreements these toxins have been transferred (Question 13, Order Paper 4 May 1993) has been passed to me to reply as Chief Executive of the Chemical and Biological Defence Establishment.2. The role of the Chemical and Biological Defence Establishment is to ensure that the UK Armed Forces have effective protective measures against the threat that chemical or biological weapons may be used against them. In order to carry out this work, it is necessary to have available small quantities of the materials which may be used as chemical or biological warfare agents by a potential aggressor.3. Since 1979 a small quantity of shellfish toxin has been received from the US Army Chemical Research, Development and Engineering Center at Edgewood, Maryland as well as a small quantity of Clostridium perfringens beta-toxin from the US Army Medical Research Institute for Infectious Diseases. The quantities in both cases were extremely small and would not be regarded as stocks of toxins. These transfers from the United States of America Department of Defense to the Ministry of Defence and more specifically the Chemical and Biological Defence Establishment at Porton Down took place under the defence agreements referred to by the Minister of State for the Armed Forces, The Rt. Hon. Archie Hamilton, MP in his reply of 21 May 1992, Official Report, columns 255–256.
  Mr. Cohen
  To ask the Secretary of State for Defence if he will make a statement on the work of the quadrupartite working party on nuclear biological and chemical defence of the United Kingdom—United States of America—Canada—Australia Armies agreement since 1978; on which dates and locations the working party has met; and which Ministry of Defence branches took part in these meetings.

  Mr. Aitken
  The quadripartite working party meets to negotiate and maintain agreements on standardisation of operational procedures and equipment.

  Dates and locations of QWP meetings since 1978 are as follows:

  Date

  Location

  8–17 May 1978

  Canada

  30 October-8 November 1979

  United States of America

  12–21 May 1981

  United Kingdom

  3–9 November 1982

  Australia

  11–17 June 1984

  Canada

  12–18 November 1985

  United States of America

  17–23 June 1987

  United Kingdom

  19–25 October 1988

  Australia

  30 May-5 June 1990

  Canada

  8–15 October 1991

  Australia

  21–27 April 1993

  United Kingdom

  Representatives of the following branches of my Department have attended the quadripartite working party:
  Operational Requirements Branches: most recently, Director Operational Requirements (Joint Systems) and Director Clothing and Textiles.
  Researches Branches: Atomic Weapons Establishment and Chemical and Biological Defence Establishment.

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  Army policy/concepts Branch: Director Doctrine Army now Director Land Warfare.
  Procurement Executive Branch: most recently, Programme Director Light weapons systems.

  Mr. Cohen
  To ask the Secretary of State for Defence when information about the L9A1 hand-held aerosol dispenser was exchanged between Britain and other countries under the defence agreements outlined in the Official Report, 21 May 1992, columns 255–56.

  Mr. Archie Hamilton
  No such exchange took place.

  Battle of the Atlantic (Anniversary)
  Mr. Parry
  To ask the Secretary of State for Defence what plans he has to visit Merseyside during the 50th anniversary of the battle of the Atlantic and the western approaches; and if he will make a statement.

  Mr. Archie Hamilton
  My right hon. and learned Friend plans to visit Merseyside at the end of the month to attend events commemorating the 50th anniversary of the battle of the Atlantic.

  Low Flying
  Mr. Redmond
  To ask the Secretary of State for Defence if he will make a statement as to what the operational sortie requirements were for the Royal Air Force rescue helicopter that flew very low over the village of Clayton, south Yorkshire at approximately 15.48 hours on 25 April.

  Mr. Archie Hamilton
  The search-and-rescue (SAR) Sea King helicopter from RAF Leconfield was returning to the station from a call-out in Morcambe bay. As the aircraft was on standby to provide SAR cover in the area, and because of the prevailing low cloud, the crew were routed to the north of Sheffield and authorised to fly at low level.

  Nuclear Weapons, Tibet
  Mr. Llew Smith
  To ask the Secretary of State for Defence what information he has as regards(a) the testing and (b) deployment of nuclear weapons in Tibet by China.

  Mr. Archie Hamilton
  We have no evidence that China has tested or deployed nuclear weapons in Tibet.

  Confidence and Security Building
  Dr. David Clark
  To ask the Secretary of Stale for Defence what is the current total of inspections carried out by the United Kingdom as part of the confidence and security-building measures agreements; which countries have been visited; what problems have occurred; and if he will make a statement.

  Mr. Archie Hamilton
  We have carried out 10 confidence and security-building measures evaluations and three inspections. The evaluations were conducted in the then Soviet Union, Romania, Poland, Bulgaria, Belarus, and Ukraine, with inspections in Belarus and Russia. Although there have been on occasions some minor logistical difficulties, no problems of substance have arisen.

  Conventional Forces in Europe Treaty
  Dr. David Clark
  To ask the Secretary of State for Defence how many practice inspections have been carried out by the United Kingdom as part of the preparation for the full implementation of the conventional forces in Europe treaty; what problems have arisen; and if he will make a statement.

  Mr. Archie Hamilton
  Twenty-one practice inspections have been carried out by the United Kingdom. Although there have been on occasion some teething difficulties, no problems of substance have arisen.

  Military Information (Exchanges)
  Dr. David Clark
  To ask the Secretary of State for Defence what exchanges of military information have occurred as a result of the signing of the Vienna document in 1990; and if he will make a statement.

  Mr. Archie Hamilton
  As a result of the signing of the Vienna document in 1990, and its successor Vienna document in 1992, three exchanges of military information have taken place. These consist of the command organisation and location of land and air forces, including personnel and equipment holdings, as well as plans for the deployment of new equipment and weapon systems in the following 12 months.

  Belize
  Dr. David Clark
  To ask the Secretary of State for Defence what recent consideration he has given to changing the level of British forces in Belize.

  Mr. Archie Hamilton
  We are in consultation with the Government of Belize about the British military presence there. The British Government expect to make a statement shortly.

  Bosnia
  Dr. David Clark
  To ask the Secretary of State for Defence what type of training has been given to units due to be deployed for duties with UNPROFOR II, and if he will make a statement.

  Mr. Archie Hamilton
  Extensive refresher training in basic skills is undertaken by any unit preparing to undertake an emergency tour. In the case of 1st Prince of Wales Own Battalion group, additional specialised training included route clearing and anti-ambush drills, convoy control and driving techniques. Some basic language training as well as briefing on the background to the conflict were also included.

  Negretti Aviation
  Dr. David Clark
  To ask the Secretary of State for Defence what contracts have been let with Negretti Aviation in the last three years.

  Mr. Aitken
  The information requested is as follows:

  Year

  Total number of contracts

  Total value of contracts

  1992–93

  88

  £6,567,649

  1991–92

  84

  £4,449,184

  1990–91

  67

  1,556,308

  523
  Details of the subject matter of individual contracts are not held centrally and could be obtained only at disproportionate cost.

  Aerospace Equipment
  Dr. David Clark
  To ask the Secretary of State for Defence what regard he pays in his defence procurement policy to the preservation of a defence industrial base capable of producing defence aerospace equipment.

  Mr. Aitken
  We believe it is important to retain a viable and effective defence industry, in aerospace as in other sectors, and our procurement policy has achieved this. We give due weight in procurement decisions to their wider industrial and technological implications.

  Non-proliferation Treaty
  Mr. Llew Smith
  To ask the Secretary of State for Defence what representation his Department had at the first preparatory committee meeting in New York on 10 to 14 May for the fifth review conference of the nuclear non-proliferation treaty.

  Mr. Archie Hamilton
  My Department is being represented at official level.

  Amphibious Helicopter Carrier
  Mr. Brazier
  To ask the Secretary of State for Defence what progress his Department has made in assessing the tenders for the amphibious helicopter carrier.

  Mr. Aitken
  I refer my hon. Friend to the pursuant reply I gave to the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) yesterday.

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

NHS: Fraud Inquiry
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
What are the terms of reference of the Audit Commission inquiry, announced on 21st April, into fraud in the National Health Service.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, the Audit Commission has not as yet drawn up its terms of reference for the inquiry which it plans to undertake into the National Health Service.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that reply. Will she accept that the health service, which is the prime target of my Question, should be asked to dictate the terms of reference for the inquiry? Is she aware that my Question is particularly aimed at the corruption and maladministration that have gone on over the purchase of computers and their operation in regional health authorities? Would it not be right and proper, in order to deal with this situation, for the investigation to concentrate as a matter of urgency on that facet? Will it then report to both Houses of Parliament as a matter of urgency so that we can have a debate, which would be in the interests both of the Government and those in both Houses who may be involved?
Baroness Cumberlege: My Lords, Ministers very much welcome this initiative on behalf of the Audit Commission. It is an independent body, and therefore its workload and timescales are of its own deciding. Every year the commission carries out about five independent inquiries into the National Health Service. In this instance it is to be a very thorough inquiry. But it wishes to carry out the review that it will undertake for local government first. From that it believes it will learn a great deal which will affect the terms of reference that are to be drawn up for its inquiry into the National Health Service.
Baroness Robson of Kiddington: My Lords, is the Minister able to tell the House whether there are any similarities between the failure of the Wessex computer system and the failure of the London ambulance service computer system; or are we simply incapable as a nation of introducing an efficient computer system into the NHS?
Baroness Cumberlege: My Lords, it is not only the NHS that finds difficulty with computer systems. But the National Health Service has learnt from these inquiries. The chief executive has set out a revised set
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of standards of business conduct. They were issued in January 1993. Sir Duncan Nichol also wrote to all regional chief executives in September 1992 drawing attention to the importance of ensuring that the proper procedures for tendering, contracting and finance were applied. My right honourable friend the Secretary of State wrote to all regional and trust chairmen in April 1993 about the lessons to be learnt from the audits of the West Midlands regional health authority.
Lord Cocks of Hartcliffe: My Lords, is the Minister able to reassure the House that there are no similar computer problems lurking in the 12 other regional health authorities apart from Wessex and the West Midlands?
Baroness Cumberlege: My Lords, I cannot give that absolute assurance. The National Health Service is an enormous organisation, with a £30 billion budget. We are doing all that we can at the moment to take measures to ensure that these situations do not re-occur. But I cannot give an absolute guarantee.
Lord Bruce of Donington: My Lords, is the Minister aware that the House and the public would be greatly assisted if the Government would publish the results of their investigations into this extremely grave matter, which has been the subject of press features over quite a number of months? Would it therefore not be best for the Government themselves to publish what they have found out without any prejudice to whatever views may be formed after detailed investigation by the auditors? Does the noble Baroness agree that the utmost frankness with the House and with the country is required in this matter?
Baroness Cumberlege: My Lords, I agree with the noble Lord. The reports of the National Audit Office have been published, as have those of the Audit Commissioners. As noble Lords will be aware, the Public Accounts Committee has also taken a great interest in this whole area. Its deliberations are public and we look forward to the minutes that will he published next week on the Wessex system. I agree entirely with the noble Lord that we should he as open as possible.
Lord Carter: My Lords, is the Minister aware that there is a damaging atmosphere of secrecy and a cavalier disregard of the ethics in the public service surrounding the whole business? Since her first reply, it appears that the report of the Audit Commission will now be long delayed. Have the Government or the National Health Service Executive issued instructions expressly forbidding the so-called "sweetheart deals" for the supply of goods and services between health authorities and their former employees? If they have not, why not?
Baroness Cumberlege: Yes, my Lords, that is all part of the guidance that has been issued. I want the National Health Service to be as open as possible. Noble Lords will have read in the national press today about a conference yesterday which I chaired. That conference looked specifically into some of the shortcomings of the National Health Service in terms

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of security. We not only ran that conference but also contributed to the cost of the National Association of Health Authorities' security manual. We have commissioned in-depth studies into six hospital sites and commissioned and launched a training video. We are aware of the problems that exist in the National Health Service. If any are lurking, we are anxious that they should be made known, made public and dealt with.
Lord John-Mackie: My Lords, in view of the fraud and stealing of which we have been told, are the police not being brought into the picture?
Baroness Cumberlege: Yes,of course, my Lords. If there is any suspicion of law-breaking the police are immediately brought in.
Lord Dean of Beswick: My Lords, is the Minister aware that last week I sat for four hours as an observer in the Public Accounts Committee in another place? Will she accept that, although I knew that something was wrong, I felt that the evidence produced by the Audit Commission on corruption, maladministration and insider dealing in tenders in the Wessex situation was absolutely mind-boggling? Is it not strange that Sir Duncan Nichol has now expressed deep concern? Some weeks ago in your Lordships' House I produced an official document from the National Audit Office from over two years ago showing that it knew that there was a £63 million error somewhere in Wessex, but nobody was brought to book over it.
I do not want to appear to be getting at the present Minister, who is carrying the can for previous officers or Ministers in that department. But does she agree that, unless this matter is completely opened up, it will remain a running sore and the public will expect some action? Why do the Government try to subsume this issue in a general investigation into public expenditure? Why do they not treat it in isolation? That is what should be done.
Baroness Cumberlege: My Lords, the Wessex failures took place in 1986. The noble Lord will be aware of the action that the Government have taken since then. A number of people have left that region because of the results of inquiries that have taken place. There has been police activity in this instance. All the issues have been faced. We welcome the Audit Commission's decision to make an even more thorough investigation into National Health Service dealings. That is important and we believe that it will come up with some useful advice.

Piracy
2.45 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether their actions, taken in concert with other maritime nations, have yet led to a reduction in piracy at sea in South-East Asia and the Far East.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, there are indications that effective enforcement by the coastal states has led to a significant reduction in the number of attacks by pirates or armed robbers in or near Malaysian, Singapore and Indonesian waters. However, there are reports of an increased number of attacks in the South China Sea area.
Lord Campbell of Croy: My Lords, I thank my noble friend for his reply. While it appears that there has been a reduction in the number of incidents since my Question a year ago, does he agree that it is tragic and intolerable that a British captain and his first officer should have been shot and killed in an attack on their ship near Indonesia last December? Will he accept that unfortunately the oriental successors of Long John Silver are alive and well and engaged in armed robbery with violence?
The Earl of Caithness: My Lords, there is nobody who was not shocked by the callous murder of Captain Bashforth and his chief officer. We are pressing the Indonesians hard for a full report and inquiry into the captain's brutal murder. Since my noble friend asked his earlier Question, the coastal states in that area have apprehended a number of people on charges of armed robbery and piracy.
Lord Harvington: My Lords, I am glad to hear what the noble Earl just said. Does he agree that, in days gone by when the Pax Britannica saw to all such things, these matters were rather better managed than they seem to be today?
The Earl of Caithness: My Lords, times have moved on and we must respect the territorial waters of the coastal states.
Lord Ironside: My Lords, in view of the fact that the Government have rejected a general role for the Royal Navy in putting down piracy, does my noble friend agree that there is a very strong case for the Hong Kong Patrol Squadron, which already deals with a lot of incidents in our sovereign waters there, to extend its role to cover these piracy issues? Therefore, is there not good reason for the Hong Kong Patrol Squadron to extend its role after June 1997?
The Earl of Caithness: My Lords, we have not rejected the role of the Royal Navy in the matter of piracy. A different matter is armed robbery within the 12 mile coastal limit. That is a very different question. In exactly the same way that we have responsibility for the waters up to 12 miles from our coast, so a coastal state has responsibility for its 12 mile area. As regards Hong Kong, I know that the Hong Kong Government have raised the matter of piracy direct with the Chinese Government.
Lord Boyd-Carpenter: My Lords, in view of the fact that under international law for many centuries the penalty for piracy has been death, can my noble friend confirm that if Her Majesty's forces catch pirates that penalty will now be imposed?
The Earl of Caithness: My Lords, that question would have to be resolved if we caught a pirate on the high seas.
Lord Tanlaw: My Lords, does the Minister think that possibly there is value in considering Sir James Brookes' method of 150 years ago whereby the successful suppression of piracy was not done at sea but by finding out where those people lived on shore and dealing with them properly on land?
The Earl of Caithness: My Lords, the noble Lord is right. That is why we find it so encouraging that the coastal states in that area have apprehended a number of people who are at the moment awaiting trial. But we must remember that piracy and armed robbery are not confined to that part of the world. There are other incidents off the African and South American Coast.
Lord Geddes: My Lords, can the Minister say what role, if any, the IMO has in that context?
The Earl of Caithness: My Lords, it has a substantial role. The United Kingdom was part of an IMO delegation working group that went out to Malaysia, Singapore and Indonesia. The subject will be raised in the IMO at the Maritime Safety Committee later this month.
Lord Carmichael of Kelvingrove: My Lords, does that mean that the British Government have taken the initiative in developing an anti-piracy strategic policy for those areas? If not, can the Minister say whether the Government will produce an initiative reflecting our history as a sea-faring nation? Although it is good to know that until recently there was a drop in the number of incidents, looking at the press over the past few weeks there seems to be an increase in piracy, particularly off the African and South American coasts. It looks, therefore, as though it is an international problem.
The Earl of Caithness: My Lords, it is not for us to dictate an armed robbery or piracy solution to the problem that is faced in various parts of the world. However, we work with the coastal states and help them wherever we can. I believe that we are the first and only country so far to have produced a notice to mariners—the M Notice—in considerable detail on how to avoid piracy and what to do in the event of an attack.
Lord Campbell of Croy: My Lords, is it correct that the IMO recently set up a monitoring station in South-East Asia? If so, does my noble friend have any information so far in regard to its success?
The Earl of Caithness: My Lords, we are trying to improve the evidence that we receive of armed robbery and piracy attacks. Of course, it is up to the captain of the ship to report the attack in the first place. That is why statistics are poor. However, we hope that that will improve in the future.
Lord Marlesford: My Lords, does my noble friend believe that the Beijing Government are aware of the damage done to their reputation through apparent failure to control entrepreneurial and criminal
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elements from the mainland of China, which have in recent months shown a number of piracy activities in Hong Kong territorial waters?
The Earl of Caithness: My Lords, it does not do the reputation of any country any good to be associated with either armed robbery or piracy. The Hong Kong Government have taken the matter up most strongly with the Chinese Government.

BCCI: Compensation
2.52 p.m.
Lord Spens Lord Spens asked Her Majesty's Government:
Whether, in the light of the publication of the liquidator's accounts, they have considered requiring the Bank of England, as the responsible supervising and regulating authority, to compensate depositors and creditors of the Bank of Credit and Commerce International.
The Earl of Caithness: My Lords, the Government sympathise with those who lost money in the collapse of BCCI. But, having considered the matter carefully, they do not believe that it would be right to offer compensation over and above that provided for under the statutory deposit protection scheme.
Lord Spens: My Lords, I thank the noble Earl for that reply. Does he agree that on 19th July 1991 in another place the Chancellor of the Exchequer said that he would reconsider the implications for compensation if it had been found that the Bank of England had not discharged its role and duty properly and competently? Would not he agree that in any circumstances what has happened since—the Lord Justice Bingham Report, the report of the Treasury Select Committee and now the liquidator's report—indicates that that duty had not been carried out? Therefore there is an obligation to compensate depositors along the lines that depositors of Barlow Clowes were compensated for massive fraud. Is my noble friend not worried that the two-tier system of banking now having been established by the Bank of England, in that there are banks whose depositors are protected and others where they are not, will create problems for the future unless compensation is properly delivered?
The Earl of Caithness: My Lords, I agree with the noble Lord, Lord Spens, in that the Bingham Report made serious criticisms of the Bank. Where I differ with him is in the interpretation and consequence of that. As he will know from the report, it stops well short of suggesting that things would necessarily have been different if the Bank had acted differently. It does not make any accusations of negligence.
Lord Richard: My Lords, I congratulate the noble Earl on the skill with which he skipped from piracy in the Far East to piracy in the City of London. He will know that the liquidator's report says that the bank's losses of 14 billion dollars were caused by,
"bad banking, pure and simple".

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In those circumstances, how can the Bank of England not accept some degree of responsibility for failing to notice and take action on those practices?
The Earl of Caithness: My Lords, the noble Lord the Leader of the Opposition will have read the Bingham Report with care. He will be aware that the report says that the blame for the frauds lies with those who committed them. As I said, my right honourable friend the Chancellor of the Exchequer considered the matter most carefully and felt that it would be right not to offer compensation.
Lord Richard: My Lords, I am not talking of the Bingham Report; I am talking about the liquidator's report. As the noble Earl will be aware, it is a powerful indictment of the behaviour of BCCI and the Bank of England. How can they not take some responsibility?
The Earl of Caithness: My Lords, the matter has been carefully considered. However, in regard to the Question on the Order Paper, it was the Bingham Report that supported the Government's view on the matter.
Lord Eatwell: My Lords, given that the date on which the Bank of England knew what was happening at BCCI is fundamental to the Question, can the Minister say when the Bank of England first advised the central bank of another country that BCCI was likely to be uncreditworthy?
The Earl of Caithness: My Lords, I cannot answer that question because it is not relevant to the Question on the Order Paper.

Power Stations: Requirements
2.56 p.m.
Viscount Hanworth Viscount Hanworth asked Her Majesty's Government:
Whether, in approving larger gas-fired turbine installations, they will give priority to those which, first, are sited in the long-term interest of the United Kingdom's power requirements, and, secondly, may be of use for industrial or domestic combined heat and power projects.
Viscount St. Davids: My Lords, in determining the best site for power generation an applicant should give consideration to the economic case for that site, and to the environmental impact which it will make. It is the Government's policy to consider the environmental merits of the site of a proposed power station when considering an application made under Section 36 of the Electricity Act 1989. The economic case for a site is best determined by the company which is to risk the considerable capital involved in building and operating the station—often for more than 20 years. The impact a proposed station will have an the nation's integrated network is best influenced through price signals given by the National Grid Company on behalf of the network.
Viscount Hanworth: My Lords, I thank the Minister for that reply, which is not wholly
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satisfactory. What is worrying me, and I hope is worrying him to some extent, is that it appears that overall the Government have no energy policy and are prepared to accept the marketplace with its short-term ideas in place of taking a more robust attitude regarding our future.
Viscount St. Davids: My Lords, I repeat the argument central to the Government's energy policy from Hansard, when my noble friend Lady Denton repeated in this House a Statement made by my right honourable friend the President of the Board of Trade in another place. He said,
"It is central to the Government's energy policy to help create competitive energy markets within which consumers can obtain electricity produced from a diversity of sources at competitive prices. This is the best way to keep consumers' costs down and thereby strengthen our industrial competitive-ness".—[0fficial Report, 25/3/93; col. 451.]
Lord Stoddart of Swindon: My Lords, is the noble Viscount aware that this is a most important Question? It involves our future energy supplies. Is he aware that a shortage of gas to both industrial and domestic consumers has been predicted by Mr. Chris Fay, the managing director of Shell exploration and production wing, and also by stockbrokers, Wood Mackenzie, who predict that there will be shortages by 1996–97? Under those circumstances does it not behove the Government to ensure that power stations which are going to use gas, use it in the most efficient manner possible? Better still, perhaps they should reconsider their attitude towards coal, gas and other energy supplies.
Viscount St. Davids: My Lords, gas will certainly play its part in the power generation market, but so, too, will other types of fuel.
Lord Bruce of Donington: My Lords, is the noble Viscount aware that the quotation that he was kind enough to provide out of a Statement made by his right honourable friend in another place does not disclose a policy at all? It is merely a lot of pious platitudes. When will we have a statement of the Government's policy (if they can spare the time to think one out) on the energy requirements of the country as a whole?
Viscount St. Davids: My Lords, I would again refer the noble Lord to the Statement made by my right honourable friend the President of the Board of Trade and to the subsequent debate that took place in your Lordships' House.
Lord Ezra: My Lords, the Question on the Order Paper put by my noble friend includes a reference to combined heat and power. May I therefore ask the noble Viscount what is the Government's policy in order to promote this means of virtually doubling the efficiency of power stations? Are they now going to pursue a more active policy in this regard than in the past?
Viscount St. Davids: My Lords, the Government recognise the potentially favourable economics and environmental benefits of new power stations which have a substantial heat and power element. The construction of new plant for generating electricity

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which is consumed on site is already encouraged by their exemptions under certain conditions from the need for a supply licence. The Government are currently consulting the electricity industry and its consumers as to whether and how these conditions might be relaxed to ensure further CHP projects.
Lord Donoughue: My Lords, bearing in mind that the 36 gas turbine generating plants proposed to be commissioned within the next three years—half of that capacity is already under construction or has consent—is probably the single largest factor in the reduction in demand for British coal, can the Minister tell us how many pits have ceased production since the announcement of the new coal strategy last October, and how many miners have been made redundant?
Viscount St. Davids: My Lords, I would deem the question posed by the noble Lord to be somewhat wide of the Question on the Order Paper. I do not have the figures he requires to hand; but if he will permit, I shall write to him in due course.

Procedure of the House: Select Committee
The Chairman of Committees (Lord Ampthill): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Lord Carter be appointed to the Select Committee on Procedure of the House in place of the Lord Underhill deceased.—(The Chairman of Committees.)
On Question, Motion agreed to.

Wealth Creation
3.2 p.m.
Lord Mancroft Lord Mancroft rose to call attention to the importance of wealth creation, in view of the impact of new technologies on employment, and the long-term demands on public services; and to move for Papers.
The noble Lord said: My Lords, one of the joys of 19th century politics was that the subject of the economy rarely raised its ugly head. This was not, as your Lordships may be forgiven for assuming, because most politicians knew nothing much about economics, a situation that might possibly continue to this day, but because, throughout the entire period of our nation's greatest economic and political growth, there was no need for prolonged economic debate, because there was only one accepted way of running an economy; and that was the capitalist way, the way of the free market.
It was only in the 20th century, with the growth of communism and its offspring, socialism, that politicians, and then voters, were seduced into thinking that there may be another way. But now the wheel has turned full circle, and although the Labour Party still seems to be wrestling with its trade union paymasters and still debating the desirability of a state-owned development bank, nobody seriously believes that there is any way to run an economy except the capitalist way.
However, to the casual observer of British politics it might almost seem that this extraordinary development had not taken place. Looking back at the last general election campaign, the old antagonism seemed not to have faded one jot. But closer examination reveals that the arguments about which the parties fought were largely spurious. The Liberal Democrats, for instance, fought on what we might call the "education ticket". They maintained, and they may easily have been right, that what we need in this country is to concentrate our efforts, and indeed our cash, on developing better education and better employment training. Big deal. Did anybody ever say that we should not improve our education services? Of course we should.
The Government and the Labour Party clashed, if noble Lords remember, on the subject of NHS spending. Labour tried to persuade the voters that the Conservative Party planned to sell off the NHS; the Government just denied it. At one point, in the second or third week of the campaign, it began to sound like a Punch and Judy show. "Oh yes you will!", cried Labour; "Oh no we won't!", screamed the government party, in a manner not calculated to enthuse the electorate with either's ability to rule. We know now, if we did not know then, that what was happening was that the Labour Party was trying to frighten people, particularly old people, into thinking that the Government were going to privatise the health service, and that they would consequently be denied free health care. And the Government, I have to say, were too cowardly to admit what we all know, which is that they were searching, and still are searching, for ways to bring commercial disciplines into an organisation whose cost has spiralled out of control, and far, far beyond our ability to fund it.
So in place of the debate that should have taken place between the parties about how to control expenditure, and how to find alternative funding proposals, we fought the general election campaign on the different ways of cutting up the national cake, without mentioning that that same cake is no longer big enough to meet the demands made upon it. For three weeks 1,800 and more parliamentary candidates enthralled the electorate with their plans for spending the electorate's hard earned wages, without any mention of the fact that how ever well they are spent there is no longer enough to go round.
There is a view that no party really won the last election but that the party that lost most was the one that had failed to take account of one of the most important lessons of the 1970s and 1980s. Under the last Labour Administration we discovered the hard way that there is a level of taxation that completely stifles growth and takes more out of the economy than any amount of expenditure can put back. But under the more recent prudent stewardship of my noble friend Lord Howe we were able to discover the level at which incentive returns and growth is encouraged. To have discovered that ceiling of taxation is a vital lesson, and one that future governments would be very unwise to ignore.
Of course, knowing your income is one thing; but you then have to match your expenditure to it, which,

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as we all know, is a very different problem. Conducting successful election campaigns on the basis that the winner is the party that can best bribe the electorate with its own money is a very risky business, as the Labour Party found out to its cost last year, and the Government will discover now. During the boom years of the 1980s the Government could get away with this policy, knowing that income was rising to meet the cost of it. But that has now changed.
Whether or not my right honourable friend the Prime Minister should apologise for causing the recession I do not know, and history will judge better than we can. But what all those who were elected last year from all parties must accept is that they are at present held in lower esteem, collectively and individually, than at any time within memory, and that they have no-one to blame for that but themselves. For it is they who endlessly drummed through the voters' heads that they have the right to this service and that service, and better this and better that, but have never once pointed out that all these wonderful things must be paid for. The result is that we currently have a social security bill of £80 billion a year and a health service bill of£39 billion a year. Legal aid is soaring out of control from £900 million last year to £1.1 billion this year, a rise of more than 20 per cent. We are going to spend more on our road building programme than ever before.
However, it is not part of my purpose this afternoon to attack the Government's spending programme. Individually, I have no doubt that there are very compelling reasons for each and every item of expenditure. But it is the way that plans are made, and the perception of government as having an obligation to meet all perceived needs, that I question. Public spending cannot and must not be planned on the basis that the strongest, loudest or most politically correct pressure group earns the largest chunk of the budget. Does anyone now doubt. for instance, that the £886 million that has been spent on AIDS was as a result of political pressure, as opposed to the cool, calm assessment of need that it should have been?
Indeed, it is becoming apparent that the only budget that the Government are prepared to cut is the defence budget, the one that most voters, regardless of political affiliation, are keenest should not be cut. Of all the services that government supply, the one which is universally acknowledged as a world leader, and the very best there is, is our armed forces and it is they that are to be reduced to a state where their ability to respond to any call above their day-to-day duties is now in some doubt. However much the Government deny it, it is quite clear that these economies are entirely Treasury led and that no assessment of the future role of the armed services has been made—certainly not in public.
The real political debate and the one which we should be having; the one which our elected representatives seem to have studiously avoided having, is about how we are going to balance the ever-increasing demands on government services that
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society has been taught are its of right, and our economy's ability to meet those demands, particularly when the assessment of them appears so haphazard.
That is the nub of the problem with which we are confronted. On the one hand we have a ceiling on the amount of revenue which government can raise through personal, and indeed corporate taxation. On the other hand, we have a population which demands better health care, better education, more social services, more and higher levels of benefits, more roads, more policemen and a burgeoning legal-aid requirement for those tiresome occasions when a policeman catches us driving too fast down one of those splendid new roads. This year the gap between what we intend to spend and what we can afford is a cool £35 billion. Next year it will be £50 billion and the year after—well, who knows?
If that were not enough, there is an added dimension. As each year goes by the technology that increasingly governs our lives produces more and more machines and more and more computers to do our jobs for us which means that we have fewer and fewer jobs for people to do. Cardinal Spellman once asked Pope John how many people worked in the Vatican. "About half", the Pope replied, sadly. Let us hope that that state of affairs is never repeated in this country.
I know that there is a school of thought which suggests that increased technology actually creates jobs by generating increased business activity. But there can be no area of our economy which has seen a greater increase in technology than agriculture. But that increase in technology has caused a reduction in the workforce of around 90 per cent. during the past two generations.
Economists tell us that any fall in employment as a result of increased technology is compensated for by a rise in jobs within service industries. I suspect that a survey of the employment patterns in villages which used to be primarily agricultural may well show that to be true, but few of those employed within those service industries will be the same people who have lost their jobs through increased mechanisation. Those poor people will be living in cities, either working in industry, if it exists any more, or unemployed.
The idea that all those made redundant as a result of 20th century innovation can be employed in the services simply does not hold water. The example which is often given to support that is that of the Japanese economy. But even the Japanese economy is now slowing down at last as the markets for its phenomenal industrial output finally dry up.
We need to start facing the truth. There is unlikely ever to be full employment again in this country—at least employment as we currently understand it—regardless of the economic climate, and regardless of which party is in government. For example, we already know that the ratio of those in work to those in retirement, currently 3:4, will fall over the next generation to 2:4. As a result, the contributions of those in employment will be unable to meet the pension requirements of all those in retirement. Likewise, as the number of people in full-time

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employment falls, there will be less revenue to fund the unemployment benefit of those for whom there are no jobs.
It is a pretty grim picture, but it is made more so by the ostrich-like attitude that appears to be politically fashionable at the moment. Yet there are solutions, but only within a capitalist economy. Nothing would be more destructive than a return to socialist supply-led economics of the kind favoured by previous Labour Governments.
However much he may be criticised at the moment —by God he has been criticised!—my right honourable friend the Prime Minister deserves credit for identifying inflation as the number one enemy. He was right when he said that every attempt we have made to develop our economy since the war has been crippled by inflation. But the honesty for which the Prime Minister is rightly renowned reminds me of General Smuts' assessment of Stanley Baldwin:
"When playing chess it is not enough merely to be honest; one must also know how to play chess".
Although my right honourable friend the Chancellor of the Exchequer certainly won no prizes for tact and diplomacy when he said that unemployment was a price worth paying, he was, I am sad to say, right. Of course unemployment is an appalling blight and no one doubts that, particularly for those who are going through it. But it must be recognised that inflation causes unemployment quicker than anything whereas unemployment does not cause inflation. But what does cause inflation is a rise in public spending in a deliberate attempt to create jobs which the market has not demanded. That is what Labour Governments did again and again—short-term engineered booms leading to inflation, downturn and more unemployment. That is a path which must never be travelled again.
What we must do is first and foremost conduct a full review of public spending. Of course I am aware that my right honourable friend the Chief Secretary has embarked on one, but I am not talking about the kind of review which we have had before which searches for waste in the Civil Service. We have been down that route before as well. What is needed is a full-scale public debate led by our elected representatives, to determine which services could and should be better funded by being contracted out. For instance, there is little doubt that virtually all health care that is not mainstream can be done to a higher standard and at a cheaper price in the independent sector. I have learnt that myself at first hand.
The announcement that we are at last to have toll roads is to be welcomed, but why has it only come now? We have known for years that we needed alternative ways to fund our road-building programme, and yet we have avoided the obvious answer far too long. I suspect this issue was side-stepped because it was seen as potentially unpopular, Is it really true that our political leaders are now so spineless that they will do anything to put off making difficult decisions rather than risk telling the electorate the truth?
I have never believed that unemployment leads to crime, and, indeed, have always considered that
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concept to be an insult to the unemployed. But I am convinced that the current benefits system has created a dependent, purposeless underclass, that is obliged to leech off the rest of society.
It must by now be clear that some form of national service—not military, but a form of community work, both at home, and abroad, as a part of our overseas aid programme—could be a very desirable component, partly because we cannot afford to pay people to do nothing any more, and partly because it is clearly so demoralising and degrading for the individuals concerned, to eke out an existence on the dole.
It is no part of the Conservative philosophy that I grew up with to enable people to perpetuate a life of unfulfilled destructive mediocrity on state handouts. As a nation we can no longer afford a blaming society of the kind which seems to be developing. It has reached the stage where either we teach those people to swim, or they will drag us down with them and drown us too.
First, to allow the welfare state to continue as it is at present, without massive reform, is to avoid confronting our greatest social problem, and our greatest public expense. Secondly the Government must, as a priority, work to remove the shackles of regulations that are currently throttling commerce. Napoleon called us a nation of shopkeepers, and was then furious that we took it as a compliment, for we were then, and throughout the last century, the greatest trading nation in the world. It is no coincidence that the rise in socialism has been mirrored by a gradual decline in our trading capacity, and our ability to develop world markets. It is vital that the Government look to our past to learn how to foster the entrepreneurial spirit that still exists. They may even learn from the tale of the tourist in France who was charged 100 francs for a single egg. He asked the shopkeeper if eggs were scarce in that part of France.
"No, Monsieur", the man replied, "eggs are not scarce. But tourists, they are very scarce indeed."
The more Government tamper in industry and commerce, the worse they get. The lesson is a simple one; politicians should get back to the business of politics, and leave business to businessmen, particularly when so few members of another place have any practical experience of commerce. We have to accept that the other place is full of a new breed of professional politicians. Look what they have done to politics; imagine what they might do to industry!
Thirdly the Government should seek to reform further our system of taxation. There is a strong case for the abolition of national insurance which could then he replaced by increased tax on profits. It must be madness to make it more expensive to employ someone than it need be, and certainly more expensive than it is for our competitors. This would be an immediate incentive to enlarge the workforce, leading to increased production, and would make British industry more competitive.
Further reductions in inheritance tax would allow small businesses, family farms and principal residences to pass down through the generations. This reform, spotlighted by my right honourable friend the

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Prime Minister, and since then for some reason forgotten, would do more to give confidence to those who create the wealth of the nation than anything. For it is high taxation and inflation that have destroyed our entrepreneurial spirit more than anything. People need to know not just that they can earn enough to live, but that they can keep what they have earned, and pass it on to their children; it is the security that that knowledge brings that creates the basis for a strong society.
We have now, therefore, huge problems to face: some problems of our own making, caused by our own advances, others by circumstances beyond our control. But we also have the means to solve them if we are prepared to be ruthlessly honest in approach, casting aside all political correctness.
There is a collection of ideas that contains solutions to most of these problems: the problems of burgeoning public expenditure, the problem of developing a vital industrial training base, free of regulatory shackles, and most of all the problem of a society too many of whose members seem to have lost their way. Both the Government and the Opposition would do well to note these ideas and to debate them publicly. These philosophies, broadly speaking, are capitalist and if properly adhered to they result in sound, competent government. Historically they have been adopted and followed by one political party in this country. It is called the Conservative Party, and I commend it to the Government and to this House. My Lords, I beg to move for Papers.
3.20 p.m.
Lord Desai: My Lords, I thank the noble Lord, Lord Mancroft, for introducing such an important topic which allows me, so soon after my return to the happier realms of the Back Benches, to indulge in some speculations on a subject that is close to my heart. I hope that I shall be forgiven if I use some of the ideas that I wrote about in that well known journal Tribune—now compulsory reading for the Tory Cabinet—which I think are very important.
The noble Lord undertook a wide-ranging survey of the issues, but I should like to emphasise some of them more than others. I shall leave aside altogether the question of taxation. Budget deficits are budget deficits and we must get on with the discussion of wealth creation which I think is more important than anything else. The noble Lord was right to draw our attention to the importance of wealth creation because the questions that it raises—not only for Great Britain, but for Western Europe as a whole—such as those relating to the emergence of new technologies and their impact on employment as well as on the demand for public services are questions that will not go away and to which there are no simple, partisan solutions.
One of the most important things that we must face is that for some time now—and especially for the past 15 years or so—we seem to have interpreted "wealth" rather narrowly. By "wealth" we have meant "financial wealth", very often elevating the pursuit of paper assets above the creation of real wealth. Indeed,
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the City of London is littered with names which once upon a time were thought to be very rich when fortunes were made in real estate, by exchanging our assets from public ownership into private ownership and by creating a false credit boom. However, at the end of those 14 or 15 years, we have not created more wealth as such. We may have shuffled the deck differently and given more money to the rich and less to the poor, but we have not created either wealth or the feeling of being rich. If your Lordships go out into the world you will see that, in the main, people do not feel that they have been enriched, but that they have been impoverished. If your Lordships look at the streets of London and see the homeless, you will not think that this is a rich country any longer.
I do not want to be partisan about this, but I believe that we must understand that "wealth creation" means creation of real, useful products and services and not "wealth" as defined in the inflationary climate in terms of an amount of money. One does not create wealth by pursuing false credit booms which, as it happens, we have done at least twice in the past 20 years (first, in 1972 and again in 1987–88). We must concentrate on the creation of real wealth.
John Ruskin said that people are the real wealth of a nation, and I shall take that to be the central idea that we must pursue. Let us consider what is about to happen to us. For a long time we relied on the growth of industrial technology not only causing a growth in productivity, but on the fact that that growth in productivity would not threaten the growth of jobs. Incomes created by greater productivity pass to the largest possible number of people. However, we are now about to enter a phase in which the nature of the technology is such that although productivity will increase, jobs will not be created. We are about to enter an era of jobless growth. The experience of even the past decade has been that although there has been growth, the number of jobs has not grown. The productivity growth is there, but the growth in output is not sufficient to create the jobs which should accompany that productivity growth.
We shall soon emerge—I think that we have already partially emerged—into a world in which very little labour will be employed in the manufacturing sector. Each person employed will be highly productive because he or she will be highly trained, highly skilled and highly educated. Manufacturing will demand only a highly skilled and educated labour force. Already only 21 per cent of the labour force is employed in manufacturing. Not so very long ago the proportion was twice that, and I dare to predict that that 21 per cent. will be down to 15 per cent. within another 15 years or so. That 15 per cent. of the labour force will be highly trained and highly skilled. It will be complementary to capital; it will not be a substitute for it.
However, what will not happen is that the bulk of jobs that manufacturing used to provide for the relatively low-skilled and the relatively young will not be created. As productivity grows, the people who are relatively older—and I say "relatively older" because they will be younger than me; people in their forties—will be thrown out of work because they will become

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obsolete unless care is taken to retrain and reskill them. Therefore, we seriously face the prospect that not more than 15 per cent. of the workforce—highly paid, highly skilled people—will be employed in what we used to call "wealth creation"; that is, in the business of producing things that we can sell.
Many people today—58 per cent. of the labour force—are employed in the service sector. That has been a great transformation in the British economy, but let us remember that only half of them are employed in what I would call the well-paid private service sector, such as banks, finance houses and estate agents. Those people also are complementary to expensive capital. They use the new technology and benefit from it. In many cases, they are highly educated.
However, surrounding that enclave of about 30 or perhaps 35 per cent. of the labour force are many other people. The question that we must pose ourselves as more and more wealth is created is: How will a society in which 30 to 35 per cent. of its members are employed in profitable commercial private activities finance the jobs of the other 50 or 60 per cent.? I am not saying that anybody whose job falls outside that well-paid private sector is not doing a useful job, but that person is not doing a job for which the market is willing to pay. The dilemma facing public finances throughout developed capitalist countries—not just the dilemma facing the United Kingdom's finances; I do not want to take a narrow one-country view on this—will be: How can we finance the many useful services that will be required which, although useful, are hard to produce via the market?
This is not a matter for a doctrinal debate between capitalism and socialism. We shall come to that next week when I shall tell your Lordships all about socialism. What is important is that we must find the devices within our public finances whereby the people who have and who earn the money are willing voluntarily (and because it is in their own interests) to part with a sufficient amount of it to allow jobs to be created. I would call those jobs "carers' jobs". They could be in the health service, or in education. It could mean looking after the elderly or the mentally ill. Many of those jobs demand person-to-person attention, care and devotion. Those jobs are hard to do. They are not well paid, but they are essential. As the NHS improves, the demands upon it also increase. It is not indulgence or a matter of pricing health correctly which causes that. There is a constant demand for better quality public services, more attention, more care and more compassion.
The dilemma we face is that the 35 per cent. of highly paid job holders will have to be persuaded somehow to see that the other 60 per cent. of jobs are worth doing. They are in the more labour-intensive sectors. They have to be, because they provide face-to-face services. The growth in those services will provide the real challenge to job creation. It is not that full employment will be difficult to create—I agree with the noble Lord, Lord Mancroft, that we may not have jobs in the old fashioned way where people started in the job market at 15, 16 or 17 and went on
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to 60 or 65—but there may need to be a great deal of flexible working. People may have different episodes of part-time, full-time and self-employment. At the end of the day, we must generate incomes for people who are doing useful work. We can do that provided we use imagination when organising our social arrangements.
There is another danger which we must face about which I wish to talk. We have noticed how much the UK economy and other developed economies are facing competition from the newly industrialised countries of East Asia, South-East Asia, Latin America and so forth. That is not surprising because most the products we used to make so well can now be made by other countries where labour is cheaper. The answer is not to cheapen our labour, to so cut British wages that we can compete with Taiwan or Korea. That is a delusion. Given our culture, habits and history, there is a limit to what people will tolerate by way of low wages. The answer is that we shall have to move on to a different set of products. They will have to be new products requiring a great deal of research and development and innovation. They will have to emerge somehow so that we can move up the ladder of technologically sophisticated products and sell new ones.
Until we find new products to sell and new technologies to market, competition will shrink even further the number of well-paid manufacturing jobs in this country. The challenge is not just to take the new technologies for granted and find solutions to the problem of the people who will need jobs in the public sector, but to ensure that we have sufficient investment in terms of research and development, education, taxation arrangements and so forth to enable us to encourage innovation and the quick implementation of new inventions so as to keep our lead in new products, thereby protecting our jobs.
The noble Lord introduced an important topic. We shall have to think of wealth differently: not in terms of total income, as such, but in the way that income is distributed. Unless we distribute income properly, the quality of life in this country will deteriorate. A country is not wealthy if its people are poor, homeless and illiterate. It is not just that, because if people are illiterate, homeless and unhealthy the country will not become wealthy.
3.34 p.m.
Lord Holme of Cheltenham: My Lords, the House is greatly in the debt of the noble Lord, Lord Mancroft, for introducing the Motion which is ambitious in its scope. He was ambitious in the way that he tackled it. He was most interesting too, if I may say so. We on these Benches have a great commitment to higher quality public services, but I shall confine myself to the wealth creation part of what he has put before us. Perhaps I may say how nice it is to see that the noble Lord the Leader of the House will be responding to the debate. It will be interesting to hear what he has to say. I take it as a sign of the importance that the Government now ascribe to this vital subject. Finally, to be even-handed, the House will note the position from which the noble Lord, Lord Desai,

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spoke. It might share my sympathy for him in that the rewards for intellectual adventurousness are that he finds himself at the very back of the Chamber.
The subject of wealth creation is of essential importance to the British economy. We have a looming balance of payments crisis. It is noteworthy—I am sure that noble Lords will recognise this—that in a recession we have had a balance of payments deficit, something which is almost unprecedented. That has worrying implications for the future. The Government are planning to borrow next year about £50 billion to balance the books. Another way of expressing that is that the Government will be borrowing £50 for every family in Britain each week of next year. It may be that that is inevitable and the only thing to do in the circumstances, but if we look to the future, we cannot continue to live like that as a trading nation.
That can only be exceptional, and yet we have this endemic balance of payments problem. In the end it is about the competitiveness of British goods in the world market, for we are a trading nation. It is worrying, for instance, that in the recent World Economic Forum measurement of the prowess of the various industrial nations, Britain came 13th in competitiveness in the OECD league table.
Perhaps I may say parenthetically that if we need to be more competitive as a country—we on these Benches believe that we need to be—it is a shame that the privatisation of utilities, which in many ways has been one of the most significant changes in the British economy in the past decade or so, seemed to be so much driven by the Treasury in terms of the revenue achievable on sale rather than by the need to create competition in those privatised utilities. The swap of a utility from a public monopoly to a private monopoly cannot in itself be said to enhance competitiveness.
What would make British goods more competitive? Because that is something that we have to do. If we look at our share of world trade we see that it has dropped from 9.5 per cent. in 1960 to about 5 per cent. 30 years later. If we were able to be more competitive, the effect would not merely be seen because we were selling more British goods abroad; it would be seen by the fact that we were replacing imports with products produced at home. We all know that Britain now has a high import propensity. The products, processes, components and machinery used in large parts of British industry are imported. If we could become more competitive, we could not only sell abroad, we could produce a better share for our own domestic market.
Broadly speaking, what is needed to become more competitive is of course that, first, we should be a higher skilled economy in which through our skills we can add value to the products and services that we sell so that people want to buy what we produce at a competitive price. In the wake of the recent spectacular devaluation it has been suggested that price is somehow the only factor in competitiveness. Of course price is a factor. It is an important factor, but it is not the only one. What matters as much, and indeed may matter more, is the quality of the goods
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that we sell. There, the reference made the noble Lord, Lord Mancroft, to education, training and re-training is crucial. It was nice of him, in a slightly double-edged way, to mention the Liberal Democrat commitment at the last general election to putting a penny on income tax to pay for education. Of course, people may believe that that is the kind of thing which parties say during election campaigns. However, I was struck by the fact that the response to that single policy was the best given to any single policy during the election. There was an extremely positive public response to the idea that education and training are an overwhelming priority for the future of the country.
Perhaps we may look briefly at the employment side of the equation. In a world of great competition and change we shall be able to keep our people in work only if we are able to be competitive; and we shall be competitive only by adding value. It is noteworthy that in the survey which I mentioned, out of 22 OECD countries we were measured 13th for competitiveness, but 20th for educational strength. That is a feature of weakness in the British economy and in British society.
Secondly, we must have a dedicated concentration on quality. The noble Lord, Lord Desai, mentioned competition from East Asia, the Pacific region and Japan. Perhaps when we were younger some of us may have patronised those societies for producing second-rate goods which were imitative of western products. However, they now lead us by a large margin on consistent control of quality. We need to look at our design skills and to bring those together in added value. Above all, we need in British industry a process of continuous and relentless innovation. It is to that subject that I wish to address my concluding remarks.
We need continually to innovate, first, in order to catch up and then to move ahead of our foreign competitors. The omens for British industry as innovator are not particularly good. It is true that this country has great historical strengths in research and development, although it has been over-dependent on defence-related research and development. With the end of the Cold War that will be of little consolation to us. We need more government support for science and research and development. In that context I wish to inquire of the noble Lord, Lord Wakeham, whether the science White Paper will be published soon. There will be considerable interest in its contents.
Let us assume for the moment that we have good scientists. We certainly have great companies—for instance, in the pharmaceutical industry—carrying out a great deal of interesting and original research and development. However, the problem is one of application. The recent joint study by the CBI and DTI shows that we have increasingly fallen behind on the registration and application of patents to what we develop and we do not have a good record of investment in new processes and technologies.
In the area of innovation we need, first, a greater emphasis on bench-marking and best practice so that we learn from the best not only in Britain but from around the world. We must see who is performing well and we must do our best to measure up to those

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bench-marks. That must be done systematically. It has been said that the perfect market for innovation is one where close to the firm there is competition but a little further away there is collaboration where people exchange ideas and best practice. Secondly, we need a greater speed to market; we are rather slow in taking good new ideas and moving them forward to the market place. Thirdly, we need to keep consistently close to our customers. The successful manufacturing company will be one which in a sense works as the product development section of its main customers and works closely with them. It will be a collaborative model.
The Government could do more to communicate to private industry—and industry should communicate within itself—the fact that innovation has important rewards within a capitalist system. A London Business School study which was published last year took 539 British companies and compared the performance of the innovators—I am afraid to say that there were only 98—with that of the 441 non-innovators. The study showed that the innovators enjoyed profits which were 7.4 per cent. higher than those of the non-innovators and growth rates which were 5.6 per cent. higher. The exact statistics do not matter; what does matter is that the rewards of innovation to the firm are potentially considerable.
If there are rewards to the firm it would be prudent to do a great deal more to share those rewards with its employees. It is fair to say that in recent years the Government have made progress towards the idea of profit-sharing and have given some incentives for that. But, frankly, we shall not succeed as a competitive trading nation until we get out of the automatic pay increase mentality and into one where a major consistent attempt is made both at participation and profit-sharing within the firm. In that case people's extra reward and enhancement in their standard of living will be directly related to the further progress of the firm; there will be a sharing of rewards and burdens within the firm.
Finally, I turn to the role of the DTI in respect of which we have something of a problem. Members on these Benches have been heartened to see that the new team of Ministers at the Department of Trade and Industry—that is the President of the Board of Trade, the Minister for Trade, and the noble Baroness, Lady Denton—are committed to a pro-active approach on the part of the department. That is good news. Some of us may say that it is long-overdue news because for a long time it has not been the case. At last the invisible hand has been given a bit of a rest. That is probably a good thing too because after 14 years I should think that the wrist of the invisible hand has become tired. We are now fortunate enough to have such a group of Ministers in the department. Potentially that department is much more important to Britain's industrial recovery than the Treasury. In that case, why cannot they talk much more openly about an industrial strategy and an industrial policy? It has become the policy that dare not speak its name. I hate to make a partisan point in this House of all places, but it appears that that has something to do with the theological disagreements in the governing
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party about whether it should all be left to the invisible hand or whether there is a constructive, pro-active role for the Government to play in a successful economy.
As evidenced by the innovation initiative in the area that I have mentioned, I believe that that is now the case. It would be so much better if the Government's plans, strategies and policies were published so that we could understand them and so that companies could adjust their behaviour according to the help that government can give. Government can give real help without handouts; they can do so much.
In conclusion, it must be apparent that we are talking not only about a change in policies but about a change in culture in this country. It must be a culture which welcomes innovation. Innovation is extremely uncomfortable. It is human nature to find a rut and to get stuck in it. Therefore, the process that I have described of continuous innovation is not comfortable. On the other hand, it is an essential process and one which can be exhilarating. It would be very nice to see the Government openly taking a lead in that.
3.49 p.m.
The Earl of Halsbury: My Lords, I am grateful to the noble Lord, Lord Mancroft, for introducing the subject and for giving me the opportunity to exchange thoughts with other noble Lords. I am grateful too for the pleasure of being able to speak in the same debate, in the same place and at the same time as the noble Lord, Lord Desai, with whose views I strongly agree.
Forty years ago when I was managing director of what is now the British Technology Group there was a big kerfuffle in the press about something new called "automation". My chairman of the day, then Sir Alan Saunders, asked me what it was all about. I said, "I can tell you exactly what it is about because I have just come back from a visit to the Ford Motor Company at River Rouge trying to sell them a computer and it is simply transfer machining as pioneered by the Morris Motor Company in 1923. The ratio between capital services and labour costs in those days rendered it uneconomic but times have changed and it is now economic and the Ford Motor Company are operating it". He said, "Well, if that is the case, all this talk of a new Luddite movement is politically mischievous. I wish that you would do something about publicising your views".
That happened to coincide in point of time with an invitation from the Institution of Production Engineers to give a talk about the subject at one of its annual conferences. I did so. The speech received a certain amount of publicity. Before I knew what was happening, I found that I was regarded as an expert on a non-subject. I was talking about the advancing front of production engineering in whichever field it was applied to—the motor industry, the oil refining industry, and so on. It was a non-subject.
In 1776 two things happened more or less simultaneously. There was the Declaration of Independence in America and Adam Smith published the Wealth of Nations. His doctrine was that wealth is measured by the national consumption represented by

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production plus imports less exports, which you sacrifice to pay for the imports so that positive or negative balances may establish themselves.
Expanding the economy means, at constant workforce, advancing productivity. That brings us back to the advancing front of productivity, or whatever your Lordships may like to call it. Between the middle of the 18th and the 19th centuries Britain was the workshop of the world. One of our most important products was cotton cloth. But, exactly as described by the noble Lord, Lord Desai, other people can make cotton cloth especially if we are selling them the textile machinery with which to make it. That means that exports of textile machinery are growing, but even that, again, can have an end to it. We could have followed the Italian lead in high quality textiles but we missed the bus there.
The days of our age are three-score years and ten, but the days of our employment are somewhat shorter than that. From school-leaving age at 16 to retirement age at 65 is 49 years. Let us call it 50 years because that is a good round number. Therefore, at constant population, 2 per cent. of the workforce is retiring every year and 2 per cent. is maturing and becoming ready for employment. There is a constant redeployment of the workforce which, because it is constant, is not noticed. Redeployment of the workforce is available at the rate of 2 per cent. per annum. Boom and slump are not due to redeployment of the workforce but are due to mismanagement of the economy, and in particular to the mismanagement of leads and lags.
My reminiscence went back 40 years so I shall now advance to some 30 years ago when I was a governor of the BBC. The governors of the day paid a state visit to the BBC research laboratories. There I saw an astonishing display which I shall try to describe to your Lordships in familiar terms. Part 1 of the display was a television camera which was looking at a television display set to which it was connected. Of course, it was transmitting what it saw but it saw nothing so that it did not transmit anything except a little white noise; a pattern of black and white dots which you see when a station is off the air. If you connect them with a delay line, the most extraordinary phenomenon manifests itself. The odd white noise organises itself into moving patterns of black and white oozing across the display tubes, sometimes organising themselves into a vortex and sometimes reverting to banded patterns, but always in motion.
That was 30 years ago. It has now become fashionable. Mathematicians and statisticians are fascinated by what is now called the theory of chaos; that what starts as chaos can, by some mysterious means, apparently non-causative, organise itself into patterns. That has been taken up, particularly in America, by economists who are fascinated by the idea that the economy has a kind of will of its own. The need is always for foresight. To manage is to foresee. If, as the noble Lord, Lord Holme, said, we want a better-educated workforce we must begin to organise that now for the future. It is no good waiting
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until such members of the workforce are in short supply and then say, "What a pity it is that people are not well educated". Foresight is what is called for.
As regards new capital investment, we need an earthquake at the Treasury which will distinguish between capital and revenue expenditure. It is wrong to balance the house books by borrowing money. It is not wrong to borrow money to build a house provided that it is written off to revenue at the appropriate life of the asset. Until we manage our investment better, we shall never be able to afford to train the teachers who will be the technologists of the future. On that note, it is time for me to sit down.
3.56 p.m.
Lord Carr of Hadley: My Lords, I fear that what I am going to say will not be as enlivening or as interesting as the speech of the noble Earl who has just spoken. When he spoke about watching television sets at the BBC in the 1930s, I remember in a much less grand way as a schoolboy at Westminster watching a television set, that wonderful thing, in the physics laboratory. I recall that one of those watching it with me was somebody who I realised was much cleverer than I was but I did not fully appreciate quite how clever he was. He was the present Sir Andrew Huxley, later to become a most distinguished scientist and Nobel prize winner. However, I am afraid that that was not for me, although I have never regretted my scientific education.
Like other noble Lords, I wish to thank most sincerely my noble friend Lord Mancroft for raising this subject in the debate today. It rather complements the useful debate which we had last week on manufacturing industry. It reminds me that when I first became a Member of your Lordships' House we had a series of Back-Bench Motions on deep industrial matters which I thought were extremely helpful and valuable. Perhaps the debates of last week and this week will be the beginning of another series of debates which could be extremely helpful. They may help us to arrive at what is most important for this country at present; namely, some sort of consensus. That consensus may not necessarily be about the methods of achieving the objectives but a consensus of view about the objectives themselves.
Most of my political life has seen a situation in which the main political spotlight and controversy was focused on the subject of wealth distribution rather than wealth creation. Of course, I do not under-estimate the importance of wealth distribution because it is, and always will be, important. However, except in the very short term, it is not nearly as important as the subject of the creation of new wealth. One thing that has pleased me in the past few years—and the 1980s saw it happen—is that now there is a much higher concentration on wealth creation. Trying to distribute and redistribute more fairly an over-limited supply of wealth leads to much frustration and a great deal of bitterness. This country urgently needs a more ample supply of national wealth both for its material and social benefit.
All my life I have held a very strong belief that the overwhelming first objective of economic policy is to

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achieve economic growth; that is, the creation of new wealth. Of course, economic policy should not always override other policies because, in the end, the economy is made for man and not man for the economy. But in so far as we are dealing with economic policy, and whenever we are, it seems to me that in economic terms growth must always be a clear objective.
It seems strange to me that economic growth in recent history has quite often been a rather dirty word. Environmentalists objected to it for their own reasons and some economists also seemed to object to it, presumably because they always equated it with inflation or, perhaps, because some of them believe that it is a matter of principle so deep that a policy of economic growth directly pursued will lead to some intervention in the pure free play of market forces. I believe profoundly that both those objections to making growth an objective are wrong. They urgently need to be superseded by a clear, overriding determination to achieve economic growth and new wealth creation.
Of course, you cannot drive the economy with the accelerator all the time; there must also be brakes. Certainly inflation is the worst enemy of sustained economic growth that one can imagine or experience. Therefore, sitting on inflation is and always will be a matter of prime importance. But however hard one is sitting on inflation it is also important to remember that it is a means to an end and not the end itself. Over recent years I have felt sometimes that the means and the end were getting a little confused. I have a feeling that that mistake is now behind us.
I am glad that the Motion asks us to consider the question of wealth creation in the context of employment and the demands of public services and of modern technology. As regards public services, although anyone suddenly brought back to life who died 50 years ago would be amazed with the quantity and quality of public services available, we are only too aware of how inadequate they still are in relation to some of the great personal and general social needs that we see around us.
When I was Home Secretary in the Cabinet of Sir Edward Heath, then Prime Minister, I remember him asking me—I do not know whether it was an official part of my duties—to preside over a small team to try to form some estimate of the developing cost of social service policies about 10 years ahead on the assumption that no further improvements or additions would be made to them. That was a pretty improbable assumption. But, when one did so, and although it was impossible to get accuracy, it soon became obvious, as an order of magnitude, that we were looking at a projected increase in social expenditure which would be far beyond the wealth of our economy to bear. I believe that we are grappling with that problem at present. I am glad to see that the Labour Party in opposition are looking at the social services. I hope that they are looking at them from that fundamental point of view. I also hope that the present Chief Secretary to the Treasury, Mr. Portillo,
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is doing likewise. We cannot go on in this way: wealth creation has to take higher precedence in this country than it has in the past.
I turn now to unemployment. I suppose that my chief political motivation—and that again refers to my school days at Westminster—came from seeing and hearing unemployed marchers in Jarrow, South Wales, and so on, and thereby forming a determination that something had to be done to ensure that unemployment was removed and did not recur. There was a time in the 1950s when it seemed that mass unemployment was a problem that no longer existed. Unfortunately, as we now know, that is not the case. While it is thankfully true that unemployment today is not the crude cause that it was 50 or more years ago, it is still a cancer in society which we would do well not to underestimate. It is more serious than it appears to be on the surface.
In that context, I welcome technology. Although, superficially, it may appear to be one of the causes of unemployment, in fact it is something much more constructive. There is no shortage of work to be done in this country, if only we had the wealth to pay for it. Modern technology increasingly enables us to produce the wealth with a smaller and smaller proportion of our working population. Provided that the wealth is there and has been created, it enables us to pay people to do those things as well as increase the monetary value of our public services, which are wealth consuming not wealth producing. Therefore, if we look at it aright, it is a virtual beneficial circle and not a vicious one. That is the way we should look at the matter.
To me, all that points to the urgent need for us as a country to give utmost priority to wealth creation. I hope that the message of today's debate to the Government is that they should put clearly before the country the objective of wealth creation as the major—certainly one of the most major—overall objectives of the Government. They should put before the country a clear strategy for achieving it, so that the country as a whole can see what the Government, and all of us as the people of this country, are trying to achieve.
As we come out of a very deep and serious recession there will be some economic growth; indeed, some is already appearing in real terms. But the question I ask myself is: for how long and how much will it amount to? Surely we must not allow it, yet again, to come to a sudden stop as it runs into the buffers of inflation. I submit that what we need is a clear strategy for sustained, non-inflationary growth in the country. There is no evidence I can see from the past to encourage us to believe that that will happen naturally while the Government stand and look on.
The achievement of that non-inflationary growth requires positive, pro-active government leadership which will enable it to happen. It should be monitored as it happens and policies should be adapted as a result of such monitoring. All of that should be done most openly and in public view. Please note that I am not—I repeat not—calling for detailed government intervention, for subsidies to sick companies or for

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Whitehall to start spotting industrial winners. All that has been tried and has been shown to be a hollow means of achieving nothing.
I am talking about the need for a clearly declared, comprehensive and properly correlated Government strategy which can be seen and understood and which will capture the attention of the whole of the Government and all interests in the nation. I believe that such a strategy must be owned and supported by the whole Government; it must not be just the policy of the Department of Trade and Industry (The Board of Trade). It has to be just as much the policy of the Treasury and, indeed, of all departments.
That is why I am asking for a Government declaration of strategy, subscribed to by the whole Government and to which the whole Government are committed. I believe that a public statement is necessary. I am not talking about a great, detailed five-year national plan—Heaven forbid! I am talking about a strategy statement listing some of the main issues of policy that must be carried through by the Government and by the various interests in the country, and which can and will be publicly monitored.
Last week's debate on manufacturing industry was a relevant part, but only a part, of that about which I am talking. I believe that such a strategy, presented to the country, would be received by the country as part of the leadership for which the country is looking and which I believe the Government wish to give.
Time does not allow me to go into the details of that strategy but I shall give one example of something that needs deep and public, open discussion; namely, the effect of the taxation of profits and dividends on wealth creation. Do we have, or do we want to have, a taxation policy which encourages the distribution of profits or encourages the ploughing back of profits into new investment? That is a big question. Some years ago, for reasons I cannot go into now, there was too much ploughing back and too little distribution. But now the pendulum has swung. We need more ploughing back and less distribution.
I believe that dividends in this country are relatively high compared with other countries. Among other things this means that the cost of raising new capital is relatively high compared with other countries. These are not tactical matters but deep strategic matters and they are the considerations that I believe need to be spoken of openly within government and between government and the outside world of industry and academia.
I could give many more examples but I shall merely say "Hear, Hear!" to the reference of the noble Earl, Lord Halsbury, to the Treasury learning to distinguish between capital and revenue expenditure. I welcome the hopeful remarks made by the Chancellor in a speech at the Mansion House last autumn. I hope we shall all play our part in turning those remarks into reality. I hope this debate will result in the Government thinking deeply about the publication of a strategy for this country for sustained, non-inflationary growth.
4.11 p.m.
Lord Elton: My Lords, I join my noble friend Lord Carr of Hadley in thanking my noble friend Lord Mancroft for initiating this timely debate. I also join my noble friend Lord Carr of Hadley in his encouragement to the Government for a particular area of strategy. However, having said that, I ask your Lordships to stand back from this issue and to look again at the Motion on the Order Paper and to see it in a different perspective. The Motion asks us to consider the importance of wealth creation. One cannot do that out of context. The context is, I think, a good deal wider than your Lordships have so far considered.
I go back in my mind to a conference held some four years ago in Oxford. That conference was addressed by, among others, a returned space traveller who stood beneath an enormous photograph of the world as seen from outer space. That led one to ask a number of questions. For a start even at that short distance—it was less distant than the moon —the divisions between nations were invisible and it became shatteringly clear that this world, beyond which we so rarely cast our imaginations, let alone our hopes, is one single entity. Surveying it against the vast, barren expanses of space swept by nothing but the solar wind, it is shatteringly clear that even within our insignificant galaxy, let alone the unimaginable depths of the universe, it is a very tiny particle of matter indeed. That is our home. That is the context within which we must evaluate the importance of wealth creation.
As seen like that many of the questions asked this evening look perhaps a little peripheral. Just two stark questions remain and the order in which one asks them depends on one's point of view. If one's concerns are primarily material, one will ask first: can mankind survive? If one's concerns are primarily spiritual, one will ask: what on earth is it all for? It seems to me that whatever our answers to the second question, we can all agree as to the first. Survival is necessarily the prime aim of the human race, collectively as well as individually. The prime duty of government is therefore to secure the survival of the nation and to contribute to the survival of the species.
What are the characteristics of survivors, and do we have them? The first thing one notices about communities that survive is that survivors tend to co-operate. They compete with other communities to secure the survival of their own, but competition between themselves within the community is friendly and aimed at assisting, not eliminating, their rivals. Secondly, they tend to prize what they have in common. Where they have differences they value them because it means that collectively they can muster a greater range of responses to whatever challenges they meet. Thirdly, they recognise what they have in common as being more important than these differences. Fourthly, they recognise that the welfare of the group transcends their own, and they are prepared to make sacrifices for it. Indeed the freedom of debate that we are enjoying here and now was paid for by thousands of such people not so very long ago.

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It is the absence of that spirit of co-operation, of that valuing of people for their differences and of that spirit of self-sacrifice that makes me wonder whether, even within our own borders, our own small society is not now becoming too sick to survive in the long term. I believe it is, and I believe it has to change. For a start we need to recognise again, and teach our children, the moral values that were commonplace in this country between the two world wars and which were largely responsible for our surviving both those wars. Those moral values embrace most of the qualities that I have just listed. However, the context of that lesson has gone beyond war, I am glad to say. We must look at this nation and look at the Europe of which it is already and inescapably a geographical, an economic and a cultural part. We must consider the way we view Europe and speak of it. We almost always speak about it in terms of what we can get and hardly ever in terms of what we can give or even achieve in co-operation; that is, we look at the countries of Europe not as co-survivors but as deadly rivals.
There is so much that is hugely wrong. It is true that within the United Kingdom our institutions and our laws are designed towards unity, both of purpose and regard. But what fuels our press and, to a lesser extent, our TV is not our unity, even within this Kingdom, but everything that drives us apart. The treatment by almost the whole press of almost the whole of the rest of the world is designed to fill us with a mixture of ignorance, fear and contempt for everything beyond the Channel. When we come to debate the press, I hope that we shall consider how to encourage in it some regard both for truth and for the national interest as well as the respect for individual privacy that is so much in our minds at present.
The British people will not be, cannot be and should not be the only people to survive. Indeed the British people as such are invisible from the standpoint that we have taken up. Just as individuals need certain characteristics to survive as a nation, so nations need similar characteristics to survive as a community. Perhaps we should begin to think that communities of nations may need the same characteristics for the survival of the human race.
During the war when our national survival was clearly at risk, it was enough to know a man's nationality to know whether he was one's friend. A Briton abroad had only to see another Briton to see a friend, but even that small achievement now eludes us. We are further than ever from seeing friends and allies among our fellow Europeans. To be fair the same can probably be said about their view of us. As for the rest of the human race, most of us regard it, understandably I fear, not as an ally but as a threat.
The day must surely come, if mankind is to continue in the unravelling of history, when it is not just a case of where I see a "United fan" I see a friend, or where I see a Briton or even a European I see a friend, but where I see a human being I see a friend—a friend for whom, in the interest of survival if nothing else, I am prepared to make sacrifices. So much is, I believe, necessary, secular common ground for the human race. That alone dictates a programme for this nation and a role for it in the world
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community that is perhaps a little different from the one we now aspire to and which gives a purpose for wealth generation which is a valid exercise beyond the bounds of our nation state.
That is an intellectual but not a compelling idea. It is not an idea for which one goes to the barricades or even is prepared to pay more income tax or join and serve under the colours. To breathe life into it one has to recognise the spiritual dimension. That is where noble Lords will go in different directions. But to me there is a transparent relevance in the Christian faith which underlies the statutes of this country and to which we have recently returned again and again in our legislation on education.
I believe that if this nation were to recognise the extraordinary way in which the Christian faith turns everything upside down it would be a different and stronger place. Where else does one learn that the way to become rich is to give everything away? Where else does one learn that the way to be first is to be last? Where else does one learn that the way to be the greatest is to be the least? Where else can one expect the greatest man who ever lived to wash the feet of tired and dirty fishermen as a demonstration of what kingship is about?
I do not want to wander into theology or to be carried away by my own enthusiasm. But I believe that the context in which we look at the generation of wealth will be entirely lopsided if we do not recognise that that wealth has to be put to a purpose which serves the whole of the nation and the whole of mankind and that we shall not be fit to discharge that function if we do not again recognise those values on which we stood in two world wars and which are fit for an eternity of peace.
4.21 p.m.
Lord Wade of Chorlton: My Lords, following my noble friend Lord Elton, who has drawn our attention to more important things in life than merely the use of wealth, I am prompted to begin my remarks by saying that I started life as a farmer and thought in the 1960s that that was all that I would be. I became involved in public life in the early 1970s because I was concerned that there were many people in society who were not able to benefit from wealth as they should have. I was concerned that we seemed to be creating a society in those days when although we believed in capitalism it was an elitist capitalism which gathered the wealth of the nation in too few hands. I became involved in public life in the hope that I could make a small contribution to ensure that everybody in the nation had the benefit of wealth, but with the clear understanding that the only way to create that wealth was through the free market.
In the early 1970s I was concerned that many of the problems relating to wealth creation were caused by a socialist approach—which was possibly not confined to one political party—and an attitude towards wealth creation which worked against the creation of wealth and more people becoming better off rather than achieving what it was intended to achieve. Here we are 20 or 30 years later debating how we can continue to create wealth for the benefit of everybody.

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As I have had the privilege of sitting in this House over the past three years it has occurred to me on a number of occasions that we are still inclined to be elitist in much of what we talk about in this House. We see education as the preserve of people who have been to the top universities rather than considering the importance of education for everybody. We are still inclined to regard the privilege of being protected from environmental problems and having our own security in life in an elitist manner, which does not consider how we might open up the benefits of our society and our country to everyone. Therefore, when I speak of wealth creation I believe that it should ultimately be aimed at raising the standard of living of every person living in our country.
It is not just a question of our country. Within this wide-ranging debate one cannot help but consider for a moment that since the middle of this century the population of the world has nearly doubled and now totals some 5 billion people. By the middle of next century it will double again to some 10 billion people. Enormous problems will arise because that increase in population will not occur in strong economies where there are means of coping with it but in weak economies where there is already a shortage of resources to feed the existing population. We have to look at the future position of Britain, as a relatively prosperous country, and the difficulties of wealth creation in the years ahead in the context of our role in a world in which more and more people will see the Western world as a place to be envied. We should be concerned with how we redress the balance. That is one aspect to which I may return.
I turn now to the need for greater wealth in this country. A number of noble Lords have already referred to the enormous burden of cost placed on the Government and the rest of us by the demands of certain sections of society. This year alone 45 per cent. of our GDP will be spent by the Government. The continuing demand for resources is now reaching the point where the 55 per cent. who are producing cannot carry the burden. Increasing demands are now being placed on the health service. The social services, invalidity pensions and single parent families now cost more than £1 billion a year. There is a continuing feeling in society that the demands can increase without it ever being considered who will pay for them. I welcome this opportunity for noble Lords to express their views as to how that can be stopped, because once one starts giving something to people they never think of its value or where it comes from.
I was interested to read today that the health service is concerned about the amount of theft it is suffering. That cannot be a surprise. Generally, if something can be stolen it is stolen. Certainly, when people feel that all the resources they see around them are not theirs but that when the present items have gone the Government will replace them the attitude to property and its cost floats away. People think of it as something they can use for themselves.
What is wealth creation? Surely we only create wealth by producing products for somebody else to use. When we eat a sausage in the canteen next door
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how many of us think of how that sausage is produced—the agriculture industry, the cattle breeders, the cereal producers, the technology to produce better cereals, plastics, and the vast amount of technology which has been developed to produce the little machine that sits behind the bar in which the sausage is cooked? So much of what we do in life generates the attitude that that is just a sausage without our realising that it is an important wealth creator. The only way we can create wealth is to do things for other people. We should do more of it and open up opportunities, as the noble Lord, Lord Desai, said. We should look for better sausages, different sausages, or something that is an alternative to a sausage. From their reaction obviously noble Lords like that idea.
How can we generate that capacity to start producing very many more products within our own nation, find a home for them and produce them at the quality which is necessary? One of the interesting aspects of our economy, compared with the other economies of Europe is that some 80 per cent. of our GDP is produced by about 2,000 listed companies. Yet there are 3 million companies in this country, the vast majority of them one-man bands. We are unique in that so much of our GDP is produced by relatively few companies. That may be the result of some of the socialist attitudes on the development of taxes and pressures on individual companies in the 1950s, 1960s and 1970s. Such attitudes have forced out some of our smaller businesses and put pressure on the growth of large businesses. I like large businesses; I do not wish to decry them. However, much innovation and development evolves quickly from smaller companies. Nearly 2 million companies in this country are one-man companies. One man alone is involved. Think, my Lords, of the pressures on him in making a living while at the same time having to consider the development of the company.
Not only in Government but as a nation we shall have to push more strongly the philosophy of the importance of small businesses and of supporting them in their growth in ideas and development. That is where wealth comes from. It is surely for Government and society to understand that wealth comes from those factors and to encourage them in the knowledge that that is how we attain the products that we wish to consume.
Let us turn for a moment to an aspect referred to in this debate on technology and its influence. I refer to a range of new technologies which will have an enormous impact. Perhaps I may refer to four companies with which I have been involved. UMIST—the University of Manchester Institute of Science and Technology—recently set up a company called UMIST Ventures Limited to join with financiers and entrepreneurs to use new technology products in order to start new companies. In the past few years that body has developed over 15 major companies. Each company has created a new business, new jobs and a new set of products. That matter was raised by the noble Lord, Lord Desai. That initiative was taken by free enterprise to combine such knowledge with business in order to create new opportunities.

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Waverley Pharmaceuticals is a company in the north west. About five years ago it was in desperate difficulties. It employed about 34 people and was losing about £300,000 a year. The company decided to exploit some new German technology which it brought into the country at relative low cost. It has been able to develop its pharmaceutical products in such an efficient way that it now employs 250 people and makes a profit of £1 million per annum. That is a direct benefit arising from new technology and employing many more people.
Another company, Weston, makes computer-controlled machine tools. Recently it was asked by a non-UK company to quote for a machine tool which would undertake a certain job. Using modern knowledge the company would have expected to provide some 14 machine tools for which some 60 specialist technicians would have been employed. Weston spent some time on research and development over a period of 12 months and developed one machine which would undertake the work of 14 machines but with no need for the 60 technicians. The machine has now been marketed and is at present being installed. The non-UK company has not had to employ the 60 technicians, but the company in Manchester which invented the new machine employs many more new people because it now has a market which it would not otherwise have had.
The impact of technology upon employment and wealth creation has to be the positive, right way forward. It is possible to argue that the utilisation of robotics technology will result in the loss of jobs. However, I believe that through technology we shall develop new products and new markets. Although one set of jobs may be lost even more new jobs will be created. It is essential within our economy that we produce higher value products, as the noble Lord, Lord Holme, stated. We shall be able to do that through the use of technology.
The key to the use of technology is not so much the prime development of technology but its comer-cialisation. Most of our resources come from banks which are lenders and not risk takers. There is a great importance to create an environment in which more venture capital can be encouraged to invest in new technology.
It is important that I refer to the new biotechnology which will clearly have an important impact on food production over the next 20 years. It will give an enormous opportunity to reduce the number of people employed in the agricultural industry. I do not refer so much to this country but to the developing countries of the world. As the biotechnology opportunities increase, one can foresee problems developing of a highly increasing technology in the West which creates more wealth, with a greater use of our technology in the developing countries reducing their employment levels. Again, that changes the balance.
The final point must surely refer to the politics of such changes. Quite clearly our Government take a positive view towards wealth creation and the need for finding a better balance between their increased cost of government and creating the wealth to govern. My right honourable friend Mr. Michael Portillo has
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made several references in another place for a need to find a better way of balancing the books in the future. Therefore, it is for us to encourage the nation to understand where wealth comes from, the need to create it, and the need for growth. There is a feeling among many people in this nation that growth is wrong and that it creates more problems than it solves. That cannot possibly be true. It is beholden on us in this House, on society and Government to give a lead. Now is the time to change that approach. The only way forward for British society in the next century is to have an economic system which creates wealth from which all can benefit. That will come through our better use of technology and our understanding of the needs of the world.
4.36 p.m.
Lord Vinson: My Lords, I am sure that we are all grateful to the noble Lord, Lord Mancroft, for calling this timely debate. I believe deeply that the key to compassion lies through the creation of wealth, but I wish to take up one point he raised; namely, regulation and the effects of overregulation on the wealth creation process.
I was lucky enough to start my business when I was 21 in what was then a relatively regulation-free society. The business was a little noisy. It certainly created a bit of smoke; and there were by-products which we disposed of by burning. In practice it was in a nissen hut next to a railway yard, and our environmental offences were marginal compared with those of the diesel locomotives and steam engines next door.
I make the point because I was lucky enough to see that business turn into an organisation employing over 1,000 people, and it eventually won the Queen's award for technological innovation.
The sad aspect is that it would be impossible to start that business today because even though its level of so-called pollution was low, the cost of complying with today's regulatory obligations would have made the business quite uneconomic in its early years, when, like any struggling business, it was making very small profits.
We live in a much more environmentally sensitive world. While we may pride ourselves on how conscious we have become of this and how green are our industrial valleys, it is becoming more apparent that the environmental gain may well be at substantial long-term economic cost to the economy.
The enthusiasm for regulation is like a tidal wave, often emanating from Brussels and then unfortunately enhanced and embellished within the UK. We may all bless the green movement, but anything when overdone becomes harmful. I do not believe that there is a Member of this House who has not had some practical experience of the harmful effects of over-regulation on his or some other business. The road to a safer environment is paved with bankrupt small businesses and businesses that never started. The true cost of over-regulation that no one takes into account is in jobs denied to the unemployed.
But the pendulum is perhaps swinging back. Canvassers at the Newbury by-election reported that

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many voters were fed up with irksome regulations, and it is now good to hear, from my right honourable friend the Prime Minister downwards, that talk of deregulation is in the air.
But how can we turn those brave words into deeds? Law enforcement officers have a natural self-interest to empire build. They protect their own flanks when they over-interpret rather than under-interpret the law in case they are criticised by their superiors for not doing their job properly. Likewise, the self-financing regulatory authorities have even greater incentives to expand their empires and raise their charges.
Meanwhile, behind all this lies the motherhood and apple-pie brigade, who simply do not understand the harm caused by the unintentional and unforeseen results of well-meaning legislation. Harm it often does, to others rather than to themselves.
Perhaps I may give some instances: petroleum regulations that insist on the same environmental standards as apply to motorway service stations being applied to on-farm pumps in rural areas; slaughter-house regulations enforced with such zeal that 157 small slaughter-houses around the country have been closed down, even though the local environmental health officers who dealt with them for years could find no fault; bee-keepers now forced to batch and date-stamp honey—itself a sterile material which could never poison anybody. The list is endless, and it grows. There appears to be a total lack of proportionality in the application of regulations and precious little mechanism for unscrambling stupidity, and such regulation is introduced without sensible cost-benefit analysis as to the overall public gain.
I do not for one moment suggest that we do not need hygiene laws or health and safety regulations. But no one in his right mind could have expected the zealotry—indeed the new puritanism—with which those regulations are being enacted. Few realise that for every crumb of good that they may do, they inflict real cost on our community, a cost that is often wholly disproportionate to the increase in safety or hygiene obtained and the underlying risk in the first place.
Proportionality simply must be brought back into this equation. The regulated feel powerless and helpless. It is encouraging, therefore, that the Government have set up deregulatory units to examine the whole question, and that that is happening against a change in public opinion that may now enable sensible deregulation to take place and sensible appeal procedures to be set up. As often as not the problem arises because regulatory laws are drafted to deal with one situation and are then interpreted in a manner that is quite unsuitable for another. Indeed, the regulatory authorities will argue that they have no power to exempt installations and little if any flexibility.
I believe that there are various ways that the matter could be met. It could be met, say, by an annual deregulatory Bill. But I fear that those in favour of regulation would fight tooth and nail. It would become a tedious business to unscramble legislation in that way. An alternative might be to introduce a general enabling facility that would give power to the
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regulatory authorities to make commonsense de minimis interpretations of the law and for them to be encouraged so to do. Once regulatory authorities were obliged by law to interpret the law sensibly, then they would indeed be open to be challenged through the law for failing to be reasonable. At the moment, the regulatory authorities hold all the cards. They can inflict untold economic damage on a business and walk away from it without penalty.
What I suggest is that the balance of power is corrected by putting the ability to litigate back into the hands of the consumer—the regulated. It is important that penalties should fall on that authority and be seen to hurt the appropriate officers both through pride and through their departmental pocket. We shall never change the attitudes of regulatory officers until they have something to lose as well as something to gain. Currently there are simply not sufficient statutory checks and balances which allow the regulated to appeal except at excessive cost in time and money.
But good precedents exist. The Inland Revenue, which has handled such matters for years and knows how to interpret laws flexibly, is a good example. Here disputes can be settled out of court with the special tax commissioners—laymen knowledgeable in their sub-ject. Such a precedent, I suggest, should be introduced by the Health and Safety Executive and other comparable regulatory authorities. In parallel with that it might be possible to graft such a mechanism onto the Citizen's Charter, and indeed such a concept would give that charter a double purpose.
I believe this to be a very serious matter, and I hope that on a future occasion the House will return to it. History is littered with examples of societies that have literally pulled themselves down by over-taxation and over-regulation. I fear that unless we do something soon, this could well apply to our own society.
In conclusion, perhaps I may leave noble Lords with the image of Gulliver in Gulliver's Travels:
"No one silken thread held him down but thousands of them made him immobile".
The threat to wealth creation is no less real.
4.46 p.m.
The Viscount of Oxfuird: My Lords, the Motion tabled by my noble friend Lord Mancroft gives us all the opportunity to consider this most important subject of wealth creation—a subject which affects us all collectively as a nation and which has certainly exercised my own mind on a more personal level as I approach retirement.
I am sorry that my noble friend Lord Joseph is unable to be with us this afternoon. I am sure he would regard the Motion, to use cricket parlance, as "a batting wicket". But how right my noble friend was to link this subject with the equally important matter of the long-term and increasingly onerous demands placed on us by the growing requirements of our public services. Much as noble Lords on all sides of this House would like to see an improvement in the benefits provided for our state pensioners, our schoolchildren, our unemployed, and our sick and needy, we can only afford to give what we can afford

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to pay for. With the national current account deficit approaching £50 billion, this has become an urgent problem that we must urgently address.
I have to confess that I do not often agree with Mr. George Bernard Shaw, but I agree with him when he wrote in 1898 in his play "Candida":
"We have no more right to consume happiness without producing it than to consume wealth without producing it".
Let us then consider this important subject of wealth creation and link it particularly to the impact that the new technologies may have on patterns of employment in the future. Wealth creation is about identifying unfulfilled demands, and sometimes dreams, from the market and finding practical and affordable means of satisfying them. However, I believe that wealth creation in the context of this debate is rather more than that. It is about increasing our gross national product per head of population. It is therefore concerned much more with making things or adding value to things than with merely providing services. If we need a clue, we should look to our own Industrial Revolution of the 19th century, or come right up to date and look at the Singaporean economy of today. Singapore, a tiny nation with almost no natural resources, is able by sheer hard work, exploitation of new technologies and motivation to take on the rest of the world and in many cases to win. In doing so, it has created a very enviable standard of living for its whole population. It is the only country that I know which has two dustbin collections per day.
I believe, therefore, that the future lies in providing far greater encouragement to the rebirth of our manufacturing industries, which is a subject that has been very seriously neglected in recent years. That neglect is reflected in the statistics published in 1991. They indicated that less than 7 per cent. of graduating students were seeking jobs in the manufacturing industry whereas over 30 per cent. of them were seeking their futures in media-related employment.
It is encouraging that about a year ago the Confederation of British Industry launched its manufacturing initiative. It is even more encouraging that that theme has been taken up in recent months by my right honourable friends the Prime Minister and the President of the Board of Trade. The National Manufacturing Council of the Confederation of British Industry in its recent report Making it in Britain made it clear that, although United Kingdom manufacturing improved significantly in the 1980s, very significant additional improvement will be required to achieve world class standards. As a nation we face a performance gap of some 20 per cent. to 40 per cent. against our major competitors on a range of factors including productivity, investment, research and development, stock turn, time to the market, training and others. That points to the urgent need for British industry to increase its industrial competitiveness by attacking all those areas that have been shown to be deficient.
One of those areas is investment in new technologies. We must face up to one of the dilemmas implied by the Motion for this debate. New technologies mean greater productivity and therefore fewer jobs, leading perhaps to higher unemployment
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and even greater demands on our overstretched public services. What is the answer? The answer is not to bury our heads in the sand and hope that the problem will go away. It is to make the investments, overtake our overseas competitors and in so doing open up new markets, getting and leading to greater output, higher gross national product and more jobs.
I turn to the related matter of innovation, which has already been mentioned by the noble Lord, Lord Holme, and research and development. That is an area in which we as a nation have a real opportunity to lead the world. The report entitled Innovation in Manufacturing Industry, published a year ago by your Lordships' Select Committee chaired by my noble friend Lord Caldecote, made it clear that leading British companies were of world class stature in this area. We can do it if we put our minds to it. There is a whole range of potential new technologies in which, the world looks to the British academic community to take the lead. The world is hungry to take up our ideas and exploit them. Let us encourage our industries to do the same and in doing so to create new industrial sectors and new jobs to replace those which technology is replacing in the more mature industries.
Perhaps I may now address the long-term demands on our public services. Fortunately we are all healthier and living longer. But by doing so we are placing an increasing burden on that diminishing portion of our population who are working and producing wealth. Let me suggest what is maybe a seemingly heretical thought: since we are all living longer, perhaps we should all work a little longer to reduce the burden that we place on the nation and to contribute tangibly and incrementally to our national wealth.
I am sure that Members of your Lordships' House have read the recent note in the newspaper in which Voluntary Services Overseas is recruiting people in the age group 50 to 70. I believe that there is also a real case for better targeting of our state benefits to those who really need them. I await with interest the review that is currently being undertaken in this field by my right honourable friend the Secretary of State.
My noble friend Lord Mancroft mentioned National Service. To many people that is anathema to discuss today. But thinking back to the days of National Service—I am sure many noble Lords enjoyed that privilege—there is a warmth in the memory of the comradeship and shared experience of men with many shades of opinion and personalities whose lot had been cast together under service discipline. There is no opportunity for that to happen in the civilian world today except for brief courses. Perhaps we should seriously address the problem in another way—not by National Service but by service for the nation. I am sure that it would do much to create a society which is more at one with itself and less reliant on the state.
In the area of health care itself I believe that there is a further opportunity for wealth creation. Our teaching hospitals, nurses and doctors are acknowledged as world class. We could do much more in that area in the field of training and by the further export

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of medical training expertise around the world, thereby earning a positive contribution to our balance of payments.
So what is the outlook? We stand at a crossroads of real opportunity. We know that we can create wealth as a nation. We have done so in the past. We know that we have the new technologies to exploit and that if we have the courage to do so and market their output successfully, it will create rather than destroy jobs. There are greater demands on our public services but, properly managed, with better targeting and a little common sense, a way forward should not prove beyond us. Finally, thanks to the events of White Wednesday last September, the pound sterling is pitched at a level at which our goods and services are priced competitively against our principal overseas competitors.
I conclude by quoting an amusing verse, written by Hilaire Belloc in 1911, which is particularly relevant to this debate.
"Lord Finchley tried to mend the electric light,
Himself. It struck him dead: and serve him right!
It is the business of the wealthy man
To give employment to the artisan."
Wealthy or not, we all have a part to play in the rebirth of our nation's competitiveness. When we succeed, we shall all benefit.
4.58 p.m.
Lord Archer of Weston-super-Mare: My Lords, I thank the noble Lord, Lord Mancroft, for introducing this debate. The Motion is very wide-ranging, and I shall deal with one aspect; namely, the problems that we shall face in the social security world in the next generation.
At the outset, let me say that I approve of wealth creation because it produces the possibility of paying for so many other things. Let me pick up one point made by the noble Lord, Lord Mancroft, about Members of the other place; namely, that the other place gets the people who are willing to stand and be elected. The tragedy is not that there are not more businessmen in the other place; the tragedy is that there are not more businessmen who will stand in the first place to be considered as candidates.
A report was recently produced by the Carnegie Institute suggesting that in the problem we face there are four ages of man. The Carnegie Institute on that occasion was led by Sir Kenneth Stowe, but took most or a considerable part of its evidence from the French who also suggested that there were four ages of man. Before I read it I began to wonder whether it was a plot against William Shakespeare to prove that there had never been seven ages of man.
As your Lordships will remember, the first age is the age of the child. At the present time the child, through child benefits, is costing the wealth creators £6 billion a year. I am among those who believe that if we are to look for cuts, if we are to consider where money can be saved and used better, then in the future we shall have to consider that when people can afford to pay for certain things they should do so. There should not be an across-the-board payment just because it has a name like "child benefit".
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In Shakespeare's second age of man we come to higher education. All those who have been attending the Education Bill debates will know that this year higher education will cost £32 billion. I mention figures simply because in the end we must come to the conclusion that someone must pay. I will go on to try to prove my case, to show which age group it is that will have to pay. I want to get the message to my noble friend sitting on the Front Bench who will be replying to the debate that because of the problems we will face in the years 2010, 2020 and 2030, if we do not do the thinking now, if we do not come up with some bold ideas now, we shall leave those who follow a legacy which will be impossible to deal with financially.
Shakespeare's third age of man is that of the lover. I am bound to say that however much research I did in the Libraries, I was unable to find any benefits at all that were received by lovers.
The fourth age is the soldier. At the moment our defence budget is £23.5 billion. It may interest the House to know that in 1946, just having finished a world war, we spent a mere £1.7 billion on defence. But that was 19 per cent. of GDP. We are now up to £23.5 billion and it is only 3.7 per cent. of GDP.
I make the point because we are cutting back in many areas in order to pay for health and social security, for pensions and for education. But there will come a point when there is nothing else to cut back on; when there is no new money available. That must surely be the important point. For example, when the National Health Service was introduced, it cost £39 million. We are now spending £39 billion. The figures are astronomical.
The figure I want to impress upon the House concerns unemployment. I take the point made by my noble friend Lord Mancroft. The late lain Macleod stood at the Dispatch Box and criticised the Labour Party with all the venom and power he had for allowing unemployment to reach 500,000. He received screams of delight from the Conservative Benches but screams of "You do not understand" from the Labour Benches. Unemployment has now reached 3 million. We would be totally unrealistic to imagine that it will ever return to 500,000 or 1 million in the age in which we live.
In 1947—I say this to any Treasury Minister who will listen—unemployment cost £15,235,318 4s. 6d. When I telephoned and asked how much unemployment would cost the Government this year, the "estimate" was around the £18 billion mark. That is the state we have reached with finance. We give estimates of £18 billion. One must admire the Labour Government of 1947 for being able to calculate it right down to 4s. 6d.
The Carnegie Report went on to show that three of the four ages of man produced no income for the nation—or very little—and that the main age, between 25 and 55, was where wealth creation lay. It indicated how that would be the power for the future. Indeed, that age group would pay for the first, second and what it called the fourth age group. They were the people who would have retired and have the right to

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a decent life after retirement—not having to wonder what happened to their money and how it would all end.
That is why I say to my noble friend Lord Wakeham that we must make bold decisions now or those who come later will find that there is no money. I do not say that simply because in the year 2015 I shall be 75 and looking forward to whatever pension I am able to obtain. On a point raised by my noble friends Lord Carr and Lord Mancroft concerning inflation, I should perhaps say that I wrote to the lower house fees office to ask how my pension was developing. I received a letter in the following terms,
"Dear Lord Archer, thank you for your pension inquiry. The value of your pension when you left the House in October 1974 was £360. Your pension has attracted annual cost of living increases and is currently valued at £2,346. But as you will not be receiving this pension until you are 65 and you will have annual increases, we are unable to tell you what the amount will be".
That brings home the importance of inflation and the importance that this Government placed on bringing it down to the lowest in Europe.
The biggest problem with which we shall be faced is sheer numbers. That is one of the reasons I agree with so many noble Lords who have spoken about raising the retirement age. At present the situation is that 30 people in every 100 in our nation are retired and living on benefits. In the year 2010, 49 people out of 100 will be living on benefits, the group aged between 25 and 55 still being the group that will have to pay for them, provided it is the Government that are still paying for pensions. Unless we have the courage to say to our people that they must make their own provisions, there will come a stage when no government on earth, of whatever colour or power, will be able to pay the bill. That is the point I should most like to emphasise to the House.
A short point the House may like to keep in mind is that in the year that Her Majesty the Queen came to the throne, 1952, she sent out 201 telegrams to those people reaching 100 years of age. In the year 1992 she sent out 2,738. I naturally hope that many of your Lordships will be receiving those telegrams. Indeed, my noble friend Lord Wakeham, the Leader of the House, will be receiving his in the year 2032. Perhaps I may say how delighted I am because it is the same year in which the Leader of the Opposition will be receiving his telegram from the Queen. I hope that both men will still be sitting in the seats in which they are sitting today. But the problem is that someone will have to pay for those two men when they are 100. Of course, they may be the only two who are lucky enough still to be in employment and have not yet fixed their retirement age.
My point is a serious one. The Government and the Opposition too must understand the problem that will be faced early in the next century by our old people. Whether the French and the Carnegie Institute think that there are four ages, or whether Shakespeare was right when he said that there are seven, I say to the House that I do not want that to be for our people. As the great Bard suggests, sans teeth, sans eyes, sans taste, sans everything; let us not have a situation where the Government have created sans meaning,
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sans pensions and sans ability to keep our people in a way they have grown accustomed to. It is this Government's responsibility to make the last age—whether it be, in the view of the French, the fourth, or whether it be, in the view of Shakespeare, the seventh—one they can be proud of.
5.11 p.m.
The Earl of Dundonald: My Lords, I also take this opportunity to thank my noble friend Lord Mancroft for initiating this debate. I for one very much enjoyed his opening speech. I do not agree with all of it but I do think that my noble friend has some ideas that the Government would be well advised to take to heart.
The noble Lords, Lord Holme of Cheltenham and Lord Wade of Chorlton, have already picked up on a theme that I intend to be more specific about—that is, the financial support of high technology/biotechnology products and how they are taken to market. However, I feel that my contribution to this debate, bearing in mind the speeches of other noble Lords, will be rather small.
I, for my part, wish to turn my attention to a particular area of wealth creation, an area which I think is very much overlooked by the Government but is of critical importance to the country's medium to long-term economic prospects. This area is "true venture capital" or investment in "start-ups" and, in particular, investment in high technology, biotechnology and manufacturing. I say "true venture capital" because it is my belief that venture capitalists in this country should properly be called development capitalists of supporters of MBOs or MBIs. There is nothing wrong with this, only that there is little or no money being channelled into start-ups. Without them, where will our medium or indeed large-sized companies come from in 10 to 15 years time? This point was eloquently portrayed by the noble Lord, Lord Wade, earlier. Britain will suffer desperately without them and we cannot afford to lose people with ideas to other countries. Time and time again I hear of people with good ideas who cannot raise money in this country and who end up going to the US where they are welcomed with open arms. The wealth generated from British ideas more often than not ends up in other people's pockets. This is not the right recipe for our future.
I should like to draw your Lordships' attention to some figures that I managed to pull together from the Library. Noble Lords will, I hope, forgive me if some seem a little out of date but these are the most recent published figures. First, I should like to draw your Lordships' attention to the financial year 1990–91 and the BES published figures. Of £323 million raised in this financial year only £13 million was invested in high technology, biotechnology or manufacturing. I do not suppose that the figure will be any better in 1992–93.
Secondly, I should like to draw on figures from the 1992 British Venture Capital Association report. A total of £1.25 billion was raised and invested during the calendar year. This figure includes all equity, mezzanine and bank finance. Of that, £874 million was invested in sectors other than manufacturing, high

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technology or biotechnology: £302 million was invested in industrial products companies, communications, construction and manufacturing; £91 million was invested in electronics, high technology and biotechnology; and only £82 million was invested in start-ups as a whole.
If one extrapolates the figures further—I am afraid that I cannot vouch for the accuracy because no official figures are available—one might make the following observation. Thirty-one per cent. of total investment using venture capital money is made in manufacturing, high technology and biotechnology. If one applied the same percentage to start-ups then only £25 million per annum would have been invested in this critical area of start-ups. Taken together with BES money, therefore, it is likely that less than £40 million was invested in the whole of 1992 in start-ups in high technology, biotechnology and manufacturing. I do not have comparable figures for the US or any of our European partners, but I cannot believe that they are any less; and I suspect that the difference between the UK and the US is an order of magnitude of two. I should therefore like to suggest a way of encouraging investment in this critical area. I do not suppose that it is the only or the best way, but I believe that it is worth putting before your Lordships' House and the Government.
Investment is all about the ratio of risk and reward. Currently, there are not too many people taking risks, including, regretfully, the professionals—the venture capitalists—although I now believe they are putting far more funds into manufacturing but not in the start-up phase. The Government BES scheme finishes at the end of the year, and as I have already pointed out, little or no money is being invested in the area with which I am most concerned. Although there are no official figures published for the 1992–93 fiscal year, I believe that more than £800 million was raised through BES and almost all of it went into private rented housing with guaranteed buy-back clauses issued by the builders concerned. Perhaps, therefore, we can persuade the Treasury to offer a really decent tax incentive package to investment companies or private individuals who invest in start-ups in the sectors that really count for our future—high technology, biotechnology and manufacturing.
If an individual, or group of individuals, with a product or concept wished to start up a business they could contact a high net worth individual or investment company. They, in turn, might pump prime the new company and be able to write off their initial investment 100 per cent. against tax in the first year. I suggest that this should be done in an unregulated fashion so as to mitigate the amount of money being directed to professional fees in the start-up phase. An investor of this kind is likely to be "street wise" and already have good advice to hand. Additionally, investors may wish to form clubs to spread their risk better, as they do in the States. They are better known as business angels.
Initially, investors will be difficult to find for two principal reasons. They have had it too good with asset-backed BES schemes and they will have to have
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time to adjust to the risk-reward ethos, more prevalent in the United States. I am, however, sure that given time investors will start backing this critical sector. I would hope that the one-stop shop proposed by the DTI might form a useful forum for investors to meet inventors. The loss of revenue to the Treasury would be minimal and it would put back the onus of investing in our country on the individual rather than always turning to government. I believe that a scheme such as this would be of enormous benefit to the future of our economic well being as a wealth-creating nation.
I am sure that the Treasury can think of many reasons why we should not look at this option, but so far I have not heard anything but silence regarding a replacement for BES. And although this scheme latterly was derailed, its original aims were laudable. If we simply leave a vacuum, how can new business start up with only £25 million to £40 million being available each year to this critical sector?
In conclusion, perhaps my noble friend on the Front Bench and other noble Lords, will try to persuade the Treasury that this proposal, or a suitable alternative, is worth taking forward. I should like once again to thank my noble friend Lord Mancroft for initiating this debate.
5.20 p.m.
Viscount Chelmsford: My Lords, there was a report issued recently under the auspices of the National Economic Development Office, which suggested that for a mature country like ours some two-thirds of economic growth comes from innovation. In view of the comments on innovation from many noble Lords, perhaps there will be some agreement with that.
The report goes on to say that economies cannot rely on growth in labour and capital alone to increase the living standards and the competitiveness of the countries concerned. On the contrary, firms must introduce new products, new processes and organisational structures to support those new products and processes if they are to succeed.
Successful technological change, it suggests, is more likely to be market-led than science-led. So we have the suggestion, not just that new products, as has been mentioned, but rather that new products combined with new ways of processing them and new organisational structures, are driven by the market, driven by what the customer needs, and that that is the way forward. Those were the suggestions of that report from the experts commissioned to research into the matter. Of course there is no proof that that is correct, but with my 40 years' experience in commerce, it smells right.
The key words in the Motion today are "wealth creation", "new technologies", and "public services". I should like to focus not on the general, as so many people have done, but move sharply and specifically to one existing innovation which touches on all those three key descriptions. There is a major need for our business leaders today to harness the power and productivity of electronic networking. To do so they

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need to manage the conflict of interests which the move from manual processes to electronic ones so often brings with it.
Why is electronic networking productive? Basically, it is because whenever two or more parties need to pass on information, there is an enormous productivity from doing so electronically by the use of single data entry. Single data entry means that the first person who needs the information enters it electronically and nobody else needs to re-enter it. The benefits of that (which are very significant and very simple) are, first, that it saves the cost of the second and subsequent entries; but, secondly—and even more importantly—it avoids the errors which are implicit in manual re-entry. Thirdly, it reduces, and possibly eliminates, the amount of paper documentation needed for the transaction. Fourthly, it reduces transaction times because there is less paper or perhaps no paper, passed between the parties. Fifthly, it cuts storage costs, particularly archival, which is old storage costs. The costs of storing electronic data are very much less than those vast paper mountains buried in damp basements many miles away. Sixthly, it improves the time to recover such information from archives. Perhaps more importantly it is more likely that you will actually recover it. Those of us in commerce have much experience of not being able to find documents which are 10 or 15 years' old.
Some of those benefits will clearly occur within the single company. One small example is that when I entered my own profession of insurance broking in 1951, I found myself having to enter the same information about a claim on at least five different documents. But today's recruit in my company is much more lucky. He has only to enter once the information about the claim. He does not have to enter information about the policy at all because he retrieves it from an existing electronic data premium file. So there is a real saving there.
I suggest that there is an even greater saving when two or more companies are part of an external electronic network. But to get those savings they will only come about when the leaders of the networking community concerned recognise that they must adapt the processes to fit the electronic means. It is not any good just using electronic data for an existing manual method; you have to change your manual methods. The adaptation required means that leaders have got to manage change.
We have recent proof in fact of just how hard some of these decisions are to make and how hard they are to make on a timely basis. We read recently a Financial Times report on the problems of TAURUS. According to the Financial Times, it would have been possible five years ago for someone to explain to bank registrars that they were not going to be needed in a system which involved paperless share certificates, although there was not anyone there—or perhaps there was not anyone there with the right authority at the time—to do so. They fell into that most common of traps; they computerised something according to the existing methods with the added complexity and cost and finally it died.
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New technology is tough on service providers. I remember that in 1987 that we had to tell the insurance brokers that the arrival of networks meant that it was going to be easier for insurance companies to deal direct with clients without their services. We used a picture of King Canute with his courtiers, telling him to stop the waves coming in, to illustrate the fact that it was not any good the insurance broker pretending that the network did not exist. It was much better that he went out and looked for new services to offer based on electronic data means.
In fact, the commercial insurance market was perhaps luckier than the Stock Exchange on its computerisation in as much as there were already in existence three manual processing centres acting as key points between the 200-plus brokers and the 300-plus underwriters in the commercial market. Because of that we perhaps avoided some of the worst excesses that can go wrong on networking. However, it is 12 years since we started and the market has about 50 per cent. of its claims handled electronically with great productivity. The very long time to reach this stage has arisen principally because there has been only one method by which we could get it up and running and that was consensus.
It is perhaps interesting that it has taken the business crisis at Lloyd's to produce a new management and a business plan where it is stated emphatically that there will be electronic networking. There will be no more hanging around. Lloyd's say that they cannot afford to wait for consensus. I believe that that is a lesson for all of us.
What lessons can we learn? We know that a company can very easily network internally. It simply requires the executive act of its managing director. We have seen supermarkets that can handle electronic networks just as easily. They say to their suppliers "Join our network or else" and the suppliers join in droves. So it can be done. We now know that formal marketplaces such as the Stock Exchange or the commercial insurance market, find it harder to achieve because there has been no obvious organisational structure to see that the hard decisions are taken at the right times. Perhaps that is changing and it is hoped that lessons are being learnt.
What then about informal marketplaces? Last year I listened to a chief constable who was calling for an English data bank for fingerprints. He complained that there had been a Scottish data bank for many years, but he could not get an English one. The only way in which he could achieve it, as far as he could see, was through consensus because there was not any other structure by which that could be achieved. I have not followed that up; but as far as I know, he is still trying.
I move to another public service. We are all familiar with those ladies in a local surgery who handle thousands of files, bulging in the corners. One of them told me that her practice straddles two area health authorities. They have to fill in the same type of form for each of the two authorities. But the forms are different. Their content may be approximately the same, but the way in which it is requested, the lay-out of the form and even the paper size is different at

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times. What a massive opportunity for an increase in productivity by that most primary of methods, standardisation. Those are just two of the public services encompassed in the Motion. Neither appears to me to have realised the network possibilities which alone could achieve the organisational structure that is required to achieve such primary productivity.
So to create wealth, the United Kingdom needs innovation. In my view, electronic networking is a very underdeveloped innovation. It is underdeveloped because not enough of our business leaders understand its potential, and those who do understand it need to organise the right structures across the networking participants and then direct—because we cannot wait for consensus.
Where marketplaces are informal, there may well be a need for government intervention to give the legal authority to those who must implement change. I am happy to report that by a fortunate coincidence I received a letter this morning from the Department of Trade and Industry responding to a letter that I had written to the DTI along those lines. It agreed with what I am saying in general and added in particular:
"I agree with you that changing the attitudes of UK management is evolutionary, and requires consistent and sustained argument based on real business benefits. DTI recognises that in order to maximum these benefits, it is often necessary to re-engineer the business process".
We need to take that message to everyone concerned with networks—formal or informal—in order to improve our wealth creation.
5.31 p.m.
Lord Ezra: My Lords, I am pleased to follow the noble Viscount, Lord Chelmsford, in his interesting speech on electronic networking, which is an area of technology that he rightly considers we should be developing. We are, indeed, indebted to the noble Lord, Lord Mancroft, for the subject of today's debate. In fact, he has given us the opportunity to debate three subjects in one: the importance of wealth creation, the impact of new technologies on employment and the long-term demands on public services, on which many of your Lordships have spoken. I should like to deal with each of those three issues, bearing in mind the comments made in previous speeches.
I entirely agree with the noble Lord, Lord Carr of Hadley, when he said that this is the second in a series of important speeches on economic issues in which your Lordships have demonstrated their particular skill of riding above party polemics and expressing objective views which, put together, demonstrate a remarkable consensus. What we need to do, however, is to follow up the words of wisdom that are uttered so frequently in this House. No doubt the noble Lord, Lord Wakeham, will indicate how that is to be done.
Let us start with the question of wealth creation. What struck me was that we have now come up with a definition of wealth creation which has been missing in recent years. It was the noble Lord, Lord Desai, who made the important distinction between nominal wealth creation and real wealth creation. During the late 1980s we were creating nominal wealth. There was
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massive inflation of property values. Enormous benefits were earned in the financial markets, and real wealth creation was lost sight of. Manufacturing industry was rarely mentioned from Government Benches in those days. I am glad to see the noble Lord, Lord Aldington, in his place because it was his report on overseas trade that brought that matter to the fore in the mid-1980s.
Now, however, the consensus is moving in the other direction. There is a recognition that wealth must be created in real terms—in real goods and services—and not in nominal terms. I regard that as one of the most important aspects to have come out of our debate today. I believe that it is a view that is increasingly shared by Government. It is a view on which there is now very little difference of opinion.
So we move on to the next issue, which is how we create that real wealth. Here, regrettably, perhaps because we ignored the creation of real wealth for so many years, we are not doing as well at it as our competitors. My noble friend Lord Holme referred to a recent report issued under the auspices of the Confederation of British Industry and the Department of Trade and Industry—impeccable authors of a document which has shown that, as my noble friend said, on the competitive scoreboard of world trade we come 13th of the 22 OECD countries. But what is even worse is that in certain areas we fall well below that. In infrastructure, for example, we are in 16th place. As my noble friend said, in education and training, we occupy 20th place. So, there is a very long way to go if we want to create the real wealth on which we are all agreed.
Another measure was produced in a further report, also published by the CBI at that time. I refer to patent indicators. In the period 1985–1990, if one looks at the change in patent activity between the different leading competitive countries, one sees that there was a rise of 7 per cent. in Germany and of 3.5 per cent. in both the United States and Japan. In France there was a fall of 2 per cent., but there was a fall of 6.5 per cent. in the United Kingdom. Again, that should indicate to us the ground that we have got to make up. I am not saying that for reasons of pessimism or lack of faith in our ability; I am merely saying that that is the situation in which we happen to be. If we are really keen on wealth creation and on the development of technology, that is the route along which we must move.
One aspect of the technology section of the Motion has perhaps not been dealt with very much so far. I refer to the impact of technology on employment. The accepted wisdom seems to be that as we move into more and more technology, fewer and fewer people are needed to produce the goods. Perhaps I may quote the noble Lord, Lord Desai, again. He told us that whereas 21 per cent. of the working population is in manufacturing today, his guess was that in five or 10 years' time that proportion could fall to 15 per cent. Normally, I entirely agree with him, but I should like to express a different opinion. Does improved technology necessarily mean reduced manpower?
Perhaps I may relate an experience of my own to your Lordships. I was in the mining industry for many

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years. During that period and subsequent to it, the number of face workers employed per face fell dramatically. When I joined the industry, it was something like 30; and when I left, it was under 10. I am sure that the figure is lower today. That meant a massive increase in productivity, and in turn meant fewer men employed on the number of faces that were operated. But how did they achieve that improved productivity? They achieved it because of the availability of massive coal-cutting machines, heavy-duty powered supports, and heavy-duty chains which drew all the material along the face. And where did that come from? It came from an entirely new industry that was set up to produce that equipment. In my time in the industry—I am sure that this has been continued since—we gave that indigenous coal mining equipment industry every possibility for exporting. We supported it in every way that we could and by the end of my time there it was exporting 20 per cent. of its total production. The effect of technology, to my mind, in that instance meant a redeployment of people and not necessarily an overall reduction.
Let me take another example which is not to our advantage. It concerns improving the environment. For many years in this country we resisted the concept that acid rain was a harmful emission. On the Continent it was accepted as something that was serious. In Germany, in particular, they introduced high standards for limiting acid rain, or sulphur emissions, and they developed the equipment to deal with it. In due course we had to accept that there was an acid rain problem. We were left behind, because we had not anticipated the market demand for that particular form of technology. So I feel that the challenge of technology is to anticipate the demands, get in there with the equipment and the software (in the case, for example, referred to just now by the noble Viscount, Lord Chelmsford) and develop the production capability not just to meet home demands but to have sufficient over for export.
On the question of employment and technology, I was for a number of years on the advisory board of a large Continental energy group. I remember having a chat with the chairman and chief executive of that group during the recession of 1979–80 when people were being laid off left, right and centre. He said, "I would like you to know that I have told my executives that in future their salaries will be reviewed on the basis of the additional people they have taken on on a productive and profitable basis". That is an interesting concept.
When we talk in this country about companies that are now lean and efficient, the term "lean" unfortunately has come to be synonymous with laying off labour. I believe that we should be thinking about a different way of expressing industrial success: not laying off labour, but producing opportunities for new jobs and new technologies. Why do not we look upon the problem in that more positive way? I believe that we should revise fundamentally our views on the impact of technology on employment.
Let me turn finally to the third part of the Motion:
"the long term demands on public services".
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Of course one of the main objectives of wealth creation is to be able to use part of that wealth for services which can be better performed by the state: of a social nature, in the health sector, helping people who are disabled, education, and so forth. We are worried at the moment with our high PSBR and having to reduce it. The noble Lord, Lord Archer, told us in graphic terms what the various ages of man—I presume in that he included women—are costing us. There is no doubt about that. I hope that it will be for a short time only that we have to look at those essential services as something that we have to slim down and have to make lean, as the word is, and that we can soon benefit from the increase in real wealth creation upon which we are all agreed.
There was another aspect which was referred to by the noble Earl, Lord Halsbury, who so often lets us benefit from his accumulated wisdom. It was something about which we have all worried for a long time in public expenditure: the lack of distinction between capital and revenue. There is a large part of the public services which is essential for the success of wealth creation. That part includes the transport system, the essential buildings in which education and so forth can be conducted—the educational services themselves. There is of course the revenue part—the essential social part which has to be paid for.
I am pleased that in advance of their Budget, towards the end of the year the Government are to be introducing, as I understand it, the distinction between capital and revenue expenditure. I hope that then the view will be expressed that just as capital investment in the private sector has to be encouraged, so there are segments of the public sector where we have to increase capital investment. That could give us an entirely more balanced approach to those important matters.
I should like to thank the noble Lord, Lord Mancroft, for having given us the opportunity to tackle these issues. I support the noble Lord, Lord Carr, and my noble friend Lord Holme in asking the Government why they are so reluctant to bring out a White Paper on industrial policy. In 1990, they brought out a remarkable White Paper on the environment. They are shortly to bring out a White Paper on scientific research and development. Would that not be effectively complemented by a White Paper on industrial strategy, which we could all debate and upon which I very much expect, in the light of today's debate and the debate we had last week, this House could quickly reach a consensus?
5.46 p.m.
Lord Richard: My Lords, perhaps I may start, as have other speakers, by congratulating the noble Lord, Lord Mancroft, on initiating the debate. It has been interesting and revealing, and, in some respects, a fascinating debate. I was delighted to hear my noble friend Lord Desai and pleased to see that on the Back-Benches he displayed that independence of mind and freedom of spirit which so characterised his time on the Front Bench. I am bound to say that I also found myself in great agreement with much of what he had to say. We heard the noble Lord, Lord Archer,

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that Atlas of the social security system, supporting upon his productive shoulders the combined weights of the Leader of the House and myself. I would only point out to the noble Lord, Lord Archer, that when his noble friend and I are 100 he will be 93. How productive he may be at that age, I know not. I hope the support will continue to be offered.
It has indeed been an interesting debate, and it comes at a time when the country is clearly eager for an economic recovery and the new opportunities to create wealth that may come with such a recovery. But there are questions that have to be asked. It is also a time of great anxiety. Is there really a recovery yet? Will it be too quick? Is it just another loop on an economic-roller coaster? How long will the wealth created over the next boom last? Who will suffer most when the next bust comes?
The Government may believe that wealth creation is a subject that those on the Conservative Benches can discuss cosily, pleasantly, with enthusiasm, and without any trace of the anxiety that Ministers must feel when other issues are raised: those intrusive issues such as schools testing, the size of the PSBR, the Budget, unemployment, Europe, the Criminal Justice Act, the Serious Fraud Office and county councils. The list is long and goes on and on. The Government must surely feel that wealth creation, the traditional preserve of the Conservative Party and its supporters, is a safe topic for debate, so what on earth can the Labour Party find to say about this apparently most capitalist of subjects?
I regret that Ministers' confidence may be misplaced. The Labour Party has never been opposed to wealth creation or indeed to new technology. It has never sought to inhibit prosperity or to insist upon manual labour when machines will do the work as well. But it can, and it must, ask questions about what is to he done with the wealth and how the new technology is to be employed. For whose benefit are the money and machines to be used?
No one can deny that now some people are better off than they were 14 years ago. There are the chairmen and the shareholders of privatised utilities whose salaries and dividends seem to keep well ahead of the cost of living at a time when pay freezes are demanded of others. Other people are wealthier than they used to be: for example, the foreign currency dealers who left the Treasury reeling last September and those people who sold their properties at the height of the market and who held on to the proceeds. Such people are better off under this Government, but whom has their wealth touched and how has it been used? As far as one can tell it has been used for few except themselves, their friends and in some instances the funds of the party opposite.
The vast majority of the people of this country are left with scant memories of the fragile prosperity of the boom years of the 1980s. What wealth have the Government created for 3 million unemployed who are struggling to make their benefit last the week and to feed their children; or, indeed, for the repossessed homeowner, still being pursued by the mortgage company for the money which he still owes on the
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home that he has now lost; or for the victims of negative equity wondering whether their homes will ever be worth what they paid for them and how on earth will they ever be able to move on?
Nor has much of that wealth been invested in British industry. Investment levels in this country are behind those of Germany and Japan and even of the newly-industrialised countries of the Pacific rim. In 10 of the 13 years since 1979 the rate of new investment has been less than the rate at which old plant and machinery were being scrapped.
Our manufacturing industry is in deficit for the first time in three centuries. There has not been much wealth creation there. Consumer spending, such as it is, is going abroad and that situation is bound to worsen if consumer confidence grows and spending on manufactured goods increases. Where, too, is the wealth creation and the lasting prosperity for the small businessmen who have been losing their livelihoods at the rate of 1,500 a week? What wealth have the Government created to enable pensioners to survive as their fuel bills rise first by 8 per cent. and then to 17.5 per cent. with the imposition of VAT?
After 14 years of Conservative Government the abiding memory of the ordinary people of this country is not one of wealth, of opportunity and of a brave new world of technological innovation. I have to say to the party opposite that it is one of struggle, depression and waste.
The Motion appears to assume in its terms—and it came through in the speech of the noble Lord, Lord Mancroft—that new technology must result in the redundancy of workers replaced by machines, those workers then becoming a burden on the state. The noble Baroness, Lady Carnegy of Lour, shakes her head. I can say only that that seems to be the clear implication of what the noble Lord, Lord Mancroft, and others were talking about. The workers who are being replaced by machines will become a burden on the state. That is a burden which, according to the noble Lord, Lord Archer, the country will be increasingly unable to bear. That is an unnecessarily gloomy scenario. I find myself in great agreement with the points made by the noble Lord, Lord Ezra.
Technology is a useful servant. It liberates human beings from laborious and dull tasks, but that does not mean that human labour will not be needed in the future. To accept that the new technology inevitably signals job losses seems to me almost to encourage a Luddite attitude to the introduction of that new technology instead of ensuring that people embrace it as being complementary to the tasks which they must perform. Just as improved productivity should not be achieved simply by employing fewer workers—as seems to be the pattern of the party opposite—but by producing more goods, so improvements in technology can be achieved not just by using machines instead of people but by using the best combination of both. I agree profoundly that the future belongs to those nations which possess new technologies and which can turn them into products that other nations want to buy.
In the past Britain excelled at that. We were inventive, energetic and successful. Given the chance,

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I believe that our people can again establish Britain as a leading industrial economy but not without backing by the same investment in machinery, training and skills as well as co-operation from government which industry in our competitor countries receive. I agree with the quotation of Ruskin, which my noble friend Lord Desai quoted, that people are the real wealth of a nation.
In today's world people are the key to economic success and to wealth creation. I am not sure whether the Government fully appreciate the importance of the people of Britain when they allow more than 3 million to be unwillingly idle and give millions more no prospect of lasting fulfilment in the jobs that they hold.
The failure is a result not just of the operation of vested interests, not just of the creation of wealth for a select few who attach little significance to the long-term building of economic strength, but a result fundamentally of a wrong economic approach. Again, I agree with much of what was said by the noble Lord, Lord Ezra. There is a mistaken belief that except by their absence government have no constructive part to play in wealth creation and individual opportunity. That was echoed by the noble Lord, Lord Carr, and expressed by the noble Lord, Lord Mancroft, in his opening speech.
We have had 14 years of a Government committed to non-intervention. After 14 years of a non-interventionist policy, letting the markets do their best or their worst, depending on where one views it from, experience must show that that approach is wrong. We must now go beyond the old battle between state and market and between public and private interests to address a more central question: how should we be investing in the future and what should we be looking for?
The answer is surely a partnership between public and private sectors, with a market assisting efficiency and providing consumer choice but within a framework of necessary regulation, encouragement and intervention. It is the role of good government to ensure that the market is working in the public interest and not against it. It certainly does not follow that the market is always right. Indeed, the strategy which the noble Lord, Lord Carr, had in mind, is the kind of policy for which I am perhaps imperfectly groping.
We must distinguish between competition without regulation or standards, which leads to wealth only for those who are part of a short-term process, and competition accompanied by proper regulation, which can lead to prosperity for society as a whole.
Instead of wealth creation for the benefit and enrichment of a few, we must surely pursue the advancement of individual opportunity and potential. Only in this way can we achieve the modernisation of the British economy and our industrial base, the reversal of decades of national economic decline, the long-term creation of wealth which benefits the whole nation and the ability to develop new technology and to turn it into the products which can be sold in a global market. It is people and their skills which will enable Britain to seize these opportunities.
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We believe, for example, that only constructive intervention by government can ensure that industry, and especially manufacturing industry, will be able to resist the pressures to cut back investment in research and development in order to maintain short-term dividends. Long-term strategies to develop new technologies are essential. Surely the Government have a role here and an initiating role. They have not merely a regulatory function but the function of encouraging industry to move in the direction in which all of us would wish it to go.
By definition manufactured goods—manufactured by utilising the new technologies—are tradeable and vital to any return to a balance of trade surplus. Every reduction in our manufacturing capacity increases Britain's dependence on imports for modern goods and technology but at the same time it reduces our ability to export in order to pay for them.
This new industrial revolution which we face is based on internationally accessible raw materials, inventions and capital. In that revolution the resource of skilled people and educated minds is the true determinant of national competitive advantage.
The real challenge for us now is how to enhance the true value of individual labour. That is a policy objective which is the key not only to the realisation of individual potential but also to a successful economy.
That objective of a high skilled, high tech, high productivity and high wage economy embraces both social justice and economic efficiency. The message seems to me to be clear: as individuals succeed by virtue of those skills, companies and countries succeed too.
The basic goal in economic policy is surely the fulfilment of individual potential as the equal right of all. The principal enemy of growth now is the failure to employ the skills, energies and talents which exist in this country today. The obstacles which threaten our goal include a lack of education and work opportunities and mass unemployment.
In the 1960s everybody believed, wrongly as it turned out, that the key to growth was the application of technology alone requiring fewer and fewer skilled people. In the 1990s, it is clear that it is the application of skills to technology which matter more, requiring more and more skilled people.
I agree profoundly with those who have participated in the debate who have made the point that the pattern of working life has now changed. Indeed, the number of instances in which someone can leave school with a skill, or be trained in a skill, and then look forward to a life for 50 years employing that skill, reaching the age of 65 when he can retire with a gold watch and pension, seem to be extraordinarily limited if they exist at all. People must be trained to become more and more adaptable during the course of their working lives. They must be trained not only at the beginning of their working lives but as new technological opportunities open up during that time, there must be proper opportunities for them to be retrained and for them to understand and appreciate new skills.
This has been a helpful and useful debate. It has exposed a number of views. Perhaps it has exposed a

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degree of agreement or almost a consensus—at least an understanding —that there is a need for the state to play a more active, interventionist and encouraging role as regards the economy. We should not be quite so afraid of the new technologies as some noble Lords would have us believe.
The key to wealth creation in the sense of lasting prosperity not just for a few but for the whole nation really lies in expanding the skills of our people and expanding their job and training opportunities.
6.3 p.m.
The Lord Privy Seal (Lord Wakeham): My Lords, I should like to begin by congratulating my noble friend Lord Mancroft for moving the Motion which we are debating today: it covers admirably the challenges which will face the UK economy over the coming years, and which are central to the business of this Government.
The Motion before us highlights three important matters: the importance of wealth creation; the challenge of new technologies; and the need to ensure that the long-term demands on public services can be appropriately met.
My noble friend Lord Carr said how much he appreciated this type of debate. I remember having a conversation with him just about a year ago when I first arrived in your Lordships' House when he said that he thought that we should have more debates of this kind. Perhaps it has taken a year to get round to it, but having had two debates in succeeding weeks, I think that I can say to my noble friend, who made a very interesting speech, that he may have been rather ahead of us but I hope that he believes this to have been a worthwhile debate. I am sure that all noble Lords believe that it has been worthwhile.
Before I respond to the many interesting points made in the debate, I should like to say a few words about the three propositions that make up the Motion. I shall try to deal, first, head on with the point made by the noble Lord, Lord Richard. At no time has it been this Government's policy to have a hands-off approach as regards the economy.
The primary objective of this Government's economic policy is to restore sustainable growth to the economy. We are pursuing simultaneously a macro-economic and micro-economic policy: a macro-economic policy directed at continuing the downward pressure on inflation; and a micro-economic policy designed to make the economy work better, and thus generate more jobs.
My noble friend Lord Mancroft and others stressed the importance of the downward pressure on inflation. I agree with what he said. I agree with much else of what he said although my style may not be as quite as robust as his. I agreed also with my noble friend Lord Elton. Wealth creation is important, but even more important is what we do with that wealth. I share my noble friend's view of the central importance of the Christian faith but we must recognise also that it is not only Christians who approach these issues from a
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moral point of view. However, your Lordships will be grateful to my noble friend for putting forward his views so clearly in the debate.
We know that persistently high inflation is disastrous for an economy, and our acceptance for many of the post-war years of inflation above the level of our competitors did untold harm. It is sometimes suggested that in the current economic situation, the Government should pay less attention to inflation and more to the level of activity. But we believe that an environment of low and stable inflation is the surest way to get sustainable growth in the long term. Underlying inflation at 3.5 per cent. is good, but still not good enough. It is vital that as the economy grows, companies continue to keep costs—and above all wage costs —firmly under control.
It was this Government's achievement in bringing down inflation in the early 1980s, to below 5 per cent. in 1983, which gave us the foundation for faster growth in the mid-1980s than our major EC competitors, France, Germany and Italy. This together with the supply side reforms which we introduced—above all the important and overdue reforms in industrial relations—led to the great improvement in the underlying efficiency of the economy. This has concrete effects. The fall in unemployment in the past two months—while still a tentative indicator—suggests that our labour market reforms in the 1980s have reduced the time lag between economic recovery and a fall in unemployment.
The ability of this economy to create the levels of wealth which we should like in the next century will depend on individuals and companies realising their own potential for wealth creation. The role of Government is to create the conditions in which people have the freedom and the incentives to exploit opportunities to create wealth. What we should not try to do is to take over entirely the activity which common sense and history tell us is better undertaken by private enterprise.
My noble friend Lord Mancroft and other noble Lords highlighted the anxieties that exist about the effect of new technologies on employment. Such fears are of course understandable. Everywhere, machines seem to be replacing workers. Accounts are maintained by computers. Robots paint cars. Microprocessors print newspapers. But, nevertheless—and here I agree with the noble Lords, Lord Ezra and Lord Richard—at the same time employment is growing, up 1.4 million in the past 10 years, and a far greater number of women have entered the market for jobs.
Therefore, it seems a pity that the noble Lords, Lord Richard and Lord Ezra, and I disagree with the noble Lord, Lord Desai, as regards part of a very interesting speech. I believe that the right way to refer to the noble Lord's return to the Back-Benches is to say that what might be seen as his right honourable friend the Leader of the Opposition's loss from the Front Bench may be our gain as he will be able to address us on a wider range of subjects from the Back-Benches in the future. I look forward very much to hearing him speak from that position.

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We must not fear the impact of new technologies. They need not go hand in hand with higher unemployment. Take the example of Japan, at the forefront of new technology in the electronics and motor industries, but with the lowest unemployment rate of any major industrialised country. Who would argue that the South-East Asian economies are not benefiting from technological progress? Far from causing unemployment, new technology can create jobs.
Moreover, the use of new technologies, the new products and higher productivity which they bring, have driven a vast increase in living standards. The great majority of the population have seen a long, sustained improvement in their quality of life: working hours are shorter, work is less onerous and more interesting, housing conditions are better, access to consumer goods is vastly greater and life expectancy has increased.
The future is uncertain and brings risks as well as opportunities. We cannot hide from that. But we must respond to the challenges that the new technologies bring.
The market place for goods and services is always changing, and individuals and businesses in the UK must change too if they are to be successful. Our success at meeting the challenge of change will depend on the skills and talents of our young people. It is bizarre that we are debating at present whether or not to test our children in schools. Such a debate would not take place in our competitor countries. They recognise, as the Government, that to achieve high standards one must set high standards; and test whether they are being met.
The surest way to increase employment in Britain is for our industry to become even more competitive in international markets. The success of our exports—which are at record levels—has been built, above all, on improved productivity.
The noble Lord, Lord Holme, referred to our share of world trade which had been falling for many years but which stabilised in the 1980s. After decades of decline, it is now increasing. During the 1980s UK manufacturing productivity growth was the fastest of the major industrialised countries; and it has held up well since. Our success is based on two key factors: first, a willingness to embrace new technologies and new ideas; and, secondly, a government that have put in place a framework that allows British companies to be as competitive as possible. I very much agree with my noble friend Lord Oxfuird who said that the best of the British companies are among the best in the world. Our collective task is to help some of the others reach a degree of excellence achieved by the best.
One of this Government's key aims is the improvement of public services. The Citizen's Charter is at the heart of the Government's drive to improve quality, choice, service standards and value for money in public services, within a tax bill which the nation can afford. The policy is pursued through a number of means: privatisation, contracting out, more competition, published performance targets, more effective complaints procedures and better redress. We must, however, ensure that the role of the state in the provision of public services is appropriately drawn.
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Again, my noble friend Lord Mancroft, was the first to emphasise the control of public expenditure as did other speakers, especially my noble friend Lord Archer of Weston-super-Mare who, in his own inimitable style if I may say so, stressed those problems. The Government have set up a long-term spending review under the Chief Secretary to the Treasury which will eventually extend to all areas of government. It is currently examining health, education, social security and the Home Office. It is exploring the question of whether the Government are currently doing much, or concentrating scarce resources in the wrong areas. That review, together with our firm commitment to bring down public spending as a percentage of GDP—a commitment that was underlined by the new system of public spending control introduced last year—will ensure that in the 1990s, as in the 1980s, the Government will not spend more than the country can afford.
In a most interesting speech, the noble Lord, Lord Holme, spoke about the importance of utilities and the lack of competition. However, if I may say so, I believe that he missed one aspect of what the Government believe to be developing competition; that is, the competition between different types of fuel for energy production. What we need is a level playing field. We believe that competition between different fuels on such a level playing field will produce the best protection for consumers.
In that context, I am afraid that I cannot resist a reference to the electricity industry. It is also important to recognise that the privatisation of the electricity industry was set up with a very significant transitional period and that period was of course established particularly because we recognised—and, perhaps, this part was well thought through—that the coal industry would have considerable difficulty in adjusting to the new situation. In some ways, part of the problem has been that competition has come too fast; that is, before the industry would necessarily be able fully to cope with it. That is an important addition to the other comments made by the noble Lord.
The noble Lord, Lord Holme, also asked me about the White Paper on science. I remember one of my noble friends from the Front Bench saying earlier in the week that that would be published soon. When pressed hard—I think extremely hard—he said that the word "soon" meant soon. I do not think that I can add anything more to what he said. However, as it has now been said about four times, the noble Lord can take it that it will be published soon.
The noble Earl, Lord Halsbury, made a most interesting speech. I know that the House has listened to him over many years because of his great experience. I am very honoured to find myself president of an organisation of which he was president up to a short while ago. I listened to him with particular interest. The House especially enjoyed his explanation of the chaos theory. From my relatively short time in this Chamber perhaps I may say that, if any group is admirably suited to impose order on the chaos of politics, it is your Lordships.

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I was very pleased to hear the contribution made by my noble friend Lord Vinson. I remember him starting up his small business in Guildford when I started up my own not many miles away. The difference was that mine remained a small business rather longer than his did. But, nevertheless, my noble friend was right to talk about deregulation. I can tell him that the Government are very serious about the matter. I thought that some of my noble friend's suggestions as to the practical way in which we might approach some of the problems, especially his suggestion about the way that the Inland Revenue approaches some of them, were well worth while. I shall draw them to the attention of my right honourable friend the President of the Board of Trade who, as. I am sure my noble friend knows, has set up seven task forces from the private sector which are at present studying about 7,000 regulations on the private sector to see whether they are appropriate in this day and what can be done about the situation. The task forces have the duty to report to the Prime Minister every eight weeks.
My noble friend Lord Dundonald was quite right to stress the need for more real venture capital. I think it is fair to tell my noble friend that there is more than there used to be. However, I recognise the problems. I was a Minister in the Treasury working with the late Lord Ridley of Liddesdale when we devised the BES scheme which my noble friend talked about. I believe that that measure has achieved some good in the area of the creation of venture capital. But I also think he was right to say that over the years too much of the capital went into the kind of projects that we did not have at the forefront of our minds when we were setting up the scheme. These matters are not my direct responsibility, but I shall pass on the comments of my noble friend to my right honourable friend the Chancellor of the Exchequer.
As regards my noble friend Lord Chelmsford I was a little out of my depth. When I was at the DTI I was the chairman of a committee that was called the Focus committee. I believe I was a Minister in that department for only six months, and I spent five of those six months trying to find out what I was supposed to be doing on that committee and what the committee was supposed to be achieving, before the noble Baroness, Lady Thatcher, moved me away. However, that does not mean to say that what my noble friend said was not important. He demonstrated another factor that I have learnt in the year I have spent in your Lordships' House. Your Lordships appreciate noble Lords who speak from real knowledge of a subject. Today my noble friend told us about the application of new technology in the industry that he knew. He described how that new technology could be adapted in other fields. I am glad to hear my noble friend tell us that my colleagues in the relevant government departments know his views and appreciate them.
It will be clear from my remarks that although I believe the role of government to be limited, I think it is vital that the Government should manage our economic affairs so that inflation is low and people can
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conduct transactions with confidence about the value of money. The Government need to keep a firm control on public expenditure so that the wealth-creating sector does not bear an undue burden. The Government need to invest public spending where it will do most good—in capital projects for the future and in the training and education of young people and the workforce. The Government need to widen the market sector and strengthen and protect competition within it. We must make our markets more efficient and flexible, removing unnecessary regulations and state intervention.
We must encourage enterprise, particularly on the part of small businesses and the self-employed. I agree with my noble friend Lord Wade of Chorlton that small businesses form a vital part of our industry. Some 400,000 new businesses were started in this country even in 1992, which was a depressed year. One can see the contribution they make—I am confident they will continue to do so—to the economy as we move out of the recession. We must continue to ensure that Britain can compete with the best in the world in the years to come. These aims are the basis of a strategy which this Government have been following throughout the past decade and which we shall continue to follow into the next century.
6.23 p.m.
Lord Mancroft: My Lords, we have had a wide-ranging debate. I am grateful to all noble Lords who have taken part in it. It was too wide-ranging for me to attempt to pull together all its threads, even if I had the inclination to do so. I thank my noble friend the Leader of the House for the courtesy he showed me in answering the debate today. I, too, heard with pleasure the speech of the noble Lord, Lord Desai, delivered from the other side of the House. However, my pleasure is tinged with a little sadness that none of his noble friends felt able to take part in what is after all an extremely important debate.
The noble Lord, Lord Ezra, on the Liberal Democrat Benches made a most telling remark when he pointed out the consensus from all sides of the House on the huge range of subjects we have covered today. That range was added to by his noble friend Lord Holme of Cheltenham in discussing the balance of payments problem. That matter was not directly stated in the Motion but it undoubtedly needs to be carefully considered.
If I take one thing away from the debate this afternoon, apart from Lord Halsbury's dictum about order arising out of chaos—like my noble friend the Leader of the House I found that statement comforting—it is the advice that my noble friend Lord Oxfuird gave when he mentioned an amusing verse concerning Lord Finchley. I believe it may be unwise to change a lightbulb! I shall follow those instructions very carefully. When, as we do it again, as the noble Lord, Lord Richard, put it, and create a huge industrial trading base as we had in the past and could have again—I agree with the noble Lord that we will have it again—I shall know when we have arrived because we shall have two dustbin collections every

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day as is the case in Singapore. The noble Viscount, Lord Oxfuird, mentioned that. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Osteopaths Bill
Brought from the Commons; read a first time, and to be printed.

Tibet
6.25 p.m.
Lord Ennals Lord Ennals rose to ask Her Majesty's Government what is their policy concerning the future of Tibet, particularly in respect of the right of self-determination of its people, human rights and the protection of the environment.
The noble Lord said: My Lords, I hope I may say how grateful I am to the other noble Lords and noble Baronesses who are taking part in this short debate. It is for me a great privilege to open this debate on Tibet and to ask for a statement of government policy when his Holiness the Dalai Lama is in Britain and in particular on the day when he was received by the Foreign Secretary, Mr. Douglas Hurd. He was received by the Foreign Secretary this morning and I was present. I can confirm that the discussions that took place were of a constructive nature. I hope they will be the beginning of an important dialogue between the Dalai Lama and his representatives and Her Majesty's Government. The Government have made it clear that they want to see a constructive dialogue between the Chinese and the Tibetans. I thought the Government set a good example in that this morning.
I should say a few words about the Dalai Lama himself. He was forced into exile in 1959 as a young man from his occupied and oppressed country. He represents the cause of democracy and freedom not only in Tibet but wherever liberty is denied. The Dalai Lama has many endearing qualities. Those in the House who have met him will know of his courage, constancy, modesty and compassion. But most of all in a world of cruelty, intolerance, torture, nationalism and ethnic cleansing, his commitment to non-violence is to be warmly applauded.
If one believes that in the end virtue will triumph, then Tibet will this century regain its freedom and its independence. But time is the enemy. At least a million people have been lost since China's unprovoked and illegal invasion in 1950. Policies of enforced sterilisation and enforced abortion have kept down the Tibetan indigenous population. Year by year tens of thousands—and in some years hundreds of thousands—of Han Chinese have been encouraged with financial incentives to move from China into Tibet to take on jobs that would otherwise have been carried out by Tibetans, undermining Tibet's rich religious and cultural heritage with the aim of exploiting Tibet's natural and mineral resources and eventually making Tibetans a minority in their own country.
I know from my own experience in Tibet that this is the case. I believe it is a deliberate policy on the part of the Chinese Government. That policy should be stopped and world opinion should speak out. Already Chinese outnumber Tibetans in Lhasa, the capital, by three to one. The city's plans for the year 2,000 make no provision for Tibetans. It is as if they did not exist. Only 2 per cent. of the land in the capital is now owned by Tibetans. It is a deliberate attempt to stamp out a race with its separate language, history, religion and culture. Britain should take up this aspect of the Tibetan problem as a matter of urgency. As it is a matter of principle, we should respond to it in a positive way.
Other noble Lords and noble Baronesses will speak about the appalling denial of human rights in Tibet; the cruel colonial policies pursued by the Chinese; the development of Tibet as a testing ground for nuclear weapons; and the massive deforestation of the beautiful Tibetan plateau. To see those trees going out of Tibet in dozens of lorries every day, for the benefit of the Chinese and to the destruction of Tibet, is an awful sight. I want to spend the rest of my time on the status of Tibet and to make a plea to the British Government to see the appalling facts as they are.
In my view, the Government have too often seemed to accept the Chinese version of events, to the sadness of the Tibetans who look to Britain as their most natural and probably most beloved friend. That acceptance of Chinese statistics is deplorable. I have a recent letter from a Foreign Office Minister which sought to prove, on the basis of Chinese census figures, that what I have said about population transfer is not true. The Minister quoted the Chinese census figure that showed that over 2 per cent. of the population of Tibet were Chinese. One has only to set foot in the country to know that that is nonsense.
Before the invasion in 1950, Britain recognised the de facto independence of Tibet and recognised that it had been so since 1911. That was confirmed by Sir Anthony Eden in July 1943, when he was Foreign Minister, and by Mr. Ernest Davies—an old and dear friend of mine who died many years ago, who was Ernest Bevin's junior Foreign Minister—who made the same confirmation on 7th November 1950. It was a bipartisan policy at that time. Clement Attlee, when Prime Minister, received a Tibetan trade delegation. That shows that in those days Britain recognised that Tibet was independent, although not diplomatically because it was not a country to apply for membership of the UN, for example.
For the record, I want to quote a paragraph from a letter sent by our last British diplomat in Lhasa, Hugh Richardson, to the noble Baroness, Lady Chalker, who we had thought would be replying to the debate. The letter was written following an exchange which took place in this House on 1st February. Hugh Richardson is in his late 80s, but his age does not undermine his acceptance of the truth as he knew it. He said:
"I represented the British Government in India at Lhasa from 1936 to 1940, 1944, and from March 1946 to August 15th 1947; and from then until October 1950. During that time, I saw the unmistakable reality of Tibetan independence.

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There was only a handful of Chinese civilians at Lhasa and, certainly, no Chinese military presence anywhere in the country".
It is estimated that there are now about a quarter of a million Chinese soldiers in Tibet. He continued:
"It is difficult to see how Her Majesty's Government could regard Chinese actions from October 7th 1950 onwards as anything but invasion and occupation of Tibet".
He added that Sir Anthony Eden had said that Britain was prepared to recognise Chinese suzerainty over Tibet providing Tibet was treated as being autonomous. The argument about autonomy is repeated time and time again in statements from the Foreign Office. We shall see what the Minister has to say when she replies to the debate.
I ask why Britain has changed its policies in the past 50 years. The Government know that there is no vestige of real autonomy in Tibet now, nor has there been at any time since Tibet was occupied in 1950.
I received a communication from the Chinese embassy this morning. I was grateful for any communication from a country which I greatly respect in so many ways and which is playing a very important role in the world. I am not anxious to do other than to comment on Chinese actions in relation to human rights and in relation to Tibet and Hong Kong. That communication said:
"Tibet returned to the big family of the motherland through peaceful liberation in 1951",
and:
"The Tibetans won basic human rights during the democratic reform".
We can examine those sentences and see what they actually mean.
Why do not Her Majesty's Government openly acknowledge what they know to be true? In the language of the conference of international lawyers—which was held in London from 6th to 10th January under the auspices of the All Party Parliamentary Group for Tibet, of which with the noble Lord, Lord Braine, I have the honour to be joint president:
"by reason of the act of aggression and military occupation the Tibetan people's right to the exercise of self-determination has been denied. Since the military action of 1949–50, Tibet has been under the alien occupation and domination of the PRC [People's Republic of China] and has been administered with the characteristics of an oppressive colonial administration".
I want to know why the Government do not recognise that fact. I could make worse criticisms than "colonial". I believe that in Tibet there is an apartheid system. I recall many times seeing Tibetan people on the streets in their capital being ushered into the road by Chinese soldiers. It is expected that they will behave as if they are an underclass.
I hope that the Government will respond to the lawyers' conference recommendations. There are other recommendations which I wish to mention. The conference reached some important conclusions. It was a conference of well qualified international lawyers from many parts of the world under the distinguished chairmanship of Judge Michael Kirby of Australia, the current chairman of the International Commission of Jurists.
In addition to the decision which I have quoted, the conference said that under international law the
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Tibetan people are entitled to exercise the right to self-determination. It said that the Tibetan people had been denied the right of self-determination formerly enjoyed by Tibet prior to the act of aggression, which had been condemned by the United Nations General Assembly in three separate resolutions, to two of which the British Government gave their support, including one which called for China to recognise the right of self-determination for Tibet.
What is the Government's attitude to those important conclusions? The Foreign Office has had three months to react and I hope that the Government's reply will form part of the Minister's Foreign Office response at the end of the debate.
The situation is far too serious for any more weasel words. Tibet has no autonomy. Part of old Tibet is called by the Chinese the autonomous region of Tibet, leaving out vast areas of Tibet where no Chinese existed until the time of the invasion in 1950. It is ruled by the Chinese with an iron hand. It is an old style, communist police state. There is no real democracy, no freedom and no right to protest. Any Tibetan bureaucrats who do not toe the party line are sacked. Is that description what the Government mean by suzerainty? That is a term created by the Foreign Office, which I do not understand. I hope that the Minister will say what suzerainty means. It was first mentioned by Sir Anthony Eden; but he mentioned it in the sense in which I have already quoted it.
I want to see some clear, effective action by the Government in support of the Tibetans under the Dalai Lama, who put his case so clearly to the Foreign Secretary today. I pay tribute to the Foreign Secretary for receiving him in such a courteous and constructive way.
President Clinton is under strong bipartisan pressure in both the Senate and the House of Representatives, where Bills have been presented urging him to grant most favoured nation status for the Chinese only under certain conditions. That is understandable because it is only in the field of trade that we have the most important influence on China.
Last week our parliamentary group organised a conference of European parliamentarians in the Palace of Westminster. It was a good, constructive conference. I wish to quote one paragraph relating to trade.
"While accepting that China should in no way be isolated in its international trade, National and European Parliamentary representations should urge that China's Most Favoured Nation economic status with the USA and its economically advantageous status with the European Community … be made conditional on the terms contained in Bill S.806 currently before the US Senate introduced on 22nd April 1993, which includes conditions both on Tibet and Hong Kong".
All of us are as anxious about Hong Kong as we are about Tibet, if not more so, because we have a special responsibility, but the debate relates to Tibet. We appreciate the principled stand for democracy which has been taken by the new governor of Hong Kong.
In conclusion, I wish to say this to the Government. There is now, as there never has been before, strong support in Britain by the Press and the public up and down the country. Meetings addressed by the Dalai Lama have been totally full, with people turned away.

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He is possibly more popular than the Government at present. If we were to have an election, I believe that the Dalai Lama would win. The very fact that the Foreign Secretary met the Dalai Lama today, and that so many MPs came to hear his message last week in the Grand Committee Room and have signed the Early Day Motion, prove that. Tibet is not a far away country about which little is known or cared. An opinion poll which will shortly be published will show the, to me, extraordinary extent to which the public understand the problem. They know who the Dalai Lama is; they know where Tibet is; and they have a view on the issues.
What we want from the Government is strong support for the cause that is represented by the Dalai Lama. I believe that the Government will gain more credit for a principled reply than a cynical repetition of the negative lines to which we have become accustomed. As a result of the visit and the meeting with the Foreign Secretary, I hope—I should like to think that we shall not hear them today; I am not certain—that we shall have an end to what I have called weasel words.
6.42 p.m.
The Earl of Selkirk: My Lords, I shall be brief because the time is getting on and some of us have listened to three-and-a-half hours of extremely interesting speeches. I wish to congratulate the noble Lord who opened the debate. I have no doubt that his father would have been extremely proud of the speech that he delivered today.
On behalf of the House, I congratulate the noble Lord, Lord Ennals, on what he has done. He has devised something which has played a large and vigorous part in the whole history of this country. We developed Tibet and made a useful contact of it. Much of it remains connected loosely, and sometimes not so loosely, with this country. The noble Lord has done a great job. I believe that we should offer him our warmest congratulations on what he has achieved.
Tibet is a real country. It is not just a piece of land. It was declared independent by Kublai Khan, who, incidentally, I do not believe was Chinese. He held it for a number of years until the Chinese became communists. From what I read I believe that changes are taking place today. Some are very important. The Chinese may well experience a totally different outlook.
With reference to the debate that we have just had, such changes may encourage an opening for trade to be conducted. As the noble Lord, Lord Ennals, said, that country has mineral resources and a fine weaving trade. In a very cold country such as Tibet, weaving is a useful occupation and creates a useful product. I shall say no more than that I believe the proposal is well worth while. I hope that the House will endeavour to convey to the Government that it is worth while. Along the south east and east coast of Asia there still remains a strong communist link which has done an immense amount of harm. I shall not enlarge on it. If we can get rid of that influence, it would be much in the interest of the people who live in Tibet and indeed in other parts of the world.
6.44 p.m.
Lord Weatherill: My Lords, I first met His Holiness the Dalai Lama shortly after I was chosen as Speaker. At that time Her Majesty's Government were concerned, no doubt, about their relationship with China and were not prepared to meet him formally. But a discreet message was passed to my office to the effect that a visit to Speaker's House would be very much appreciated. From that moment has arisen my interest in Tibet and the reason why I seek to make a small contribution today.
I, too, warmly congratulate the noble Lord, Lord Ennals, for his initiative in arranging the debate and for the terms of his Motion.
I have had the pleasure—I would say the privilege—of meeting the Dalai Lama on all of his subsequent visits to our country. My admiration and respect for him as a man of wisdom and great spirituality is unbounded. On each of his visits he has made a great impression, in particular on his last visit when he addressed a large gathering in the Grand Committee Room, arranged by the all-Party group on Tibet to whom considerable credit should be given for bringing the attention not only of Parliament but also the public to the oppression of the Tibetan people. I am pleased to hear from the noble Lord that the meeting which His Holiness had today with the Foreign Secretary was so frank and successful.
I can well understand the concern of Her Majesty's Government not to disrupt relationships with China when negotiations about the future of Hong Kong are at a delicate phase. Nevertheless, when I first entered the House of Commons I remember being taken aside by a member whom I greatly respect who said, "Never forget: nothing is ever politically right that is morally wrong". What is going on in Tibet today is morally wrong. I believe that it is high time that public opinion was alerted to it and that Her Majesty's Government took a much more active and positive line in condemning the Chinese for the abuse and denial of human rights, for the action of the Chinese Government in destroying Tibetan culture and the Tibetan way of life. In a real sense it is, and has been, cultural and physical genocide. Over 6,000 monasteries and temples have been destroyed. As the noble Lord said, there has been a massive transfer of population from China into Tibet. In that process over 1 million Tibetans have been killed—one-fifth of the entire population. So much for that peaceful return to the motherland, to which the noble Lord, Lord Ennals, referred when citing the communication that he received from the Chinese Embassy.
In Yugoslavia such a transfer would be called ethnic cleansing, would it not? Yet it has been going on in Tibet for well nigh 40 years and nothing has been done about it—perhaps not quite nothing because there have been three United Nations resolutions condemning China for violation of fundamental human rights and the United Nations has called upon the Chinese to respect the Tibetan people's rights to self-determination.
No one who has met the Dalai Lama could ever doubt his absolute integrity, sincerity and resolute commitment to non-violence. Whenever I have met

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him he has explained to me how difficult it has been for him to persuade the young Tibetans in exile to pursue a policy of non-violence when they have seen the attention and the access to governments that violence can frequently bring in other countries. No leader has adhered so steadfastly to a non-violent approach in pursuing his cause. No leader and no people have been so cruelly tested over the decades.
We take our parliamentary system far too much for granted. Yet does not the word "parliament" mean "the settlement of dispute by the word rather than by the sword": in other words, the non-violent approach? If we cherish that for ourselves, should we not be giving wholehearted support to a small country which for centuries has practised the same approach?
In exile the Dalai Lama has promulgated a democratic constitution for Tibet combining Buddhist principles of non-violence with a constitutional monarchy and an elected parliament. Such a parliament does now exist in Dharamsala, elected on a basis of one-man-one-vote by Tibetans living in exile in India and in 33 other countries. The Tibetan cabinet is accountable to the Tibetan electorate through the Assembly of Tibetan People's Deputies. The Dalai Lama told me that there is even a speaker elected (or chosen) by the members of the parliament. I hope that he gave to that speaker in his parliament the same advice that he gave to me when I first met him. He said: "You have a very frustrating life". "Correct", I said. "What am I going to do about that?". "Ah," he said, "you must take it all upon yourself and dissolve it with compassion". Well, my Lords, I try.
The Dalai Lama has consistently said that when Tibet is released from the Chinese yolk his first action will be to stand down as a political leader and ensure a constitutional assembly based upon the pattern which we enjoy here in what we frequently term the Mother of Parliaments.
For all these reasons, I believe that we should be much more positive in our support for this small peace-loving country which has suffered so much, almost in silence.
I do not know whether it is in order to give quotations in this House—and I wish I could remember where I picked this one up—but I end my brief contribution with these words:
"Let no-one be discouraged by the belief that there is nothing one man or one woman can do against the enormous array of the world's ills: against misery and ignorance, injustice and violence. Few will have the greatness to bend history itself, but each of us can work to change a small portion of events, and in the total of all those acts will be written the history of this generation. It is from the numberless diverse acts of courage and belief that human history is shaped. Each time a man [or a woman] stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends a tiny ripple of hope, and, crossing each other from a million different centres of energy and daring, these ripples build a current which can sweep down the mightiest walls of oppression and resistence".
Let us pray that we are doing that tonight.
6.54 p.m.
The Earl of Longford: My Lords, I rise with diffidence following such great dedicated experts as the noble Lord who just spoke so movingly, the noble
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Earl, Lord Selkirk, and my noble friend Lord Ennals, who has given a lead for so long on this point at issue. I had better plead for a measure of their compassion, a quality which, as we have just been told, is associated with the good Dalai Lama and all the best people.
I cannot help recalling a story told in Kenneth Harris's fine life of Lord Attlee. Lord Attlee, when a young social worker, was taken to his first Labour Party branch meeting. He noticed that all the men wore beards. I do not know how the women were dressed. I do not believe that in those days that was commented upon. Attlee whispered to his brother: "Has one got to be bearded to join this show?", meaning the Labour Party. The question arises: does one have to be an expert on Tibet to take part in this debate? I venture to offer the opinion that one does not have to be. I believe that this debate will be read in our own Foreign Office and elsewhere. My noble friend Lord Ennals escorted the Dalai Lama to meet the Foreign Secretary. I am not quite sure what the result was but it seemed that my noble friend did not come away discouraged. So I suppose it went well. At any rate, I hope that this debate will be read in our own Foreign Office, in the office of the Secretary of State in the United States and in China. From that point of view, the more contributions we have and the bigger the volume of speeches, the more notice will be taken of the efforts we make.
I would not claim to have learned much, or anything, worthwhile about Tibet; though I was a Foreign Office Minister for a while, and when I was Leader of this House I used to reply to the many debates on foreign affairs. I should say that my general knowledge of things Tibetan was about that of the average person in public life. That was until I read just recently a wonderful book by Mary Craig which I venture to recommend to everybody, even the experts if they have not read it. My noble friend Lord Ennals has praised it very highly. Mary Craig is a respected author but she is perhaps best known for her book called Blessings about her two handicapped children. From that tragic situation she extracted an inspiring beauty.
The situation in Tibet, although of course on a very much larger scale, is tragic enough. It is difficult at first sight to see what beauty can be extracted from events in Tibet during the past 40 years. On the other hand, there is the undying courage of the Dalai Lama in exile for the people of Tibet, determined to survive and in the end to conquer through non-violence. So there is something beautiful there.
We ask what can be done. Mary Craig brings out all the facts which are so well known to the speakers tonight. One of the most horrible was mentioned by my noble friend Lord Ennals, when he said that in Lhasa the Tibetans are now shoved into the street and treated as second-class citizens. I had not grasped quite how degraded a position was now being allocated to them. But the facts are known to all noble Lords who are taking part in the debate tonight and much more widely.
We are bound to ask: will things get better? I am one of those who believe that in the end things do get better. Who could have forecast that the communist

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empire would have dissolved? One may say that many troubles have followed that. That was not forecast a few years ago and, taking a broader view, I believe that the situation there is very much better.
Things could get worse in Tibet. I hope that I am not striking too jarring a note when I say that. If the influx of Chinese into Tibet continues, things could get very much worse so that their ideal of self-determination would begin to look very feeble. So there must he the strongest possible efforts made to stop that influx. That is not sufficient of course. Self-determination is mentioned in the Motion. I suppose that self-determination has been accepted by the civilised world since President Wilson enunciated it in 1918, but we have not always lived up to that principle. But that has been the aspiration: that the nations of the world should be allowed to determine their own futures. Many complications can result, as anybody can see today in former Yugoslavia. Still, that ideal must be maintained.
I suppose that in practice—as my noble friend Lord Ennals and other experts will tell us—we must insist on negotiations with the Chinese without preconditions. I presume that means that the Dalai Lama should go back forthwith and be allowed to be the spiritual leader. How on earth can one bring about that kind of result? How can it be achieved?
I was encouraged to read in The Times this morning a statement which has reference to a point mentioned earlier by my noble friend Lord Ennals. The article is headed:
"US negotiator will use trade weapon to coerce Peking".
We are told in the article that the American negotiator is warning the Chinese that unless they make commitments on human rights, including Tibet, America will attach conditions to China's trading status. That situation seems to be full of promise. It is possible that this is a moment of opportunity. But it is not enough—as all noble Lords will agree and as so many people of this country are beginning to appreciate—for us to say, "Leave it to the Americans". That would be a very unworthy course to follow. Everyone—experts, non-experts and the general public—feel in their bones, and history bears it out, that this country has a special responsibility with regard to Tibet. It would be shameful to leave it to the Americans. We must make a contribution and more strongly than ever before.
Personally, I agree with every word that has been said hitherto.
Lord Ennals: My Lords, perhaps I may intervene before my noble friend sits down. I simply want to say that it is not just a matter of whether we would interfere or leave it to the Americans. The British Government at the moment are positively urging President Clinton to do the opposite of putting on conditions. I think that is very important.
The Earl of Longford: The trouble with being a novice is that one says so much that is correct and then one gets something wrong. I was beginning my peroration when it was stultified by my noble and dear
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friend behind me. I shall say no more. I welcome this debate and am proud to have been able to play a small part in it.
7.4 p.m.
Lord Braine of Wheatley: My Lords, we are indeed indebted to the noble Lord, Lord Ennals, for initiating this debate. He was absolutely right when he said that the reception that His Holiness received last week and indeed on his previous visit to our country aroused enormous public interest among ordinary people.
This debate is about Tibet and the agonies that its people have suffered under Chinese occupation. Some 30 years ago the International Commission of Jurists declared that the Chinese were committing genocide—that is the word that was used. Yet the civilised world so far has done nothing about it.
In an important sense this debate is also or should be about China, where tyranny has reigned even longer over the world's largest nation and where millions have been sent to 5,000 or more forced labour camps for so-called crimes which are not defined by law. In such places beatings, torture and solitary confinement are used to crush the spirit, perpetuate the Maoist view of communism and cut off the talented and hardworking Chinese people from the rest of the human family.
In regard to Tibet we are told that our hands are tied because of Hong Kong. Unless there are changes in China, the outlook for Hong Kong after 1997 is black indeed, and 1997 is not far off. In the meantime, the Tibetan people are the victims of one of the cruellest regimes on earth.
The civilised world cannot stand by and do nothing. I believe one speaker said that the situation could get worse. It is getting worse. Those who study this matter closely know that it is getting worse all the time. Tibet's natural resources are being plundered. In the past 40 years its forest cover has been almost halved and soil erosion and consequential flooding have become a serious problem. Chinese settlers are being moved in fast in order ultimately to displace the native Tibetans. Tibet was rich in minerals. Those minerals are being ruthlessly exploited in China's interest. Forced labour is the order of the day.
It is not that people in the West are indifferent to all that is happening. The recent Conference of European Parliamentarians urged that measures should be taken by the international community to safeguard the very existence—those are the words that were used—of Tibet and to end its illegal occupation by the Chinese. The conference further urged that the international community should not allow China to pursue its unrestrained policy of oppression. It declared that European parliamentarians and our own national parliaments—that includes us—should call for implementation of UN General Assembly Resolutions 1723 and 2079 calling for the restoration of Tibet's human rights, including the right of self-determination, the release of political prisoners and for the International Committee of the Red Cross and other human rights organisations to be permitted to

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inspect prisons and other places of detention. That is a clear call to our Parliament and I hope that it will be heeded. Let us give a clear response.
I have some sympathy with the Government. One can understand HMG's hesitancy about taking tougher measures unilaterally or even urging the European Community and the United States to take positive joint action under the banner of human rights. One can understand Her Majesty's Government's anxiety to ensure that their actions do not make greater difficulties for Hong Kong in the run-up to the colony's return to China.
But Tibet is a mirror in which not only Hong Kong but Taiwan—Taiwan in particular—can see reflected what on present form can be expected when the great motherland of China opens her arms to bring home her grown-up and highly successful children who are now outside China. At present what those people see can bring little comfort. It brings no comfort at all to Hong Kong where the die is cast. But to Taiwan there is a stark warning of what to expect.
It is not the Tibetan leadership that presents obstacles, as has been rightly said by every speaker in the debate so far. His Holiness the Dalai Lama, who has now been in exile in India for 33 years, keeps alive the hope that his people will be free. I had the honour of being present in Oslo in 1989 when he received the Nobel Peace Prize for his advocacy of peaceful struggle for the liberation of his country. He is truly a man of peace. I venture to say that he is the most saintly man I have ever known in my life. It was an impressive ceremony, attended by the Norwegian royal family. Afterwards, the Dalai Lama went on the balcony of his hotel. But what moved the heart was the tremendous greeting which the Norwegian people gave him. Thousands of Norwegians paraded in the streets and cheered in his honour as they passed the hotel.
His Holiness has repeatedly said—he said it in London last week—that he is in favour of discussion with the Chinese; he is ready to talk with them at any time and in any place about the future of his country. All that begs the question: can we in the free world simply stand by and do nothing? That is all that we are doing at the moment—nothing. That begs the question also: is there anything that we can do?
The West as a whole is not obliged to aid China's trade. The United States could waive MFN status if it chose. Indeed, if the American public and people in Europe knew that they were currently importing goods manufactured in China's vast prison camps, which is where so many exports being bought in the West come from—where people labour under the most inhuman conditions—they would draw back and ask what our governments are doing about it.
Up to 20 million Chinese men and women are employed in those camps. People in the West should know that there is still resistance in Tibet. The Tibetans are not lying down. They may not have arms but they are brave spirits. Wall posters appear regularly in Lhasa about what is happening to their enslaved and plundered country. I was struck by the
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wording of an appeal from a prison addressed to the United Nations and smuggled out of Tibet last October. It said,
"Most of the Tibetan people, even those
who are not in prison are like prisoners,
having mouths but no freedom of speech,
having eyes but no freedom of sight,
having legs but no freedom of movement".
Those appeals are specific about the cruel exploitation of both the people and the national resources of Tibet. We are told of resistance and cruel punishment meted out to those who are caught. Those who lead the civilised world must listen to the cries of a people who are being systematically destroyed. Let me put it another way. Parliamentarians in democratic countries are indeed asking for some co-ordinated action. It is our Government that must listen and devise an appropriate strategy. And they must devise it soon.
7.14 p.m.
Viscount Mersey: My Lords, I should like to concentrate on the Chinese exploitation of Tibet's materials, and in particular its minerals. I would first comment on the general Tibetan attitude to all things material. It is that matter is merely energy temporarily locked up. After a short time it is released again and the matter becomes once more a force —a force for good.
The reason I mention that is that two relevant thoughts flow from it. First, that which the Tibetans discovered 2,000 years ago Einstein rediscovered for us this century. He expressed it in a different way, in the famous equation that relates energy to matter—E=MC2 Thus it is a mistake to think of Tibetan thinking as in any way primitive. It is in fact extremely modern.
The second thought is that the civilised world's development of E=MC2 is not a life force; it is a death force. From it came the nuclear missile. How ironic it is that the Chinese have sited their missiles all over Tibet. What a travesty of the Tibetan belief that energy is a force for good; Tibet is now in fact the main launch pad for Chinese H-bombs.
Along with the bombs there are now millions of Han Chinese civilians in Tibet, together with a considerable army of occupation. That military occupation is expensive. But it is paid for twice over by the sale of Tibetan materials and artefacts; for instance, religious pictures and sacred texts stolen from the temples. Today any tourist can buy a sacred text in Macao. He can buy a religious painting. He can buy a large range of tourist goods for a very fair price. That is not surprising, for the goods are made by slave labour as my noble friend Lord Braine said.
Besides the plunder of the books and pictures, the Chinese are plundering Tibet's minerals—its natural resources. China is spending 40 million US dollars on exploiting Tibet's oil and gas alone, and it is spending yet more on mining marble, chromite, gold and no less than 140 other minerals. The money is well spent because the profits on the minerals are considerable. Perhaps I may take just one —borax—from which is made boracic powder. The actual profit to China from

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boracic powder is sufficient to have paid the entire cost of invasion and occupation of the so-called People's Liberation Army over the past 43 years. That is another nightmare version of the Tibetan belief that all matter is energy. In this case the matter—the powder —lines the pockets of the Chinese, and the energy is the sweat of the Tibetan slaves who mine the borax.
What is to be done? We have this debate around every two years. It normally coincides with a visit by His Holiness the Dalai Lama. But there is modified hope because each time he visits us he seems to attract more press coverage, more public support and more government recognition. Originally noble Lords may remember that he was denied access to 10 Downing Street. On his last visit he met the Prime Minister and on this visit he today had successful talks with the Foreign Secretary. For the first time we British favour unconditional talks between the Chinese and the Dalai Lama. That is a giant stride forward from the old position whereby the Chinese would only talk with His Holiness on condition that he first admitted that he was a willing Chinese vassal, and that the People's Liberation Army had indeed freed his people and suchlike nonsense.
I believe that it is premature for us to recognise Tibet as an independent nation when no other country does and when the United Nations do not either. I have discovered a body affiliated to the United Nations called UN RPO—the United Nations Non-represented Peoples' Organisation. That is lobbying for Tibetan independence. It is a start.
A more important start is the talks mentioned already by the noble Lord, Lord Ennals, and the noble Earl, Lord Longford, that I too read about in today's The Times. They are being conducted between the Peking authorities and the United States Assistant Secretary of State, Mr. Winston Lord. He seeks to impose conditions on China's current trading status with America, which is that of most favoured nation. Mr. Lord, backed by Congress, seeks to continue that preferred treatment if and only if—among other things—China stops making nuclear weapons and if and only if her record on human rights improves. Specifically regarding Tibet, Peking must put an end to the great influx of Han Chinese. It is a serious and urgent matter because quite soon, if the present trend continues, the Chinese will outnumber the Tibetans in their own country.
It seems that here in the United Kingdom we are keen to placate the Chinese, doubtless bearing in mind how vulnerable we are in Hong Kong. We argue that greater trade could lead to greater wealth, which could lead to greater democracy. But the Dalai Lama, a very compassionate man, takes the opposite view: that greater trade will encourage the hardliners and that greater wealth will be spent on a mightier military force. Anyhow, our governor-general in Hong Kong seems to favour soft soaping the Chinese, which, sadly, does not do him much good in their eyes. I have discovered a headline in the Chinese newspaper Wen Wai Po which describes his excellency as "wildly arrogant, conceited, opinionated and unbridled".
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As the noble Lord, Lord Ennals, mentioned, earlier this year the Convention of International Lawyers held a conference here about self-determination for Tibet. It invited the Chinese to partake. Their reply was typical. It will surprise no one. This is how it goes:
"As is known to all, Tibet has been an inalienable part of China since the 13th century. The Tibetan people are a member of the big family of the Chinese Nation … We strongly insist that arrangements for this conference be cancelled".
The debate we hold tonight has its own mixture of the good, the bad and the ugly. I know how the Dalai Lama would respond to these Chinese threats and insults. He would surely say, "These are not typical of the Chinese people. They come merely from the caucus of hardliners at the top. But we must nevertheless bear them squarely on our shoulders and drown them in a sea of compassion". We must do our utmost to ensure that Chinese bluster will be smothered by Tibetan kindness.
7.22 p.m.
Lord Thurlow: My Lords, I have vivid personal memories of the invasion of Tibet in 1950 because I happened to be serving in our High Commission in New Delhi. It was my job, as the relevant counsellor, to be sent along to the government of India's Foreign Office to discuss their position in the light of this aggression. It was not very long after the transfer of power in India. The British Government, for their part, had no significant national interest and after 1947 had handed over to India the responsibilities which formerly we carried on behalf of India in relation to Tibet. We all remember that at that time Pandit Nehru, with all his great qualities and his great contribution to India, had a very unrealistic attitude towards China and the Chinese communists. He actually believed the professions of the Chinese when they signed the five very idealistic principles of international comity at Bandung. So the position of the Indian government was, "Trust the Chinese". We have seen what the results of that have been.
Noble Lords have raised the question of what can be done. We all know that there are very strict limits. We are not prepared to contemplate the use of force. The Dalai Lama would be the last to accept such a contingency. But there are means—noble Lords have referred to them—by which we can build up and maintain the pressure of international opinion to which, whatever we may think about the hardliners, there are grounds for believing that they are not entirely insensitive. There are the two resolutions in the United Nations Assembly which have been referred to. It is perhaps time for another resolution calling on the Chinese to implement the two resolutions of the past for self-determination. There is the Human Rights Commission. Might not the Human Rights Commission appoint a special rapporteur to keep what is going on in Tibet under review? Might not even the United Nations Assembly reactivate the special committee on decolonisation, which used to cause us so much trouble? Tibet is no more than a colony of China.
What about us Europeans? We are, I hope, within sight of the ratification of Maastricht. When the

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European Union comes into existence, we shall proceed to seek to draw up, under the foreign policy and security pillar, common positions. Let us encourage our European partners to draw up a common position over Tibet. No European country carries very much clout by itself. But Europe as a whole carries very considerable clout and will carry more clout as trade increases; and potential trade can become something very important to China. The commercial advantages that China already enjoys with the European Community could be made conditional in the way that Congress is seeking to get the US Government to insist on with their own MFN renewal.
We all recognise the delicacy of Her Majesty's Government's position over Hong Kong. But I regard it as an illusion to think that Beijing respects appeasement. Bullies do not respect appeasers. It is an illusion to suppose that silence on Tibet to avoid provoking China will improve the prospects of Chinese implementation of the agreement on Hong Kong. Probably, indeed, nothing could do more to reduce the distrust at present felt in Hong Kong about Chinese intentions after 1997 than an end to the injustice and oppression in Tibet. This could be a sign of possible change. Change is going on the whole time in China. We know of the enormous economic progress in parts of China. Change will continue to go on. This makes it a moment, as noble Lords have said, at which Her Majesty's Government can suitably review the position they have taken for so many years.
Our own public statements since 1950 have lacked both honesty and clarity. I suggest that it is time to come out plainly in support of Tibetan self-determination with our European partners. There is no reason any longer for refusing officially to expose the facts and demand change.
In 1991 one of the foremost authorities on the historic and legal position of Tibet, my former colleague, Sir Algernon Rumbold, commented:
"The depth of the Foreign Office's kow-tow is disturbing: the Foreign Office often describe Britain's view of Tibet's status before 1950 incorrectly to avoid displeasing China".
He went on to say:
"The Foreign Office would be wiser and their position more respectable if they spoke out in strong condemnation of China's seizure and misgovernment of Tibet".
I hope that the weasel words of the past 40 years may no longer be heard. I hope that the confusion which has been sown by the use of the phraseology of suzerainty and autonomy, will now pass into oblivion. Those terms were introduced for what at the time were no doubt valid imperial reasons. But suzerainty means nothing whatever to China. It is a meaningless term for them and it has relevance only to European feudalism.
So I hope that we will give the lead to our European partners and that, when the time comes, seek to initiate the drawing up of a common position for the European union which may pursue the recommendations of the international conference of lawyers and others for aiming at self-determination and the ultimate independence of Tibet.
7.32 p.m.
Baroness Strange: My Lords, we are all grateful to the noble Lord, Lord Ennals, for initiating this debate on Tibet, particularly so at this time when His Holiness the Dalai Lama is in Great Britain, and was indeed in the Palace of Westminster last week when many of us, as well as our colleagues from another place, were privileged enough to meet him and to hear him speak about the problems facing Tibet. On Friday he will be receiving an honorary degree at my old university, St. Andrews, at which the noble Lord, Lord Ennals, will also be present.
Since our last debate on Tibet, initiated by my noble friend Lord Willoughby de Broke, there has been a considerable shift in opinion towards receiving His Holiness, as is evidenced by his discussions this morning with my right honourable friend the Foreign Secretary, and towards recognising the independence, de jure, if not now de facto, of Tibet.
From 6th to 10th January of this year a conference of international lawyers from Great Britain, the United States, Canada, Australia and many other parts of the world including India, was held in London to which the noble Lord, Lord Ennals, and my noble friend Lord Mersey have already referred. The Chinese refused to attend; tried to make Justice Michael Kirby of Australia cancel the conference, and sent to the conference a number of Chinese pamphlets stating their viewpoint, all of which were read and many referred to, and all of which were found unconvincing.
The conference concluded that Tibet was an independent country, compulsorily invaded and annexed by the Chinese, and it urgently invited the United Nations to review its call for the respect of human rights in Tibet and the implementation of the self-determination of the Tibetan people.
Several noble Lords have spoken of the packing of millions of Chinese into Tibet where there are only 6 million Tibetans. The Chinese, having invaded Tibet, killed and tortured Tibetans, smashed, defiled and destroyed all their holy places and monasteries, are now seeking to squeeze out their population by outnumbering them.
Chen Kuiyan, the First Secretary and ruler of the autonomous region of Tibet since last December, is giving more and more incentives to Chinese people to settle in Tibet, including his profiteering son. He is trying to repeat his success in Mongolia where 81 per cent. of the population is now Chinese.
Chinese is being taught in all the schools in Tibet and those speaking Tibetan are made to feel second-class citizens and backward.
It may interest your Lordships to know that last week, in the Grand Committee Room, I was working out in my mind how to frame a question about what language was being taught in schools in Tibet, when His Holiness, who was answering another question, turned in my direction and said that Chinese was being taught in all Tibetan schools, and thoroughly answered the question which I had not yet asked and was still in my mind.
One of the many upsetting things about the Chinese occupation of Tibet is the degradation of the

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environment. My noble friend Lord Mersey and I both wished to speak of this. We agreed that he would talk about minerals and let me take vegetable.
Until the 1950s, the Tibetans' agricultural methods were suited to the fragile mountainous terrain. A small population lived chiefly off yak herding and barley growing, leaving fields fallow for long periods to prevent leaching and erosion. Hunting and logging were controlled by taboos, particularly round the monasteries.
The fauna and flora of Tibet include many hundreds of rare species adapted to difficult and highly localised conditions. Forests range within a short space from sub-tropical to alpine; larch and maple flourish in temperate lower valleys; spruce, fir, oak and rhododendrons in the south east.
In 1950 the forested areas of eastern Tibet were annexed to China, renamed as parts of Sichuan and Yunnan, and became the second largest timber source for China when an intense programme of clearance began. In 1950 9 per cent. of Tibet was forest. By 1985 only 5 per cent. was. Roads were built, and are continuing to be built, to make the forests accessible to logging. By 1985 15 per cent. of U'Tsang forests and over half of Kaam forests were opened up by roads.
It is alleged that in the Kongbo and Pawo Tamo areas of U'Tsang alone over 20,000 Chinese army personnel and Tibetan prisoners are involved in felling dense old forests. Tourists have reported seeing up to 50 trucks per hour, loaded with mature timber, leaving Tibet on the roads to Chengdu and Golmud.
In Watershed Management in Mountain Region of South West China the editors, Li Wehua and Zhang Mintao, state that south east of the Himalayan/ Hungduan mountain ranges, where there has been extensive clearance:
"Restocking has not been undertaken; neither have new trees been planted at the correct times".
China Daily in March 1989, quoted only a one in seven survival rate of replanted trees. Once forest or grass cover is destroyed, erosion is rapid. Silt washes down, clogs up dams, and causes floods.
It is worth recalling that six of the world's greatest rivers rise in Tibet—the Ganges, the Indus, the Brahmaputra, the Irrawaddy, the Yangtse and the Yellow River. The last two flow into China, and according to the Beijing Review of 21st November 1983, 14 million tons of topsoil are washed away daily. Hydro-electric dams and reservoirs on the Yangtze have clogged up, and flooding now occurs more widely in all the lower channels of the six great rivers.
As a result also the climate is changing and becoming dryer; lack of oxygen which used to be released by the trees is leading to a thinness in the ozone layer.
While I am on the subject of vegetables I should like to quote from a letter of 3rd February this year which reached the Dalai Lama on March 7th, from a lady from Kham, who is growing vegetables in Lhasa. She says:
"1 would like to report to you, on behalf of myself and others, that the present situation in Tibet is very poor.
For example, I have grown just twenty eight kilograms of vegetables, and for this I have to pay one thousand Yuan"
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which I think is about £100—
"rent on the land. Although we are living in our own Tibet, if we don't have a registration card, we don't have any way of living. We are like the corpse on the stone platform of a sky burial site."
My noble friend Lord Mersey and I did not mention animals, in our division of vegetable and mineral, so I should just like to say that of the large herds of wild yak, antelope and musk deer which used to roam Tibet 50 years ago, the Himalayan brown bears, wolves, lynx and snow leopard, as well as white pheasants, eagles, Brahmani duck and quail, few are left, due both to the dramatic increase in hunting, the increase in human population, and the reduction of forest habitat. Musk deer, Thorold's deer, and McNeill's deer, now all endangered species, are hunted to supply the pharmaceutical markets of China. The pelt of the golden monkey, a Tibetan species, is also much in demand.
The Chinese people are long-term thinkers. They have a great and an ancient civilization, as have the Tibetans. The Chinese do not think of what will happen today, or tomorrow, or even next week. They see far into the centuries.
I would say this to the Chinese. The pen has always been deemed to be mightier than the sword, and the word, which was there in the beginning, is mightier than either. They should listen to the words of the Dalai Lama, and to what he says about his people, and about his country of Tibet, for those words will blow through the winds on the roof of the world like the breath of God, and will endure for ever and ever.
7.42 p.m.
Lord Belhaven and Stenton: My Lords, like other noble Lords who have spoken, I am very grateful to the noble Lord, Lord Ennals, for tabling this Unstarred Question because, with all the other troubles in the world, it would be only too easy to forget Tibet if the noble Lord did not remind us of it from time to time. I was also very impressed by the speech of my noble friend Lady Strange. Having a slight acquaintance with another country which, fortunately, has just been abandoned by the Communists, I would say to her that the Communists have ruined everything that they have touched, including Tibet and China, and the sooner they go, the better.
Like the noble Earl, Lord Longford, I am not an expert on Tibet. In fact, I am possibly even less of an expert than he is. I do not know, but perhaps we might compare notes later—
The Earl of Longford: My Lords, I do not want to interrupt the noble Lord, but I cannot believe that any noble Lord speaking in this debate is less of an expert than me, so the noble Lord must excel.
Lord Belhaven and Stenton: My Lords, I accept that.
I shall limit my remarks to two parts of the situation. First, as was touched on by the noble Lord, Lord Thurlow, in particular, the Chinese Government say that they have suzerainty over Tibet. Unhappily, the word "suzerainty" has been accepted by the Foreign Office—possibly it was even invented by the

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Foreign Office. As I understand it, it is also accepted by all the major powers in the world and the United Nations.
Your Lordships, especially those of your Lordships who are Scottish, ought to have some understanding of the meaning of the word "suzerainty" —that is, if you have read the history of your country. For many centuries the English Crown claimed suzerainty over Scotland and that claim gave rise to innumerable laws and much bloodshed, now happily in the past. The French kings also claimed suzerainty over the English kings in respect of their French possessions. This, no doubt, was one of the reasons why Edward III claimed that he was King of France. It was very convenient for him, but at this point perhaps I could remind your Lordships, Her Majesty's Government and any members of the Chinese Government who may happen to be listening that suzerainty is a medieval term. It implies feudal superiority. So, are the Chinese, the Foreign Office, the United Nations and all the rest of them saying that China has a feudal superiority over Tibet? Surely that is absurd, anachronistic nonsense and I invite my noble friend Lady Trumpington to agree with me when she replies that it is anachronistic nonsense.
So, if we exclude suzerainty, what is it that legally justifies China's brutal occupation and colonisation of her neighbour? Do we accept that force alone gives a state the right and title to occupy its neighbour? If we do, then in 1943 most of Europe was legally part of Germany.
So what is it that makes Tibet a part of the Chinese motherland? It cannot be race because racially the Tibetans are Mongol and they are less like the Chinese than we are like the Turks and we are not part of the Turkish motherland. Is it culture? I put it to your Lordships that the Tibetan culture is quite different from Chinese culture.
The cultures are different; the languages are different; the races are different and the will for unity only exists on the Chinese side. So I hope that the Foreign Office will stop saying that the Tibetans should not be encouraged to seek their independence. I believe that the time may not be far away when Tibet will be free. After all, we have seen it in Europe and nobody expected it. Her Majesty's Government ought to prepare for that because Tibetans may then ask who helped them during their years of depression and darkness.
Like other noble Lords who have spoken, I accept that Her Majesty's Government obviously cannot physically and alone end the Chinese occupation of Tibet. I doubt if the whole world could do that. We can only ask that Her Majesty's Government show a more sympathetic attitude than they have shown in the past. It is an advance that the Dalai Lama has been received by both the Prime Minister and the Foreign Secretary. A further advance would be if Her Majesty's Government acknowledged Tibet's absolute right to independence. I also hope that we may hear the last of this absurd and anachronistic rubbish about suzerainty.
7.47 p.m.
Baroness Blackstone: My Lords, I, too, would like to thank my noble friend Lord Ennals for initiating this debate. Unlike him and some other speakers, I have not had the privilege of meeting the Dalai Lama but I have long been an admirer of him; first, for his incredible fight on behalf of his people over so many years and, secondly, for the way in which he has undertaken that.
Every noble Lord who has spoken has supported what my noble friend Lord Ennals said in his passionate plea for a better deal for the Tibetan people and has condemned the Chinese Government's treatment of Tibet since 1950. It is now nearly 30 years since the United Nations resolution on the right of self-determination for Tibet was passed. How much longer must the people of Tibet wait for this right to be realised? Surely there can be no better time than now to start exerting sustained pressure on the Chinese Government to change their policies towards Tibet.
As others have already said, China wishes to extend MFN status with respect to trading with the United States. China wishes to host the Olympic Games in the year 2000. China wishes to become a full member of the General Agreement on Tariffs and Trade. Those are all understandable and legitimate aspirations, but questions must be asked about whether China's aspirations to become a full member of the international community in all respects and to benefit from the various privileges associated with that can be met while its human rights record in Tibet is so deplorable.
As the noble Lord, Lord Thurlow, has said, we must of course recognise the many positive changes taking place in China today: the rapid economic growth, the acceptance of the benefits of the market economy which accompanies that, the greater freedom for many of its citizens and the opening up of the country to foreigners. That change is taking place at great speed. We should welcome it and congratulate the Chinese on their achievement; nevertheless, at the same time we should not hesitate to express our disappointment and our dismay that Tibet is benefiting so little from those changes.
Like other speakers, I should like to draw attention to certain recent developments which have worsened rather than improved the situation. First, let me deal with population transfer. The encouragement of thousands of Chinese settlers in Tibet so that Tibetans become a minority in their homeland must be deplored. I know that there is some dispute about the figures. According to the Chinese 1990 census, 7.5 million people living in Tibet are Tibetans and some 5 million are Chinese. I am aware that there are disputes about those figures, and I accept what my noble friend Lord Ennals said about that matter.
I understand that the reason the Chinese have been justifying that position is that they see it as part of the economic development of Tibet, but I suspect that there is also a wish on the part of some members of the Chinese Government to break down resistance to Chinese rule, and in doing that they are risking destroying its unique culture. That is unacceptable

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under the 10th Geneva Convention of 1949 which outlaws such behaviour. Perhaps the Minister will tell us whether the Government have raised that question recently with the Chinese Government.
The second issue concerns the destruction of the environment. China has turned Tibet into a vast military base. A quarter of the Chinese 350-strong nuclear missile force is located there. At least 300,000 troops are also stationed there. The ominous-sounding 9th Academy has become a testing ground for extensive nuclear activities. There are reports of radioactive contamination of the drinking water. There are now reports of cancer among children living near the 9th Academy. There is also an increasing risk of pollution of the water supply as a result of soil erosion caused by deforestation, a point to which the noble Baroness, Lady Strange, referred. We cannot accept that Tibet should pay such a heavy price for China's irresponsible environmental policies.
Let me turn now to the subject of human rights. We know from Amnesty International that there are still large numbers of political and religious prisoners in Tibet, many of them kept in appalling conditions. We know from Amnesty International that torture is common. We know that only recently five farmers were imprisoned for between 13 and 15 years merely for raising the Tibetan flag and shouting pro-Tibet slogans at a political education meeting in their village. Many others have been imprisoned without fair trial for opposing the regime. I refer again to last year's report from Amnesty International which catalogues many of those grotesque violations.
Perhaps I may turn now to the nature of the Tibetan regime. As other speakers have already said, it is tightly controlled by the Chinese Communist Party. All senior government officials and party officials are appointed in Beijing. Many of them speak no Tibetan. There has recently been a further purge of Tibetan officials suspected of sympathising with the Dalai Lama. According to an article in the Independent in February of this year, the Chinese policy in the 1980s of rehabilitating prominent Tibetans once denounced as reactionaries is now coming unstuck. The new party chief in Lhasa (Mr. Chen whom the noble Baroness, Lady Strange, has already mentioned) served previously in Inner Mongolia. He is reported to have brought several hundred Chinese cadres to replace Tibetan officials even at county and prefectural levels.
In distasteful language, rather reminiscent of the cultural revolution, Mr. Chen has started attacking the children of the former ruling class in Tibet for trying, in his words, to restore the old system and—crime of all crimes—for displaying pictures of the Dalai Lama in their homes. Mr. Chen spent some time reminding the Tibetans that they are meant to be atheists. In the light of such repression is it surprising that many Tibetans believe that the only solution is complete independence from China. The refusal of the Chinese Government to allow Tibetans to hold senior positions in the country is hardly consistent with the claim that Tibet has the status of a special autonomous region. We also know that while there has been some improvement in respect of religious
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freedom, there are still far too many reports of monks and nuns being expelled from their monasteries. We also know that the teaching and study of Buddhism is forbidden.
The map of Tibet has been redrawn by the Chinese, so that some parts of what was Tibet before 1950 have been absorbed into neighbouring Chinese provinces. Once again, that does not conform to international law. So far as concerns education, the poor quality of Tibetan schooling compared with that provided for Chinese children is a scandal. According to a recent article in the Economist, bright Tibetan children are now being offered scholarships to attend secondary schools in China, which may greatly improve their chance of a university place later. That is causing concern in Tibet. What is really needed is serious investment in schools in Tibet so that children's educational opportunities in their own country are improved. That means higher salaries for teachers and an improvement in the provision of education in remote areas. That would be far better than quasi-exile for their children to secondary schools in China.
I believe that I have said enough about the iniquities of Chinese rule in Tibet to demonstrate that since its invasion in 1950—here I repeat the quotation already provided by my noble friend Lord Ennals—China has continued to occupy Tibet, behaving like "an oppressive colonial administration". To conclude in that way is a matter of sadness to me, as I greatly admire the Chinese people, Chinese culture and, as I have already said, the many reforms that are now taking place in China.
Let me now turn to the subject of action. In doing so, I should like to ask the noble Baroness speaking on behalf of the Government some questions about UK government policy in respect of Tibet in the light of our special responsibility to that country to which many speakers have referred. Will she begin by making clear whether the Government share the Labour Party's view that Tibet must have the right to self-determination? If the Government share that view, the next question must be: what are they going to do to help to bring that about? Because of the movement of population to which a number of speakers have referred, the matter is now of some urgency. Tibet is in danger of being submerged. Its traditions, its culture, and its very existence are under threat.
In the light of that, will the Government invite the United Nations General Assembly to pass a resolution renewing its call for the implementation of the right to self-determination of the Tibetan people? As the noble Lord, Lord Thurlow, has already asked, will the Government request the UN General Assembly to expand the mandate of the special committee on de-colonisation to include Tibet? I hope that we shall receive an answer to these questions from the noble Baroness.
Will the Government also accept the various excellent recommendations of the conference of international lawyers on Tibet, which took place earlier this year and to which the noble Viscount, Lord Mersey, referred? In particular, will the Government

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agree that the United Nations Sustainable Development Commission should consider the problem of deforestation with special reference to Tibet? Will the Minister also agree that the UN Commission on Human Rights should appoint a special rapporteur on Tibet as an urgent priority?
Government support for these recommendations would be most welcome. But I hope also that the Government will exercise their influence to secure talks between the Dalai Lama and the Chinese Government as soon as possible. Meanwhile, will the noble Baroness confirm a statement made by the Parliamentary Under-Secretary in another place that European Community ambassadors in Beijing will be visiting Tibet this month? Have they been yet? If not, when are they going and what instructions have they received?
In conclusion, we on these Benches recognise the importance of good bilateral relations with China. It is a country of great and increasing international importance. As the noble Lord, Lord Weatherill, said, there are special considerations in relation to our bilateral relationship because of Hong Kong and its future. But we also recognise the importance of trade with China and welcome China's opening to the world. However, it cannot be in our long-term interest to turn a blind eye to China's continuing oppression of Tibet. Nor is its continuing failure to respect human rights acceptable. It cannot be right morally and politically. In any case, we owe it to the Tibetan people to do all that we can to help them preserve their unique cultural heritage, to protect their environment and, above all, to have the right to self-determination that they so richly deserve.
8.2 p.m.
Baroness Trumpington: My Lords, the question of Tibet is a matter of importance to a considerable body of opinion in the UK. The noble Lord, Lord Ennals, has emphasised that fact by raising the question of Tibet in your Lordships' House tonight. I listened with close attention to the views of many noble Lords who added their wisdom to the debate. It is right that we should acknowledge the continuing problems in Tibet and that this House should consider how we in Britain should respond to the situation there. We need to approach the issue with a clear vision of the principles involved and with a sense of realism.
I believe that all Members of your Lordships' House are agreed on one point: that we are all defenders of the universally-accepted standards of human rights contained in the Universal Declaration and subsequently codified in the two international covenants. We believe that these rights and freedoms transcend national, religious, cultural and ideological frontiers and are equally applicable to all persons at all times. It is not a question of interference in the affairs of other countries; it is a fundamental stance of principle in our foreign policy. That leads Her Majesty's Government, like all Members of this House, to feel the deepest anxiety about the continuing reports of human rights abuses in Tibet.
We have heard tonight from the noble Lord, Lord
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Weatherill, and others, of detentions; of the erosion of Tibetan cultural and even ethnic identity; and of the lack of real autonomy in Tibet. It is difficult to obtain full confirmation of all the reports, but perhaps I may state clearly that we deplore abuses of human rights in Tibet. Of particular anxiety are the continued persecution of religious believers and the detention of students and others from the free expressions of political beliefs. Other issues of concern include forced abortion, torture and the death penalty. We fully understand and share the feelings of noble Lords in this respect.
Where the Government begin to part company with the noble Lords, Lord Ennals and Lord Thurlow, and my noble friend Lord Belhaven and Stenton—and I speak in reply to the noble Baroness, Lady Blackstone—is on the issue of Tibet's political status. Successive British Governments, including this Government, have regarded Tibet as autonomous while recognising the special position of the Chinese authorities there. That remains our view. We have repeatedly stressed to the Chinese authorities the need for fuller autonomy in Tibet.
The noble Lord, Lord Ennals, and other noble Lords, referred to self-determination. The Government's view is that all peoples have the right to self-determination but that that right can be expressed in several different ways. Perhaps I may answer in particular the noble Baroness, Lady Blackstone. Difficult issues are involved in deciding who are a people with a right to self-determination because there is no authoritative United Nations text in this respect. I agree with my noble friend Lord Mersey. We do not believe that independence for Tibet is a realistic proposal. It would be no service to the Tibetans to encourage them to seek independence. Particularly difficult issues are involved in international law in deciding who are the people with this right in this context.
The noble Lord, Lord Ennals, asked about the international lawyers conference in London. Foreign and Commonwealth Office legal advisers are carefully studying documents and their conclusions. As soon as the work is complete, they will respond formally to the noble Lord, Lord Ennals.
The noble Lord, Lord Ennals, and others asked about the position of Her Majesty's Government on Chinese claims to sovereignty/suzerainty over Tibet. Successive British Governments have regarded Tibet as autonomous while recognising the special position of the Chinese authorities there, as I have said. That continues to be the Government's view. The position remains as stated in another place by my honourable friend Sir Richard Luce on 22nd November 1983. For a long time we have recognised Chinese suzerainty over Tibet. That has been on the understanding that Tibet is regarded as autonomous. It was proclaimed an autonomous region in 1965.
My noble friend Lord Belhaven and Stenton gave the House an historic account of the word "suzerainty". It is, indeed, an old expression which goes back to our long-standing attitude extending before 1950. Our position is thus not a change. The word means that we regard Tibet not as independent

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but as autonomous and we recognise China's special position there. I should add that no other Government recognise Tibetan independence.
My noble friend Lord Braine called for the United Kingdom to lead the civilised world. We are active on this issue in many different fora. We raise the question of Tibet bilaterally on every occasion with the Chinese. We have taken an active part in EC action on this matter. We have pursued it at the UN; for example, in the human rights commission. In the widest sense we are encouraged that in recent years China has been pressing ahead rapidly with a process of economic reform which has resulted in sustained economic growth and an impressive improvement in living standards. We are encouraged also by Chinese willingness to receive delegations from other countries such as, that led by my noble friend Lord Howe in December 1992 which looked at human rights questions and related issues.
In reply to the noble Baroness, Lady Blackstone, I should say that at our suggestion EC ambassadors in Peking are proposing to visit Tibet next week. The programme has been arranged by the presidency and in consultation with the Chinese authorities. The ambassadors have been asked to pursue a number of issues of anxiety including the general situation in Tibet and population transfer on which they will press for accurate statistics on the numbers involved. Other issues include forced abortion, detention of people for free expression of their political beliefs, persecution of religious believers and ill-treatment of prisoners.
Lord Ennals: My Lords, I am most grateful to the noble Baroness for giving way. Will she ensure that when the ambassadors go to Tibet, they are properly and effectively briefed before they go there? They will be unable to talk to any Tibetans there, and they will be at the mercy of their Chinese guides.
Baroness Trumpington: My Lords, I do not believe that the ambassadors are a group of naive men. They are experienced in the pursuit of the best interests of their own countries in conjunction with their wide experience abroad. However, I shall certainly pass on to my right honourable friend the noble Lord's remark.
The delegation proposes also to hand over lists of issues of concern prepared on the basis of information provided by Amnesty International and other NGOs. I should like to pay tribute to all those NGOs who have tried extremely hard to work in support of Tibet over the years.
The noble Lord, Lord Ennals, spoke about most favoured status for China and population transfer. He suggested that the United States Government should be urged to demand as a condition of the renewal of China's MFN status that China halt the transfer of Han Chinese into Tibet.
The noble Lord, Lord Ennals, and my noble friend Lord Braine referred rightly in that context to strong interests of the Hong Kong people in this regard and the importance of HMG's responsibilities for Hong Kong. I should like to underline that point. Hong Kong's continued economic prosperity and social stability is closely linked to that of China. Any
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measure which would reduce China's trade with the world would also damage Hong Kong. It is estimated that ending MFN status for China would cause a 50 per cent. reduction in GDP growth leading to the loss of up to 60,000 jobs. We have made the US Government aware of those important considerations and as I have said already, we deplore the human rights abuse in Tibet and elsewhere in China but we do not believe that it is sensible to pursue those issues by restricting free trade which would therefore damage Hong Kong. Rescinding MFN status would be unlikely to bring about any improvement in the situation in Tibet.
I was surprised that my noble friend Lord Mersey quoted the rude remarks published in Wen Wai Po which is a pro-Chinese newspaper. I assume that he does not share the sentiments expressed in those remarks.
The noble Lord, Lord Weatherill, asked what steps the Government can take to ensure improvements in Chinese performance as regards human rights. As I have said, human rights are a central issue in all our bilateral relations with the Chinese and are on the agenda at every ministerial meeting. We and our EC partners shall continue to urge the Chinese authorities to adhere to internationally recognised standards of behaviour and to improve their human rights record.
It is not a question of internal affairs. We have repeatedly emphasised the principle of universality of human rights to the Chinese authorities. A number of particular issues are connected including the situation in Tibet, persecution of religious believers, and so on. The EC presidency, on behalf of the Twelve, has repeatedly raised that subject in previous sessions of the UNCHR calling on the Chinese authorities to guarantee full respect for human rights throughout China and Tibet in keeping with its international obligations under the UN Charter. At this year's session and in close consultation with a number of NGOs, we and other EC member states introduced a resolution on China which was co-sponsored by a number of other countries. Unfortunately, that was blocked by a narrow majority by a Chinese no-action motion, a procedural device intended to prevent the original resolution being voted upon. Nevertheless, we believe that showing our anxiety in that way continues to be the best way to bring about real improvements in the conditions of the Chinese people, including the Tibetans.
I should say to my noble friend Lady Strange that we are aware of and concerned about the persistent reports of the Chinese degrading the environment in parts of Tibet, including the over-exploitation of natural resources. We have a number of channels open to the Chinese authorities on environmental issues and will continue to urge them to improve their environmental policies. We are aware also of the worries about potential fossil-fuel burning, particularly with regard to the vast population of China. One of the British Government's objectives at the UN conference on environmental development in Rio was to ensure that all countries, including ourselves and China, were made aware of their environmental responsibilities and obligations and to persuade all

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concerned to improve their performances. I take careful note of the anxiety expressed by my noble friend Lord Mersey about the exploitation of Tibet's natural resources as I do with regard to the very serious worries about its atomic weapons building and weapons in general.
The noble Lord, Lord Ennals, and my noble friend Lord Mersey are aware of the anxieties about the transfer of the Chinese population to Tibet. His Holiness the Dalai Lama also raised this issue, I gather, at the meeting this morning. We are not in a position to confirm the accuracy of the reports. Different sources provide different figures and often refer to different geographical areas. However, I am told that this morning His Holiness said that it is not clear whether the migration of ethnic Han Chinese to Tibet is a deliberate policy undertaken by the Chinese authorities or whether those involved are simply acting upon the economic and commercial opportunities now available in Tibet. We certainly share His Holiness's anxiety about the threat to the Tibetans traditional culture and identity.
We are not kow-towing to the Chinese. We do not believe that what the Chinese are doing in Tibet they will do in Hong Kong after 1997. It is our intention that the Chinese should realise that if they wish to enjoy—
Lord Harlech: My Lords, I wonder whether I may intervene for a moment.
Baroness Trumpington: My Lords, I am not sure whether it is in order for my noble friend to do so.
Lord Harlech: My Lords, if I am allowed, I should like to intervene.
I worked with the Red Chinese for three-and-a-half years, purely in agriculture and in its development there. The gentleman who was my contact was, obviously, a member of the Red Chinese. He was about 60 years of age. He never smiled, except for one morning when we drove past a wall which had gun shots in it. He said that what he had done the night before was to shoot three men. He shot them because one had stolen a duck—
Viscount Long: My Lords, I am afraid that I have to intervene, although I hesitate to interfere. But this is an Unstarred Question. At this stage, a question must be delivered to the Minister.
Lord Harlech: My Lords, I am sorry; I understand, "delivered to the Minister".
My question is as follows. Does my noble friend the Minister agree that the human rights and environmental issues regarding the Chinese and their relationship with Tibet are very questionable? Our noble and extremely honourable governor is trying very hard to work on them in Hong Kong at present.
Baroness Trumpington: My Lords, I thank my noble friend for his remarks. I am afraid that I have no idea what time he came into the Chamber during the course of the debate. Therefore, I do not know whether I have already spoken on the matter. I rather think that I have. Perhaps my noble friend will read the Hansard report tomorrow. However, if he wishes, I shall write to him in answer.
It is our intention that the Chinese should realise that if they wish to enjoy the continued support of the international community for the modernisation of China, they need to take account of international anxieties. In particular, they must show a greater understanding for the need to respect human rights in China as a whole, including Tibet. At the same time, it is not our intention to interfere in China's internal affairs or indeed to isolate China.
We continue to believe that the best way forward in Tibet is for constructive dialogue without preconditions between the Chinese authorities and the Tibetans, including His Holiness the Dalai Lama. Both the Chinese authorities and the Dalai Lama have accepted, in principle, the value of such a dialogue; although so far they have not been able to agree on terms. We find it most disappointing that agreement to start talks has not yet been reached. We regret continuing reports of human rights abuse in Tibet. We shall continue to do what we can to encourage the Chinese Government.
I think that your Lordships' patience has been remarkable. However, this is a very important and deeply felt subject. I could continue, but I shall not do so.

Statute Law (Repeals) Bill [H.L.]
Reported from the Joint Committee with amendments and recommitted to a Committee of the Whole House.
House adjourned at twenty-two minutes past eight o'clock.

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  UK—SOUTH AFRICA: CITY TWINNING AND VOTER EDUCATION
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