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Orders Of The Day

Volume 928: debated on Monday 21 March 1977

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Redundancy Rebates Bill

Order for Second Reading read.

3.42 p.m.

I beg to move, That the Bill be now read a Second time.

Let me say frankly at the outset that this Bill is a consequence of the defeat on Second Reading on 7th February of the Reduction of Redundancy Rebates Bill. In doing so, I am telling the House nothing of which it is not already fully aware, but I want to make it quite clear that I am not going to try to be coy with the House or be other than candid and open about our purpose.

Having said that, let me also make it clear that this is not a rehash of the earlier Bill. That Bill had the simple purpose, as I explained on 7th February, of reducing employers' rebates from the Redundancy Fund from 50 per cent. to 40 per cent.

This Bill, of itself, does not reduce the rebate at all. It is quite different in concept since it enables the rebate to be varied—varied up or down. I shall not mislead the House, let me hasten to add, about our early intention—and I shall come to that in a few minutes. I repeat that I want to be candid and open about our intention. But I believe that the formula on which this Bill is based is not only different but is a better approach than the earlier one. Let me say why that is the case and why it may be more attractive, or perhaps less repugnant, to hon. Gentlemen opposite.

This is not the first time that a Government have sought to vary the rebate from that provided for in the 1966 Act— and I am sure it will not be the last, if not least because hon. Gentlemen opposite, it I understand their attitude, would like to see it varied upwards, if not now, perhaps at some future time. Whether the best way to do so is through primary legislation— with all that accompanies it, not least the demand on Parilament—is open to question. But notwithstanding the cautious approach that all of us should have when confronted with enabling legislation, I think we should now recognise the need for flexibility in this matter—and equally recognise that it is a flexibility better exercised by order rather than by the sometimes long and cumbrous procedures entailed by a Bill.

Furthermore, I am sure the whole House will hope that the circumstances which have made necessary a reduction in the rebate will prove to be of short duration. No one will be more pleased than I to see a return to a more generous level of rebate. When those changed circumstances arise, I am sure that hon. Gentlemen opposite will join me and my right hon. Friend in wishing to be able to restore higher levels of rebate more speedily than by passing a Bill through Parliament. I regret that we did not go for an enabling Bill in the first place— not just because we lost the vote of 7th February, but because it seems to make better sense.

I should now like to say something about the Bill itself. It is intended to enable rebate to be varied between one of 10 different rates over the range of 35 per cent. at the bottom level to 80 per cent. at the upper level. At no time would it be possible under the proposed measure to introduce rebate at the rate of 40 per cent. The House has made its views clear and we must respect them. Nevertheless, we have thought it right to make provision for a near alternative.

The Minister said that the precise rates laid down in the earlier Bill are not included in this legislation and added that there was an alternative. What are the Government's intentions? Obviously they are introducing this measure with the intention of using it.

I shall come to that point a little later in my speech. I have already said that I want to be frank and candid about our intentions. I am hesitant to inflict tedious explanations on the House. If I thought that we all understood the way in which the Bill will operate, I should be quite happy to say no more on the subject. But at first sight the Bill is not particularly easy to understand, and some explanation might be helpful.

A redundancy payment is calculated at three different rates according to age and length of service. The highest rate is one-and-a-half week's pay for each complete year of service over the age of 41. The second, or middle, rate is one week's pay for each year of service below that age, but after age 22. The third and lowest rate applies to service from age 18 to 21.

The method chosen for calculating rebate for the 1965 Act was to set down three different fractions of a week's pay, each of which corresponded to one of the rates at which entitlement to a redundancy payment accrued. All this may seem complicated, but in practice it is relatively easy. For example, the rebate payable in respect of service which counts at the rate of one-and-a-half week's pay is three-quarters of a week's pay. Similarly, the rebate payable against the two lower entitlements of one week's pay and half a week's pay are one-half and one-quarter of a week's pay respectively.

The same principles apply to the sets of fractions set out in the schedule to the Bill. Accordingly, the first set of fractions of 21/40ths, 7/20ths and 7/40ths equate to a flat rebate rate of 35 per cent. The second set of fractions produce a rebate of 41 per cent. and the third set of 45 per cent. Thereafter, each set of fractions increases the rebate rate by 5 per cent. until it reaches a maximum of 80 per cent. at the top.

The two limits have been carefully chosen. A figure of 35 per cent. represents the lowest point to which rebate can be reduced without further legislation. The 80 per cent. maximum is broadly equivalent to the rebate of one and one-sixth week's pay, or very roughly 78 per cent., which was payable under the original 1965 provisions in respect of the one-and-a-half week's pay entitlement.

What emerges from all the seeming complexity is really a simple system of varying rebate. It will be unnecessary to bother employers with the detailed processes leading up to the overall rebate. In practice, all they will need to know in order to claim their full entitlement is the percentage rate to be applied.

As I said at the outset, this is an enabling Bill. One point to which we gave the most careful consideration was whether the powers should be exercised subject to the affirmative procedure, or whether it was sufficient to seek to adopt the negative resolution procedure. We came to the conclusion that adequate parliamentary control can be exercised by making the order subject to annulment by resolution of either House.

There is nothing devious about this. In no sense should it be taken to imply a hope on the part of the Government that it may be possible to slip through an order without anybody noticing. Advance publicity has to be given to changes in rebate. Employers need to know their entitlement. Even therefore if an order is overlooked on being laid, its existence cannot escape notice for more than a few days at the most, thus giving ample opportunity for objections to be raised as necessary.

The Bill will also amend the Northern Ireland legislation. As I explained to the House on the 7th February, Northern Ireland is not covered directly by the Redundancy Payments Act 1965, but by parity legislation contained in the Contract of Employment and Redundancy Payments Act (Northern Ireland) 1965. Given that in practice the two schemes are operated as a single system, Clause 2 seeks to short circuit the lengthy Order in Council procedures by providing a similar enabling power for exercise in Northern Ireland.

In respect of Northern Ireland an order will never come before the House.

That is true, but I can give the House the assurance that we shall proceed on strict parity lines. Therefore, when an order that applies to Great Britain is laid before the House, hon. Members representing constituencies in Northern Ireland will have the opportunity to express any objections and views.

There are two points that follow from the right hon. Gentleman's intervention. The first is that the enabling power will be vested in the Department itself rather than in the Minister. I understand that that follows convention for which there is well-established precedent. The second point has already been dealt with in my reply to the intervention. I assure the House that use of the powers in the way that I have described—on the basis of maintaining strict parity—should avoid any absurdities that could arise if different rates of rebate were applied over any length of time.

Having dealt with the mechanical details of the Bill, now turn to the question that was raised by the hon. Member for Basingstoke (Mr. Mitchell) about the way in which the Bill will be used.

Initially, we propose to make an order reducing rebate to 41 per cent. This will have the direct effect of reducing the public sector borrowing requirement. Put very simply, rebates are paid from the Redundancy Fund. By definition these payments are public expenditure. If the Fund is in deficit it has to be financed by borrowing from the National Loans Fund which involves a direct charge on public funds by any definition. On the other hand, if it is in surplus, that has the effect of reducing the public sector borrowing requirement through being invested in Treasury Bills or stock. There can be no argument about this. It is a matter of fact.

The hon. Member for Brentford and Isleworth (Mr. Hayhoe) was interviewed on Radio 4 on the morning after the debate on the earlier Bill. I hope that the transcript does not misquote him. He said—when challenged about the Opposition's attitude on public expenditure and when reminded that his party has repeatedly said that the Government should cut public expenditure—that the Bill would not cut public expenditure. He said that the money involved was in the Redundancy Fund and that all the money in the Fund comes from industry — and I do not challenge that. He also said that the money in the Fund was all used for making redundancy payments and could not be used for anything else.

In fact, as I have just described, when the Fund is in surplus, it is committed by the provisions of the Redundancy Payments Act 1965, Section 26(3), to use that money as directed by the National Loan Commissioners and to invest it in Government stock. To that extent, it does offset the public sector borrowing requirement. Equally, when the Fund is in deficit, that deficit is incurred against the public sector borrowing requirement.

The hon. Member for Brentford and Isleworth also said that Ministers had made no attempt during the debate, to justify the Bill on the ground of public expenditure. I am sure that the hon. Gentleman did not intend to do us an injustice, but that was the main burden of my speech. In a brief speech, I emphasised that point at least four or five times.

When I said that the money could not be used for any other purpose, I was paraphrasing what was said by the Minister in introducing the Bill on 26th April 1965.

No doubt the hon. Gentleman has had an opportunity since then to look at the 1965 Act which says that any moneys forming part of the Fund may from time to time be paid over to the National Debt Commissioners and invested by them, in accordance with such directions as may be given by the Treasury, in such securities as are authorised by Parliament, as investments for savings banks funds. It has been modified since by the Social Security Act 1973.

Is that not a direct contradiction of the economic policy of the Chancellor who has said that his purpose is to try to attract more investment and funds into industry? The Minister is now telling the House that the Government will take money out of industry and put it back into the hands of the Treasury. That is in direct opposition to the Chancellor's policy.

I understood that the Opposition want reductions in public expenditure and that they are critical of the Government for not reducing it adequately. This is a reduction in public expenditure. I was replying to the point that was made by the hon. Member for Brentford and Isleworth in a radio interview when he said that we had not made out a case for the Bill on the ground of public expenditure.

Is the Minister not aware that last week there was a sizeable majority against the Government's public expenditure White Paper? Can the Minister tell us what the economic effect of the Bill will be? This question was raised when the subject was debated previously and the hon. Gentleman suggested that it would be £80 million per annum. Can he say whether that figure will be changed as a result of what he intends to do today?

I shall answer at least a part of that point in a moment. This is an enabling Bill and its effect will depend on the terms of the order that will be laid before the House and on what the House decides to do in respect of that order.

I am sorry to press the point, but the hon. Gentleman has been kind enough to explain the effect of these different permutations in the table. Surely it is possible to give permutations for the economic effect of each level set by the table.

If the hon. Gentleman will let me continue, I may be able to satisfy him on at least part of his question.

It has been stated in the House on a number of occasions that the Redundancy Fund is intended to be self-supporting. There is nothing in a proposed reduction of rebate which detracts from this principle in any way. At the moment, the Fund is in surplus to the extent of approximately £7 million. If rebate is reduced naturally we expect that the surplus will increase. This increase will have a direct beneficial effect on the public sector borrowing requirement. Admittedly if that surplus is allowed to grow unreasonably, it could give rise to problems in the future.

But machinery exists for adjustment and it can be used as and when necessary. Either the Fund's income can be reduced by cutting the allocation which is made front the employer's share of class 1 earnings-related contributions — at present 0·2 per cent. — or alternatively, the rate of rebate can be increased. Of these two possibilities, it is the second that could be done most easily and quickly under the provisions of the Bill. I have already put the case for being able to make future changes with the minimum of delay according to the requirements of the economy and the state of the Redundancy Fund.

There is also the question whether the Government are justified in looking to employers for a further contribution intended to play a relatively modest part in a vitally important overall package. Looked at in isolation the savings may appear small. For example, on the basis of the best estimates we have been able to make for 1977–78, each 1 per cent. of rebate is the equivalent of approximately £1·8 million on the Fund for a full year.

It may help the hon. Member opposite who put a point to me if I quote a full year saving for 41 per cent. rebate. The answer is £16·2 million. To put it another way, expenditure from the Fund will be reduced by approximately £1·35 million a month—and I hope hon. Members opposite will find that helpful. The actual amount saved during the coming financial year must depend of course on how soon it is possible to reduce the rebate and on how quickly we can introduce the order, have it approved by the House and made effective.

These figures may seem small when compared to the £1,000 million July package. Taken by themselves they may not seem worth bothering about, but that would be missing the whole point of the exercise. The package announced by the Chancellor last July is fundamental to the healthy economy of the country. It went much wider than simply cutting expenditure and reducing the public sector borrowing requirement. Its declared aim was the deliberate encouragement of an upturn in the economy. It was also spread to do the least damage bearing in mind the need to preserve rightly important social and economic priorities. Directly or indirectly, there can be very few people in this country who have not been required to make a contribution in some form or other, however small, to the stringent measures dictated by our economic circumstances.

We believe it not unreasonable to ask employers to make an additional contribution within the context of the package as a whole. I appreciate that some employers may feel the impact more harshly than others. Even so a sense of proportion must be retained. For example, the maximum additional cost to an employer of a reduction in rebate to 41 per cent. will be something less than three weeks' pay for each employee made redundant. On average, the amount will be much smaller, in most cases a week's pay or less. Additional costs of this order should not be difficult to assimilate.

As I made clear at the outset, this is an enabling Bill. It will not reduce rebate, but, given all the circumstances which surround its introduction, it would have been wrong for me to attempt to conceal in any way the immediate use to which we propose it should be put on enactment. On this occasion, and I freely acknowledge the stimulus to clearer thinking which was given by the House through its rejection of an earlier Bill, we have produced a more useful and flexible instrument for the administration of the statutory scheme. I think that the Bill achieves this object. I have no hesitation in asking for the support of the House for this measure.

4.2 p.m.

Six weeks ago the House rejected the Second Reading of the Reduction of Redundancy Rebates Bill by 130 votes to 129. I am not sure whether it was entirely the eloquence and arguments that we deployed from the Opposition side of the House, or the fact that the Prime Minister and the Chancellor of the Exchequer were absent unpaired, that led to the defeat, but for the first time since 1888 a Government were defeated on a Second Reading.

Now the Government have brought in another Bill and, although less obnoxious in form in certain respects, it is perhaps just as poisonous in effect. The question that we posed last time was "Why have it at all? "That question remains unanswered.

The Bill has not been asked for by Jack Jones, nor by Tom Jackson, nor any of the other puff merchants for the Labour Party—I am thinking of their comments on radio recently. Certainly the CBI does not want it. Who does want it?

Evidently the Labour Party does not want it. Has my hon. Friend not noticed the serried ranks on the Benches opposite?

I imagine that Labour Members have other things to contemplate. We are not discussing unemployment, but perhaps many of them are contemplating the unemployment that will face them as a result of events later this week and next month.

The public expenditure arguments are the only arguments that the Minister tried to deploy, but what he said was fatuous. The words that I used in the radio broadcast were taken straight from what the then Minister of Labour, Mr. Gunter, said on Second Reading of the original Act:
"The Redundancy Fund itself will be quite separate from the National Insurance Fund and will be used solely to finance redundancy payments, not for any other purpose."— [Official Report, 26th April 1965; Vol. 711, c. 44.]
That is clear, and it is also clear that it was not intended that the legislation should be used as a back-door way of collecting revenue from industry.

The Minister of State said that employers had to make a contribution as a result of the package, and presumably the contribution that he had in mind was that they should get less rebate while continuing to pay the levy to the Redundancy Fund at the previous level. I understand that the difference is the equivalent of 0·03 per cent. If the object of the Bill is to levy this charge, equivalent to 0·03 per cent. more on the general levy than the level of rebate justifies, it is a nonsense in the context of a package which also imposed a payroll tax of 2 per cent.

The Minister seems to have forgotten that the package included a proposal for making a surcharge of 2 per cent. on national insurance contributions. That was asking employers to make a contribution with a vengeance. It was sucking out £1 billion from the resources available to industry. His suggestion that 0·03 per cent. is significant in that context is fatuous and absurd.

There is no public expenditure case for the Bill except on what I described on Second Reading of the former Bill as a:
"wholly pernickety, bureaucratic, legalistic interpretation".—[Official Report, 7th February 1977; Vol. 925, c. 1132.]
If that is the cap that the Minister of State wishes to wear, I shall not deny him its use.

Perhaps I have not understood the hon. Gentleman's argument, but is he saying that the amount is insignificant, while accepting that it still counts against public expenditure, or is he persisting with the line that the money cannot and should not be counted against public expenditure? He should remember that during the 1970– 74 Conservative Government the Department of Employment and the Treasury considered the income and outgoings of the Redundancy Fund to be debits or credits against public expenditure.

I made my point clearly in my speech on the last Bill and in the extract from it that I have just quoted. Perhaps the Minister was so busy thinking up his intervention that he did not listen to what I was saying.

I accept that public expenditure Is involved if one takes the most narrow, pernickety, legalistic and bureaucratic interpretation, but if we look at this matter in the context of the effect on industry of the measures announced recently, together with the 2 per cent. surcharge, the Bill makes no sense.

The Government are facing a great political crisis. They are a divided, demoralised and discredited Administration who have run out of steam. The dry rot of Socialism is going through the fabric of their whole being. Yet they come to the House, presumably to rally the Labour faithful—just look at the empty spaces behind the Minister—with this insignificant irrelevance of a Bill.

The Leader of the House also gives priority to this Bill. We could be debating the confidence motion today. The Leader of the House, presumably after consulting the Prime Minister, has decided that we should not debate that issue but that we should deal with this earth-shattering Redundancy Rebates Bill. Perhaps the reason is not the relative priorities, but that the Leader of the House and the Prime Minister want more time to try to cobble together some grubby and shady deal that will enable them to survive on Wednesday night.

We could have had a debate on unemployment or on the difficulties confronting teenagers who have not got jobs. If today had been allocated as a Supply Day, issues of that kind could have been debated.

We could have debated the way in which the Government are imposing by diktat a substantial increase in the price of gas. Is it not interesting that the Government cannot make a Supply Day available to the Opposition but can find time for this insignificant and irrelevant little piece of legislation?

I do not think that people outside wholly understand how the agenda for this place works. On most days the agenda is determined by the Government. The Opposition have the opportunity of determining what will be discussed only khen a Supply Day is made available to them, or in the very exceptional circumstances of putting down a censure motion, or something of that kind.

Therefore, the Government prefer to use the time of Parliament to debate this kind of issue rather than some of the more substantial issues which worry many people. If they have not the guts to put important matters before the House, they should at least allow the Opposition a Supply Day so that they can do so.

The Leader of the House is strangulating Parliamentary debate on issues by bringing forward such Bills and clogging up the Order Paper with this kind of measure. We see both the Government and the Department of Employment giving this Bill priority. That fact, I suggest, demonstrates their manifest unfitness to remain in charge of the nation's affairs.

The Bill underlines and lends emphasis to the Government's shortcomings. I shall explain why. The defeated Bill was explicit. It followed precedent as well, because changes had been made in rebates. Therefore, the previous Bill, which the House defeated, at least had those virtues. However, this Bill is nonspecific and is an enabling measure. I suppose that all Governments have sought such legislation. They ask the House for broad general powers. I wholly accept that Conservative Governments have done that in the past. But we should recognise the dangers of enabling legislation.

The Minister of State said that it was flexible, that it did not need to go through the cumbersome procedure of a debate in this House. What does it do? It enhances the power of the Executive and diminishes the rôle and power of Parliament.

The changes proposed by the Government in the Reduction of Redundancy Payments Bill were subject to debate and amendment in Committee. If Members wanted to argue against the 40 per cent. or 41 per cent. which is now proposed, they had the opportunity to do so at the time and in the circumstances in which a change was proposed. But hon. Members will now be given no chance other than accepting or rejecting what the Government put before them. The use of the order procedure means that no amendments can be taken. Therefore, that gives an advantage to the Executive. It is certainly flexible from the Executive's point of view. It is not cumbersome, because the Government do not have to argue their case in detail before Parliament and have it undergo the scrutiny which takes place in Committee.

In my judgment that typifies the Socialist Government's approach to legislation. They prefer enabling legislation. It is much easier to roll it through. Indeed, leading Socialist thinkers have often argued that the right course for an incoming Socialist Government is to have one simple debating Bill and then do practically what they like by order subsequently.

This Bill covers three financial elements. First, there is the maximum level of pay for calculating entitlement. That was covered by Schedule 1 of the original Act and was amended in the Employment Protection Act. That enabled the Government to change the maximum level of pay to be taken into account in determining the amount of redundancy payments to which an individual was entitled. There was the power for changes to be made by order, but by affirmative order. It was necessary for the Government to get a resolution of both Houses of Parliament to do that.

The second financial part of the original legislation was the amount of charge to be levied across industry. That was Section 27 of the 1965 Act. Again, that was amended and new provisions were written into the Social Security Act 1973— Section 122. But again that carried forward the idea that changes would be made by order and that the affirmation of both Houses would be required.

Now I turn to the percentage of rebate which would go to the firms concerned. The figure was written into the 1965 legislation, which was debated and amended in Committee. In 1969 the then Government asked for a change. Six weeks ago the Government asked for a change. They sought by legislation to modify the amount of rebate. Now we have the Government seeking this enabling legislation, which will not follow the affirmative procedure which was followed for the previous legislation where changes were envisaged from the start—obviously less important changes than the change in the percentage of the rebate which in 1969 was held to be changed only as a result of legislation. Now the Government are trying to achieve that change by way of the negative procedure. That is entirely wrong.

In addition, there is the point made by my right hon. Friend the Member for Crosby (Mr. Page) that, while we, at any rate, can debate a Statutory Instrument which would apply a change in rebate for the United Kingdom, there would be no necessity for a similar debate in this House regarding Northern Ireland. That is a considerable change from the provisions of the original legislation and of the proposal which was before us six weeks ago.

It is typical of the Government that they should be so contemptuous of the rights of the House and of the rights and powers of Back Benchers that, having been defeated, they should come forward with a measure which takes power away from the House, which seeks to avoid the detailed discussions which would follow changes in the amount of the rebate, and which gives greater power to the Executive.

Of course the Bill itself is small and relatively unimportant, insignificant and irrelevant to our economic problems by itself, but I submit that it is highly significant and relevant if we look at how the issue has been handled by the Government. The truth is that the facts of parliamentary life at the moment prevent the Government from steam-rollering through Parliament their damaging devolution Bill and prevent them from even bringing before Parliament their doctrinaire direct labour proposals.

But we see the arrogance of the Socialists and of Socialist Ministers in the way in which they are putting this Bill before the House. Since Parliament has rejected the Bill when it was specific, they come forward with a broad enabling measure seeking to do by the negative procedure what has normally been done by amending legislation. It is in utter and total opposition to that arrogance, as well as in opposition to the Bill itself, that we shall vote tonight.

4.21 p.m.

Unlike my hon. Friend the Member for Brent-ford and Isleworth (Mr. Hayhoe), I do not object to this small Bill being discussed in the House now, because it raises a very important constitutional issue. The Minister of State, in his usual charming, courteous and persuasive way, put over what sounded like a modest and reasonable case. Who would have dreamt that in fact he was telling us that the House has already chucked out the Bill once and that, therefore, the Government will in future achieve its aim "under the counter".

The Minister of State is saying that the Government will not ask the House to approve the details of the scheme, but they will do it by order, and by a form of order that he attempted to justify, as so many Governments have in the past, by saying, "We must have flexibility in this matter," that is to say, the Executive must have flexibility. That merely means that the Executive want to go behind the House of Commons and cheat Parliament and the Back-Bench Members. I say that because it is well known that if subordinate legislation is subject to negative resolution only, it has little or no chance of being debated in the House. If subordinate legislation is merely subject to annulment, it comes to the House for debate only by the grace and favour of the "usual channels".

The Back Bencher has little or no chance of bringing a Prayer before the House these days. If he wishes to do so he has to go to the merits Committee—the Statutory Instrument Committee—which sits in the mornings and is very badly attended. There are no votes in such Committees. The Committee merely takes note of an order.

Let us suppose that a negative order is brought forward under Clause 1 of the Bill and an hon. Member puts down a Prayer for its annulment, so it is sent upstairs. An order under the Bill might increase the levy imposed on certain citizens, but when it goes upstairs the Committee may say only, that it has taken note of the order. This is not the right way to treat the House when discussing increases in levies that may be imposed on certain citizens.

Even if it is by affirmative order, it is difficult enough to cover all the issues in the one and half hours allowed for debating affirmative orders. But at least in that case we have a fixed one and a half hours, whereas with an order that is subject to annulment we cannot debate it after 11.30 p.m., and, if there have been two or three votes after ten o'clock, the debate will be cut down to perhaps three-quarters of an hour.

This endeavour to come before the House and say that the rate of rebate in redundancy payments shall be decided in this way in England, Wales and Scotland is cheating the House. It is impossible, even by an order that is subject to affirmative resolution, to amend the order or debate any amendment to it, and it is certainly impossible with an order that is subject to negative resolution.

The Minister of State said, perhaps by a slip of the tongue, that the order would require the approval of the House. But it will not do so if it is by negative resolution. An hon. Member might see the order on the Order Paper as having been laid before the House and might be quick enough to put down a Prayer to annul it. The Minister said that someone would see it on the Order Paper within a matter of days and put down a Prayer to annul it.

There is a convention that Departments should not make an order operate in less than 21 days from its being laid before the House, but how many orders disregard that convention at present? The 21-day convention is not fully observed, particularly in money orders that come before the House. If it were observed there might be some chance of annulling orders before they come into operation, but in practice that is not possible.

I come now to Clause 2, which deals with Northern Ireland. On the face of it, any order affecting Northern Ireland could be annulled by resolution of Parliament, but in fact under the Northern Ireland Act 1974, no subordinate legislation which is subject to the negative resolution procedure comes before this House at all.

Any subordinate legislation which needs the approval of Parliament is laid before us with the possibility of a Prayer to annul it. On the face of it, Clause 2 states that the order will require a negative resolution to annul it, but under the Northern Ireland Act 1974 that does not happen. This order for Northern Ireland is not even made by the Secretary of State. It is made by the Department of Manpower Services for Northern Ireland. It is possible, and has been done in the past, for such an order to be required to be made by the Secretary of State, in which case it comes before the House if an hon. Member puts down a Prayer against it. Why did not the Minister adopt that procedure? It is possible to do this under existing legislation, and has been done in recent legislation. He should have adopted that course in this case.

It is preposterous that, having lost the Bill on the first occasion, the Government should bring in another Bill before the House and say that, as they cannot get it through a full House, they will do it by negative resolution procedure, which it is almost impossible to debate on the Floor of the House. I hope that we shall divide against this Bill.

4.29 p.m.

I agree with the remarks of the right hon. Member for Crosby (Mr. Page) who has brought out some of the most important defects in the Bill. I find it quite astounding that the Government have not learned and have not listened to what was said in the debate on 7th February.

The Government do not command an obedient majority from their followers but have to seek the support of a majority of other hon. Members to sustain their legislation. Against that background they are going completely against that support in reintroducing the Bill in a sneaky and back-door way, as the Minister has done. I was amazed to hear the Minister of State, for whom I have a great regard, say that the rate is not exactly 40 per cent. as it was when the House turned down the Bill last time, but that it will be 41 per cent. That is unworthy of the Minister of State and of any Government who hope to command respect and, on occasions, support from anyone other than their own devoted and obedient followers. They cannot continue in that spirit and in that light, and that must add a certain piquancy to our discussions later this week. Clearly, unless the Government can show that they can learn the lesson of the views of the House, they have no right to remain in Government, and the sooner they are replaced the better.

At the beginning of the debate the question was posed of who wants the Bill. It seems slightly incongruous, in view of the figures which we have discussed on many occasions, that the Government should be straining so hard to get what the Minister of State now tells me will be about £ 16·2 million from the 41 per cent. of rebate. In a sense, the Government are going for the widow's mite. We have heard that it is not the Government who want the Bill. The Government have said that they regret having to bring the Bill before us. The Bill is certainly not wanted by the other parties in the House. They voted against the Government on the last occasion. One can assume only that the Bill is wanted by the IMF alone.

Following the Chancellor's package of measures last July, we are hearing a different tune from the Government. We are hearing how the Chancellor has £1 billion, £2 billion, or £3 billion— who knows exactly how much? We hear that he will lay this before us in eight days' time. That is the largesse which will be offered to the electorate in the forthcoming election campaign. But here we are arguing over a Bill which, although having been defeated, is reintroduced in substantally the same form and will produce £16·2 million. Once more, that does not seem to me to be the act of a Government who are taking account of the views of the House and of political realities.

The Minister said that the maximum cost to any employer would be three weeks' pay for each employee made redundant. I calculate that with some companies that could be between £200 and £250. That could mean a sizeable pay-out for a small company. Suppose that 10 or 20 people were made redundant in a small company. They would have to be paid out at a time when the company was least able to bear the expense. The Minister says that the expense would not be great, but the incidence of this tax— for that is what it is— comes when the company is already in difficulties.

There is an air of unreality about all this. The Minister cannot expect us to believe that this Bill will not adversely affect companies, particularly small companies. That arrangement demonstrates the saddest aspect of the lack of logic in the Minister's argument.

On Second Reading of the original Bill, the Minister was unable to give any extrapolation of the figures with a rising trend of unemployment. But unemployment in Scotland has increased by about 2,000 a week over the last three months, and figures from the Department of notifications under the Employment Protection Act seem to show that we are talking in terms of at least 1,000 a week for the next three months.

The House must be cautious of seeking to establish a correlation between the level of and number of redundancy payments and the level of unemployment. There is no clear correlation. For example, between 1975 and 1976 there was a significant rise in unemployment, and yet the rate of redundancy payments made in 1976 was significantly below that of 1975. I can make a forecast. The Government expect that in 1977 the number of redundancy rebate payments will be between 250,000 and 270,000, but it would be misleading to draw from that conclusions about the level of unemployment. There are so many factors involved that one cannot establish a clear correlation between the two.

I am sure that the Minister would not argue that there is no relationship at all between unemployment and redundancy. It would be interesting to know whether the Department has figures which show whether as a result of the Employment Protection Act, which defines the rights of work-people made redundant, there is a much clearer link between redundancy and unemployment than was hitherto thought to be the case. Perhaps the figures might reveal a pattern which will develop in the future.

No doubt the Minister, like other hon. Members, has been notified about potential redundancies in the construction and engineering industries. We are told that in Scotland Babcock and Wilcox may have up to 1,500 redundancies, with possibly another 550 in Standard Telephones and perhaps 2,000 to 3,000 in shipbuilding over the next six months. Redundancies are also expected in jute, steel and textiles.

The Scottish economy is facing a very serious situation. I hope that the Minister will not try to underestimate that situation and will not say that it is impossible to calculate what the effect of it on jobs will be. Of course, if the Government plan to contribute less, people in Scotland will have to pay more as the rate of redundancy there goes up. That will take more money out of the Scottish economy, money which will run down the bottomless sink in Whitehall to be squandered as so much money is squandered by Whitehall.

The Minister of State has not convinced me that the Bill is in any way suitable or appropriate. He has not convinced me that the Government have listened to the voice of the House on 7th February. I must therefore recommend my hon. Friends to oppose the Bill tonight.

4.38 p.m.

Until I listened to the Minister of State I was doubtful of the wisdom of my party in deciding to vote against the Bill. But the Minister of State's speech reminded me of a highly respectable figure in a Whitehall farce who is discovered with his trousers down as the curtain goes up on Act II, having been seen at the end of Act I with his hand in the till. My doubts about voting against the Bill are therefore evaporating very rapidly.

I am against the Bill not so much because it is the wrong way to cut Government expenditure. If I were pushed, I am sure that I could think of much worse days of doing that. Certainly the Government have managed to find some. I am against the Bill not solely because it is directly contrary to the Government's much-proclaimed industrial strategy. That strategy never was credible. The only credible form of industrial strategy for this country is to change Governments as quickly as possible.

The additional cost to the employer directly as a result of the Bill may very well prove critical. It may very well prove critical particularly in those industries and in those parts of the country where the Bill' will be most used. The hon. Member for Aberdeenshire, East (Mr. Henderson) put his finger on this very well, and I echo what he said also with regard to Wales. The effect of the Bill can only be to penalise those parts of the country which are already the worst hit by the problems arising from redundancy. This is a further load imposed on employers, who are already staggering under the impact of the surcharge on employers' contributions, who are already affected by the operations of measures such as the Employment Protection Act, by various other measures which the Government have enacted concerning trade unions, and also by., some of the consequences of legislation concerning equal opportunities.

As to the whole concept of shielding employees from the consequences of redundancy and of trying to ensure security of employment by legislation, the evidence seems to be accumulating that this complex of legislation is now not merely ineffective but beginning to become counter-productive. The concept of redundancy payments, like that of wage-related unemployment benefits and of employment protection, is all right at a time of industrial expansion. In a country such as the United Kingdom, where old industrial habits die hard, it is most important to induce employees to move out of declining firms and industries into growing firms and industries. It could very well be that measures such as these may be helpful in the context of getting people into the frame of mind in which they readily accept the idea of moving from one firm or industry to another.

At a time of declining opportunities and a contracting economy such measures reinforce' the downward spiral and make it more' difficult to move people from unproductive to productive employment. Many firms might be able to stage some kind of recovery if they could shed two or three employees and streamline their operations— those employees would go off elsewhere, and so on— but the impact of having to contribute to the Redundancy Fund and having to make an increased contribution to it under the Bill may have precisely the effect to which the hon. Member for Aberdeenshire, East has just referred. It may be critical in driving a small firm into bankruptcy.

Yesterday I was speaking to a meeting of the National Federation of Self-Employed. The self-employed are very much concerned by the effect that all these measures are having on them and on small businesses in inhibiting their growth and discouraging them from expanding and taking people into new jobs. As the representative of an area body badly affected by a sudden spurt in unemployment— caused very largely by the simultaneous failure or contraction of huge employers, such as the British Steel Corporation, Hawker Siddeley Aviation and Courtaulds— I am more conscious than any other hon. Member of the vital importance of enabling small firms to expand and of encouraging people to become self-employed.

The best way of securing a very rapid diminution in the unemployment figures is by concentrating on what can be done at the very bottom end with the very smallest businesses— the self-employed. The time has come, therefore, not just for tinkering with the existing measures for employment protection and redundancy but for taking a radically new look at the whole complex of legislation that is supposed to govern the creation or the preservation of employment.

It is no good looking to the present government for any such radical new look. The Government in these matters, if not in all others, are completely under the thumb of the unions. The unions themselves, alas, seem to be completely under the thumb of those whose thinking on these matters is totally arthritic.

I am sure that a number of hon. Members who have been in contact with trade union leaders recently have found welcome evidence of some individual trade union leaders thinking in bolder terms than others, but the plain fact is that such views are not effectively represented on the General Council of the Trades Union Congress, and show very little sign at present of making headway in the trade union movement.

I am very pleased with the observations just made on trade union leadership. Does the hon. Gentleman subscribe to the view, put from the Opposition Front Bench, that these leaders are puff merchants?

I am not quite sure what the Under-Secretary of State means. I was listening very carefully to my hon. Friend the Member for Brentford and Isle-worth (Mr. Hayhoe) and I did not hear him use that particular phrase.

I am making a very serious point. Despite the fact that certain trade union leaders are now well aware of the need for a very radical re-think of our employment policies, and of the fact that intelligent employment policies will produce a permanent increase in the level of employment in this country and a permanent reduction in the level of unemployment, such policies would now necessarily entail an increase in unemployment over the next couple of years. It is simply not possible to run away from this fact.

Whatever party is in power, it will have to accept increased unemployment figures for the next two years or more. The real question is whether at the end of those two years we shall have a permanent reduction in the level of unemployment, or whether, on the contrary, the temporary increase will turn out to be part of a permanent increase in unemployment.

By that acid test the Government have totally failed, because they are incapable of any fresh or original thought on the subject. The present Bill is merely an acceptance of the fact that we have a set of measures which is the most to which the trade union movement would allow the Government to assent. These measures are manifestly failing and have to be tinkered with and in some respects made worse.

Since the Minister of State has said nothing whatever to disabuse me of the belief that this minor measure will now make the Redundancy Payments Act itself a questionable piece of legislation, and make it slightly but significantly worse, I shall have little hesitation in voting against it.

4.49 p.m.

Last week we had government by abdication. This week we have government by subterfuge and deviousness.

On 7th February the Government sought to increase the employer's proportion of the cost of redundancy. The House of Commons said "No". Today we have a Bill to enable the Government to do exactly the same thing. Of course, there are two changes. First, the Bill permits the Government to do it by an order which will come up for approval in the House in the dead of night. The Government might expect to get it through when perhaps the House is thinly attended— not that it would be possible for the Labour Benches to be much more thinly attended than they are at the moment. The Government are taking this course in order to get through what they could not get through by their Bill lost in February.

I was interested to hear the Minister's comment that hon. Members might find this Bill more attractive than its predecessor. He said that he himself did. He said that this procedure would be better than the long and cumbersome procedures and pressures of the House. It means that the Government will be able to introduce legislation by order, approved, if time is found for discussion at all, in the dead of night. The hon. Gentleman is one of the nicest and kindest men in the Government, but I wonder whether he realises the implication of his statement. If the procedures and pressures of the House are a nuisance to a Government, is not that what democracy is about? Is not that what the House of Commons is here for? Is not the view he has expressed getting dangerously near to contempt of Parliament?

It will not be lost on hon. Members that if the procedure outlined by the Government in the Bill, which would enable them to do by order what they were unable to do by debate on the Floor of the House, is followed, such an order could not be amended. It could only be either overturned or not. Contrary to the terms of the Bill which the Government lost on 7th February, there would be no Committee stage for an order, and no opportunity to probe line by line and clause by clause with amendments seeking to change what the Government were proposing. There would be none of that. The House would be left with the straightforward choice of accepting an order or not, and that choice would be given mostly in the dead of night. In effect, therefore, this Bill, unlike its predecessor, would allow the Government to do by subterfuge what they could not do on 7th February.

Secondly, the Bill reduces the extra contribution to be made by employers. It does so only slightly, but we must be grateful. The Government will take only £16½ million out of industry under this Bill instead of the £18 million they proposed to take under the lost Bill. But I believe that we must look at this Bill against the background of the unemployment situation. Although there may be a statistical aberration, to which the Minister referred, one cannot separate unemployment and redundancy, and I shall discuss a key point where the two impinge upon one another. We are considering the Bill against the background of an unemployment figure of over 1⅓ million, which is expected to go to 1¾ million. We have a Government who want employment but do not care for or understand or even want employers.

The Bill piles yet another burden on industry on top of all the other burdens that it already has to suffer. It is difficult to know what is the last straw which breaks the camel's back in this case—whether it is the burden of inflation, which means that industry needs more money in order to achieve the same turnover; whether it is increased corporation tax, which takes money out of the business community at the very time when inflation means that it needs more; whether it is increased income tax; whether it is increased national insurance contributions, or whether it is the new surcharge which is to come in next month—the jobs tax, the surcharge of 2 per cent. on national insurance for everyone in employment.

I do not know which of those burdens is the worst, but the total, with this £16½ million piled on top, will clearly lead to an increase in unemployment. It seems that the Government's slogan could well be "unemployment". Perhaps, if we are to have a General Election soon, they will go to the country on the slogan "We are the party that has managed to double unemployment in only two years. Put us back to continue the good work." I do not know whether that will be the case, but this Bill will certainly add to the unemployment.

Before the Minister sat down, to thunderous applause from both of his supporters in the Chamber, he said that the Bill would have the effect of reducing the public sector borrowing requirement, because if there were a surplus on the redundancy fund it would go to the Treasury. But we know the policy of the Government as outlined by the Chancellor of the Exchequer in his Budget Statement 12 months ago and reaffirmed by him in the economic debate last summer. He told us that he wanted to see a transfer of resources from the consumer and the Government into industry. Yet we are now being asked to approve a Bill to take another £16½ million out of industry and put it into the hands of the Government. The contradictions are all too clear.

The Minister said that he did not feel it wrong to ask employers to make this additional contribution in the national interest. But is it in the national interest to denude industry of the funds that it needs for investment? Is it in the national interest to denude it of another £161 million which might otherwise go into modernisation or re-equipping? The Bill will lead directly to an increase in unemployment, and I do not see that that is in the national interest.

The truth is that in 1976 and 1977 the burden of carrying the Government has broken the back of industry. As the process has gone on, the number of unemployed and the number of bankruptcies have risen. There is now the additional burden of £16½ million, but it will not be spread thinly across industry. The Minister cannot say "But it will cost each employer only so much". It is being placed specifically on firms which are in the greatest financial difficulty.

No company pays people off unless it has to. No company makes people redundant unnecessarily. On the contrary, machines and empty factories do not make profits; they do not help to earn for shareholder, investor, manufacturer or management. They mean a dead loss. When a company reluctantly decides, because of its financial situation, that it has no option but to pay off some of its employees, at that time of acute financial pressure the Government say "You will pay more towards the redundancy payments than you would have done previously". In effect, when a company has had a bad year and is in its weakest financial position, this scheme will translate that bad year into bankruptcy. I know a number of firms which have had to face the fact that if they paid off the number of employees they needed to pay off in order to remain in a viable position they would bankrupt themselves because of the Bill.

Another important point has been made to the Government, but with no response—that there is no right under the companies legislation for any company to accumulate reserves against this liability. Therefore, the liability comes along and the company is unable to accumulate free of tax, a fund with which to meet it. What is more, family companies, close companies and companies which under the tax legislation are forced to pay out their profits in dividend are not allowed to retain the profits within their finances unless they are for immediate investment. They are in the position that they cannot retain the funds necessary to meet redundancy payments because they have had to pay out the money to the shareholders.

I have a third reason for opposing the Bill, and that is the lost opportunity, to which my hon. Friend the Member for Flint, West (Sir A. Meyer) referred, to rationalise the whole area of what happens when a man becomes either redundant or unemployed in other ways. The redundancy payments legislation helps most those who may need help least. I go further: it may give no help to those who are most in need.

I shall give two examples to the House. There is the case of a married man with three children living in Scotland who, as the representatives of the Scottish National Party will bear out, is suffering from rising unemployment under the present Government. He finds it difficult to get work in Scotland. He is being driven—as were so many, including my grandfather—to England to seek work. He had the misfortune of changing his job in Scotland a couple of years ago, and now he has lost his job because of rising unemployment. He searches England for a job, finding one, perhaps, in Basingstoke. He has to meet the cost of moving which is much higher, and he has the cost for a while of keeping two homes, yet he has no redundancy payment. He is in great need, but he receives no help.

I am glad that the Minister has returned to the Chamber. I was making the point to him about the lost oppor- tunity to rationalise all that happens when a man loses his job whether through redundancy or in other ways. I was indicating that there are men who are in great need but who get not one penny from the Redundancy Fund, but other men may receive help.

There is another example from my constituency, where a builder made three men redundant. He did not want to do so, but a contract had ended and demand for construction work was shrinking. He had no option but to pay off the men. There was another building contractor, literally across the road, who took on those three men. They simply crossed the road. I do not know whether they were paid slightly more or less or the same, but I imagine that there was no distinctive difference. They suffered no cost, and they received a substantial sum in redundancy payment. The original builder nearly had a strike on his hands. The other men whom he had not dismissed said "Please, why do you not make us redundant? We could have worked across the road next week for somebody else and we could have had that nice sum of redundancy money in our pockets, yet we got nothing."

Irrationally, the system often pays out according to how lucky one has been. The luckier one has been, the longer one has had a job and has not been out of work, the more good fortune one has and the more one gets in the payout. The greater the misfortune one has, when one has perhaps changed jobs a number of times and one's employer has gone bankrupt under this Government, the more one suffers.

Would the hon. Gentleman add to his examples the kind of situation which obtains in Moray and Nairn, where a Government-subsidised bus company is able so to undercut all local contractors in the Grampian Region between Inverness, Peterhead and Aberdeen that they are driven out of business? The undercutting means that the Alexander buses are taking on contracts at a loss. Local contractors are having to allow men to become redundant, but they immediately get jobs with Alexander. Money from the ratepayer's pocket is making that undercutting possible. The result is that small businesses engaged in transport in the area are being driven out of existence.

I am happy to accept the hon. Member's additional example. I could expound to the House for a long time on other examples of the sort of unfair competition subsidised by the Government and ratepayers which is leading to people being made redundant and, therefore, to claims upon the Redundancy Fund, but I am sure that I would not be allowed to do so because there are others who wish to take part in the debate.

One can think of, for example, the electricity industry. It has fine show- rooms in the High Street, paid for out of electricity charges on the individual consumer, where it sells electrical equipment, heaters, cookers and so on. The Government subsidise that activity, but by their action they bankrupt the small private enterprise electrical contractor and sales company that is operating alongside the showroom.

The Minister looks annoyed. I assure him that if he looks at what is happening he will discover that what I have been describing is the case. He will see that the return on assets, where separate accounting has taken place in some of the electrical industries, is such as would have driven bankrupt any private enterprise company.

If the House wants to look further, there is the direct labour organisations of local authorities. They frequently drive local builders out of business because they act without private accounting, and by using ratepayers' money they are able to make losses and conceal them in a way that no private enterprise firm would be able to use. These examples add to the point made by the hon. Member for Moray and Nairn (Mrs. Ewing). I give one example. In Glasgow it costs more than £4,000 more to build a house through a direct labour department than through private enterprise. These are examples of areas where people are being made redundant as a result of Government activities and therefore calling for additional money from the Redundancy Fund.

I repeat that an opportunity has been lost. I hope that the Minister will take back the Bill—although it may, happily, be defeated again as was its predecessor— and, in the short time still available to him as a Minister in this Government, consider how he can roll together and rationalise redundancy payments and wage-related unemployment benefits. They are related to the difficulties and the suffering of unemployment, unlike the redundancy payments. I hope that he will look at the whole area of retraining.

If we roll these two things together into a rationalised programme for giving financial and other help to people when they become unemployed, we shall be helping the economy and we shall bring fairness into an area which is so unsatisfactory at present. Above all, we shall be doing something to prevent the growing level of unemployment occasioned by firms having to make payments at their weakest possible moment—when they have to pay people off.

5.9 p.m.

I shall not detain the House for more than a couple of minutes, but I think it is right to draw attention to the distinctive difference between this debate and the one in February. This debate does the House no credit. In February, the Bill presented an opportunity for the House to discuss the redundancy payments scheme. It did so, in a debate which, for all its faults, and even though it lasted for only three hours, got together a number of comments that were worthy of the House. Hon. Members made a number of useful points about the scheme and a number of suggestions.

My hon. Friend the Member for Basingstoke (Mr. Mitchell) and others are trying to inject that same view into this debate. That debate even occurred with two Labour Back Benchers taking part. The debate took place, and, having discussed the redundancy payments scheme and having taken account of the Government's overall economic problems and the fact that they wanted to cut down on our borrowing requirements, the House decided this was not the way to do it. It was a simple matter for the House to take that decision in a useful and valuable debate. We now have that thrown back in our faces, with the result that today we have a debate that is empty, not so much of argument, because we have been trying to keep that up, but of purpose.

One has only to look at the schedule to the Bill to realise what a tawdry measure this is. Even the fractions show what we are talking about. One chunters down the first column dealing with fortieths until one looks at Item 2 where the fraction suddenly splits into 123/200. The purpose of that is to enable the Minister to put a loin cloth on this dreadful Bill. The Minister is an honourable man and it is unfortunate that he has been put in the position of having to introduce the Bill.

Let me recap on three small points about the Bill, and what we said before and what we say now. It is right for the Government to decide to cut their borrowing if they desire to do so, but it must be right for the House to decide that there are certain areas which they should not touch. If we do not have any latitude in the matter, the House might as well pack up and go home if at all times what the Government say must take precedence.

If the House decides, as it clearly did, not by accident but of its own will, that something should not be done, and if the Government come back in the same Session with identical proposals, disguised though they may be, and spit in the face of the House of Commons, they ought to be thoroughly ashamed of themselves. The arguments put forward in that debate are still true today. They have been rehearsed, and the Government have presented no answer to them.

This Bill is an attempt to cut public expenditure at the expense of companies. The Government are taking money from industrial potential and using it for other purposes, but the argument advanced by the Government to date has been that where cuts have to come, and where economies have to be made, industry at least must be allowed to go forward. The Government have shown again that their priorities slip whenever it suits their political convenience.

Thirdly, and it came out loud and clear in the previous debate, the redundancy rebates system is an integral part of the whole way in which we tackle unemployment. If we tackle it in this way, with a hotchpotch measure that makes matters worse at a time when, as the hon. Member for Aberdeenshire, East (Mr. Henderson) said, companies are at their most vulnerable, we shall do a great disservice.

The Minister comes from an area in which there is substantial unemployment. I come from an area in which unemployment is even higher. It is not sensible for any Ministers who are concerned, as I am sure present Ministers are, with introducing suitable measures to deal with the unemployment situation to come to the House with legislation which is ill thought out for the circumstances with which we are dealing.

During the past two years we have seen measures which might have had their heart in the right place when they started but which have cumulatively had a deleterious effect on employment prospects. This is becoming increasingly recognised, and if the House is not given an opportunity to debate rationally and calmly and come to a decision, as it did in February, and have an effect on proposed measures, the Government are taking us for a ride, and this exercise is a complete waste of time.

5.14 p.m.

The first thing about this short debate is the note of surprise that has been struck by my hon. Friends that we are debating a measure that has been brought back to us in this way. I think we are all agreed that the Bill is not really necessary. The Minister will recall that in the earlier debate in February the hon. Member for Aberdeenshire, East (Mr. Henderson) raised a question about consultation before the Redundancy Rebates (No. 1) Bill, if I may so call it, was introduced.

The Minister replied to the hon. Gentleman in this fashion:
"I return once more to the questions put by the hon. Member for Aberdeenshire, East. It is true that there were no consultations"—
that is before the Bill was introduced—
"but the hon. Member would have been fairer had he indicated to the House that in a previous Question he had asked me how many representations had been made."—[Official Report, 7th February 1977; Vol. 925, c. 1182.]
Whether it be consultation or representation, the fact that the Bill was ordered to be printed by the House of Commons on 10th March 1977 has not given industry very much time in which to have consultations and to make representations to the Government on why a second shot should not be made at introducing a Bill of this nature. One would have thought that, having lost the Second Reading of the Bill in February, the Government would have allowed a considerable period to elapse before making any attempt to bring forward fresh legislation.

The Minister of State, in an open and honest speech— at least most of it was that— talked about how the calculations had been arrived at and indicated that a complicated procedure had been gone through. My hon. Friend the Member for Manchester, Withington (Mr. Silvester) rightly drew attention to the fact that to avoid falling foul of the Public Bill Office and the parliamentary draftsmen the Government in the calculations in the schedule leap from 21/40 to 123/200. Presumably, the Statutory Instrument implementing a change in the redundancy rebates will cite which set of fractions in the schedule to the Bill is to be substituted in Schedule 5 of the Great Britain Act and Schedule 6 of the Northern Ireland Act. We no doubt have to wait until the Statutory Instrument is introduced to see which fraction is used.

Secondly, mention has been made of why 41 per cent. has been used in one of the calculations when all the other percentages go up in multiples of five, from 35 per cent. minimum to 80 per cent. maximum. Again, I assume that 41 per cent. has been arrived at because the Government did not want to fall foul of the parliamentary draftsmen and the Public Bill Office, but we should like an assurance that if the Bill ever gets on to the statute book, before the Government start tinkering around with these percentages, industry, and especially small businesses, will be properly consulted.

The Bill refers in the Explanatory and Financial Memorandum to the effects of the Bill on public service manpower and says:
"The changes in public service manpower resulting from the Bill are expected to be minimal."
In the original Bill it said:
"No changes in public service manpower are expected to result from the Bill."
I assume that the reason for that is that, because of the new calculations and the rather complicated 41 per cent. calculation that has to be made, extra work will be necessary and more time may be needed and that may lead to more people having to be employed.

A number of points have been reiterated in the speeches today, and I want to emphasise one point made by my hon. Friend the Member for Basingstoke (Mr. Mitchell). He touched on it today, but he went into it in greater detail on the previous occasion, and it is as relevant today as it was on 7th February. My hon. Friend referred to the contingent liability of small firms and said:
"It is a liability against which a firm is not allowed to make a reserve."—
that is the liability for redundancy payments—
"It is a liability that cannot be entered in the accounts, although it is clearly an expenditure that will have to be met at some stage. There is a strong case for the Minister saying to the Government that there should be an allowance in terms of companies providing reserves for this purpose. That could be mixed in with the way in which the Chancellor deals with the system of stock relief, which is offset against profit. I do not propose to enter into the details, only to say that representations should be made to the Treasury." — [Official Report, 7th February 1977; Vol. 925, c. 1148.]
My hon. Friend was specific, but when the Minister wound up the debate on that occasion no answer was given to my hon. Friend's question. Assuming that the Government can stagger on, we are entitled to know whether the Department of Employment has drawn this matter to the attention of the Chancellor, who in eight days' time may have an opportunity to make some alterations along the lines mentioned by my hon. Friend on 7th February. It is a point put to us since the debate took place. There has been no answer from the Government. Today provides an opportunity for that answer. There is certainly an opportunity to do something when the Budget comes before us next Tuesday.

The negative order procedure has been touched on in relation to the three elements in the Redundancy Fund which must be kept in balance. By Section 86 of the Employment Protection Act there is:
"the general level of earnings … the national economic situation and … such other matters as"
the Secretary of State
"thinks relevant."
The way the Government propose to introduce this legislation is via the negative procedure, but changes to the other elements I have mentioned can be brought about by affirmative resolution and according to specific criteria. As we see it, the new form would allow changes in the level of rebate which would be subject only to the negative resolution. No criteria for change are offered. Many speeches have drawn attention to this issue. There is an opportunity for the Government to think again about it.

When the Minister began his speech he said that in due course it might be possible for higher levels of redundancy rebates to be paid. This debate gives us another chance to look more widely into the whole question of redundancy payment provision. When we won the vote on 7th February we hoped that the Government would allow a considerable time to elapse before attempting anything like this again, not least because we invited them to think more deeply and consult more widely on this issue of redundancy payment provision.

I leave the Government with some thoughts and suggestions on this subject and draw their attention to the Continental situation. I hope, even at this late stage, that they will look at these matters rather than charge on with the Bill, or attempt to do so. They will agree that there is little sign of the Redundancy Payments Acts since 1965 having reduced collective resistance to changes entailing redundancy. They might also agree that there is not much evidence of lump sum payments helping redundant workers to find better jobs by enabling them to look round at leisure and make a considered choice of a new job.

Equally, there is no evidence of payments unnecessarily prolonging periods of unemployment or of their being expended in an irresponsible way. Payments are neither more nor less than financial compensation for loss of job, which is only tenuously and indirectly linked to the cost of redundancy. The Government ought to discover whether increased weekly benefits for the unemployed would be a more equitable form of financial compensation for loss of job and would be more likely to contribute to a more relaxed and rational approach to job-seeking.

If we look at the situation up to 1976 we find that generally the employment service had succeeded in placing about 15 per cent. to 20 per cent. of those laid off in major redundancies. That propor- tion has not increased very much in the past 20 years, although there are signs at last that special on-site services where there is mass redundancy are being more effective. Government retraining is considered by few and appeals to fewer people. It has been taken up by only a relatively small number of those made redundant. It is hoped that the latest figure will show an improvement.

What we are worried about is the provision to assist in geographical transfers. This is even less generally known and used than are the training provisions. On the Continent there are four alterations, and measures which I invite the Government to consider before proceeding further with this Bill. On the Continent a great deal of resources and much expertise are devoted to placement training and assistance with geographical transfer with regard to the labour market generally and the internal labour markets of enterprises. Secondly, greater protection is given in existing jobs for those employees who suffer most from redundancy and who are most difficult to employ, particularly the older workers.

Thirdly, the promotion of manpower planning within enterprises and the development of an agreed social plan is there to cope with the need for redundancy. Fourthly, although the Government have put effort into their job-creation activities, some of this effort, alas, has not been very effective. More attention and greater resources are devoted to effective job creation on the Continent than in this country.

There is, of course, a close relationship between unemployment benefit and redundancy payments. The two are inextricably entwined. Having fallen down on 7th February, the Government should look again at this Bill, at what I have said about the background to redundancy payments, what the situation is in the EEC countries, and to remember that there is no pressure for the Bill from industry, small or large businesses, or from the unions.

We might ask "From whence cometh the pressure?" Is it only that the Government want to salvage their own pride? If so they are going about it the wrong way. They would have been able to perform a much greater service to the nation and to the House if they had said "We are spending six months thinking about this question" rather than charging ahead with a Bill which is so complicated and unnecessary.

5.25 p.m.

The hon. Member for Bedfordshire, South (Mr. Madel) referred to the fact that the previous Second Reading of this Bill was the first occasion since 1888 that a Bill has been lost on Second Reading. I accept the entire responsibility. My former colleagues in the Whips' Office share that view. The truth is that I am accident prone, having been hit by a bus and lightning, among other minor disasters. To lose a Bill after my first speech at the Dispatch Box was an event which should have been readily foreseen by the Deputy Chief Whip sitting here next to me, who should have known better.

Losing the Bill was not the only mistake I made that evening. I feel bound to report a bad error concerning redundancies in Northern Ireland which I have had to correct in a letter to the hon. Member for Harrow, West (Mr. Page). In that letter I said:
"On 7th February— which turned out to be a black night all round for us—I quoted an estimated 'redundancy rate in 1977– 78 of 31,000 and of approximately 33,000 in 1976– 77. I shall try to let the hon. Member have more precise figures'.
In the event it appears that I gave you false redundancy figures; those that apply in this case are much less, 8,000 for 1976–77 and 6,500 for 1977– 78."
I apologise to the House for that mistake.

The hon. Member for Brentford and Isleworth (Mr. Hayhoe) has a bad habit of being offensive. I do not mind him sneaking off and saying nasty things on the radio about my hon. Friend and me. We are used to it. We are quite ready to put up with it, although it would be better if he would name us rather than leaving us anonymous. I do object, however, to the hon. Member being offensive under the protection of parliamentary privilege to people outside this House. To describe the trade union leaders of this country as "puff merchants"—

That was just about Mr. Tom Jackson and one or two colleagues, who, I think, behave as puff merchants for the Labour Party. I would not apply that term to all trade union leaders.

I made a careful note. The reference was to Jack Jones and Tom Jackson. They were singled out as names that would be known.

This is a question of recollection. The reference to "puff merchants" was to Tom Jackson and others who have been speaking on the radio as public relations protagonists for the Labour Party. I did not include Jack Jones in that, although I accept that I had said earlier that Jack Jones had not demanded this Bill, as far as I knew.

No doubt the hon. Member will have the chance to correct Hansard and make certain. For an Opposition Front Bench spokesman on employment matters to describe people of that standing as "puff merchants" is totally irresponsible. We shall not get industrial peace by using intemperate language of that sort.

I say in passing that I do not want to be misunderstood. Members of my union have taken Tom Jackson to task for speaking for the whole of the telecommunications industry. But we should not use intemperate language of that sort under the protection of parliamentary privilege. If the hon. Gentleman is to abuse people, he should do it outside, face to face, so that they can answer back.

It is an interesting observation by the Minister that it is a term of abuse to describe someone as an unpaid PR puff merchant for the Labour Party. If in his book that is a term of abuse, so be it.

Our recollections differ. The hon. Gentleman will have to go again to the Hansard office to make sure that appropriate corrections are made to the record—a practice to which I am not unaccustomed myself. Let it be a lesson to the hon. Gentleman to be more temperate in his language because, as in the previous debate, when he referred to our Permanent Secretary in terms which he should not have used, he has a bad habit of being carried away when he is at the Dispatch Box or before a microphone. We advise him to be more conciliatory in his approach.

There is very little that I want to say about the speech of the hon. Member for Brentford and Isleworth. The hon. Member for Manchester, Withington (Mr. Silvester), who was yawning his head off at 4.15, summed up the reaction to the hon. Gentleman's speech.

The yawn had more to do with a four-week old baby in the middle of the night than with my hon. Friend's speech.

I should perhaps congratulate the hon. Gentleman, but I do not know how he could have told the difference between the hon. Gentleman and a four-week old baby in the middle of the night.

It was apparent from the speech of the hon. Member for Brentford and Isleworth that, to a large extent, the arguments used in the previous debate had been abandoned. I am glad that the hon. Gentle man has departed from them. He spoke mainly about the technical procedure. I am sure that in Committee this matter will be the subject of long and intensive debate.

Is the hon. Gentle- man undertaking to make a change in Committee from the negative to the affirmative resolution procedure?

Of course I am not, otherwise I should have said so. I have said that it is certain that this matter will be debated at length.

I turn to the speech of the hon. Member for Aberdeenshire, East (Mr. Henderson) —

The hon. Gentleman cannot pass over in a sentence like that an important constitutional matter which has been raised by every hon. Member who has spoken. He cannot chuck it overboard like that.

The answer to that is, who cannot?

We appreciate that the amounts involved are relatively small. The hon. Member for Aberdeenshire, East referred to them as the widow's mite. It is a fact of public expenditure that small amounts add up to substantial amounts, and that is why ceilings are applied to public expenditure and reductions are suggested in the public sector borrowing requirement.

I wish to deal with the question of consultation. We have received, even after the last debate, no formal representations from the CBI. I was concerned to hear it said in our last debate that I had not considered the representations from the County Councils Association. But it seems that those representations were not sent to me or to my Department. We have received no representations from the association, as we have received no representations from the CBI. Had representations been made, had we refused to consider them, and had we refused to consult if we had been asked by these outside organisations to do so, the hon. Gentleman would have been correct to chide us for it.

Whenever I have been asked to consult on or discuss any issue of this sort, my attitude has been to do so. But we have received no formal representations from the CBI, never mind the County Councils Association.

I am surprised by the hon. Gentleman's remarks. The shortness of notice between publication of the Bill and the date of Second Reading may have something to do with it. However, I do not want to be unfair. The hon. Gentleman has mentioned the CBI and the County Councils Association. What about the TUC? Has not the hon. Gentleman asked the TUC for its opinion on the Bill?

Should not the hon. Gentleman have discussed with the TUC a Bill that will increase unemployment?

I do not believe that it need necessarily lead to an increase in unemployment; but I must get on. [Interruption.] I was long enough in the Whips' Office to know that when the Deputy Chief Whip frowns at me, I must get on.

It is important that we deal with the question of the difficulties of small firms, but if it is a choice between granting and not granting the temporary employment subsidy, I shall keep the temporary employment subsidy, because it is the Government measure which has been of greatest assistance in reducing redundancies, not only in Scotland, but elsewhere. That is the best way in which we could have responded since December to this question.

We do not underestimate the importance and gravity of unemployment in Scotland, although we expect fewer rebates to be paid next year. But let me make it clear that the Tory alternative is to increase redundancy. The right hon. Member for Leeds, North-East (Sir K. Joseph) and the hon. Member for Flint, West (Sir A. Meyer), who has apologised for not being present, made it clear that they do not want assistance to go to firms in trouble. If they were on the Government Front Bench, Scotland would be in trouble, because they would refuse financial assistance.

Since the Government are unable to cope with the situation and since the Tories will increase unemployment, does not the hon. Gentleman conclude that the best thing we can do in Scotland is to become independent?

That is not a view that I hold. But the hon. Gentleman would carry a heavy responsibility if, by any mischance, members of the Opposition were to be in the Departments of Employment and Industry and refusing assistance to people in Scotland threatened with redundancy.

The Government's policy is to save firms wherever possible. British Leyland was saved with the commitment of £300 million. Chrysler, which is of great importance to Scotland, had £162 million committed, £54 million being saved. The temporary employment subsidy has created 27,682 jobs in Scotland. The hon. Member for Flint, West said that the whole concept of shielding employees proved ineffective, but it has not been ineffective in the British motor car industry or British industry generally, and certainly not in Scotland.

The hon. Member for Basingstoke (Mr. Mitchell) said that we did not want to help employers. In that case, I should like to know what I have been doing day by day when I have been receiving deputations from employers to save their firms and have assisted in doing so. Day by day we in the Department of Industry and the Department of Employment have constantly met joint deputations of employers and trade unionists begging us to save their firms and their jobs. Whenever possible we have taken the view that it is right to do so at the present time. We are appalled that Opposition Members want to depart from that view.

I shall not give way. The hon. Member for Bedfordshire, South asked a question about contingent liability.

On a point of order, Mr. Speaker. When a Minister attacks an hon. Gentleman in the House is it not usual for him to give way to allow that hon. Member to respond?

The hon. Gentleman knows that when the Minister is in charge of the Floor it is his actions that are paramount.

It is in the interests of brevity, Mr. Deputy Speaker, that I get on. This point has not been raised again with the Treasury, but I shall undertake to do so following the debate.

We believe that the payment of redundancy benefits has reduced resistance to change. Mr. Gunter said on introducing the original Bill:
"The purpose of redundancy pay is to compensate a worker for loss of job, irrespective of whether that leads to any unemployment. It is to compensate him for the loss of security, possible loss of earnings and fringe benefits, and the uncertainty and anxiety of change of job."—[Official Report, 26th April 1965; Vol. 711, c. 36.]
I agree with the hon. Member for Bedfordshire, South when he says that we ought to do everything possible to increase placement, training and mobility allowances and to do whatever we can to protect existing jobs and to do more for job creation. I hope that Opposition Members who are constantly attacking the Manpower Services Commission for doing just that very thing will listen to his words.

The hon. Gentleman talked about protecting people in existing jobs. I hope that he will have a word with his right hon. Friend the Member for Leeds, North-East who wants firms to go to the wall and workers to be declared redundant in the name of classical orthodox economics.

Before the Minister sits down is he not going to deal with the charge that he is trying to get legislation by negative order instead of bringing it forward in primary legislation?

Division No.89


[5.44 p.m.

Abse, LeoForrester, JohnMulley, Rt Hon Frederick
Allaun, FrankFraser, John (Lambeth, N'w'd)Murray, Rt Hon Ronald King
Archer, PeterFreeson, ReginaldNewens, Stanley
Armstrong, ErnestGarrett, John (Norwich S)Ogden, Eric
Ashley, JackGeorge, BruceO'Halloran, Michael
Ashton, JoeGilbert, Dr JohnOrbach, Maurice
Atkins, Ronald (Preston N)Ginsburg, DavidOrme, Rt Hon Stanley
Atkinson, NormanGolding, JohnOvenden, John
Bagier, Gordon A. T.Gould, BryanOwen, Rt Hon Dr David
Barnett, Rt Hon Joel (Heywood)Gourlay, HarryPalmer, Arthur
Bates, AlfGraham, TedPark, George
Benn, Rt Hon Anthony WedgwoodGrant, George (Morpeth)Parker, John
Bishop, E. S.Grocott, BrucePavitt, Laurie
Blenkinsop, ArthurHamilton, James (Bothwell)Perry, Ernest
Booth, Rt Hon AlbertHardy, PeterPhipps, Dr Colin
Bottomley, Rt Hon ArthurHarrison, Walter (Wakefield)Price, William (Rugby)
Bray, Dr JeremyHattersley, Rt Hon RoyRadice, Giles
Brown, Hugh D. (Provan)Healey, Rt Hon DenisRees, Rt Hon Merlyn (Leeds S)
Brown, Robert C. (Newcastle W)Heffer, Eric S.Richardson, Miss Jo
Buchan, NormanHooley, FrankRoberts, Albert (Normanton)
Buchanan, RichardHoyle, Doug (Nelson)Roberts, Gwilym (Cannock)
Butler, Mrs Joyce (Wood Green)Huckfield, LesRobinson, Geoffrey
Campbell, IanHughes, Robert (Aberdeen N)Roderick, Caerwyn
Canavan, DennisHughes, Roy (Newport)Rodgers, George (Chorley)
Cant, R. B.Hunter, AdamRodgers, Rt Hon William (Stockton)
Carmichael, NeilIrvine, Rt Hon Sir A. (Edge Hill)Rooker, J. W.
Carter, RayIrving, Rt Hon S. (Dartford)Roper, John
Castle, Rt Hon BarbaraJackson, Miss Margaret (Lincoln)Rose, Paul B.
Clemitson, IvorJanner, GrevilleRoss, Rt Hon W. (Kilmarnock)
Cocks, Rt Hon MichaelJay, Rt Hon DouglasSandelson, Neville
Cohen, StanleyJeger, Mrs LenaSedgemore, Brian
Coleman, DonaldJenkins, Hugh (Putney)Selby, Harry
Conlan, BernardJohnson, James (Hull West)Shaw, Arnold (Ilford South)
Cook, Robin F. (Edin C)Johnson, Walter (Derby S)Sheldon, Rt Hon Robert
Cowans, HarryJones, Alec (Rhondda)Shore, Rt Hon Peter
Cox, Thomas (Tooting)Jones, Dan (Burnley)Silkin, Rt Hon John (Deptford)
Crawshaw, RichardJudd, FrankSilkin, Rt Hon S. C. (Dulwich)
Crowther, Stan (Rotherham)Kaufman, GeraldSilverman, Julius
Cryer, BobKelley, RichardSmall, William
Cunningham, G. (Islington S)Kerr, RussellSmith, John (N Lanarkshire)
Cunningham, Dr J. (Whiteh)Kilroy-Silk, RobertSpearing, Nigel
Davidson, ArthurKinnock, NeilSpriggs, Leslie
Davies, Bryan (Enfield N)Lamborn, HarryStallard, A. W.
Davies, Denzil (Llanelli)Lamond, JamesStewart, Rt Hon M. (Fulham)
Davies, Ifor (Gower)Latham, Arthur (Paddington)Stoddart, David
Davis, Clinton (Hackney C)Lever, Rt Hon HaroldStott, Roger
Deakins, EricLewis, Arthur (Newham N)Strauss, Rt Hon G. R.
Dean, Joseph (Leeds West)Lewis, Ron (Carlisle)Summerskill, Hon Dr Shirley
Dell, Rt Hon EdmundLipton, MarcusSwain, Thomas
Dempsey, JamesLomas, KennethTaylor, Mrs Ann (Bolton W)
Doig, PeterLoyden, EddieThomas, Jeffrey (Abertillery)
Dormand, J. D.Luard, EvanThomas, Mike (Newcastle E)
Douglas-Mann, BruceLyon, Alexander (York)Thomas, Ron (Bristol NW)
Duffy, A. E. P.McCartney, HughThorne, Stan (Preston South)
Eadie, AlexMcDonald, Dr OonaghTierney, Sydney
Edge, GeoffMcElhone, FrankTinn, James
Ellis, John (Brigg & Scun)MacFarquhar, RoderickTomney, Frank
English, MichaelMacKenzie, GregorTuck, Raphael
Ennals, DavidMcMillan, Tom (Glasgow C)Urwin, T. W.
Evans, Fred (Caerphilly)Madden, MaxVarley, Rt Hon Eric G.
Evans, Ioan (Aberdare)Magee, BryanWainwright, Edwin (Dearne V)
Ewing, Harry (Stirling)Mallalieu, J. P. W.Walker, Harold (Doncaster)
Faulds, AndrewMarquand, DavidWalker, Terry (Kingswood)
Fernyhough, Rt Hon E.Marshall, Dr Edmund (Goole)Ward, Michael
Fitch, Alan (Wigan)Maynard, Miss JoanWatkins, David
Flannery, MartinMellish, Rt Hon RobertWatkinson, John
Fletcher, Ted (Darlington)Mendelson, JohnWeetch, Ken
Foot, Rt Hon MichaelMolloy, WilliamWeitzman, David
Ford, BenMorris, Rt Hon J. (Aberavon)Wellbeloved, James

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 220, Noes 183.

White, Frank R. (Bury)Williams, Sir Thomas (Warrington)Young, David (Bolton E)
White, James (Pollok)Wilson, Alexander (Hamilton)
Whitehead, PhillipWilson, Rt Hon Sir Harold (Huyton)TELLERS FOR THE AYES:
Whitlock, WilliamWise, Mrs AudreyMr. Joseph Harper and
Williams, Rt Hon Alan (Swansea W)Woodall, AlecMr. Peter Snape.
Williams, Rt Hon Shirley (Hertford)Woof, Robert


Adley, RobertGrant, Anthony (Harrow C)Nelson, Anthony
Alison, MichaelGray, HamishNeubert, Michael
Arnold, TomGrieve, PercyOnslow, Cranley
Atkins, Rt Hon H. (Spelthorne)Grist, IanOppenheim, Mrs Sally
Bain, Mrs MargaretHall, Sir JohnPage, Rt Hon R. Graham (Crosby)
Baker, KennethHannam, JohnPage, Richard (Workington)
Banks, RobertHarrison, Col Sir Harwood (Eye)Parkinson, Cecil
Beith, A. J.Hastings, StephenPenhaligon, David
Bennett, Sir Frederic (Torbay)Havers, Sir MichaelPercival, Ian
Bennett, Dr Reginald (Fareham)Hayhoe, BarneyPrice, David (Eastleigh)
Berry, Hon AnthonyHenderson, DouglasPrior, Rt Hon James
Biffen, JohnHiggins, Terence L.Pym, Rt Hon Francis
Biggs-Davison, JohnHordern, PeterRaison, Timothy
Boscawen, Hon RobertHowe, Rt Hon Sir GeoffreyRathbone, Tim
Bottomley, PeterHunt, David (Wirral)Rawlinson, Rt Hon Sir Peter
Bowden, A. (Brighton, Kemptown)Hurd, DouglasRees, Peter (Dover & Deal)
Braine, Sir BernardHutchison, Michael ClarkRenton, Rt Hon Sir D. (Hunts)
Brittan, LeonJenkin, Rt Hon P. (Wanst'd & W'df'd)Rhodes James, R.
Brooke, PeterJessel, TobyRidley, Hon Nicholas
Brown, Sir Edward (Bath)Johnson Smith, G. (E Grinstead)Ridsdale, Julian
Bryan, Sir PaulJohnston, Russell (Inverness)Rifkind, Malcolm
Budgen, NickKing, Tom (Bridgwater)Roberts, Michael (Cardiff NW)
Burden, F. A.Kitson, Sir TimothyRodgers, Sir John (Sevenoaks)
Butler, Adam (Bosworth)Knox, DavidRossi, Hugh (Hornsey)
Carlisle, MarkLangford-Holt, Sir JohnRost, Peter (SE Derbyshire)
Chalker, Mrs LyndaLatham, Michael (Melton)Royle, Sir Anthony
Churchill, W. S.Lawrence, IvanSainsbury, Tim
Clark, Alan (Plymouth, Sutton)Lawson, NigelShaw, Michael (Scarborough)
Clark, William (Croydon S)Lester, Jim (Beeston)Shersby, Michael
Clarke, Kenneth (Rushcliffe)Lewis, Kenneth (Rutland)Silvester, Fred
Cockcroft, JohnLloyd, IanSinclair, Sir George
Cooke, Robert (Bristol W)Loveridge, JohnSkeet, T. H. H.
Cope, JohnLuce, RichardSpeed, Keith
Cormack, PatrickMcAdden, Sir StephenSpicer, Michael (S Worcester)
Costain, A. P.McCrindle, RobertStainton, Keith
Crouch, DavidMcCusker, H.Stanbrook, Ivor
Davies, Rt Hon J. (Knutsford)Macfarlane, NeilStanley, John
Dean, Paul (N Somerset)MacGregor, JohnSteel, Rt Hon David
Douglas-Hamilton, Lord JamesMacmillan, Rt Hon M. (Farnham)Stewart, Rt Hon Donald
Drayson, BurnabyMcNair-Wilson, M. (Newbury)Stewart, Ian (Hitchin)
du Cann, Rt Hon EdwardMcNair-Wilson, P. (New Forest)Stokes, John
Durant, TonyMadel, DavidStradling Thomas, J.
Dykes, HughMarten, NeilTapsell, Peter
Ewing, Mrs Winifred (Moray)Mates, MichaelTaylor, R. (Croydon NW)
Fairgrieve, RussellMather, CarolTebbit, Norman
Farr, JohnMaudling, Rt Hon ReginaldTemple-Morris, Peter
Finsberg, GeoffreyMawby, RayThatcher, Rt Hon Margaret
Fisher, Sir NigelMaxwell-Hyslop, RobinThorpe, Rt Hon Jeremy (N Devon)
Fletcher, Alex (Edinburgh N)Mayhew, PatrickTownsend, Cyril D.
Fookes, Miss JanetMeyer, Sir Anthonyvan Straubenzee, W. R.
Forman, NigelMiller, Hal (Bromsgrove)Wainwright, Richard (Colne V)
Mills, PeterWakeham, John
Fowler, Norman (Sutton C'f'd)Miscampbell, NormanWalder, David (Clitheroe)
Fraser, Rt Hon H. (Stafford & St)Mitchell, David (Basingstoke)Walker, Rt Hon P. (Worcester)
Fry, PeterMoate, RogerWall, Patrick
Gardiner, George (Reigate)Moore, John (Croydon C)Walters, Dennis
Gardner, Edward (S. Fylde)Morgan, GeraintWarren, Kenneth
Gilmour, Rt Hon Ian (Chesham)Morgan-Giles, Rear-AdmiralWeatherill, Bernard
Gilmour, Sir John (East Fife)Morris, Michael (Northampton S)
Goodhew, VictorMorrison, Charles (Devizes)TELLERS FOR THE NOES:
Goodlad, AlastairMorrison, Hon Peter (Chester)Mr. Spencer Le Marchant and
Gow, Ian (Eastbourne)Mudd, DavidSir George Young,
Gower, Sir Raymond (Barry)Neave, Airey

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Nuclear Industry (Finance) Bill

Not amended (in the Standing Committee), considered.

Clause 1

Government Guarantee Of Companies' Borrowing, Etc

5.58 p.m.

I beg to move Amendment No. 1, in page 1, line 12, leave out subsection (2).

With this it will be convenient to discuss Amendment No. 4, in page 1, line 18, at end insert—

'() The specified circumstances mentioned in subsection (2) above shall be those set out by the Secretary of State by order (made by statutory instrument and subject to negative resolution by the House of Commons) within six months of the coming into force of this Act.'

In the view of the Liberal Party, in many ways this provision is the whole guts of and certainly refers to the real controversy in this Bill. We as a party for some time have been gradually increasing our doubts about the wisdom of a number of aspects of nuclear power, and this subsection refers to the issue which disturbs us most at the moment.

As it stands, the clause in effect gives permission to the British nuclear fuel industry to make guarantees to overseas customers to repay them sums of money which they will advance to us for the building of the reprocessing plant at Windscale. Our basic and fundamental objection is that this seems a rather peculiar way of legislating—making guarantees for sums of money for a project which is the subject of a public inquiry at the moment.

It is our view that the decision on reprocessing is a political one, but one that we hope will be based on the facts. Until a public inquiry has taken place, we do not believe that there are sufficient facts available on which to base the decision.

6.0 p.m.

We wish to remove this subsection so that when the House does discuss the matter it will be better informed about the arguments for and against a nuclear reprocessing plant at Windscale. The real worry of the Liberal Party in relation to reprocessing is the increased chances of the proliferation of plutonium throughout the world, particularly in countries without access to that substance.

When this matter was debated in Committee we asked the Minister just how a guarantee could be made that the plutonium could be kept under lock and key, so to speak. We asked for an assurance that tremendous efforts would be made to ensure that the "book-keeping" on plutonium was such that it could not be taken by a third party on an illegal basis.

The scientists believe that the best bookkeeping they can do on this matter would give an error of about 2 per cent. The charge of plutonium required for a single fast breeder reactor is of the order of 1·1 tonnes. Two per cent. of 1·1 tonnes means that for a single charge for a single fast breeder reactor the accuracy of the bookkeeping is plus or minus 22 kilograms. People who are experts suggest that the minimum quantity of plutonium needed for any nuclear weapon is 6 kilograms. Therefore, it would appear that the maximum error which would not be detected would be the disappearance of 20 kilograms of plutonium. No one would know, yet that would be enough to make three weapons.

Far larger quantities of plutonium at this moment are being generated in thermal reactors. The average charge for a thermal reactor is 25 tonnes of uranium 253 and 238. Even when that particular reaction stops, the vast bulk of what is left in the reactor is uranium 235 and 238. Out of the original 25 tonnes I understand that about 24 tonnes are left. The only reason why reprocessing is considered at that particular stage is that it is no longer possible to make the pile go critical. In other words, reaction stops.

That reminds me of a simple physics experiment that many of us performed at school. Two different plates were put in acid and as a result a bulb lit up. When the bulb went out the reason was the oxidisation of the plates. The particular skill involved here is making sure that the chemical reaction does not foul itself up. So it is with thermal reactors. After a period of about two years the reaction stops because the by-product of the reaction is such that in effect it can no longer be started up.

If one reprocessed 25 tonnes of two sorts of uranium and the by-products, one could release the uranium and presumably use it again. It is the by-products that are really crucial. Even on one charge of one nuclear reactor there are 250 to 350 kilograms of plutonium. It is the belief of many people, including the Liberal Party, that reprocessing on the scale envisaged by some will make available to the world very large quantities of plutonium in a relatively short period. It will not just be the plutonium from the fast breeder reactors to which I have referred, but there will be substantial quantities also from the thermal reactors.

The Bill, if implemented, will mean that the overseas contract, about which so much is being said in the Press, will begin the process towards extraction of these materials. The particular guarantee most likely to come to fruition in the near future is the one from Japan. This is a guarantee against a sum of £400 million offered by the Japanese Government as an advance payment to British Nuclear Fuels Limited to build the reprocessing plant. A lot of questions are being asked about the guarantees in these circumstances.

If the plant does not get planning permission, the Japanese will get their money back, and no one would dispute that. If the plant is built and is discovered not to function for numerous reasons, the Japanese will not have their money returned. Some questions have been asked about the right of the Japanese and other overseas countries to information giving the precise technical reasons why the plant had failed and they had lost their £400 million. The assurance was given that they would have no right to any technical information as they would not be involved in any technical decisions in building the project. I can never recollect Governments overseas showing such remarkable generosity with such a large sum of money. The Japanese are desperate to get reprocessing out of their own country, not least because the plant they are trying to build does not seem to work.

The third possibility is of the plant being half built with the Japanese money, and the Americans then using their power to ban the transfer of what was their uranium 235 and 238 to third countries. The vast bulk of uranium came originally from America and in the contracts under which they sold to other countries there was the power to say "No" to that country selling or transferring the uranium to third countries.

I am told that a combination of the various groups on 9th March petitioned the United States Energy Research and Development Administration in what is called a rule-making hearing at which discussions about the re-processing of nuclear fuel originate in the United States. As recently as last year the Ford Administration introduced temporary bans on the transfer of such fuels from Japan and Spain to Windscale. That ban was rescinded, but there is a good possibility—and a few people think a likelihood—that the ban will be reimposed, and therefore the Japanese will not be allowed to send the material to the United Kingdom in any case.

In that event what will happen to the £400 million? The Government must have applied their mind to this question. Will the Americans pay damages if certain decisions are taken? That is hardly a possibility. Will Britain return to Japan the money lent to us, money that we have already spent, or will Japan take the view that that money will be lost?

There is enormous anxiety in the United States over the subject of reprocessing in Western Europe, mainly at Windscale and in France. We all know that very great efforts have been made by the United States and indeed by ourselves to stop the spread of plutonium. If the material to which I have referred is released from what is left in the reactor, enormous quantities of this material will exist and it will be available for people to use almost as they choose.

I have tried to outline in brief the proliferation problem. It is not only a matter of third or fourth countries obtaining this material. I am told that, given a source of plutonium, any country could obtain the services of nuclear advisers and out of that material make a bomb. That is one important side of the proliferation question. Tht other aspect that worries me equally is what will happen if guerrillas in any country manage to obtain a small quantity of this material and use it in guerrilla warfare in a way that the world has not yet experienced.

The main argument advanced in favour of this form of nuclear reprocessing is on the lines "If we do not do it, somebody else will." That has been the defence of the prostitute over the centuries. I do not dismiss that argument out of hand, but experience leads us to think differently. The United States has built two or three reprocessing plants within the last decade, every one of them has been shut down, and the losses have been enormous. The Japanese have been trying to do their own reprocessing and their plant does not work. The plant leaks and cannot be used.

The only people who appear to have a plant working on any scale are the French. They have already entered into commitments extending that equipment to the maximum capacity. There is little likelihood of the French building enough equipment to grab all the contracts, if I may put it that way.

It is nonsense for the House to approve these borrowing powers when the project to which the expenditure refers is in the process of public inquiry about safety and a number of other factors. This House will abdicate its responsibility if it does not take those matters strongly into consideration. The matter of reprocessing is a political decision, and the more we can base that decision on facts, the better. The inquiry has been set up to try to elicit all the factors from arguments for and against, and it is absurd for this House to pass judgment before we have heard the arguments.

6.15 p.m.

The Minister was asked on Second Reading whether we were to sign any more contracts for the reprocessing of nuclear waste from third countries. We already have substantial quantities of such material in the United Kingdom. We require an answer to that question before deciding how to dispose of this material. Many arguments can be put against the continued importation of nuclear waste until we decide what we are to do about the situation. Relatively speaking, there is no great problem in dealing with the material that is already in the United Kingdom, because we have a substantial number of ponds where this material may be watched, cooled and kept under careful conditions. That material can continue to be dealt with in ponds until we have reached a final solution on the disposal of 600 or 700 kilograms of waste.

Are the British Government contemplating further contracts for the storage of other countries' waste? I do not understand why it is regarded as so important for Britain to store other people's waste. It is said that the Japanese do not wish to store their own waste because they are in an area of high geological activity and are worried that escapes of this material could lead to great loss of life. No doubt the Japanese are right to be worried about these factors, but they are building their own power stations in which these materials are used and have also built their own reprocessing plants. I suggest that the Japanese should seek to cope with three units of this material instead of the present figure of two units.

I do not fully understand the pressures on this country to import this material. There is the slightly cynical view held by some that the final solution in getting rid of this waste is a long way off—and that certainly applies to a solution that is acceptable to public opinion. It is said that the Japanese take the view "If there is to be a dump, it is better that it should be in the United Kingdom than in Japan."

I have tried to give an outline of my reasons for wishing to delete subsection (2). We are also discussing Amendment No. 4, which seeks to provide a similar level of protection, because it will make the legislation subject to negative resolution by the House of Commons. That would bring the political decision back to the Floor of the House, so that these matters may be debated and considered against the knowledge that is then at our disposal. It is precisely for that reason that we are asking this. Until the reprocessing inquiry at Windscale has been completed, we do not have the best information to make a logical decision.

The hon. Member for Truro (Mr. Penhaligon) used the word "we". Is the Liberal Party officially opposed to nuclear power stations?

No. The Liberal Party is not officially opposed to power stations. I mean nuclear power stations. To be against all power stations would be a difficult policy to adopt. We are saying that because of our luck in finding other sources of material and because of the potential energy saving that exists through massive schemes of insulation and the improvement of the efficiency of transport equipment, the country does not require a final decision to be made about the use of nuclear power yet. There is a breathing space and it can be used for the House to concentrate its mind on the facts as they are revealed, and not all the facts have yet been revealed. The House can then come to a logical decision.

It is for those reasons that I move the amendment. It is intended to enable the House to make a decision after the public inquiry has been held, and I hope that it will receive widespread support.

We are told that the state of the economy is now such that we must guard and watch over every pound of proposed public expenditure. Yet in such a situation we are presented with a Bill that cheerfully proposes a commitment of £1,00) million of taxpayers' money in an area that is technologically and politically highly controversial. I doubt whether anyone knows exactly what direction the argument will take and what policies will be deployed over the next 10 years. Yet the Bill proposes that the British taxpayer should bear the burden of £1,000 million, £500 million for existing work and another £500 million for work that is dubious in many respects—some of which have been mentioned by the hon. Member for Truro (Mr. Penhaligon)—and which carries the greatest possible technical, political and international uncertainties.

I do not wish to go over the technical questions that have been touched upon by the hon. Member for Truro. It is generally known that there are great and considerable technical controversies about reprocessing. There is great political controversey over whether it is necessary and about its political implications. America cannot be regarded as a technologically backward country, yet the American Government appear to have suspended judgment on reprocessing for a period and are using possibly rather strong-arm tactics on some of their allies to persuade them not to spread reprocessing technology around the world too lightheartedly.

Subsection (2) proposes the most extraordinary commercial arrangement that one could envisage. It says that if BNFL persuades a customer to put up money for a reprocessing plant, if something goes wrong, neither BNFL nor the customer but the British taxpayer would have to stump up. There is an open guarantee up to £500 million—and that is not a fleabite—that if anything goes wrong between the overseas customer and BNFL, the British taxpayer will be required to stump up.

I pursued this point in some depth through Parliamentary Questions and I think the Minister will probably agree that if, for technical reasons, the plant fails, the overseas customer will lose his money. I received that information as a result of parliamentary Questions and I pass it on as a point of interest.

It is up to the overseas customer if he is prepared to enter into a contract on that basis. If BNFL goes for such a contract and can persuade the overseas customer to accept it, the customer or BNFL should stand the loss.

I find it extraordinary that no provision appears in Clause 1 that BNFL must use its best possible technical expertise, that it must go into the commercial implications and possibly take special advice on the technology or the commercial viability of the contract. There is an open-ended offer of £500 million of taxpayers' money to enable BNFL to go ahead with a contract that is generally accepted to be technologically and politically of considerable uncertainty.

I certainly do not call into question the technical competence of BNFL scientists and engineers and their wish to do a good job, but this is an extremely hazardous and uncertain area. There was a disastrous accident at Windscale as recently as four years ago that resulted in the closing of part of the plant. Windscale has been struggling to recover from that for some time.

There was recently an unfortunate leak of radioactive liquid of some kind that caused, perhaps unnecessarily, public anxiety about processing and the safety requirements at Windscale. We also know that, as a result of considerable pressure from the public and hon. Members, the Secretary of State for the Environment has called in a planning application for a particularly controversial aspect of work at Windscale. In the light of this I find it extraordinary that the House should be asked to commit the taxpayer to a potential outlay of £500 million—although I agree that the amount would not have to be anything like as large—for a reprocessing plant that has been the subject of so much controversy on technical, planning and international diplomatic grounds.

There is another consideration. The hon. Member for Truro said that the Japanese had not got far with their reprocessing. My impression is that they are not doing too badly. I was in Japan a fortnight ago and, according to the Press, the Japanese seem to be making some technical progress with the plant. This matter raises questions about the diplomatic relationship with regard to nuclear fuel between the United States and Japan. The United States may exert pressures on the Japanese Government not to go ahead with the reprocessing plant, even if the Japanese proved technically competent to build and operate it. But that is a matter for Japan and the United States.

I dare say that the hon. Member for Sheffield, Heeley (Mr. Hooley) is aware that in The Guardian of 16th March it was indicated that the Japanese plant that will be ready and coming into operation shortly will be able to deal with 250 tonnes of oxide fuels a year. In that case the plant would not serve Japan's existing power stations and it is essential for the Japanese to try to obtain the English contract.

6.30 p.m.

I am not disputing that. I think that I remember seeing that report. I am not certain what the Windscale capacity for the Japanese contract was supposed to be, but I think that it was about 600 tonnes a year, which is not widely different from the figure quoted by the hon. Gentleman.

I am not quibbling about the exact figures and I accept that, at least in the short term, Japan would find it convenient to have its fuel reprocessed at Windscale. However, we are not talking about the short term; we are talking about a major new project that is the subject of a planning inquiry by the British Government and about a technological process that has been called into question by a country as technologically sophisticated as the United States.

It is strange that we should be expected to give a blank cheque to BNFL and to tell the firm that, whatever it does, it cannot lose, that it can sign any contract with the Japanese, because if something goes wrong, for political, technical, or other reasons, the taxpayer will bail it out. There is no incentive for BNFL to examine carefully the commercial implications of the contract.

My reading of the clause and the Explanatory Memorandum does not indicate that BNFL will be under any constraints if advance payments have to be repaid. That is an odd way of dealing with public money.

We are constantly told that nuclear power is the cheapest form of power available. This calculation turns on whether a particular station is used for base loading and run continuously or brought in to meet peak load demand. One can never work out the cost of such things as research and development over the past two decades, the processing of fuel and the associated research and technology. I sometimes wonder whether we have been given an accurate assessment of the cost per unit of electricity generated from nuclear sources and when I see a Bill that asks for £1,000 million of taxpayers' money to continue the programme, I become more dubious about the real cost of nuclear power to this country.

It would be out of order to have a wide-ranging discussion on fuel and energy policy, though it has some bearing on the Bill. I have some reservations on the provision to give the Secretary of State authority, subject to parliamentary approval, to provide capital for the existing activities of BNFL, which I am not calling into question, but if we underwrite another £500 million for a contract that has attracted within the United Kingdom and internationally so much uncertainly and criticism, that would be a curious act by this House at this time.

The question that I put to the hon. Member for Truro (Mr. Penhaligon) goes to the root of the matter. We must make up our minds whether we want electricity derived from nuclear fission or not. If we are to get the massive blocks of power for the future to maintain our industry when fossil fuels eventually run out, I can see no way of obtaining them except by nuclear fission and power stations operating that principle. This has been the accepted wisdom in these matters for a considerable time.

The hon. Member for Truro said that the Liberal Party was not against nuclear power stations or against power stations generally—which was reassuring—and that in any economy with nuclear power stations, reprocessing facilities must be provided. That has been done in this country.

The Select Committee on Science and Technology considered reprocessing in considerable detail in 1968–69. We thought then that it would eventually be a fairly important trading and commercial business for this country, which was well ahead of most other nations in nuclear power.

One of our recommendations was that a separate State trading company should be set up to do this work. We looked upon it as legitimate commercial trading business. We needed this reprocessing ability for our own stations and, as sensible people, we thought that Britain, as a commercial and industrial nation, should take on this work. I am glad that the Government of the day implemented that recommendation.

Can the hon. Gentleman explain why a reprocessing facility is needed now or at any time in the next decade when we seem to have got along quite well without it for the past 20 years?

There is a constant movement of nuclear fuel between a power station and a reprocessing plant. The question of how much fuel is kept at a power station and how much is taken for reprocessing at Windscale is a matter for arrangement, but a reprocessing facility is part and parcel of a nuclear power system. We cannot have a nuclear power station and then decide that there should not be any reprocessing.

I often think that many of the opponents of reprocessing are actually against nuclear power generally and it would certainly be more honest to say that we should not have nuclear power stations at all than to say that we can have the stations but we must not have the reprocessing.

My hon. Friend has said that there is no nuclear power which does not have reprocessing as part of the industry, but the Canadian system, CANDU, was specifically designed to exclude the reprocessing of fuel. The Canadians do not reprocess oxide fuel. I visited Windscale with our hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) and was advised by scientists there that it is as possible to vitrify without reprocessing as with reprocessing. The only reason for reprocessing is the added economic benefit which it can bring, although this depends on having a fast breeder reactor to give it commercial viability. Without that, there is no need for commercial reprocessing.

I am aware of the points made by my hon. Friend the Member for Edinburgh, Central (Mr Cook). I have seen the CANDU power station at Pickering. It is a highly successful plant. It is possible to arrange these matters so as not to have reprocessing, but that is not the nature of our nuclear power programme.

Does my hon. Friend agree that with our power stations reprocessing is required because we cannot allow nuclear waste to build up indefinitely? Does he also agree that one of the advantages—it may not be the main one in the long run—is that it decreases by nine-tenths the volume which ultimately has to be buried somewhere? Does he further agree that, if reprocessing is to be continued, the nuclear power industry is the only fuel-producing industry which is fully self-contained and has to bear all the costs, including reprocessing costs?

My hon. Friend has underlined the point I am trying to make. I wish people would be honest and say that they are against nuclear power stations instead of trying to get at the nuclear power programme by attacking the financial arrangements for reprocessing. We have the reprocessing facilities. It is good, sensible, commercial business, subject to safeguards, to obtain such business internationally.

The hon. Member for Truro said that the United States had doubts about reprocessing. It may be that the United States does not have engineers as good as ours in this area. We must not necessarily assume that they can do everything. We must look at this matter from the point of view of our own stations. We have the reprocessing capacity and we can us it commercially. That was the sensible recommendation of the Select Committee in 1969.

I congratulate the BNFL on the great success that it has made of the task that was given to it. It is a successful State trading company.

With large capital transactions of this kind, there must be a Government guarantee. There must be sufficient financial arrangements. If we leave out the subsection, the Bill will be wrecked. I think that that is the real intention behind the amendment. However, I wish that the hon. Member for Truro would do it in a more straightforward way.

A number of general points have been made with which I should like to deal before turning to other aspects of the debate. I think that the most useful course is for me to deal with the substance of Amendment No. 1.

As I indicated during earlier debates on the Bill, the Government's intention in taking these powers is to enable them to guarantee advance payments made by overseas customers to finance their share of the proposed oxide reprocessing plant at Windscale, which, as the House knows, is to be the subject of a public inquiry. In view of the sums involved—the limits proposed in the Bill relate to the estimated cost of the plant—the Government believe that it is reasonable that customers should be guaranteed a return of these payments should BNFL be unable to repay in the limited circumstances which have already been explained in great detail.

6.45 p.m.

In addition, we cannot rule out the possibility that other aspects of BNFL's business, such as uranium enrichment or hexafluoride conversion, might be financed in a similar way. If the terms were right, we would not wish BNFL to be denied access to financing its investment in this manner because the Government could not guarantee such advance payments. In principle, therefore, the amendment is unacceptable. If the indirect object of the amendment, as the hon. Member for Truro (Mr. Penhaligon) has explained, is to discourage and, if possible, prevent BNFL from undertaking overseas reprocessing work, that is a mistaken objective.

There are two important advantages in undertaking this kind of work. Not only is it attractive commercially, but it assists our non-proliferation objectives. By taking on work of this kind for foreign countries, we help to discourage the development of reprocessing plants overseas.

Am I right in thinking that Sir John Hill is on record as saying that there is no commercial viability in reprocessing and that the cost is far greater than the value of the material recovered?

My hon. Friend is wrong in thinking that. We discussed these matters at great length in Committee and to some extent on Second Reading.

The hon. Member for Sutton and Cheam (Mr. Macfarlane), who is not present, made a long and careful speech outlining why it was not as profitable as the Minister thought. The hon. Gentleman's reply was that the hon. Member for Sutton and Cheam had his experts and he had his own. That was the end of the Government's reply.

I think that the hon. Gentleman has been very unfair to the hon. Member for Sutton and Cheam (Mr. Macfarlane). I think that the hon. Member for Ross and Cromarty (Mr. Gray) will recall that his hon. Friend the Member for Sutton and Cheam spoke at great length on the non-proliferation argument and that I responded to that argument. The hon. Member for Truro may not agree on how the hon. Member for Sutton and Cheam put the argument. It is for both of them to argue that matter. I suggest that it was in the context of the non-proliferation argument, and I complimented the hon. Gentleman on it.

For the sake of the record, perhaps I should point out that the hon. Member to whom reference has been made is my hon. Friend the Member for Carshalton (Mr. Forman), not my hon. Friend the Member for Sutton and Cheam (Mr. Macfarlane).

I am sorry. I thought that it was the hon. Member for Sutton and Cheam.

Yes, it is the hon. Member for Carshalton (Mr. Forman).

The main arguments advanced against undertaking the process are that it might not be safe, that we might find ourselves having to store the resulting nuclear waste, and that there might be heavy losses if advance payments had to be returned because of technological or other difficulties in operating the plant.

As to the first argument, as my right hon. Friend the Secretary of State for the Environment said on 22nd December, the relevant safety considerations will be examined at the forthcoming public inquiry. As to the second argument, contracts are to contain clauses giving the option to return waste to the country of origin and to discontinue the reprocessing obligation if this cannot be done. As to the third argument, I repeat the assurances already given that the technological risk in these contracts will be borne by the customer, not by the company, and that advance payments will be repayable only in circumstances which would not represent a loss to the company. I hope that the House will reject Amendment No. 1.

On Amendment No. 4, I think that the hon. Member for Truro to some extent tied his arguments to those in support of Amendment No. 1, so I would advocate the same arguments as I used on Amendment No. 1.

I come now to the point of substance that the hon. Member for Truro raised. He was concerned about undertaking the storage of irradiated fuel and taking in such fuel before knowing how residual waste will be disposed of. I refer him to the remarks made on Second Reading by my right hon. Friend the Secretary of State. I shall not quote my right hon. Friend's words, but the hon. Member for Truro can refer if he wishes to Hansard of 8th February, at col. 1256. when this matter was dealt with at great length.

The hon. Member for Truro also argued about America, but I ask him to recollect that I dealt with the issues of proliferation and safeguards at great length in Committee, as he will see if he looks at columns 75 and 76 of Hansard. On the question of American intervention, the hon. Member asked about the implications for the Japanese contract of any United States restraint or other international restraints on the shipment of irradiated fuel. My right hon. Friend the Secretary of State for Energy explained the implications in a Written Answer on 23rd December, when he stated:
"It is usual for nuclear fuel to be supplied subject to a requirement that it will not be transferred by the recipient to another country without the suppliers' authorisation. This is the only international restraint on the transfer of spent fuel from Japan to the United Kingdom for reprocessing. This requirement is not new, and authorisation has never been refused for transfer to the United Kingdom."—[Official Report, 23rd December 1976; Vol. 923, c. 299.]
The Government of the United States are currently reviewing the conditions under which authorisations for transfers were granted, in the light of the conclusion of the review of nuclear export policy. If the United States stopped BNFL reprocessing, the risk would fall on the customer. Repayments would be due in under the limited circumstances that I have described at length.

I understand that the Minister is referring to existing contracts. The American Government have authorised transfer to the United Kingdom for reprocessing. Will the hon. Gentleman take a step further and explain what will happen to the new contract which is likely to come into operation? Would the United States exercise a veto in that case? If it did, there would be great problems for the United Kingdom.

The hon. Member for Bedford (Mr. Skeet) posed the same question in Committee.

I said in Committee that one reason why I could not give an answer was that I was not privy to the decisions of the American Government. I am still not privy to the decisions of the American Government.

The hon. Gentleman is putting a question to me as if I knew what the decisions of the American Government were. I have replied as best I can to the debate, and I hope that the House will reject the amendment.

It is not the intention of the official Opposition to vote on this amendment, although the hon. Member for Truro (Mr. Penhaligon) says that he will vote on it.

To some extent the amendment of the hon. Member for Truro was irrelevant at this stage of the proceedings. Those of us who were on the Committee heard him deal with this subject at great length, and he was given the same answers as he has received today. I think that the hon. Member for Truro has a genuine desire to see more parliamentary scrutiny. That could well be achieved if he interested himself in the next Opposition amendment.

The Liberal Party has to make up its mind about its attitude to the whole nuclear industry. In the part of the United Kingdom that I represent, the North of Scotland, there is a United Kingdom Atomic Energy Authority establishment at Dounreay. In the years that I have been in politics I do not recall any Liberal candidate or any representative of the Liberal Party taking exception to that establishment at any time. The former Liberal Member for Caithness and Sutherland, who is now Lord Mackie, would be willing to confirm that the Liberals in that part of the country did not take exception to Dounreay when it was created, and, to my knowledge, they have not taken exception to it since.

Division No. 90.]


[6.59 p.m.

Bottomley, PeterFookes, Miss JanetGrylls, Michael
Clark, Alan (Plymouth, Sutton)Glyn, Dr AlanHenderson, Douglas
Cooke, Robert (Bristol W)Gow, Ian (Eastbourne)Hodgson, Robin
Fisher, Sir NigelGrimond, Rt Hon J.Howells, Geraint (Cardigan)

Waste fuel has been moved from that part of the country to Windscale for many years. This has been known, and no objection has been taken to it. It seems rather strange that at this stage a great deal of anxiety should be expressed about it. I do not say that the anxiety is not justified, and I wholly support every conceivable measure which would ensure the safety of transport of any spent fuel, but it seems surprising that such concern should be expressed at this stage.

The reason is fairly obvious. We are about to build a reprocessing plant. If I judge the feeling of the House correctly, the House is about to vote a very large sum of money to build a plant for which the House has also agreed that there should be a public inquiry. The House will be voting the money before that public inquiry has reported. That seems to be lunacy of the first order, even if all the hon. Gentleman's other points are valid.

The whole point—which the hon. Member for Truro had not spotted—is that the House will be voting on an extension of the limits. The fact that a public inquiry is to take place is a complete safeguard and should answer the hon. Gentleman's point.

It is not unusual for a Government to come to the House and ask for limits to be extended. If the Government continue in office for much longer—let us hope that they do not, but it is up to the Liberals what they do about that—it is likely that they will come back to the House with a great many more Bills to ask for limits to be increased because of the inflation to which they have contributed. But it is not my duty tonight or any other night to argue the Government's case.

We do not see that the amendment does anything more than the amendment that the hon. Member for Truro discussed in Committee, and we shall not be supporting him on this occasion.

Question put, That the amendment be made:—

The House divided: Ayes 28, Noes 171.

Knight, Mrs JillRathbone, TimWainwright, Richard (Colne V)
Lawrence, IvanRees-Davies, W. R.Wakeham, John
Marshall, Michael (Arundel)Stainton, Keith
Mates, MichaelStanbrook, IvorTELLERS FOR THE AYES:
Miscampbell, NormanThompson, GeorgeMr. David Penhaligon and
Nelson, AnthonyThorpe, Rt Hon Jeremy (N Devon)Mr. A. J. Beith.
Onslow, CranleyTrotter, Neville


Allaun, FrankGrant, John (Islington C)Parker, John
Armstrong, ErnestGrocott, BruceParry, Robert
Ashley, JackHarper, JosephPhipps, Dr Colin
Ashton, JoeHarrison, Walter (Wakefield)Radice, Giles
Atkinson, NormanHattersley, Rt Hon RoyRichardson, Miss Jo
Bagier, Gordon A. T.Hoyle, Doug (Nelson)Roberts, Gwilym (Cannock)
Barnett, Rt Hon Joel (Heywood)Huckfield, LesRoderick, Caerwyn
Bates, AlfHughes, Rt Hon C. (Anglesey)Rodgers, George (Chorley)
Benn, Rt Hon Anthony WedgwoodHughes, Robert (Aberdeen N)Rodgers, Rt Hon William (Stockton)
Bennett, Andrew (Stockport N)Hughes, Roy (Newport)Rooker, J. W.
Bishop, E. S.Hunter, AdamRose, Paul B.
Blenkinsop, ArthurIrvine, Rt Hon Sir A. (Edge Hill)Ross, Rt Hon W. (Kilmarnock)
Boardman, H.Jackson, Colin (Brighouse)Ryman, John
Bray, Dr JeremyJackson, Miss Margaret (Lincoln)Sandelson, Neville
Brown, Ronald (Hackney S)Janner, GrevilleSedgemore, Brian
Buchan, NormanJeger, Mrs LenaSelby, Harry
Buchanan, RichardJohnson, James (Hull West)Shaw, Arnold (Ilford South)
Butler, Mrs Joyce (Wood Green)Jones, Alec (Rhondda)Silkin, Rt Hon S. C. (Dulwich)
Callaghan, Jim (Middleton & P)Jones, Dan (Burnley)Silverman, Julius
Canavan, DennisKaufman, GeraldSkinner, Dennis
Carter, RayKerr, RussellSmall, William
Carter-Jones, LewisKinnock, NeilSmith, John (N Lanarkshire)
Clemitson, IvorLambie, DavidSpearing, Nigel
Cocks, Rt Hon MichaelLamborn, HarrySpriggs, Leslie
Cohen, StanleyLamond, JamesStallard, A. W.
Coleman, DonaldLatham, Arthur (Paddington)Stewart, Rt Hon M. (Fulham)
Cowans, HarryLeadbitter, TedStoddart, David
Cox, Thomas (Tooting)Lee, JohnStott, Roger
Crawshaw, RichardLester, Miss Joan (Eton & Slough)Summerskill, Hon Dr Shirley
Crowther, Stan (Rotherham)Lewis, Ron (Carlisle)Taylor, Mrs Ann (Bolton W)
Cryer, BobLipton, MarcusThomas, Ron (Bristol NW)
Davidson, ArthurLoyden, EddieThorne, Stan (Preston South)
Deakins, EricLyon, Alexander (York)Tierney, Sydney
Dean, Joseph (Leeds West)Lyons, Edward (Bradford W)Tinn, James
Dempsey, JamesMcCartney, HughTuck, Raphael
Doig, PeterMcDonald, Dr OonaghVarley, Rt Hon Eric G.
Dormand, J. D.McElhone, FrankWainwright, Edwin (Dearne V)
Duffy, A. E. P.Maclennan, RobertWalden, Brian (B'ham, L'dyw'd)
Dunnett, JackMcMillan, Tom (Glasgow C)Walker, Harold (Doncaster)
Eadie, AlexMadden, MaxWalker, Terry (Kingswood)
Edge, GeoffMagee, BryanWard, Michael
Ellis, John (Brigg & Scun)Mahon, SimonWatkins, David
Ennis, DavidMarks, KennethWatkinson, John
Evans, Ioan (Aberdare)Marshall, Dr Edmund (Goole)Weetch, Ken
Ewing, Harry (Stirling)Marshall, Jim (Leicester S)White, Frank R. (Bury)
Faulds, AndrewMaynard, Miss JoanWhitlock, William
Fernyhough, Rt Hon E.Mendelson, JohnWilliams, Rt Hon Alan (Swansea W)
Flannery, MartinMolloy, WilliamWilliams, Sir Thomas (Warrington)
Fletcher, Ted (Darlington)Moonman, EricWilson, Alexander (Hamilton)
Foot, Rt Hon MichaelMorris, Charles R. (Openshaw)Wilson, Rt Hon Sir Harold (Huyton)
Forrester, JohnMoyle, RolandWise, Mrs Audrey
Fowler, Gerald (The Wrekin)Oakes, GordonWoodall, Alec
Freeson, ReginaldOgden, EricWoof, Robert
Garrett, W. E. (Wallsend)Orbach, MauriceWrigglesworth, Ian
George, BruceOrme, Rt Hon Stanley
Golding, JohnOvenden, JohnTELLERS FOR THE NOES:
Gould, BryanPalmer, ArthurMr. James Hamilton and
Gourlay, HarryPark, GeorgeMr. Peter Snape.
Graham, Ted

Question accordingly negatived.

I beg to move Amendment No. 6, in page 1, line 20, leave out from "section" to end of line 24 and insert:

"And before any guarantee is given, an order made by statutory instrument showing the extent, character of and amount of the guarantee shall be laid before and approved by the House of Commons".

With this we may take Amendment No. 7, in page 1, line 20, leave out from "section" to end of line 24 and insert:

"and any of the following matters shall be subject to an order made by statutory instrument, a draft of which has been laid before and approved by the House of Commons:
  • (a) guarantees concerning services relating to the location and storage of radioactive materials;
  • (b) guarantees concerning services relating to the importance of waste materials.".
  • It is necessary to outline first the purpose of subsection (3) of Clause 1, which provides that a statement of the expenditure and character of guarantees, which were the source of discussion on the previous amendment, should be laid before the House. It is the purpose of the amendment to provide the House with more accurate and definitive control over the actions taking place, and perhaps putting in more precise form the responsibilities of the House.

    We had the opportunity in Standing Committee to discuss the problems which arise in the form of democratic and parliamentary control in relation to matters of this particularly complicated and difficult nature. We had already recognised that this was a matter which had very strong—and, indeed, on some occasions overriding—environmental considerations. The social considerations, which might affect future generations, place a very special obligation on the House of Commons in particular. It is really that matter of parliamentary control which has caused me to put this amendment before the House.

    Subsection (3) states that:
    "a statement showing the extent and character of the guarantee, and the circumstances in which it came to be given",
    shall be placed before the House. The object of my amendment is to seek approval before that event and not after it. I recognise that that is changing the emphasis and putting the decision-making process outside ministerial action but inside this House of Commons, in the Chamber itself.

    We must look at some of the current evidence of what has happened on reprocessing contracts so far. Our current experience shows that, on work that has taken place up to now, losses have not yet been fully determined. The source of that information lies in the last accounts of British Nuclear Fuels Limited.

    Members of the Standing Committee will be familiar with some of these matters, and I may be forgiven if I reiterate a little about them. On page 17 of the fifth annual report and accounts of British Nuclear Fuels Limited, note 1(b), referring to the trading profits, says that
    "Certain reprocessing contracts entered into in previous years which have now become unprofitable are in course of renegotiation. Pending the outcome of these negotiations it is not possible to determine whether any provision needs to be made for losses which may arise in future years."
    Those are quite ominous words.

    On page 11 those doubts are re-emphasised. The auditors underline their concern and consideration. It is a very reputable firm of auditors, Coopers and Lybrand. The report, which is signed by the auditors, says in note 3:
    "For the reasons given in note 1(b) no provision has been made in these accounts in respect of any future losses which might arise on certain reprocessing contracts which are in the course of renegotiation."
    That seems to me to be a matter which should be drawn to the attention of all of us so that we may see what is happening in this case.

    Indeed, that was my concern when I put questions to the Minister asking what were the underlying facts behind those statements of doubt and inability to decide the amount of losses arising on reprocessing. I was told that these were matters of the day-to-day running of British Nuclear Fuels Limited, and I was asked to write to that authority. I did so.

    7.15 p.m.

    Here we see illustrated the problems of parliamentary control to which my amendment refers, because in his reply, the Chairman of British Nuclear Fuels Limited said:
    "As you will see from the letter, Government decisions do in fact impinge on two of your questions, but I will nevertheless do what I can to answer them."
    Therefore, although we are told in parliamentary terms that this is a matter of day-to-day running of this quasi-nationalised institution, we find that the chairman is saying that this is a matter on which Government decisions impinge. It is for that reason that I am concerned that matters of this nature should come before the House.

    If we go further into the explanation of the reprocessing losses which have been taking place up to now, we find in that very letter that the Chairman of British Nuclear Fuels Limited said that he could not in the present uncertain situation give an estimate of future losses. He added:
    "We had hoped to renegotiate arrangements which would minimise or eliminate loss, but the announced intention to hold a public inquiry into the new plant for reprocessing oxide fuel, coming as it does a year after the Government's approval for further overseas reprocessing business, could make a substantial loss unavoidable."
    We see there a political and public action which is entirely proper, and which starts to bedevil some of the commercial aspects of the company. We have a parliamentary duty to involve ourselves in those detailed matters.

    On page 12 of the annual report and accounts there are references to long-term storage problems. This once again illustrates the difficulties that we have in maintaining the proper sort of control, because note 4 on page 12, dealing with accounting policies, says that
    "An amount is set aside each year for the estimated cost of the long-term storage of the Group's waste products. The total amount retained is reviewed annually based on the latest technical assessment but this is a long-term project and the computation of the estimated costs is necessarily imprecise."
    I agree with that absolutely. It is the imprecision, the uncertainty and the fact that we are looking into the future which make me feel that we have to be very careful in our review and our method of control of this matter.

    We know, for example, from the recent history that there have been some very uncertain problems on the question of pay. In that same annual report and accounts the chairman's review mentions the special pay problems and the difficulties reflected in them. Recently the Secretary of State paid literally a flying visit to try to take some emergency action. In those circumstances, it seems clear to me that political considerations are dominant and that Parliament has a duty to satisfy itself on the policies as to the usage of the funds and not only on the question of appropriation.

    The Under-Secretary of State was very kind to all members of the Standing Committee and wrote to us explaining some of the difficulties which he felt arose in the consideration of an amendment of this nature. With his approval, I shall refer to some of the matters contained in that letter. I felt that the Minister's approach was both helpful and thoughtful, seeking to ascertain whether we could find a method of control over this activity.

    The Under-Secretary of State's first point was that this was probably an unnecessary duplication of some of the financial controls which already exist under the terms of the Bill. That may be so, but I have tried to indicate that there is a special situation here. The Under-Secretary added that
    "it would be illogical to have more stringent controls over the giving of guarantees than over the provision of finance direct."
    I do not wish to dilate at length on the fact that a guarantee is as good as the money. It is an obligation of this House and of Parliament to ensure that guarantees are not freely or thoughtlessly given, or given in an uncontrolled fashion. A guarantee is the word of the Government and its bond, and we have just as much a duty to safeguard the issuing of those guarantees as we have a duty to safeguard the issuing of funds.

    After all, in the very form of the Bill we must recognise the special nature and circumstances. The Bill says that a statement showing the extent and character of the guarantees, and the circumstances in which they came to be given, shall be laid before the House. That is too late a stage, and it is not enough. We need an opportunity for the House to put a point of view before the ministerial decision is taken.

    Is not my hon. Friend's best argument the fact that this is precisely what the Government are doing with the Japanese contract? We know the extent of the guarantee of the contract for a thermal-oxide plant to be built for operation in the early 1980s. We know that the guarantee covers specific commitments to be negotiated with the Japanese utilities. My hon. Friend is asking for prior notification and examination by the House and in doing so he is following precisely what is being done in the Japanese negotiations.

    I am obliged to my hon. Friend. In Committee the Under-Secretary of State referred to the fact that we had an affirmative procedure at an earlier stage in order to provide just such opportunity for debate as I am now seeking. I must make it clear that I am not anti-nuclear energy. I am, however, concerned that we should discharge our obligation to the public in the course of setting up the future of our nuclear industry, and I am seeking to do so in a positive and constructive way.

    I was concerned about a statement in the Minister's letter —which was offered in a helpful and friendly spirit—when he referred to the question of guarantees of advance payments. He said that the difficulty was that a guarantee might not be available "even if the Secretary of State had expressed his support for the venture and his willingness to give a guarantee". I do not think that the Secretary of State should be allowed to give a guarantee until we have had discussions on it. That is the object of this exercise. The amendment would clearly lay down that we should have to have an order made by Statutory Instrument showing the extent and amount of the guarantee. That Statutory Instrument would have to be laid before and approved by the House.

    I understand and accept the line taken by the Minister in his letter, when he said:
    "It would complicate and delay the process of giving a guarantee and (if taken as a precedent and adopted more widely) would be likely to put a severe burden on Parliamentary time."
    But I have exactly that object in view. It is my understanding and belief that Parliament has lost its financial teeth, and it is time it got them back again. It is time that we got a grip on the financial affairs of the nation. I am offering the House the opportunity, through this amendment, of taking that grip in this matter.

    My hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth) moved the amendment skilfully, as he did a similar one in Committee. This is not an official Opposition Front Bench amendment, but we are sympathetic towards it.

    I was disappointed in the letter which the Under-Secretary of State sent to all hon. Members who served on the Standing Committee. We had considerable discussion of this matter one morning in Committee, and to the Opposition it appeared that the Government Benches were rather thinly populated. In his reply to that debate the Minister began by not being particularly helpful to my hon. Friend, but his attitude changed considerably when his Whip whispered in his ear. By the time he was finishing his reply, the hon. Gentleman was indicating to my hon. Friend that, although he could give no promise, he would look at my hon. Friend's proposal sympathetically.

    Earlier in the debate the Minister said:
    "if individual approvals were to be required, there would seem to be no point in having an overall limit."
    Later, however, he said:
    "I am prepared, because this is a vital principle, to take the matter back and examine it and to come forward with views on it. I say that without any promise, but I give the hon. Gentleman a guarantee—since we are talking about guarantees—that I shall examine his proposition in great detail."—[Official Report, Standing Committee A, 3rd March 1977; c. 103.]
    I was, therefore, disappointed by the hon. Gentleman's letter to my hon. Friend advising him that, although the Minister and his advisers had considered the matter,
    "The normal practice in controlling guarantee powers is that followed in the Bill as now drafted.… This practice has been followed by successive Governments…".
    That really is not a very good answer. We all know that in this House Ministers rest on the actions of previous Governments, and anything that is a precedent is used over and over again.

    My hon. Friend has tonight made a very good case for further parliamentary scrutiny. When we are talking of reprocessing plants we are talking of a very new activity, and it is difficult to be certain just what the cost involved may be. There is also difficulty in determining exactly what is the ministerial responsibility and what is the day-to-day responsibility of British Nuclear Fuels. All that my hon. Friend is trying to do is ensure that Parliament has complete scrutiny over the sums of money involved. He himself explained that he is not antinuclear. I feel the same way. With the limited knowledge which a layman can have, and from the information given to one, one can only reiterate that British Nuclear Fuels has a very proud record of safety. That, however, is no excuse for not monitoring with the greatest skill the amounts of money voted by this House.

    We shall listen carefully to what the Minister has to say before we decide whether to support my hon. Friend in the Lobby, just as he himself will have to decide whether he wishes to press his amendment to a Division. It would be wrong for us to decide before we hear what the Minister has to say. I hope that he has been more persuaded by our remarks than he was in Committee and that, despite what he said in his letter, he will decide to overrule his previous view. My hon. Friend has given him a case that he can usefully consider.

    I did not have the privilege, or perhaps the burden, of serving on the Standing Committee, so I have heard only this debate on the subject. The hon. Member for Hertfordshire, South-West (Mr. Dodsworth) has made a very good case. Guarantees of the magnitude we are talking about ought to be subject to the positive control of the House.

    The amendments also concern the disposal of wastes. The Minister knows of my deep interest, both personal and as a constituency Member, in this matter. I believe that firm control of these guarantees by the House would be a guarantee to the people, who are worried about the disposal of these wastes, that control would rest with this House at the financial as well as at other levels. The public are concerned about these matters and, quite properly, rely on the House to subject them to close scrutiny on their behalf. From what the hon. Member has said, I am in favour of his proposition as being a solution to the problem.

    7.30 p.m.

    I am in great difficulty. I do not quarrel in any way with the hon. Member for Hertfordshire, South-West (Mr. Dodsworth). Indeed, I have great admiration for his advocacy. He was a powerful advocate in Committee and he is a powerful advocate here today. I should have to do well in order to emulate him. But I cannot win, because I wrote not only to the hon. Gentleman but to all members of the Committee to acquaint them with the facts. It was not a question of my naturally wanting to be hostile, because that is not my make-up. People sometimes have common points of view, and I believe in argument, discussion and debate to try to resolve the issues.

    I told the Committee and the hon. Gentleman, which I think I was entitled to do because of the hon. Gentleman's advocacy for his amendment, that I would give it close consideration. I have done that, and I regret to inform the House that I have concluded that the Government cannot accept the amendment. I owe it to the House to try to explain why. I regret that I shall have to go over some of the grounds and some of the arguments that were used in Committee, but I think that it is appropriate to place my comments on record.

    The amendment is unacceptable in principle. The practice in controlling guarantee powers is that followed in the Bill—to set up an overall limit, to require Treasury consent to individual guarantees and to require returns to Parliament to show how that power has been used. I hope that the hon. Member for Galloway (Mr. Thompson) is listening. I saw him smiling when he was pressing the case concerning the power of Parliament. He is doing his best to get out of this Parliament. I know why he was smiling. I say that as an aside, but I know he is suggesting that he wants accountability to Parliament. I hope that the hon. Gentleman is listening to this. He was entitled to raise the matter, and I am sorry that he could not be with us on the Committee.

    This practice has been followed in the past. The hon. Member for Ross and Cromarty (Mr. Gray) mentioned it when I said that it had been "followed by successive Governments". He made the point that when the present Opposition were the Government they laid down a similar procedure in the Gas Act 1972. To go further and require parliamentary approval for each exercise of the guarantee would unnecessarily complicate and delay that process.

    The hon. Member for Hertfordshire, South-West understands this probably better than anyone else present in the House. If it were taken as a precedent, it would be likely to put a severe burden on parliamentary time. It would also be illogical in the context of guarantees for loans to BNFL and TRCL. The arrangements under the 1971 Act and the Bill would allow the companies' financial requirements to be met in two ways, either by loans from the private sector, which the Secretary of State might guarantee, or directly from public funds by share purchase or through the National Loans Fund. These two latter methods of financing are not subject to a control of the kind proposed, and it would be illogical to have more stringent control over guarantees than over the provision of finance direct.

    The amendment's application to guarantees for advance payments could prejudice BNFL's commercial interests. If the company wanted to negotiate business in an area where guaranteed advance payments were needed, it would be unable to have any assurance that such a guarantee would be available if negotiations were otherwise successful and it the Secretary of State agreed that a guarantee would be given. This would inevitably lessen the interest of a company and customer in embarking upon the complex negotiations involved.

    Guarantees arise under Clause 1(1) and Clause 1(2) and, as the Minister said, there may be an extremely broad coverage of guarantees under Clause 1(2). My hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth) is arguing that there should be prior approval by Parliament, and the Minister is saying that the commercial relations of BNFL will be prejudiced, as in the case of the Japanese contract. How has BNFL been prejudiced in any way? Other factors have supervened. It is not a question of guarantees. If this procedure had been followed with prior notification, that would have been satisfactory for the company.

    The hon. Gentleman is trying to assume that he is making a clever point, but there is the question of commercial aspects in negotiations. By drawing in the Japanese contract as an argument in favour of the amendment, the hon. Gentleman is doing his hon. Friend a great disservice. His hon. Friend's advocacy was not related to whether they were Japanese contracts or anything else. The point of his argument was that there should be Parliamentary accountability. The hon. Member for Bedford (Mr. Skeet) has done his hon. Friend a great disservice by his intervention.

    The amendment would unnecessarily complicate the giving of guarantees. It would make for an illogical situation with regard to the provision of finance for the two companies, and it might prejudice BNFL's commercial interest. For those reasons the Government cannot accept the amendment, and I hope that the hon. Gentleman will withdraw it.

    The main objection to Amendment No. 7 is one of principle. The practice in controlling guarantee powers, which has been followed by Administrations from both parties, is that followed in the Bill —that is, to set an overall limit, to require Treasury consent to each exercise of the power, and to require returns to Parliament. To go further and require specific approval for the exercise of the power, whether in every case or for a class of cases, would complicate and delay the process of guarantees. This could prejudice the company's commercial interests. Uncertainty whether a guarantee would be available would, to say the least, discourage both company and customer in the complex negotiations involved in setting up the kind of contract that would involve guarantees.

    The amendment would have unwelcome side effects. Although I think that the hon. Gentleman has reprocessing contracts mainly in mind, the amendment as drafted would restrict guarantees arising in connection with the general financing of BNFL and TRCL under Clause 1(1). That financing would relate to the general external finance requirement arising from the companies' total activities. Such activities could well include some of the items mentioned, in which case an order would be required. That would not only complicate the financing arrangements but would be illogical. Guarantees are an alternative to direct financing by the Government, and the latter method is not subject to any restriction of this kind.

    Finally, because of the deletion of the existing words in the subsection, guarantees which did not involve services of the kind mentioned would not need to be reported to the House at all. I hope that the House will reject the amendment.

    In view of what the Minister has said, I should be happy to withdraw Amendment No. 7. I must, however, express my extreme disappointment over the whole of the rest of the content of his observations on Amendment No. 6. I do not feel that he has in any way answered the purport of the case put forward for Amendment No. 7.

    Order. I must point out to the hon. Gentleman that technically it is only Amendment No. 6 which is before the House.

    I understand, Mr. Deputy Speaker, and I apologise to you for my inept phrasing. I accept the burden of the Minister's observations on Amendment No. 7. On Amendment No. 6, however, the point of view expressed by the Minister is unacceptable. It is not a fair observation to make on a narrowly-drawn affirmative procedure, which is what this is. It is a sharply-defined procedure—I use the Minister's words. It is the specific nature of the industry that is of consequence. In those circumstances, it does not seem that we have any reason to withdraw the amendment.

    I am sorry that I gave way to the hon. Gentleman. I felt that he had made two important points, and I wanted to attempt to reply to them. Whether I should have satisfied him with my reply is not for me to say, but I regret his remarks, although I understand how he feels.

    The hon. Gentleman talked about existing unprofitable contracts. I have to inform him that the existing contracts contained provision for escalation costs which were not in the event sufficient. That difficulty will not arise in the contracts that we now envisage. The new contracts will be on a full cost-plus, risk-free basis—I mentioned this in Committee—that will ensure that the company maintains a good return.

    The hon. Gentleman then raised the question of the opportunity to discuss BNFL's finances, and he made some play of this. He suggested that there was insufficient opportunity to discuss BNFL's investment and expenditure. I remind him that the whole range of BNFL's activities was discussed in a useful debate, which a number of those who were on the Standing Committee will recall, on 28th

    Division No. 91.]


    [7.45 p.m.

    Bain, Mrs MargaretClarke, Kenneth (Rushcliffe)Gardner, Edward (S. Fylde)
    Beith, A. J.Cockcroft, JohnGrimond, Rt Hon J.
    Boscawen, Hon RobertFairgrieve, RussellHampson, Dr Keith
    Bottomley, PeterFisher, Sir NigelHicks, Robert
    Buck, AntonyFookes, Miss JanetHodgson, Robin
    Budgen, NickFox, MarcusHowells, Geraint (Cardigan)

    July 1976. The debate was on an affirmative proposal to increase the limit of payment to BNFL under the Atomic Authority Act 1971. The Bill now before the House provides a further opportunity for debate as and when increases are made in future under the new limit. The company's accounts are available to the House every year and the Opposition can, if they so desire, find time to discuss them. That is their prerogative, and no Opposition should be deprived of that right.

    I hope the House will accept that I have given the best possible explanations on the points that have been raised, and that it will oppose the amendment if the hon. Gentleman does not withdraw it.

    I regret that I do not find the Minister's explanations satisfactory. I do not feel that it is right to talk about the burden of additional parliamentary work and additional legislation when we are dealing with one specific, narrowly-defined matter that is of particularly onerous concern for the future, both environmentally and socially. I do not think that the case has been answered by the Minister.

    It might have been helpful if subsection (3) had reflected the Department's and the Minister's acknowledgement of the seriousness of this issue, but it says that a statement has to be laid before the House after the event. My suggestion is that that should be done before the event.

    Future contracts might well be on a cost-plus basis, but my experience of contracts of this nature is sufficient for me to ask that the terms be defined first. I need to know those and what the cost will be before I can decide whether there will be effective control from the point of view of the House. I hope that my hon. Friends will support me in pressing the amendment to a Division.

    Question put, That the amendment be made:—

    The House divided: Ayes 40, Noes 145.

    Knight, Mrs JillPenhaligon, DavidThompson, George
    Lawrence, IvanRathbone, TimTrotter, Neville
    Macfarlane, NeilRoss, Stephen (Isle of Wight)Viggers, Peter
    Morris, Michael (Northampton S)Sainsbury, TimWainwright, Richard (Colne V)
    Nelson, AnthonyShersby, Michael
    Newton, TonySkeet, T. H. H.TELLERS FOR THE AYES:
    Nott, JohnSmith Cyril (Rochdale)Mr Geoffrey Dodsworth and
    Page, Rt Hon R. Graham (Crosby)Stanbrook, IvorDr Alan Glyn.
    Pardoe, JohnSteel, Rt Hon David


    Allaun, FrankGolding, JohnRichardson, Miss Jo
    Armstrong, ErnestGrocott, BruceRoberts, Gwilym (Cannock)
    Ashton, JoeHarrison, Walter (Wakefield)Roderick, Caerwyn
    Atkinson, NormanHoyle, Doug (Nelson)Rodgers, George (Chorley)
    Bagier, Gordon A. T.Huckfield, LesRodgers, Rt Hon William (Stockton)
    Barnett, Rt Hon Joel (Heywood)Hughes, Rt Hon C. (Anglesey)Rooker, J. W.
    Bates, AlfHughes, Roy (Newport)Rose, Paul B.
    Benn, Rt Hon Anthony WedgwoodHunter, AdamRoss, Rt Hon W. (Kilmarnock)
    Bennett, Andrew (Stockport N)Irvine, Rt Hon Sir A. (Edge Hill)Ryman, John
    Bishop, E. S.Jackson, Miss Margaret (Lincoln)Sandelson, Neville
    Blenkinsop, ArthurJanner, GrevllieSedgemore, Brian
    Boardman, H.Johnson, James (Hull West)Selby, Harry
    Bray, Dr JeremyJones, Alec (Rhondda)Shaw, Arnold (Ilford South)
    Buchanan, RichardKerr, RussellSilverman, Julius
    Butler, Mrs Joyce (Wood Green)Kinnock, NeilSkinner, Dennis
    Callaghan, Jim (Middleton & P)Lamond, JamesSmall, William
    Canavan, DennisLatham, Arthur (Paddington)Smith, John (N Lanarkshire)
    Clemitson, IvorLeadbitter, TedSnape, Peter
    Cocks, Rt Hon MichaelLee, JohnSpearing, Nigel
    Cohen, StanleyLestor, Miss Joan (Eton & Slough)Spriggs, Leslie
    Coleman, DonaldLewis, Ron (Carlisle)Stallard, A. W.
    Cook, Robin F. (Edin C)Lipton, MarcusStewart, Rt Hon M. (Fulham)
    Cowans, HarryLoyden, EddieStoddart, David
    Cox, Thomas (Tooting)Lyon, Alexander (York)Summerskill, Hon Dr Shirley
    Crawshaw, RichardLyons, Edward (Bradford W)Thomas, Ron (Bristol NW)
    Crowther, Stan (Rotherham)McCartney, HughThorne, Stan (Preston South)
    Cryer, BobMcDonald, Dr OonaghTierney, Sydney
    Davidson, ArthurMacFarquhar, RoderickTim, James
    Deakins, EricMaclennan, RobertVarley, Rt Hon Eric G.
    Dean, Joseph (Leeds West)McMillan, Tom (Glasgow C)Wainwright, Edwin (Dearne V)
    Dempsey, JamesMadden, MaxWalden, Brian (B'ham, L'dyw'd)
    Doig, PeterMagee, BryanWalker, Harold (Doncaster)
    Dormand, J. D.Mahon, SimonWalker, Terry (Kingswood)
    Duffy, A. E. P.Marks, KennethWatkins, David
    Dunnett, JackMarshall, Dr Edmund (Goole)Watkinson, John
    Eadie, AlexMaynard, Miss JoanWhite, Frank R. (Bury)
    Edge, GeoffMendelson, JohnWhitehead, Phillip
    Ellis, John (Brigg & Stun)Miller, Dr M. S. (E Kilbride)Whitlock, William
    Ennals, DavidMorris, Charles R. (Openshaw)Williams, Rt Hon Alan (Swansea W)
    Evans, Ioan (Aberdare)Moyle, RolandWilliams, Sir Thomas (Warrington)
    Fernyhough, Rt Hon E.Oakes, GordonWilson, Alexander (Hamilton)
    Flannery, MartinOgden, EricWise, Mrs Audrey
    Fletcher, Ted (Darlington)Orme, Rt Hon StanleyWoodall, Alec
    Foot, Rt Hon MichaelOvenden, JohnWoof, Robert
    Ford, BenPark, GeorgeWriggles worth, Ian
    Forrester, JohnParker, John
    Fowler, Gerald (The Wrekin)Parry, RobertTELLERS FOR THE NOES:
    Freeson, ReginaldPendry, TomMr Joseph Harper and
    Garrett, W. E. (Wallsend)Phipps, Dr ColinMr Ted Graham.
    George, BruceRadice, Giles

    Question accordingly negatived.

    7.55 p.m.

    I beg to move, That the Bill be now read the Third time.

    The Bill has given rise to a very full discussion of nuclear issues. At this stage the most helpful course would be for me to remind the House of the content and purpose of the Bill. So far as BNFL is concerned, the Bill provides the basis for financing the company's large investment programme, which, I emphasise, relates to providing facilities required for United Kingdom nuclear pro- grammes already approved and does not imply any commitment to a new major nuclear expansion.

    The Bill provides for further capital in two ways. First, it increases the limits on Government capital payments to £300 million, which sum may be increased to £500 million by order. Secondly, it allows the Secretary of State to guarantee loans raised by BNFL, such guarantees counting against the new limits in the same way as does direct Government investment. The Bill also allows the Government to guarantee advance payments made to BNFL under service contracts. The immediate importance of this power is in relation to the contract which BNFL hopes to conclude with overseas utilities for the reprocessing of irradiated fuel.

    In this connection, I might deal with a point raised by the hon. Member for Carshalton (Mr. Forman) in Committee about safeguards. He proposed that the Euratom Treaty should be amended to allow nuclear suppliers' group safeguards to be implemented. There is no proposal at present to negotiate a new formal agreement between supplier Governments. I gave the hon. Member an assurance in Committee that I would draw this point to the attention of my colleagues in the Foreign and Commonwealth Office before the next Nuclear Supplies Group meeting. I have done this.

    The hon. Member also inquired about the rate of profit under the company's proposed overseas reprocessing contracts. The actual rate of profit under the contracts is commercially confidential. I am afraid, therefore, that I cannot disclose its amount or confirm the figure that the hon. Member mentioned. I can, however, assure the House that the Government regard the proposed return as very good.

    Though the provisions have not so far received great attention, the Bill makes similar provision for the Radiochemical Centre Limited. The present upper limit on Government capital payments is raised from £7 million to £15 million. Private borrowings by the company may be guaranteed, and, again, sums guaranteed count against the limit.

    Finally, the Bill would allow the Secretary of State to incur expenditure on acquiring shares in the National Nuclear Corporation Limited. This power is needed to tidy up an illogical situation which, while not causing difficulty at present, might do so in the future.

    Having emphasised those three points, I hope that the House will see fit to give the Bill a Third Reading.

    7.59 p.m.

    The Bill is being given a Third Reading in a situation of unreality. The Chamber is empty; hon. Members have other things on their minds. The events of next Wednesday undoubtedly have a bearing on the attendance tonight, but that should not deter us from giving the Bill a Third Reading with good grace. Naturally, we were disappointed that some of our proposals to improve the Bill were not accepted by the Government, but we had the opportunity on Second Reading and in Committee of discussing the energy question in more detail than it has been dealt with in the House for some time.

    The Bill is a narrow measure. The restrictions of a Third Reading debate prevent us from elaborating on some points, but I think it only right that I should repeat that, although the Bill is small, it deals with many complicated arrangements. Therefore, we are grateful to the Secretary of State for the helpful brief which he gave us in Committee at the beginning of our deliberations.

    The raising of the financial limits and the permissions which the Government require to give loan guarantees are dealt with in Clause 1. The Government did not include the recommendation of the Flowers Commission in the Bill, and we were rather sorry about that, but the Under-Secretary of State in Committee gave some very good assurances that the Government were considering this matter very carefully. No doubt we can expect legislation on that subject in due course.

    We criticised to a certain extent Clause 2, which deals with the financial limits. We still feel that the limits are excessive; they are greater than is absolutely necessary. In Committee my hon. Friend the Member for Bedford (Mr. Skeet), in an excellent and well-researched speech, made a very good case for the limits not being at their present level but being more in accordance with the amendment which we tabled.

    Principally, the points which my hon. Friend made were that the purpose for which the £300 million was required was not very clear because the earned profits of the industry would meet the requirement. The same applied to the thermal oxide reprocessing plant in respect of which £330 million was required, but this will be customer-funded. My hon. Friend, with his calculations, had reduced the figure about which we were talking to about £415 million spent over 10 years. However, the Government have taken the precaution of setting fairly high limits, which should be very useful for them in future.

    Clause 3 was not debated in Committee, and that was perhaps regrettable. We had the opportunity of debating it and perhaps we should have spent more time on it. The remainder of the Bill had a fairly good going over in Committee, and it is leaving Parliament in as reasonable a state as we could expect. I am sorry that the Government were not able to accept some of our amendments, but we welcome the Bill and we are happy to give it a Third Reading.

    8.4 p.m.

    I accept that the Bill makes a contribution to the general debate, but there are one or two observations that I should make.

    The commitment to existing domestic nuclear power stations is one of the reasons why we must have a Bill of this nature, and it is against this background that it must be examined, but there is no escaping the fact that the programme outlines essential work which will ultimately result in producing an acceptable rate of return on the investment provided and will considerably extend the scope and flexibility of the company's operations.

    The difference between the Government and many hon. Members on these Benches is not that substantial funds are required for the programme but that provision should be made for extensive borrowing from the National Loans Fund and not from the market. If the latter course were adopted rather than the former, the borrowing limits would not have to be extended to anything like £300 million, extendable to £500 million as stated in the Bill. In fact, at the upper limit the figure represents a sevenfold advance on the existing order.

    The Secretary of State said in the House on 8th February, as reported at column 1258 of the Official Report, that of the £1,500 million required for the 10-year programme only about £230 million would be required from external sources. The Under-Secretary said in Committee:
    "As the Committee is aware from the briefing made available to it, BNFL's exter- nal borrowing requirement over the next two years is covered by borrowing from the private sector subject to the provision of a guarantee under powers to be taken in this Bill".—[Official Report, Standing Committee A, 3rd March 1977; c. 65.]
    It is rather extraordinary that funds will not be taken from the market, although it must be recollected that if these are subject to the guarantee they will count against the borrowing limit. Enterprises in various parts of the world are undertaking exactly the same work as has been indicated here. They do not have the aid of the guarantee and they are capable of going to the market. I see no reason why a similar approach should not be made in this case. Moreover, it was intended from the start that the company should be a mixed enterprise undertaking and, hence, would operate as closely to commercial principles as possible. It is worth observing that funds derived via Section 8 of the Industry Act 1972, as amended by Schedule 4 to the Industry Act 1975, and voted by Parliament do not count against the limits imposed.

    The argument on the borrowing limits comes to this. The present borrowing limit of £75 million is too small. Even though £50 million in total has yet to be taken up, a maximum of £300 million to £500 million is excessive, bearing in mind the present national economic stringency and the fact that there are many alternative sources of finance available to the company. Governments frequently talk despairingly about the ravages of inflation, which they themselves create, and then proceed to proffer it as a reason for further provision being made.

    Another scapegoat is changing technology. Tens of millions of pounds may be charged to this account, but there is nothing like over-provision for cultivating administrative extravagance. It is solid commercial sense that BNFL should carry the greater part of its financial burdens, and there are many who think that it is in a position to do so. After all, it is a profitable company.

    The House should note these observations. While domestic orders produce 60 per cent. of BNFL's business, on a cost-plus basis, the company has a captive market in that 13 per cent. of the electricity sector is nuclear, and if the new programme goes ahead the percentage will be even higher. The company has secured valuable contracts for reprocessing oxide fuel elements, notably from the Swedes, European utilities and, it is hoped, the Japanese. I confidently believe that the Japanese contract will be secured, despite the inept handling of the situation by the Government. The reprocessing is administered through a third holding in the United Reprocessors GmbH, a multinational company with roots in the European Community market, and is beginning to prove commercially formidable abroad.

    BNFL, through its third interest in URENCO, has achieved a share in enrichment contracts totalling £700 million for delivery in the 1980s. This also is a multinational company associating British, Dutch and Germans and it promises to be strongly competitive with its Community rivals in France. The sale of Uranium 238 has proved profitable, with export business envisaged by the Department of about £45 million up to 1985. Services are rendered in converting uranium into uranium hexafluoride. In 1975 –76 the company secured orders to supply 14,000 tonnes between 1977 and 1986 to customers in the United States, Japan, Italy and the Federal Republic.

    It is worthy of observation that under Clause 1(2) it may be that customer-funded business in the United Kingdom will be extended to the provision of uranium hexafluoride. This was the Minister's suggestion, and it may come to fruition at a later date.

    I pause here to indicate one anxiety that I have. I thought after having put down an amendment that the limitations on customer-funded contracts would be limited to reprocessing of oxide fuels and also to enrichment if the case should arise in future. But apparently, according to the Minister, this is an open-ended facility, and this may be secured in any other thing that BNFL might have in view. That is taking it too far, and, while there is a limit on the extent of the guarantees that may be committed by the Government, what should be covered should be laid down more specifically in the Bill.

    Of course, Clause 1(2) makes provision for the Japanese contract, which, if secured, will provide the company with earnings of £500 million. On this matter the Government have been particularly inept. The possibility of the contract being secured was foreshadowed many months ago, but delays have allowed the French to step in. Now, an unseemly contest is being conducted between the Department of the Environment, based on conservation arguments and planning permission, and the Department of Energy, with little drive from the latter to reach finality.

    The result of all this national bickering is that the programme has been put out of schedule, the Japanese are dissatisfied and the construction of the oxide facilities has had to await the outcome of what could be a substantial public inquiry. Ministers would seem reluctant to talk about the contemporary picture.

    Perhaps the Minister will clarify the following points. Are the Japenese utilities prepared to await the outcome of the Section 282 inquiry without in the meantime seeking or making alternative provision? That is a simple point. I hope the Minister is prepared to say that the Japanese utilities will wait until the inquiry has been completed. Are the French prepared to act as joint partners in the United Reprocessors GmbH and to stick to a half interest in the tonnage available and not take the lot?

    I must repeat the point which I put to the Minister upstairs and to which I have not yet had an answer. Will an immediate grant of planning permission for storage points, which are necessary to meet the Japanese programme—be made so that construction of these ponds may be undertaken, and will this be done ahead of or during the course of the public inquiry on the thermal oxide plant'? If the Minister will give answers to these three points, I for one will be perfectly satisfied that things are going ahead as planned.

    I wish to put some general observations. While I consider this to be a necessary Bill in providing the necessary funds on limits, I am not certain that we have the necessary safeguards. I am making this point in connection with the public and not the people who have looked into the matter carefully. The Secretary of State must bridge the broad credibility gap between the public and the physicist and give the public at least the feeling that the great issues which are now being debated about the plutonium economy and nuclear waste disposal are, and would seem to be, both thoroughly taken care of and completely researched. I have no doubt about this being done, but I hope that the right step is being taken in that direction.

    During the course of the Committee, we put forward certain amendments which would have implemented Sir Brian Flowers' recommendations. Instead, we have had an indication of a further slice of Bennery in the shape of a management and supervisory board associating the State, the trade unions and research and environmental representatives to manage a 1300-MW demonstration fast breeder reactor. I would call this a Heath Robinson contraption which is patently defective as the supervisory board will have limited capacity, limited expertise and limited independence either to control or to persuade the very competent management team.

    I put this to the Secretary of State and I hope that he will follow some of our recommendations. After he has completed his consultations over Flowers, I hope he can bridge the gap between the physicist and the public. I hope he will put himself in the public's position and realise that while nuclear stations possess a risk, and while reprocessing facilities are reasonably sound, the public have doubts which must be dispelled, and it is up to the Government to dispel them. Meanwhile, the Bill is before the House and it should certainly receive a Third Reading.

    8.16 p.m.

    With the leave of the House, I should like briefly to reply. I am grateful for the way in which the hon. Member for Ross and Cromarty (Mr. Gray) approached the Third Reading. When the hon. Gentleman said that hon. Members are thinking of other things, I was minded that this is the first day of spring, but I do not think that the hon. Gentleman meant that.

    I am grateful to the hon. Gentleman for acknowledging the fact that a brief was provided in Committee, because this is a very technical Bill and we provided a brief in order that the Committee could have a good debate. I believe that it was a very good and thoughtful debate. Indeed, many hon. Members would profit greatly from reading that Committee stage.

    The hon. Gentleman mentioned the Flowers Report. I still give the assurance that I gave in Committee. We can hardly meet the assurances that the hon. Gentleman seeks, because we argued this in Committee and in the ordinary traditional way we voted when we disagreed.

    The hon. Member for Bedford (Mr. Skeet) made a thoughtful contribution. He always says that he is in favour of the Bill and of nuclear power, but I get the impression that he is not prepared to will the means in this respect. For some particular reason, the hon. Gentleman has at times been ultra-critical of BNFL, but that is the job and responsibility of the Opposition. I cannot accept what the hon. Gentleman said about the inept handling of the Bill by my right hon. Friend. I am sure that many of the hon. Gentleman's hon. Friends would disagree with him.

    I think that having a public inquiry into this aspect of the Bill will be welcomed by many people in the sense that it will to some extent take away the uncertainty. I do not think the hon. Gentleman will carry the whole House with him in his views. Those are his views, however, and he is entitled to have them.

    What is true is that the Department of Energy gave consent to the contract with the Japanese and that a year later the matter was referred to planning inquiry by another Department, the Department of the Environment.

    We can accept responsibility for the Department of Energy, but the hon. Gentleman cannot expect us to accept responsibility for the Department of the Environment. That is what democracy is all about. I do not understand why the hon. Gentleman is protesting about the processes of democracy. He may protest about some aspects of the nuclear process, but I do not think he can protest about the processes of democracy.

    The hon. Gentleman is being unfair, because between the decision to give the go-ahead and the decision on the planning inquiry we had publication of the enormously important Flowers Report, which gave other reasons for not simply going ahead.

    I am always grateful for comments from my hon. Friends. The hon. Member for Bedford asked about the inquiry, I am surprised that the hon. Gentleman raised this again, because we had this out in Committee. I gave a very positive answer to that question. I told the Committee that the Japanese had understood the position entirely. That is on the record.

    With regard to the French attitude, I gave the hon. Gentleman a specific answer to that. With regard to his third question about predicting the outcome of the inquiry, no one, of course, can predict the outcome of the inquiry. That is why the inquiry is of interest in many people's minds, and that is why many people will be paying attention to what the outcome of the inquiry is.

    I think I have answered the main points in the debate. I hope that the House will give the Bill a Third Reading.

    Division No. 92]


    [8.21 p.m.

    Allaun, FrankGraham, TedPhipps, Dr Colin
    Armstrong, ErnestHarrison, Walter (Wakefield)Radice, Giles
    Ashton, JoeHeffer, Eric S.Richardson, Miss. Jo
    Atkinson, NormanHodgson, RobinRoderick, Caerwyn
    Bagier, Gordon A. T.Hoyle, Doug (Nelson)Rodgers, George (Chorley)
    Barnett, Rt Hon Joel (Heywood)Huckfield, LesRodgers, Rt Hon William (Stockton)
    Bates, AlfHughes, Rt Hon C. (Anglesey)Rooker, J. W.
    Benn, Rt Hon Anthony WedgwoodHughes, Roy (Newport)Roper, John
    Bennett, Andrew (Stockport N)Hunter, AdamRose, Paul B.
    Bishop, E. S.Irvine, Rt Hon Sir A. (Edge Hill)Ross, Rt Hon W. (Kilmarnock)
    Blenkinsop, ArthurJackson, Miss Margaret (Lincoln)Rowlands, Ted
    Boardman, H.Janner, GrevilleRyman, John
    Booth, Rt Hon AlbertJohnson, James (Hull West)Sandelson, Neville
    Bray, Dr JeremyJones, Alec (Rhondda)Sedgemore, Brian
    Buchanan, RichardKerr, RussellSelby, Harry
    Butler, Mrs Joyce (Wood Green)Kinnock, NeilSilverman, Julius
    Callaghan, Jim (Middleton & P)Lamond, JamesSkinner, Dennis
    Canavan, DennisLangford-Holt, Sir JohnSmall, William
    Cocks, Rt Hon MichaelLatham, Arthur (Paddington)Smith, John (N Lanarkshire)
    Cohen, StanleyLeadbitter, TedSpearing, Nigel
    Coleman, DonaldLee, JohnSpriggs, Leslie
    Cook, Robin F. (Edin C)Lestor, Miss Joan (Eton & Slough)Stallard, A. W.
    Cowans, HarryLewis, Ron (Carlisle)Stanbrook, Ivor
    Cox, Thomas (Tooting)Lipton, MarcusStewart, Rt Hon M. (Fulham)
    Crawshaw, RichardLoyden, EddieStoddart, David
    Crowther, Stan (Rotherham)Lyon, Alexander (York)Summerskill, Hon Dr Shirley
    Cryer, BobLyons, Edward (Bradford W)Taylor, Mrs Ann (Bolton W)
    Davidson, ArthurMcCartney, HughThomas, Ron (Bristol NW)
    Deakins, EricMcDonald. Dr OonaghThorne, Stan (Preston South)
    Dean, Joseph (Leeds West)MacFarquhar, RoderickTierney, Sydney
    Dempsey, JamesMaclennan, RobertTinn, James
    Doig, PeterMadden, MaxVarley, Rt Hon Eric G.
    Dormand, J. D.Magee, BryanWalden, Brian (B'ham, L'dyw'd)
    Douglas-Mann, BruceMahon, SimonWalker, Harold (Doncaster)
    Dunnett, JackMarks, KennethWalker, Terry (Kingswood)
    Eadie, AlexMarshall, Dr Edmund (Goole)White, Frank R. (Bury)
    Edge, GeoffMaynard, Miss JoanWhitehead, Phillip
    Ellis, John (Brigg & Scun)Miller, Dr M. S. (E Kilbride)Whitlock, William
    Evans, Ioan (Aberdare)Morris, Charles R. (Openshaw)Williams, Rt Hon Alan (Swansea W)
    Fernyhough, Rt Hon E.Moyle, RolandWilson, Alexander (Hamilton)
    Flannery, MartinMurray, Rt Hon Ronald KingWise, Mrs Audrey
    Fletcher, Ted (Darlington)Oakes, GordonWoodall, Alec
    Foot, Rt Hon MichaelOgden, EricWoof, Robert
    Forrester, JohnOrme, Rt Hon StanleyWrigglesworth, Ian
    Fowler, Gerald (The Wrekin)Ovenden, John
    Garrett, W. E. (Wallsend)Park, GeorgeTELLERS FOR THE AYES:
    George, BruceParker, JohnMr. Joseph Harper and
    Golding, JohnParry, RobertMr. Peter Snape.

    The Minister says that he has sat down. Neverthless, I hope he will rise to his feet to answer my last question. Prior to the conclusion of the inquiry, will he permit BNFL to go ahead with the building of the ponds? These are essential for the collection of the spent elements coming from Japan under the prospective contract.

    I dealt with this aspect of the matter in Committee; indeed, it was dealt with on Second Reading. I ask the hon. Member for Bedford to read the reports of the proceedings in Committee and the Second Reading debate. He will find the answer to his question there.

    Question put, That the Bill be now read the Third time:—

    The House divided: Ayes 140, Noes 11.


    Bain, Mrs MargaretRoss, Stephen (Isle of Wight)Wainwright, Richard (Colne V)
    Freud, ClementSmith, Cyril (Rochdale)
    Grimond, Rt Hon J.Steel, Rt Hon DavidTELLERS FOR THE NOES:
    Howells, Geraint (Cardigan)Stewart, Rt Hon DonaldMr. David Penhaligon and
    Pardoe, JohnThompson, GeorgeMr. A. J. Beith.

    Question accordingly agreed to.

    Bill read the Third time and passed.