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Orders Of The Day

Volume 961: debated on Tuesday 23 January 1979

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Industry Bill

Order read for resuming adjourned debate on amendment to Question [18th January], That the Bill be now read a Second time.

Which amendment was, to leave out from "That" to the end of the Question and to add instead thereof:

"this House, while accepting the usefulness of a significant part of the work of the Scottish and Welsh Development Agencies, declines to give a Second Reading to a Bill which is based on totally inadequate documentary evidence of the performance and prospects of the National Enterprise Board."

Question again proposed, That the amendment be made.

4.35 p.m.

The five depressing days that have passed since this debate was adjourned have done nothing to make less miserable the unhappy political plight of the National Enterprise Board, which is caught in the fatal zigzag of British politics. Last week we heard the Government's attempts to make the NEB play a grotesque charade, pretending to be the embodiment of the Labour Party's 1974 manifesto. Plainly, part of this transparent ploy is that Socialist zealots for the 1974 manifesto and its original grotesque concept of the NEB will be appeased by Labour Members flourishing this Bill and its provision for £4½ billion.

That essentially moderate man the Secretary of State for Industry has no time for the original pretentious role of the NEB, but he is resorting to this ploy, much to the disadvantage of the admirably managed NEB. In response to his gross exaggeration, which amounts to a hoax, the official Opposition say that qualified euthanasia should be practised in relation to the Board. They say that it should continue with its rather depressing inherited assignments until they can be cast off. That will be the end of the Board.

A great disservice is being done to those who are doing admirable work on the Board and who do not have a pretentious attitude towards their activities. They must be embarrassed by the inclusion in the Bill of the horrific figure of £4½ billion.

It is well known that the Liberal Party has a considerable regard for the concept of the NEB—but on certain conditions. There must be a reasonable amount of recycling. We feel that the NEB should not be run down but that there should be recycling of money as the Board restores important companies to health and vigour. Unfortunately, there is no sign that any recycling is embodied in the calculations of this Bill. There is not even a token or a gesture of money being obtained by the return of companies to private enterprise after some years in the care of the NEB. That is one of the reasons for the stupendous sums in the Bill.

The second condition on which we, as democratic parliamentarians, feel bound to insist is that Parliament must find ways, and, in the meantime, must use the ways open to it, to establish direct accountability of the NEB to this House. I am the first to concede that this is a difficult operation in which to achieve anything like perfection. It will take time to adapt the role of the Comptroller and Auditor General, which is wrapped in history, to a new concept like the NEB. We had a welcome announcement from the Secretary of State in the first part of the debate last week on the Comptroller and Auditor General's role, but while that is being worked out the mechanism on which we must insist to keep some kind of parliamentary control is what I would describe as a version of the mechanism of supply.

For the NEB to be assured of its continuance, the Secretary of State must ask this House at fairly frequent intervals for a further ration of capital. The Board should certainly not be given five, six or seven years' ration all in one go so that, after one fairly major debate, parliamentary control can be abdicated for an appallingly long period, apart from brief late-night debates.

Does the hon. Gentleman agree, touching on a theme earlier in his speech, that an essential part of the Secretary of State's coming to the House should be to give up-to-date operating accounts overall? We had no overall results from the Secretary of State. I hope that the Minister of State will bring us up to date.

I expressed that hope last Thursday in the overture to our debate and I am glad to repeat it now. It would be intolerably wet of this House even to consider passing this Bill without a great deal more up-to-date information both on profit and loss and on balance sheet items of the National Enterprise Board. Unless the Government produce that information tonight, before the matter is put to the vote, they will be open, as I hinted last Thursday, to a charge of sharp practice in bringing this Bill forward when it can only be a matter of weeks before some unaudited figures are freely available from the National Enterprise Board.

We on this Bench have no desire to starve out the NEB or to deny it and its very important subsidiaries the funds which they need to keep the operations going and to maintain the skill and enterprise that the NEB has gathered around it. If the Government would present the House with a more modest and reasonable Bill, scaling down its requirements in line with the Government White Paper on public expenditure, which gives the show away and indicates exactly what the Government expect the NEB to need over the next few years, we would give that sort of legislation a fair wind and, indeed, our full support. But we are not prepared to abdicate parliamentary control by voting tonight such a vast increase in borrowing powers that there will not be any need or any real chance of major debates on the NEB for a very long time to come.

I remind the House, although it will already be present in many hon. Members' minds, that since the establishment of the NEB we have had only two major debates on this subject, one in April 1978, when there was an important motion to extend the financial limits on an order, and again in December, when there was a big debate on the Public Accounts Committee requirement. Otherwise there have been two other brief debates initiated by Bank Benchers. That is all.

In my view and that of my colleagues, that does not amount to adequate parliamentary scrutiny and, if necessary, control of a body with such wide-ranging operations and using so much of public credit and public money. I repeat the offer that if the Government will come forward with realistic legislation embodying sums that bear some relation to what can be required in the next 12 months or so, we shall be willing to support it. But a measure that is grotesquely designed for propaganda purposes and which, if taken seriously, means that the NEB is not to do any serious recycling of its funds but is to grow bigger and bigger, with the abdication of parliamentary control, requires that I shall recommend my right hon. and hon. Friends to support the Opposition amendment.

4.45 p.m.

I was glad to hear what the hon. Member for Colne Valley (Mr. Wainwright) said about the Liberal Party's attitude towards this Bill. His speech was a cogent argument against a Second Reading of the Bill being given by the House, for we are asked in the Bill to provide another £3,500 million to the National Enterprise Board on grounds that the Secretary of State himself described last week. He said:

"The NEB is by any objective assessment one of the great success stories of British industry."
I think that the objective assessment that he described was founded on the fact that, as he said,
"It was an essential feature of industrial policies put forward for the Labour Party's manifestos in 1974."—[Official Report, 18th January 1979; Vol. 960, c. 2022.]
Using perhaps rather different assessments from those employed by the Secretary of State, I would only say that so far as the accounts show, and what the taxpayer has had to bear, the National Enterprise Board has a ragbag of investments that have run at a sustained and continuing loss ever since it was founded. I see the Minister of State shaking his head. Clearly, he takes into account the figures produced by National Enterprise Board reports. During my remarks, I shall show why the Minister of State is wrong and why the report and accounts of the National Enterprise Board are grossly misleading.

I must recognise, of course, that the National Enterprise Board has been bequeathed a number of problems which it did not seek. I refer to British Leyland, Rolls-Royce and Alfred Herbert. These are the giants of the motor industry, the aircraft engine industry and the machine-tool industry. It is a deplorable commentary on the state of industry in our country that those important elements should be in the hands of the National Enterprise Board and causing such grave problems for it.

We know from the last report of the National Enterprise Board that the problem companies of the NEB, namely British Leyland and Rolls-Royce, are required to obtain a return of 10 per cent. by 1981. If the Government were so confident that this would be done, I do not see why the House is expected to provide so much money as it is. It must follow that if 10 per cent. can be achieved by 1981, the cash flow from these companies will enable these businesses to be run very effectively without too much recourse to these funds.

There is no attempt whatever to justify this enormous sum of money. When the Secretary of State said that it had very little effect on the level of public expenditure, it is true that there is little relationship between £3,500 million set out in this Bill and the £270 million annually for the next four years in the public expenditure White Paper. What the Secretary of State did not say is that every penny borrowed by the National Enterprise Board is borrowed from the capital market, and that is every penny less available for the productive industry of our country.

These are enormous sums of money. They are not mere trifles. It is no good saying, as the Government do, that the Bill will have no impact on public expenditure. What about the impact of the debt interest? That would be very considerable. It would be a good idea for the Secretary of State for Industry to get in touch with the Chief Secretary to the Treasury to tell him what he is doing and then tell the House what are his proposals for this enormous sum of money.

The problem stems from the fact that the Government are not clear, even now, about the proper role of the NEB. We have been told that one of its roles is to provide, maintain or safeguard productive employment. It stands to reason that if the Board runs at a loss, it can provide employment only at the expense of productive employment in the private sector.

If the Government are serious about controlling the money supply, the money that they borrow must be in competition with private industrial borrowing, and the weight of Government borrowing is so huge that they cannot borrow at an interest rate of less than 14 per cent. Profitable companies in the private sector are deterred from expansion because interest rates are at a level that allows the Government to lend money to the NEB in order to get a pre-interest return of 10 per cent. from British Leyland and Rolls-Royce and of 11 per cent. from its other investments. Even the figure of 11 per cent. falls well short of the Government's cost of borrowing.

The Minister of State does not agree that the NEB is running at a loss. The objectives of the Board are plainly set out in the report and accounts. They include the achievement of a pre-interest return of 15 per cent. I do not know many companies that are asked to get a pre-interest return. If we take interest charges into account, the profit is reduced by a substantial margin.

In addition, the public dividend capital on which the NEB largely rests does not entail any interest charges, and it is time that the House realised the taxpayer's true penalties for this system. The same applies to nationalised industries. Neither the NEB nor nationalised industries can have public dividend capital unless that money is borrowed from the taxpayer. What is really important is the cost to the taxpayer. Since he now has to pay 14 per cent. on the sum that the Government borrow, the whole of the public dividend capital should bear a proper interest charge of 14 per cent. The crucial test should be the profit, post-interest, allowing for a proper level of interest to be charged on the public dividend capital.

These matters have been discussed in the Public Accounts Committee and are on the record. It is unwise for the House to continue to swallow the concept of public dividend capital which increases yearly and shows precious little return for the taxpayer. That is why I reject the view of the Secretary of State and the Minister of State that the NEB runs at a profit. It runs at a significant loss.

It is beyond argument that employment, health, education and all our social services can be provided only by profitable industry and business. Many people say that they believe in a mixed economy. Sir Leslie Murphy says so in the NEB's latest annual report. We certainly have a mixed economy—a mixture of a profitable private sector, though it is declining in profitability, and a loss-making public sector.

It is not widely recognised that the national income accounts apparently do not show the full scale of loss-making among the public corporations. Unlike the private sector, the public corporations have no deduction for capital consumption from their trading profits. If that were done, it would be sufficient to remove the entire reported surplus in most of the past 10 years.

Since the NEB makes a true post-interest loss on its capital, it seems sheer folly to increase the scale of its operations by £3,500 million. That money could be employed and borrowed by profitable private industry. In his last report, Sir Leslie Murphy said:
"We have evolved a satisfactory method of dealing with the companies in which we invest. We will not involve ourselves in day-to-day management. Our concern is with the quality of the management."
That is our concern as well. The quality was certainly not very good under Lord Ryder, and although it is too early to pass judgment on the management ability of Sir Leslie, I do not think that he can altogether escape responsibility for some of the real stumers that the NEB has perpetrated. I refer particularly to British Tanners Products, Hivent and Thwaites and Reed as glaring examples. If the new as opposed to the inherited investments are taken into account, the losses greatly exceed the profits on the NEB's investments.

In an important passage in his speech last week, the Secretary of State discussed the role of the Comptroller and Auditor General. That is another matter that the Public Accounts Committee has examined at length, and that all-party Committee has made clear its view that the Comptroller and Auditor General should be allowed access to the books of the NEB.

I am sure that there is no question of the Comptroller and Auditor General interfering with the commercial freedom of the Board. It is important that he should be able to make the House, through the PAC, aware of anything that seems, on the face of it, to be going wrong, so that an early inquiry may be carried out. If that had been done, some of the stumers to which I referred may have been avoided.

It is not satisfactory that the Government should carry out an inquiry into the role of the Comptroller and Auditor General and the Exchequer and Audit Department. It is rather like a judge acting also as a jury. I hope that the inquiry will be sufficiently wide-ranging and that the committee will be composed of people other than those in the public service so that it can make an up-to-date survey of what the Exchequer and Audit Department is doing, and what it ought to do.

There is no case for the extra funds provided for in the Bill and the Secretary of State has not attempted to make out a case for them. He is interested in extending his empire, and that ought not to be the interest of the House. While that attitude and this Government remain, we are, it seems, condemned to high interest rates and high personal taxation. It is a fitting tribute to the work of the NEB and the state of our industry under a Labour Government that their cheap troubleshooter, Sir Michael Edwardes, should have said in his latest reported statement that if the level of taxation is not substantially reduced in three years' time, he will leave his country.

4.58 p.m.

There was a notable contrast between what the hon. Member for Colne Valley (Mr. Wainwright) said and the pronouncements of the hon. Member for Horsham and Crawley (Mr. Hordern) and it concerned the question of support, or lack of support, for the National Enterprise Board. It is well known that the hon. Member for Horsham and Crawley is opposed to the NEB, and he is therefore inclined to produce arguments against it anyway. That is why he was not constructive and why he spoke without evidence. There was a contradiction in his complaining that he did not have sufficient information yet claiming to have an abundance of evidence for condemning the NEB.

I am sure that the Government will accept that when the House is asked to agree a substantial increase of moneys for the development agencies and the NEB, we should have a great deal of information available to us. In addition, there is a contradiction in treatment if the development agencies are subject to the scrutiny of the Public Accounts Committee and the NEB is not.

It may well be that the Government approach on this matter is correct, but I hope it will be agreeable, in view of the comments made by the Public Accounts Committee, the Expenditure Committee and the Procedure Committee, that the argument may continue in the House in order that we can see for ourselves where the strength of argument lies concerning the future treatment of the NEB.

It is quite clear to me that the Secretary of State for Industry rightly claimed, on 18 January, at the beginning of the debate, that the SDA, the WDA and the NEB have been success stories in industry. In order that I may not excite the hon. Member for Horsham and Crawley too much, I place emphasis on the word "success". I do not want to get into an argument about profitability. We are dealing, in historical terms, with a very new venture, and it would be wrong to presume too much, or to expect a great deal of profitability at this stage. There have been several teething troubles which I am sure have been overcome, and we should not condemn it on the rather questionable arguments put forward by the hon. Gentleman.

The House is aware that the Conservative Party voted against the establishment of the development agencies, as the right hon. Member for Leeds, North-East (Sir K. Joseph) confirmed last week, following an intervention from me. He said:
"I have nothing new to say about our intentions in relation to the NEB. We have explained them a number of times. We shall keep the Board"—
that is, the NEB—
"to run its existing portfolio, with the instruction that it should, with due care for the public interst, sell its assets when it can, which will, no doubt, mean that it will retain British Leyland and, perhaps, Rolls-Royce for a little longer than it will retain a number of the other assets."—[Official Report, 18 January 1979; Vol. 960, c. 2046.]
That really means the strangulation of the enterprise upon which many thousands of jobs and valuable industries have depended.

It is not without significance that the right hon. Gentleman, in addition, began his speech last week by stating that his Conservative colleagues the hon. Members for Pembroke (Mr. Edwards) and for Glasgow, Cathcart (Mr. Taylor) and others of his hon. Friends had told him that the work of the Scottish Development Agency and the Welsh Development Agency was very much appreciated in those parts of the United Kingdom. As that came from members of a party which was opposed initially to these agencies, one can only presume that its conversion has taken the form of a convulsion brought about by an unwillingness to learn and a readiness to avoid the embarrassment of denying the success of these agencies. The right hon. Gentleman reserves his condemnation, therefore, to the NEB. He was rather mealy-mouthed about the agencies, but at the behest of his hon. Friends he gave them some qualified support.

Having regard to the right hon. Gentleman's opposition to the NEB, I wonder whether he will take note that the 1977 annual report on the company shareholdings, involving 12 subsidiaries and 16 associated companies, with 287,292 jobs—and by December 1978 more than 40 companies and an estimate of well over 300,000 jobs—is of significant importance to this House and to the country.

Can anyone deny that, between 1977 and December 1978, the support for Rolls-Royce, British Leyland, Ferranti and ICL, to mention only a few companies, provided for them a long-awaited turning point and, indeed, considerable success? These are companies which are of signal importance to the United Kingdom economy, and no responsible Member of the House of Commons can deny that. The House of Commons could not, in any case, having regard to the recent history of those companies, stand aside and let them fall. Whether the Conservative Party likes it or not, these companies know the wisdom of the NEB being established in this country by my party.

Looking at the 300,000-plus jobs over the total range of the NEB holdings, and considering the dependence of other occupations—this is another important factor—as a result of which many hundreds of thousands of jobs have been protected by NEB activity, it is clear that we have already a considerable work force protection which has come from the work of the Board. Where we have companies such as Rolls-Royce and the need to maintain a very substantial car manufacture in this country—and also ICL and Ferranti in computers and engineering—it is important to understand that, if these areas of the economy were not protected, hundreds of thousands more jobs would be placed in jeopardy.

We can reasonably conclude that the Scottish Development Agency and the Welsh Development Agency, and the record of the NEB, have been justifiably praised by the Secretary of State. But the Bill seeks to raise the limits substantially—the SDA to a maximum of £800 million, the WDA to a maximum of £400 million, and the NEB to £4,500 million. These figures may well be justified, but here I come nearer to the position of the hon. Member for Horsham and Crawley. At this stage, bearing in mind that we shall be dealing with some of these matters in Committee, it is not for me to question the word of my right hon. Friend. I take it for granted that he has discussed with the NEB the full financial limit implications of the proposals.

To that extent, I accept that this illustrates the need, at this stage anyway, to support the Bill in the vote to be taken later today, but it also illustrates another matter. There is, in my view, an imbalance of treatment which can be seen, in relation to the Northern region in particular, if the present trend of the NEB investment continues. Here we have an indication that the Northern region has suffered a lack of investment support. For instance, by April of last year, only five Northern companies and three subsidiaries attracted NEB investment, involving 1,679 jobs. In the North-West region, as the Secretary of State mentioned last week, there were 35,000 jobs involved. But, with NEB investment at the level of which we are now aware, there was a total job involvement of 287,292 jobs at the relevant date. Quite clearly, in the North-West region and the Northern region, as compared with Scotland and Wales, we are certainly in the less favoured position. If I may say so, the Northern region is at the bottom of this league.

If the NEB strategy in the regions is to help medium sized and smaller firms, as was claimed in the annual report of 1977, why is there this disappointing level of investment in the Northern region? As I understand it, the purpose of the Board is to promote industrial efficiency and market competitiveness and provide, maintain, and safeguard productive employment. Why is there such little impact in the Northern region where for decades there have been intolerable levels of unemployment and an outstanding potential for development of new skills? There is also a high level of regional activity to attract new industries and the advantages of improving communications and port facilities which are ideal for home and international trading.

Assistance to the Northern region up to the third quarter of last year by regional development grants and payments under sections 7 and 8 of the Industry Act 1972 amounted to £143 million. For the financial year 1977–78 Northern region it was £145 million. The NEB is not matching by any investment activity the level of aid to the region. It is suggested that the NEB has taken the view—and I hope that it is wrong—that the North is largely made up of what are described as slave companies, which have their parent companies outside the region. Consequently, when the economic winds blow cold the first action of the people at head offices is to cut their losses and run. In Hartlepool we have a great experience of that. Such a move was announced just a few days ago. There may be an element of truth in the suggestion.

Is it not time that large inputs of finance to induce companies to settle in this region had a more active response from the NEB to provide the confidence which the parent companies apparently lack? Especially with this new input of financial limits, the NEB now has an opportunity to correct this regional imbalance of investment.

I understand that the location of INMOS, the micro-electronics company associated with what is popularly known as the silicone chip production proposals, backed by the National Enterprise Board, has not yet been decided. I am informed that the Government have granted an industrial development certificate to INMOS for its United Kingdom technology centre at Bristol. This move is to accommodate some 50 design and development personnel, but a report in the press suggests that the force will be built up by the early 1980s to between 400 and 500.

On 13 December my hon. Friend the Member for Easington (Mr. Dormand) and my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans), on behalf of the Northern group of Labour MPs who have been diligently working on this matter and preparing as usual a constructive and formidable case for the Secretary of State to consider, made representations to him. They learned that no decision had been taken on the matters referred to in press reports. They were also informed that a certain advertisement was unauthorised. I make no further comment because, as I appreciate the position, the chairman of the NEB has courteously taken the initiative to put that matter right.

There has clearly been a decision regarding the technology centre. There was a later press report on 5 January of this year following a meeting of my hon. Friends. It adds that the Government have also granted—I hope the Under-Secretary of State will listen carefully to what I say—an industrial development certificate in Bristol for 100,000 sq. ft. for a manufacturing centre. Will the Secretary of State clarify the position? He stated last week in the House:
"About 90 per cent. of the expenditure and 90 per cent. of the jobs"
in the manufacturing side—and I believe he may well have included the head-quarters—
"will be in the assisted areas."—[Official Report, 18 January 1979; Vol. 960, c. 2035.]
I am aware that the consultant managers who are engaged on this matter are studying sites. Indeed, on 13 December 1978 the Secretary of State informed the Northern group of MPs' officials that 90 per cent. of the jobs and 90 per cent. of the capital investment would be in the assisted areas. His statement last week confirmed that. Clarification is needed in the light of the Bristol IDC press report of 5 January.

The Secretary of State will understand that on a number of other industrial development matters in the past Governments have expressed confidence that the claims of the Northern region would be carefuly considered. I am sure that he has expressed a similar view. But since we are dealing with the proposals for four manufacturing units involved in the INMOS plan, employing 1,000 people in each unit, and a substantial administrative centre in a new headquarters, the North regional claim requires a confirmation that INMOS will be establishing the manufacturing units and the headquarters in assisted areas. There should be a rebuttal of any press statements suggesting otherwise.

I wish to make this matter absolutely clear. It is true that the INMOS technology centre will be located in Bristol. Nobody in this House regrets that more than I do. I had hoped that it would be located somewhere nearer my constituency. But I wish to make it perfectly clear that the NEB have announced that INMOS has engaged a firm of management consultants to conduct a detailed study with the intention of locating the INMOS factories in assisted areas. It is expected that the headquarters will be alongside one of these factories in an assisted area.

On this reasonably satisfying note, I draw to a conclusion merely by giving a warning and at the same time expressing my thanks for my right hon. Friend's remarks. The North-West region, the Northern region and, indeed, England, are not making a plea that we are envious of the impact of the development agencies in Wales and Scotland. Quite the contrary; we understand their problems. But there does not appear to be the same impact in areas inside England, such as my region, which has many decades of experience of high levels of unemployment. On many occasions we have made representations to Ministers where the industrial power structure has been such that in the end they have had their own way. It is no consolidation to have had the encouragement of the backing of a Government Department—in this case the Department of Industry—yet subsequently to find that the preconceived notions of those in industry influence them to go elsewhere.

Tonight the House of Commons is passing a Bill involving substantial additions to the financial limits of the National Enterprise Board. I am conscious of the fact that the chairman of that Board is jealously guarding his entrepreneurial rights, and I have the right to say to him that he must bear in mind that the NEB also carries a responsibility to this House which gave him the organisation that he now heads. He must be answerable to Parliament—to all Members of this House who have a stake in this undertaking, whether they oppose the NEB or not.

It is imperative in the functioning of our economy that the chairman must understand that the good will of the House and the support of its Members depend on his recognition that his entrepreneurial instincts must carry a responsibility to carry out the statutory powers that have been vested in the NEB. He must see that the regions get a fair crack of the whip in terms of investment and that the NEB will match the substantial amounts of money that the Government give under sections 7 and 8 of the Industry Act 1972.

There is no point in attracting industry to the regions if a powerful body like the NEB will not confirm the foundations of investment there. The absence of NEB activity in the regions indicates to parent companies outside those regions that the NEB has no confidence in them. If that is the case, why should the parent companies have confidence in the regions? I hope that this debate will convey our attitude to the chairman and that he will realise that our support for him depends on the fact that there are social, economic and regional judgments which he in turn must support and on which he must soon make some pronouncements.

5.22 p.m.

I was interested to hear from the remarks of the hon. Member for Hartlepool (Mr. Leadbitter) that he was not at all jealous of the Scottish and Welsh Development Agencies, even though he represents a constituency in the North-East. That is a measure of his sound judgment. However, I did think earlier that he had swallowed the Government's propaganda about those agencies rather too literally. Also, in the earlier part of his speech he made some play about the Conservative Party's attitude to the agencies. I hope that he will realise that there is a reason for the distinction that we draw between the SDA and the WDA on the one hand and the NEB on the other.

My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) was absolutely right to say that the Secretary of State was talking rubbish when he suggested that the Bill was vital to the SDA and WDA. The fact is that the existing financial limits for these agencies have not been stretched. For example, in the case of the SDA, which has spent or committed £170 million, the Bill provides a new financial limit of £800 million. This can only be described as a piece of political gimmickry and a commitment that could be put into effect only by a new Government and a new Parliament in the future.

In fact, the Bill is very much in line with the exaggerated claims that Ministers make in relation to the NEB and the two agencies. Of course Ministers have to find something to boast about in these rather gloomy days, but the suggestion that this Bill will provide a massive transfer of funds to development areas is totally illusory, and the Secretary of State must know that.

The amendment tabled by my right hon. Friend helps to put the SDA into perspective by distinguishing between its inherited functions and its new functions. There is no substantial disagreement across the Floor of the House about the importance of the inherited functions of the SDA. These include industrial estates management, advance factories, environmental improvement, the attraction of industry, and help for small businesses—in fact 90 per cent. of the agency's functions.

The management of industrial estates and the attraction of industry were previously carried out by the Scottish Industrial Estates Corporation and the Scottish Council (Development and Industry). Tribute is due to both these organisations for the tremendous contribution that they have made over the years to the Scottish economy on a very modest budget.

The difference today is not simply that these functions have been transferred to the SDA; it is that the agency is presented to the public as some kind of miracle machine—a new miracle cure for all of Scotland's economic problems. Ministers stoke up great expectations for the NEB and for the agencies just as, over the years, they have stoked up great expectations about the benefits of nationalisation, only to find that the extension of public ownership and Government intervention has stifled economic growth and left Britain lagging behind nearly all her international competitors.

In his opening speech the Secretary of State said:
"The Scottish Development Agency has firmly established itself in the industrial scene and has gained widespread and genuine acceptance and support from the Scottish banks and industry and commerce generally."—[Official Report, 18th January 1979; Vol. 960, c. 2040.]
But, as my right hon. Friend the Member for Leeds, North-East indicated in his contribution, industry's attitude is ambivalent, particularly in the present state of the British economy. Industry welcomes another source of funds which may be obtained below the going rate—it would be foolish not to do so—but few business men can be sure that tomorrow they will not be competing against the NEB or one of the agencies. Of course, industry very much resents the tendency of the NEB and the development agencies to invest in one particular company in a declining market.

Can the hon. Member give chapter and verse either of the institutions in Scotland or the industrial organisations in that country which have been specifically critical about the role of the SDA? Will he bear in mind the fact that in their evidence to the Wilson committee on the financial institutions, the Scottish clearing banks indicated that the SDA filled a noticeable gap in the equity market for small and medium-size companies?

I have already referred to that point. I said that business takes an ambivalent attitude to the SDA—and why should it not do so? I am sure that if the hon. Member were a banker he would understand that if he could reduce his own risk with a company and get a Government agency to put in some extra money he would do so. As long as the agency exists it will be a temptation for bankers and business men of all kinds to take advantage of it.

Of course, the agencies are under great pressure to spend money, and that is not a good discipline for any kind of Government body. There is pressure from Ministers and from trade unions every time a business runs into any kind of difficulty. Economic forces which should be disciplining a market economy are plagued by the belief that the Government or their agencies can always be relied upon to save the day whatever the problem and whatever the cost.

This pressure for Government intervention becomes more and more persistent with every extra £1 million that is made available to the NEB and its agencies.

The SDA denies that it is a rescue operation for sick companies. In its 1978 report it says that it aims
"to support companies showing long-term prospects of viability and profitability."
It all depends on what is meant by "long-term."

In view of the amount of funds already available from other sources for profitable investment in Scotland and elsewhere in the United Kingdom, it is not surprising that the SDA investments are more related to high-risk rescue operations than to viable and profitable concerns. That is a fact of life when considering the investments of the SDA to date. This is why Ministers, the NEB and the agencies need to be reminded of the excellent advice given to them by the Financial Times—a newspaper that knows something about these matters—on 25 April 1978. The leading article of that day said:
"The Government agencies ought to be guarding against two dangers—being used as a 'soft touch' by companies which are perfectly capable of raising money from market sources, and being used as a lender of last resort by companies whose future is so uncertain that no private sector institution will help them. If they turn away both these sorts of business, there will be very little for them to do and that will be all to the good."
What worries me is that this good advice is wasted as long as Ministers revel in using the NEB and the agencies as political tools with which to distort the market economy—a situation that must make life impossible for the executives and staff of the agencies as they try to follow the guidelines laid down by the Government.

That is why, therefore, in the case of the SDA in particular, a Conservative Government would introduce new guidelines. We want to ensure that economic realism and financial discipline are linked to the incentive to work, so that economic growth may be achieved and sustained. It is badly needed, for it is the only cure for our economic ills. That is why we must end the pretence that the NEB and the SDA can produce an economic miracle and work wonders for the Scottish economy.

Labour Members, in this House and in Scotland, are continually raising great expectations, the kind of miracle cures that the SDA will be able to achieve. That is completely false. What must be learned is that economic success cannot be based on more and more public expenditure. That has been tried time and time again and has failed miserably, and it accounts, to a very large extent, for the economic problems that face us today.

I am grateful to the hon. Gentleman for his reference to my party. I think that he might have read the remarks that I made when this debate began, when I said:

"The Government will have much more credit and respect if they make clear that the Agency can, at best, make only a marginal contribution to the Scottish economy."—[Official Report, 18 January 1979; Vol. 960, c. 2079.]

I am glad to notice from what the hon. Member said that he had read Professor Donald Mackay's report, which underlined that point very strongly—a report, indeed, which he quoted. Of course, the SNP cannot get enough agencies of this kind, and its manifesto is filled with agencies, Government funds, investment funds and everything else, which all support the kind of ideas which the Labour Party puts forward.

The hon. Gentleman referred to Professor Donald Mackay, of Heriot Watt university when he spoke last Thursday. It is quite true that the £24 million per year which the SDA is spending on industrial projects has been more than offset by a substantial fall in Government expenditure on industrial regional aid in Scotland. Therefore, again we can see that the Bill, to a very great extent, is a sham.

We should also reconsider the wisdom of combining financial aid to small businesses—which is essentially the investment function of the SDA—and the industrial and environmental functions into one single agency. It would certainly be worth while considering the effect of operating this investment function separately, as was the case for small businesses before the SDA was formed.

I think that we should re-examine the SDA's environmental functions with a view to introducing more privately funded investment, particularly for housing. It can be no coincidence that Scotland, with more council housing than any other country in Western Europe, still has some of the worst housing in Western Europe.

I was less than clear how the hon. Gentleman envisaged the SDA's role vis-à-vis the smaller companies. The SDA currently makes loans to a substantial number of companies. In the Lothian region, in which the hon. Gentleman is interested, about 25 companies have benefited to the extent of rather more than £250,000. I am not quite sure what the hon. Gentleman is proposing should now happen to assist these small companies either in the way of finance or of guidance and advice, such as the small firms sector of the SDA does at present.

What I am suggesting, and what I shall repeat, is that it might be worth reconsidering whether the investment function, the small business function, should remain with everything else that the SDA does. It might be worth while putting the investment and small business function into some other kind of Government-sponsored agency. The Minister will remember that the Small Business Council did this work before the SDA was dreamed of, and did it rather well. It may be that we could go back to that kind of arrangement.

Before the Minister intervened, I was referring to the question of housing and the environmental functions of the SDA. The fact that Scotland has some of the worst housing in Western Europe suggests that the remedy must be to increase the number of owner-occupiers. It may be that the SDA could help in this respect. That is the way in which I believe we should look at the SDA and its functions generally. I believe that we should do this with realism and common sense, to make sure that the Scottish people get value for money. This Bill is clearly an attempt to prolong the myth that Government spending and Government intervention can create prosperity when in fact the opposite is the case. That is why I shall vote against the Bill this evening.

5.37 p.m.

My contribution will be relatively brief, if only because I am aware that several of my colleagues wish to participate before the Minister of State winds up this debate.

I listened with great interest on Thursday to the opening speeches of my right hon. Friend the Secretary of State and the right hon. Member for Leeds, North-East (Sir K. Joseph), leading for the Opposition. My comments about those speeches are as follows. I thought that my right hon. Friend was unnecessarily muted and by no means willing—apparently unwilling—to take advantage of the opportunity of describing what to me amounts to a remarkable success story of the activities of the National Enterprise Board since its inception. I think that my right hon. Friend could have said a great deal more about the achievements to date of the NEB.

The right hon. Member for Leeds, North-East, in his own inimical style, with sheer political dogma, poured scorn on the whole idea of State intervention in industry. His attitude was somewhat reminiscent of the attitude of Selsdon man in 1970 towards the IRC, which was dismantled by the right hon. Gentleman's Government but which was already proving that it was having an impact on industrial development in this country.

The indecision for several months after the election in June 1970 of the right hon. Gentleman and his right hon. Friends led to a crisis of confidence in industry in relation to investment grants. I trust—indeed, it is my fervent hope—that when the electorate of this country record their vote at the polls in a few months' time they will remember the outrageously inefficient policies of the previous Conservative Government in relation to industrial development.

There are fundamental factors in the development areas in relation to unemployment and the allied subject of industrial development which demand that there should be a continuation of an agency such as the National Enterprise Board. Together with masses of my constituents and friends and colleagues in the Northern region, I deplore the right hon. Gentleman's attitude when he says, in deprecatory terms, as he did last Thursday, that the NEB will be allowed to continue with British Leyland and, perhaps, with Rolls-Royce. The right hon. Gentleman has not yet learned the lesson which I and my hon. Friends have been learning for years and years while representing the people who have elected us to the House of Commons. I am referring to the measures which are necessary to create new employment to provide job opportunities for countless thousands of people who are denied the right and privilege of working and earning a living.

My right hon. Friend has not gone quite as far as he ought to have done. The right hon. Member for Leeds, North-East (Sir K. Joseph) said that instructions would be given to sell the assets and that perhaps Rolls-Royce and British Leyland would last a little longer. What confidence can that give to those two large companies?

I am grateful to my hon. Friend for reminding me about that. I did not wish to be too devastating in my comments. I am sure that my hon. Friends have a full understanding of the points that I have already made.

It is in this context that I suggest to the right hon. Member and to the hon. Member for Edinburgh, North (Mr. Fletcher), with as much emphasis as I can, that when reference is made to the existing limits of the development agencies not being stretched, the unemployment situation in the development areas demands the allocation of financial resources that are as great as can be made available by the Government. I am sure that my Government are fully seized of their responsibilities in that regard.

It was a little unfortunate that in our debate on Thursday—apart from the presentation by my right hon. Friend the Secretary of State and the contribution made by my hon. Friend the Member for Consett (Mr. Watkins) — insufficient emphasis was placed on the regional dimension of the NEB. In the short time available to me I want to place even more emphasis on the regional aspects of the situation than my hon. Friend the Member for Hartlepool (Mr. Leadbitter) placed upon them.

I must point out to the right hon. Member for Leeds, North-East that the northern group of Labour Members loses no opportunity to meet organisations in the Northern region and to have discus- sions with their representatives. We do this almost every weekend when away from the House, when we discuss the very difficult and almost intractable problems of unemployment which affect the Northern region. On Saturday morning last, in a very prolonged discussion with representatives of the Confederation of Shipbuilding and Engineering Unions, we had a remarkably lucid exposition, from the essentially moderate trade union leaders present, of the real problems affecting the Northern region which can be influenced by the NEB, especially since the inception of its regional arms in the North and North-West.

My trade union colleagues in the Northern region quite properly claim that private industry is failing the region—as it is, indeed, failing other parts of the country. It is a national as well as a regional disease, but it is one which bears more heavily on the development areas. I cannot refute their arguments when they tell me, for example, that the Northern region is rapidly losing its place in the manufacturing section of heavy engineering. Only a few days ago Vickers announced the closure of its works in the Tyneside area, demonstrating, I am told, a nineteenth century attitude owards the problems of its particular section of industry and, more especially, in regard to its failure to inform the unions and employees of the closure plans.

I am told—again I have no reason to refute the arguments; indeed, I accept them in their entirety—that the machine tool industry has always been inadequately represented in the Northern region, be it on the Tyne, the Wear or the Tees. The British machine tool industry cannot meet the demands which are placed upon it.

There is a role here for the NEB. I want the NEB to seek, at least, to adopt—this is not permissible under the present rules, as I understand it—an innovatory role, instead of going to the rescue of companies that might be on the verge of failure. Private investment in the Northern region has completely failed us. We are almost entirely dependent upon the activities of the Government, the investment prescribed by the Government through investment grants and the other methods that are available through legislation, especially that of the present Government.

I repeatedly remind myself of the brave words of my right hon. Friend the Member for Huyton (Sir H. Wilson) a few years ago when he talked about the white heat of the technological revolution and said that where private industry was seen to be failing the Government would intervene and set up new industries. We are still awaiting the redemption of that promise and the assurance that at some time or another the Government will grasp this nettle and say "Fair enough. We have the NEB and we shall seek to ensure that it does its best, at least, to contribute towards resolving these particular problems."

On Thursday my right hon. Friend the Secretary of State referred to micro-chips, as did my hon. Friend the Member for Hartlepool today. Already there is a Government investment of £100 million in this exciting new development. Even though I accept in its entirety the assurance given a few minutes ago by my right hon. Friend the Minister of State regarding the manufacturing arms of this organisation, one cannot emphasise too heavily the vital importance of these manufacturing arms coming into the development areas.

I conclude with a brief comment on the development agencies as compared with the NEB. So deeply concerned are we in the Northern region about the continuing high and totally unacceptable levels of unemployment that we are driven, almost in desperation, to find new solutions, to find anything that will help to resolve the desperately difficult situation.

For some time now, we in the Northern region have been saying that we are afraid of the repercussive effects of devolution to Scotland and Wales. In our view, there is nothing conciliatory about events as they have developed over the last year or so. Our fears, and the fears of many people in places of responsibility in the region, are sharpened because of the establishment of the Scottish and Welsh Development Agencies.

It should be borne in mind that the NEB is a far-flung empire which is not restricted to the development areas of England alone but operates equally in Scotland and Wales. However, while I am convinced that the Government will do, and are doing, everything in their power to ensure that there is equality of treatment and equal allocation of resources, none the less the suspicion remains in the minds of many people in the development areas—especially in the the Northern region—that we are disadvantaged because there are development agencies in Scotland and Wales and not in the Northern region.

I sincerely trust that at some time in the future the Northern region will be placed at least on an equal footing with the other underdeveloped areas, such as Scotland and Wales. I hope that we shall be able to say to our friends and colleagues in the Northern region "Well, there we are, we now have everything that they have." We ought to be able to say in the future that everything else is equal.

With those remarks I firmly and warmly support the content of the Bill, which seeks to extend the amount of money available to the NEB, in the firm belief that the Northern region will benefit substantially from the advantages which that money should bestow on the development areas.

5.51 p.m.

I believe that the right hon. Member for Houghton-le-Spring (Mr. Urwin) has unfairly and inaccurately reflected the comments of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) on the question of British Leyland and Rolls-Royce. Conservative Members have repeatedly made it clear that we back Mr. Edwardes in the decisions that he has taken in British Leyland. We shall go on backing him. We support the activities of Sir Kenneth Keith in Rolls-Royce and are delighted that that company is doing better. It does not help if the right hon. Gentleman takes that sort of attitude. It may be useful and effective in electoral terms, but it does not assist the debate.

When the Secretary of State for Industry opened the debate last week, some of us who admired his sincerity as a man realised that we did not know him as a humorist. However, when I heard his speech I thought that he had commissioned a speech-writer from Private Eye, because when he described the NEB as "one of the great success stories of British industry" he was at least modestly over-egging the pudding.

The right hon. Gentleman went on to say that it is impossible to imagine the British industrial scene without the NEB. I am not sure whether most of British industry today, as it is struggling to keep its head above water with the strike and lack of supplies, in addition to declining profitability and high taxation, would agree with the right hon. Gentleman's view. Of course, that was absurd hyperbole, and he cannot have meant it seriously.

My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) dealt effectively with the classic question of the profitability of the NEB. I say no more about that. I thought that he dealt effectively with the public dividend capital of £439 million, on which no return has been made. I hope that the Minister will tell us when it is expected the NEB will be making a return on this money, because that is important.

When the Bill first appeared and saw the light of day, it must have been a shock to the NEB itself, and to almost everybody in the House, to see this gargantuan sum of £4,500 million. This seems to me to support what my hon. Friend the Member for Henley (Mr. Heseltine) said on Second Reading, that the first £1,000 million would not be the end of the story, that that would go, and that another £1,000 million would follow. My hon. Friend was guilty of an underestimate. It is not £3,000 million, but £4,500 million, but how right he was in the general direction of what was likely to happen. He merely underestimated the NEB's appetite for money.

When one casts one's mind back to that Second Reading debate and the sort of comment being thrown around at that time, one recalls an amusing article in The Observer, which stated:
"Now the mountain of British industry is to be forced to walk hand-in-hand with Mahomet, in what Mr. Benn describes, without a trace of self-consciousness, as a 'genuine tripartite exercise of power-sharing—the biggest innovation in industrial policy since the Second World War'."
That was perhaps the hope of certain Labour Members at the time when the NEB came into existence.

What was the NEB supposed to do? It was said that it would reverse the long decline in British manufacturing industry. I wonder how many people think that it has achieved that. Indeed, was it fair to expect the NEB to achieve that? Of course not. It is absurd. Its other objectives were to inject the national and regional interest, to take working people into strategic decisions made by important firms and to extend industrial democracy.

We should be pleased that very few of those objectives have been achieved. Looking back on them now, they seem almost like chapter headings in a Fabian leaflet rather than reality. None has been achieved. In many ways, perhaps this is to the credit of the NEB. Some of them have not even been attempted, and we should be grateful for that.

As my hon. Friend the Member for Horsham and Crawley rightly said, the truth is that in those cases where the NEB made its own decision—I do not mean the inherited companies; I am thinking of, for example, British Tanneries which was set up to support all the ailing tanneries that Barrow Hepburn was praying to get rid of—it took over concerns which gave rise to trouble. Thwaites and Reed, that tiny minnow on the South Coast, which had never been successful, and never could be successful, had to be disposed of.

Cambridge Instruments is almost a classic case of interventionism. That case goes back 11 years, to 1968, when it cost the IRC about £2 million and was disposed of to the NEB for £1·25 million. Altogether £10 million has been put into this company, and still it is a disaster story. It has had 11 years of support from taxpayers' money, yet it is still doing badly.

I hope that INMOS will succeed. We all hope that, because taxpayers' money is involved. I do not have enough time to quote the comments of those in the industry who know a lot about micro-processing. All I say is that I am doubful about its future. If I am proved wrong, I shall be the first to admit it.

Are all these companies, the ones that we know have already gone wrong and the ones that look very unhopeful for the future, really the "commanding heights" which the right hon. Member for Bristol, South-East (Mr. Benn) described as
"the biggest innovation in industrial policy since the Second World War"?
When Ministers talk about the NEB, they talk about ICL and Ferranti. If they were really honest and accurate, they would say that ICL's entry into the public sector was nothing to do with the NEB. They would say that Ferranti was nothing to do with the NEB. The fact that at least half of the shares in Ferranti have been returned to the market again is no thanks to the NEB but thanks to the agreement that Ferranti entered into with the Government, with the blessing of Lord Goodman. I believe that the NEB would wish to be judged on those decisions that it has taken on its own initiative. Those decisions do not look very hopeful.

But what happens now? The 1976 Labour Party manifesto promised not only more money for the NEB but more NEBs. The Labour Party is not satisfied with only one but is proposing that there should be more NEBs. All I would say is "Heaven help the poor taxpayer".

The question of accountability was mentioned by the Secretary of State in his opening speech. It is common knowledge on both sides of the House that the lack of accountability of the NEB is something that worries hon. Members. The hon. Member for Ormskirk (Mr. Kilroy-Silk) wanted the NEB to do all sorts of other things, but he was very critical of its lack of accountability. The hon. Member for Gloucestershire, West (Mr. Watkinson), who is a member of the Public Accounts Committee, said that it should be more accountable to Parliament. I myself have asked about 250 questions about the NEB, only a small proportion of which have been properly answered. Some have not been answered at all. That is wrong, and it is something on which the House should insist.

The Public Accounts Committee, which is made up of hon. Members from all parts of the House, has clearly stated that the Comptroller and Auditor General should be allowed to look at the books and the papers of the NEB so that he can report to the PAC. There is no reason why that should not be done in confidence in those cases which are commercially sensitive or over which there are difficulties.

The NEB is not a private sector company responsible only to a set of shareholders. It is responsible to every citizen of this country, and through the House of Commons we must be able to demand more information. It is quite astounding that it should ask for this huge amount of money with no prospectus whatever for the future. Is it really conceivable that any other company in any other country in the free world could do that? It is not. Indeed, every commentator, whatever his political colour, has said that this is grotesque.

It should be understood that the powers of the Secretary of State under the 1975 Industry Act are very wide indeed with regard to the Board. They verge on dictatorial. They affect Board appointments, financial objectives, directions under section 3 and specific directions to take over particular companies. Those are very wide measures. For example, not only can the NEB get the £4,500 million under this Bill but, under a section 3 directive, the Secretary of State can also move about £1,600 million out of 1972 Industry Act money into the NEB. These are terrific dictatorial powers, yet the House cannot control them.

When introducing the 1975 Industry Act, the right hon. Member for Bristol, South-East said that it would provide powers to extend public ownership. That was true. But he said that this would be done through the full parliamentary process. But four years later we have yet to discover what the full parliamentary process is. Ministers can, as it were, come along to the House and in a one-and-a-half hour debate can extend, first from £700 million to £1,000 million, and now from £3,000 million to £4,500 million, the amount of money to be allocated to the NEB. Is that a full parliamentary process?

Of course, in a sense the process is an enabling Act, because it enables a Labour Government to pick off any company they choose if they want. The NEB has not yet been able to do a lot of nationalisation, but given this huge amount of money it could do almost whatever it wants. If the House approves this enormous amount of money, a £4,500 million blank cheque will be put into the hands of the NEB, without any control. That will fuel the engine of future nationalisation, with no parliamentary brake or check on the Board's actions or performance. It makes a mockery of any pretence that Parliament can have control over taxpayers' money.

In considering the Bill the House must ask itself several questions. Is this huge sum needed? Has the case been made out in detail? If we do not get answers tonight, I am certain that we shall pursue them in Committee, because the £2,000 million blank cheque on top of what the Secretary of State described last week has not been explained away.

Could not the money be found from the NEB's own resources? Which companies could be returned to the market so that a profit could be chalked up for the taxpayer and, if necessary, that money used for something else? My right hon. Friend the Member for Leeds, South-East made this perfectly clear, and he should not be derided for insisting that the NEB's money should be turned over more frequently. What it should not be able to do is to whistle up more money as one would whistle up a taxi outside the House of Commons.

I have already mentioned accountability. If the House doe not get satisfactory answers to all these questions, I believe that it should vote against the Bill. If it does not suceed in voting against it tonight, we should give the Minister a very tough time in Committee in order to try to protect and safeguard the taxpayer against the excesses of the NEB.

6.6 p.m.

This has been an unsatisfactory debate, and not just because it has been like a five-day test match split in two over the weekend, with the hon. Member for Colne Valley (Mr. Wainwright) playing the role of night watchman. It is also unsatisfactory because, under one Bill, we have had to consider three very different institutions. They are different animals which stem from different legislation, and there is no reason at all why they should have been taken under this one Bill.

As my hon. Friend the Member for Edinburgh, North (Mr. Fletcher) pointed out, one difference between the SDA and the NEB is that only 20 per cent. of its activities are actually industrial investment. The rest comprises advance factory building, environmental programmes and programmes such as the rehabilitation of the east end of Glasgow. Of course, we regard those programmes as extremely important and ones of which we wholly approve.

Even in terms of industrial activities there is a difference between the development agencies and the NEB. Not only are the development agencies' activities on a smaller scale, but they are also usually undertaken in conjunction with private enterprise. For example, SDA projects usually have private capital outweighing public capital in the ratio of three to one. The vital test of the market is still there and there is, therefore, less of a reason why the development agencies could be regarded as instruments for the extension of State ownership.

As my hon. Friend the Member for Conway (Mr. Roberts) pointed out, our criticisms of the development agencies are somewhat more muted than our criticisms of the NEB. We shall retain the agencies, give them different guidelines, discourage them from rescuing lame ducks and encourage them to turn over their investments. Indeed, I agree with what the hon. Member for Colne Valley said about this. Why should anyone object to that? That merely takes the development agencies at their own valuation. If they believe that there is some function which they can do profitably, and which ought to be done, they ought to be quite willing to finance some of their future investments out of the profits which they are so confident that they will make on their present investments. We are only taking them at their own word.

Of course, not everything that the development agencies have done is marvellous. There have been some failures. As my hon. Friend the Member for Edinburgh, North said, there have been some cases of companies complaining about SDA-backed companies taking away skilled labour, and there have been other examples of companies complaining of unfair competition from SDA-backed companies. That is always a danger whenever the State intervenes to support, just as there is also a danger that this sort of intervention will lead to the politicisation of industry—an ugly word for an ugly thing. There is always the temptation for jobs and investment to be allocated by some trade union or bureaucratic committee.

I know that the Minister of State is fond of quoting my hon. Friends who write and ask him for Government aid for particular projects. Before he stands up tonight to rebuke my hon. Friends yet again, let me do it for him. Alas, we are mortal men and all of us wish to do our best for our constituencies. However, as long as we continue to put political and social objectives before commercial interests in this country we will not get the industrial recovery that the country needs.

Our main criticism of the development agencies is that the money allocated to them under this Bill is too much. Perhaps I ought to say, as my hon. Friend the Member for Edinburgh. North pointed out, that it would be too much if one could be sure that the agencies were in fact going to get the money. There remains the suspicion that all the Government are doing is writing some meaningless figures on a picee of paper in a rather grubby attempt to rustle up some votes from the Scottish nationalists. Either way, real or pretend, we are against it.

Our main concern in this debate centres on the increased finance for the NEB. A number of hon. Members have laid emphasis on the size of the NEB—it is now the sixth largest group in the country—but when they emphasise the size of the NEB and the employment involved I wish they would also emphasise that size brings dangers. Size brings the tremendous prospective financial burden on the Exchequer and the borrowing requirement if and when the NEB goes wrong.

My hon. Friend the Member for Workington (Mr. Page) said that hon. Members opposite used to contrast the NEB with the Italian State company IRI. We hear much less of that kind of comparison now. Is it any wonder? The debts of the IRI have grown and grown. It became involved in the political process, and its debts at one time were threatening to match those of the Italian Government. I was amused to read in The Times the views of the Italian Communist Party on State holding companies. To judge by what it says, it understands the market economy somewhat better than the so-called British Liberal Party. One of the Italian Communist Party's spokesmen, a Professor Mangetti, gave an interview to The Times about State holding companies in which he warned of the dangers of growing indebtedness, the threat of surreptitious nationalisation, and the desirability of selling off those investments which could be sold. Above all, he said that it was much more important, from the point of view of industry, to encourage entrepreneurs than to create new agencies. When I look at the Tribune group opposite or listen to their views, I wish that we could exchange them for some of the Gucci comrades.

Much of this debate has been taken up with Rolls-Royce and British Leyland. A number of hon. Members have referred to Rolls-Royce as a success. We hope that they are right, but on reading the report of the NEB one can see the concern over the profitability and productivity of Rolls-Royce. The accounts portray a cash-hungry company making very marginal profits.

At the same time, hardly a week goes by without Rolls-Royce announcing some tremendous new contract. That is very good as far as it goes, but let us remember that 10 years ago Rolls-Royce announced that it had won the contract of the century. The trouble was that the terms were ruinous. The flow of orders Rolls-Royce is now getting makes it all the more important that there should be a decent return. Contracts that do not offer sufficient profit or which cannot finance investment and pay dividends are no less ruinous just because the name in the shareholders' register is the magic initials NEB. It is just as bad for the country as a whole, and that is why we are extremely disappointed that the Secretary of State has not announced, as he said he would, any target rate of return for Rolls-Royce.

After two and a half years of the NEB we still do not know what rate of return Rolls-Royce is meant to be earning. How can one be confident, therefore, that this State-backed company has any discipline imposed on it whatever?

The Secretary of State said that this Bill was essential for the future of British Leyland. I do not believe that, and my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) explained why that statement was rubbish. However, if that were true it would mean that the Secretary of State was treating this House with very great arrogance and contempt. It would mean that he was saying that the House had no option but to grant this money to the Government because it was essential for British Leyland. At the same time, as my hon. Friend the Member for Arundel (Mr. Marshall) pointed out, the Secretary of State gave us not a single piece of worthwhile information about British Leyland.

He promised us, in April, when he introduced the last NEB Bill that there would be a review last November and every November subsequently. What happened to that review? We do not know how much of the money that Parliament voted has gone on wages and how much has gone on investment. When the Secretary of State was asked that last April, he did not know then, and he still does not know today.

We do not know whether British Leyland has met its productivity targets. What we know from the newspapers is that it has not succeeded in getting its target market share, nor has it succeeded in reducing overmanning, as it had planned. It therefore seems unlikely that it has generated the funds for investment from its own sources. We should not have to guess these things; it is for the Secretary of State to tell us.

But perhaps I am doing the Secretary of State an injustice. He is not keeping us in the dark. The truth is that he is in the dark too. All the evidence shows that he has not got very much control over British Leyland. Earlier this year in a written answer it was announced that £275 mill ion was being loaned to British Leyland. When the Department of Industry was asked by the PAC whether the House of Commons ought not to have been given more time to consider this, we were told that the Department did not know that so many short-term bank loans were maturing. But it coughed up the £275 million all the same.

It is because of incidents such as this that the question of accountability is, as my hon. Friend the Member for Arundel has said, a deeply serious one.

If the NEB chairman, Sir Leslie Murphy, had known of the lack of information in the Secretary of State's speech he really could not have argued, as he did before the PAC, that responsibility to the Secretary of State is the same as responsibility to the House of Commons. Nobody is suggesting that the day-to-day activities of the NEB should be interfered with, but it is anomalous, surely, that the SDA can be investigated by the PAC and the NEB cannot. Some of the reasons advanced by Sir Leslie were all too reminiscent of the arguments advanced against the investigation of the Crown Agents by the PAC. When Sir Leslie pleads the example of the nationalised industries, I think that he ought to remember that the nationalised industries have a very close relationship with some of the Committees of this House. We do not have such a relationship with the NEB at the moment and the present situation is not satisfactory. There must be greater accountability.

I turn now to the investments of the NEB, and before I look at them as a whole perhaps I could make a comment on two points. The first concerns the involvement of the NEB in microelectronics. A number of hon. Members have talked about that as though the very fact that the NEB is involved in microelectronics is by itself a sufficient justification for the NEB's existence. We are deeply sceptical of what the NEB is doing on microelectronics, but we should like more details from the Minister of State. I hope that when he winds up the debate he will give us some details.

For example, will he tell us about the taxation arrangements for the Anglo-American entrepreneurs who will be working for INMOS? If even half of what has been written in the newspapers is true, that goes a long way to justify what we on the Conservative Benches have always held, that under Britain's present tax regime it is not possible to found new industries in this country.

Secondly, will the Minister tell us how much of INMOS's activities is to be carried out overseas? I gather from some newspapers that it will manufacture not only in America but possibly in the Far East. Whilst I have no objection to companies manufacturing overseas, I merely observe that those on the Labour Benches who are the first to argue that the NEB is filling a gap in our industrial process are the very people who are the first to criticise any British company whenever it chooses, for the best of commercial reasons, to invest overseas.

We remain highly sceptical of what the NEB is doing in this field. It will face great competition both from British companies and international companies. I know that ITT is already a bogy name to some Labour Members. Perhaps it will be even more of a bogy name when they discover what competition it will provide for INMOS. Already, ITT is producing the 64K chip that INMOS has been set up specifically to produce. It is producing those chips in this country, at its worldwide micro-chip headquarters in Sidcup, at the rate of 600,000 chips a month.

We hope that our scepticism will be confounded, but we fear that, like many other Government ventures into high technology, this will be another headlong rush down a cul-de-sac.

One aspect of the NEB's investment policy that we wholly approve of is the decision to sell off some investments. We welcome the fact that Sir Leslie Murphy has taken a less doctrinaire view and that, with an eye on the next Conservative Government, has already started implementing ow policies. As my hon. Friend the Member for Surrey, North-West (Mr. Grylls) said, there are many things in the NEB's portfolio that could be sold off. We shall encourage the NEB to do that.

My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) quoted the astonishing statement made by the Secretary of State last week. I could hardly believe it when I heard it, but one of the advantages of this split debate is that one can look in Hansard and discover whether the things that one could not believe were said were actually said. The Secretary of State said:
"The NEB is by any objective assessment one of the great success stories of British industry."—[Official Report, 18 January 1979; Vol. 960, c. 2023.]
He did not say "one of the great political successes of the Labour Government in getting it set up". He said "one of the great industrial successes". I wonder what he was thinking of. Was he thinking of the miserable profits the NEB has earned on its turnover? Is he seriously arguing that the future of British Leyland has just been assured because of the NEB? Or was he, as my hon. Friend said, thinking of the rate of return it has earned on its investments?

The rate of return is lower this year than last year. Even excluding British Leyland and Rolls-Royce, it is 11·7 per cent., which compares with 18 per cent. earned in a private sector conglomerate, such as Thomas Tilling. It is well below the average for British industry and well below the 15 per cent. to 20 per cent. target that the NEB has set itself for only two years' time.

There is a curious thing about the 15 per cent. to 20 per cent. target. When Sir Peter Carey appeared before the Public Accounts Committee he admitted that the reason 15 per cent. to 20 per cent. had been chosen as a target was that that was expected to be the rate that British industry would be earning in 1981. Labour Members must forgive our puzzlement. I had always thought that the object of the NEB was to improve our industrial performance, and that one of the things that was wrong with us was that our rate of return was so low. But apparently we should now use taxpayers' money simply to achieve what we are already not doing very well in this country.

We are very puzzled, because we hear bright-eyed executives from the NEB talking about how they will knock hell out of private enterprise, how they will found new industries. Why is it that these latter-day Rockefellers and Carnegies are so modest when it comes to measuring their own performance?

Perhaps the reason is that, as my hon. Friend the Member for Chertsey and Walton (Mr. Pattie) pointed out, so many of the investments have begun to go wrong: Power Dynamics, receiver appointed; Hyvent, insolvent; Thwaites and Reed, down the spout—an investment of which Lord Ryder said, when asked by my hon. Friend the Member for Croydon, North-West (Mr. Taylor) why the NEB had invested in it, "Because the opportunity is so breathtaking." Now it has gone. The losses at Barrow Hepburn may eventually top £4 million. Alfred Herbert has consumed £10 million in six months and is still making losses.

But whenever one mentions any of those points the Minister of State has the same reply: "You can't win 'em all." Of course, "You can't win 'em all" when every company that has been turned down by its bank manager is knocking at your door. But the question is, is the NEB even winning most of them?

I looked at the details about the companies that are consolidated in the NEB's last accounts. There are 17 which the NEB did not inherit from the Department of Industry and which it was not compelled to take. Nine of them are making losses and eight are making profits. The losses outweigh the profits by three or four to one. Labour Members may say "It will take time and it is difficult." But it is difficult to believe that when so many investments have already gone wrong the NEB will lead to the regeneration of British industry. It is difficult to believe that those struggling tiddlers will make any difference to Britain's overall industrial performance.

Nor will some of the other activities, such as the NEB's punting on the Stock Exchange with taxpayers' money. I am amazed that Labour Members do not ask questions about that. The NEB buys shares in companies such as Brown Boveri on the stock market. Why? The reason is obvious: it buys them in order to buy the profit figures to consolidate them in its accounts. Again, Labour Members must forgive our being amazed. We listened year after year to speeches by the right hon. Member for Huyton (Sir H. Wilson) telling us how the NEB would alter things in the real world—and the real world was where people made things, not where pieces of paper chased pieces of paper and people made money out of money. Apparently, all that has now gone, and in next year's NEB annual report we can confidently expect to see that the NEB has invested in bottles of port and Tiepolos. That would make no less difference to British industry than its activities in the stock market.

Some Labour Members cling to the belief that in the longer term the NEB will achieve the impossible and make an impact on our industrial performance. We believe that that is an illusion and that the NEB will almost inevitably be tempted to do things that it should not do.

Why should one believe that the NEB will be able to overcome the problems of the hostile environment to business in this country any better than the private sector? Why should one believe that there is a pool of talent available to the NEB that is not available to private industry in general? Why should one believe that managers in the NEB will see opportunities that those in British industry cannot already see?

One answer may be provided in the planning booklet that the NEB gives to its subsidiary and associate companies. It is full of profound advice for drawing up a five-year plan:
"Analyse/assess the company's strength and weaknesses
Identify key problems and opportunities".
Over the page there is even a diagram, no doubt drawn by a highly-paid management consultant. Under the heading "Problem: Low productivity" is an arrow leading to the solution "Modernise plant". We also read "Problem": "High risk" followed by another arrow leading to the solution "Invest to maintain technical lead."

The significant thing about this pamphlet is not the banality of it, because no company that needs advice is going to be saved by getting such advice. What is significant is what it does not say. It does not say "Low productivity—look at the problems of over-manning." It does not say that, because it dare not say that, and it dare not say that because the NEB operates within a political framework. It operates within the framework laid down in its guidelines, which give it incompatible objectives. In addition to achieving a second Industrial Revolution, the NEB is also to promote regional policy, promote consumer interests and promote industrial democracy. That cannot all be done together; it cannot be done and reconciled with the Prime Minister's declaration that the object of industrial policy must be to put industrial objectives before social objectives.

The whole thinking behind the NEB is wrong. Our problem in this country is not lack of investment. Even the Chancellor of the Exchequer now understands that. He said in one of his Mansion House speeches that
"Our problem is not a lack of investment; it is getting a decent return out of the investment we have got already."
Our problem in this country is our lack of competitiveness. It is a problem that has existed for many years, but this Government have achieved something astonishing; they have managed to make it even worse by a deliberate policy of subsidising uncompetitiveness. Week after week Ministers stand at the Dispatch Box boasting of their addiction to failed capitalists, of how they are handing out money to private industry, of how they are making plans to strengthen private enterprise. It sounds wonderful, these endless sums of money, as long as one does not look at one thing, and that is the result. The result has been that our productivity is now almost the worst in the whole OECD area. Our productivity has sunk because the Government cannot make up their mind whether they want to have productive industry or indoor welfare—a twentieth century version of the workhouse.

The Minister of State will no doubt make his usual speech about the Tories wanting to destroy jobs. It is good stuff, and the delivery gets better each time he makes it. But he never addresses himself to the argument that higher living standards and better social services in fact come from the destruction of bad, unsound, unprofitable jobs and their replacement by sound jobs. It is the unique achievement of this Government to prop up bad jobs and to do everything possible to prevent the appearance of good, profitable jobs.

Real job creation is the task of management, choosing the projects which stand a chance of success, and the present Government, alas, have done everything possible to undermine the morale and authority of management. They listen only to the voice of the unions, which have been allowed to veto the elimination of bad jobs. If we want rising living standards in this country, we shall have to remove the trade union veto.

The NEB is irrelevant to the wider tasks that need to be done. If this Government really wanted to reverse our industrial decline they would start today cutting public spending, cutting taxes and reforming the trade unions. They will not do it, they cannot do it, but the next Government can do it and will do it.

I urge my hon. Friends both to vote against the Bill and to vote for our amendment.

6.35 p.m.

It was instructive to listen to the call for the destruction of bad, unsound jobs and an end to subsidies from the spokesman of the party that nationalised Upper Clyde Shipbuilders, and nationalised Rolls-Royce in 17 hours—a record nationalisation in the history of this House. The Tory Party is, of course, ambivalent, and must be, in view of its record, in view of its industrial history and in view of its legislation dealing with aid. And it must be, and is, ambivalent concerning the National Enterprise Board.

It is clear from the debate and from the ambivalent contributions, the differing contributions, the contributions which have disagreed with each other, from hon. Gentlemen opposite, that they are very bothered indeed by the whole concept of the NEB and what to do about it.

My hon. Friends on this side have made it perfectly clear in this debate that they are firmly in favour of the National Enterprise Board. They may have criticisms of what it does or, more frequently, of what it does not do that they think it should. My right hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) and my hon. Friends the Members for Consett (Mr. Watkins) and Hartlepool (Mr. Leadbitter) understandably advocated greater activity in the Northern region, and my hon. Friend the Member for Consett put forward a programme for advancing industrial democracy. My hon. Friend the Member for Birmingham, Ladywood (Mr. Sever) spoke up for the West Midlands, and he will certainly be glad to know that more workers are employed by NEB companies in the West Midlands than in any other part of the country.

However they may differ in viewing the work of the National Enterprise Board as incomplete, my hon. Friends welcome the approach of the NEB and value its existence. But it is clear from this debate that the Tories are perplexed by the NEB. They do not know what to think about it and they do not know what to do about it, and the reason is clear. The National Enterprise Board is a new idea, and a new idea is something that always troubles the Tory mind.

What is more, it is a new idea that is working, a new concept that is accepted—accepted simultaneously by Tribune and the Financial Times accepted simultaneously by shop stewards and the Confederation of British Industry, whose deputy director only recently made a speech firmly opposing the abolition of the NEB, the Scottish Development Agency and the Welsh Development Agency, which he said would be
"a blow to stability and consistency".
The fact is that only three years after it came into being, and despite the unsupported jibes of hon. Members opposite, the National Enterprise Board is so integral a part of Britain's industrial life that it is impossible to imagine how we would get on without it. Whenever a difficult situation arises, whenever an industrial problem is highlighted, someone—whether a trade unionist, a banker, an industrialist or, as often happens, a Conservative Member of Parliament—is likely to come to us and ask us to send for the NEB. Indeed, one of the greatest challenges facing the National Enterprise Board today is that so much—maybe, as the hon. Member for Colne Valley (Mr. Wainwright) warned, too much—is expected of it.

To recall some of the statements made less than four years ago by hon. Members opposite during the Committee stage of the 1975 Industry Bill, to which we have had reference today from the Opposition, is to peer back into political pre-history. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley), whom we miss from this debate, prophesied that the NEB would be a dismal failure.

The hon. Member for Henley (Mr. Heseltine), whom we very much miss from the Front Bench opposite on these matters, gave us the characteristically utter certainty which we can always expect from him when he said:
"We simply do not believe that the National Enterprise Board will earn an adequate return".—[Official Report, Standing Committee E, 13 March 1975; c. 184.]
And we recall the lame attempt at humour by the hon. Member for Mid-Sussex (Mr. Renton), whom we are glad to welcome to the debate, when he said:
"The name will be changed to the National Disaster Board or the National Disintegration Company."—[Official Report, Standing Committee E, 4 March 1975; c. 46.]

I must thank the Minister for sending me another of his billets-doux saying that he was intending to make reference to me during his winding-up speech tonight. When I first started receiving these letters from the right hon. Gentleman they used to strike terror into my heart, but I am now making a collection of them to frame and hang in my loo.

May I just suggest to the Minister that, rather than waste the time of the House on those smears and personal innuendos at which he is a past master, he spends some time telling the House about the developments in INMOS and answering the questions concerning microelectronics that my hon. Friend the Member for Kingston upon Thames (Mr. Lamont) asked him? In particular, will be answer the question that I would have asked him if I had caught your eye, Mr. Deputy Speaker? Is it not a fact that the NEB, in the field of microelectronics, has backed the most risky side of all, the manufacture of integrated circuits, when it would have done far better to go for consideration of applications, and that this would have employed many more people in the United Kingdom than what the NEB has chosen?

I sympathise with the hon. Gentleman for calling it a smear when I quote him directly. Far from the NEB being a dismal failure, as the hon. Member for Cirencester and Tewkesbury warned, the NEB, despite the logic chopping of the hon. Member for Horsham and Crawley (Mr. Hordern), is earning a profit on its own investments. Far from failing to earn an adequate return, as the hon. Member for Henley prophesied, it is making satisfactory if not undeviating progress towards achieving its required rate of return. Even the hon. Member for Arundel (Mr. Marshall) admitted that it was moving in the right direction as regards rate of return. Far from being associated with disaster or disintegration, as the hon. Member for Mid-Sussex advised us would happen, it is increasingly linked with innovation. It is linked, for example, with the INMOS project—

I shall give way to the hon. Member for Horsham and Crawley because I referred to him, but before doing so I shall finish my sentence. The NEB has taken an important initiative in launching British industry into the silicon chip revolution. The hon. Member for Arundel has praised it for its pacesetting work on silicon chips.

As the right hon. Gentleman knows, the Secretary of State said that the public dividend capital that has been taken up so far by the NEB amounts to £439 million. Where does he suppose that that money is coming from? Does he not recognise that it comes from the taxpayer, and cannot be borrowed at the moment at less than 14 per cent.? The interest on the sum must amount to at least £60 million a year—far exceeding any possible profit that the NEB is showing or can show.

The hon. Gentleman knows that that has to be remunerated in the normal way.

In their amendment the Tories claim that the House is not being given sufficient—

Will the right hon. Gentleman explain what he means by

"has to be remunerated in the normal way"?
What did he mean by that?

I refer the right hon. Gentleman to the Act. I refer him to the statements that we made in the White Paper on nationalised industries about our attitude to the remuneration of public dividend capital. If he wishes to refer to those statements, we may refer to the issue in Committee.

Public dividend capital is required to be remunerated. I refer the right hon. Gentleman, for example, to British Aerospace and its remuneration of public dividend capital.

In their amendment the Tories claim that the House is not being given sufficient information about the activities and plans of the NEB to justify their voting the money. In their amendment they complain about what they describe as
"totally inadequate documentary evidence".
However, the Government and the NEB have gone considerably further in providing information than the Tories did in a similar situation. Last autumn the NEB issued an interim statement for the first half of 1978. The Board is required to issue six-monthly accounts under schedule 2 to the Industry Act 1975. Regular accountability to Parliament was imposed on the Board by the Government. I am open to correction, but I have been unable to discover any Tory legislation that imposed similar parliamentary accountability on any comparable body.

It is interesting to remember what happened when the borrowing limits of public sector bodies were increased during the period in office of the Tory Government. The Electricity Bill 1972 raised the borrowing limits of the Electricity Council and boards in England and Wales and of the two Scottish boards. Yes, England, Scotland and Wales—separate bodies—were lumped together in one Bill. However, the Opposition have the cheek to argue that it is improper for us to do the same thing in the Bill. The increases in the Tory Bill raised the limits from £5,200 million to a whopping £7,700 million. The increases were brought before Parliament on the strength of pamphlets issued by the organisations concerned. All that the Tory Government provided to inform Parliament was a completely uninformative eight-paragraph memorandum.

When, also in 1972, the borrowing powers of the Post Office were increased from £2,800 million to £4,800 million, the Post Office issued a glossy brochure consisting predominantly of pretty coloured photographs. The Tory Government put no special documentary evidence before the House at all. However, the Tories have the nerve to attack us for providing inadequate documentary evidence.

As the NEB becomes more and more securely established and more and more readily accepted, the Tory Party becomes more and more uncertain about how to approach it. Atavistic instinct says "Club it to death". Cautious self-interest warns "Come to terms with it".

An instructive illustration is the Tory attitude to the NEB's project for manufacturing standard silicon chips—the INMOS project. The Tory Party's public posture, reiterated by the hon. Member for Kingston upon Thames (Mr. Lamont), has been to pour scorn on INMOS as a hare-brained device for squandering taxpayers' money. The hon. Gentleman asked about the possibility of offshore activity by INMOS. It would be better to have an indigenous industry with offshore work added than to settle for being an offshore offshoot of America and Japan, as the right hon. Member for Leeds, North-East (Sir K. Joseph) advocates.

The Tories pour scorn on the INMOS project but at the same time I receive letters from Tory Members putting in a claim for the project for their own areas. The letters have been pouring in. I have a sheaf of these letters in my hand. They make moving reading.

The hon. Member for City of Chester (Mr. Morrison) requested:
"I would be grateful to know what are the chances of all or part of this new industry being located in the North-West."
The hon. Member for Lancaster (Mrs. Kellett-Bowman) was rather more precise in her solicitations. She wrote:
"I very much hope you will insist that the NEB should establish it in the North-West—preferably at another site at Heysham or White Lund."

As the right hon. Gentleman's Government have always clobbered, and continue to clobber, the North-West, especially Lancaster, by giving it less for education and less for health, and since unemployment in the area is infinitely higher—in Lancaster it is now 7·9 per cent.—if there is anything by which the Government are to improve employment prospects it is my duty to get the improvement. However, the Government should give us a fairer deal in all the other respects.

I took the trouble to compile for one of my constituents, who lives in the Levenshulme district of Manchester, a complete account of what the Government have done for the North-West. It is an exceptionally impressive document and I shall send a copy of it to the hon. Lady tomorrow.

The hon. Lady pleaded for Heysham or White Lund, but her hon. Friend the Member for Wallasey (Mrs. Chalker) had different ideas. She wrote:
"I write to urge you to ensure that all or part of the new industry will be located on Merseyside."
But she was very much at odds with her hon. Friend the Member for Gloucestershire, South (Mr. Cope). He wrote:
"I hope you will be able to confirm to me that your Department will be at least neutral on the choice, so that Avon can be considered by the company".

I shall give way to the hon. Lady in a moment. That would not be universally popular, because the hon. Member for Tynemouth (Mr. Trotter) wrote—[Interruption.] The line stretches out to the crack of doom, but when I have completed it I shall gladly give way. The hon. Member for Tynemouth wrote:

"I am writing to urge you to decide in favour of Tyne and Wear".
But none was equal to the eloquence of the hon. and learned Member for Colchester (Mr. Buck), who wrote:
"If all the relevant factors are considered, Colchester is from every point of view an ideal location."

I am most grateful to the Minister for giving way and also for his courtesy in sending me a letter which ended in the way that my hon. Friend indicated and no doubt will help the interior decor in my house. It was courteous of the Minister to write to me in the way that he did. If these funds are to be made available, the right hon. Gentleman is merely showing what conscientious Conservative Members of Parliament are doing to ensure that their constituents get their proper share and due. I hope the right hon. Gentleman will quote from what has been said by some of his hon. Friends, which shows that they, too, have been assiduous in speaking for their own constituencies.

Conscientious they certainly are, but they are desperately at odds with each other, as the hon. Lady will now make clear in her intervention.

The hon. Gentleman is well aware that under his Government Merseyside suffers from the highest unemployment anywhere in this country. If there is a new development from which young people—and on Merseyside we have double the southern average of young people unemployed—may benefit, then to my dying day, even against a few of my colleagues in my party, I shall fight for Merseyside.

Order. I hope the Minister is not going to read a succession of these letters, otherwise we shall be here till midnight with all these interventions.

The hon. Gentleman did not ask for it. Instead, he has work from British Aerospace for his constituency. I am being selective here, Mr. Deputy Speaker, and will not stretch these out, but this goes on, from Cumbria, from where we had a passionate plea for his area from the hon. Member for Workington (Mr. Page)—who in this very debate denounced this Bill as galloping Socialism—all the way to Cornwall. All of these hon. Members who wrote to us, all the hon. Members who have intervened during my speech this evening who were bitterly vying wth each other to win the project for their area, are united in one thing; the votes they will cast in the Division Lobby this evening to ensure that the project does not go ahead at all.

It is fascinating to trace the evolution of Tory policy towards the NEB. At first there was no doubt about it at all. Perorating grandiloquently at the end of his speech on the Second Reading of the Industry Bill, the hon. Member for Henley proclaimed in February 1975:
"It will destroy, not create jobs. It will divide management and unions, not bring them together ߪ I tell the House, on behalf of the Conservative Party, that we shall repeal this Bill."—[Official Report, 17 February 1975; Vol. 886, c. 965.]
Uncompromising words, apparently endorsed in the statement of aims published by the hon. Gentleman's party the following year, in 1976. That invaluable document "The Right Approach" declared:
"The National Enterprise Board must be abolished."
But a shadow of doubt seemed to have crept in. "The Right Approach" continued:
"though we shall have to retain some sort of administrative mechanism for selling off NEB shareholdings where this is possible, and for administering those which cannot be sold off immediately."

The hon. Member for Wolverhampton, South-West (Mr. Budgen) says "Quite right" and his hon. Friend the Member for Kingston upon Thames was perfectly certain about it. Speaking from the Front Bench opposite in January 1977, he declared that they had made clear that they would get rid of the NEB and said that in that way the policy had not changed one iota or scintilla.

Later that year the iotas and scintillas were infiltrating subversively, as they have a way of doing when the right hon. Member for Lowestoft (Mr. Prior) interprets his party's policy. He told the readers of the Birmingham Post in August 1977:
"It is rubbish to suggest that we would immediately cut the lifeline of State-assisted firms such as Leyland. They need help to get back on their feet. … We are committed to holding the firms now owned by the NEB until any hope of recovery is abandoned."

I will give way to the hon. Gentleman in a moment. What Lowestoft reinterprets today Leeds reassesses tomorrow, and to a somewhat more specialised audience—the readers of Computer Weekly—the right hon. Member for Leeds, North-East confided in April 1978 that the only role he saw for the NEB was as

"A financial standby of last resort and a casualty clearing station. We do not intend to leave it with scope for acquisition into the private sector and no money will be made available to acquire companies or parts of companies."
Even that statement, however, was not the final word in this evolving approach.

The hon. Member for Rushcliffe (Mr. Clarke), whom this Conservative Central Office handout identifies as "an Opposition spokesman on industry", told Huddersfield business men on 4 January last:
"A Conservative Government will only make slow and cautious changes in industrial policy. … The National Enterprise Board will carry on but we will want safeguards on its ability to buy into profitable companies."
So in less than four years the Conservatives have come round from insisting on the complete abolition of the NEB to accepting its role of buying into profitable companies—with suitable safeguards.

The Minister started his speech by saying that the NEB was accountable to Parliament. Is he, therefore, going to answer a single question that has been raised today? Will he, for example, when we are told that the Bill is essential for British Leyland, tell us why the review which the Secretary of State said would take place this November and every November has not been mentioned so far?

I am responding directly to the amendment which the Opposition have tabled. I am quoting directly and responding to it, but hon. Gentlemen opposite apparently do not like their amendment being debated.

I am coming to the Scotland Bill.

Meanwhile, the hon. Gentleman has to reconcile that the National Enterprise Board must be abolished in October 1976 with the assertion that the NEB will carry on in December 1978. While the policy of hon. Gentlemen opposite changes, their votes stay the same. They voted to prevent the birth of the NEB, and the Scottish and Welsh Development Agencies. They will be voting tonight to extinguish them all, for that would be the inevitable effect of their votes tonight if they are successful, and the impact throughout the United Kingdom would be catastrophic. Scotland and Wales would suffer if the work of their development agencies were brought to an end.

In Wales, over 3,000 jobs have been created and many more have been safeguarded by the Welsh Development Agency. In Scotland, 35,000 workers depend upon the Scottish Development Agency. That brings us, as the hon. Member for Glasgow, Cathcart (Mr. Taylor) has requested, to the extraordinary terms of the amendment:
"while accepting the usefulness of a significant part of the work of the Scottish and Welsh Development Agencies",
and so on. We have heard of the curious incident of the dog that did not bark in the night time, but on this occasion the Tory corgis and Scottish terriers have been tremulously wagging their tails and they have their tongues out ready for a cautious lick.

In his speech on Thursday last, the right hon. Member for Leeds, North-East brought us the startling news:
"Much of the work of the agencies … is valued in Scotland and Wales."—[Official Report, 18 January 1979; Vol. 960, c. 2045.]
But it just will not do. The Tories cannot live down their past. When it really mattered, when the House was considering the Bills setting up those valued Scottish and Welsh agencies, the Tories both barked and bit. Opposing the Second Reading of the Welsh Bill, the Tory spokesman on Wales declared that they believed that the agency as constituted would encourage a misdirection of resources, both human and financial, in a series of dubious ventures.

On the Second Reading of the Scottish Bill, their spokesman said that the Tories had many objections to it, that the agency was unnecessary and, for good measure, that it was not needed. They voted against the Second Reading of both Bills, and they voted against them 47 more times in succeeding stages. But they now have the sauce to talk about their usefulness.

Will the Minister accept that what makes an enormous difference is that 90 per cent. of the work carried out by the Scottish Development Agency was being carried out by other Government bodies beforehand and, under Conservative Governments, extremely well?

But the hon. Gentleman said—indeed, I quoted his remarks—that the agency was not necessary and was subject to many objections. Now, in the Tory amendment, he seeks to praise it.

It is not only by preventing money going to the agencies that the Tories seek to damage Scotland and Wales tonight. As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said, they do so as well by their attack on the NEB. In addition to the agencies, NEB companies are established at 12 locations in Scotland and in five locations in Wales. There are six in the Eastern region of England, 42 in the South-East, seven in the East Midlands, five in Yorkshire and Humberside, 16 in the West Midlands, seven in the South-West, 11 in the Northern region, and 20 in the North-West. There is not a country or region in the United Kingdom that would not be damaged if this Bill did not go through, for the NEB is now firmly established throughout the country as a valued and needed industrial instrument.

In 1977 its subsidiaries exported well over £1,000 million worth of goods. A total of 330,000 workers are employed directly by NEB companies, and hundreds of thousands more work for supplying companies. All their jobs will be threatened if this Bill is not carried tonight.

Of course, for the Tories a vote to maim or cripple the NEB, the SDA and the WDA, or to wipe them out entirely, is completely in character. For five years now they have remorselessly voted against every measure by this Government to

Division No. 46]


[7.02 p.m.

Adley, RobertDykes, HughHowell, David (Guildford)
Aitken, JonathanEden, Rt Hon Sir JohnHowells, Geraint (Cardigan)
Alison, MichaelEdwards, Nicholas (Pembroke)Hunt, David (Wirral)
Amery, Rt Hon JulianElliott, Sir WilliamHunt, John (Ravensbourne)
Arnold, TomEmery, PeterHurd, Douglas
Atkins, Rt Hon H. (Spelthorne)Eyre, ReginaldHutchison, Michael Clark
Atkinson, David (B'mouth, East)Fairbairn, NicholasIrving, Charles (Cheltenham)
Awdry, DanielFairgrieve, RussellJames, David
Baker, KennethFarr, JohnJenkin, Rt Hon P. (Wanst'd&W'df'd)
Banks, RobertFell, AnthonyJessel, Toby
Beith, A. J.Finsberg, GeoffreyJohnson Smith, G. (E Grinstead)
Bell, RonaldFisher, Sir NigelJones, Arthur (Daventry)
Bendall, VivianFletcher, Alex (Edinburgh N)Jopling, Michael
Bennett, Dr Reginald (Fareham)Fookes, Miss JanetJoseph, Rt Hon Sir Keith
Benyon, W.Forman, NigelKaberry, Sir Donald
Berry, Hon AnthonyFowler, Norman (Sutton C'f'd)Kellett-Bowman, Mrs Elaine
Biffen, JohnFox, MarcusKershaw, Anthony
Biggs-Davison, JohnFraser, Rt Hon H. (Stafford & St)Kimball, Marcus
Blaker, PeterFreud, ClementKing, Evelyn (South Dorset)
Body, RichardFry, PeterKing, Tom (Bridgwater)
Boscawen, Hon RobertGalbraith, Hon T. G. D.Kitson, Sir Timothy
Bottomley, PeterGardiner, George (Reigate)Knight, Mrs Jill
Bowden, A. (Brighton, Kemptown)Gardner, Edward (S Fylde)Knox, David
Boyson, Dr Rhodes (Brent)Gilmour, Rt Hon Sir Ian (Chesham)Lamont, Norman
Braine, Sir BernardGilmour, Sir John (East Fife)Langford-Holt, Sir John
Brittan, LeonGlyn, Dr AlanLatham, Michael (Melton)
Brocklebank-Fowler, C.Godber, Rt Hon JosephLawrence, Ivan
Brooke, Hon PeterGoodhart, PhilipLawson, Nigel
Brotherton, MichaelGoodhew, VictorLester, Jim (Beeston)
Brown, Sir Edward (Bath)Goodlad, AlastairLewis, Kenneth (Rutland)
Bryan, Sir PaulGorst, JohnLloyd, Ian
Buchanan-Smith, AlickGow, Ian (Eastbourne)Loveridge, John
Buck, AntonyGower, Sir Raymond (Barry)Luce, Richard
Budgen, NickGrant, Anthony (Harrow C)McAdden, Sir Stephen
Bulmer, EsmondGray, HamishMcCrindle, Robert
Burden, F. A.Grieve, PercyMacfarlane, Neil
Butler, Adam (Bosworth)Griffiths, EldonMacGregor, John
Carlisle, MarkGrimond, Rt Hon J.MacKay, Andrew (Stechford)
Chalker, Mrs LyndaGrist, IanMacmillan, Rt Hon M. (Farnham)
Channon, PaulGrylis, MichaelMcNair-Wilson, M. (Newbury)
Churchill, W. S.Hall-Davis, A. G. F.McNair-Wilson, P. (New Forest)
Clark, Alan (Plymouth, Sutton)Hamilton, Archibald (Epsom & Ewell)Madel, David
Clark, William (Croydon S)Hamilton, Michael (Salisbury)Marshall, Michael (Arundel)
Clarke, Kenneth (Rushcliffe)Hampson, Dr KeithMarten, Neil
Clegg, WalterHannam, JohnMates, Michael
Cockcroft, JohnHarrison, Col Sir Harwood (Eye)Mather, Carol
Cooke, Robert (Bristol W)Harvie Anderson, Rt Hon MissMaude, Angus
Cope, JohnHaselhurst, AlanMawby, Ray
Cormack, PatrickHastings, StephenMaxwell-Hyslop, Robin
Corrie, JohnHavers, Rt Hon Sir MichaelMayhew, Patrick
Costain, A. P.Hawkins, PaulMeyer, Sir Anthony
Critchley, JulianHayhoe, BarneyMiller, Hal (Bromsgrove)
Crouch, DavidHeath, Rt Hon EdwardMills, Peter
Crowder, F. P.Heseltine, MichaelMiscampbell, Norman
Dean, Paul (N Somerset)Hicks, RobertMitchell, David (Basingstoke)
Dodsworth, GeoffreyHiggins, Terence L.Moate, Roger
Douglas-Hamilton, Lord JamesHodgson, RobinMolyneaux, James
Drayson, BurnabyHolland, PhilipMonro, Hector
du Cann, Rt Hon EdwardHordern, PeterMontgomery, Fergus
Durant, TonyHowe, Rt Hon Sir GeoffreyMoore, John(Croydon C)

preserve or create employment. From Leyland to Herbert's, from the Polish shipbuilding deal to the Lindsey oil refinery, they have cast their votes in favour of the dole queue. But the NEB, the SDA and the WDA have proved their worth, and this Bill will give them a chance to build on what they have already achieved. I call on the House to vote for the Second Reading.

Question put, That the amendment be made:—

The House divided: Ayes 276, Noes 295.

More, Jasper (Ludlow)Renton, Tim (Mid-Sussex)Stewart, Ian (Hitchin)
Morgan, GeraintRhodes James, R.Stokes, John
Morgan-Giles, Rear-AdmiralRidley, Hon NicholasStradling Thomas, J.
Morris, Michael (Northampton S)Ridsdale, JulianTapsell, Peter
Morrison, Hon Charles (Devizes)Rifkind, MalcolmTaylor, R. (Croydon NW)
Morrison, Hon Peter (Chester)Roberts, Wyn (Conway)Taylor, Teddy (Cathcart)
Mudd, DavidRodgers, Sir John (Sevenoaks)Tebbit, Norman
Neave, AireyRoss, Stephen (Isle of Wight)Temple-Morris, Peter
Nelson, AnthonyRossi, Hugh (Hornsey)Thatcher, Rt Hon Margaret
Neubert, MichaelRost, Peter (SE Derbyshire)Townsend, Cyril D.
Newton, TonyRoyle, Sir AnthonyTrotter, Neville
Nott, JohnSainsbury, Timvan Straubenzee, W. R.
Onslow, CranleySt. John-Stevas, NormanVaughan, Dr Gerard
Oppenheim, Mrs SallyScott, NicholasViggers, Peter
Osborn, JohnShaw, Michael (Scarborough)Wainwright, Richard (Colne V)
Page, John (Harrow West)Shelton, William (Streatham)Wakeham, John
Page, Rt Hon R. Graham (Crosby)Shepherd, ColinWalker, Rt Hon P. (Worcester)
Page, Richard (Workington)Shersby, MichaelWalker-Smith, Rt Hon Sir Derek
Pardoe, JohnSilvester, FredWall, Patrick
Parkinson, CecilSims, RogerWalters, Dennis
Pattie, GeoffreySinclair, Sir GeorgeWarren, Kenneth
Penhaligon, DavidSkeet, T. H. H.Weatherill, Bernard
Percival, IanSmith, Dudley (Warwick)Wells, John
Peyton, Rt Hon JohnSmith, Timothy John (Ashfield)Whitelaw, Rt Hon William
Pink. R. BonnerSpeed, KeithWhitney, Raymond
Powell, Rt Hon J. EnochSpence, JohnWiggin, Jerry
Prentice, Rt Hon RegSpicer, Michael (S Worcester)Winterton, Nicholas
Price, David (Eastleigh)Sproat, IainWood, Rt Hon Richard
Prior, Rt Hon JamesStainton, KeithYoung, Sir G. (Ealing, Acton)
Raison, TimothyStanbrook, Ivor
Rathbone, TimStanley, JohnTELLERS FOR THE AYES:
Rees, Peter (Dover & Deal)Steel, Rt Hon DavidMr. Spencer Le Merchant and
Rees-Davies, W. R.Steen, Anthony (Wavertree)Mr. Michael Roberts.
Renton, Rt Hon Sir D. (Hunts)


Abse, LeoCorbett, RobinGeorge, Bruce
Allaun, FrankCowans, HarryGilbert, Rt Hon Dr John
Anderson, DonaldCox, Thomas (Tooting)Ginsburg, David
Archer, Rt Hon PeterCraigen, Jim (Maryhill)Gould, Bryan
Armstrong, ErnestCrawshaw, RichardGourlay, Harry
Ashton, JoeCronin, JohnGrant, George (Morpeth)
Atkins, Ronald (Preston N)Crowther, Stan (Rotherham)Grant, John (Islington C)
Atkinson, Norman (H'gey, Tott'ham)Cryer, BobGrocott, Bruce
Bagier, Gordon A. T.Cunningham, Dr J. (Whiteh)Hamilton, W. W. (Central Fife)
Barnett, Guy (Greenwich)Davidson, ArthurHardy, Peter
Barnett, Rt Hon Joel (Heywood)Davies, Bryan (Enfield N)Harrison, Rt Hon Walter
Bates, AlfDavies, Rt Hon DenzilHattersley, Rt Hon Roy
Bean, R. E.Davies, Ifor (Gower)Hayman, Mrs Helene
Benn, Rt Hon Anthony WedgwoodDavis, Clinton (Hackney C)Healey, Rt Hon Denis
Bennett, Andrew (Stockport N)Deakins, EricHeffer, Eric S.
Bidwell, SydneyDean, Joseph (Leeds West)Henderson, Douglas
Bishop, Rt Hon Edwardde Freitas, Rt Hon Sir GeoffreyHome Robertson, John
Blenkinsop, ArthurDell, Rt Hon EdmundHooley, Frank
Boardman, H.Dempsey, JamesHoram, John
Booth, Rt Hon AlbertDewar, DonaldHowell, Rt Hon Denis (B'ham, Sm H)
Boothroyd, Miss BettyDoig, PeterHoyle, Doug (Nelson)
Bottomley, Rt Hon ArthurDormand, J. D.Huckfield, Les
Boyden, James (Bish Auck)Douglas-Mann, BruceHughes, Rt Hon C. (Anglesey)
Bradley, TomDuffy, A. E. P.Hughes, Mark (Durham)
Bray, Dr JeremyDunn, James A.Hughes, Robert (Aberdeen N)
Brown, Hugh D. (Provan)Dunnett, JackHughes, Roy (Newport)
Brown, Robert C. (Newcastle W)Eadie, AlexHunter, Adam
Brown, Ronald (Hackney S)Edge, GeoffIrving, Rt Hon S. (Dartford)
Buchan, NormanEllis, John (Brigg & Scun)Jackson, Colin (Brighouse)
Buchanan, RichardEnglish, MichaelJackson, Miss Margaret (Lincoln)
Butler, Mrs Joyce (Wood Green)Ennals, Rt Hon DavidJanner, Greville
Callaghan, Rt Hon J. (Cardiff SE)Evans, Fred (Caerphilly)Jay, Rt Hon Douglas
Callaghan, Jim (Middleton & P)Evans, Gwynfor (Carmarthen)Jeger, Mrs Lena
Campbell, IanEvans, Ioan (Aberdare)Jenkins, Hugh (Putney)
Canavan, DennisEvans, John (Newton)John, Brynmor
Cant, R. B.Ewing, Harry (Stirling)Johnson, James (Hull West)
Carmichael, NeilFaulds, AndrewJohnson, Walter (Derby S)
Carter, RayFernyhough, Rt Hon E.Jones, Alec (Rhondda)
Carter-Jones, LewisFlannery, MartinJones, Barry (East Flint)
Cartwright, JohnFletcher, Ted (Darlington)Jones, Dan (Burnley)
Clemitson, IvorFoot, Rt Hon MichaelJudd, Frank
Cocks, Rt Hon Michael (Bristol S)Ford, BenKaufman, Rt Hon Gerald
Cohen, StanleyForrester, JohnKelley, Richard
Coleman, DonaldFowler, Gerald (The Wrekin)Kerr, Russell
Colquhoun, Ms MaureenFraser, John (Lambeth, N'w'd)Kilroy-Silk, Robert
Concannon, Rt Hon JohnFreeson, Rt Hon ReginaldKinnock, Neil
Conlan, BernardGarrett, John (Norwich S)Lambie, David
Cook, Robin F. (Edin C)Garrett, W. E. (Wallsend)Lamborn, Harry

Lamond, JamesOakes, GordonStrang, Gavin
Latham, Arthur (Paddington)Ogden, EricStrauss, Rt Hon G. R.
Leadbitter, TedO'Halloran, MichaelSwain, Thomas
Lee, JohnOrbach, MauriceTaylor, Mrs Ann (Bolton W)
Lestor, Miss Joan (Eton & Slough)Orme, Rt Hon StanleyThomas, Dafydd (Merioneth)
Lever, Rt Hon HaroldOvenden, JohnThomas, Jeffrey (Abertillery)
Lewis, Arthur (Newham N)Owen, Rt Hon Dr DavidThomas, Mike (Newcastle E)
Lewis, Ron (Carlisle)Padley, WalterThomas, Ron (Bristol NW)
Litterick, TomPalmer, ArthurThompson, George
Lofthouse, GeoffreyPark, GeorgeThorne, Stan (Preston South)
Lomas, KennethParker, JohnTierney, Sydney
Loyden, EddieParry, RobertTilley, John
Luard, EvanPavitt, LaurieTinn, James
Lyon, Alexander (York)Pendry, TomTomlinson, John
Lyons, Edward (Bradford W)Perry, ErnestTorney, Tom
Mabon, Rt Hon Dr J. DicksonPhipps, Dr ColinTuck, Raphael
McCartney, HughPrice, C. (Lewisham W)Urwin, T. W.
MacCormick, IainPrice, William (Rugby)Varley, Rt Hon Eric G.
McDonald, Dr OonaghRadice, GilesWainwright, Edwin (Dearne V)
McElhone, FrankReid, GeorgeWalker, Harold (Doncaster)
MacFarquhar, RoderickRichardson, Miss JoWalker, Terry (Kingswood)
McGuire, Michael (Ince)Roberts, Albert (Normanton)Ward, Michael
McKay, Allen (Penistone)Roberts, Gwilym (Cannock)Watkins, David
MacKenzie, Rt Hon GregorRobertson, George (Hamilton)Watkinson, John
Maclennan, RobertRobinson, GeoffreyWatt, Hamish
McMillan, Tom (Glasgow C)Roderick, CaerwynWeetch, Ken
McNamara, KevinRodgers, George (Chorley)Weitzman David
Madden, MaxRodgers, Rt Hon William (Stockton)Wellbeloved, James
Magee, BryanRooker, J. W.Welsh, Andrew
Mahon, SimonRoper, JohnWhite, Frank R. (Bury)
Mallalieu, J. P. W.Ross, Rt Hon W. (Kilmarnock)White, James (Pollok)
Marks, KennethRowlands, TedWhitehead, Phillip
Marshall, Dr Edmund (Goole)Ryman, JohnWhitlock, William
Marshall, Jim (Leicester S)Sedgemore, BrianWigley, Dafydd
Maynard, Miss JoanSelby, HarryWilley, Rt Hon Frederick
Meacher, MichaelSever, JohnWilliams, Rt Hon Alan (Swansea W)
Mellish, Rt Hon RobertShaw, Arnold (Ilford South)Williams, Alan Lee (Hornch'ch)
Mikardo, IanSheldon, Rt Hon RobertWilliams, Rt Hon Shirley (Hertford)
Millan, Rt Hon BruceShore, Rt Hon PeterWilliams, Sir Thomas (Warrington)
Miller, Dr M. S. (E Kilbride)Silkin, Rt Hon John (Deptford)Wilson, Gordon (Dundee E)
Mitchell, Austin (Grimsby)Silkin, Rt Hon S. C. (Dulwich)Wilson, Rt Hon Sir Harold (Huyton)
Molloy, WilliamSilverman, JuliusWilson, William (Coventry SE)
Moonman, EricSkinner, DennisWise, Mrs Audrey
Morris, Alfred (Wythenshawe)Smith, Rt Hon John (N Lanarkshire)Woodall, Alec
Morris, Rt Hon Charles R.Snape, PeterWoof, Robert
Morris, Rt Hon J. (Aberavon)Spearing, NigelWrigglesworth, Ian
Morton, GeorgeSpriggs, LeslieYoung, David (Bolton E)
Moyle, Rt Hon RolandStallard, A. W.
Mulley, Rt Hon FrederickStewart, Rt Hon DonaldTELLERS FOR THE NOES:
Murray, Rt Hon Ronald KingStewart, Rt Hon M. (Fulham)Mr. James Hamilton and
Newens, StanleyStoddart, DavidMr. Ted Graham.
Noble, MikeStott, Roger

Question accordingly negatived.

Main Question put forthwith pursuant to Standing Order No. 39 ( Amendment on Second or Third Reading):—

Division No. 47]


[7.18 p.m.

Abse, LeoBoyden, James (Bish Auck)Colquhoun, Ms Maureen
Allaun, FrankBradley, TomConcannon, Rt Hon John
Anderson, DonaldBray, Dr JeremyConlan, Bernard
Archer, Rt Hon PeterBrown, Hugh D. (Provan)Cook, Robin F. (Edin C)
Armstrong, ErnestBrown, Robert C. (Newcastle W)Corbett, Robin
Ashton, JoeBrown, Ronald (Hackney S)Cowans, Harry
Atkins, Ronald (Preston N)Buchan, NormanCox, Thomas (Tooting)
Atkinson, Norman (H'gey, Tott'ham)Buchanan, RichardCraigen, Jim (Maryhill)
Bagier, Gordon A. T.Butler, Mrs Joyce (Wood Green)Crawshaw, Richard
Barnett, Guy (Greenwich)Callaghan, Rt Hon J. (Cardiff SE)Cronin, John
Barnett, Rt Hon Joel (Heywood)Callaghan, Jim (Middleton & P)Crowther, Stan (Rotherham)
Bates, AlfCampbell, IanCryer, Bob
Bean, R. E.Canavan, DennisCunningham, Dr J. (Whiteh)
Benn, Rt Hon Anthony WedgwoodCant, R. B.Davidson, Arthur
Bennett, Andrew (Stockport N)Carmichael, NeilDavies, Bryan (Enfield N)
Bidwell, SydneyCarter, RayDavies, Rt Hon Denzil
Bishop, Rt Hon EdwardCarter-Jones, LewisDavies, Ifor (Gower)
Blenkinsop, ArthurCartwright, JohnDavis, Clinton (Hackney C)
Boardman, H.Clemitson, IvorDeakins, Eric
Booth, Rt Hon AlbertCocks, Rt Hon Michael (Bristol S)de Freitas Rt Hon Sir Geoffrey
Boothroyd, Miss BettyCohen, StanleyDell, Rt Hon Edmond
Bottomley, Rt Hon ArthurColeman, DonaldDempsey, James

The House divided: Ayes 294, Noes 275.

Dewar, DonaldLamborn, HarryRobertson, George (Hamilton)
Doig, PeterLamond, JamesRobinson, Geoffrey
Dormand, J. D.Latham, Arthur (Paddington)Roderick, Caerwyn
Douglas-Mann, BruceLeadbitter, TedRodgers, George (Chorley)
Duffy, A. E. P.Lee, JohnRodgers, Rt Hon William (Stockton)
Dunn, James A.Lestor, Miss Joan (Eton & Slough)Rooker, J. W.
Dunnett, JackLever, Rt Hon HaroldRoper, John
Eadie, AlexLewis, Arthur (Newham N)Ross, Rt Hon W. (Kilmarnock)
Edge, GeoffLewis, Ron (Carlisle)Rowlands, Ted
Ellis, John (Brigg & Scun)Litterick, TomRyman, John
English, MichaelLofthouse, GeoffreySedgemore, Brian
Ennals, Rt Hon DavidLomas, KennethSelby, Harry
Evans, Fred (Caerphilly)Loyden, EddieSever, John
Evans, Gwynfor (Carmarthen)Luard, EvanShaw, Arnold (Ilford South)
Evans, Ioan (Aberdare)Lyon, Alexander (York)Sheldon, Rt Hon Robert
Ewing, Harry (Stirling)Lyons, Edward (Bradford W)Shore, Rt Hon Peter
Faulds, AndrewMabon, Rt Hon Dr J. DicksonSilkin, Rt Hon S. C. (Dulwich)
Fernyhough, Rt Hon E.McCartney, HughSilverman, Julius
Flannery, MartinMacCormick, IainSkinner, Dennis
Fletcher, Ted (Darlington)McDonald, Dr OonaghSmith, Rt Hon John (N Lanarkshire)
Foot, Rt Hon MichaelMcElhone, FrankSnape, Peter
Ford, BenMacFarquhar, RoderickSpearing, Nigel
Forrester, JohnMcGuire, Michael (Ince)Spriggs, Leslie
Fowler, Gerald (The Wrekin)McKay, Allen (Penistone)Stallard, A. W.
Fraser, John (Lambeth, N'w'd)MacKenzie, Rt Hon GregorStewart, Rt Hon Donald
Freeson, Rt Hon ReginaldMaclennan, RobertStewart, Rt Hon M. (Fulham)
Garrett, John (Norwich S)McMillan, Tom (Glasgow C)Stoddart, David
Garrett, W. E. (Wallsend)McNamara, KevinStott, Roger
George, BruceMadden, MaxStrang, Gavin
Gilbert, Rt Hon Dr JohnMagee, BryanStrauss, Rt Hon G. R.
Ginsburg, DavidMahon, SimonSwain, Thomas
Gould, BryanMallalieu, J. P. W.Taylor, Mrs Ann (Bolton W)
Gourlay, HarryMarks, KennethThomas, Dafydd (Merioneth)
Graham, TedMarshall, Dr Edmund (Goole)Thomas, Jeffrey (Abertillery)
Grant, George (Morpeth)Marshall, Jim (Leicester S)Thomas, Mike (Newcastle E)
Grant, John (Islington C)Maynard, Miss JoanThomas, Ron (Eristol NW)
Grocott, BruceMeacher, MichaelThompson, George
Hamilton, James (Bothwell)Mellish, Rt Hon RobertThorne, Stan (Preston South)
Hamilton, W. W. (Central Fife)Mikardo, IanTierney, Sydney
Hardy, PeterMillan, Rt Hon BruceTilley, John
Harrison, Rt Hon WalterMiller, Dr M. S. (E Kilbride)Tinn, James
Hattersley, Rt Hon RoyMitchell, Austin (Grimsby)Tomlinson, John
Hayman, Mrs HeleneMolloy, WilliamTuck, Raphael
Healey, Rt Hon DenisMoonman, EricUrwin, T, W.
Heffer, Eric S.Morris, Alfred (Wythenshawe)Varley, Rt Hon Eric G.
Henderson, DouglasMorris, Rt Hon Charles R.Wainwright, Edwin (Dearne V)
Home Robertson, JohnMorris, Rt Hon J. (Aberavon)Walker, Harold (Doncaster)
Hooley, FrankMorton, GeorgeWalker, Terry (Kingswood)
Horam, JohnMoyle, Rt Hon RolandWard, Michael
Howell, Rt Hon Denis (B'ham, Sm H)Mulley, Rt Hon FrederickWatkins, David
Hoyle, Doug (Nelson)Murray, Rt Hon Ronald KingWatkinson, John
Huckfield, LesNewens, StanleyWatt, Hamish
Hughes, Rt Hon C. (Anglesey)Noble, MikeWeetch, Ken
Hughes, Mark (Durham)Oakes, GordonWeitzman, David
Hughes, Robert (Aberdeen N)Ogden, EricWellbeloved, James
Hughes, Roy (Newport)O'Halloran, MichaelWelsh, Andrew
Hunter, AdamOrbach, MauriceWhite, Frank R. (Bury)
Irving, Rt Hon S. (Dartford)Orme, Rt Hon StanleyWhite, James (Pollok)
Jackson, Colin (Brighouse)Ovenden, JohnWhitehead, Phillip
Jackson, Miss Margaret (Lincoln)Owen, Rt Hon Dr DavidWhitlock, William
Janner, GrevillePadley, WalterWigley, Dafydd
Jay, Rt Hon DouglasPalmer, ArthurWilley, Rt Hon Frederick
Jeger, Mrs LenaPark, GeorgeWilliams, Rt Hon Alan (Swansea W)
Jenkins, Hugh (Putney)Parker, JohnWilliams, Alan Lee (Hornch'ch)
John, BrynmorParry, RobertWilliams, Sir Thomas (Warrington)
Johnson, James (Hull West)Pavitt, LaurieWilson, Gordon (Dundee E)
Johnson, Walter (Derby S)Pendry, TomWilson, Rt Hon Sir Harold (Huyton)
Jones, Alec (Rhondda)Perry, ErnestWilson, William (Coventry SE)
Jones, Barry (East Flint)Phipps, Dr ColinWise, Mrs Audrey
Jones, Dan (Burnley)Price, C. (Lewisham W)Woodall, Alec
Judd, FrankPrice, William (Rugby)Woof, Robert
Kaufman, Rt Hon GeraldRadice, GilesWrigglesworth, Ian
Kelley, RichardRees, Rt Hon Merlyn (Leeds S)Young, David (Bolton E)
Kerr, RussellReid, George
Kilroy-Silk, RobertRichardson, Miss JoTELLERS FOR THE AYES:
Kinnock, NeilRoberts, Albert (Normanton)Mr. John Evans and
Lambie, DavidRoberts, Gwilym (Cannock)Mr. Joseph Dean.


Adley, RobertAtkins, Rt Hon H. (Spelthorne)Beith, A. J.
Aitken, JonathanAtkinson, David (B'mouth, East)Bell, Ronald
Alison, MichaelAwdry, DanielBendall, Vivian
Amery, Rt Hon JulianBaker, KennethBennett, Dr Reginald (Fareham)
Arnold, TomBanks, RobertBenyon, W.

Berry, Hon AnthonyHall-Davis, A. G. F.Morrison, Hon Charles (Devizes)
Biffen, JohnHamilton, Archibald (Epsom & Ewell)Morrison, Hon Peter (Chester)
Biggs-Davison, JohnHamilton, Michael (Salisbury)Mudd, David
Blaker, PeterHampson, Dr KeithNeave, Airey
Body, RichardHannam, JohnNelson, Anthony
Boscawen, Hon RobertHarrison, Col Sir Harwood (Eye)Neubert, Michael
Bottomley, PeterHarvie Anderson, Rt Hon MissNewton, Tony
Bowden, A. (Brighton, Kemptown)Haselhurst, AlanNott, John
Boyson, Dr Rhodes (Brent)Hastings, StephenOnslow, Cranley
Braine, Sir BernardHavers, Rt Hon Sir MichaelOppenheim, Mrs Sally
Brittan, LeonHawkins, PaulOsborn, John
Brocklebank-Fowler, C.Hayhoe, BarneyPage, John (Harrow West)
Brooke, Hon PeterHeath, Rt Hon EdwardPage, Rt Hon R. Graham (Crosby)
Brotherton, MichaelHeseltine, MichaelPage, Richard (Workington)
Brown, Sir Edward (Bath)Hicks, RobertPardoe, John
Bryan, Sir PaulHiggins, Terence L.Parkinson, Cecil
Buchanan-Smith, AlickHodgson, RobinPattie, Geoffrey
Buck, AntonyHolland, PhilipPenhaligon, David
Budgen, NickHordern, PeterPercival, Ian
Bulmer, EsmondHowe, Rt Hon Sir GeoffreyPink, R. Bonner
Burden, F. A.Howell, David (Guildford)Powell, Rt Hon J. Enoch
Butler, Adam (Bosworth)Howells, Geraint (Cardigan)Prentice, Rt Hon Reg
Carlisle, MarkHunt, David (Wirral)Price, David (Eastleigh)
Chalker, Mrs LyndaHunt, John (Ravensbourne)Prior, Rt Hon James
Channon, PaulHurd, DouglasRaison, Timothy
Churchill, W. S.Hutchison, Michael ClarkRathbone, Tim
Clark, Alan (Plymouth, Sutton)Irving, Charles (Cheltenham)Rees, Peter (Dover & Deal)
Clark, William (Croydon S)James, DavidRees-Davies, W. R.
Clarke, Kenneth (Rushcliffe)Jenkin, Rt Hon P. (Wanst'd & W'df'd)Renton, Rt Hon Sir D. (Hunts)
Clegg, WalterJessel, TobyRenton, Tim (Mid-Sussex)
Cockcroft, JohnJohnson Smith, G. (E Grinstead)Rhodes James, R.
Cooke, Robert (Bristol W)Jones, Arthur (Daventry)Ridley, Hon Nicholas
Cope, JohnJopling, MichaelRidsdale, Julian
Cormack, PatrickJoseph, Rt Hon Sir KeithRifkind, Malcolm
Corrie, JohnKaberry, Sir DonaldRoberts, Wyn (Conway)
Costain, A. P.Kellett-Bowman, Mrs ElaineRodgers, Sir John (Sevenoaks)
Critchley, JulianKershaw, AnthonyRoss, Stephen (Isle of Wight)
Crouch, DavidKimball, MarcusRossi, Hugh (Hornsey)
Crowder, F. P.King, Evelyn (South Dorset)Rost, Peter (SE Derbyshire)
Dean, Paul (N Somerset)King, Tom (Bridgwater)Royle, Sir Anthony
Dodsworth, GeoffreyKitson, Sir TimothySainsbury, Tim
Douglas-Hamilton, Lord JamesKnight, Mrs JillSt. John-Stevas, Norman
Drayson, BurnabyKnox, DavidScott, Nicholas
du Cann, Rt Hon EdwardLamont, NormanShaw, Michael (Scarborough)
Durant, TonyLangford-Holt, Sir JohnShelton, William (Streatham)
Dykes, HughLatham, Michael (Melton)Shepherd, Colin
Eden, Rt Hon Sir JohnLawrence, IvanShersby, Michael
Edwards, Nicholas (Pembroke)Lawson, NigelSilvester, Fred
Elliott, Sir WilliamLester, Jim (Beeston)Sims, Roger
Emery, PeterSinclair, Sir George
Eyre, ReginaldLewis, Kenneth (Rutland)Skeet, T. H. H.
Fairbairn, NicholasLloyd, IanSmith, Dudley (Warwick)
Fairgrieve, RussellLoveridge, JohnSmith, Timothy John (Ashfield)
Farr, JohnLuce, RichardSpeed, Keith
Fell, AnthonyMcAdden, Sir StephenSpence, John
Finsberg, GeoffreyMcCrindle, RobertSpicer, Michael (S Worcester)
Fisher, Sir NigelMacfarlane, NeilSproat, Iain
Fletcher, Alex (Edinburgh N)MacGregor, JohnStainton, Keith
Fookes, Miss JanetMacKay, Andrew (Stechford)Stanbrook, Ivor
Forman, NigelMacmillan, Rt Hon M. (Farnham)Stanley, John
Fowler, Norman (Sutton C'f'd)McNair-Wilson, M. (Newbury)Steel, Rt Hon David
Fox, MarcusMcNair-Wilson, P. (New Forest)Steen, Anthony (Wavertree)
Fraser, Rt Hon H. (Stafford & St)Madel, DavidStewart, Ian (Hitchin)
Freud, ClementMarshall, Michael (Arundel)Stokes, John
Fry, PeterMarten, NeilStradling Thomas, J.
Galbraith, Hon T. G. D.Mates, MichaelTapsell, Peter
Gardiner, George (Reigate)Mather, CarolTaylor, R. (Croydon NW)
Gardner, Edward (S Fylde)Maude, AngusTaylor, Teddy (Cathcart)
Gilmour, Rt Hon Sir Ian (Chesham)Mawby, RayTebbit, Norman
Gilmour, Sir John (East Fife)Maxwell-Hyslop, RobinTemple-Morris, Peter
Glyn, Dr AlanMayhew, PatrickThatcher, Rt Hon Margaret
Godber, Rt Hon JosephMeyer, Sir AnthonyTownsend, Cyril D.
Goodhart, PhilipMiller, Hal (Bromsgrove)Trotter, Neville
Goodhew, VictorMills, Petervan Straubenzee, W. R.
Goodlad, AlastairMiscampbell, NormanVaughan, Dr Gerard
Gorst, JohnMitchell, David (Basingstoke)Viggers, Peter
Gow, Ian (Eastbourne)Moate, RogerWainwright, Richard (Colne V)
Gower, Sir Raymond (Barry)Molyneaux, JamesWakeham, John
Grant, Anthony (Harrow C)Monro, HectorWalker, Rt Hon P. (Worcester)
Gray, HamishMontgomery, FergusWalker-Smith, Rt Hon Sir Derek
Grieve, PercyMoore, John (Croydon C)Wall, Patrick
Griffiths, EldonMore, Jasper (Ludlow)Walters, Denis
Grimond, Rt Hon J.Morgan, GeraintWarren, Kenneth
Grist, IanMorgan-Giles, Rear-AdmiralWeatherill, Bernard
Grylls, MichaelMorris, Michael (Northampton S)Wells, John

Whitelaw, Rt Hon WilliamWinterton, NicholasTELLERS FOR THE NOES:
Whitney, RaymondWood, Rt Hon RichardMr. Spencer Le Marchant and
Wiggin, JerryYoung, Sir G. (Ealing, Acton)Mr. Michael Roberts.

Question accordingly agreed to.

Bill read a Second time.

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

Industry Money

Queen's Recommendation having been signified

Motion made, and Question proposed,

That, for the purposes of any Act of the present Session to make provision with respect to the limits on sums borrowed by, or paid by Ministers of the Crown to the National Enterprise Board, the Scottish Development Agency and the Welsh Development Agency and subsidiaries of theirs, on sums paid by the Treasury in pursuance of guarantees of loans to the Board or either of those Agencies and on loans guaranteed by the Board or either of those Agencies or subsidiaries of the Scottish Development Agency, it is expedient to authorise all such increased payments—
  • (a) out of the National Loans Fund, the Consolidated Fund and moneys provided by Parliament, and
  • (b) into the National Loans Fund and the Consolidated Fund,
  • as may result from provisions of that Act increasing to the new amount the limit imposed by the Industry Act 1975 ("the Industry Act"), the Scottish Development Agency Act 1975 ("the Scottish Act") and the Welsh Development Agency Act 1975 ("the Welsh Act") on the amount outstanding, otherwise than by way of interest, in respect of the relevant sums specified in those Acts respectively.
  • (1) For the purposes of this resolution the new amount of any such limit is—
  • (a) the case of the relevant sums specified in the Industry Act, £4,500 million;
  • (b) in the case of the relevant sums specified in the Scottish Act, £800 million;
  • (c) in the case of the relevant sums specified in the Welsh Act, £400 million.
  • (2) For the purposes of the resolution the following are relevant sums in the case of any of those Acts, that is to say—
  • (a) the general external borrowing (as defined in that Act) of the National Enterprise Board, the Scottish Development Agency or the Welsh Development Agency, as the case may be, and their respective subsidiaries;
  • (b) sums issued by the Treasury in fulfilment of guarantees in respect of sums borrowed by the Board or either of those Agencies from a person other than the Secretary of State;
  • (c) in the case of the Industry Act, sums paid to the Board as public dividend capital (as defined in that Act);
  • (d) in the case of the Scottish Act, sums paid to the Scottish Development Agency by the Secretary of State less repayments to the Secretary of State by the Agency (other than payments made by the Agency in consideration of receiving public dividend capital) and less sums paid in respect of the administrative expenses of the Agency
  • (e) in the case of the Welsh Act, sums paid to the Welsh Development Agency by the Secretary of State less repayments to him by the Agency and less sums paid in respect of the administrative expenses of the Agency; and
  • (f) in the case of each of those Acts, loans guaranteed by the Board or either of those Agencies otherwise than in the exercise of powers conferred on the Secretary of State under section 7 or 8 of the Industry Act 1972 as applied by that Act and loans guaranteed by a subsidiary of the Scottish Development Agency.—[Mrs. Ann Taylor.]
  • 7.32 p.m.

    I oppose the money resolution for several reasons. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) referred on Second Reading to firms that the NEB has supported, and will support as a result of the money resolution, as "unbankruptable companies". This is an apt description because most business men regard competition from Government-sponsored companies as unfair competition from firms which will be supported, regardless of cost, out of the taxes paid by successful companies and individuals.

    That process will be even more inevitable if the money resolution for this enormous amount of money is passed. Nothing is calculated to infuriate the successful business man more than the knowledge that the results of his efforts, which are confiscated by the Inland Revenue through penal taxation, are being used to prop up inefficient and unsuccessful enterprises that compete with his own company.

    The successful business man pays extortionate rates of tax and has had any incentive to work harder, which would create jobs, or to sell abroad, which would create jobs, or to improve efficiency at home, which would create jobs, drained away from him. [Interruption.]

    Order. I see that a minor disturbance is going on. I hope that hon. Members will respect the right of the hon. Member for Croydon, North-West (Mr. Taylor) to address the House.

    The Prime Minister is on record as stating that the nation wants a reduction in direct taxation, yet by the money resolution we are making available enormous sums to three agencies which have neither adequate parliamentary scrutiny nor track records which give us confidence to believe that the money will be spent wisely.

    There are many politicians and civil servants who believe that they can tell business men how to run their businesses and that they know better than the commercial banks and the City institutions how to invest money. Before we approve the money resolution, we should look at an example from each of the three agencies to see whether the judgments of those who are able to hand out large amounts of taxpayers' money are better than the judgments of the professionals who have rejected appeals from the same sources.

    My first example is from the work of the National Enterprise Board. I make no apology for raising again the case of the company Thwaites and Reed. I do so because the injection of money by the NEB into that concern affected two competing companies in my constituency.

    Since I last raised the matter, there has been a startling new development. The NEB acquired 90 per cent. of Thwaites and Reed for £420,000. We were told that this was one of the speedy decisions which the Board like to take and prided itself in making much quicker than could the banks and other institutions in the private sector. As my hon. Friend the Member for Kingston upon Thames (Mr. Lamont) said earlier, when Lord Ryder was questioned in the Public Accounts Committee about why he had made the investment, he said that it was a "breathtaking" opportunity. It was certainly an opportunity which should have taken away the breath of every hon. Member because the investment of £420,000 was sold only a year later for £78,000 to one of the competing companies in my constituency.

    My next example is a company supported by the Welsh Development Agency. It is, presumably, the type of company that will continue to be supported if the money resolution is approved. The company concerned is Penrad, and, against specific advice from the Industrial Development Advisory Board, taxpayers' money was poured into the company from many and varied sources. It started with a grant of £300,000 in 1975 from the Department of Industry as a forerunner to the WDA. Eight months later, another £100,000 of taxpayers' money went into the concern. In May 1977 a receiver was appointed and a few months later a private company was induced to come to the rescue. The agency provided £600,000, interest-free for five years, to induce the company to do so.

    The Welsh Office chipped in another £190,000 by way of interest relief on a loan from the European Coal and Steel Commission. Well over £1 million went into the company, and when the matter was last ventilated in the Public Accounts Committee it was learned that about 38 jobs, with an eventual target of 90, were involved.

    It is no wonder that the permanent secretary at the Welsh Office, Sir Hywel Evans, told the Public Accounts Committee on 26 June 1978 regarding the provision of £600,000 to the company:
    "I had misgivings about the form of this investment."
    If Sir Harold had misgivings about the form of investments being made by the agency, how much more important it must be for the House to examine the money resolution with care.

    My final example comes from the work of the Scottish Development Agency. A total of £600,000 was recently invested in a firm called Scofisco, which I presume is short for the Scottish Fishery Company. It failed within a year of the money being put into it and the investment could not be justified on grounds of the number of jobs involved because there were very few jobs indeed.

    I appreciate that there must be some success stories to compensate for the failures, and certainly the advance factories in Scotland have contributed substantially to the number of jobs available there. But I do not believe that the policy of investing money, procured by this resolution, in companies against the advice of those people whose life work it has been to assess such questions has anything to commend it. I do not think that that policy should be commended to the House, and that is my principal reason for objecting to the resolution.

    Lame ducks come about as a result of bad management, poor products or bad industrial relations, and none of these maladies can be cured by milking successful companies and having an open cheque book for those which are unsuccessful.

    I mentioned earlier that if we vote this money, Parliament has very little opportunity to scrutinise investments made by the NEB. Indeed, Sir Peter Carey, the permanent secretary at the Department of Industry, has bravely fought in the Public Accounts Committee against greater scrutiny by this House on the ground of need for confidentiality. I make no apology for quoting from the answer he gave to my hon. Friend the Member for Canterbury (Mr. Crouch) on 8 May 1978. Sir Peter said:
    "I believe that these private sector companies, many of which are approaching the NEB rather than being approached by it, would take a different attitude if they believed that this new procedure was operating."
    He was referring to the procedure of greater scrutiny by this House, upon which we were trying to reach agreement. He went on:
    "I think that they would see themselves being placed in quite a different category from the normal run of private sector companies."
    I agree that they probably would feel that they were in a different category from the normal run of private sector companies, and so indeed they would be. It is my view that any company from the private sector which comes cap in hand to the National Enterprise Board for a dollop of this money that we are asked to approve tonight is in a very different position, and the management should have no misapprehensions on that score. Its accounts should be an open book for this House as soon as it gets the first penny of taxpayers' money.

    It can be argued that at the present time some information is available to the House where the NEB or the agencies have control of a company or, in other words, have 51 per cent. of the equity. But such a requirement gives a shield to the NEB or to the agencies, and as a result there is an incentive for the NEB and the agencies to keep their holding of the voting equity below 50 per cent. This is particularly so in the case of the NEB. It keeps the voting equity below 50 per cent. but in many cases the taxpayer shoulders 100 per cent. of the preference debenture or loan stock, which carries no voting rights.

    In the 1977 accounts of the National Enterprise Board, 11 out of 16 of the associate companies fall into this category; in other words, the taxpayer has less than half of the voting stock but very nearly 100 per cent. of the non-voting stock. In my view, the taxpayer is taking an unfair risk in these cases. The taxpayer should not be involved at all. But if the taxpayer is involved, he should not be at such a disadvantage.

    Before we pass the resolution, it is my view that the guidelines of the NEB and of the agencies should be altered to prevent taxpayers' money being invested in any company in the non-voting stock at a higher ratio than its investment in the voting stock. This would satisfy me to a certain degree, and that is something which should be carefully considered. Perhaps, if the money resolution is passed, it might be considered in the Committee which looks at the Bill.

    Finally, each of the agencies—and particularly the NEB—excuses its speculative ventures into the private sector by claiming to be an entrepreneur. That word has been used on a number of occasions in the preceding debate. None claims louder to be an entrepreneur than Sir Leslie Murphy. I believe such a claim to be a misuse of the English language. We are not voting this money resolution tonight so that the money shall go to entrepreneurs. An entrepreneur is essentially a man who backs his own judgment with his own resources, be they financial or his own labour. They are the men upon whose shoulders depends the future industrial success of our nation. I can only hope that it will never depend on faceless men backing corporate judgments with a bottomless pit of taxpayers' money, such as we are voting in this resolution tonight.

    7.46 p.m.

    I shall not follow entirely the line of argument pursued by the hon. Member for Croydon, North-West (Mr. Taylor), except to say that I, too, am a member of the Public Accounts Committee, which considered the National Enterprise Board. The hon. Gentleman has, I acknowledge, been a consistent critic of the NEB, and so his remarks come as no great surprise to me.

    If the hon. Gentleman is seriously asking the House to oppose this money resolution, I presume that this means that he is asking the House not to continue the supply of funds to British Leyland and not to continue the supply of funds to Rolls-Royce and to other concerns. Perhaps he and his hon. Friends will wish to go to the Midlands to explain this decision. The hon. Gentleman knows, as I do, from our study and our investigation in the Public Accounts Committee, that the major proportion of funds available to the NEB is directed towards and involved with British Leyland and Rolls-Royce. I do not see any way at all in which anyone in this House at this stage could vote to cut off funds to those two organisations. But it is with the other sector of the NEB investment that I wish to concern myself.

    Surely the hon. Gentleman is not assuming that a company such as Rolls-Royce is not perfectly capable of raising money in the market in the ordinary way, or in the way that nationalised industries do now. It is not necessarily dependent on the NEB for every penny of cash. It should be accountable in the market.

    I believe that the hon. Gentleman's party rescued Rolls-Royce as a lame duck, so I think that he should ask himself that question about recourse to the private market.

    I wish to come to the point made in the Public Accounts Committee by both Lord Ryder and Sir Leslie Murphy. It is a point to which even those Conservative Members who feel themselves doctrinally opposed to the operation of the NEB should give consideration. We on the Labour Benches have no doctrinal opposition to the intervention of the State in British industry.

    Perhaps Conservative Members will consider what was said in evidence to that Committee by Lord Ryder and by Sir Leslie Murphy. It was that in their opinion there was and is a gap in the equity market. Both Lord Ryder and Sir Leslie underlined this point. The hon. Member for Croydon, North-West is shaking his head. They were asked point-blank about this in the Committee. They both readily agreed that there was this equity gap. From their experience they found that firms with a capitalisation of between £10 million and £15 million found it difficult to raise funds.

    These companies found that they could not go to the banking sector and found it difficult to raise money through rights issues. The evidence is that companies are coming to the NEB knowing that the NEB is setting a stiff test of between 15 and 20 per cent. That is the return which they are looking for and which they expect.

    The hon. Gentleman would have realised if he had been present to any great extent in the debate that the rate of 15 per cent. is before tax and before interest. Bearing in mind that the Government have to borrow at an interest rate of 14 per cent., it is effectively a negative return as far as the NEB is concerned, because it does not cover interest costs.

    In answer to the hon. Gentleman I would like briefly to deal with the point raised by his hon. Friend the Member for Horsham and Crawley (Mr. Hordern). This was dealt with in the Public Accounts Committee. It is not possible to hypothecate in the way that the hon. Gentleman was indicating. I accept that some adjustment must be made to the return that is being sought by the National Enterprise Board. Nevertheless, a substantial return is being looked for in this area.

    It is not only possible but it is essential to hypothecate in this instance. The NEB itself puts on a target rate of return. It has to take into account the cost of borrowing the money. One cannot take taxpayers' money, allow no cost of interest, and then talk of a supposed rate of return of 14 to 15 per cent. It simply cannot be done.

    If one follows the hon. Gentleman's argument, all areas of Government expenditure must be considered in that way. That is the evidence given before the Committee by the Treasury witness.

    The National Enterprise Board should be subject to the scrutiny of this House. It has been claimed that there is adequate scrutiny through the Secretary of State, to whom the National Enterprise Board is answerable. The only proper way in which the National Enterprise Board can be held accountable is through investigation by a Select Committee such as the Public Accounts Committee; and the Comptroller and Auditor General should have access to its books.

    The Minister has instituted an inquiry into the general operation of the audit Acts and the position of the Comptroller and Auditor General. I welcome this. My first concern is to see the NEB survive. It has presented cogent argument before the Committee that, if the Committee has the power to investigate, this will undermine the operation of the NEB. I do not want to see that. I want to see the NEB survive.

    If we can ask questions on defence contracts or go into private session, it is possible for us to investigate the National Enterprise Board and to have these matters before us. In a day and age in which in America, for instance, the CIA can be investigated, it is not beyond the wit of man that this Parliament or one of its Select Committees should be able to investigate the NEB.

    7.55 p.m.

    I shall deal with only one point. In the course of our deliberations over two days it was frequently said that it was not envisaged that there would be any additional burden upon public expenditure as a result of passing this money resolution and the Industry Bill. It was said that the limits were to be raised so that the limits of the three agencies concerned could rise to £5·7 billion. Yet it was also very firmly said that there would be no additional public expenditure.

    I am prepared to concede that there will probably be no additional public expenditure in this financial year. I have no doubt that the Government are anxiously looking round for areas of public expenditure that can be cut back and if possible, cut back without the Left wing of the Labour Party seeing what is being done. I dare say that when vigorous Labour politicians are visiting the regions of the United Kingdom they believe that it is sufficient to point to the amount of industrial intervention that has taken place, to point to the raised limits that might unhappily be passed tonight and say "After the election you will get the factory you want and the support that you want." There may not be any increased public expenditure before the general election.

    In this money resolution we are dealing with what might happen in the unhappy event of the Labour Party winning the next general election. In table 2(4) on page 49 of the Government's public expenditure White Paper which we had recently, the projections were that for the next four years the expenditure on the NEB would remain constant in present money terms—indeed, that it would slightly decline by 1982–83. Those projections are nonsense. The essence of the NEB's operation is that it is propping up a large number of different firms. God knows what the requirement for money will be for British Leyland if the Labour Government win the next general election. God knows how much Sir Kenneth Keith will want in his begging bowl in three years' time if the Labour Government win the next general election.

    When Ministers say that there will be no additional public expenditure because of these proposals, they are making an assertion which they cannot possibly make in good faith. There is no way of saying that. It is certain that if they win the next general election they will use this money to try to bribe the electorate in order to win the following election.

    7.58 p.m.

    The hon. Member for Croydon, North-West (Mr. Taylor) made specific reference to Penrad. He seemed to be admitting that that company was in receivership before the Welsh Development Agency became involved. He may have some detailed criticism of the Welsh Development Agency for that involvement. He should take cognisance of the fact that the WDA got involved after receivership. If he has any detailed criticism to make, I hope that he will pass that on to my right hon. and learned Friend the Secretary of State for Wales, who will be glad to study it in detail.

    We had a very full debate on the NEB guidelines, which have been approved by the whole House. If the hon. Gentleman had doubts about the guidelines of the NEB, he should have been here for that debate. If he was, I apologise to him, but I do not recall seeing him.

    My hon. Friend the Member for Gloucestershire, West (Mr. Watkinson) is right in saying that without the NEB there would be considerably higher unemployment in many regions of this country, particularly in the West Midlands. There are currently in the West Midlands some 100,000 workers who owe the existence of their jobs to the NEB. Almost 20 per cent. of the working population of Coventry is employed by companies which are subsidiaries of the NEB. If the hon. Member for Croydon, North-West wants to vote against such issues, I shall make sure that my constituents know about it and I know that my hon. Friends will make sure that their constituents know about it as well.

    The views of the hon. Member for Wolverhampton, South-West (Mr. Budgen) on British Leyland and companies that we have rescued in the West

    Division No. 48]


    [8.01 p.m.

    Abse, LeoCanavan, DennisDunn, James A.
    Allaun, FrankCant, R. B.Dunnett, Jack
    Anderson, DonaldCarmichael, NeilEadie, Alex
    Archer, Rt Hon PeterCarter, RayEdge, Geoff
    Armstrong, ErnestCarter-Jones, LewisEllis, John (Brigg & Scun)
    Ashton, JoeCartwright, JohnEnglish, Michael
    Atkins, Ronald (Preston N)Clemitson, IvorEnnals, Rt Hon David
    Atkinson, Norman (H'gey, Tott'ham)Cocks, Rt Hon Michael (Bristol S)Evans, Fred (Caerphilly)
    Bagier, Gordon A. T.Cohen, StanleyEvans, Gwyntor (Carmarthen)
    Barnett, Guy (Greenwich)Colquhoun, Ms MaureenEvans, Ioan (Aberdare)
    Barnett, Rt Hon Joel (Heywood)Concannon, Rt Hon JohnEvans, John (Newton)
    Bates, AlfCook, Robin F. (Edin C)Ewing, Harry (Stirling)
    Bean, R. E.Corbett, RobinFaulds, Andrew
    Bonn, Rt Hon Anthony WedgwoodCowans, HarryFernyhough, Rt Hon E.
    Bennett, Andrew (Stockport N)Cox, Thomas (Tooting)Flannery, Martin
    Bidwell, SydneyCraigen, Jim (Maryhill)Fletcher, Ted (Darlington)
    Bishop, Rt Hon EdwardCrawshaw, RichardFoot, Rt Hon Michael
    Blenkinsop, ArthurCrowther, Stan (Rotherham)Ford, Ben
    Boardman, H.Cryer, BobForrester, John
    Booth, Rt Hon AlbertCunningham, Dr J. (Whiteh)Fowler, Gerald (The Wrekin)
    Boothroyd, Miss BettyDavidson, ArthurFraser, John (Lambeth, N'w'd)
    Bottomley, Rt Hon ArthurDavies, Bryan (Enfield N)Garrett, John (Norwich S)
    Bradley, TomDavies, Ifor (Gower)Garrett, W. E. (Wallsend)
    Bray, Dr JeremyDavis, Clinton (Hackney C)George, Bruce
    Brown, Hugh D. (Provan)Deakins, EricGilbert, Rt Hon Dr John
    Brown, Robert C. (Newcastle W)Dean, Joseph (Leeds West)Ginsburg, David
    Brown, Ronald (Hackney S)de Freitas, Rt Hon Sir GeoffreyGould, Bryan
    Buchan, NormanDell, Rt Hon EdmundGourlay, Harry
    Buchanan, RichardDempsey, JamesGraham, Ted
    Butler, Mrs Joyce (Wood Green)Dewar, DonaldGrant, George (Morpeth)
    Callaghan, Rt Hon J. (Cardiff SE)Doig, PeterGrant, John (Islington C)
    Callaghan, Jim (Middleton & P)Dormand, J. D.Grocott, Bruce
    Campbell, IanDuffy, A. E. P.Hamilton, James (Bothwell)

    Midlands are well known. He has said time and time again, and when it comes to an election he will be on the record as saying, that these companies should have gone bankrupt or into receivership. His constituents will get that message passed home to them very forcefully at the time of the next election.

    However, the hon. Gentleman seems to have forgotten to take into account that in the passage of time something like one-half of the increase of £3,500 million which is being talked about in this money resolution will come from private sources of finance. It is not good enough to stand up in the House and make generalised criticisms of the public expenditure White Paper without understanding the meaning of those criticisms. Certainly, to judge from the hon. Gentleman's comments tonight, he does not understand what they mean.

    Having said that, I hope that the House will agree to the money resolution. It is essential, before we can bring about any changes in the NEB, that the money resolution goes through. Shortly, the NEB will be hard up against its borrowing limit, and a large number of jobs are at stake.

    Question put:

    The House divided: Ayes 275, Noes 255.

    Hamilton, W. W. (Central Fife)McMillan, Tom (Glasgow C)Sever, John
    Hardy, PeterMcNamara, KevinShaw, Arnold (Ilford South)
    Harrison, Rt Hon WalterMadden, MaxSheldon, Rt Hon Robert
    Hattersley, Rt Hon RoyMagee, BryanShore, Rt Hon Peter
    Hayman, Mrs HeleneMahon, SimonSilkin, Rt Hon S. C. (Dulwich)
    Healey, Rt Hon DenisMallalieu, J. P. W.Silverman, Julius
    Heffer, Eric S.Marks, KennethSkinner, Dennis
    Home Robertson, JohnMarshall, Dr Edmund (Goole)Smith, Rt Hon John (N Lanarkshire)
    Horam, JohnMarshall, Jim (Leicester S)Snape, Peter
    Hoyle, Doug (Nelson)Maynard, Miss JoanSpearing, Nigel
    Huckfield, LesMeacher, MichaelSpriggs, Leslie
    Hughes, Rt Hon C. (Anglesey)Mellish, Rt Hon RobertStallard, A. W.
    Hughes, Mark (Durham)Mikardo, IanStewart, Rt Hon M. (Fulham)
    Hughes, Robert (Aberdeen N)Millan, Rt Hon BruceStoddart, David
    Hughes, Roy (Newport)Miller, Dr M. S. (E Kilbride)Stott, Roger
    Hunter, AdamMitchell, Austin (Grimsby)Strauss, Rt Hon G. R.
    Irving, Rt Hon S. (Dartford)Molloy, WilliamSwain, Thomas
    Jackson, Colin (Brighouse)Moonman, EricTaylor, Mrs Ann (Bolton W)
    Jackson, Miss Margaret (Lincoln)Morris, Alfred (Wythenshawe)Thomas, Dafydd (Merioneth)
    Janner, GrevilleMorris, Rt Hon J. (Aberavon)Thomas, Jeffrey (Abertillery)
    Jay, Rt Hon DouglasMorton, GeorgeThomas, Mike (Newcastle E)
    Jeger, Mrs LenaMoyle, Rt Hon RolandThomas, Ron (Bristol NW)
    Jenkins, Hugh (Putney)Mulley, Rt Hon FrederickThompson, George
    John, BrynmorMurray, Rt Hon Ronald KingThorne, Stan (Preston South)
    Johnson, James (Hull West)Newens, StanleyTierney, Sydney
    Jones, Alec (Rhondda)Noble, MikeTilley, John
    Jones, Barry (East Flint)Oakes, GordonTomlinson, John
    Jones, Dan (Burnley)Ogden, EricTuck, Raphael
    Judd, FrankO'Halloran, MichaelUrwin, T. W.
    Kaufman, Rt Hon GeraldOrbach, MauriceVarley, Rt Hon Eric G.
    Kelley, RichardOrme, Rt Hon StanleyWainwright, Edwin (Dearne V)
    Kerr, RussellOvenden, JohnWalker, Harold (Doncaster)
    Kilroy-Silk, RobertPadley, WalterWalker, Terry (Kingswood)
    Kinnock, NeilPalmer, ArthurWard, Michael
    Lambie, DavidPark, GeorgeWatkins, David
    Lamborn, HarryParker, JohnWatkinson, John
    Lamond, JamesParry, RobertWatt, Hamish
    Latham, Arthur (Paddington)Pendry, TomWeetch, Ken
    Leadbitter, TedPerry, ErnestWeitzman, David
    Lee, JohnPhipps, Dr ColinWellbeloved, James
    Lestor, Miss Joan (Eton & Slough)Price, C. (Lewisham W)Welsh, Andrew
    Lever, Rt Hon HaroldPrice, William (Rugby)White, Frank R. (Bury)
    Lewis, Arthur (Newham N)Radice, GilesWhite, James (Pollok)
    Lewis, Ron (Carlisle)Rees, Rt Hon Merlyn (Leeds S)Whitehead, Phillip
    Litterick, TomReid, GeorgeWhitlock, William
    Lofthouse, GeoffreyRichardson, Miss JoWigley, Dafydd
    Loyden, EddieRoberts, Albert (Normanton)Willey, Rt Hon Frederick
    Luard, EvanRoberts, Gwilym (Cannock)Williams, Rt Hon Alan (Swansea W)
    Lyon, Alexander (York)Robertson, George (Hamilton)Williams, Alan Lee (Hornch'ch)
    Lyons, Edward (Bradford W)Robinson, GeoffreyWilliams, Sir Thomas (Warrington)
    Mabon, Rt Hon Dr J. DicksonRoderick, CaerwynWilson, Gordon (Dundee E)
    McCartney, HughRodgers, George (Chorley)Wilson, William (Coventry SE)
    MacCormick, IainRodgers, Rt Hon William (Stockton)Wise, Mrs Audrey
    McDonald, Dr OonaghRooker, J. W.Woodall, Alec
    McElhone, FrankRoper, JohnWoof, Robert
    MacFarquhar, RoderickRoss, Rt Hon W. (Kilmarnock)Young, David (Bolton E)
    McGuire, Michael (Ince)Rowlands, Ted
    McKay, Allen (Penistone)Ryman, JohnTELLERS FOR THE AYES:
    MacKenzie, Rt Hon GregorSedgemore, BrianMr. Donald Coleman and
    Maclennan, RobertSelby, HarryMr. James Tinn


    Adley, RobertBoyson, Dr Rhodes (Brent)Cockcroft, John
    Aitken, JonathanBraine, Sir BernardCooke, Robert (Bristol W)
    Alison, MichaelBrittan, LeonCope, John
    Amery, Rt Hon JulianBrocklebank-Fowler, C.Cormack, Patrick
    Arnold, TomBrooke, Hon PeterCorrie, John
    Atkins, Rt Hon H. (Spelthorne)Brotherton, MichaelCostain, A. P.
    Atkinson, David (B'mouth, East)Brown, Sir Edward (Bath)Critchley, Julian
    Baker, KennethBryan, Sir PaulCrouch, David
    Banks, RobertBuchanan-Smith, AlickCrowder, F. P.
    Beith, A. J.Buck, AntonyDean, Paul (N Somerset)
    Bell, RonaldBudgen, NickDodsworth, Geoffrey
    Bendall, VivianBulmer, EsmondDouglas-Hamilton, Lord James
    Bennett, Dr Reginald (Fareham)Burden, F. A.Drayson, Burnaby
    Benyon, W.Butler, Adam (Bosworth)du Cann, Rt Hon Edward
    Berry, Hon AnthonyCarlisle, MarkDurant, Tony
    Biffen, JohnChalker, Mrs LyndaDykes, Hugh
    Biggs-Davison, JohnChannon, PaulEden, Rt Hon Sir John
    Blaker, PeterChurchill, W. S.Edwards, Nicholas (Pembroke)
    Body, RichardClark, Alan (Plymouth, Sutton)Elliott, Sir William
    Boscawen, Hon RobertClark, William (Croydon S)Emery, peter
    Bottomley, PeterClarke, Kenneth (Rushcliffe)Eyre, Reginald
    Bowden, A. (Brighton, Kemptown)Clegg, WalterFairgrieve, Russell

    Farr, JohnKing, Tom (Bridgwater)Rathbone, Tim
    Fell, AnthonyKitson, Sir TimothyRees, Peter (Dover & Deal)
    Finsberg, GeoffreyKnight, Mrs JillRees-Davies, W. R.
    Fisher, Sir NigelKnox, DavidRenton, Rt Hon Sir D. (Hunts)
    Fletcher, Alex (Edinburgh N)Lamont, NormanRenton, Tim (Mid-Sussex)
    Fookes, Miss JanetLangford-Holt, Sir JohnRhodes James, R.
    Forman, NigelLatham, Michael (Melton)Ridley, Hon Nicholas
    Fowler, Norman (Sutton C'f'd)Lawrence, IvanRidsdale, Julian
    Fox, MarcusLawson, NigelRifkind, Malcolm
    Fraser, Rt Hon H. (Stafford & St)Lester, Jim (Beeston)Roberts, Wyn (Conway)
    Fry, PeterLewis, Kenneth (Rutland)Rodgers, Sir John (Sevenoaks)
    Galbraith, Hon T. G. D.Lloyd, IanRoss, Stephen (Isle of Wight)
    Gardiner, George (Reigate)Loveridge, JohnRossi, Hugh (Hornsey)
    Gardner, Edward (S Fylde)Luce, RichardRost, Peter (SE Derbyshire)
    Gilmour, Rt Hon Sir Ian (Chesham)McAdden, Sir StephenRoyle, Sir Anthony
    Gilmour, Sir John (East Fife)McCrindle, RobertSainsbury, Tim
    Glyn, Dr AlanMacfarlane, NeilSt. John-Stevas, Norman
    Godber, Rt Hon JosephMacGregor, JohnShaw, Michael (Scarborough)
    Goodhart, PhilipMacKay, Andrew (Stechford)Shelton, William (Streatham)
    Goodhew, VictorMacmillan, Rt Hon M. (Farnham)Shepherd, Colin
    Goodlad, AlastairMcNair-Wilson, M. (Newbury)Shersby, Michael
    Gorst, JohnMcNair-Wilson, P. (New Forest)Silvester, Fred
    Gow, Ian (Eastbourne)Madel, DavidSims, Roger
    Gower, Sir Raymond (Barry)Marshall, Michael (Arundel)Sinclair, Sir George
    Grant, Anthony (Harrow C)Marten, NeilSkeet, T. H. H.
    Gray, HamishMates, MichaelSmith, Dudley (Warwick)
    Grieve, PercyMather, CarolSmith, Timothy John (Ashfield)
    Griffiths, EldonMawby, RaySpence, John
    Grist, IanMaxwell-Hyslop, RobinSpicer, Michael (S Worcester)
    Grylls, MichaelMayhew, PatrickSproat, Iain
    Hall-Davis, A. G. F.Meyer, Sir AnthonyStainton, Keith
    Hamilton, Archibald (Epsom & Ewell)Miller, Hal (Bromsgrove)Stanbrook, Ivor
    Hamilton, Michael (Salisbury)Mills, PeterStanley, John
    Hampson, Dr KeithMiscampbell, NormanSteen, Anthony (Wavertree)
    Hannam, JohnMitchell, David (Basingstoke)Stokes, John
    Harrison, Col Sir Harwood (Eye)Moate, RogerStradling Thomas, J.
    Harvie Anderson, Rt Hon MissMolyneaux, JamesTapsell, Peter
    Haselhurst, AlanMonro, HectorTaylor, R. (Croydon NW)
    Hastings, StephenMontgomery, FergusTaylor, Teddy (Cathcart)
    Havers, Rt Hon Sir MichaelMoore, John (Croydon C)Tebbit, Norman
    Hawkins, PaulMorgan, GeraintTemple-Morris, Peter
    Hayhoe, BarneyMorris, Michael (Northampton S)Thatcher, Rt Hon Margaret
    Heseltine, MichaelMorrison, Hon Charles (Devizes)Townsend, Cyril D.
    Hicks, RobertMorrison, Hon Peter (Chester)Trotter, Neville
    Higgins, Terence L.Mudd, DavidVan Straubenzee, W. R.
    Hodgson, RobinNeave, AireyVaughan, Dr Gerard
    Holland, PhilipNelson, AnthonyViggers, Peter
    Hordern, PeterNeubert, MichaelWainwright, Richard (Colne V)
    Howe, Rt Hon Sir GeoffreyNewton, TonyWakeham, John
    Howell, David (Guildford)Onslow, CranleyWalker, RI Hon P. (Worcester)
    Hunt, David (Wirral)Oppenheim, Mrs SallyWalker-Smith, Rt Hon Sir Derek
    Hunt, John (Ravensbourne)Osborn, JohnWall, Patrick
    Hurd, DouglasPage, John (Harrow West)Warren, Kenneth
    Irving, Charles (Cheltenham)Page, Rt Hon R. Graham (Crosby)Weatherill, Bernard
    James, DavidPage, Richard (Workington)Wells, John
    Jenkin, Rt Hon P. (Wanst'd & W'df'd)Parkinson, CecilWhitelaw, Rt Hon William
    Jessel, TobyPattie, GeoffreyWiggin, Jerry
    Johnson Smith, G. (E Grinstead)Penhaligon, DavidWinterton, Nicholas
    Jones, Arthur (Daventry)Percival, IanWood, Rt Hon Richard
    Jopling, MichaelPink, R. BonnerYoung, Sir G. (Ealing, Acton)
    Joseph, Rt Hon Sir KeithPrentice, Rt Hon Reg
    Kaberry, Sir DonaldPrice, David (Eastleigh)TELLERS FOR THE NOES:
    Kellett-Bowman, Mrs ElainePrior, Rt Hon JamesMr. Spencer LeMerchant and
    Kershaw, AnthonyRaison, TimothyMr. Michael Roberts.
    Kimball, Marcus

    Question accordingly agreed to.


    That, for the purpose of any Act of the present Session to make provision with respect to the limits on sums borrowed by, or paid by Ministers of the Crown to the National Enterprise Board, the Scottish Development Agency and the Welsh Development Agency and subsidiaries of theirs, on sums paid by the Treasury in pursuance of guarantees of loans to the Board or either of those Agencies and on loans guaranteed by the Board or either of those Agencies or subsidiaries of the Scottish Development Agency, it is expedient to authorise all such increased payments—
  • (a) out of the National Loans Fund, the Consolidated Fund and moneys provided by Parliament, and
  • (b) into the National Loans Fund and the Consolidated Fund,
  • as may result from provisions of that Act increasing to the new amount the limit imposed by the Industry Act 1975 ('the Industry Act') the Scottish Development Agency Act 1975 ('the Scottish Act') and the Welsh Development Agency Act 1975 ('the Welsh Act') on the amount outstanding, otherwise than by way of interest, in respect of the relevant sums specified in those Acts respectively.
  • (1) for the purposes of this resolution the new amount of any such limit is—
  • (a) in the case of the relevant sums specified in the Industry Act, £4,500 million;
  • (b) in the case of the relevant sums specified in the Scottish Act, £800 million;
  • (c) in the case of the relevant sums specified in the Welsh Act, £400 million.
  • (2) For the purpose of this resolution the following are relevant sums in the case of any of those Actd, that is to say—
  • (a) the general external borrowing (as defined in that Act) of the National Enterprise Board, the Scottish Development Agency or the Welsh Development Agency, as the case may be, and their respective subsidiaries;
  • (b) sums issued by the Treasury in fulfilment of guarantees in respect of sums borrowed by the Board or either of those Agencies from a person other than the Secretary of State;
  • (c) in the case of the Industry Act, sums paid to the Board as public dividend capital (as defined in that Act);
  • (d) in the case of the Scottish Act, sums paid to the Scottish Development Agency by the Secretary of State less repayments to the Secretary of State by the Agency (other than payments made by the Agency in consideration of receiving public dividend capital) and less sums paid in respect of the administrative expenses of the Agency;
  • (e) in the case of the Welsh Act, sums paid to the Welsh Development Agency by the Secretary of State less repayments to him by the Agency and less sums paid in respect of the administrative expenses of the Agency; and
  • (f) in the case of each of those Acts, loans guaranteed by the Board or either of those Agencies otherwise than in the exercise of powers conferred on the Secretary of State under section 7 or 8 of the Industry Act 1972 as applied by that Act and loans guaranteed by a subsidiary of the Scottish Development Agency.
  • Social Security Bill

    As amended (in the Standing Committee), considered.

    New Clause 1

    Special Child Allowance

    'In Chapter II of Part II of the principal Act (non-contributory benefits) the following is inserted after section 37A

    "37B—(1) Subject to the provisions of this section a child aged over 2 but under 5 years shall be entitled to a special child allowance payable from the National Insurance Fund for any period throughout which he is suffering from physical disablement such that he is either unable to walk or virtually unable to do so.
    (2) The circumstances in which a child is or is not to be treated for the purposes of this section as suffering from such physical disablement as is mentioned above shall be the circumstances prescribed by regulations for mobility allowance under Section 37A of this Act; but a person qualifies for the allowance only if—
  • (a) his inability or virtual inability to walk is likely to persist for at least 12 months from the time when a claim for the allowance is received by the Secretary of State; and
  • (b) during most of that time his condition will be such as permits him from time to time to benefit from enhanced facilities for locomotion.
  • (3) The weekly rate of a special child allowance shall be that specified in Schedule 4 to this Act, Part III, paragraph 3A for mobility allowance.
    (4) No child shall be entitled to a special child allowance except in prescribed cases, for any week before that in which a claim for the allowance by or in respect of him is received by the Secretary of State.
    (5) Except so far as may be provided by regulations, the question of the child's entitlement to a special child allowance shall be determined as at the date when a claim for the allowance is received by the Secretary of State.
    (6) A payment to or in respect of any child by way of a special child allowance, and the right to receive such a payment, shall (except in prescribed circumstances and for prescribed purposes) be disregarded in applying any enactment or instrument under which regard is to be had to a person's means.
    (7) Any regulations made by the Secretary of State under Section 37A of this Act shall apply to a special child allowance as they apply to a mobility allowance provided that no regulation restricting mobility allowance to persons over the age of 5 years shall apply to the special child allowance".'[Mr. Carter-Jones.]

    Brought up, and read the First time.

    8.14 p.m.

    I beg to move That the clause be read a Second time.

    I am very pleased to be the first Member to speak in this House to congratulate my right hon. Friend the Under-Secretary—the Member for Manchester, Wythenshawe (Mr. Morris), who will take part in the debate—on the well-deserved honour that he has received. It is rather appropriate that I should be the first to congratulate him, as I am a very close friend of his.

    The new clause is primarily concerned with the age group 2 to 5 and mobility. I had a choice. I could have moved a variety of new clauses. For example, there are certain classes of the elderly who need mobility allowance but who will not receive it. I could have talked about the mentally handicapped who will not receive the allowance. I could have spoken about agoraphobics, who will not get mobility allowance. I could have spoken about the blind, who will not receive the allowance. This worries me intensely.

    However, I have chosen to base the new clause on the question of mobility allowance for children aged from 2 to 5. In reality, we face a great problem. The Government have made substantial sums of money available. I hope that the Opposition will agree with me when I say that vast sums of money have been made available for mobility.

    Those of us who belong to the all-party group will say "Yes, we agree with this". The difficulty was how to spread the load, how to spread the jam. It seems to me that we have made a tremendous step forward on mobility and that we have had to ask ourselves whether we should do it in depth or spread the money thinly. What we seem to have done is to choose a certain group of people who will be aided and to leave out others, such as the older age group, certain classifications of the mentally handicapped and the agoraphobics.

    I do not know quite how it can be done, but my new clause at least gives us the opportunity to have a debate on the subject. The purpose of the new clause is to debate the way in which we might spend the money and resources that are available. I have tried to pick out one group which appears to be the most important.

    I have no intention of pressing the new clause to a vote tonight, but I want the Government and the Opposition to state where their priorities lie. A substantial amount of money has been made available. If someone were to push me hard tonight, I would vote against my own Government.

    I believe that we can find the money from the national insurance fund. It is a device that the hon. Member for Exeter (Mr. Hannam) and I have used frequently. When we have been unable to get round the money resolution, we have gone back to the national insurance fund, which is one way of getting the money.

    The new clause involves greater public expenditure. What I want from the Government tonight is a statement of intent, a statement of priorities. It is very difficult for me to talk about the cost factor, because the hon. Member for Wallasey (Mrs. Chalker)—I am tempted to say "my hon. Friend the Member for Wallasey"—tabled a question in October 1976 to find out what would be the cost of providing a mobility allowance for those between the ages of 2 and 5 years. At that time the figure was £2 million. It could be argued that that figure has been overtaken by inflation. We could argue a whole host of factors, but I believe that that figure of £2 million still applies, for two basic reasons. First, the number of people involved has been reduced because of the fall in the birth rate. Secondly, demand has decreased because people are not taking up this benefit. Therefore, I think that the figure we are talking about is still £2 million.

    There are three basic reasons why I move this new clause. I cannot say that I speak as an ex-father, because I am still a father. I cannot say that I speak as an ex-grandfather, because I am still a grandfather. But I know, casting my mind back and even referring to the present, that one can somehow, male or female, cope with a baby up to the age of 2. At least one can carry a child of that age—although that gets more difficult as one gets older.

    When they reach the age of 5, children go to school. There is then a period when they are off one's hands—speaking as a mother, a father, a grandfather or a grandmother. But between the ages of 2 and 5, children are a grave burden if they are severely handicapped. I took my grandchildren shopping just before Christmas. They are very able-bodied. Perhaps they are a little too lively. They gave me a run around. But I would hate to have handled my grandchildren in Woolworth's, Marks and Spencer or Littlewoods had they been disabled.

    The first point that I make is that the 2 to 5-year-old severely disabled child who is not mobile presents a major problem for the mother, because of a lack of educational opportunity.

    The second point about the 2 to 5-year-old group is that before the age of 2 one can take a child to hospital with a reasonable amount of ease—ease in relative terms, because if one has a disabled baby, one has a problem. If children between the ages of 2 and 5 need medical treatment, one is faced with a very severe mobility problem.

    I make my third point rather reluctantly, but it is a truth of life. Normally, when a child is aged 5 and goes to school, there is an opportunity for the mother to go out to work to augment the family income.

    It is for those three reasons that I want a statement tonight from my right hon. Friend about the way in which he views the problem of the 2 to 5-year-old child and mobility. First, this is the age at which there is no real educational opportunity. Secondly, this is the sort of child that has to be taken to hospital frequently on the basis that there is a chance of rehabilitation. Thirdly, at this time the mother is denied the opportunity of earning money to augment the family income.

    I raise this matter in order to allow the House to have a debate and to find out where in the problem of priorities the Government place these people.

    The whole Opposition join the hon. Member for Eccles (Mr. Carter-Jones) in congratulating the Under-Secretary of State, the right hon. Member for Manchester, Wythenshawe (Mr. Morris). It is true to say that there cannot be anyone in this country who is not delighted at his elevation and tremendously grateful for the efforts that he has made—sometimes against some odds.

    The new clause has been moved by someone whom I regard very often as my hon. Friend—the hon. Member for Eccles. It concerns children between the ages of 2 and 5 who are disabled. We well understand the hon. Member having taken up the device—what I now call the myth—of the national insurance fund, and it has been used by the Opposition on some occasions to get the matter debated. It is right that we should discuss this issue in the House on these occasions, because we get few enough opportunities to do so.

    Of course, I understand that there is a very good case for the measure. There can be no question at all about that. The House will recall that several years ago, when we debated the money resolution on the mobility allowance, I raised the issue. At that time I too, was testing the strength of the proposal. We were all well aware of the tremendous burden that a disabled youngster places on a mother, in particular at a time when one expects an able-bodied youngster to be getting around on its own little feet and being able to amuse itself. One great problem is to keep a physically disabled toddler occupied during the hours of the day.

    There is no difference between the hon. Member for Eccles and Conservative Members. We all know that this is a real problem. I have seen this over many years, ever since I became involved with young disabled children in hospital, and we are gradually moving towards a solution to the problem.

    The first thing that we should look at is the availability, where it is totally needed, of the attendance allowance for children of this age. All children need attendance, but is it the sheer attendance about which we are talking rather than the mobility? I believe that there is a problem here.

    Another problem is that this matter has not been discussed for some time in the House. We shall, therefore, welcome the answers which I am sure the right hon. Gentleman will give in responding to the debate.

    I must disagree with the hon. Member for Eccles that there are no educational opportunities for disabled toddlers. In many of the more recent cases that I have come across there are such opportunities, and I pay tribute to the Toy Libraries Association, which has begun to do so much for families with disabled youngsters. I hope that it will continue to do that very good work. However, the hon. Member for Eccles is right in saying that that does not remove the burden from the mother, because it still means that the mother has to get her child to the toy library in the first place. I thoroughly accept that.

    I am grateful to the hon. Lady for giving way. I hope that tomorrow morning Hansard will show that I entered a caveat—that a development is taking place which assists the mother, and that toy libraries, and so on, are helpful. I was suggesting that it will be some time before facilities are totally available for this group.

    I agree with the hon. Gentleman that none of these helpful facilities grows as fast as we would like. I believe that over the past few years there has been a change and a new awareness in the importance which society now, thankfully, places on the development of children who although physically disabled are mentally alert and have a great deal to give. Therefore, we should examine this problem from both the social and the educational point of view.

    I should be glad to hear from the Minister whether he has discussed the needs of the under-fives disabled children with his opposite number at the Department of Education and Science. In the last two years there have been a number of new pamphlets and debates about the needs of the under-fives. I believe that the specific needs of the under-fives, who can sometimes be accommodated in special schools for a short period of the day, are matters which the two Departments together would do well to explore.

    In saying that, I am conscious that the last published figure of cost for this group was small. I am led to believe that the Amelia Harris figures, on which the estimate of cost of £2 million in 1976 is based, are now considered to be out of date. I should be grateful if the right hon. Gentleman could provide us with the up-to-date costs that his Department must, surely, have worked out for extending the mobility allowance to this group of little people.

    We also need to know what range of facilities are already available. This is not to say that we do not place great importance on helping the mothers of these children, but there are always so many calls on the public purse, especially with regard to this Department, that we must make a decision whether this gets the top priority of the money available.

    8.30 p.m.

    Every week another worthwhile cause requests money. It may be for £1 million or for £500,000; it may be for much more. For my part, I believe that this is a group that is well up the list. But, in the stringent situation in which we presently find ourselves I do not believe that it can be a group to which we can devote funds. That is not to say that I do not want to see it happen, because I sincerely do. It is a step for the future, one which I hope we can continue to research perhaps a little more avidly than we have done in the last couple of years to see whether we can extend this allowance to the parents of toddlers when the time is right. Perhaps we might even be able to extend a percentage of the allowance, because it might be argued that toddlers do not need the full extent of the mobility allowance, as does an adult disabled person, in order to get around.

    In saying that, I do not want any hon. Member, least of all the hon. Member for Eccles, to feel that we shall not give this due consideration. As the hon. Gentleman mentioned, as well as agoraphobics, blind people feel that they have had nothing out of the health and social services kitty for a long while, and they also have put immense pressure on the right hon. Gentleman.

    In Committee we debated whether we should remove the upper limit for the receipt of mobility allowance. I know that every Government Minister receives daily requests for additional expenditure, just as we, either as constituency Members or as an Opposition, are asked to support many good causes. Therefore, I ask the Minister for more information. I should also like to know what can be done in conjunction with the other Departments concerned.

    One of the problems which confronts me more and more as a constituency Member is that many families with disabled children are more hampered by the lack of facilities for those children within their own homes than they are by the lack of outside mobility. We know that this should not be so, because there is the Joseph Rowntree family fund. That is worth mentioning tonight, because that might help some of those who look to this debate to solve their additional expense problems in respect of disabled children.

    For all the reasons that I have outlined, and in view of the many cases of genuine need to which we cannot yet give the funds that we would like, I believe that for the time being other cases will have a higher priority than the one outlined by the hon. Member for Eccles. The abiding duty, whether of this Government or the next one, is to get the economy in such a state that we can talk about additional funds for the disabled, and additional funds for this group. My one ambition may be to spend money, but in order to spend money the country must first earn it. That must be the top priority, because then 2 to 5-year-olds will be able to have their mobility allowance.

    I am grateful both to my hon. Friend and to the hon. Lady for their kind references to my appointment to the Privy Council. As my hon. Friend has made clear, his purpose in moving the new clause was to probe the Government's view about extending the mobility allowance to children between the ages of 2 and 5.

    I have noted the hon. Lady's request for an updating of the figures based on the Amelia Harris survey. However, meanwhile the cost is still estimated at around £2 million a year, and we expect about 4,000 disabled children to benefit. This was of course one of the recommendations of the Royal Commission on civil liability and compensation for personal injury—the Pearson Commission—and the Government are giving very detailed consideration to those recommendations. The suggestion has also been made on a number of occasions and has been sympathetically examined, as are all suggestions for extending the scope of benefits to disabled people.

    Against a background of scarce resources, one is always faced with a difficult, indeed agonising, decision about competing priorities, and, without wishing to minimise the problems of families with handicapped children under 5, we have so far felt bound to give higher priority to the elderly, many of whom are left to cope with their difficulties as best they can. That is why clause 3 extends the age limits for the elderly at a cost over four years of £20 million a year. For the future the Government are still considering the Pearson report.

    The House will recall that the Commission also recommended a general benefit for all severely handicapped children. Over and above this, more and more people are pressing for a new general disablement benefit for all severely disabled people, adults and children alike. There are difficulties in designing benefits for particular and very deserving groups rather than adopting a comprehensive approach to all severely disabled people. These problems concern not only costs but such other difficulties as taxability, how disablement is assessed, and the relationship with other benefits. We are studying all the possibilities and options very carefully.

    It may be helpful to remind the House that in the three years since it was first introduced we have doubled the rate of mobility allowance from £5 to £10 a week. It was increased to £7 a week in November 1977 and to £10 a week in July 1978. Moreover, we have undertaken to review the rate of the allowance regularly every year. With the improvements that we have put forward in the Bill, expenditure on mobility allowance will reach £65 million in the financial year 1979–80 and £72 million in 1980–81. These are the latest figures available. By 1980–81 we shall have raised overall expenditure on mobility for the disabled to some £90 million a year.

    Many people will say that this is not enough, but it is certainly a considerable advance on the £13 million a year that was being spent when we took office in 1974. I know that the House will be glad to learn tonight that we are now paying the mobility allowance to over 100,000 people. The latest figures available to me show that 103,500 people are now in receipt of this important new allowance. As my hon. Friend is aware, there are strong pressures on the Government to extend the mobility allowance to many other categories of disabled people. They include the blind, the deaf blind, people suffering from epilepsy, the mentally handicapped and agoraphobics, all of whom have mobility problems even though physically they may be able to walk.

    This is one reason why I have so often said that in this long-neglected field I face infinite claims with only finite resources. There is no one in this House who appreciates the truth of that more than my hon. Friend and, indeed, the hon. Member for Wallasey (Mrs. Chalker), who referred to Jonathan Bradshaw's work at York. We are looking at this paper carefully and especially the medical and statistical data. However, I must emphasise that the Government see the issue not so much as one of the individual merits of a particular case where children aged 2 to 5 should have the allowance but rather as one of priorities where we seek to establish whether children should take precedence over many other competing claims for an extension of the allowance. This is a most difficult decision for the Government and one that we shall continue to consider very carefully.

    I can assure my hon. Friend and the hon. Lady that we shall continue to do everything in our power further to promote the well-being of disabled people as a whole, and that in doing so we shall continually have in mind such claims for assistance as the one that has been made tonight.

    I hope that in the light of my reply my hon. Friend will not press his new clause.

    Motion and clause, by leave, withdrawn.

    New Clause 2

    Power To Abolish Earnings Rules

    "(1) The Secretary of State may by order determine that the deductions from pensions prescribed by sections 30(1), 45(3) and 66(4) of the principal Act, as amended, shall cease to apply from such date as the order may lay down.

    (2) No order shall be made under this section unless a draft of it has been laid before and approved by a resolution of each House of Parliament.".—[ Mr. Patrick Jenkin.]

    Brought up, and read the First time.

    As one who did not take part in the Committee proceedings, I find that I have a little hesitation in moving, That the clause be read a Second time. I hope that if I trespass on to matters that were well and truly thrashed out in Committee I shall be forgiven.

    A new clause was moved in Committee right at the end—one might almost say that it was moved in extra time, because it was after one o'clock on the last day—by my hon. Friend the Member for Ealing, Acton (Sir G. Young). The new clause before the House is in identical terms. Because of the time available, there was only a brief debate in Committee. There was a tied vote, and as a result we return to the matter tonight. Since the Committee stage the Under-Secretary of State has written a letter to my hon. Friend, and some of us have been able to see copies.

    The purpose of the new clause is, first, to allow a debate on the earnings rule and to consider the Government's recent report, published in October, in which they analyse the effect of the earnings rule. The second purpose is to give the Government power, if the House so decides, to phase out the earnings rule by order, so that when the moment comes to do that, as surely it must in the next year or two, they do not need to go through the whole process of legislation.

    It is no secret that the earnings rule has been increasingly criticised in recent years, mainly on two grounds. It is increasingly felt to be unfair. Pensioners say that they have paid their contributions and should be entitled to their pensions as of right. We in the House know, and many of us must have sought on many occasions to argue with our constituents, that the earnings rule exists to, reinforce, so it is said, the retirement rule, and that the contributions are paid to secure the benefit of a pension subject to the retirement rule and the earnings rule. But, equally, I think that all hon. Members know that it has proved almost impossible to convince people of the correctness of that argument.

    In addition to the argument of fairness, there is the social argument. The earnings rule is increasingly regarded as undesirable socially. It is undesirable to put barriers in the way of the younger retired working longer or earning more. As life expectancies steadly increase, people can look forward to 20 or even 25 and sometimes 30 years of retirement after the normal retirement age. Many would like to feel free to go on earning after that normal retirement age without feeling that they are fettered in any way by financial disincentives.

    One of the interesting findings of the OPCS survey, which is referred to in the Government's report, is that the psychological effect of the earnings rule may be as important as the financial disincentive. Far more people feel that they are being hindered by the earnings rule than its actual impact on their personal finances would justify.

    The fact is that all parties in the House are now committed to end the rule when resources allow. Therefore, the central question is what the cost of doing that will be. I shall not tonight argue for more cost, for reasons that we all understand. But when one considers the cost one sees that some important facts need to be considered.

    The rule now bites at a substantially higher level of income than it used to. That is due, as the House knows, to pressure from both sides over recent years—pressure, let it be said, that was resisted all the way each time by the Government. It had to be voted through time after time and the record shows that very clearly. The earnings limits have been raised substantially in the last five years, from £13 a week in July 1974, equal to about 28 per cent. of average earnings, to £45 a week, as from last November, which is probably, although we do not know the figure yet, around 50 per cent. of average earnings. But the rule is still there, and the earnings limit is still there, and the arguments for abolition are no less strong.

    8.45 p.m.

    In our debates we have had a variety of estimates for the cost of abolishing the rule, and a little over a year ago the Government were saying quite firmly that the cost was well in excess of £100 million—perhaps £140 million or £150 million. On this side of the House, ever since my hon. Friend the Member for Rushcliffe (Mr. Clarke) and Mr. Christopher Mockler published the CPC pamphlet "An End to the Earnings Rule?", we have argued that the Government have always grossly over-estimated the cost of abolishing the rule. What has happened is that by stages we have been proved right and the Government have had to concede that they were over-estimating and were wrong.

    The House will remember that in 1977 the Government made some major concessions on costs. They published a paper headed "Note on estimated savings", in which they conceded that previous assumptions were wrong and that the figures had been wrongly interpreted. In that year we forced through the House, and the Government finally accepted, when it came back from another place, a clause to oblige them to review the operation of the rule properly and to report back to the House, and this they have now done. The reason why we did that is perfectly clear. It was admirably stated by the Government spokesman in another place, the noble Lord, Lord Wells-Pestell, when he said:
    "I imagine that the expectation in putting down the new clause is to assess the cost of bringing the earnings rule to an end. If the Secretary of State undertook this kind of investigation, the hope would be that he would find that less public expenditure was required than he had so far supposed and, consequently, would be more willing to announce a timetable for the ending of the rule." [Official Report, House of Lords, 14 March 1977; Vol. 380, c. 1291.]
    Exactly so, and of course that is exactly what has happened, because this is what the report has done, as I shall show in a moment.

    I may say that when the Bill came back to the Commons on that occasion it did not prevent the hon. Gentleman the Under-Secretary of State from saying:
    "It remains the Government's view that such a review is not necessary on its merits."—[Official Report, 24 March 1977; Vol. 928, c. 1501.]
    I hope that we shall have a clear statement from the Government this evening that they are glad that they had to undertake this review, because it has disclosed a lot of new and interesting figures. The merits of the report will be clear as I go on.

    The study, although it leaves out two important factors which we have always argued should be taken into account, shows once again that even the revised estimates of the cost given to the House in 1977 were based on wrong figures, that the assumptions on which cost estimates were based were themselves wrong, and that important factors which the Government had previously discounted are relevant and should be brought into the balance.

    I should like to demonstrate to the House that, on the basis of the figures in this report, and taking account of the two factors which the report does not mention and which we argue should be counted, the earnings rule for pensioners might well be abolished now at no cost to public funds. But I stress the word "might" because I concede that there are still some uncertainties and there may well, therefore, be some cost.

    The biggest single factor has always been how many of the 137,000 people who are currently deferring retirement, postponing claiming their pensions and earnings increments would, if the earnings rule were abolished, take an immediate pension and forgo the increment. The Government have always argued that they would. They have said that it would be 100 per cent. No doubt the Minister will remember the statement made in paragraph 18 of the estimate paper of 1978. That stated:
    "In all estimates of the extra cost to the national insurance fund if there were no earnings rule or retirement condition, it has been assumed that 100 per cent. of those aged 65 (men) or 60 (women) with entitlement to retirement pension would receive it".
    The report shows—it is an important finding based on a retirement survey carried out by the Office of Population Censuses and Surveys—that the paragraph in the estimate paper was wrong. About 40 per cent. would continue to defer taking their pension.

    That is stated not as succinctly but perfectly clearly in paragraph 4.8 in the report on the earnings rule, which states:
    "the results of the Retirement Survey suggest that about two-fifths of those who, under the existing provisions, cannot be treated as retired, would choose to earn increments rather than receive an immediate pension in the event of the earnings rule and retirement condition being abolished."
    That is an interesting finding. It radically affects the cost of abolishing the rule.

    As long ago as 1976 my hon. Friend the Member for Rushcliffe and Mr. Mockler estimated in their paper a very similar percentage of the then rather larger number of deferrers. It may be said that the OPCS survey wholly vindicates my hon. Friend's judgment. The effect is to reduce the gross cost to the national insurance fund from the Government's starting figure of £199 million, assuming 100 per cent. would take the pension, by about £80 million to £119 in the first stage.

    There has been argument about the figures, but the Government have always conceded that if we had people earning and taking the pension a good deal more tax would be paid. It is accepted that that, too, has to be brought into the account. That is put at £43 million—I accept that figure—and that reduces the cost of abolition from £119 million to £76 million.

    We now have to break new ground. Hitherto the Government have refused to accept the argument that the effect of the earnings rule is to limit what pensioners earn. We have always argued that if we have a marginal tax rate of, in effect, 100 per cent., that is bound to have a bearing on people's willingness to earn above that limit. For the most part, people will not go on working if they lose £1 for every £1 they earn. It was contrary to common sense to argue, as the Government did in the past, that no account should be taken of that factor. The OPCS survey, as appears from the Government report, shows that we were right. The language is somewhat convoluted but the purpose is clear.

    In paragraphs 4.10 and 4.11 it is stated that it is right to assume extra earnings and right to assume that some people will work longer hours, and that therefore there will be extra revenue to the Exchequer. That is put at £28 million. That reduces the cost from £76 million to £48 million. At this stage we begin to wonder why the Under-Secretary of State was so reluctant to concede such a report. Why did he say that it had no merit? Clearly it has merit. It is bringing us nearer the day when we shall be able to abolish the earnings rule.

    I do not stop there, because there are three further matters that have to be taken into account. First, the Government persist—as far as I can see, on no evidence—in the error of believing that the effect of ending the earnings rule will lead to many people reducing their incomes and so paying less tax. There are two other matters that the Government ignore altogether.

    Let me take these in turn. It is the Government's apparent belief that people will reduce their incomes. I find it strange that the Government take the view that if we remove a disincentive to work there will be some who work less. The Government do not put it in those terms, but that is what they mean. They argue that if someone gets his pension as well as his earnings, he will be able to work fewer hours without loss of income. I have to concede that there may be some, especially those who are disabled or are nearing the moment when they feel that they want to give up work altogether, who may do exactly that. The Government's argument is that there will be a reduction of about 10 per cent. in the earnings of pensioners across the board. That is a wildly excessive figure.

    In a letter from the Under-Secretary of State to my hon. Friend the Member for Ealing, Acton it was stated:
    "The idea that people who unexpectedly qualify for a pension which they did not previously receive might feel able to reduce their hours of work is in accordance with an acceptable economic theory."
    I suspect that this is what it is based on. We are given a reference:
    "A formal statement of the theory as applied to an earnings-tested social security benefit may be found in 'The Labour Supply Curves under Income Maintenance Programs' by G. Hanoch and M. Honig, Journal of Public Economics, Volume 9, 1978".
    There may be a theory, but there is really no evidence at all. Hon. Members on both sides of the House know perfectly well that the vast majority of people need every penny of income they can get. After all, are we not being reminded of that every day this week? The figure based on a 10 per cent. cut, which I suggest is wildly excessive, increases the cost of abolishing the rule by some £17 million. I should be prepared to concede that there may be a few at the margin, and I suggest that the increase is more of the order of £2 million to, say, £3 million, but I do not believe that it would be more than that. My previous figure of a cost of £48 million then becomes £51 million, but that is without taking account of two factors of which the Government take no account at all.

    I start with a quotation:
    "If the earnings rule were abolished a number of people who in present circumstances might well retire would not then retire."—[Official Report, 29 January 1975; Vol. 885, c. 469.]
    I agree, because it seems only common sense. It was said by the late Brian O'Malley, who, as we all know, had a deep knowledge and understanding of these matters which we all greatly respected.

    That is the first point. There will be some people who are coming up to retirement and who are planning to retire but who, if they find that they do not lose their whole pension when they go on working, will go on working. There is nothing at all in this report on that. There is no figure given. It is all the odder because in 1976 an OPCS survey found that 40 per cent. of non-working women between the ages of 60 and 64, and men between 65 and 69, wanted to work beyond retirement age, and yet no account was taken of that. I believe that there ought to be something in for that because extra tax revenue would be paid as a result of some of these people continuing at work.

    On my second point, I referred earlier to the psychological effect of the earnings rule to which increasingly people are giving credence. It is clear that the earnings rule is thought by many working pensioners to limit their earnings by more than is in fact the case. This point was made in paragraph 2.8 of the report, which said:
    "Relatively few, about 80,000, seemed to be limiting their earnings because of the earnings rule and of these only 40,000 were influenced by the correct earnings limit rather than a misconception of it. These answers say more about the general state of confusion surrounding the rule than about the extent to which it really acts as a disincentive".
    Poor knowledge may be as much of a problem as the rule itself, but, considering that the rule has operated for 30 years, we must recognise that if people do not understand it now, they never will. The fact is that it deters people from working.

    There must be many pensioners who do not work and who would like to work but who never get round to working because they have been put off by their impression of how the earnings rule would affect them. Therefore, rather than that they should start some new part-time job, they accept retirement. If they had the chance to keep on full-time, they would do so. There are 2 million non-working pensioners in the earnings rule bracket, of whom about 1 million are, or would be, affected by the present rule. Is it reasonable to assume that not one of them will return to work if the earnings rule is abolished?

    9.0 p.m.

    Will my right hon. Friend accept that it is not only the money they can earn which has to be considered, but the fact that people who are going into retirement because of this misconception have the skills that are needed to keep our factories moving? Once they have gone out of the system, this could very well lead to higher unemployment.

    My hon. Friend is right. Studies produced by the Department of Employment show that it is a substantial fallacy, though not a total one, to believe that young men step into old men's jobs. That does not happen. The fact that elderly people go on working seems to have remarkably little effect on the availability of jobs for youngsters at the other end of the age bracket. I do not believe there is any argument for keeping on the earnings rule as a disincentive to people to work in order to provide jobs for younger people. That is a fallacy, and my hon. Friend is right.

    My point is that there is nothing in the White Paper to suggest that people would return to work after retirement age once they knew they could keep their pension and earnings, paying only the tax on the income. The question is how much extra tax revenue we should allow in respect of people who are coming up to retirement but who decide to go on working and in respect of those who have retired and who believe that, with the ending of the earnings rule, they could go back to work. I do not know the answer, and it is a difficult question to answer without a further survey.

    In the CPC pamphlet of 1976 it was estimated that an extra 25,000 people would remain in work or return to work who would otherwise retire, and it was calculated on the figures in that year that there would be extra tax revenue of £19 million. If we apply the same proportions to today's figures, both as to tax revenue and in respect of the numbers involved, we estimate that this would yield a tax revenue of £46 million which would have to be thrown in on the credit side. If my sums are right, that reduces the total net cost of abolishing the earnings rule to £5 million.

    If we were wholly satisfied with £5 million, we would now be debating a new clause to abolish the earnings rule and I suggest that we would carry it because it would have support in all parts of the House. I do not know whether the figure of £46 mililon is right. The Minister's letter to my hon. Friend dismisses the figure as fanciful. Perhaps I may quote from page 3 of that letter:
    "The OPCS Survey attempted to discover whether any pensioner did not work because of the rule but the replies were difficult to interpret."
    We have to rely on anecdotal evidence in deciding whether the figure is fanciful. I refer to a recent issue of "Choice", the magazine published for retired people. A journalist interviewed an elderly widow whose husband, when he retired, became bored, returned to work and found that the earnings rule substantially limited the value to him. He was losing a pound for a pound. That was the rub.

    The report said:
    "the wages paid to him meant that he had to surrender some of his state pension. He was angry at the deduction. His view was that he had paid for the pension and it offended his sense of justice that he should be 'fined' for doing a fair day's work".
    The article says that it would have been better if the man had approached the matter more philosophically and continued working. But he could not. He gave up the job in mute protest. A few months later he was dead. His widow was convinced that if he had kept on at his job he would still be alive.

    That is an extreme case. But there are people who resent the situation. They take the view that they would rather take the pension, retire and have their time to themselves. But there are those who would carry on working or return from retirement if it were not for the earnings rule. Whether or not the figure involved is £46 million, something should have been put in the balance to cover that situation.

    I cannot argue on the basis of guesswork. If it were to cost £25 million, or £30 million, to abolish the earnings rule, I do not believe that it would be justified in the present state of the nation's finances. We have always approached such matters with responsibility. I cannot prove that it will not cost that amount.

    However, the Government should have the power to make the change by order. We have hammered out the principles. We are agreed about the rule being undesirable and that it should go. When we can afford it, we should phase the rule out. That is what my new clause proposes.

    There is another argument involving the wives of pensioners and invalidity pensioners. Theirs is a different case. Even if we could abolish the earnings rule at no cost—and that could be done for such pensioners—it is difficult to justify paying a dependence allowance to somebody who, by definition, is not a dependant. I do not seek to argue that case now because it involves different principles.

    We are all agreed about ending the earnings rule for pensioners and that it should be done as soon as resources allow. As a result of the latest work which the Opposition obliged the Government to undertake, we are nearly there. It would be reasonable for the House to decide to remove the procedural obstacle of legislation and to allow the Government to act by order. The facts are clear. When we can afford it we should get rid of this unfair anachronism, once and for all.

    I agree that the earnings rule is a most unpopular measure, but the campaign to abolish the rule has become a populist cause. Sometimes people are unwilling to face the realities.

    The right hon. Member for Wanstead and Woodford (Mr. Jenkin) lost me when he said that if the earnings rule were abolished all the people working at present who were affected by that rule would retire. That seems to defy logic.

    The right hon. Member's reasoning seemed to fly in the face of common sense and all the evidence—which is anecdotal—which has been presented to me by pensioners in my constituency. Almost to a man—or a woman—they say that if the earnings rule were abolished they would go back to work. Whether they would go back to work is open to question. But the right hon. Member's reference to the psychology of the matter is not far off the mark.

    We should consider the economic and sociological effect of people not retiring at 60 or 65, or going back to another job after retiring from their main job. One thing must be established first. That is that the retirement pension is what it says. It is a retirement pension, a pension for people who are not in employment.

    Confusion arises when people are told that they must retire at 65, all the actuarial calculations of contributions having presumably been based on some notional life span of employment. If men are told that they must retire at 65 and women at 60, in normal circumstances, although it is not a legal requirement that they must retire, they feel that having paid for X number of years they are entitled to that pension as of right, because they have paid insurance contributions or taxes for it. It is some time since I looked at the actuarial position but I have a feeling that a big whack of retirement pensions comes out of general taxation and not from a sound actuarial insurance scheme.

    There is no absolute principle that as one has paid for one's retirement over the years, one is entitled to it as of right at 65. One is, of course, entitled to it if one retires. Leaving the issue of principle aside, what would be the effect of abolishing the earnings rule in terms of employment? With 1½ million unemployed, we cannot say that people should go on working beyond the normal retirement age of 65.

    I know that the right hon. Member for Wanstead and Woodford said that there is little evidence to show that young men step into old men's shoes. I am not sure how firm his evidence is, but if it became normal practice, as it would be considered normal practice if the earnings rule were abolished for people to stay on beyond normal retiring age, this would be bound to have an effect on the number of people in work and those seeking work. How big or how small that effect would be, none can tell, but it would have a significant effect if one takes at face value the number of people who have told me that they did not want to retire but that to go on working would have been a financial disadvantage through loss of part of their pension. I believe that a substantial number would either continue in their jobs or go to other jobs apart from the one in which they have worked for most of their lives.

    A twin argument is developing in the country. On the one hand, there is the perfectly principled argument that people should retire earlier than 65 in order to enjoy a leisure life at a time when they are physically and mentally active enough to appreciate leisure that they cannot get during their working period. That is a perfectly reasonable argument. But there is another argument, to which I do not wholly subscribe, that the way to cure the unemployment problem is to reduce the retiring age of men to 60, which would automatically release jobs for younger people.

    I am a little worried about that argument, because it would simply mask the unemployment problem. One would be simply juggling with figures, just as we altered the unemployment position by raising the school leaving age. It was the right thing to do in itself. It affected the unemployment figures but did not affect the general problem of providing for full employment. I am not in favour of facile solutions that mask a real problem of providing meaningful employment for people of working age.

    These two arguments tend to push us in the direction of reducing the retirement age. Yet we seem to say, on the other hand, that the retirement age will be reduced but people will be allowed to earn more without penalty. These arguments are at odds with and pull against each other. The way to tackle the problem of retired people in meeting their daily costs and paying for their rent, electricity and food is not by juggling with the abolition of the earnings rule. The right way is to provide decent pensions.

    9.15 p.m.

    Although it is unpopular to argue with pensioners and their organisations that the earnings rule should not be abolished, it is an argument that must be put. It is akin to the argument over the claim that the pension part of a person's income should not be taxed. That is another popular cause, but I am coming increasingly to the view that we are tackling the problems of hardship in our society by creating special cases to which we give privileges instead of looking at how we can provide the wherewithal to give all the special classes a decent standard of living.

    I wish that we would look much more at that end of the argument instead of concentrating on arguments about abolishing the earnings rule There is, however, one aspect of the argument in favour of abolishing the rule with which I have some sympathy. I have no vast body of evidence to substantiate what I have to say, but I am told that many employers take on pensioners because they can tell the pensioner that he will be paid only £40 a week because if he gets £45 or more he will lose his pension.

    Many people do not understand precisely how the earnings rule works. I do not claim to understand it myself. Some people believe that they will lose their pension if they work on beyond their retirement at above a certain wage. I do not think that people set out to tell me lies, and there seems to be evidence that unscrupulous employers deliberately take on pensioners at much less than the going rate for the job because the pensioners believe that employers have a hold over them. Again, the best way to tackle that is under the fair wages provisions and by ensuring that investigations into low pay are properly carried out.

    The immediate abolition of the earnings rule would be a move against the sort of policies that we want to see of people retiring and having a decent living without having to work. If a man has spent all his days driving a lorry, especially in the sort of foul conditions that we are experiencing now, or down the pits—and thank heaven I have never had to do that—he is entitled to retire at a decent age and not be forced to work on. He is entitled to retire at a time when he can appreciate the value of society and benefit from all it has to offer.

    We need to tackle the question of how people can retire and have the wherewithal to enjoy their leisure without financial worries. That would be better than adopting the populist cause of abolishing the earnings rule. The bad effects of that are probably greater than the good effects that some people believe would result.

    I thank my hon. Friend the Member for Aberdeen, North (Mr. Hughes) for ably covering a great deal of the ground that I had wished to cover. That will reduce the length of my speech.

    The pension is linked to retirement, and it is almost a contradiction to suggest that people should remain at work when they are receiving the retirement pension. I appreciate that in our constituencies and surgeries the opposite view is often put, and many pensioners point out that they have paid contributions that entitle them to a pension, despite the fact that they continue to work.

    I do not entirely accept that argument. If we assess the contributions formula, we see that the younger working population is funding the pensions scheme. The value of the pension, especially under the present Government, has increased in real terms, and that increase is being financed by the population that is still at work.

    But there is a wider background to the new clause. We must recognise that the available work force in this country—that is, the number of people between 16 and 65, excluding students—has increased considerably over recent years and will continue to increase at a quite sensational pace during the coming years. The available labour force will increase by about 2 million in the next 15 years. This will be alongside the advance of technology, which will lead to a smaller labour force being required, especially in manufacturing industry.

    I advocate earlier retirement. I do not accept the argument that this is perhaps a sly or almost dishonest way of dealing with the unemployment problem. I believe that it is a genuine and worthy way of reducing unemployment. If the requirement for people in the work force is lessened, we should accept the position. We should, if we can, reduce the retirement age and the length of the working week and, by various other methods, seek to reduce the work force, while retaining our capacity to generate prosperity. If there is the opportunity to do this, we should welcome it. It would rather defeat the purpose of that philosophy if I were to support the new clause. I would not press the enforcement of a compulsory retirement age, but I do not think that we should encourage people excessively to remain at work.

    Not all those who continue in employment after they have reached retirement age are there for virtuous reasons. Many of them are in employment simply because the opportunity presents itself, and opportunities of that sort are not generally available to people. Some are unable to take advantage of employment in old age because they worked excessively when they were younger. Many are too ill, too exhausted, too worn out to take up employment. Generally speaking, it is those who have had a comfortable working lifetime who are able to take advantage of employment after normal retirement age.

    While recognising all the arguments which have been put at some length and in some detail, I cannot accept that we have a priority for abolishing the earnings rule at this stage. I think that it should come very low in our list of priorities. Therefore I cannot support the proposition.

    We have had an interesting debate, which has gone fairly wide, on the whole subject of retirement in connection with the earnings rule. Perhaps it would help, as the right hon. Member for Wanstead and Woodford (Mr. Jenkin) spent quite a long time in introducing it, if I made some comments about the new clause.

    The clause gives power to make an affirmative order to stop deductions from pensions under the earnings rule in respect of retirement pensioners and the dependent wives of retirement and invalidity pensioners and of those receiving industrial injuries unemployability supplement.

    The Government see several disadvantages in proceeding in this way. First, the retirement condition, upon which entitlement to retirement pension rests, can be satisfied either by reference to the amount of time a person expects to spend at work after retirement or the amount of money he expects to earn, which is now up to £45 a week. The earnings rule is inextricably bound up with the retirement condition as the basis upon which entitlement to pension rests, and it has always been recognised that abolition of the earnings rule means that the retirement condition has to go also.

    The effect on the retirement condition of ceasing to make deductions under the earnings rule, in consequence of an order made under the new clause, is not clear. The Act would still provide for a retirement condition, although the circumstances in which it could be satisfied are debatable, and it is doubtful whether the ensuing legal tangle would accurately reflect the wishes of Parliament. It is an unsatisfactory solution, therefore, to remove the earnings rule in isolation. The remainder of the provisions in the Act are left in doubt, and we would not think that this is an appropriate way in which to set about the operation.

    The second difficulty is that the new clause excludes the most likely way of bringing the earnings rule to an end—that is, by phasing it out. The Government are already committed to phasing out the earnings rule. The cost of overnight abolition is substantial. It involves considerable public expenditure, and phasing out would allow us to meet this cost over a period of years. As suggested in the report on the earnings rule which was published last October, phasing out could be accomplished by progressive reduction of the upper age to which the rule ceases to apply, at present 70 for men and 65 for women.

    I shall deal briefly with the points raised by the right hon. Member for Wanstead and Woodford about costs. One of the recurring features of these debates—we have had a number of debates on the earnings rule—is a dispute about costs. Costs are very important, and it is right that we should examine them closely. They can also be very complex. It would do injustice to some of the points involved to make them subject to exchanges, so to speak, off the cuff. The question of cost has been given a good run in the House and in Committee.

    Estimates of costs were debated at some length during the passage of the Social Security (Miscellaneous Provisions) Bill in 1977. The Government undertook to prepare a detailed report, which the right hon. Member quoted tonight. The report was prepared in October last year. Various costs were closely examined. The estimates published were the most sophisticated that it had been so far possible to make. These were challenged by the hon. Member for Ealing, Acton (Sir G. Young) in the Committee on this Bill before Christmas.

    In the light of the hon. Gentleman's arguments, we re-examined the figures with the help of the Government Actuary, who is independent of my Department, and my own economic advisers. In the result, we see no reason to alter the estimates put forward. Perhaps more to the point, we have not been convinced that the alternative estimates put forward challenging our own are based on evidence sufficiently sound to persuade us to prefer them. It would serve no purpose of ours to put forward figures that were unnecessarily high. We, too, welcome low figures where they are justified. I wrote to the hon. Member for Ealing, Acton on 19 January explaining our reasons. The right hon. Gentleman was good enough to quote several passages from that letter.

    In these debates we have gone over a lot of ground. I doubt whether there is much scope left for profitable exploration. The cost of abolishing the earnings rule is still formidably high. It is between £64 million and £124 million after allowing for tax, depending on the number of people who would decide to defer taking their pension so as to earn increments on it. The actual number that would defer their pension may be uncertain. In any event, the cost is a problem that has to be faced by any Government. It would help to be able to take on that cost gradually.

    The third point about the new clause is that it ties the abolition of the earnings rule for retirement pensioners to that of dependent wives. In the case of retirement pensions, the function of the earnings rule is to support the retirement condition. But in the case of an increase of benefit for a wife the earnings rule is a test of dependency. As the right hon. Gentleman rightly pointed out, it sets the point at which the wife's earnings have become too high to be consistent with her being regarded as being dependent on her pensioner husband. In tackling the earnings rule, therefore, it is necessary to separate the effect of the rules on the retirement pension from the effect on benefit for the dependent wife. The new clause does not do that.

    Having pointed out those aspects of the new clause which make it unacceptable as it stands, I acknowledge the common ground that the Government share with hon. Members opposite in that we agree that when resources are available the earnings rule should go. This is a commitment that we have made previously. That being so, we see advantage as well in taking suitable preparatory steps to achieve that purpose. I have indicated the defects in the new clause which hinder making progress in the desired direction. I accept that it is insufficient for the Government simply to find fault with proposals that other people have put forward while making no positive move. Probably the most promising way forward would be through a progressive reduction in the upper age for the retirement pensioners' earnings rule.

    If the right hon. Gentleman will at this stage ask leave to withdraw the new clause, the Government will in another place introduce a new clause that will enable the Government, by means of orders subject to the affirmative resolution procedure, to phase out the earnings rule for retirement pensioners by steadily reducing the period over which it applies, with the aim of abolishing it completely. In so doing the Government would simply be taking power to make changes. The question of using that power would need to be considered in the light of the economic situation at the time, in relation to the many other claims on public expenditure and the Government's expenditure priorities.

    The Government have been most forthcoming on this. I am especially grateful to the Under-Secretary for reiterating the Government's commitment to getting rid of the earnings rule. We have listened to two closely argued speeches by the hon. Members for Aberdeen, North (Mr. Hughes) and for Chorley (Mr. Rodgers). They both made it clear that they did not want to see the end of the earnings rule. They were prepared to argue for it.

    It is important that the Government have reiterated that they are committed to ending the earnings rule. I found the arguments of the hon. Member for Chorley unattractive. He seemed to think that it was necessary to have the earnings rule in order to save people from themselves, that they feel that they have to go on working but they were worn out and they should really retire.

    9.30 p.m.

    I should make my point clear, because I did not intend to give that impression. I said that some people were unable to take advantage of any relaxation in the earnings rule because of the nature of their working lives, which have been hard. I said that they were worn out and sick, and unable to continue working. That is rather different from what the right hon. Gentleman suggested that I said.

    Then I fear it is even less admirable than I thought. I was interested to see the hon. Member for Bolsover (Mr. Skinner) nodding in agreement. Of course my hon. Friends will recognise that we have just heard the old Socialist cry "If I cannot have it, you shall not have it either."

    I had better clear the decks as well. I come from the pits, and I still represent a constituency that has many thousands of miners and retired miners. The fact is that when we introduced a new scheme recently for early retirement at 60 over a period of years, only about half a dozen miners in the whole of the Derbyshire coalfield stayed on beyond the retirement age, which is down to 62. The point that my hon. Friend is making is absolutely right. In that kind of industry most of the people concerned simply cannot carry on working and they look forward to their retirement. As far as I am concerned, I have done my 20 years underground. I qualify under the scheme, and if they get the age down to 55 it will not be long before I can retire.

    Many of us on the Conservative Benches would feel a very great sense of loss if the hon. Member for Bolsover retired. Nobody for one moment has denied the right of someone who reaches retirement age to retire if that is what he or she wants to do. The argument is—the Government's latest report emphasises it—that many people feel able to stay on doing the same job, the same job on a reduced basis or, as I suspect is the case with many of the Derbyshire coalminers, other lighter jobs above ground. I bet that they take jobs behind the bars and in all sorts of other useful ways where their experience and personalities help them to help themselves. Nothing that I have said would prevent them from doing so. On this side, we want to see a progressive move to more flexible retirement and greater freedom of choice. Ending the earnings rule is one important step in this direction.

    I understand the case that the Under-Secretary has made. One way of doing this is to alter the ages—to reduce the age by a year, or six months, or whatever. I would be grateful if the Under-Secretary would examine the possibility of raising the limit faster than is currently done under the 1977 Act and to include that in the proposed amendment, in addition, as an alternative method so that we can have a combination of raising the earnings limit and reducing the age.

    I would be a little unhappy if I thought that the only thing that we could do was to reduce the age by order. I suspect that if one wanted to accelerate the raising of the limit one would then have to have a Bill. Perhaps that can be done by order already. I suspect that all that can be done by order is to move in line with earnings, because that was what was agreed in 1977. If the Under-Secretary would undertake to do that as well—I see that he is nodding assent—we would feel that we had amply achieved our purpose this evening and that when the Bill comes back from another place it will contain an acceptable clause which we shall greatly welcome.

    In view of what the Minister has said, I beg to ask leave to withdraw the motion.

    Motion and clause, by leave, withdrawn.

    New Clause 3

    Amendment Of Social Security (Invalid Care Allowance) Regulations 1976

    'The Social Security (Invalid Care Allowance) Regulations 1976 shall be amended by adding the following sub-paragraph at the end of Regulation 6:—

    '(3) The relationships of "husband" and "wife" as are specified in sub-paragraph (1) of this regulation shall be taken to include common-law husband and common-law wife respectively, provided that any allowance payable by reason of this sub-paragraph only shall be payable out of the National Insurance Fund'.".—[Mr. Newton.]

    Brought up, and read the First time.

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

    I believe that I can explain the new clause fairly briefly. Those who have studied the Amendment Paper will have seen that my new clause concerns the invalid care allowance. I can sum up its purpose very quickly. It is designed to allow the payment of an invalid care allowance to a common law husband.

    The House will be aware of the purpose of the invalid care allowance. It is a benefit for men and, at present, only for single women of working age who cannot go out to work because they are needed at home to care for a severely disabled relative who is receiving an attendance allowance. A whole range of issues which arise on this allowance—in particular the fact that it is not paid to married women—are controversial and could be discussed. My new clause concentrates on a much narrower point.

    I recognise that the phrase "common law" is not particularly elegant or attractive. But I think we can all agree that there are many relationships which are enduring, stable and worth while and which can only be described by the use of that phraseology. They are, almost by definition, likely to be such enduring and worthwhile relationships in a case which would be covered by my new clause, which is one where one of the partners is loking after the other—the husband is looking after the common law wife in circumstances where she is very severely disabled.

    I should acknowledge at once, if only to remind the Minister of the correspondence that we have had, that this matter arose in my mind because of a constituency case which came to my attention. For obvious reasons, I do not want to name the constituent, but I think it might be helpful if I briefly outline the circumstances.

    When my constituent came back from the war—now some considerable time ago—his wife had gone and was subsequently untraceable. Since then he has lived with his present partner, for a period of some 32 years. Ten years ago this second partner had a very severe stroke and was substantially paralysed and severely disabled. My constituent later found that he was forced to give up his work in order to care for her.

    In due course, becoming aware of the provisions for an invalid care allowance—which appeared to cover circumstances such as his, because the lady is in receipt of an attendance allowance—my constituent applied for an invalid care allowance, only to find that because they were not legally married he did not qualify. That is a point which caused me great concern.

    I accept at once that it is almost certain, in the circumstances as I know them, that my constituent and his partner could get married because present divorce law would almost certainly allow the matter to be sorted out. But they have been living in the same community for a long time, with most people thinking that they are already husband and wife. They have a daughter who is married. I am not sure whether she knows about the relationship, but probably her relatives and friends do not know of it. Very understandably, many people are shy about such matters. Some people would be shy, and some would not.

    At any rate, I feel that everybody in the House will understand why, after 32 years, this couple do not particularly want to go through the formalities of a divorce and remarriage, especially if it became known to their friends and relatives in the area. Therefore, they find that they cannot get the invalid care allowance. The man applied for it, and he was refused. He appealed, and that was refused. He came to me, and I wrote to the Minister. The Minister replied explaining, very courteously and sympathetically, why my constituent had been refused this allowance.

    It is perfectly clear that, under the existing regulations, the man was rightly refused. It may perhaps be helpful to the House if I read the list of qualifying relationships, as it were, from the Social Security (Invalid Care Allowance) Regulations 1976. This comes from part of paragraph 1 to regulation 6. The people who can qualify are:
  • "(a) lineal descendant or ascendant in a direct line;
  • (b) husband, wife, step-father, step-mother, step-son, step-daughter, brother, sister, half-brother, half-sister, step-brother, step-sister, aunt, uncle, nephew, niece; or
  • (c) father-in-law, mother-in-law, brother-in-law, sister-in-law, son-in-law or daughter-in-law."
  • That regulation seems to be pretty widely drawn, but it is clear that it does not include what, for the purpose of the new clause, I have been forced to call a common law husband.

    In cases such as that of my constituent, which I have described—and I have no doubt that other hon. Members could think of comparable cases or cases with somewhat different circumstances but leading to the same result—my argument almost makes itself. It seems patently unfair that this allowance should not be available to them.

    I should like to make one further point. Having read the definitions contained in subsection (1), those who have studied the new clause assiduously will see that what I have actually sought to add is a subsection (3). It may have occurred to some to wonder precisely what sub-paragraph (2) is in paragraph 6 of the existing regulations. Perhaps I may also read that to the House, because that sub-paragraph says:
    "Any such relationship as is specified in paragraph (1) of this regulation"—
    that is the one from which I have already extensively quoted—
    "shall be taken to include also any such relationship as would have subsisted if some person born illegitimate had been born legitimate."
    Unless I have gravely misunderstood the matter, what that means is that the daughter of my constituent and his common law wife could qualify for an invalidity care allowance because she is deemed to be legitimised under these regulations, but the father of that daughter cannot qualify as he is not legitimised for this purpose.

    That seems to transform something which, in common humanity, I would think unfair into something amounting almost to a breach of natural justice. I hope that Ministers will very seriously consider putting this matter right in the terms that I have suggested in the new clause.

    Has the hon. Gentleman made any estimate of the cost of implementing the new clause? I have great sympathy with the idea behind the new clause, but does he think that the difficulty would be overcome by a simple statutory declaration, without the public knowing anything about it at all, it being a matter between the parties involved and the Department of Health and Social Security?

    I am grateful to the hon. Gentleman, in this matter as in many others, for his helpful suggestions. I shall certainly put them to my constituents. I should be grateful for the Minister's comments. I had not formed any estimate of the cost. However, in this day and age, especially as for many people divorce is much easier than it used to be, I should have thought that the numbers affected by this difficulty must be tiny and that the cost must be verging on the insignificant. However, perhaps Ministers can give us some estimate. Obviously, this is something that will have to be taken into account. Unless the cost is more than a few tens of thousands of pounds, I believe that here we have something that is clearly unjust, and if there may be ways around the difficulty we should seek to put right something which seems so manifestly unfair.

    I support the hon. Member for Braintree (Mr. Newton) in his new clause. I seek from the Government an assurance that if, perhaps for some technical reason, they feel that the new clause is defective, they will take steps in another place to bring forward an appropriate amendment. I am astonished at the story that the hon. Gentleman has told this evening—that what are called common law relationships prevent people from qualifying for benefit.

    I ask a very difficult legal question of the Minister. I do not expect a reply tonight, but I hope that he will write to me about it. He will be aware that in Scotland, where we do not necessarily call people common law husbands and wives, a marriage by habit and repute is a perfectly legal marriage for all sorts of ancillary legal matters, such as accession and so on. Therefore, I wonder how far in Scotland the parties to marriages of habit and repute would find themselves disqualified in the circumstances that the hon. Gentleman described.

    I go further than the hon. Gentleman and say that many people today live together as man and wife without either the blessing of the Church or the legal sanction of a marriage in a registry office. If they live together as man and wife and pay taxes as man and wife, surely they are entitled to benefits as man and wife. It seems as simple and logical as that. If there are difficulties about the qualifying test, the fact that they live together and pay taxes on the basis of being husband and wife, possibly with children, ought to satisfy the test for benefit.

    I should add one barbed note about acceptance of the new clause. If the DHSS carries out investigations and concludes that a couple are living together as man and wife—the old question of the co-habitation rule in relation to benefits—and if it is good enough for the Department to say that it means that people are living together and therefore the husband is required to contribute, where a marriage clearly exists, whether or not legally sanctioned or blessed by the Church, the corollary is that the parties should benefit from the excellent scheme which the State has made available.

    9.45 p.m.

    I also rise to urge the Government to look sympathetically at this proposal. I do so partly because of the cohabitation rule, since people who are living together are deemed, for one purpose, to need to be treated as though they were legally married. I believe that that should apply in this case also.

    My hon. Friend the Member for Aberdeen, North (Mr. Hughes) mentioned taxation. I would point out that at an earlier stage in their relationship, when the wife was healthy and perhaps working, such a couple would be paying more tax than a legally married couple, since they would not be entitled to the married man's allowance. Therefore, there can be no argument that they will not have paid their fair share when they were both in good health.

    I do not believe that this proposal would cost much. If it does, it means that many men are sticking by women in these circumstances and caring for them in ways that couples who are legally married might find burdensome. I believe that the Government should look sympathetically at this proposal, and I urge them to do so.

    If the Government do adopt such a new clause, they might call it the "Lee Marvin clause".

    Let me say straight away that we shall look sympathetically at everything that has been said by the hon. Gentleman and by my hon. Friends in keeping this matter under active consideration.

    The invalid care allowance is a non-contributory benefit which is available to people of working age but who cannot work because they have to stay at home to care for a severely disabled relative. In this context, "relative" means wife, parent or grand-parent, child or grand-child, sibling or half-sibling, aunt, uncle, nephew or niece, certain step-relatives and certain in-laws. The benefit is not available to a wife caring for her husband, or companion if they are not married.

    When ICA was introduced in 1976, the Government said that they would seek to extend coverage to those caring for non-relatives once experience had been gained of dealing with claims from relatives.

    We estimate broadly that there could be between 200 and 300 men who would qualify under the new clause proposed by the hon. Gentleman. The gross cost of paying ICA to them would be about £150,000 a year. But, since most such men would be receiving supplementary benefit, the net cost would be lower, though I am not able to provide precise figures tonight. Extending the benefit to all those caring for non-relatives would, however, increase expenditure on the benefit by an estimated £1½ million a year at current benefit rates, though there would be some offsetting savings on supplementary benefits. Such extra expenditure could only be afforded if extra resources became available. Even then it would have to compete with the many other pressing claims for additional expenditure.

    The amendment seeks to extend invalid care allowance to a man who is caring for a woman to whom he is not married while they are living together as man and wife, and I know that the hon. Gentleman has a particular constituency case in mind. The new clause is technically defective in two respects—first, for obvious reasons, it makes the benefit payable out of the national insurance fund, which is quite inappropriate, and, secondly, it amends paragraph 7 of the regulations instead of paragraph 6. But, more important, it would be invidious to extend the benefit to some persons caring for non-relatives and not to others. Essentially, the question—

    I am becoming a little confused, because my right hon. Friend appears to be explaining why he cannot grant a benefit which at this stage has not been asked for. As I understand it, this is a very limited proposal which would apply to a very limited number of people. My right hon. Friend used the phrase "actively consider". I should like him to define what he means by that. Are we to have a commitment that this will perhaps be amended in another place?

    I can give no definite commitment tonight. What I have said is that we shall sympathetically consider all that has been said by the hon. Gentleman and by my hon. Friends. My hon. Friend the Member for Chorley (Mr. Rodgers) says that there is no claim on behalf of non-relatives generally, but there is a very strong claim on behalf of non-relatives generally.

    We are here discussing a proposal that would help perhaps only 200 or 300 people. Nevertheless, I assure the House that there is a strong and persistent claim on behalf of non-relatives generally. There is also a claim that we should pay invalid care allowance to married women. That argument is pressed very strongly on the Government. What I said earlier is that in my very neglected area there are infinite claims against only finite resources. From his close association with me, my hon. Friend knows that I shall do whatever I can to see that what has been said is considered as sympathetically as possible.

    I was saying that it would be invidious to extend the benefit to some persons caring for non-relatives and not to others.

    I am worried about my right hon. Friend's line of argument. Of course, if the Government saw fit to extend this to non-relatives as such, I am sure that hon. Members would be very pleased. But the specific point we are now discussing does not relate to non-relatives but to people who have a very particular relationship which it is possible to define. On this small point I believe that we must press for an undertaking to come back with something specific in another place.

    I have by no means completed my argument on this point. I am in no way seeking to minimise the force of the case that has been presented tonight What I cannot do now is give a definite commitment. My hon. Friend the Member for Aberdeen, North (Mr. Hughes) has experience of these matters from his time in Government. He will know that what I am saying is based on consultations with colleagues. I have undertaken to reflect on what has been said tonight, in further consideration of this matter. However I must emphasise that there are claims from other non-relatives who might feel that their difficulties are as great as the difficulties about which we have heard.

    Essentially, the question is whether the particular category covered by the amendment should be helped in advance of non-relatives generally. Certainly, there will be some who will doubt whether it would be right to put this category ahead of the group as a whole. In these difficult matters it is also important to draw a line which can be readily understood by claimants and staff. To single out a particular category for special treatment could create a greater sense of unfairness among people who are excluded.

    Since principal legislation is not required, I would wish to seek the advice of the National Insurance Advisory Committee on any draft regulations which would be necessary. I take note of the hon. Gentleman's concern in this area and I can assure him that as soon as the availability of resources and other priorities allow we shall seek to extend coverage to those caring for non-relatives, including this group.

    In the light of my reply, I hope that the hon. Gentleman will agree to ask leave to withdraw his new clause. My hon. Friend the Member for Aberdeen, North rightly suspected that I could not tonight deal with the point about Scottish legal practice which he raised with me. I shall seek to arrange for him to have an answer as soon as possible.

    I must confess that I am worried about the mixing up of non-relatives in the legal sense with non-relatives in the emotional sense. I do not think that anyone can consider that when two people have lived together for a long time, and perhaps produced children, they can be classed as non-relatives, although technically under the law they are. I hope that my right hon. Friend will give this issue a great deal of sympathetic consideration, because if the view that he is now taking is that because some other people who might qualify will not qualify, by that criterion we should never have introduced the invalid care allowance at all.

    I have said as much to my hon. Friend. What I have made clear is that I shall take this matter back to colleagues. I am sure he will appreciate, and that the House as a whole will accept, that it will cause me no displeasure to be able to increase further expenditure on the invalid care allowance and on further improving the well-being of all disabled people. But I must say that if we advance provision for one group of people, inevitably other groups will say that their claims must be urgently considered. I gladly give the assurance that my hon. Friend has asked for, namely, that I shall seek to get sympathetic consideration of all that has been said by my hon. Friend and by the hon. Gentleman.

    May I comment on one or two of the technical points made by the Minister? I accept that it is not particularly appropriate to do this by primary legislation, as I have sought to do, but it was the only way open to me to raise it. The reference to the national insurance fund, as the House knows, and as the Committee upstairs knew, is the only way that such a proposal could be got within order on this Bill because of the restrictive financial resolution. So far as paragraph 7 is concerned, I believe that the Minister will find that in the up-to-date Amendment Paper the proper paragraph, No. 6, is referred to. Therefore, I think that that small objection would fall.

    The main point I would wish to make—I think that I would carry with me hon. Members on both sides of the House—is that I could wish that the Minister had been a little more willing to throw away his departmental brief in view of the specific point which has been raised and the sympathy that has been engendered throughout the House. The purpose of the new clause is not to extend the provision to all non-relatives. I can only say, as indeed other hon. Members have said, that I believe a very clear-cut distinction can be drawn, and moreover one which would be accepted by most non-relatives—a distinction between other non-relatives caring for a disabled person and a common law husband, especially in cases where that relationship has subsisted for a very long time. I suppose that we should be grateful for the relatively small mercy of the Minister saying that he will look very seriously at this. I hope he will feel able to go just a little further in encouraging me to withdraw the new clause by saying either, or both, of two things.

    First, I hope that he will seek the advice of the National Insurance Advisory Committee and, secondly, that he will make a further statement about this very small point when the Bill moves to another place, which I understand is likely to be in about two or three weeks' time. I cannot believe that the scale of the issue, or the expenditure, is such that it should not be possible to carry out some further consultation and come to a view while this Bill is still before Parliament and while we can still have a further opportunity to consider the matter. If I can have one or other of those undertakings, and preferably both, I would be glad to seek the leave of the House to withdraw the motion.

    I made it clear that we would want to seek the advice of the National Insurance Advisory Committee. We are often enjoined to do this automatically before we make changes. I gave a fair indication of our intentions in this regard. I said earlier that I could not give a definite commitment to accept the clause. I have said—

    It being Ten o'clock, the debate stood adjourned.


    That the Social Security Bill may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Joseph Dean.]

    Question again proposed, That the clause be read a Second time.

    I have not kept slavishly to any brief. I have said that I shall seek to ensure that all that has been said tonight is sympathetically considered.

    On the understanding that what the Minister has just said is that he will refer the matter to the National Insurance Advisory Committee, I beg to ask leave to withdraw the motion.

    Motion and clause, by leave, withdrawn, drawn.

    Clause 2

    Attendance Allowance

    I beg to move amendment No. 1, in page 1, line 18, at end insert:

    'in respect of both a re-award of the attendance allowance and an award of a higher rate allowance to a person already in receipt of an attendance allowance at the lower rate'.
    Though I shall not take up too much of the time of the House, the amendment is important in that it allows us to take a further look at a problem that causes grave concern to the Disablement Income Group and other disablement organisations. We are here dealing with the qualification conditions for the attendance allowance, especially as they apply to the disabled person who is already in receipt of a lower rate attendance allowance but whose condition deteriorates to such an extent that he or she therefore becomes eligible for the higher rate allowance.

    In Committee the Minister gave an unequivocal answer to the question whether the seriously disabled person of whom we are talking would have to wait a further six months before becoming eligible for the higher rate of allowance, whatever the circumstances. His arguments then, I believe, were the ones expressed by his right hon. Friend the Minister with special responsibility for the disabled in letters and correspondence with Peter Large and the Disablement Income Group. Those arguments amount to the requirement by Government of a six months' qualifying period in order to be sure that the deterioration in the condition of the disabled person or patient is reasonably long-term or permanent.

    I accept that there are temporary illnesses, such as influenza, which could make a disabled person appear to have deteriorated suddenly for a very short period, but in Committee the hon. Member for Chorley (Mr. Rodgers) said that the waiting period was undoubtedly formidable and very frustrating. It is in that context that I move the amendment. We are seeking to achieve a more humane approach to the problem of the waiting period. Instances have been reported of unfortunate people who have died before the second six months' qualifying period for the higher rate allowance has been completed. We can understand how that can happen.

    A particular case quoted by the Disablement Income Group, which came to the group through a social worker, was that of a lady in receipt of the lower rate allowance who had had two strokes and was partially disabled and in need of attendance. She suffered two further strokes, having already become entitled to the lower rate allowance, but had to wait a whole six months more before she could receive the higher rate of allowance.

    The husband, who had a job and would have continued working under normal circumstances, had to give up his work to look after his wife because of that six months' delay. It seems somewhat harsh to hold up that financial help for the six months after deterioration has taken place when the increase in disability has clearly taken place.

    There are also those disablement diseases such as multiple sclerosis and arthritis, where the condition is often expected to deteriorate. The problem can arise quite often. It seems to me that if the first six months' qualifying period has been completed, and if such worsening of condition takes place, at least the payment of the higher rate allowance should be backdated to start from the day when the deterioration is assessed as having taken place, and not some six months later.

    I do not believe that a temporary illness, such as influenza, which has been quoted as being one of the problems that may arise in determining deterioration, cannot be distinguished by the medical experts from the real deterioration in disability with which I am dealing.

    I hope, therefore, in moving this amendment, that this will give the Government a chance to accept the genuine purpose behind it and to look sympathetically at it.

    The effect of the amendment that the hon. Member proposes would be that anyone already receiving the lower rate of attendance allowance whose attendance needs increased, for whatever reason, would immediately qualify for the higher rate of the allowance, notwithstanding that the conditions to be satisfied for that rate are different.

    I can see that on the face of it this might seem a desirable amendment—indeed, there was some support for it in Committee—but I think it would produce effects quite contrary to those which the hon. Member and his hon. Friend have in mind. For example, as he acknowledged, someone may receive the lower rate because, as a result of his chronic disablement, he needs attendance by day. Should he, however, have an attack of influenza or some other acute but short illness and as a result have quite different attendance needs at night for a short while, he could, by reason of this amendment, qualify for the higher rate of the allowance for that period. In that event he would be receiving the higher rate for attendance needs that were neither established nor long-term.

    The position of someone receiving the lower rate of the allowance is no different from that of someone claiming the allowance for the first time, where there is a need to establish that the particular attendance needs that are spelt out in the Act, for whatever rate of allowance is to be paid, are settled and long-term. I think that these are the two key factors.

    The purpose of the allowance has always been to provide a measure of financial assistance to those severely chronically disabled people with settled long-term attendance needs, who, arising out of those needs, have established commitments above the normal. It would be impracticable and, we feel, wrong to alter the purpose of the allowance to meet short-term attendance needs—I think that the hon. Gentleman accepts this—or to vary it to meet what in many instances would be short-term fluctuations in those needs. If account were to be taken of temporary changes it would have to cut both ways and the allowance would have to be stopped if there were improvement, or reduced if somebody were on the higher rate. I am sure that hon. Members would not want a position to arise in which disabled people were put into a state of uncertainty about their continuing right to the allowance.

    Moreover—this, too, came up in Committee—the amendment would impose an impracticable and heavy burden on the doctors charged with deciding whether the attendance needs are satisfied. Those needs can well vary from person to person even where they are suffering from similar conditions, and their necessity and extent can be satisfactorily established only over a reasonable period of time.

    As I said, we think it would be wrong to change the entire character of the allowance in the way this amendment would achieve. The six months' qualifying period makes it possible to decide with reasonable certainty that attendance needs are established and settled, and I think that is the main purpose of section 35 of the principal Act.

    Although I am sympathetic to the points that the hon. Gentleman is making, I hope that in view of what I have said he will ask leave to withdraw the amendment.

    I accept the point—I think I made it clear in my own speech—about the short-term nature of the provision. I agree that we do not want to change the rules to deal with short-term deterioration. The point that I was making, which I do not think has been dealt with, is where one has the expected deterioration in such diseases as sclerosis, or with strokes and heart conditions, where in fact the six months' delay still has to take place. Is it not possible for the Minister to look again at this whole question of whether, when the deterioration is judged to be of a permanent nature, the higher rate allowance can be made payable from the date when the deterioration is assessed to have taken place?

    I shall consider that matter and write to the hon. Gentleman as soon as I can.

    In view of the Minister's sympathetic response, I beg to ask leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    I beg to move amendment No. 2, in page 2, line 19, at end insert—

    "(7) For the purposes of determining the entitlement to attendance allowance of any person who
  • (a) has been refused payment of an allowance, or
  • (b) has had an allowance withdrawn,
  • Section 35 of the principal Act shall be deemed always to have had effect as amended by this section, but payment shall be made at the appropriate rate out of the National Insurance Fund.".
    The amendment refers to a part of the attendance allowance that was dealt with at some length in Committee. At the end of that debate a number of us still felt unhappy about the manner in which the Government had chosen to make back payments of attendance allowance for kidney dialysis patients who dialyse at home.

    Many patients had the full facilities of the National Health Service and were dialysing in our hospitals. They were in receipt of the attendance allowance. As a result of changes in the rule by the Attendance Allowance Board, those persons who had been dialysing three times a week at home, and who, through modern methodology, were permitted to dialyse for longer periods but on fewer occasions per week, had the attendance allowance withdrawn. That was done in a way which I think every hon. Member regretted. A decision was made and it took effect during a parliamentary recess. That happened last summer, during the previous Session.

    My hon. Friend the Member for Ealing, Acton (Sir G. Young) introduced a Private Member's Bill in which he sought to rectify the anomaly whereby those who were in receipt of the facilities of the NHS and dialysed in hospital to cope with their renal failure were in receipt of the allowance and those who through modern methodology were dialysing at home and having to pay somebody to prepare their renal dialysis machines and complete the operation after their periods of dialysis were denied the attendance allowance.

    It will always remain a regret to me that we did not solve the problem in the summer. However, as a result of the work of the British Kidney Patients Association and many other interested bodies which felt that an unfair state of affairs existed, we reached a position in which the Government felt that they could no longer resist what seemed such a sensible and right solution to a problem that had, through a quirk in our law, become a matter of concern and dispute.

    When the Government moved the Second Reading of the Bill on 21 November 1978, they did so with the intention of rectifying the law and ensuring that in future those who dialysed at home would receive the attendance allowance and that those who dialysed in a hospital with the attendance of Health Service staff would not qualify for the allowance because they would not be paying for someone to prepare their renal dialysis machines and complete the operation after the period of dialysis.

    We thoroughly applaud what the Government have done in the Bill. We wish that they had taken similar action when my hon. Friend the Member for Ealing, Acton introduced his Bill last year. Never mind; the Government saw sense in the end. At various stages we have concerned ourselves with the manner in which the Government have sought to make retrospective payments to about 100 persons who we know lost their attendance allowance because they were becoming home dialysis patients. We concerned ourselves with how we could rectify what had become an unfair state of affairs.

    10.15 p.m.

    In Committee, in response to a question from my hon. Friend the Member for Ealing, Acton, the Minister said:
    "I know that the Opposition, not least the right hon. Member for Wanstead and Woodford (Mr. Jenkin), are highly intrigued to know how the Government have the power to do this. 'Extraordinary payments' as is made clear by their title, have no statutory basis."
    This relates to the back payment of those who had been denied benefit. The Minister continued:
    "In essence, they are payments which the responsible Minister regards as being within the broad intention of the relevant statute, but outside a strict interpretation of its terms. Such payments are in general not disputed, but as they are not strictly proper in a legal sense they need to be noted in the appropriation account when that is laid before Parliament for approval."
    Something which is "not strictly proper in a legal sense" worries me. The Minister went on:
    "Responsibility for such payments rests with the departmental Minister, but, given the Treasury position under the Exchequer and Audit Departments Acts of 1866 and 1921, they may not be charged to a Vote without Treasury approval. The Treasury's position was set out in a Treasury minute of April 1868, which has been reproduced on pages 20 and 21 of the report for 1868 printed in the 'Epitome of reports of the Public Accounts Committees 1857–1937'".—[Official Report, Standing Committee D, 5 December 1978; c. 25.]
    That is a really interesting little snippet from the Official Report of the Committee, but what has concerned us for a very long while is not only that payment should be made as speedily as possible—I fully accept that that has been the Government's wish as well—but that we should not be using some rather antiquated Act to rectify a mistake of Government but, rather, that we should make clear once and for all that if a change in the rules was made by somebody—such as, in this case, the Attendance Allowance Board—we had a better way of dealing with it.

    Unfortunately, within the terms of the money resolution attached to the Bill it is simply not possible to do the job as we would wish. Therefore, in raising this issue with another of our "myth" amendments tonight—our national insurance fund amendments—we are seeking to make sure of what has happened and also to ensure for the future that we devise a better way of rectifying mistakes on the part of Government where they are quite genuinely agreed between all Members of the House.

    The further question I would put to the Minister in proposing this amendment tonight is this. I know it is early days since 5 December, but what progress has the Department made in trying to find those cases, of which the Minister spoke at column 30 of the report of the Standing Committee, of persons who should have received the attendance allowance, and particularly those cases where the person to whom the attendance allowance is being awarded is now regrettably deceased, and where the relatives of that person have a claim in law? If this is to be considered, as the Minister seemed to indicate, how far have we got in sorting out this very unfortunate situation which we allowed to occur within our legislation?

    We know that it is early days but we believe that we should seek to rectify this as speedily as possible, and this amendment will give the Minister who is to reply an opportunity to explain just how far he has proceeded with his extra-statutory payments and just how far the Department has been able to track down the relatives of deceased persons who should be claiming back attendance allowance for those who have since died but should have received it whilst they were home dialysing, once the entitlement had been removed. I do not believe that we need prolong this debate, but for the sake of the record I feel we should rectify something that has been regretted by everybody but which really lies in the hands of the Government for rectification.

    This matter has already had considerable discussion both on Second Reading and in Committee. It is common ground to both sides of the House that benefit should be restored to persons dialysing at home and that arrears of benefit should be paid as soon as possible for the interval between cessation and resumption. The Bill as we introduced it allowed for the restoration of benefit. Also, as I announced on Second Reading, the Government decided to identify the persons involved forthwith and to make payments in arrears immediately. I said that the payments would be made extra-statutorily, and in Committee my right hon. Friend explained at considerable length what that meant.

    The hon. Member for Wallasey (Mrs. Chalker) asked me for figures. The Government have honoured their pledge, and 40 payments of arrears have already been made. The remainder will be paid as quickly as possible.

    There is no need for this amendment to enable such payments to be made. Indeed, I am advised that the amendment, if approved, would cause considerable confusion and could harm some of the people we are all concerned to help. First, in the case of those who have already been paid their arrears, the amendment would give entitlement to a second payment of arrears. It would not simply validate the existing payment but would enable the independent statutory authorities to make a new award. Hon. Gentlemen opposite presumably do not wish to make duplicate payments from public funds.

    Secondly, the amendment would put in question the payments made since 1972 to persons dialysing as hospital outpatients, because it applies to section 2(6) as fell as the other parts of clause 2. Finally, the national insurance fund is not the appropriate source for attendance allowance payments as the hon. Lady acknowledged.

    We should pay a tribute to Mr. Peter Large, who in drafting amendments to Bills first adopted the stratagem of making recourse to the national insurance fund. His idea has been widely followed by hon. Members on both sides of the House.

    The hon. Lady referred to the British Kidney Patients Association. She may wish to know that Elizabeth Ward, of the association, wrote to me appreciatively about our solution to this difficult problem. She clearly appreciated that we wanted to help and sought the most expeditious way to do so.

    Many of those involved are already receiving their payments. The amendment is not necessary on that count. Moreover, it would create confusion and might act against the interest of claimants. Therefore, I hope that the hon. Lady will ask leave withdraw the amendment.

    The Minister knows why the amendment was so worded. We have, as a result of this device, received from him the good news that 40 people have so far had their back payments. However, it still behoves us to realise that we are using an ancient statute to do something which, because of administrative difficulties, we may find ourselves required to do on other occasions.

    We always hope that these things will not happen, but those of us who have been concerned with social security measures for a number of years in this House know that we are always amending and reamending provisions and bringing them up to date.

    We also know that in the nature of a developing system of assistance for the disabled and those in need we shall come across cases which in the original drafting have not been fully explained or understood. Therefore, although I accept that the amendment is defective, I believe that it has at least enabled the Minister to tell the House what is going on. It has put down a marker to the effect that in future we must look to a better way of making the extra-statutory payment for the payment which should have been owing but for the device which took place when Parliament was not in session, which meant that we could not rectify the matter by other means. I am wrong to say that we could not have rectified the situation. However, the Government did not see fit to give the Bill introduced by my hon. Friend the Member for Ealing, Acton (Sir G. Young) a fair wind. Had they done so, our amendment would not have been necessary.

    I beg to ask leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 3

    Mobility Allowance

    I beg to move amendment No. 3, in page 2, line 21, at end add—

    "(1A) In subsection (4) (increase in rate of mobility allowance) for the words 'and such other matters as he thinks relevant' there are substituted the words 'any changes in taxation which directly affect the cost of motoring for persons in receipt of mobility allowance and such other matters as he thinks relevant; and he shall lay before Parliament a statement setting out his conclusion and the reasons therefor as soon as is reasonably practicable.'."

    The amendments seek to tidy up two of the amendments that were accepted in Standing Committee.

    Amendment No. 3 accepts that the Secretary of State, in considering whether the rate of mobility allowance should be increased, should take into account any changes in taxation which directly affect the cost of motoring for persons in receipt of the allowance. That is the substance of subsection (5), and, as the legislation already makes clear, he can take into account any other matters that he thinks relevant.

    In accepting that any changes in taxing motoring costs should be considered, however, I must emphasise that this cannot mean that the Government will commit themselves to freezing taxation of the disabled motorist at its present level. The Government are committed to the revalorisation of petrol duty. Energy conservation needs may dictate still further increases in petrol duty in the years ahead.

    Mobility allowance is a major contribution—but a contribution only—to the cost of mobility to disabled motorists. Nevertheless, we accept that in considering whether mobility allowance should be increased we should take into account any changes in taxation in this field.

    I have been asked on a number of occasions, both inside and outside the House, about the consequences for the disabled motorist of the Government's decision to abolish vehicle excise duty and to replace it by increased petrol taxation. We are studying carefully the situation. At the appropriate time I shall make a statement to the House. I emphasise that there are a number of major and relevant issues, such as the timing of the phasing out of the duty, upon which the Government are committed to consult with industry. These consultations have not yet taken place but it is hoped to begin them shortly.

    As my hon. Friend the Under-Secretary of State made clear in Committee on 7 December, there have been inter-departmental discussions already on the position of disabled motorists. I have received a number of representations from organisations representing disabled people, including an appraisal by Mr. Peter Large, the chairman of the JCMD, which I found helpful.

    I am watching the developments carefully and I shall keep the interests of disabled people well to the fore.

    If any further assurance is required, however, I suggest that it can be found in the amendment. The Secretary of State will be required to consider in each review of mobility allowance any changes in taxation which directly affect the cost of motoring. The move to remove excise duty, from which disabled motorists are exempt, by increased petrol taxation is clearly one such change.

    As I have said, there is a lot to be done on this issue, including resolving the starting date. Things cannot be rushed, but I shall make a statement as soon as I am able.

    I turn to subsection (7). We have accepted that the Secretary of State should lay before Parliament a statement setting out his conclusions on the matter, but, whereas the original amendment required the statement to be laid
    "not later than 31 May",
    our amendment provides for it to be laid
    "as soon as is reasonably practicable".
    It will be sensible for the announcement relating to any increase of mobility allowance to be made at the same time as any announcement relating to an increase in other social security benefits.

    Inthe past, these announcements have been made on various dates, sometimes more than once a year, and within the operational limitations it would be possible for such an announcement to be made as late as early June. Hence, we feel it is right to leave the Secretary of State with greater flexibility. Since no specific date is set for the announcement of upratings of other social security benefits, it would seem invidious to single out the mobility allowance in this way. We will, however, undertake to provide the statement as soon as possible after the end of each tax year.

    10.30 p.m.

    The House has sufficient procedures to prompt the statement if one has not appeared in what seems to right hon. and hon. Members to be a reasonable time. The amendment which was passed in Committee as clause 3(6) and which we are seeking to leave out is that which required the Secretary of State to have regard to any changes in the charges levied under the Motability scheme for leasing vehicles to persons in receipt of the mobility allowance.

    There are a number of reasons for this course. Motability is an independent voluntary organisation. Its leasing scheme at present affects only a small proportion of the 145,000 people who will eventually receive mobility allowance, and even when the leasing scheme is fully operative it will still cater for only a proportion of the total number of recipients of the allowance. That is not the principal reason for our amendment. A more important reason is that if Motability charges are to be taken into account the Secretary of State should, strictly speaking, have access to its accounts and financial arrangements. As it is an independent organisation, this inevitably raises problems of law and business practice generally. For these reasons, we would regard this subsection as undesirable. For the detailed reasons I have given, I hope that the House will agree to accept the Government's amendments.

    I would like to ask a question to which I hope the Minister can reply, or write to me about. As Motability receives Government support, in the sense of administrative back-up, provided at the expense of the Exchequer, does that not automatically give the Public Accounts Committee the right to examine the accounts of Motability? It certainly does so in cases where the Government are contributing to the funds of a private body. For instance, a body like the Family Fund is as much subject to the Public Accounts Committee and the Exchequer and Audit Department as a Government Department itself.

    As the right hon. Gentleman knows, my Department helps Motability by seconding staff. We have given what we regard as very important help to this organisation. I cannot give a precise answer tonight, as the right hon. Gentleman suspected, on the point he has raised. He asked if I would write to him with an answer. I am glad to give that assurance. He and I, as patrons of the organisation, feel that it has done a great deal of good already. I am certain that the whole House wants Motability to achieve further success in the months and years ahead.

    I would like to follow up the point made by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) in connection with the Motability scheme. I am disappointed that the amendment that was passed in Committee, which inserted this subsection (6) in the Bill, has had to be struck out by the Government. Echoing the words of the Minister, we are all staunch supporters of the Motability scheme. There is grave concern that the scheme is threatened by the lack of finance provided by the mobility allowance to enable it to operate properly. We were endeavouring to build in protection for the Motability scheme by this subsection.

    I agree that, technically, as it is an independent, charitable organisation, it cannot be protected in the way we hoped in our amendment in Committee. All hon. Members of the House, Government and Opposition Front Benches, want to see Motability succeed, and I know that this is also the Minister's wish. It is going through some very difficult times. Something has to be done to ensure that it is made to succeed.

    In Committee, we discussed the problems that the Motability scheme is facing. We discussed the objective of creating a mobility allowance commutation scheme that would allow Motability therefore to provide necessary vehicles for disabled people in exchange for a four-year commutation of their allowance. This objective is seriously threatened, as we agreed in Committee, by rising prices and by, of course, the rather iniquitous double VAT charge both on the car and on the leasing of the vehicle.

    The figures given to us in December by Mr. Jeffrey Sterling, the chairman of Motability, showed that even the cheapest, unadapted mini-car will not now be covered by the £10 a week mobility allowance, An automatic mini, which I suppose is probably the suitable vehicle for disabled people, will now cost about £12·50 a week, if we include the insurance. If we add on the cost of adaptations that are needed for many of the recipients of these vehicles, we can see that these cars are being lifted by increased costs out of the reach of many of the low-income and non-employed disabled people who have to look to Motability in order to provide the replacement vehicles of the Government's vehicle scheme, the trikes.

    So the amendment that we passed in Committee underlined the tax claw-back problem that is being faced, where one has the £520 a year mobility allowance, where over £150 a year is being clawed back in car tax and double VAT on the purchase and the leasing of the car, and where, of course, if the disabled person is working and paying the standard rate of income tax a further £170 a year can be clawed back as well.

    The Government amendment refers to "any changes in taxation"—and I can understand how that will deal with particular examples, such as changes in vehicle excise duty, or motor vehicle taxation, and so on—and then it says
    "and such other matters as he thinks relevant".
    I would have liked the right hon. Gentleman to explain a little more fully what was in his mind in that phrase, because he did not really refer to the difficulties of Motability; he expressed the view, which we all share, that he wants the scheme to succeed. He did not go into the details behind the Committee's decision to put this subsection in the Bill. I hope that we shall hear a little more about how the Government are to protect Motability from this gap which is going to open up between the level of the mobility allowance at £10 a week and the minimum cost now of providing and leasing a basic adapted mini-car.

    I hope that we can be assured that, in the wording of the Government amendment, Motability and its requirements will be covered, because otherwise the whole future of the vehicle provision for disabled drivers will be in jeopardy.

    Having set my hand to drafting for the Committee stage the amendments that are now being replaced, and having had the satisfaction of seeing them inserted in the Bill in Committee, I can hardly be expected to be totally enthusiastic at seeing them messed about with by some replacement Government amendments.

    The right hon. Gentleman says that the Government amendments are improvements. I was about to say that I am rather flattered by one aspect of them, in that the wording chosen in relation to taxation is identical with my amateur draftsmanship in Committee. I take that to be very flattering indeed, because, in my relatively limited experience in this place, much of it serving on Finance Bill Committees, the parliamentary draftsmen and Ministers between them will almost invariably find some good reason for changing any Back Bencher's wording, since that makes them feel that they are one up in the game. I hope that I can be forgiven for feeling slightly one up in the game, since my wording has been accepted in that part of the Government amendment.

    As the Minister has said, there were three elements in the amendments that we passed in Committee, one relating to tax, obviously with vehicle excise duty most in mind, one to the Motability leasing charges, and one to the question of publishing the conclusions and assessment of the annual review by the end of May. The Government amendments retain the first element and the substance of the third but leave out the second. I shall return to that omission.

    We are satisfied with the outcome on the points about tax and publishing the results of the review. We on the Conservative Benches feel that what has happened to disabled people as a result of the Government's proposals on vehicle excise duty and petrol tax is important. I reiterate for the sake of the House the simple figures that I used in Committee. On the assumption that the disabled person is driving 6,000 miles a year in a car that performs at the rate of 30 miles to the gallon, and that the increase in petrol tax is 20p per gallon, the Government's proposed change would cost a disabled per about £40 per year more. In the context of the income of a disabled person and the Motability allowance, that is a significant sum and one about which he is understandably cancerned.

    It was unfortunate that the change was proposed in the same month as disabled people began to get the benefit of the vehicle excise duty exemption. They undoubtedly felt that something that they had just been given was being immediately snatched away.

    It is unsatisfactory that there is little definite commitment that disabled people in receipt of mobility allowance will be compensated. The Minister tried to sound as sympathetic as possible, but the White Paper had no commitment to compensation. It said that compensation would be considered.

    On Second Reading we were told that it would be considered. When I questioned a Treasury Minister at Question Time last week, I was told that it was still to be considered. In effect, the Minister told us tonight that it is still to be considered. We are entitled to ask for a definite assurance not about the method by which it will be done but about the fact that disabled people will be compensated if the policy goes ahead and they lose sums of the order that I have mentioned.

    When the Under-Secretary was talking in Committee on 7 December, he gave the clear impression that discussions with organisations for the disabled were taking place and that they would have moved along successfully by the time we reached the Report stage. That is at variance with what has been said today and with the remarks of the Minister of State, Treasury last week. It was stated tonight that no discussions had taken place. The Minister said that he had received some representations but that consultations had not yet begun. There is some confusion here. If consultations have not yet begun, why not? It is some time since the White Paper was published. The concern is well known. If in a couple of months' time a measure is to be moved in the Budget, it is high time that the consultations proceeded so that a result could be indicated.

    I am pleased that the Minister has accepted the substance of my amendment about publishing annually the assessment and conclusions reached on the review of mobility allowance. I take his point on removing the specific date which was in our amendment in Committee. Both I and my right hon. and hon. Friends are satisfied that we have achieved what we sought on the question of publication.

    I turn finally to the missing ingredient of Motability. I endorse what my hon. Friend the Member for Exeter (Mr. Hannam) said. It would be difficult for my hon. Friends and me to resist the point that Motability is a non-statutory body and that there is some difficulty about writing it into the Bill in the form that I suggested.

    I do not insist too hard upon that, but I emphasise the importance of Motability leasing charges to the situation that concerns us all. We all know the background. After the introduction of the mobility allowance, which the Minister has rightly claimed to be a great advance in some respects, it appeared that it was not an advance at all for some people because they had vehicles and were in practice, whatever had been intended, to lose them because the vehicles were being withdrawn and they would not be able to afford a substitute vehicle out of the mobility allowance.

    10.45 p.m.

    The Motability scheme was devised as a means of overcoming that important problem. However much the House welcomed the mobility allowance concept, hon. Members would not have agreed to it if they had thought that a significant number of people who already had vehicles would lose their mobility as a result of the introduction of the allowance. That is still happening and will continue unless Motability works as well as everyone hoped and intended. My hon. Friend the Member for Exeter has given the figures and reasons for supposing that there are still serious problems about its providing an adequate alternative to the old invalid trike for some people.

    It is a highly relevant factor to be taken into account, and even if it is not to be written into the Bill in the form that I proposed and the Committee accepted, we should like an assurance from the Minister that, in the general phrasing of the commitment being written into the Bill and the continued use of the phrase "other relevant factors". In his annual review of the mobility allowance the Minister will take into account the charges levied by Motability. That is all we ask. We accept the problem of writing that into low, but we emphasise the practical importance of the scheme and the need for Ministers to take it into account when considering the level of the mobility allowance in future.

    I well understand the position of the hon. Member for Exeter (Mr. Hannam). He is a widely respected officer of the all-party disablement group in the House and he spoke with great sincerity. I know that his motive is further to improve the wellbeing of disabled people. I have said that we cannot legislate to cover Motability's leasing charges in the way that he wishes.

    The hon. Member for Braintree (Mr. Newton) asked for an assurance that we shall take into account changes in Motability's leasing charges. Clearly, Ministers will want to take all factors into account, but, given that Motability is a voluntary, independent organisation, we do not feel that we should legislate as has been suggested.

    The hon. Member for Braintree can derive a great deal of satisfaction from what he has achieved by his drafting. I hope that he will be drafting amendments to Government Bills for many years to come. He has shown great skill in doing so and I am sure that Government after Government will appreciate the help that he can give in using his skills in seeking to amend Government legislation.

    As the hon. Gentleman said, the projected phasing out of the vehicle excise duty is an important matter for disabled people. They feel that the sweet of exemption may be snatched from their lips almost before they have got to know its taste.

    It has been nut to me by one disabled person after another that I must watch their interests in this matter very carefully. I have said tonight that I shall want to make absolutely certain that the interests of disabled people are well to the fore. The right hon. Member for Wan-stead and Woodford (Mr. Jenkin) appreciates that this is a matter for interdepartmental discussions. It is not just the Department of Health and Social Security. Other Departments are also involved. I have said that I will make a further statement as soon as possible.

    My hon. Friend referred in Committee to discussions that I was having with organisations of and for disabled people. He had no intention of misleading the Committee. I am in constant dialogue with representatives of organisations representing disabled people, as the hon. Member for Exeter and others will appreciate. I mentioned tonight the viewpoint of Peter Large. At the same time, I made it clear that the submission he has made to me is one which I found very helpful.

    I have no wish at all to pursue the Under-Secretary of State, because I am certain, knowing him, that he had no intention of misleading the Committee, but may we be quite clear about this? As I understand what the Minister is saying, there have so far been no discussions with representatives of disabled people about this policy. The Minister is simply saying that he regularly talks to them but there have not yet been consultations with disabled people about the White Paper on vehicle excise duty. Is that the position?

    What I am saying is that there have been no formal discussions specifically to deal with the phasing out of vehicle excise duty. My hon. Friend was well aware that I am day by day, not to say hour by hour, in discussion with representatives of disabled people. He knows that I have had a great many representations on this matter. I am grateful to the hon. Gentleman for appreciating position. Everything said tonight by the hon. Member for Exeter and by the hon. Gentleman will be taken fully into account.

    The Minister has plainly tried to overwhelm me by flattery of my drafting, and he has gone some way to satisfy our anxieties, at least for the moment. We shall look forward to the further statement that he has promised and give it the keenest possible scrutiny when it arrives. With that assurance, that there will be a further statement reasonably soon, I beg to ask leave to withdraw—[Interruption.] I am sorry, Mr. Deputy Speaker.

    Order. The hon. Member for Braintree (Mr. Newton) has been carried away by the flattery accorded him.

    Amendment agreed to.

    Amendment made: No. 4, in page 3, leave out lines 20 to 31.—[ Mr. Deakins.]

    Schedule 1

    Amendment Of Principal Act, Pensions Act And Act Of 1977

    I beg to move amendment No. 11, in page 13, line 1, leave out 'the said Schedule 1' and insert

    'Schedule 1 to the Pensions Act (deferred retirement)'.

    This is merely a drafting correction.

    Amendment agreed to.

    Schedule 2

    Schedule Inserted In Act Of 1976 In Substitution For Schedule 4

    I beg to move amendment No. 12, in page 17, line 20, at end insert—

    '(2) Before assigning a clerk under this paragraph the Secretary of State shall, if one or more Senior Chairmen have been appointed under paragraph 11 below, consult him or such one of them as he considers appropriate.
    (3) The Secretary of State shall consider any representations made to him by a Senior Chairman as to the desirability of terminating the assignment of a clerk and shall take such action, if any, as he considers appropriate.'.
    I should like to draw the attention of the House to the debate that we had in Committee on the operation of clerks in supplementary benefit appeals tribunals and the difficulties which arise on occasion. This issue was brought up by Conservative Members but very persuasive arguments were used on this matter by my hon. Friend the Member for Lambeth, Central (Mr. Tilley), ably aided, if I may say so, by my hon. Friend the Member for Chorley (Mr. Rodgers). It was felt that the fact that the clerks were appointed by the Secretary of State could, at times, lead to advice which was not satisfactory. I think that my hon. Friend the Member for Chorley instanced a particular tribunal, or at least complaints that he had received from his constituency, and not least from his local trades council. The arguments were supported by the right hon. Member for Wanstead and Woodford (Mr. Jenkin) and his hon. Friends.

    I undertook to consult my noble Friend the Lord Chancellor and to produce a memorandum for members of the Committee and for the House before Report. When I discussed this matter with the Lord Chancellor, he looked a little askance at the debate that the Committee had had and the problems which he and his Department would face if, for instance, the appointment of all the clerks were taken out of the control of the DHSS and put solely in his hands. However, he saw the strength of the argument for seeing that justice is not only done but is seen to be done.

    The proposal in the amendment is that the senior chairmen will interview the clerks and advise the Secretary of State before the clerks are assigned. The senior chairmen are appointed by the Lord Chancellor. The amendment further provides that if any representations are made about the unsatisfactory conduct of a clerk, the senior chairmen can make representations to the Secretary of State. I think that it is fairly obvious that if a senior chairman who is a legally qualified chairman were to make such representations, action would have to be taken.

    I emphasise that in no way is this a cosmetic exercise. Because of the memoranda that I have submitted, and the discussions that I have had with the Lord Chancellor, I hope the House will realise that a genuine attempt has been made to meet what we appreciate is a genuine point. Therefore, I hope that the House will regard our present proposal as an exercise in an extension of democratic control. I hope, too, that it will be understood by people outside the House that what we are trying to do is to show that clerks who make representation or give points of guidance to the chairman and members of a tribunal in the vast majority of cases do so based on their knowledge and training within the Department, and that very seldom is advice given which is in any way misguided.

    But, of course, that could occur. Therefore, to see that justice is done, if a complaint is made against the clerk, it will now go to an independent person, as it were, who himself is appointed by the Lord Chancellor, and that person can assess the case.

    With that understanding, I hope that the House will accept the amendment.

    The House will be grateful to the Minister for going partially along the road that was sought in Committee. When the Committee discussed this matter very seriously, both sides of the Committee, as I recall it, were anxious that the Lord Chancellor should be given the power to appoint the clerks in this case.

    I think that the reasoning behind this was really twofold. The first reason as the Minister said, was the importance of justice not only being done but being seen to be done. I think that there was genuine anxiety that the Minister appeared to be judge, jury, prosecutor and appointer of officers of the court, which could be seen to be undesirable. Secondly, there was a feeling that the clerks are in positions of rather greater power and influence than is sometimes appreciated. It was felt important that the people appointed should not just be familiar with the minutae of social security but should have a sense of justice and realise the importance of their position, and that advice on that could better come from the Lord Chancellor and his Department than from the Secretary of State.

    11 p.m.

    These clerks are not without power. I take note of some of the things that they, can do. For example, they can advise on procedural matters, take notes at the hearing, give all sorts of advice to the tribunal and make drafting suggestions. Indeed, we have seen the power of clerks in the magistrates' courts and elsewhere. Those of us who have had experience of this know that a strong clerk can influence a weak tribunal and, indeed, that a cantankerous and bigoted clerk, confronted with a cantankerous and bigoted tribunal, can put the whole system into considerable disarray. Therefore, it is important to get this right.

    I am grateful for small mercies and for the fact that the Secretary of State, in consultation with the Lord Chancellor, who I can well understand is a busy man and does not really want his Department saddled with this, has cooked up some sort of compromise. But I am bound to say that the drafting looks rather "furry". For instance, the Secretary of State must consult one or more of the senior chairmen. I hope that this will be taken seriously and that consultation means proper discussion, rather than saying "I propose to appoint Mr. X. I have hereby told you. I have consulted with you. Good afternoon".

    Likewise, sub-paragraph (3) says:
    "The Secretary of State shall consider any representations made to him by a Senior Chairman".
    That can mean everything or nothing. He can say "Yes, I have considered it", rather like the marvellous novels of Henry Cecil, in which a charming judge used to hear well-prepared applications by counsel and his reply was invariably "Yes, Mr. X. I have considered your application. It is refused". We do not want the Secretary of State to take that sort of attitude.

    At the end of that sub-paragraph there is a classic piece of parliamentary draftsmanship. It states that the Secretary of State
    "shall take such action, if any, as he considers appropriate".
    In other words, he can do anything or nothing, or neither or both, I suppose.

    We take this wording in the spirit in which it is given. I very much hope that the Secretary of State will appreciate the serious points that have been made about the quasi-judicial nature of the clerk and of the importance of getting the right sort of person—someone who will have a sense of natural justice and who is conscious of his responsibilities. If that is the spirit behind the amendment, half a cake is better than no cake at all.

    I have listened patiently to what has been said in the debate. I am not a lawyer, and therefore I can speak as an honest man. I do not have the same favour towards the lawyers as my right hon. Friend the Minister seems to have.

    I listened to the hon. Member for Harrow, Central (Mr. Grant), who is a lawyer. I am sure that he has put the case for the lawyers very well. He spoke about his anxiety over consulting the chairman. I should like to tell him a little story about chairmen. It began in September and concerns the chairman of one of the tribunals of the type described in the Bill. The case is still going on, and we are now approaching February. The chairman cannot be found. I understand that he is abroad on holiday somewhere. People cannot get hold of him to have the consultation. I want to get rid of him, never mind about the clerk.

    I say to my right hon. Friend that I see nothing in the proposals that will protect people going before his tribunals. While he is arguing about the quality of the clerk, I should like to argue much more about the quality of the chairman. Under paragraph 11, the Lord Chancellor, will
    "after consultation with the Lord Advocate, appoint persons who are barristers, advocates or solicitors of not less than 7 years' standing"
    I do not see why. I come from a working-class area. We have chaps available to do those jobs who are just as good as my hon. Friend's lawyers and lawyer friends.

    I was unable to appear on behalf of one of my constituents before one of one of my right hon. Friend's tribunals because I was delayed in going to the tribunal for two months. Apparently, it does not desire to sit in July or August, although some of us are quite happy to work through those months. The tribunal, purely to suit itself, chose a day in September that was not convenient for me, for parliamentary reasons.

    Therefore, I took my constituent aside over the weekend and explained how she should state her case. I said that my right hon. Friend was a good man and that his tribunals were fair and just. I think that he has spoken of natural justice, of justice not only being done but being seen to be done. I told my constituent that my right hon. Friend believed in that and that she should have no fear.

    My constituent went to the tribunal on her own and the chairman, a Mr. Buckley, told her "I thought you were going to have your MP with you" She replied "Yes, Sir, but unfortunately on the day you have chosen he cannot be here because he is on parliamentary duty" The chairman said "Parliamentary duty ! Parliament is not even sitting." I do not know what he implied by that in that tribunal, which was public. The interpretation, certainly of those in the tribunal, was that I was telling a bit of a tale and had wilfully refused to represent my constituent. At the very moment when the chairman was making that obscene remark, I was on my feet in the European Parliament representing the interests of this country.

    My constituent asked to receive a piece of paper from the Department that was germane to the issue. That great chairman said "You cannot expect the Department to keep details of that sort. It must be on an envelope somewhere in the papers." He treated my constituent in a most abominable way. I raised the matter with the Lord Chancellor in September, and I am still waiting for an answer.

    I understand how carefully the provisions have been drafted. I have read them with great care, and I have heard the hon. Gentleman ask that the chairman, that great man, should be properly consulted and not simply be told.

    We are talking about a small number of senior chairmen who are legally qualified. There are only a few senior chairmen. The type of chairman of whom my hon. Friend is speaking is a chairman also appointed by the Lord Chancellor but not necessarily legally qualified. He is not the chairman who will be consulted about the clerks.

    I am very pleased to hear that. I had an awful feeling that he was legally qualified and might be one of the candidates to give the advice. I can only tell my right hon. Friend that in his legislation, both in what he proposes and in the existing legislation, he is placing a great deal of dependence on the lawyers. My experience of them is that they are not very good. They do not really understand what is going on.

    It seems that those who are selected to become members of the tribunals will include those who understand the nature of the area
    "to which the panel relates".
    I do not know from where the chairmen from Hackney are to be picked. In private conversation, it will be interesting to know the names that have been received of those who live in Hackney, know the area and understand it. There is experience in Hackney of attending tribunals only to find that the members do not understand very much.

    I entered the Chamber with the intention of not supporting the Government if a Division took place, but my right hon. and hon. Friends seem to understand what I am saying. I shall be persuaded to vote for the Government should that be necessary. However, I urge my right hon. Friend to appoint those who understand the problems and who will not treat appellants in the disgraceful and disgusting manner that was met by my constituent.

    Unlike my hon. Friend the hon. Member for Hackney, South and Shoreditch (Mr. Brown), I welcome the amendment. It stems from the concern that was expressed on both sides in Committee and by many outside organisations long before the Bill was produced. There has been the fear that there may be a tendency for clerks to support the view of the DHSS, the Department being their direct and sole employer. There is the fear that that will be the tendency whatever the regulations, advice and suggestions to the contrary from the Department. It was suggested that the Lord Chancellor should employ the clerks as a means of overcoming the problem.

    The Government's proposal, which is ingenious, is to give oversight of the clerks to the new element, the senior chairmen. That new element will have oversight of the standard of the ordinary chairman, the standard that is so concerning my hon. Friend. I hope that he is reassured.

    We must ask the Minister to state more clearly—he has already done so to members of the Committee and it would be useful if he put it on the public record—that it will be the specific duty of senior chairmen both to inspect the clerks before they take up their posts and to keep an eye on them while they carry out their duties. That will be their duty, as well as undertaking all the other aspects of the tribunal system that will be their responsibility and for which the post of senior chairman is being introduced.

    It will be useful to receive the assurance that the senior chairmen will have an obligation to consider any representations about the conduct of clerks that are made by any interested party, be it an MP, a local councillor, a claimant or groups that feel that they have the interests of claimants at heart. That would reassure many groups, such as the Child Poverty Action Group, that have on many occasions tried to help claimants but have felt that their concern about certain clerks could not be expressed anywhere in a way that would be properly pursued.

    How do we get rid of an unsatisfactory chairman? I assure my hon. Friend that that is a job on its own. There is nothing in the Bill that helps in that respect.

    I shall leave the answering of my hon. Friend to the Minister.

    The remarks that we have made in Committee and in the House should not be regarded as an attack on committee clerks in general. The majority of them carry out their work extremely well. Nor should our remarks be considered an attack on the social security establishment in general. The counter clerks are at the front line in the same way as the tribunal clerks. They are overworked and have to face the consequences over the social security office counter of policy decisions taken in this House.

    The hon. Member for Harrow, Central (Mr. Grant) implied that the wording of the provision was a little furry. That is why we require reassurance. The Minister said that the provisions were not cosmetic. I am sure that that will be the case, provided that everybody involved—including not only senior chairmen but claimants and those who try to represent them—take the matter seriously.

    I have a sneaking suspicion that the amendment will, if properly exercised, achieve the objective which we sought in Committee.

    11.15 p.m.

    I wish to assure my hon. Friend that this provision will place on the Secretary of State a duty to consult the appropriate senior chairman before assigning a person to act as a tribunal clerk and to consider any representations from a senior chairman that an assignment should be terminated.

    Senior chairmen, who are to be appointed by the Lord Chancellor after consultation with the Lord Advocate, will be in frequent contact with tribunal clerks in their areas and will be in a position to observe them in action. They will also be involved in investigating complaints. I hope that complaints are few. I trust that any complaints that are made are responsible, because we are talking about people's careers. Therefore, this is not a matter to be taken lightly.

    As a further measure to try to establish the impartiality of tribunal clerks, each one will be required to attend a training course approved by the Lord Chancellor and the Lord Advocate. The courses will be designed by the advisory group which produced the procedural guide to supplementary benefit appeal tribunals. It has already arranged training for chairmen, and it has now embarked on the training of tribunal members. The first pilot course for members takes place this weekend.

    We are as concerned about the quality and standard of chairmen as we are about the standard and quality of tribunal members. We are always looking for suitable people. We have consulted organisations such as the TUC about their representatives and about training. We want to see more lay chairmen appointed wherever that is possible, and we are concerned about the standard of the tribunals. If the tribunal is of a proper standard, it should not be possible for a clerk to abuse his position.

    I hope the House accepts that we have now taken positive steps. This proposal goes far beyond the cobbling together suggested by the hon. Member for Harrow, Central (Mr. Grant). We have gone a considerable way in consultation, in open government, in providing memoranda and in canvassing the Lord Chancellor's views. I hope that this will lead to the better conduct of tribunals in future.

    Amendment agreed to.

    Schedule 3

    Minor And Consequential Amendments

    Amendments made: No. 13, in page 19, leave out line 18 and insert—

    '8. In section 119 of the principal Act—
  • (a) in subsection (3)(b), there are inserted at the end the words "or out of a requirement to repay any amount by virtue of subsection (2A) above";
  • (b) in subsection (4)—'.
  • No. 14, in page 20, line 33, at end insert—

    '18A. In section 59(7) of the Pensions Act, after the words "this section"(in the two places where they occur after the definition of "the sum") there are inserted in each case the words "and section 59A of this Act".'.

    No. 15, in page 21, line 27, at end insert—


    26A. In section 132 of the Employment Protection (Consolidation) Act 1978—

  • (a) in subsection (3)(e) for the words "and (3)" there are substituted the words "to (4)"; and
  • (b) in subsection 4(a) for the words "and (2)"there are substituted the words"(2) and (2A)".'.—[Mr. Orme.]
  • Motion made, and Question proposed, That the Bill be now read the Third time.

    11.21 p.m.

    I do not wish to delay the House but I must raise a question, under clause 10, about public service pensions. We have all received letters about the uprating of this pension. I declare an interest as one who is involved in this matter. The missing 11 days are mentioned in a letter from Mr. Maxwell of the Public Service Pensioners' Council. I require an assurance that there was proper consultation on this issue.

    Mr. Maxwell says:
    "It is accepted by the Council that the changes from those which would have applied under the Social Security Act, 1975 would be an improvement but the changes do not honour the assurance which was given during discussions in 1977 with the two Ministers that no public service pensioners would be disadvantaged by the new arrangement for their pensions to be index-linked under the new Social Security Pension Scheme.
    The wording of Clause 10 of the Bill, although an improvement on the present legislation (Social Security Pensions Act 1975, Clause 59) does not give complete effect to this assurance by the Ministers.
    The Council disputes the contention of the Under Secretary of State that the earlier date (12 November 1979 instead of 1 December 1979) would compensate for the loss of 11 days pensions increase. There was no prior consultation with the Council, representing one and a quarter million public service pensioners. …
    After I had dictated this letter I received a letter dated 18 January from Mr. Charles Morris that there would not appear to be any useful purpose served by a further meeting"
    I am concerned about this matter. Many of these pensioners feel aggrieved. I agree that the sums involved are not large. We accepted that in Committee. But the pensioners feel that there was no proper consultation. The Government said that there would be no loss as a result of changing the date. This matter was discussed in Committee and the Minister took note of what was said. We must be ensured that there was proper consultation.

    11.24 p.m.

    I identify myself with the remarks of the hon. Member for Reading, North (Mr. Durant). Many hon. Members have received correspondence on this issue. There seems to be a contradiction. It is claimed that consultations did not take place. I am not sure how we should define the word "consultations". The question of pensions was raised during consultations, but I am not sure that conclusions were reached. Those involved feel aggrieved and are concerned about the impact of the legislation.

    I am pleased that the subject has been raised, and I should be grateful for the Minister's comments.

    11.25 p.m.

    This is a useful Bill. The Minister described it as making running repairs to existing legislation, in addition to making certain specified amendments dealing with attendance and mobility allowances and supplementary benefit appeals tribunals.

    We accept, however, that at some stage not far ahead the Bill will have to be consolidated with the earlier legislation. It is no surprise to anyone dealing with this sort of legislation that one's brief case gets heavier and heavier as the days of debate go by. There is more and more backtracking into previous legislation, and with that the opportuniity for error grows. I have spoken before of the need to make our legislation clearer to understand both by parliamentarians and those who have to work with it, not least the counter clerks and many of the employees of the DHSS.

    We well understand that at present it is not possible to take further steps, but I hope that all hon. Members will look at the way in which the invalid care allowance, which is not currently awarded to women whose husbands are severely disabled, is now seen as discriminating not just against women but against the family. That is one of the issues we might have seen in an amending Bill of this nature but which is sadly absent. That must be seen in the context of the fact that an overhaul of all benefits from the Supplementary Benefits Commission is under way with the reviews that are now being made. There is now open discussion about disablement costs and about how, for many years ahead, the Government can best provide for those who do not have the able-bodied or able-minded capacity to deal with the rigours of daily life.

    Every hon. Member tries to ensure that attendance allowance goes to those who need it. But I have become aware that some people, including general practitioners, are not as familiar with the rules of attendance allowance as is desirable. It is in the hands of the DHSS to communicate to the general practitioner committees the simple rules about eligibility for attendance allowance and the means of applying for it. That is a further step of clarification and assistance that could be taken for those who qualify for the allowance.

    There is a further publicity job to be done—on the mobility allowance. There is already some misunderstanding about the eligibility of women up to the age of 65 or 66. Until June this year, the age limit on phased-in eligibility for mobility allowance is 58. After that date men and women aged 59 and 60 will become eligible for phasing in. Many people think that with the passing of the Bill, which removes the discrimination between men and women in terms of age, women aged between 60 and 65 will become eligible for mobility allowance. But I believe that that will not be so under the Government's phasing-in regulations. That must be made clear through publicity.

    We have heard much tonight about the taxation changes affecting motoring. Mobility has been regarded as the substitute for healthy legs. I hope that one day not too far away our economy will so improve that we can make sure that there is no taxation on legs. These people need their mobility allowance because that is their only means of getting from A to B.

    We welcome what the Minister said tonight about supplementary benefit appeals tribunals, and we welcome the amendment. I shall go no further into it than saying that I think a sensible compromise has been arrived at. I believe that both sides can be pleased with the work that they have done on this matter in the House.

    When we talk of the numbers receiving supplementary benefit, our long-term objective must surely be to look further ahead to the stage when we can reduce considerably the numbers of those who are dependent upon means-tested benefits.

    We have gone a long way in the Bill to tidy up odd ends. We know that there will be more to do in the months ahead. But none of this happens without co-operation, which I think has fairly been noted on the Bill, between the Government and the Opposition and all my colleagues in the House and help from all those officials who serve us in Committee and provide us with useful notes for use both in Committee and on Report. In agreeing to the Third Reading, I think that we should pay tribute to those who keep us well briefed on complicated Bills such as this.

    11.31 p.m.

    We think that the Bill is important and that it contains several advantageous measures for dealing with the disabled. It also saves public expenditure. One aspect is the public service pension, in which we all have to declare an interest because, as Members of Parliament, we are covered by it. We must ensure that the public realise that this is dealt with in a correct manner.

    The hon. Member for Reading, North (Mr. Durant) asked about consultation. Knowing that the 1975 Act would alter the situation, consultation on this matter began on 21st September 1977 with the Public Service Pensioners' Council and with my right hon. Friend the Minister of State, Civil Service Department. Consultations continued well into July of last year, and beyond. We have taken on board the representations that have been made but we feel obliged to say, in the terms that I have given to the House, that we must go ahead in the manner which we propose.

    At the eleventh hour we received this letter from the Public Service Pensioners' Council, which is addressed to all Members of Parliament. It does not alter the fact that I think that the manner in which we have acted is correct, and my hon. Friend the Under-Secretary of State has sent a detailed reply to hon Members. I think that if the hon. Member for Reading, North examines that reply he will see that it stands up to examination and that in this matter we have to say that the Government have acted correctly.

    I should like formally to place on record my gratitude to the Under-Secretary of State for the prompt reply that he gave. Inevitably, I have not been able to study every word of the letter with the detail that I should like, but it puts on record the points that the right hon. Gentleman has just made.

    If hon. Members want to come back on this matter and raise the issues again, perhaps when the hon. Gentleman has studied the letter we shall listen to further representations.

    My experience in this Department leads me to believe that, just as the Treasury must have a new Finance Bill every year, so it will be essential for our Department to have a Bill to deal with past and perhaps future measures. I make no apology, therefore, for bringing the Bill before the House, and I thank the House for its co-operation this evening.

    11.35 p.m.

    I shall detain the House only briefly. I did not have the privilege of serving on the Committee, but I should like to refer for a few minutes to clause 12. I thank those hon. Members on both sides who introduced a new clause into the Bill which brought into the limelight the question of a death grant. The Under-Secretary of State said in Committee that, for the reasons that he had given, the intention was that the death grant should not be increased as a result of the clause. Accepting that that is the case, I am particularly pleased that the Government have not seen fit to alter the clause at this stage.

    As Ministers will know, there is a strong feeling in the country, going across party lines and supported by the all-party parliamentary group—I apologise for the absense of the joint chairman, the hon. Member for Paddington (Mr. Latham), who would have liked to be with us but was unable to attend—that increasing the death grant should be given priority. We had a meeting with voluntary organisations, and the feeling is one that is gaining ground all the time.

    Age Concern, in its national policy, calls for an immediate increase in the death grant so that it reflects its value at the time of its introduction in 1949. During the debate in Committee it emerged that some people do not receive the death grant at all. About 1,100,000 people receive only half the grant. In congratulating the Government on accepting the new clause, I should like to conclude with the words of the late Brian O'Malley, who, when replying to a debate in the House in 1974, said:
    "It is my firm view, and I am sure the view of the Government, that death grants are an urgent priority."[Official Report, 10 April 1974; Vol. 872, c. 582.]
    I ask the Minister to bear that in mind.

    Question put and agreed to.

    Bill accordingly read the Third time and passed.

    House Of Commons Commission


    That Mr. Alan Beith be appointed a member of the House of Commons Commission under the House of Commons (Administration) Act 1978.—[Mr. Snape.]

    M1 Motorway(Hertfordshire)

    Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Snape.]

    11.37 p.m.

    The Minister will recollect that among the many Adjournment debates of this type which he has had to answer, there was a debate on 12th May 1978 on the subject of the M1, introduced by my hon. Friend the Member for Bedfordshire, South (Mr. Madel). My hon. Friend pointed out that it was a particularly appropriate date because, being Friday, at about four o'clock, the volume of traffic on the M1 at that time would draw attention to the urgent need for improvements to that section of the motorway to which he was referring.

    It seems particularly appropriate today that we should have had a different sort of illustration. An industrial dispute has meant an additional burden of traffic on motorways. I understand that there have been 20-mile tail-backs on some of the motorways tonight. This morning there were 8-mile tail-backs on the M1. It is a matter of deep concern, and I am sensitive of the need to get on with the work on the M1.

    I want to draw the Minister's attention to the fact that in my constituency there are a wide range of motorway matters and proposals which might be termed to have a motorway definition. There are pressures for the early completion of the M25 from Maple Cross, which is familiar to the Minister. He will be aware that there is widespread support for the early completion of the road. There is, as is usually the case, a divergence of views on the optimum route to be chosen, so the possibility of inquiry proceedings in that case cannot be overlooked. On the section of the M25 to be completed between Micklefield Green and South Mimms, which will cross the Ml, a number of alternative routes have been suggested. There has been a wide range of discussions and consultations over an extended period, and the Department's preferred route has been made known.

    In this case, however, there are differing views, there are some differences of substance between one route and another, and there are widely held reservations about the need for the construction of this motorway at all. It is against that background that I wish to draw attention to the nature of the decision that was taken with regard to widening the M1 in Hertfordshire, and in particular as it affects my constituency.

    The nature and conduct of proceedings are such that they have caused considerable misgivings among my constituents. I drew the Under-Secretary of State's attention to that in a letter that I wrote to him on 8 November, in which I pointed out that the view had been taken that, in the case of the M1 widening, the inspector's report had been thrown to one side purely for the purposes of administrative convenience and that this could only create further difficulties at any future public inquiry which might be held in the area of my constituency.

    In contradistinction to that, I have great respect for both the Secretary of State and the Under-Secretary of State in the conduct of road matters in my constituency in particular and, I am sure, in the country in general. I feel that they have on all occasions sought to discharge their duties both diligently and in the interests of the community at large.

    I do not think that anyone can really deny the need to improve and, indeed, widen the M1 between junctions five and eight in Hertfordshire. I think that it is no exaggeration that millions of motorists will testify to the present inadequacies of the roads there, and commuters who regularly use that route are finding it a cause of increasing frustration and concern. I think that it is common ground, between both the Minister and myself and both sides of the House, that action has to be taken.

    In the debate in May 1978 there was a careful review of some of the alternative proposals that might be taken on a short-term basis, and the Minister gave reasons why they had to be projected. He outlined the public inquiry position. We accept that there is a major traffic bottleneck at all times of the year, and it is no part of my case that the work should not proceed. My complaint is more at the manner and nature of the decision than at the need itself.

    After all, the scheme now, at 1976 prices, will cost nearly 20 per cent. more than the original proposal. It will involve the construction of a second three-lane carriageway adjacent to the existing route but it will omit the proposals for the new interchanges at Beachtrees, Breakspeare and Waterdale junctions.

    The report of the inspector on the 1976 public inquiry did not think that the original order should be confirmed. He agreed that there should be a second carriageway, but he did not agree with some of the details. The Department is now saying that it cannot abandon the original scheme because that would mean two more years' delay to overcome what was admittedly a mistake in the early planning of the motorway. It is to go ahead without any further public inquiry.

    This conclusion means that three of the four principal conclusions reached by the inspector are being dismissed. The inspector agreed that there should be online widening for part of the route. However, the Minister feels that, because of the difficulties of traffic diversions, he can overrule that finding. He accepts, and it is clear, that the on-line solution would have had environmental advantages, but those advantages are apparently too limited when taken in the light of any delay that might follow any further inquiries.

    The Minister has rejected that the proposed Waterdale roundabout should be built further east where the orbital road will cross the A405, and has also rejected the proposal for the acquisition of land and earthworks to be made ready when the north orbital road opens.

    The Minister's argument is on the grounds of expediency and urgency. But there has been more than two and a half years' delay since the inquiry. The start date has also been brought forward, so this becomes even more urgent. This seems to be riding roughshod over the information given to those who attended the inquiry so assiduously.

    The on-line widening proposals would have saved land and houses. I am not at all sure that there would have been any further delay, because no new orders would have been required and there would not necessarily have been a public inquiry in the light of what the Minister has now proposed. Sensible proposals have been discounted on the ground that they would have caused undue delay. The scheme still appears to be incomplete, in that the proposals on the Waterdale junction will have to be published in due course.

    The objectors feel anger and frustration at the inflexible attitude of the Department. It is a poor example of democracy when objectors who have pressed their cases entirely through proper channels can feel that they have achieved less in six years of reasoned argument than others can achieve in other parts of the country by six hours of disruptive tactics. It is six years since the proposals were first published, of which five have been spent in inactivity and silence following the public inquiries. Only one year was spent on the public inquiries themselves and each inspector completed his report in the month following the inquiry.

    I hope that the Department will look at the changes needed in procedure following the outcome of this inquiry, first on information and secondly on cost. The procedure is outlined in pages 13 and 14 of the report on the review of highway inquiry procedures.

    There are two changes that are called for in awarding costs. Where there have been responsible associations and parish councils they should be able to claim costs, and these should be awarded where the Secretary of State has chosen to override the inspector's report after he has recommended that the order should not be made.

    Secondly, on information, we must consider the case where the Minister has made available to him additional information after he has considered the inspector's recommendation. The ability of road construction units and road planners at the Department of Trade to be able to present further information to influence a decision after the inspector's report appears to be questionable. It is a one-way advantage providing no opportunity for response by objectors. It amounts to working on the inspector's report with the Minister in order to go back to the original proposal. That requires further investigation. I have written to the Minister to say that a detailed refutation of the accepted case when it has been rejected is called for. Although I accept that there was a helpful and constructive answer by the Minister giving grounds, we need a much fuller statement of his reasons for the rejection.

    The Minister will recall that I asked him on 21st November if he would let me know the number of times in each of the past five years when inspectors' reports on public inquiries into road schemes had been overruled and if he would outline the criteria which are used in such situations. The hon. Gentleman was kind enough to advise me on 12 January that he had not overlooked the matter and that he hoped to be able to let me have the infomation before very long. I think that perhaps the hon. Gentleman is being a little reticent on some of these matters and I hope that he can get complete information by consulting his regional offices. I know that a number of organisations are deeply interested in the replies to this question.

    My constituents are in no way wishing to stand in the way of progress. They are sensitive to the interests of the public at large in the use of this country's principal motorway. However, this is a classic situation of the suppression of a minority view in the interests of the majority.

    The House has laid down procedures in the interests of those minorities. They seek to ensure that minority interests are fully investigated and made known. They seek also to provide an impartial means of judging those objections and representations so that recommendations can be made to the Minister, drawn up with due regard to the highest professional standards and the latest information. In this case these procedures have been scrupulously observed.

    The Department has had two and a half years after each inquiry to digest the information and those recommendations, and has then seen fit to reject the findings of its own inspector.

    My constituents had the gravest reservations at one stage as to the impartiality of the inspector appointed, but having overcome those reservations they have been dumbfounded to find that a scrupulously professional approach has been thrown to one side by the Minister on the ground that it would all take too long. I trust that the lessons of this unhappy series of inquiries will be learnt.

    I must advise the Minister that I have put all my constituents on notice that in public inquiries in connection with my constituency they should record all the proceedings in detail and leave no stone unturned to protect their interests. I say that after careful reflection and with real regret in view of the very high regard that I have held for the integrity and fair-minded approach of the Minister on many of these matters in the past.

    11.50 p.m.

    I know that this issue has been a matter of great concern to the hon. Member for Hertfordshire, South-West (Mr. Dodsworth) and I pay tribute to the way in which he has pursued this and other motorway matters on behalf of his constituents. I am glad to have the opportunity to set out clearly the Government's view on the widening of the bottom end of the M1. In addition, I wish to express my understanding of the feelings of the people directly concerned. I feel for them very much.

    It is common ground, as the hon. Gentleman admitted, that there is an urgent need to improve the six-mile section of the M1 between junctions five and eight—the notorious two-lane section. It is greatly overloaded, especially at peak times, and carries a high proportion of heavy lorries. Driving on it can be unpleasant, not just in weather conditions such as we have had today, with the additional problem of a lack of railway services, but in any rush-hour period. There is general recognition that this section was one of the mistakes of early motorway planning.

    There is an urgent need for something to be done, and proposals for widening have been around for a long time. The first inquiry into the Department's proposals began in 1973. The proposals were subsequently changed and the inquiry was reopened in 1976, bringing forward the proposals that we are now discussing.

    At the reopened inquiry the need for widening the M1 was not seriously questioned, but the method of widening was. The Bucknalls Lane residents' group, supported by the hon. Gentleman, the National Farmers' Union, the St. Stephen's parish council and the Brickett Wood ratepayers' association argued that the widening should be achieved by the on-line method, as opposed to widening by the building of a new motorway to the east of the M1. They said that on-line widening would require less land, would save four houses in Bucknalls Lane and would cause less environmental damage. The group also objected to some of the junction proposals.

    The inspector concluded that this section of the M1 was overloaded, that it was the scene of considerable congestion and much delay and that it ought to be widened. He agreed that the road ought to be widened initially to dual three lanes and that there should be provision for a fourth lane between Breakspeare and the proposed junction with the M25. He concluded that on-line widening should take place through the existing bridge and alongside the retaining wall to Bucknalls Lane and that the resultant lack of hard shoulder and somewhat substandard clearances should be accepted. Finally, he was also generally opposed to the Department's views on junctions.

    Because the inspector disagreed with some of the major details of the scheme, although he accepted the need for widening, he recommended that none of the orders before the inquiry should be made. The Secretaries of State decided, however, that the scheme should go ahead. It was urgently needed and had been much delayed already. They accepted the inspector's conclusions about the proposed junctions but decided that they should proceed with the published proposals for a new southbound carriageway at Bucknalls Lane.

    Let me deal first with the situation at Bucknalls Lane. As I told the hon. Gentleman in my letter of 12 January, I am sorry that the Bucknalls Lane residents' group is so dissatisfied with the decision. But I can readily understand their disappointment that we were not able to accept the suggestion about online widening at that point in the road. The reasons for that were quite clear and were brought out fully at the public inquiry.

    First, the addition of a third lane to the existing two in the Bucknalls Lane area would lead to enormous dislocation during construction. It would mean building on the existing motorway a new motorway, and at the moment the motorway, as we know, is only two lanes in each direction. It would lead to considerable bottlenecks for a prolonged period if we were to adopt this method of construction—that is to say, on the existing motorway rather than alongside it. Traffic on the Ml, already heavily overloaded, would have to be diverted on to the local road system, causing intolerable congestion on those roads and protracted delays to all traffic.

    Secondly, at the end of the day the new motorway would have inadequacies, such as the absence of hard shoulders and substandard clearances, which, with the very high volumes of traffic involved—some 30,000 vehicles a day on each carriageway—would have serious disadvantages, particularly during periods of inevitable maintenance. It would be extremely difficult to keep this very important part of our motorway system functioning adequately when repairs had to be undertaken.

    I very much regret that the decision will mean that three houses, one of which the Department already owns, will have to be demolished. No. 90 Bucknalls Lane can be saved, although part of the garden will be required for the works. I entirely appreciate the distress and disturbance caused to those who have to leave their homes. But, much as I sympathise, this great disadvantage has to be balanced against the benefits to the thousands of users of the existing road and of those who would be affected by the diversions. I am satisfied that in this case the decision reflects a proper view of inevitably conflicting considerations.

    Officers of the Department have called on the families affected, and they will do everything within their power to make the move as smooth as possible. It is, I am afraid, the old story of a general good balanced against severe disadvantage to a small group of people. But, as the hon. Gentleman said, he knows the pressure that there has been for some improvement in this section of the M1 and the delay that there has been in bringing it about. Decisions had to take that into account as well as other factors.

    The hon. Gentleman further suggested that there should be a reopening of the inquiry and made several points about officers looking at new facts. I do not believe that there are any grounds for referring the proposals back to objectors or for reopening the inquiry. The procedure rules require that statutory objectors who appear be given the opportunity of making written representations where the Secretaries of State disagree with the inspector's recommendation if they differ on a finding of fact or if they have taken into consideration new evidence or a new issue of fact which was not raised at the inquiry.

    The Minister will recall that in the statement that was issued by the Department on 2 November paragraph 3.4 says:

    "The Secretary of State decided to give interested persons a further opportunity to make representations before he made his decision. As a result of further traffic studies and representations made it was decided to revise the proposals and reopen the public inquiries."
    What is the point of going through all that process when we have gone back to where we started and the further representations were of no value whatsoever?

    My point is that we are prepared to look at any new facts which are brought to our attention, but in this case the Secretaries of State did not make that decision on any new facts which were brought out or on any new evidence. They made their decision on a difference of view about the relative merits of the alternative schemes put forward—the suggestions of the inspector and the original proposals which they themselves put forward. It was not, therefore, a matter of difference in facts. It was a matter of a disagreement about the relative merits and the balance of advantage between the two alternative proposals.

    That is why, where there are new facts to be brought out, we are always prepared—indeed, there is a statutory right—for the objectors to ask for the inquiry to be reopened. But in this case there are no new facts as such. The facts in this problem have always been the same. It is simply a difference of view as to the alternative strategies put forward.

    I think that the most serious point in the hon. Gentleman's presentation is when he says that we have thrown the inspector's report to one side purely for administrative convenience, that the decision will make for further difficulties at public inquiries in his area and that some cynicism about public inquiries is justified as a result of our behaviour in this particular case.

    As the letter of 2 November conveying the decision of the Secretaries of State explained, the problem before us was a difficult one. The inspector accepted that this section of M1 is overloaded and should be widened, and we were aware that there is widespread support for the early improvement of this unsatisfactory and unpleasant stretch of road, as I have already said. But acceptance of the inspector's recommendations in full would have added at least a further two years' delay to what has already been a much delayed improvement. It would prolong the uncertainly of all those who live near this section of the motorway and have been wondering what effect the proposed improvement will have on them. New orders would have had to be published and they, in turn, would be subject to the normal statutory procedures. If they were considered concurrently with the proposals for the M25 between Micklefield Green and South Mimms, for example, the delay could be considerable.

    We did, therefore—and I ask the hon. Gentleman and residents of Bucknalls Lane and others concerned to believe this—seek a solution which would follow the spirit of the inspector's report as far as possible, while meeting the urgent need for a widening which the hon. Gentleman himself recognised.

    That was the fundamental approach that we adopted, and I believe that we have succeeded. After all, we have accepted a number of the inspector's points, particularly as regards junctions, and so forth, but we felt that to have accepted all his findings would have led to unacceptable delay, which we could not really tolerate in the national interest of having a solution to this particularly difficult problem. It is a problem which is known to all hon. Members at the bottom end of the M1. Indeed, it is almost a nationally notorious problem.

    Finally, the hon. Member has written to me, as he said, requesting information about the number of times the Secretaries of State have gone against recommendations made by inspectors. It has taken a little time to assemble all the evidence, because I am sure that the hon. Gentleman would have wanted me to go back over a number of years and to deal with all parts of the country. This has meant quite a lot of work. However, I now have the information, which I shall send to the hon. Gentleman, as I promised—probably tomorrow.

    As to the number of occasions on which the inspector's main recommendation was contrary to the Department's proposal and the inspector's recommendation was not accepted by the Secretary of State, this did not happen in 1977 or in 1978—among decisions already reached so far. Some inquiries held in 1977 and 1978 have not yet had final decisions taken on them. In 1976, when this inquiry took place, it happened in only one case—the case about which we are having this Adjournment debate—and that was one case out of 20.

    In the year before that, 1975, there were no such examples. All 24 cases did not fall into this category where the main recommendation was contested by the inspector and the Secretary of State then refused to accept the inspector's proposals. It happened only twice out of 38 inquiries in 1974.

    Therefore, the hon. Member can see that it is very much the exception that the Secretaries of State do not accept the recommendation by the inspector when it goes against their original proposal.

    From what he has said, I am sure the hon. Gentleman can see that in this case we felt that the circumstances of this problem were so unique that we had to take them into account. As the hon. Gentleman said repeatedly throughout his speech, this is a notorious problem. We felt that further delay, after an inquiry had begun in 1973—we are now delivering the verdict of an inquiry as it happened at the end of 1978—would be an incredibly long time, and that to have pushed this into further years would not have been acceptable in the national interest.

    Of course, I understand the feelings of the people in Bucknalls Lane and those who are directly affected. But, on the balance of interest, most objective observers would understand why we came down in the way that we did. Now that we have made that decision, we shall do all that we can to meet the legitimate concerns of the people directly affected. I assure the hon. Gentleman that we shall follow that up as sensitively and carefully as we can. If there are any problems in that particular regard and the hon. Gentleman cares to bring them to me, I shall give them personal attention.

    Question put and agreed to.

    Adjourned accordingly at six minutes past Twelve o'clock.