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Commons Chamber

Volume 974: debated on Monday 19 November 1979

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House Of Commons

Monday 19 November 1979

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Oral Answers To Questions

I remind the House that it has indicated to me that, when hon. Members are called for supplementary questions, they should ask one question and not a series of questions.

On a point of order, Mr. Speaker. May I make a simple but necessary inquiry? Do your remarks apply to Front Bench spokesmen as well?


British Insurance Association


asked the Secretary of State for Trade when he expects to meet the chairman of the British Insurance Association.

My right hon. Friend met the chairman of the British Insurance Association on 6 November and has no present plans for a further meeting.

The case of Prudential Assurance Co. Ltd. v. Newman Industries, which particularly concerns me, is sub judice, but may I ask whether when the Secretary of State next meets the chairman of the British Insurance Association, as I hope he will, the right hon. Gentleman will raise with the chairman the important matter of a large institutional investor taking a very small minority stake in a company and pursuing a battle of endless litigation which may end up to the detriment of other shareholders and the employees?

The hon. Gentleman knows that I cannot refer to the case of Newman Industries because the matter is before the courts. On the wider point concerning institutional shareholders, I should point out that this range of matters is being considered by the committee under the chairmanship of the right hon. Member for Huyton (Sir H. Wilson).

Has the hon. Gentleman discussed with the British Insurance Association the options that he is exploring in cost cutting within his Department as they affect the supervisory role of the insurance division? Is he aware that there is great anxiety lest we go back to the lack of supervision of the early 1970s? Can he indicate approximately how many people are engaged in such supervisory duties in his Department?

The hon. Gentleman will know that this part of my Department is being reviewed, as are all other parts, but no decisions have been taken. I emphasise that my right hon. Friend has made perfectly clear that an effective and efficient system of supervision of the insurance industry will be maintained.

Will my hon. Friend confirm that, notwithstanding any stabilisation of the staff of the insurance division which may take place, there is no indication from the Government that they propose to move backwards from the supervisory provisions of the Insurance Companies Act 1974?

I am glad to assure my hon. Friend that the system of supervision of the industry will be effectively maintained.



asked the Secretary of State for Trade what is the present annual rate of inflation.


asked the Secretary of State for Trade by how much the rate of inflation has risen since May.

The retail price index increased by 17·2 per cent. over the 12 months to October and by 9·1. per cent. between May and October.

Will the right hon. Lady explain how the Government intend to protect the 7½ million people in this country who are below, on, or within, 10 per cent. of the official poverty line from this appalling increase in the cost of living?

The hon. Lady will know that social security benefits are to increase in cash terms by the greatest amount ever. If the previous Government had not tried to borrow, print, tax and bribe their way out of every economic crisis, and if those policies had not failed, consumers would not be having to pay such high prices today.

Can my right hon. Friend give the House an indication of what proportion of the increase in the rate of inflation can be attributed to decisions taken by the previous Government?

Practically everything in the present inflation figure, with the exception of the Budget measures, can be attributed to the previous Government.

Since the Minister is making quite a play of the fact that the increase in pensions equates roughly to the present rate of inflation but not the prospective rate of inflation, which would be much more, will she pass on to other Ministers, in the Treasury and elsewhere, the message that the same should at least apply to wages?

My hon. Friends in the Treasury are perfectly aware of this. They are also aware that, if we do not get sensible wage settlements, and if productivity does not rise, inflation will be very much worse.

Is it the right hon. Lady or some other member of the Government who is in charge of finding a fifth man in order to deflect the attention of the public from the next rise in minimum lending rate and the outrageous RPI figures announced on Friday?

Is not the right hon. Lady ashamed of the figures that she has given to the House today? We now have an inflation rate of 17½ per cent. per year and are running into steep increases in gas, electricity, rents, mortgages and nearly every other charge that one can think of? When will the Government admit that their smart-alec Budget was a great mistake, and when will they bring the inflation rate down to the level which obtained under the previous Labour Government?

Of course I agree with the right hon. Gentleman that price inflation is far too high, but he and his hon. Friends cannot have it both ways. If we were to embark on the levels of expenditure that they are calling for, we would have hyperinflation, hypertaxation and a drastically devalued pound as we had under the previous Government.

Merchant Fleets


asked the Secretary of State for Trade what measures he is taking inside and outside the European Community to persuade the Governments of maritime nations to enter into a general agreement not to give special advantages to their own merchant fleets.

It would not be practicable to aim for a general agreement on all forms of special advantage. Individual Government measures are discussed within the EEC and in wider international fora. In such discussions, the United Kingdom's consistent aim is to maintain a freely competitive environment for as much as possible of world shipping.

Does not my hon. Friend agree that an open seas policy, which is clearly in the best interests of the consumers of the world, is very much at prejudice at present in view of the number of Governments who, as my question points out, are giving "special advantages" to their merchant marines? There can come a point when those merchant marines which play dead straight on a competitive policy will increasingly be put at a disadvantage.

My hon. Friend is absolutely right. That is why it is our purpose not to try to up the ante in these matters but to persuade other countries, through every international organisation and every bilateral contact, that we have, that it is in no one's interest continually to subsidise shipping.

Food Prices (Scotland)


asked the Secretary of State for Trade what action he proposes to take to eradicate the differentials which presently make Scottish food prices higher than elsewhere in the United Kingdom.

Government action as suggested by the hon. Member would not be feasible. To the extent that price differentials may be due to monopolies or anti-competitive practices, these would be subject to the existing powers in the Fair Trading Act, and the new powers conferred by the Competition Bill.

Is the right hon. Lady aware that after considerable urging the previous Government agreed to instruct the Price Commission to hold an inquiry into high food prices in Scotland? Does she further realise that consumers in Scotland, who have to pay these high food prices, will not be convinced by the answer that she has given and that they want action taken above and beyond action to deal with the general rise in inflation?

I am sure that consumers in Scotland will be comforted by the fact that under the new Competition Bill it will be possible for the first time to look at the abuse of market dominance in local situations. This is a new step. If it proves that there is abuse of market dominance, it will allow the Director General of Fair Trading to act in this area for the first time. If the hon. Gentleman knows of any specific cases, he will no doubt bring them to the attention of the Director General.

Is my right hon. Friend aware that it is the practical experience of those of us who have lived on both sides of the border that the quality and choice of food available in Scotland is consistently extremely high?

Does the Minister agree with the hon. Member for Dundee, East (Mr. Wilson) that the Labour Government tried to do something through the Price Commission to minimise the differentiation between Scottish prices and English prices? Does she find it as incomprehensible as we do that the hon. Gentleman and his party sought to get the previous Government out?

The previous Labour Government were always trying to do things through the Price Commission, and they always failed.

Does not my right hon. Friend agree that whatever special problems Scotland may have, to which the Government are rightly giving special attentions, those problems would be made infinitely worse if Scotland were ever subjected to the socialist and separatist policies of the Scottish National Party?

Scottish consumers, through their consumer council, asked for a reference on prices in remote areas. Why did the right hon. Lady turn them down?

I am aware that that request was made. We believe that consumers in Scotland can best be helped through the strengthened competition policy which is aimed particularly at the abuse of local monopolies. We believe that, if competition is limited in areas such as the Western Isles, we must look at ways of increasing that competition.

Third London Airport


asked the Secretary of State for Trade when he expects to receive the reports from the advisory groups considering the question of the third London airport.

I expect to receive the reports very soon, and to announce the Government conclusions when we have completed our consideration of all the relevant advice and information.

Can I urge upon the Minister that if at all possible the Government's own position should be made clear simultaneously with the publication of the recommendations so as, hopefully, to eliminate some of the six sites from the planning blight to which they are at present subjected?

My hon. Friend makes an interesting suggestion. It is one to which we shall give due heed, together with all the others.

Is it correct to assume that the Government are not bound by the limitations of the reports that they receive and that they could decide upon an option that is not contained in the remit of the advisory committee?

Will my hon. Friend continue to bear in mind the conclusion of the Roskill Commission that, if Maplin were chosen, Kent would be the uncompensated loser and that the situation would be particularly worse if extensive night-time flying was allowed from such an airport?

We shall take all such matters into consideration, and we shall always give due weight to what my hon. Friend says in defending his constituents.

Will the Minister listen to representations from regional airports such as Manchester International, which believe that they have the facilities and the capacity to take up a lot of the capacity that will be imposed on London and the South-East? Will the Minister consider this suggestion seriously?

Without prejudice to the decision on the third London airport, I should like to emphasise that I believe that Manchester airport has an extremely important role to play in the United Kingdom's airport policy. I look forward to visiting that airport shortly.

Arab Boycott


asked the Secretary of State for Trade whether he intends to take any further steps to assist British exporters whose trade is adversely affected by the Arab boycott of Israel.

The Government already give advice and assistance to firms experiencing problems with the Arab boycott. We are always ready to consider suggestions for improving the service.

While accepting the sincerity of the Government's condemnation of the Arab boycott, does not the Minister consider that the authentication of boycott documents by the Government is entirely inconsistent with that attitude? As the boycott now extends to Egypt as well as Israel, and as the Government are entirely in favour of peace between those two countries, as well as the peace process that has been initiated, will not they now at least stop that practice of authentication?

As to authentication, the Government's position was made very clear in the answer given by the Minister of State, Foreign and Commonwealth Office on 5 November. I cannot add to that answer.

Company Law


asked the Secretary of State for Trade what further proposals he has for reforming company law by strengthening disqualification proceedings against directors of companies going into liquidation, in line with the recommendations of the Jenkins committee.

Provisions extending the grounds on which directors may be disqualified were included in the Companies Act 1976 and the Insolvency Act 1976. Outstanding recommendations of the Jenkins committee, and other possible measures, will be considered in the light of the report of the Insolvency Law Review committee, which is expected next year, and of experience of the operations of the statutory provisions that I have mentioned.

Is the hon. Gentleman aware that many of us receive constant complaints from our constituents who are the creditors of fly-by-night directors who have taken a firm into insolvency and started it up again almost immediately using the same telephone number, the same office but a different company name? Will the hon. Gentleman, along the lines of paragraph 85 of the Jenkins report, undertake to have his Department consider this as a matter of urgency, because many people have lost a great deal of money?

I am concerned about the actions of a small number of fraudulent and delinquent directors who operate in that way to the discredit of the system as a whole. On receipt of the Insolvency Law Review committee report, I shall seriously consider the matter.

Will the Minister bear in mind the building industry when considering these matters? In that industry there are numerous examples where people have suffered unjustly through development and repair work, and pensioners have been particularly affected.

Does my hon. Friend agree that if a director knows that he may lose other people's money without loss to himself that can amount to fraudulence because he does not bother to care? Being a director surely involves caring, and we should introduce the strongest law possible to stop people from engaging in business when they have no experience and no capital and just use other people's savings.

I am glad to say that the overwhelming majority of directors do care, but there are problems that need serious consideration.

Film Industry


asked the Secretary of State for Trade what consultations he has had concerning the future of the film industry; and if he will make a statement.

Sir Leo Pliatzky, then of my Department, had wide-ranging consultations with the film industry, and copies of his report were placed in the Library on 26 July. I have also met representatives of the industry.

Although I am glad to hear that, is the Minister aware of the distrust in the film industry because of the contradictory and soothing statements and recommendations that are being made, not least by the right hon. Gentleman himself? Does the Minister agree that there is a great need for an indigenous film industry in this country and that the best way to achieve that, at least in the interim, is by adequate financing of the National Film Finance Corporation? Finally, will he confirm that, if there are any arrangements with the Eady levy, he will not use that as an excuse for reducing Government expenditure?

I am not aware of any distrust in the film industry about the Government's intentions. It is important to have a healthy indigenous film industry. The proposals that I made and publicised in July for the reconstruction of the National Film Finance Corporation, which involve some public money, will go forward, but the legislative timetable is not finally settled. We are hoping to present the Bill as planned during this parliamentary Session.

I reinforce the desire of my hon. Friend the Member for Easington (Mr. Dormand) to see an indigenous British film industry prosper. Will the right hon. Gentleman bear in mind that timely Government assistance might give an opportunity for marketing some of the outstanding British talent which exists in the industry?

If the right hon. Gentleman is volunteering himself in the role of a star, I am sure that the film industry will be glad to publicise him.

Tokyo Round


asked the Secretary of State for Trade whether he is satisfied with the speed of implementation of undertakings agreed at the general agreement on tariffs and trade, Tokyo round.

At the Tokyo summit last June the leaders of main industrialised countries committed themselves to an early and faithful implementation of the agreements negotiated in the Tokyo round. The main agreements are to come into force on 1 January 1980 and I expect that timetable to be adhered to by the main participants.

At the meeting tomorrow, will my right hon. Friend impress on the European Commission and the Council of Ministers that no further delay will be tolerated in implementing the undertaking to protect the textile industry from unfair competition based on cheap feedstocks and cheap energy sources?

Yes. I believe that the time for fact finding is over. We have been pressing for action for many months and I expect the Commission to announce tomorrow that it wishes to obtain the Council's authority to hold urgent talks under article 23 of the GATT. I consider this matter to be of great importance and intend to raise it tomorrow.

Is the Secretary of State prepared to restrict the entry into the United Kingdom of viscous yarn?

As I said to my hon. Friend the Member for Rossendale (Mr. Trippier), I intend to go to the Council tomorrow and these matters will be debated. I believe that we have sufficient facts to decide in the Council tomorrow how to go forward, and I expect that the Commission will propose action under article 23 of the GATT.

How does my right hon. Friend view the closure announced on Friday of Courtaulds Redscar mill in Preston, with the loss of 2,600 jobs? Does he recognise that that is an indictment of Government policy, both Labour and Conservative, on the import of cheap textile goods?

I am concerned to hear of the closure, but approximately 12 per cent. of the textiles sold in this country come from low-cost sources, and the overwhelming proportion of those supplies from low-cost producers are under some kind of import restraint. I am deeply concerned to hear of the closure in my hon. Friend's constituency, and perhaps he will give me more details later.

The Secretary of State will be aware that during the Tokyo round the previous Government raised the question of cheap man-made multi-fibres coming from the United States which are cheap because of cheap energy sources, and special arrangements were made under the negotiations for the matter to be raised. Does the right hon. Gentleman think that it is satisfactory that so many months after the Government took office they are still at a fact-finding stage? Does he agree that action should be taken under the rules that were negotiated?

I have said three times that I am going to the Council tomorrow on the matter. I must also point out that, with such a depressing outlook for world trade, it is vitally important for other British industries, including the wool textile industry which is a large exporter to the United States, that if possible we solve these problems by agreement and go through the agreed international procedures and not take unilateral action. I could not be more aware of the concern that is felt in the country and the House on these fibre imports, and I am anxious that we should move forward as soon as possible under article 23.

Heathrow Airport (Fifth Terminal)


asked the Secretary of State for Trade what proposals have been made by British Airways for a fifth terminal at London Heathrow airport on the Perry Oaks site.

I am aware that British Airways favour the further expansion of Heathrow, but I have received no specific proposals for a fifth terminal.

Is my hon. Friend aware of a British Airways document that partly argues the case for a fifth terminal on the Perry Oaks site and that that should be considered as an alternative to the restrictions placed on the development of Heathrow airport by the previous Government? If he does not know of the document, will he be kind enough to familiarise himself with it and put the minds of the people of West London at rest?

As I said, I am aware that British Airways favour the further expansion of Heathrow, but there are major problems. It would not be right for me to state the Government's attitude before all the options to satisfy the demand for increased air capacity in the South-East of England have been considered.

Before the hon. Gentleman starts talking about a fifth terminal at Heathrow, will he give his attention to the question of a fourth terminal? Is he aware that the inspector's report has been lying on the Secretary of State's table since 18 May, and surely it is a disgrace that such a costly delay should occur? What is the reason?

If we are to discuss costly delays in airport policy, the hon. Gentleman might be wise to leave the Chamber in order to avoid embarrassment.

Will the Minister tell us whether a decision has been taken to build a further terminal or rebuild the terminal at Stansted? That is one alternative to the fifth terminal at London airport.

As I said earlier, all these options are being taken into account in considering solutions to the problem of increased capacity in the South-East. We do not wish to rule out any option before reaching our final conclusion.

Citizens Advice Bureaux


asked the Secretary of State for Trade what will be the amount of financial assistance from his Department for local citizens advice bureaux for 1980–81; and how this compares with levels of assistance for the current financial year.

As I shall be announcing today, we shall be doubling the level of assistance in 1980–81, compared with this year. We shall provide £3 million next year. This compares with £1·5 million in the current year. Both figures are at 1979 survey prices.

Does the right hon. Lady realise that she provides practically no assistance for the local CABs? Although she is increasing expenditure at national level by £1·5 million, she is making a saving of £1·5 million because of the abolition of CACs. Is the right hon. Lady concerned that, with the pressure on local government spending, many local CABs will come under severe pressure because of the cut in grants at local level?

Like the hon. Gentleman's Government, when he was Minister with responsibility for consumer affairs, the Government make no direct grant to local CABs. I was referring to the grant for the National Association of Consumer Advice Bureaux—as happened under the previous Government. I value greatly the work done by CABs. That is why I am pleased to be able to increase support in this way. The hon. Gentleman referred to the CACs. I have noted that the CABs are far more cost-effective. It costs them £1 to deal with a complaint, against £4 in the case of the CACs.

Notwithstanding the carping of the hon. Member for Norwood (Mr. Fraser), will my right hon. Friend take it from me that some of my right hon. and hon. Friends, conscious of the need to continue to assist the consumer in whatever way is open to us, warmly welcome the announcement that she has made this afternoon?

Multi-Fibre Arrangement


asked the Secretary of State for Trade what changes he would wish to be made in the multi-fibre arrangement when it comes up for renewal.

The Government recognise that there will be a need for continuing orderly marketing arrangements for textiles after the present multi-fibre arrangement expires, but it would be premature to consider now what form those arrangements should take.

Does my right hon. Friend accept that it is not only vital to the Yorkshire and Lancashire textile industries that a new and, preferably, strengthened MFA is negotiated, but that, once it is negotiated, the Commissioners should use their powers to monitor the operation to ensure that it is not abused, as it has been in the past?

I fully accept that the MFA is of great importance to the Yorkshire and Lancashire textile industries. It will be just as important for new marketing arrangements to be adequately monitored. I give my hon. Friend that assurance that they will be.

Will the Secretary of State indicate what weight he gives to representations from the jute industry regarding the maintenance of the position of the industry on Tayside? What action does he propose to take, through the EEC or in other ways, to prevent back-door importation of jute products, which will affect employment levels in Dundee and Tayside?

I am well aware of the importance of the jute industry to Dundee. Some of my hon. Friends have been concerned about the industry for many years and I could hardly not be so aware. If the hon. Gentleman will give me specific examples, I shall look into those with great care.

Does my right hon. Friend agree that there should be provision for a meaningful annual review of any successor to the MFA, preferably to be incorporated in the current agreement, to see that restrictions on developing countries are not negatived by the increase of imports into this country from other sources?

The new MFA is not due for another two years. The bilateral agreements do not expire for another three years. It is not in the interest of the textile industry—although some people in the industry believe that it is—for us to be drawn into detailed discussions at this stage about the contents of the new agreement. However, I agree with my hon. Friend that we should ensure that, where imports fall outside the MFA arrangements, we are prepared, if there are sudden surges of imports, to look at the possibility of other restraint arrangements. That is what takes place now.

Will the Minister indicate when he believes that it will be appropriate to have discussions on the succeeding arrangement? Will he assure the House that, within the next 12 months, the trade unions and the employers federation in the wool textile industry will take part in such discussions?

My right hon. Friend the Secretary of State for Industry and I have met two substantial delegations from the textile industry. We are always ready to meet further delegations on the subject. When the time arrives for discussion on the possible new regime we will be happy to meet representatives from the wool textile industry. I do not expect that the Community will wish to make firm decisions about the matter for another year, at least.

The Secretary of State will recall that part of the British agreement to the Tokyo round's conclusion was that the MFA would continue. Agreement was secured within the Community on that objective. The Secretary of State would reassure people in the industry, without going into detail, if he would confirm that a new MFA will contain levels of protection no less than those at present.

I am reluctant to use the term MFA, because it refers to a specific arrangement. It refers to about 27 separate bilateral arrangements. It is a mistake to use the term when, in three years' time, what the House, the country and the industry may want, is a different sort of arrangement. That is the only reason for my reluctance to talk specifically about a renewal of the MFA. I prefer to say that we shall need some form of orderly marketing arrangement to succeed it.

Imports And Exports (Exchange Rate Effects)


asked the Secretary of State for Trade what assessment he has made of the effect of the recent exchange value of the pound on the level of imports and exports; and if he will make a statement.

The relative strength of sterling since the Conservative Government took office has enhanced the reputation of this country abroad, reduced the sterling value of imports and, by contributing to the fight against inflation, will help our future export performance.

Does the Secretary of State appreciate that the reputation of sterling abroad does not necessarily bring jobs at home? Does he accept that the high and escalating value of sterling—according to the latest figures—will lead to cheap imports, expensive exports and the consequential de-industrialisation of these islands? Taken in conjunction with the lifting of restraints on the export of capital and the high interest rates on home manufacturing industries, does he agree that the value of sterling is having a devastating effect on the country?

The strength of sterling is a by-product of the new Government's economic policies. I find it strange that when the House has complained for years and years about the weakness of sterling and its accompanying problems—including a high domestic inflation rate—many hon. Members now start to complain because sterling is strong. They cannot have it both ways. It must be for the benefit of the country that our currency is highly regarded overseas. That plays an important role in reducing the cost of imports. For that reason, it is beneficial in the fight against inflation.

Will my right hon. Friend comment on Professor Reddaway's report and the CBI report on investment overseas? Those reports show that such investment brings greater exports and greater employment for the country.

I agree with my hon. Friend. Trade follows overseas investment. The example of the United States is a good one to illustrate that point. The National Economic Development Council considered these matters, as did the sector working parties on which the trade unions were represented. The majority view was that overseas investment helped to provide jobs at home.

Will the right hon. Gentleman give his support to what appears to be the developing policy of Her Majesty's Government, to run down the currency reserves so that they can no longer be used by the Bank of England and others in the silly game of rigging the exchange rate?

I think that the right hon. Gentleman is slightly confused in his question, if I may say so. If he is suggesting that we should not support the value of sterling, or we should not intervene in the foreign exchange market—I think that was his point—I would agree with him. There may be some reason for the Bank of England being in the market in some minor way, but I would certainly agree with him that it is markets, not the Bank of England, which decide the value of sterling.

Is it the Secretary of State's view that we should maintain a substantial surplus in the balance of trade during the oil years? If not, how are we to live when they are over?

I believe that our recently announced policy for the abolition of exchange controls is an extremely important one for the balance of payments. It is absolutely fundamental that we invest some of the proceeds of North Sea Oil in overseas income-producing assets. This will provide great benefits for this country in future years, just as overseas investment has provided enormous benefits to this country throughout its recent history. That aspect of our policies will bring great benefits over future generations.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the answer, I beg to give notice that I shall seek an early opportunity of raising the matter on the Adjournment.

Import Controls


asked the Secretary of State for Trade what is the Government's present policy in regard to import controls; and what controls have been introduced during the last six months.

The Government are completely opposed to general import controls, since they would destroy jobs and diminish our competitiveness. But they are always prepared to consider the imposition of temporary import restraints where special circumstances apply.

Does the Secretary of State recall that on earlier occasions Conservative Members have frequently and loudly complained that the special steel interests of south Yorkshire were being severely harmed by unfair overseas competition, despite the helpful action taken by the last Government? Is their silence today evidence of the fact that the Government have done anything to help? Have they done anything at all?

Since the Government came to power they have acted in very many instances where it has been shown that unfair trading practices are being indulged in by our overseas competitors. I have been to the EEC in Brussels in order to discuss this with the Commission.

There is, I think, a great misunderstanding of the anti-dumping powers that we have in this country, and I am anxious to make the procedures more generally known.

If the hon. Gentleman has examples of unfair trading practices in the industry with regard to dumping, we shall be only too ready to help the industry and the hon. Gentleman in trying to deal with them.

Is it not a fact that the total import bill for steel last year was over £1,000 million, and that in the same year the total number of motor cars imported was 800,000? Does not this gravely impair the viability of two basic industries in Britain as well as leading, incidentally, to steel closures?

I am sure that the hon. Gentleman is aware that the motor industry and, indeed, the steel industry, are both very substantial exporters. We not only import steel; we also export it. When one-third of our gross national product finds its way into export markets, we have to be extremely careful about imposing import restraints on products in regard to which we benefit greatly in export markets.

I welcome my right hon. Friend's antipathy towards unfair trading practices, but will he consider the relationship between the British Rail pension fund and Sotheby's auction house, in particular in the context of the Ojjeh sale in Monte Carlo in June or July this year, when there were strong rumours of a price being guaranteed by Sotheby's auction house to the British Rail pension fund and to the sellers of the particular goods involved?

I have to say to my hon. Friend, in the most friendly spirit, that there are a number of matters for which I am responsible, but that fortunately I am not responsible for British Rail or for its pension fund. The way in which the investment manager of the British Rail pension fund behaves is ultimately a matter for the trustees of that fund. If my hon. Friend wishes to put further questions on this matter, I suggest that he put them to my right hon. Friend the Minister of Transport.

Departmental Staffing Levels


asked the Secretary of State for Trade when he expects the review of staffing levels in his Department to be completed.

I am reviewing a number of functions of the Department with a view to reducing Civil Service work and will announce the outcome as soon as possible.

I thank my right hon. Friend for that assurance. Will he give an equally strong assurance that his review will make quite sure that the net figures produced will take account of the amalgamation between his own Department and the now defunct Department of Prices and Consumer Protection?

I am endeavouring to eliminate unnecessary functions. There is not any particular determination on my part to get numbers down for the sake of getting numbers down. I am looking at the general efficiency of the Department. Where we can eliminate functions, or improve the way in which we do our work, we may, as a byproduct of that, obtain reductions in staff.

I am conscious of the fact that two Departments have been merged into one. Both are now working very much better under the Conservative Administration than they were before. I hope that we can achieve some savings of the sort that my hon. Friend proposes.

On a day when this House is reminded of the courage and skill of our air-sea rescue personnel, will the Secretary of State assure us that in his review he is not considering a cutback in the marine division, particularly in the coastguard services or the marine survey office? Any such cutback would inevitably reduce safety for our seafarers.

I am very well aware of the vitally important work done by the marine division and by the coastguard service. There is no question of our reducing in any way the role that we play in this area. That could not be so. However, if some reorganisation is found to be desirable within, let us say, the marine division, we must be free to make that reorganisation. We are looking at how we can make the Department more efficient, and not at how we can get numbers down just for the sake of it.

How can my right hon. Friend justify the near doubling of the airport security levy on air passengers next spring when manning levels—for example, four people are assigned to each X-ray machine—appear to be higher than is the case elsewhere in the world?

This function must pay for itself. It would be quite wrong, in my view, for the general body of taxpayers—many of whom have never travelled on air transport and will never do so—to be subsidising this function. We shall look into the efficiency with which the operation is conducted, but it must cover its own costs.

Will the right hon. Gentleman give the House an undertaking that he will not delegate essential survey work from the survey department within the marine division to the independent classification societies?

I am not giving any undertakings to the hon. Gentleman. I shall give undertakings about the organisation of the Department when we have fully completed our study of all these matters.



asked the Secretary of State for Trade what new initiatives he intends to take to increase trade with France.

The British Chamber of Commerce in France has recently published a policy statement aimed at increasing trade with France. I am studying its report.

How is the trade in lamb getting on? If the French continue to refuse to take our lamb, why should we continue importing unlimited quantities of their revolting apples?

As for French lamb, it is for the Commission, not for us, to take action against illegal behaviour by France. I do not know that I agree with the hon. Gentleman's comment about French apples. I think that some French apples are delicious, but that is a matter of taste.

Price Commission


asked the Secretary of State for Trade when he next expects to meet the chairman of the Price Commission.

My right hon. Friend has no plans to meet the chairman at present.

Now that the Government's counter-inflation strategy seems to be an absolute shambles, with inflation over 17 per cent. and likely to rise to 20 per cent. by the turn of the year, and with more and more people complaining about the high price of food, fuel, clothing and many essential goods and services, will the Government, even at this late stage, abandon their insane proposals to abolish the Price Commission? What we need is more price control, not less.

I do not accept the hon. Gentleman's diagnosis that the Government's counter-inflation policy is a shambles. If the last Government had had the courage to face economic realities, as we are doing today, the country would not be facing its present problems. As the Price Commission never significantly affected prices in any way, the latter part of the hon. Gentleman's supplementary question is irrelevant.

Is my right hon. Friend aware that the prices policy of the last Government drove nearly half the suppliers of paraffin out of business? The result of that is that in many rural areas today no paraffin can be obtained for delivery to homes.

I am aware that the operation of prices policies under the last Government caused prices to more than double. I am also aware of the problems to which my hon. Friend rightly referred.

Are the many companies which donated so generously to the Conservative Party now satisfied with the abolition of the Price Commission?

The people who donate most generously to the Conservative Party are the people who work for the party on the ground.

The right hon. Lady rejected the word "shambles" as a desscription of the Government's counter-inflation policy. With inflation heading towards 20 per cent., what word would the right hon. Lady use?

I would use the word "shambles" to describe the counter-inflation policy of the last Government.

Inflation (International Comparisons)


asked the Secretary of State for Trade what is the present level of inflation as measured by the retail price index; and what are the comparable levels for the other members of the European Economic Community.

The retail price index increased by 17·2 per cent. over the 12 months to October and by 10·3 per cent. over the 12 months to May.

As the Minister did not give the comparable figures for the European Community I assume that, unlike the press, the Treasury does not keep those figures. Is the right hon. Lady aware that the Treasury indicated in figures published last week that the correlation between growth of the money supply and inflation broke down two years ago and that present inflation is not due to money supply, and still less to rises in wages for working people, but is almost exclusively caused by the actions of the Government since they came to power in April?

In answer to the first part of the hon. Gentleman's question, with permission I shall circulate the figures for other members of the Community in the Official Report. As he will be aware, the rate of inflation in this country was higher when we took office than in most other countries of the European Community. I do not accept his diagnosis of the present cause of inflation.

Now that the Treasury's forecast of inflation has been invalidated by last week's statement, will the right hon. Lady give us her inflation forecast for next year?

The Government's counter-inflation strategy is not aimed at any one year, or any one month. We are tackling the root causes of inflation in all our economic policies. The consequences of living beyond our means during the past five years will be painful in the short term, but I believe that in the long term our policies will succeed.

Following is the information:

In September (the last month for which comparable figures are available) inflation in the nine EEC members was:
  • Belgium 4·6 per cent.
  • Denmark 12·8 per cent.
  • France 11·0 per cent.
  • Germany 5·3 per cent.
  • Ireland 13·6 per cent. (To August, latest available figure).
  • Italy 15·1 per cent.
  • Luxembourg 5·1 per cent.
  • Netherlands 3·9 per cent.
  • United Kingdom 16·5 per cent.



asked the Secretary of State for Trade how many quasi autonomous national government organisations for which he is responsible have been abolished; and what progress is being made towards the abolition of the remainder.

Announcements have been made that I intend to abolish the Price Commission and the Metrication Board. Departmental funds are being withdrawn from 120 consumer advice centres. A review of the remaining bodies is in hand. The total saving arising from these measures amounts to over £11 million a year.

Although I welcome my right hon. Friend's announcement, and the progress that he has made so far, may I ask him to tell the House how many more quangos he proposes to abolish and what the net saving to the taxpayer will be in that event?

I cannot answer that question, because our review of the other bodies is still in hand. I hope that we may be able to save more of the taxpayers' money in this area in future.

Will the Minister confirm that he is already in the process of setting up another quango for pilots; that is the Pilotage Commission? How much will it cost?

I know how very faithfully the hon. Gentleman supported his own Government when they were in office. I must tell him that I did not propose the establishment of the Pilotage Commission. That proposal came from right hon. Gentlemen now in opposition. I believe that the Pilotage Commission is necessary and that it will perform an important role. If the hon. Gentleman wishes to find out more about it, he should ask his right hon. Friends.

Monopolies And Mergers Commission


asked the Secretary of State for Trade when he next expects to meet the chairman of the Monopolies and Mergers Commission.

My right. hon. Friend meets the chairman of the Monopolies and Mergers Commission as frequently as necessary. He has no meeting arranged at present.

Does my right hon. Friend agree that a subject which may come up for discussion when next she meets the chairman is the problem of monopoly buyers—I believe that the correct word is "monopsonists"—and will she encourage him to launch an investigation into one in order to discourage the others?

This is an interesting matter and, I believe, is the subject of an amendment which is likely before long to be before the Standing Committee considering the Competition Bill. It is of special interest in relation to public sector buyers, so obviously it is a matter to which the Government will be giving due consideration.

Medieval Churches (Restoration)


asked the hon. Member for Wokingham, as representing the Church Commissioners, what estimate the Commissioners have made of the shortage of skilled stonemasons capable of doing restoration work on medieval churches.

While this matter does not come within the responsibility of the Church Commissioners, in order to help the hon. Member I can tell him that there are now 14 English cathedrals with cathedral workshops employing skilled stonemasons and apprentices, and that a number of substantial private firms do the same. The advent of State aid for churches in use has given a considerable fillip to stonemasonry and the situation to which the lion. Member refers may, therefore, be expected to improve somewhat.

In the light of the detailed correspondence from the Department of Employment that I have sent to the hon. Gentleman and in the light of the anxieties caused by the age of those who can do this extremely skilled work in stonemasonry, would the Commissioners consider lending their weight to proposals that the Manpower Services Commission should undertake a further training programme in stonemasonry?

I recognise the validity of the point raised by the hon. Gentleman. If I may have time to consider the correspondence that he has been courteous enough to send to me, I will gladly see whether, consistent with our responsibilities, it would be appropriate for the Commissioners to make any representations.

What discussions have the Church Commissioners had with the Department of Employment on the training of young people in this vitally important craft? Will my hon. Friend acknowledge that, unless young people are trained in this craft, all the State aid in the world will be no good?

The Commissioners have not had any discussions, for the reasons I indicated in my main answer.

Does my hon. Friend agree that the greatest shortage is not of stonemasons but of stone conservators, who require considerable additional training? I am sure that hon. Members on both sides of the House wish to see stone conserved. Will my hon. Friend make inquiries in the appropriate Department and find what opportunities there are for expanding the number of places for training stonemasons to become stone conservators?

I will gladly look into that matter, but I repeat—with no discourtesy to my hon. Friend—that, consistent with the duties of the Commissioners, they have no direct responsibility here.

Church Commissioners


asked the hon. Member for Wokingham, as representing the Church Commissioners, when next he expects to attend a meeting of the Church Commissioners.

Consistent with my duties in this House, I hope to be present at the Commissioners' headquarters twice this week.

What do the Church Commissioners think of the proposal of the Government to deprive children of their legal right to free school transport? Does the hon. Gentleman agree that the children who will suffer most as a result of this mean proposal are those who travel considerable distances to attend denominational schools? This Government are depriving parents of freedom of choice in the education of their children as well as depriving their children of free school transport.

The Church Commissioners have no responsibility in education or in the voluntary controlled and voluntary aided schools. Therefore, the matter has not been discussed. On the more general question, I have noticed that in our efforts to improve the lot of the low-paid clergy the present economic climate has considerably helped the efforts of the Commissioners.

Will the Church Commissioners use their influence to ensure that space is provided temporarily in our parish churches for the storing of the Book of Common Prayer so that, when people tire of the new services, it may be used again?

I find, increasingly, that the duties of a Second Church Estates Commissioner get wider and wider—and I refer not only to his shape. The short answer to my hon. Friend is that, since I am quite certain that he is an active member of his own parochial church council, that is the body on which he should make his influence felt.

Business Of The House

The Chancellor of the Duchy of Lancaster and Leader of the House of Commons
(Mr. Norman St. John-Stevas)

With permission, Mr. Speaker, I would like to inform the House that the business for this week has been rearranged as follows:

On Wednesday 21 November there will be a debate on the case of Anthony Blunt, on a motion for the Adjournment of the House.

Consideration of the documents on the EEC Community budget will now be on Thursday 22 November.

The Supply [6th Allotted Day] announced for 22 November has been postponed until Monday 26 November.

The Opposition think that it is right that the Government should have rearranged the business to have the debate proposed for Wednesday. However, we should still like to have some discussions through the usual channels about Monday's debate, in view of the fact that we may wish to have that debate on the Tuesday, so that the day that the Government have agreed for an economic debate would be the Wednesday. In other words, we should like to discuss through the usual channels the possibility of holding the Supply debate on the Tuesday and the other debate possibly on the Monday.

That is an interesting piece of information, for which I am grateful to the right hon. Gentleman. I hope that it will be discussed amicably through the usual channels.

Although we welcome an early debate on this issue, does not the Leader of the House think it necessary in the circumstances to suspend all proceedings in the Protection of Official Information Bill? Does not he think that there is a risk of its becoming known as the Protection of Incompetence and Covering Up for Treason Bill?

I congratulate the hon. Gentleman on his lurid turn of phrase, but clearly this is a matter that will be relevant to the debate that the Government have provided on Wednesday.

Order. Of course, I shall take some further questions, but I hope that they will be related directly to the business announced for Wednesday.

Does the right hon. Gentleman understand that many of us view with great suspicion the Government's proposition to have a full debate on Wednesday on the Blunt case? [HON. MEMBERS: "Why?"] I hope that I shall be able to expand on that on Wednesday. In view of the enormous interest in the debate, will the right hon. Gentleman consider extending the time for the debate to 11 o'clock, or even midnight? Does he understand that if we take this debate on the Adjournment we shall be unable to refer to legislation; in other words, we shall be unable to refer to the Protection of Official Information Bill, which really ought to be consigned to the dustbin now?

When we are providing a full day's debate on this important subject I do not think that it would be suitable to extend it still further. What is in order and not in order on the Adjournment is for Mr. Speaker—

It is not for me.

As for the hon. Gentleman's suspicions, if he is suspicious when a full day's debate has been announced, he must have a very suspicious nature.

I congratulate the Leader of the House and, through him, the Prime Minister on managing, with the advice of the censor in Smith Square and the mole at the Paymaster General's office, to divert attention from an inflation rate of 17 per cent. to a 28-year-old scandal.

I am grateful to the hon. Gentleman for what I take to be a compliment. As I am a simple person, I do not fully understand what he is getting at.

Will the right hon. Gentleman ensure that the Select Committee appointments that were blocked on Friday will be got through the House before Wednesday, since the Home Affairs Committee and possibly others could consider and investigate this issue? Obviously it would be much more desirable, rather than having a roundabout debate, if a proper Select Committee could be set up to consider the issue. The necessary motions are on the Order Paper. They were blocked by a member of the right hon. Gentleman's own party. Will he ensure that they go through on, say, Tuesday night in opposed business time?

I regret to tell the hon. Gentleman that the motions were blocked by both sides of the House. I was here, and I heard the shouts of "Object" coming from both sides. I hope that these motions will be passed in record time. However, that is not in my power. It is in the hands of the House.

I am grateful to the Leader of the House and to the Prime Minister and her colleagues for responding very quickly to the demand for a debate on this very important and sensitive subject. However, does the Leader of the House consider that a parliamentary debate is sufficient to deal with this matter of national importance? Can he say more about the Government's thinking, perhaps today? Will not he take into account the fact that serious issues arise from the Prime Minister's statement in reply to my question last week—

Order. With every respect to the hon. Gentleman, that is a matter that could be raised during the debate on Wednesday, if he is called.

If I may conclude, Mr. Speaker, perhaps the Leader of the House will indicate to the House whether, in addition to the parliamentary debate, which we welcome, there will be an inquiry so that public confidence may be restored.

I am grateful to the hon. Gentleman for his tribute to my right hon. Friend the Prime Minister, which I think is well deserved. The Prime Minister has been more open with and responsive to the House than any of her predecessors.

As for further action following the debate, I suggest that the hon. Gentleman waits for the debate itself.

Does not the right hon. Gentleman agree that it would be intolerable if the scope of the debate were limited to the trivial aspects of this affair and precluded the House from discussing such matters as the proper control of our security services? Will he undertake to reconsider the wording on the Order Paper with a view to changing it from the simple title

"The case of Anthony Blunt"
to a rather wider form of words, so that it becomes clear to all concerned that we may discuss every aspect of this affair?

I should have thought that the Adjournment debate was a debate during which it was possible to raise matters of general interest surrounding this subject. As for trivialising the debate, that is up to hon. Members. On these occasions the House of Commons normally treats the subject under discussion with the seriousness that it deserves.

I do not know whether the right hon. Gentleman was led a little astray just now when he contrasted the Prime Minister's actions with those of her predecessors. If he was, perhaps he would would like to consider withdrawing that statement.

I was praising the attitude of my right hon. Friend the Prime Minister. I was not condemning the attitude of any of her predecessors.

Many of us entirely agree with the right hon. Gentleman that the Protection of Official Information Bill is relevant to Wednesday's debate, since we should not have reeached even our present state of knowledge if that Bill had been law last week, but may we take it therefore that at the outset of the debate we shall have an indication of what the Government now propose to do with a Bill that has been deeply discredited by the events of the past few days?

I must ask the hon. Gentleman to await what is said by the Government spokesmen in the debate.

May we have an assurance that the Prime Minister—I assume that she will be taking part in the debate—who paraded the country during the election campaign talking about law and order and the need for a more sober society, will give a full disclosure of why she turned into nothing more than a common or garden nark in tipping off Professor Blunt?

May we have an assurance that the Home Secretary also will take part in the debate? Secondly, can the right hon. Gentleman assure us—he did not respond on this to my hon. Friend the Member for Edinburgh, Central (Mr. Cook)—that the Home Secretary will give his views on the alterations prepared for the Protection of Official Information Bill, which have already been announced? Further, will the Home Secretary and/or the Prime Minister tell us in the debate what form of inquiry into this matter will be undertaken?

I understand that the Government spokesmen in the debate will be my right hon. Friend the Prime Minister and my right hon. and learned Friend the Attorney-General.

Select Committees

On a point of order, Mr. Speaker. Perhaps you could correct me. The right hon. Gentleman the Leader of the House said that approval of the Select Committees was now for the House, but the Order Paper does not show that the motions have been tabled again. They have been taken off the Order Paper by the Leader of the House. Is that correct, Mr. Speaker?

Adjournment Debates

On a point of order, Mr. Speaker. My point of order is not on the question that I raised last Friday but is closely related to what has just happened, and I seek your guidance. I understand that when there is a motion for debate on the Adjournment of the House we cannot discuss legislation. Can you give us an assurance that we shall be able to discuss the Protection of Official Information Bill in the debate on Wednesday?

The House will be aware that normally in an Adjournment debate we cannot ask for legislation. However, Standing Order No. 16 lays down that

"Notwithstanding the practice of the House which prohibits in a debate on a motion for the adjournment of the House any reference to matters requiring legislative remedy, Mr. Speaker may permit such incidental reference to legislative action as he may consider relevant to any matter of administration then under debate when enforcement of the prohibition would, in his opinion, unduly restrict the discussion of such matter."

Courtaulds, Preston (Mill Closure)

I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,

"the closure of Courtaulds Red Scar mill, Preston."
May I say, Mr. Speaker, that many of my constituents would consider this matter to be a little more important than the activities of Anthony Blunt?

The 90 days' notice of closure of this factory has been given by Courtaulds. That notice having been given on Friday, you will readily understand, Mr. Speaker, why this is the earliest possible time at which the matter could be raised with you on the Floor of the House of Commons.

There are 2,600 jobs involved, and the imminent loss of these jobs comes rapidly on top of the closure of a textile mill last Saturday, which meant the loss of 800 jobs, and on top of the Preston borough council's decision to close Preston dock. In fact, we are here talking of the loss of between 4,000 and 6,000 jobs in the Preston area, which will deliver a tremendous body blow to the town of Preston.

As I am sure you are aware, Mr. Speaker, Courtaulds produces viscose filament yarn, which is used mainly by the tyre industry. Financial losses of about £5 million over the past four years have put the company in difficulties, and it may well be that companies such as Dunlop, Michelin and Goodyear, which are now buying this yarn from Holland and Austria, have to some extent contributed to the present position—another illustration of the lack of planning in our trade.

The closure will immediately affect 12,000 workers and their families. Moreover, there will be a loss of skill that we shall need over the next few years when the developing countries find it necessary to withhold their cotton.

In my view it is essential that the House should address itself to this problem and consider ways by which we can replace productivity in the Preston area—and in the Red Scar mill in particular—so that the workers may have employment in this factory and it is not closed. It is our responsibility, Mr. Speaker—the responsibility of the House, the company and the work force—to find some means of preventing the closure.

The hon. Member for Preston, South (Mr. Thorne) gave me notice before 12 o'clock today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believed should have urgent consideration, namely,

"the closure of Courtaulds Red Scar mill, Preston."
I listened with care to what the hon. Gentleman said. As the House knows, I do not decide whether the matter is to be discussed. My discretion is limited to the question whether it is of such a nature that it should be discussed tonight or tomorrow night. As the House knows also, under Standing Order No. 9 I am directed to take account of the several factors set out in the Order but to give no reasons for my decision.

I have to rule that the hon. Gentleman's submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

Orders Of The Day

Civil Aviation Bill

Order for Second Reading read.

3.47 pm

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

The Bill has two main objectives. First, it paves the way for a change in the status of British Airways from that of a nationalised undertaking governed by statute to that of a normal private sector company incorporated under the Companies Acts. Second, it amends the Civil Aviation Act 1971 so that the award of new routes and the maintenance of the existing route structure reflects the major changes which have taken place in the world airline business over the past few years.

I shall deal with each part of the Bill in turn, but both of them have the common purpose of fostering a vigorous United Kingdom air transport industry ready to respond to the needs and pocket of the airline passenger and then to meet and beat foreign competition for his custom.

British Airways are now the world's largest international scheduled operator. They are big enough and powerful enough to stand on their own feet as an independent airline, without Government guidance, without Government targets, without Government guarantees, and, above all, without Government interference. British and foreign airlines one-tenth their size, without their long traditions, financial strength and huge prestige, buy modern aircraft, provide safe and efficient services and run a profitable enterprise as independent companies. If those airlines can do it, so can British Airways.

British Airways' services represent two-thirds of the total British airline business. The corporation has prospects of carrying out one of the most exciting investment programmes in the world. Its 57,000 employees share a substantial pride in their corporation, and a substantial number of these employees want to share financially it its future. By opposing the Bill, the Labour Party has shown that it wants to stop them doing that. There is not one reason why, except that it is gripped by a strange and thoroughly irrelevant ideology. As a by-product of that ridiculous condition, the Treasury controls the investment programme and the targets of British Airways, Ministers approve the corporate plan, the Secretary of State appoints all the directors and in any real sense the shares are owned by nobody at all.

We have to ask why right hon. and hon. Members imagine that they are more competent to supervise the airline than the management. What special managerial qualities are possessed by right hon. and hon. Members that are not shared by the chairman and chief executive of the airline? What special insight do they feel that they possess that entitles them to speak of what the employees want, and what is the talent in the Treasury, which now effectively oversees the corporate plan of the airline, that provokes the Labour Party's fascinated admiration?

For years my right hon. and hon. Friends have heard the Labour Party call for more genuine participation, more worker involvement, and more democracy in the ownership of business. However, when we come forward with a plan that gives such real opportunities and freedom from the pettifogging interference of Government, the Labour Party oppose it.

What is so wrong with the structure and independence of British Petroleum? Are the employees and the management of BP demanding the warm embrace of Government? Not a bit of it. If it is wrong to sell some shares of British Airways, why was it right for the previous Government to sell BP shares to the public? This is not merely my opinion. Our proposals have captured the imagination of not only the British people generally but the employees of British Airways. My hon. Friends who represent constituencies in which the staff and employees of British Airways live—

It may be that the hon. Gentleman has heard some opposition, but my hon. Friends who represent constituencies in which many of the staff of British Airways live have indicated to me that substantial interest has been shown by the employees of the airline in owning shares in it.

I accept that the Labour Party is opposed to our policy. However, it is not only the shop floor that has deserted it on this issue. Even its intellectual and ideological allies have deserted it. I shall refer to a leader that appeared in The Guardian the day after the announcement of our proposals. The leader stated:

"The decision is basically a sensible one"—
that was its comment on our proposals—
"which the Labour Party ought to ponder rather than decry. To begin with, the whole idea that State ownership of the commanding heights of the economy brings power to the people has been badly undermined by many years of practical experience."
It continued:
"by providing British Airways with shareholders it will give its chairman something which many nationalised industry chairmen dream of: a measure of independence from Whitehall."
It was a long leader that was mainly in favour of our proposals, with a few questions here and there. It concluded:
"If its worker-shareholders become more committed to the company and its managers are invigorated by their new freedom, then we shall all have learned something useful."

Two days after I made the announcement of our proposals. That was in July.

On a point of order, Mr. Speaker. Would not it be more courteous if the hon. Member for Feltham and Heston (Mr. Kerr) rose to his feet occasionally, if he can do so?

Out of deference to the hon. Member for Woking (Mr. Onslow) and yourself, Mr. Speaker, I shall do so in future.

I must offer special congratulations to my hon. Friend the Member for Wokingham (Mr. Onslow) on having caused the hon. Member for Felt-ham and Heston (Mr. Kerr) to rise to his feet. I am well used to receiving interventions from that quarter while the hon. Gentleman is in a sedentary position.

On the appointed day, British Airways will be changed from a nationalised industry into an ordinary Companies Act company, with all its shares held on behalf of the Crown. At the appropriate time the Government will sell a minority of the shares in British Airways, making provision for a genuine, attractive and substantial shareholding for the staff and employees of the airline. We anticipate that of the shares not taken up by the employees the overwhelming proportion will be acquired by pension funds and other institutions representing the interests of millions of pension beneficiaries throughout the country. We believe that many small investors will seek to put some of their small savings into the airline at that time.

I do not doubt that the pension funds of the trade unions and Transport House will, as usual, and wisely so, be substantial investors in such an opportunity. The trade unions are normally the first institutions to grasp an exciting investment opportunity when they see one.

We shall be providing for public ownership in the true and proper meaning of the term. For the first time our national carrier will be genuinely publicly owned.

At the time of the quotation the Government will cease to crawl over and interfere with British Airways' procurement programme. The purchase of new aircraft—the corporate plan of British Airways envisages expenditure of about £2 billion on new aircraft during the next five years—will go forward on its merits. We believe that the management, in consultation with the employees and its shareholders, is best able to judge the numbers and types of aircraft required to enhance its competitive position and maximise results. My Department will thereafter cease to approve each decision for new aircraft purchases. At present I approve each of the aircraft purchases of British Airways, and I see no reason for that.

The Treasury will relinquish control of the airline's finances. The commercial borrowings of the airline will fall outside the Government's accounts. Thereafter, British Airways will not be subject to the traditional cutback in its investment programme every time the Government, of whatever party, go in for general public spending reductions. The right hon. Member for Lanarkshire, North (Mr. Smith) will remember the occasions on which his party has indulged in public spending cuts.

When the airline has become a company, it will be governed by the ordinary provisions of the Companies Acts. Our objective will be to appoint initially an experienced and independent board that will in future determine business policy and assure the continuity of management at both board and lower levels. I do not readily foresee circumstances in which the Government would seek to mobilise their shareholding in opposition to the board.

Furthermore, the airline will no longer be subject to statutory financial targets, nor will it be subject to cash limits. We shall not take the power to guarantee its borrowings or to make it loans. However, like other shareholders, the Government will be able to subscribe to the rights issues of the company.

British Airways are not a monopoly. They have to operate commercially in an increasingly competitive market. The mechanism of an arbitrary Treasury target will be replaced by a far more appropriate and realistic discipline, namely, the need to maintain the confidence of those who invest in the airline, which will include the staff, its employees and those who travel on its services. The single greatest service that we can afford to the employees of British Airways and their passengers is to allow the airline to get on with its job without Government interference and control. Although the Government will retain a substantial majority shareholding, the airline will cease to be their creature. It will stand or fall by its own efforts.

Will the directors be appointed by the Government, or will some be appointed by the minority shareholders?

We anticipate that when the company becomes quoted the majority of the directors will have been appointed by the Secretary of State. That is the present position. Thereafter we anticipate that the shareholders generally will be responsible ultimately for choosing the board. We do not foresee circumstances in which the Government will seek to mobilise their shareholding—I think that that covers the right hon. Gentleman's question—in opposition to the board, or in order to appoint particular directors. It is not intended that the Government, after quotation, should take a power to appoint their own creatures to the board.

But as the Government are the major shareholder, does that mean that they will continue to appoint some of the directors, or none of them?

The Government as the Government will not appoint the directors as such. But the Government as a majority shareholder will have the right, under the Companies Acts, to appoint directors if they should seek to do so. As a majority shareholder the Government clearly will have the power to do that. But it is not our intention to mobilise that right. We shall allow the shareholders, generally, to choose the directors to the board, and we shall not seek to appoint our own creatures.

Is the Minister serious about that? Is he saying that after the company has been floated, with the Government as the majority shareholder, they will not use their normal rights, as trustees of the public shareholding, to appoint directors? Or have the Government not thought out any policy on that yet?

We have a policy and I have explained it to the right hon. Gentleman. As a Government we do not intend to appoint directors to the board. However, we shall have rights under the Companies Acts to do so. We do not intend to take a power which precludes us from appointing directors to the board. The matter will be entirely open and will be no different from the position which now applies to the majority of British companies, where the majority of shareholders do not, in practice, get together and select directors for the board, although under the Companies Acts they have the final right to do so.

The right hon. Gentleman made the comparison with British Petroleum. As we know, for 50 years the Government have appointed one or two directors to the board of BP. Is it intended to depart from that practice in this case and, if so, why does the right hon. Gentleman make that comparison with BP?

British Petroleum is very different. There is no direct analogy with BP. Under special arrangements entered into many years ago—an exchange of letters between the Government and BP, known as the Bradbury letter—the Government specifically reserved to themselves the right to appoint two Government directors to the board of BP. We do not intend to take any special powers in the Bill for the appointment of Government directors. We do not intend to have an exchange of letters, such as exists between the Government and BP, entitling us to appoint two specific directors. As majority shareholders, we shall always have the right to do so, but it is a right that, as I stand here, we do not intend to mobilise. I do not think I could have been clearer, and I leave it to my hon. Friend to answer further questions on this subject during the debate.

Is the Minister seriously telling us that there is a comparison between British Petroleum and British Airways? Do not the Government have an overwhelming majority in the equity ownership of British Airways? Is it not, therefore, a total abdication of our present ownership, if one likes to put it that way, not even to suggest the appointment of one or two directors? To me that seems a travesty of fair play.

I say quite genuinely that if right hon. and hon. Members feel very strongly on these matters and are determined to insert a clause in the Bill or introduce amendments which would involve the Government actually appointing, in the way that they do now, a number of directors nominated by them, we can debate that in Committee. But our intention is that this company will proceed like any other company incorporated under the Companies Acts. The majority shareholder will have the right to mobilise its shareholding—as, indeed, any majority would have—but it is not our present intention to make a special objective of the appointment of our particular nominees to the board. We intend to hold back from that and to allow the company to proceed in the normal way.

Institutions in this country do not normally go out of their way, where they have a substantial shareholding of, say, 30 per cent., to appoint 30 per cent. of the board, and we shall act in the same way.

I wonder whether the right hon. Gentleman would be generous enough to carry the matter a little further. As I understand it, as regards British Petroleum, the Government have, as a matter of policy and historically, forsworn the use of their position as the majority shareholder in order to influence the policy of a company. Is he or is he not saying that a similar enunciation will be made in respect of the successor company? Is he saying that, although the Government will be the major shareholder, appointment of directors apart, they will not seek, although they are the overwhelming majority shareholder, initially to influence the conduct of the affairs of the company?

Yes, I am saying just that. Apart from the rights which will obviously stem from the Companies Acts—because the shareholders will be, according to the Companies Acts, the owners of the company—the Government want to stand entirely apart from British Airways. We want them to act commercially, and we do not foresee circumstances in which we, as the majority shareholder, would seek to influence the commercial decisions of the airline. That is precisely what I am saying.

We are getting into a Committee stage debate, but what I think the right hon. Gentleman was asking was whether we intend to have an exchange of letters or whether we intend to go further and preclude ourselves, legally, morally or in any other way, from ever taking any kind of position. The answer to that is "No".

Do I understand my right hon. Friend to say that if the minority shareholders put up a candidate for election to the board the Government will not use their majority shareholding to outvote the minority shareholding that has nominated that director? I understand my right hon. Friend to have said that, but I do not want to misunderstand him.

No. I am saying that it is our present intention not to interfere, as a majority shareholder, with board appointments. I hope I have satisfied my hon. Friend.

We cannot continue debating this matter now. I suggest that we debate it at length in Committee. If right hon. and hon. Members wish to table amendments and to change the position, we shall have to look at those amendments. I have explained that it is our intention that this corporation should become a company incorporated under the Companies Acts, and should be treated like any normal company quoted in the market.

Has not the right hon. Gentleman now brought us to the stage where this company will, in future, have its directors appointed by a minority of the shareholders, which is contrary to all normal company practice?

If the minority shareholders seek to mobilise themselves into some kind of body to decide whom they should nominate as directors, they will, as shareholders, have a right to vote on that matter in general meeting. If they seek to do so, the Government will also have the right, by virtue of the fact that they are shareholders, to mobilise their shares in general meeting. What I said, and hoped I had made clear, was that the Government do not foresee circumstances in which they will mobilise their shareholding in such a way. We shall treat the company in precisely the same way as most shareholders treat a company. Most shareholders do not set out to appoint their own creatures as directors.

I turn to part II of the Bill which is described as "Miscellaneous". There are a number of minor provisions amending the existing law, but I want to concentrate on clauses 10 and 11 which deal with the Civil Aviation Authority.

This part of the Bill, in many respects, heralds a more substantial and important change for the future of our civil aviation industry than Part I. Although "ownership" is significant—and part I is concerned ultimately with ownership—the key to the future lies in an aviation policy that brings the maximum benefit to airline users, commensurate with the need to develop our airlines on a profitable, safe and stable basis. Thus, while we are making major changes that reflect current conditions in the airline business, I am anxious to ensure that we do not damage the airlines' stability in difficult times.

The court of appeal case in 1976—Laker Airways v. the Department of Trade—made a change in the guidelines inevitable. It would not be given to any mere mortal to arrive at a change that brought about universal acclamation from British Airways, British Caledonian, Laker Airways and all the other private operators. Indeed, to bring forward such universal acclamation from all of these would lead me to wonder whether our policy was right or whether it would not eventually founder in recrimination.

There is, inherent in a sound policy for awarding routes, a strong element of tension. I do not expect that tension to disappear. I shall have done a good job if none of our airlines is entirely happy. That would indicate that we had achieved a degree of impartiality and a balance in our proposals.

When my right hon. Friend talks about balance between the various airlines and makes the point that none of them should feel badly done by, will he take note of the fact that in this Bill he does not appear to change the position of airlines that are in fact British but are not based within the United Kingdom? One such airline is Cathay Pacific, which is in this position and is therefore at a significant disadvantage in competing for routes in the future. My hon. Friend the Member for Howden (Sir P. Bryan) will raise this matter in more detail in his speech, and I hope that my right hon. Friend will take it into account.

I shall certainly take account of that point when I hear my hon. Friend the Member for Howden (Sir P. Bryan) speak. If any of my hon. Friends wishes to come forward with particular points that affect non-British airlines with a close connection with this country, or airlines that are British but are not based in this country, he may table amendments in Committee and we shall be glad to look at them.

Although the changes give more authority to the Civil Aviation Authority,