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Commons Chamber

Volume 981: debated on Monday 24 March 1980

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House Of Commons

Monday 24 March 1980

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Oral Answers To Questions


South-West Durham


asked the Secretary of State for Industry what is the Government's policy for attracting industry to South-West Durham.

The Darlington and South-West Durham travel-to-work area is to remain an assisted area.

Is the Minister aware that there are parts of my constituency in South-West Durham where the unemployment rate is now 12 per cent? Does he realise that, now that the area has been downgraded, not only incentives but a large part of the advance factory programme will be lost? Will he now, in partnership with the local authorities, invest in an advanced and nursery unit programme and also in the refurbishment of small units for small businesses?

The hon. Gentleman has raised two matters. The first concerns the level of unemployment in his constituency which is made up partly of the Barnard Castle travel-to-work area, where 319 people are unemployed, and partly of a section of the South-West Durham travel-to-work area, where unemployment in 1979 was 6·8 per cent. which compares with the national average of 5·6 per cent. Therefore, the hon. Gentleman was referring to a small pocket, in relation to the very high figures which he just quoted. As regards nursery units, my Department has just received a report from Coopers & Lybrand Associates Limited relating to small firm premises and we shall be publishing that next month.

Does the Minister realise the seriousness of the situation in West Durham? Statistics and averages are no answer to the men and women who now feel that their only alternative, if they are to secure work and provide for their families, is to move to the South. Is he aware that this is not acceptable? Does he appreciate that unless more regional aid is made available, the cynicism, bitterness and, indeed, anger now growing because of the savage cuts in regional aid will lead to serious repercussions?

We are concentrating regional aid on the areas of greatest need. That means that they will stand out much more than they have done in the past. We really care about the problems of very high unemployment in areas such as Newcastle and other special development areas.

British Steel Corporation


asked the Secretary of State for Industry when next he intends to meet the chairman of the British Steel Corporation.

I do not have a meeting arranged with Sir Charles Villiers at the moment, but we meet from time to time.

When my right hon. Friend meets the chairman of BSC will he draw to his attention the fact that there are many steel workers who now wish to settle along the lines of the offer made by the corporation? Can my right hon. Friend give us some assessment of the damage to job prospects and job security caused by this strike?

I fear that the strike will have jeopardised the size of the industry but I hope very much that when it gets back to work—we all hope that that will happen as soon as possible—it will quickly manage to recover its market share.

Does not the Secretary of State agree that British steel workers have put up a remarkable display of solidarity in supporting what they believe to be their just wage claim? What is more, does he not agree that they are not likely to forget in a hurry those people, including their elected representatives, who have done everything possible to undermine them in the dispute?

I have a high respect for the steel workers. I hope they will recognise that the sooner they get back to work, the better it will be for the future of their own jobs.

Although it is clear that the strike has not gained an additional penny for the steel workers but has lost them vast sums, will my right hon. Friend make it plain that once the strike is over he will be prepared to listen very carefully to anything that the corporation may say about the possibility of a more intelligently phased operation of slimming down the size of the industry?

I shall listen to anything that the corporation may say, but the limitation upon the money available to it from the taxpayer must remain firm.

May I remind the Secretary of State that the gap between BSC's offer and the union's claim is less than £50 million? Using the Minister's figures of some weeks ago, the loss of revenue to BSC at £10 million a week or so now totals £120 million. If we add to that the loss of revenue to British Rail and the National Coal Board, we are discussing a figure four times the amount of that gap. Therefore, was not it extremely stupid of the Prime Minister to say on Saturday that the Government could have avoided the steel strike but did not do so for the sake of the taxpayer?

No. The gap to which the right hon. Gentleman referred is far more about where the money to meet the earnings shall come from than about the size of the earnings. The issue is whether the taxpayer should be asked to meet some of the increase in earnings which, in the view of many people, myself included, should come from the productivity of the steel workers and not from the taxpayer.

But the £200 million of which I have spoken, and which the Secretary of State cannot possibly deny, will have to be found by the long-suffering taxpayer anyway.

The right hon. Gentleman did not ask me a question, but per- haps I may treat his remarks as if they were a question.

It does not follow that the loss imposed upon the Steel Corporation by the strike has to be met by the taxpayer. The Steel Corporation is required, as any private business would be, to take every step that it can, including cutting its overheads—

Alas, if the hon. Member for Feltham and Heston (Mr. Kerr) knew more about the steel industry—I withdraw that, because the hon. Gentleman was Chairman of the Select Committee. He should know, even when he comments from a sedentary position, that steel is a buyer's and not a seller's market. But I was saying that the Steel Corporation will be required, as any private business would be required, to break even by every legitimate means in its power—that is, including cutting overheads, buying better, reducing stock, disposing of non-essential assets and, if necessary, increased redundancies.

Manufacturing Industry


asked the Secretary of State for Industry what is his estimate of the effect of the present exchange rate on production in manufacturing industry.

The present exchange rate must affect our manufacturing competitiveness. But a strong exchange rate should help to contain inflation, and success on that front is important for future manufacturing production.

Does not my right hon. Friend agree that this is having a very severe effect on the profitability of our manufacturing industry? Has he drawn the attention of the Chancellor of the Exchequer to this matter? If not, will he do so?

The Chancellor of the Exchequer is certainly extremely well aware of the effect of the exchange rate upon manufacturing industry. But I repeat that to alter by Government action the level of the exchange rate, even if it were practicable, would endanger the priority objective of reducing inflation, which is equally if not more important for manufacturing industry.

Is the Secretary of State not aware that in one month last year imports of finished manufactures actually exceeded exports of finished manufactures, and that this situation is likely to deteriorate further this year? Will he bear in mind that his monetary policy—to which he adheres and which is responsible for the failure to instruct the Bank of England to intervene in the exchange rate—is a very heavy price to pay for the certainty of the damage that it is doing to our competitiveness and to the export possibilities for British industry?

There is a lag in all these things. I do not want to put too much weight upon the performance of British manufacturing industry at present, but the fact that British manufacturing industry is maintaining and even increasing the volume of its exports, while the volume of imports did not increase so much last month, is encouraging. I repeat that to let inflation rise further, which is what would be involved by seeking to lower the exchange rate, would be more damaging still to British manufacturing industry.

Does the Secretary of State agree that Germany and other countries have shown that it is possible to prosper with a strong exchange rate, and that this can enable the benefit of our prosperity to be spread by enabling higher wages to be paid to our labour, whereas the low exchange rate is needed only if one is concentrating on cheap labour?

I agree with the gist of what my hon. Friend has said. It is true that good manufacturing companies are finding the high exchange rate an intense stimulus to their efficiency.

Is there not a widespread and strongly held view throughout British industry that sterling is overvalued? Has not the Secretary of State been told this by a large number of industrial organisations, including the footwear industry, the textile industry and, most recently, the chemical industry? For the first time for many years, record import levels of chemicals are coming into the British economy, which is surely a disgrace. The Minister's answer would be acceptable if inflation were falling and output were increasing, but is not the reverse the truth in both cases?

As I have said before, there is a lag in these matters, and inflation is still reflecting the loss of control of the money supply by the Labour Government in their last year. I repeat that manufacturing industry recognises that the defeat of inflation, to which the exchange rate contributes, is in its own highest interest.

National Enterprise Board


asked the Secretary of State for Industry when next he expects to meet the chairman of the National Enterprise Board.

When the Secretary of State next meets the chairman of the NEB will he be informing him that it is the intention to go ahead with the Inmos microchip production unit and that the Government will finance it? Will he also further indicate to the chairman that the Government's decision is that the production unit must be placed in an assisted area?

This is a very complex question. I shall make a statement as soon as a decision is reached.

Does my right hon. Friend agree that pressure for direct investment from the NEB in the information technology industry should be resisted, and that, alternatively, there is a role for the Department of Industry in the co-ordination of Government buying schemes and the placing of large contracts with successful British companies in this field?

I agree with the latter part of my hon. Friend's question. As to the former part, the NEB has been given a remit by the Government.

When the Secretary of State meets the chairman of the NEB will he make clear that it is his firm belief that, where the NEB is being forced to dispose of assets, such as in Fairey Engineering, the workers in those industries should be fully consulted about would-be purchasers?

The NEB is required to take into account the interests of the company as well as the national interest in its disposal policy, and it is for the NEB to decide how to carry out that instruction.

As the Government can expect oil and gas revenues of between £15 billion and £20 billion a year within the next three or four years, will the Minister have discussions with the NEB on how best it can make sure that those revenues are channelled into industry and manufacturing and are not squandered simply on higher imports within the next few years?

We must not spend money before we have it. It is the Government's view that such money as is available is better spent by the consumer than by Ministers and officials.

Trades Union Congress


asked the Secretary of State for Industry when next he proposes to meet leaders of the Trades Union Congress.

Does the right hon. Gentleman accept that, if he meets the TUC leaders, some of them certainly would say to him that his industrial policies are needlessly turning some of our workplaces into centres for trials of strength between management and the shop floor? Does he agree that his inflexible monetarist policies are posing a danger to the social fabric of our country as well as bringing about the likelihood of an unemployment figure well beyond 2 million?

I did not notice that the previous Government's industrial policy brought about a situation of unrelieved sweetness and light in every workplace.

When my right hon. Friend meets the TUC will he discuss the apparent difference between the industrial rate of exchange and the financial rate of exchange? Will he make the TUC understand that a neutral monetary policy—monetary control—leaves it to employers and trade unions to negotiate pay increases that are greater than the increase in the money supply? Does he not agree that those increases will lead to reduced industrial competitiveness, and higher unemployment?

I agree that excessive unit labour costs, which result from wage claims that are not accompanied by higher productivity, will destroy jobs.

When the right hon. Gentleman meets the TUC—apart from his philosophical discussions about monetarism—will he hold concrete discussions on selective import controls? Does he not agree that such import controls will save some of our industries from the pressures that they now suffer?

At present, we have some selective import controls. To go further would risk encouraging inefficiency and price rises as well as retaliation.

When my right hon. Friend next meets the leaders of the TUC will he stress the important role that they could play in the application of microprocessor technology to industry? Does he not agree that that technology can substantially improve our industrial efficiency and assist in raising the standard of living of TUC members?

TUC leaders do not need much persuasion. A TUC booklet called "Employment and Technology" was recently published. As I have mentioned in public before, it contained a most encouraging welcome for micro-processing as a new technology. However, I think that some of the conditions attached to the application of those new techniques are misguided.

Is the right hon. Gentleman aware of the sense of dismay that is felt by leaders of the TUC and by the country about the Government's monetarist policies? Does he not recognise that such policies can lead only to a return to massive unemployment? Does he not accept that we shall have disaster areas instead of industrial areas?

The hon. Gentleman has got it entirely wrong. It is long-established common sense that a monetary policy involves moving towards a balance between the growth of demand and the growth of supply. The hon. Gentleman has forgotten that the last leader but one of the Labour Party, the right hon. Member for Huyton (Sir H. Wilson) got it exactly right. He said that inflation, which monetary policy seeks to abate, is the father and mother of unemployment.

When my right hon. Friend speaks to the TUC will he emphasise the need for increased productivity in most of our industries? Does he not agree that if we are to compete and to attain the level of production and employment that all hon. Members desire, there must be a heightening in the level of productivity and a lowering in unit costs? Will he stress that point, above all else, in his discussions with trade union leaders?

To be fair, those trade union leaders attending the NEDC do not need any persuasion. They understand that perfectly well. However, at shop steward level, one finds resistance, because there is fear about the loss of jobs. At that level there is no understanding that higher productivity is a source of greatly increased employment.

When the Secretary of State meets TUC leaders and gives them his ideas on the necessity to curb inflation, will he explain why his Government doubled VAT in the last Budget, thereby increasing inflation to double the figure that existed when they took over?

The right hon. Gentleman must remember that the previous Labour Government complained throughout their lives that the inflation that occurred during their first two years of office resulted from an inherited lag from the previous Conservative Government. We can, therefore, make the same claim now. We inherited rising public expenditure and a rising monetary supply. At present, the country is suffering from the consequential inflation.

Finniston Report


asked the Secretary of State for Industry if he will list the organisations that have submitted their views to him on the Finniston report.


asked the Secretary of State for Industry what actions he is taking both to assess the Finniston report on engineering and also to implement its findings.

The Department is currently seeking views on the key recommendations of the report from over 350 organisations and in- dividuals. Over half of these have replied to date and I expect most of the remainder by the end of the month. Other Departments are carrying out their own consultations. In addition, many unsolicited views are being received.

I do not think it would be appropriate to list the individuals and companies who have submitted their views, whether solicited or not, but I shall place in the Library a list of those representative organisations from which the Department sought comments.

The consultation exercise is being co-ordinated by officials, who are also advising my colleagues and myself on various aspects of the report. As I told the House on 29 January, we intend to reach decisions on the key recommendations quickly and to announce them in the summer.

Will the right hon. Gentleman consider eschewing a noninterventionist view of the report? Does he not recognise that Government intervention is needed if the major recommendations of the Finniston report are to be accepted and carried into practice? Will he further note that there is a shortage of science and mathematics teachers? If we are to have engineers, those teachers are required now.

I note the hon. Gentleman's remarks, particularly those referring to the work of educationists. No doubt my colleague in the Department of Education and Science will consider those remarks. I appeciate the hon. Gentleman's broader point about intervention. I hope that he will use his influence to encourage industry to put its money where its mouth is to ensure development along those lines.

Further to that reply, does my hon. Friend agree that this is a most important report about the future of British engineering and the economy? Will he ensure that the Government implement the report's major conclusions as soon as possible?

I am glad that the right hon. Member for Deptford (Mr. Silkin) has already welcomed the report. I think that the House will recognise the significance of the analysis. There was a great deal of agreement about it. The decisions that flow from it must be carefully analysed.

Does not the Minister agree that there is a great shortage of skilled workers on the shop floor? Does not that shortage flow to a great extent from the trouble that arose in 1973–74 when apprenticeships in many parts of British industry came to an end? Does not the Government's policy of massive deflation encourage the loss of skilled workers, although they will be needed, in the future?

The right hon. Gentleman seeks to widen the debate. The question of technicians is not covered by the Finniston reports, although some people would have liked it to have been. The right hon. Gentleman's arguments are therefore somewhat specious.

Does my hon. Friend realise that some of us feel that it is high time that the House had a debate on this important document? Will he give us a guarantee that a debate will be held before the Government reach a conclusion?

I note my hon. Friend's remarks. However, he will appreciate that the issue has been debated in another place. We shall want to consider that point when we are nearer to reaching our own conclusions.

Does my hon. Friend not agree that the shortage of skilled labour—complained of throughout British industry—is an inevitable consequence of freezing differentials as a result of successive wage controls?

Investment In Industry


asked the Secretary of State for Industry what estimate his Department has made of intended Government investment in industry in 1980–81.

Details of Government assistance to industry in 1980–81 will be given in the White Paper on public expenditure and the Supply Estimates, both of which will be presented to the House on 26 March. It would not be appropriate for me to anticipate the publication of these documents.

Is the Minister aware that the gap between industrial investment in Britain and that in Germany, France, Japan and other major manufacturing countries is terrifying? Does he not realise that Government policies will do nothing to encourage private investment in Britain? Does he not accept that substantial public investment is essential if we are to survive as an industrial nation?

The hon. Gentleman is aware that massive industrial investment has been made in the public sector. He knows that losses are now being made in that sector. The best investment will come from the private sector putting money into projects from which it knows that a profit can be made.

Is not the Treasury right to wish to encourage the State's accretion of funds through the sale of State assets so as to reduce the level of direct Government holdings in industry? What action is my hon. Friend taking to bring that about in the case of British Leyland?

I know my hon. Friend's concern about British Leyland. He knows the Government's position, which is that we should not stand in the way if it were the commercial decision of British Leyland to sell. On my hon. Friend's first and more major point, it will be significantly to the benefit of British industry for certain assets held by the State to be returned to the private sector.

Is not the Minister aware that the biggest fear on the shop floor, not only in British Leyland but in successful manufacturing nationalised industries, such as British Aeropace, is that Government investment in those industries is about to disappear?

Is the hon. Gentleman aware that half of the British Aerospace workers have stopped work today, and that 5,000 have marched on the House this afternoon because they fear that British Aerospace will be sold off to foreigners, or to those who pay most to Tory Party election funds?

The hon. Gentleman would do a great service to British Aerospace and its employees if he did not—as he has done yet again today—perpetuate untruths about the industry's future. He is thoroughly to blame for the anxieties which exist in British Aerospace. The hon. Gentleman is perfectly well aware that in the articles of association there will be a maximum limit of 15 per cent. foreign ownership. That will be safeguarded by the Government retaining 25 per cent. of the shares and their preparedness to vote their shareholding to defend the articles.

As my hon. Friend's answer indicates that a large sum of money is likely to be involved, is there not enormous scope for reducing the amount of money invested by the Department of Industry? Does he agree that the right level of investment by the private sector will never be achieved if the Government continue to pre-empt so much of its money? That is a lesson that the House should learn.

Order. I shall call the hon. Member for Nuneaton (Mr. Huckfield). However, as the House knows, I do not usually call even Front Bench spokesmen twice on one question, especially when many other hon. Members are seeking to catch my eye.

If there were not 5,000 workers from British Aerospace outside the House I should not press my case Mr. Speaker. Will the Minister confirm or deny that there is nothing in the Bill that will prevent the breaking up of British Aerospace, and that there is no provision, if the Bill reaches the statute book, that will prevent British Aerospace being taken over lock, stock and barrel by foreign interests?

I have stated very clearly the safeguards against British Aerospace being taken over by foreign interests. I should like to think that a statement to this effect from the Dispatch Box—which has been made on previous occasions—would be accepted by the House.

The Government have made it clear that it is not their intention to split up British Aerospace. There is allowance for only one successor company to the corporation, and that, in itself, is a safeguard and an assurance that British Aerospace will remain in its present form.



asked the Secretary of State for Industry what work on the Concorde project is currently being funded by his Department.

Work on the Concorde project currently being funded by the Department is mainly for the support of the aircraft and engines in service with British Airways and Air France, including, in particular, in-service development, continued fatigue specimen testing, the meeting of warranty claims, and the manufacture of spares.

Because £800 million of taxpayers' money is being spent on the project, will my hon. Friend tell the House whether the Government are seeking to persuade American manufacturers to become interested in the advanced technology developed by ourselves and the French, so that this vast sum will not cease to exist in practical terms when the aircraft ceases to fly? Will he do that to ensure that we shall have a stake in the second generation of supersonic aircraft that will fly within the next decade or two?

Discussions on the matter are continuing between British Aerospace and American manufacturers. There is nothing more that I can add this afternoon.

Is the Minister aware that about 20,000 people turned out yesterday to see Concorde on its first appearance at Edinburgh airport? What is the extent of the warranty claims? Has the Minister figures in his brief?

I cannot answer that question without prior notice. I shall write to the hon. Gentleman.

As this is the supreme example of State entrepreneurship to date, will my hon. Friend contemplate establishing a Select Committee to examine the whole ludicrous story, together with the enormous sum of public expenditure that has been wasted for no purpose whatever?

My hon. Friend is aware that the question of Select Committees is one for the House itself. If he wants a more detailed exposition on the matter, I suggest that he consults his own splendid book.

North-East Lancashire Development Association


asked the Secretary of State for Industry whether he will now meet representatives of the North-East Lancashire Development Association.

My noble Friend will be meeting the North-East Lancashire Development Association on 22 April. My noble Friend the Under-Secretary of State for the Environment and my hon. Friend the Parliamentary Secretary to the Ministry of Transport will also be present.

Is not the Minister aware that there is deep concern across the whole political spectrum in North-East Lancashire that the Secretary of State views the region's problems with such complacency that the association is to be fobbed off with a meeting with Ministers who are not hon. Members of this House? Is he aware that there is even greater concern that one of those Ministers is Lord Bellwin, whose only contribution to North-East Lancashire was increasing unemployment by some hundreds through the closure of firms of which he was chairman?

If the Secretary of State is not willing to meet the representatives, is he willing, at some stage during the next six months, to visit North-East Lancashire so that he can appreciate what damage or success his policies are causing?

The hon. Gentleman refers to complacency. The fact that three Ministers will meet the deputation is a sign that there is no complacency. The Government intend to examine carefully what is said by the deputation.

The hon. Gentleman referred to unemployment in the area. The level of employment will be determined by employers and workers in the way in which they proceed. I am bound to say that there is substantial concern that wage increases not covered by improved productivity are being demanded and granted, and that these will lead to job losses.

Is my hon. Friend aware that I and my constituents are grateful for his visit to Rossendale last year when he made himself aware of the problems there? When considering the representa- tions of the North-East Lancashire Development Association will he remember that the two most important grants that we are anxious should be continued after 1 August 1982 are the industrial grants from the EEC and the derelict sites grant, which is of great value to certain parts of East Lancashire? I understand that no decision on these matters has yet been reached.

I am grateful to my hon. Friend for drawing attention to these matters. He took me to see some of the areas concerned, and I held subsequent discussions with Ministers in the Department of the Environment.

Post Office Corporation


asked the Secretary of State for Industry when next he intends to meet the chairman of the Post Office Corporation.


asked the Secretary of State for Industry when next he expects to meet the chairman of the Post Office.

My right hon. Friend meets Sir William Barlow as the need arises. I myself met Sir William on 20 March and expect to do so again later this week.

When my hon. Friend next meets the chairman of the Post Office, will he seek to persuade him to reconsider the refusal of the Post Office to issue a special stamp to commemorate the opening of the Humber bridge? [Laughter.] Is he aware that despite the recent unfortunate problem, the bridge will be the longest single-span suspension bridge in the world? Opposition Members may laugh, but it will be a great engineering achievement, by British firms.

Perhaps I could use this occasion to express considerable regret about the accident which occurred in the building of the bridge, and about the delay in its completion.

Both the Post Office and my Department receive a large number of requests for commemorative stamps. I am sure that my hon. Friend's remarks will be read by Sir William, but I cannot give him much encouragement.

When my hon. Friend next meets the chairman will he raise with him the increasing absurdity of the Buzby advertising campaign? Is he aware that we now have a Buzby balloon, and that when such a balloon is deflated it produces a sound which approximates very closely to the feelings of many of my constituents about the declining quality of our postal services?

I must congratulate my hon. Friend in giving an indirect raspberry to the public relations section of the Post Office. However, it is entitled to use whatever advertising it wishes, and the Post Office's view is that the Buzby advertisements are increasing traffic and are proving profitable.

Will the Minister discuss with Sir William Barlow the damage being done by the irrelevant application of cash limits to the Post Office telecommunications business? In addition, will he agree that the increase in the calling rate which has been achieved by the Buzby campaign, has been important in increasing profitability in this public service?

In the second part of his question the hon. Member agreed with what I said a few minutes ago. On the question of cash limits, I would like to think that the whole House would support the Government in their determination to observe cash limits as one way of helping to overcome inflation. In the current year the Post Office's cash limits have been put very seriously at risk by the damaging strike last summer, which greatly affected cash flow. I hope that in his position of influence, the hon. Member will try to ensure that such disputes are minimised in future.

When my hon. Friend meets the chairman of the Post Office will he convey to him the views that I have conveyed to my hon. Friend from the Post Office Engineering Union? That union is looking forward to the division of the Post Office, and would like to think that this will occur in the immediate future. Is he aware that its members would like to think that their jobs will be protected by this extra commercial incentive, but they want an assurance that the telecommunications department will not be split further than the one initial split in the Post Office itself?

My hon. Friend is quite right in drawing attention to the Government's policy, namely, that there shall he a split of the telecommunications side from the postal side and Giro. These are very disparate activities, and we are certain that both will benefit from the split. I note what my hon. Friend says about not splitting the telecommunications side any further.

Will the Minister tell the chairman that the Government will not countenance any change in the way that social security benefits are being paid at present? Is he aware that the inept handling of this matter by the Government has brought genuine anxiety to the most vulnerable sections of the community? Will he give an assurance that this nonsense will be dropped?

The alarm was caused by rumours that were spread and intensified some weeks ago. It led to a debate in the House, during which my right hon. Friend and I were ready to give an assurance about the future of the network. More recently it was made abundantly clear that there would be no question of forcing pensions to be paid through a bank—but we hope that that will be an option open to people—and that secondly, the retention of weekly payments will be maintained for those who want it.

Manufacturing Industry


asked the Secretary of State for Industry whether he is satisfied with the level of profitability in manufacturing industry.

Will my hon. Friend agree that one of the features that has distinguished British industry from its competitors in recent years is the low and falling rate of profitability? Will he accept that one of the prices that must be paid for a high exchange rate is further compression of that profitability? Accepting the argument that there will be a lag before Government policies are successful, may I urge my lion. Friend to give the House some idea of when productivity in British industry will improve, in order to restore the competitive balance?

My hon. Friend rightly points out that the profitability of manufacturing industry has been falling over a number of years and has become a long-term problem which reached its crescendo in the last four years of the previous Government.

Will the Minister bear in mind that the manufacturing industries, especially carpets, textiles and machine tools, which have formed the backbone of the industries of Halifax and West Yorkshire for many years, are now in serious difficulty? What specific proposals have the Government to help those industries, particularly in view of the great contribution that they made in the past towards industrial development?

The House is unlikely to forget the contributions made by these industries as long as the hon. Lady is a Member. The question that she raises comes back to the broad ways in which the economy must be stimulated in order to produce the growth that we all seek.

In the representations that my hon. Friend or his ministerial colleagues have made to the Treasury in the last few weeks, have they drawn attention to the fact that one of the major factors intensifying the liquidity squeeze on British companies is the high level of the national insurance employer's surcharge, which was increased so savagely by the former Chancellor of the Exchequer?

As ever, my hon. Friend has put in a timely word to remind my right hon. and learned Friend, the Chancellor of the Exchequer, but I am sure that he is aware of these matters. I did not fully answer my hon. Friend the Member for Loughborough (Mr. Dorrell) on the previous question. It is impossible to say what the time lag will be, particularly given the nature of the long term problem that we face.

Does the Minister realise that the present Government's policies are making private manufacturing industry and investment less profitable than for many years past?

The right hon. Gentleman should bear in mind that the profitability of British industry fell to an all-time low of 2 per cent. during the life of the previous Government. We seek to reverse that trend as a matter of policy.

Is my hon. Friend aware that there are many businesses and industries, especially small businesses, which are in great difficulties at present? They are profitable, but they are threatened with liquidation because they have cash flow problems. Will he ask the Chancellor to have a word with the banks to ensure that they lend money to industry, rather than give personal loans? This is not being done sufficiently at present.

I am sure that the Chancellor will note my hon. Friend's suggestion. There is a good deal of evidence that the banks are being particularly helpful at present, bearing in mind the existing difficulties.

Will the Minister explain how he proposes to increase profitability in the manufacturing industry when his Government are, by savage deflation, destroying demand; by high exchange rates, preventing our exports from being competitive abroad; and by ludicrously high interest rates, driving many companies into liquidation?

As usual, the right hon. Gentleman presents only one side of the picture, and he does so with his usual vigour. He has overlooked the fact that in the battle against inflation it is vital to strike a reasonable balance on wage agreements. I hope that he will lend his weight to that side of the argument as well.

Nationalisation (Compensation)


asked the Secretary of State for Industry what steps he is taking to compensate the companies owning assets nationalised under the Aircraft and Shipbuilding Act 1977; and if he will make a statement.

Compensation is not yet determined for 12 out of the 25 companies. Payments on account totalling £60 million have been made in respect of the 12 companies. Arbitration is in progress concerning three of the companies. The position remains open in respect of the remaining nine companies, effectively involving seven negotiations. These inevitably raise some particularly intractable issues. It would not be appropriate for me to comment further on individual cases.

Will the Minister give an assurance that the Government have not been dragging their feet in this matter? It appears that these negotiations have taken an unconscionable amount of time. Can he say whether the possibility of denationalisation has entered these negotiations?

I assure my hon. Friend that Ministers have not been dragging their feet. It is a highly complicated matter and in some cases there is a difference between what is asked by the previous owners and what the Act appears to allow. This dictates a longer period of negotiation. Compensation payments and denationalisation are separate matters, but it remains the firm policy of the Government to introduce private sector capital into British Shipbuilders at an appropriate time.

Does not the hon. Gentleman understand that, despite what he says, he is trying to denationalise an industry which has not yet been properly nationalised? Does he accept that, on the basis of the replies that he has given today, there is nothing in his Bill, and there will be nothing on the statute book if the aerospace denationalisation Bill gets through, to prevent British Aerospace from being either broken up or taken over, lock, stock and barrel, by foreigners?

I am interested in what the hon. Gentleman says about the companies not being properly nationalised, but I understand that, in law, ownership was transferred on vesting day. In regard to the hon. Gentleman's repeated remarks about the aerospace industry, I can say only that there are none so deaf as those who will not hear.



asked the Attorney-General in how many prosecutions for shoplifting offences during the latest period of 12 months for which figures are available the Director of Public Prosecution has either undertaken the prosecution or been consulted.

Of prosecutions undertaken by the Director in 1979, eight have to date been concluded where an offence of theft of the shoplifting variety was charged.

It is not possible to give details of cases of shoplifting theft on which the Director was consulted in 1979: this sort of offence is not normally reported to the Director and is, therefore, not a type of theft for which detailed indices are kept in the registry. Those cases which are reported normally involve one or more of the following factors:
the alleged offence was committed by a police officer or a police officer's spouse;
the alleged offence was committed by a public figure;
the alleged offence was committed in addition to other offences which are reportable, for example murder or corruption;
the alleged offence involves an issue of identification;
a private prosecutor wishes to withdraw the summons.

I am grateful for that careful reply. Does the right hon. and learned Gentleman agree that, while the right to bring a private prosecution is an important constitutional safeguard, it can operate harshly against individuals who ought not to be subject to criminal proceedings? Will he further agree that shoplifting is an example of an offence in which the motives and circumstances can vary, from the persistent professional offender to the merely absent-minded? Bearing in mind the recent example of an 83-year-old man who was driven to suicide, will the right hon. and learned Gentleman discuss with the DPP whether those who bring private prosecutions for shoplifting might be asked to consult the Director beforehand?

I agree with the right hon. and learned Gentleman. Wherever there is a public interest aspect, for example the advanced age of the proposed defendant, that is a matter which the Director, when deciding whether to prosecute, would bear in mind. I would welcome that going out to private prosecutors so that, where they felt that there was a public interest aspect, they could consult the Director for his advice.

Although the matter is not my right hon. and learned Friend's direct responsibility, does he agree that there is an obligation on shops and stores to limit the opportunities for shoplifting and that the provision of bag parks is a commendable and constructive action to that end?

Any shop operation that affords an amount of temptation will lead to prosecutions, and sometimes to ill-considered prosecutions when an offence is not intended. It is just as serious for my hon. Friend to leave his wallet in his room when he goes to wash his hands. That is offering temptation to the cleaner who comes to clean his office. The circumstances must be decided on each case.

I hope that my right hon. and learned Friend will follow through the sort of exception outlined by the right hon. and learned Member for Warley, West (Mr. Archer) by circulating private prosecutors so that that matter can be brought before them. Is my right hon. and learned Friend satisfied that the general principle of stores prosecuting offenders is working in the public interest and can he tell us what saving results to the public purse by continuing the present system?

Bearing in mind the shoplifting figures, I believe that it would place an impossible burden on police forces if they had to prosecute such offences in addition to all their other duties. The right of private prosecution has been jealously guarded over the centuries and I should not like to alter it.



asked the Attorney-General what representations he has received following his recent statement on the law relating to picketing.

Does not my right hon. and learned Friend feel that some of the more aggressive noises from the TUC and particularly, I understand, from the GMWU over the weekend are not representative of the views of the majority of trade unionists? Will he therefore do all that he can to ensure that the sensible proposals going through the House are pursued in such a way as to retain the support for them of the majority of working people?

The enforcement of picketing laws, whether as they exist or as they will be if clause 14 of the Employment Bill becomes law, is entirely a matter for the chief constables and particularly the police officers at the site. The statement that I made on 19 February was circulated to chief officers of police and no doubt they will bear it in mind when they advise their officers what to do about picketing.

In view of the Attorney-General's repeated statements that primary pickets will retain the right to peaceful persuasion after the passing of the Employment Bill, will he inform the House whether the Government intend to introduce a new clause to the Bill to allow primary pickets the right to stop lorry drivers to persuade them peacefully of the justice of the dispute?

There has been a great deal of discussion about that matter and it has been decided that there should be no right to stop lorry drivers. One of the questions that always occurs to me is what would happen if a lorry driver did not want to stop. Would he be committing a criminal offence? That is the sort of problem that one would face if one went down the road suggested by the hon. Gentleman.

Does my right hon. and learned Friend agree that, even under the existing law, so ably defined by him recently, there are still difficult situations for the police and those who are trying to picket peacefully? Does he agree that it would be a great help if the TUC would go further with the law enforcers in agreeing basic guidelines that could be enforced by both police officers and those operating picket lines?

I said on 19 February that I thought that the guidelines issued by the TUC were sensible. I was sorry to see some comment the other day that tended to suggest that the TUC was withdrawing those guidelines.

Is the Attorney-General aware that in some areas there is automatic fingerprinting of pickets charged with obstruction? Does not that increase tension? Would it not be better to limit fingerprinting to cases where serious charges are involved and not make it automatic, as is the case in many areas? Does he not agree that automatic fingerprinting causes increased tension in those areas?

That is a question which would be better put to my right hon. Friend the Home Secretary.

Police Conduct (Complaints)


asked the Attorney-General if, in the light of the recent Lannon case, he will now make available to interested parties the reports submitted to the Director of Public Prosecutions by the police following complaints about police conduct.

Since the judge in the Lannon case ruled that the family had a right to see the police investigating officer's report in order to pursue a civil action, on what grounds, in equity, can the Attorney-General deny sight of such reports to other families, whether or not they decide to go for the elaborate and expensive procedure of instituting a civil action?

In the case to which the hon. Gentleman referred, the only claim for privilege was for profess- sional legal privilege. In other cases it may be necessary for the Director to consider whether he is to make a claim for privilege upon the class or contents grounds. The reasons for that were given in detail by the Director when he gave evidence before the Select Committee on Home Affairs on 14 February. I refer the hon. Gentleman to the full account. In summary—the reports are confidential—they contain views and opinions of the police officer making the report; the credibility of the witnesses is discussed together with, in some cases, their previous convictions. Details are also given about the suspected police officer which, if the Director decided not to proceed, could lead to a form of public trial without the safeguards of a trial in court. Those are strong public aspect reasons why it should not be a matter of course that section 49 reports should be published.

Is the Attorney-General aware of reports that the team under Commander Cass, which investigated the circumstances of the death of Blair Peach, was anxious—

Order. I wish to help the hon. and learned Gentleman and the House. Hon. Members will be aware that both the Blair Peach and the Kelly case are sub judice at the moment. No one in the House would want to seek to influence in any way the decisions of the coroner's court. It could have a serious effect on people later.

Has my right hon. and learned Friend had a chance to see a replay of the BBC television plays called "Law and Order"? If he has, can he think of any drama series that is more likely to undermine confidence in the police?

I have seen part of the series. I agree with my hon. Friend that it shows not only the police but lawyers and others concerned in the administration of justice in a very unfavourable light when that light is the exception to the rule rather than common form.

Questions To Ministers

On a point of order, Mr. Speaker. Has the learned Attorney-General made any request to answer question No. 47 or to make a statement regarding jury vetting?

Business Of The House


That, at this day's Sitting, Standing Order No. 3 (Exempted business) shall apply to the Motion relating to European Economic Community Convergence and Budgetary Questions with the substitution of half-past Eleven o'clock or three hours after it has been entered upon, whichever is the later, for the provisions in paragraph 1(b) of the Standing Order.—[Mr. MacGregor.]

Orders Of The Day

Transport Bill

As amended ( in the Standing Committee), considered.

New Clause 1

Obligatory Test Certificates For Passenger-Carrying Vehicles

'In section 44 of the Road Traffic Act 1972 (obligatory test certificates) in subsection (4) (excluded classes of vehicles) the following words (which relate to the exclusion of large public service vehicles) shall be omitted—

  • (a) the words from "to public service vehicles" to "passengers or"; and
  • (b) the words from "but shall apply" onwards.'.—[Mr. Fowler.]
  • Brought up, and read the First time.

    3.32 pm

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

    With this we are taking new clause 8—Annual inspection of public service vehicles:

    'The Minister shall prescribe in regulations arrangements for the annual inspection of public service vehicles at either official public service vehicle testing stations or, if the equipment provided is adequate, the operator's premises, but no such regulations shall be made until a draft thereof has been laid before, and approved by a resolution of, each House of Parliament.'.
    and Government amendments Nos. 75, 76, 91 and 92.

    I am delighted to open the debate by proposing a new clause that I am sure hon. Members on both sides of the House will welcome. The clause concerns, basically, the safety of vehicles. It paves the way for a new annual test of all large passenger-carrying vehicles. It is a commitment to higher standards.

    On the day after a coach accident in France in which 16 young people lost their lives, we must all be aware of the need to tighten standards. I emphasise again, as I did in Committee, that although this Bill reduces restrictions on the number of services that can be provided in this country—we look forward to an increase in services—it does not reduce safety standards. Our aim has been to produce a system that does not mistake paperwork for effective safety controls.

    The Bill generally attacks the problem in three ways. It deals first with the fitness of the operator—what I might call the first level of prevention. The Bill requires an operator to demonstrate both his competence to run buses and that he has adequate maintenance facilities or arrangements. If an operator cannot meet the standards, he cannot operate.

    Secondly, the clauses on vehicle fitness ensure that the Ministry of Transport's examiners have powers to inspect public service vehicles at any time and to prohibit their use straight away if they are defective. With this clause we are looking ahead to the more formal requirement of the annual test, as my hon. Friend the Parliamentary Secretary undertook to do in Committee. I should like to thank the hon. Members for Holborn and St. Pancras, South (Mr. Dobson) and for Newcastle upon Tyne, Central (Mr. Cowans), who raised the matter in Committee.

    What will the annual test achieve? I believe that it will be a tighter, more foolproof means of ensuring that all buses undergo a thorough examination. The rather informal process of inspection now carried on runs the risk that some vehicles may not be examined as regularly as they should be. Secondly, and just as important, the new test will apply to all passenger vehicles with more than eight passenger seats, regardless of whether they are used for hire and reward. As we discussed in Committee, there has been, since 1930, a rather uneasy distinction between the safety standards required of public service vehicles and the lack of controls over privately run buses. The new annual test takes a major step towards bringing all buses into line. I believe that this will help to give the public the confidence that they deserve to have, whatever kind of bus they are travelling on.

    When will the new test be brought in? Inevitably, there must be time to make all the necessary practical arrangements. We are required by the EEC—this is one EEC requirement, whatever hon. Members' views, that can be welcomed—to have a testing system fully in operation by January 1983. This means carrying out the first tests in January 1982 at the latest.

    We shall shortly be circulating the necessary regulations in draft for consideration by all interested parties. We shall also be discussing with operators the best arrangements for testing. We have already said that we accept the case for using operators' premises to the fullest extent possible consistent with the maintenance of safety standards and a reasonably economic deployment of resources, both public and private.

    I commend the new clause to the House.

    Before I call the right hon. Member for Barrow-in-Furness (Mr. Booth), I draw the attention of the House to the fact that the Government did not move the motion on the order of business, outlined on the Notice Paper. In order that there should be no misunderstanding later, I should like to put on record that the result is that instead of proceeding to Government amendment No. 1 after new clause 9 is disposed of the House will go straight on to discuss the remainder of the new clauses, beginning with new clause 5.

    On a point of order, Mr. Speaker. That is correct. The Government did that with the agreement of, and at the request of, the Opposition.

    I understood that. In case the matter is raised by hon. Members who are not now in the Chamber, the occupant of the Chair will be in a position to say that the matter was explained succinctly.

    Thank you, Mr. Speaker. We always welcome your guidance. It is helpful for the House to be absolutely clear about the order in which it is to proceed with the Bill.

    The Minister's statement on new clause 1 is surprising. In a Committee stage that was pretty barren of joy for Opposition Members, the willingness of the Minister, on the raising of this issue, to agree that there should be some provision within the Bill for annual testing of public service vehicles shines like a beacon. It should have been in the Bill from the outset. There should have been a Government proposition in the Bill for annual testing of public service vehicles.

    When the issue was raised in Committee, the Minister undertook to consider it and to bring forward his own proposition for inclusion at this stage. But his proposition in new clause 1 does not create a statutory obligation for annual testing of public service vehicles. The new clause removes from the Road Traffic Act 1972 the specific exclusion of public service vehicles from the range of classes of vehicle for which test certificate provisions can be made. Those test certificate provisions in the 1972 Act can be for 10-year tests or tests of other periods.

    We want spelt out clearly in the Bill that public service vehicles shall be annually tested. That is a basic safety requirement that we want to see written into the law.

    The Minister touched upon the use of operators' premises. There is nothing in his new clause that touches on operators' premises. I believe that new clause 8 is much better for this purpose.

    I wish to deal first with the question of a statutory requirement for annual inspection. If one was to use the procedure used under the 1972 Act for other vehicles, one would not bring about a satisfactory position on the annual testing of public service vehicles. Public service vehicles are in a special position and their testing is not the same as the testing of other vehicles.

    In Committee the Minister withdrew the requirement for an operator's disc to be displayed on the vehicle, so we have to be assured that this testing requirement can be enforced in its own right. We cannot rely on the operator licence requirement. It is virtually unenforceable, since the requirement to display the discs has been removed from the Bill that we considered on Second Reading, so the link has been removed between the operator and the number of licensed vehicles that he runs. Therefore, in some ways, the annual safety check becomes more important. It means that any safety inspector or policemen can ensure that the fitness to carry passengers of any vehicle on the road has been tested in the previous 12 months. It would be impossible to know from an examination of the vehicle whether it was covered by an operator's licence.

    But a specific requirement for annual safety tests is important because of the nature of the operation. We should all be alarmed that any large vehicles should be able to travel on our roads without safe brakes and steering, for example. A major public service vehicle can affect the safety not only of other road users but of those who travel as passengers on it. The vehicle is in constant use and stops and starts frequently. Safety control is crucial.

    The other question raised by new clause 8 is whether the operator's premises should be available for inspection. The control of PSV safety has, if anything, a longer history than safety control of other vehicles, so it is surprising that annual testing has not been insisted upon before. There is testing provision, however. Good operators often have good testing facilities on their premises. This testing has developed in a way very suited to the needs of the PSV. Major fleet operators have their own engineering facilities which they can use in the interests of greater efficiency. That should be recognised in legislation of this sort.

    However, we know that we are dealing with Ministers who are on record as wanting to put testing facilities in the hands of private operators rather than those of Government inspectors. We put down a marker about the need for independent monitoring by the Department's own engineers. There may be a difference between the two parties as to how safety testing is best achieved and how specific the legislative commitment to annual testing should be, but I hope that there is no difference between us that stringent and impartial requirements should be imposed for annual testing so that it is done to a uniform and high standard.

    3.45 pm

    At some time in the near future we need some assurance that, however the tests are done—in what are now Government stations and handed over to private control, a move that we would oppose; on the operator's own premises; or in Government test stations run by the, Minister's own staff—they will all be subject to independent monitoring by the Department's engineers, in whom we have great confidence.

    In all these circumstances, the annual inspection of PSVs should not be dealt with in general test regulations by removing the ban in the 1972 Act to imposing a test requirement on public service vehicles but should be specifically related to the needs of the special case of the PSV.

    That is why new clause 1 is inadequate. It does not achieve the purpose or the specified period of testing. New clause 8 is vastly superior. It achieves our intention and that which I think the Minister spelt out.

    I am grateful to the Minister for thanking my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans) and myself for pointing out that the Bill contained no provision for annual testing of public service vehicles. If the Minister's intention is met by the new clause, we welcome it, because people who travel in PSVs are entitled to high standards of safety.

    However, I must add that it was pointed out on Second Reading that some provisions of the Bill would adversely affect safety. Right at the end of his reply to the Second Reading debate, the Parliamentary Secretary said:
    "I reject completely suggestions that safety is threatened. That is absolute nonsense. If anything, the Bill will improve the safety arrangements."—[Official Report, 27 November 1979; Vol. 974, c. 1246.]
    As originally drafted, the Bill clearly would not have improved safety because it would have got rid of the annual testing of vehicles. I am afraid that the Parliamentary's Secretary's brief was somewhat amiss.

    There is no system of annual inspection of vehicles at the moment, so there could have been no question of the Bill getting rid of it. All that we are introducing in the new clause is the ability to bring in the annual inspection of vehicles as a new concept in this country. We always intended to bring it in anyway, but we had not intended to use this Bill to do so.

    I accept that, but we are getting something worth while from the suggestion of my hon. Friend and myself. We look forward to the introduction of annual testing, which will make things safer both for PSV passengers and for other road users.

    In the spirit in which he moved new clause 1, however inadequate it may be, I hope that the Minister will recommend the House to accept our amendment No. 25. That would extend the provision for the safety testing of vehicles to include vehicles owned by education authorities and used as school buses. There is no requirement at present to test them as there is with public service vehicles.

    I was delighted to hear from the right hon. Member for Barrow-in-Furness (Mr. Booth) that there were some aspects of the Bill about which we agreed. We have agreed throughout on the principle that the safety of passengers should be paramount in the passenger transport industry.

    I repeat without hesitation what I said on Second Reading, that there is no provision in the Bill which threatens or reduces the present protection given to passengers in trying to maintain the proper level of safety on public transport vehicles. There are aspects of the Bill that will strengthen the protection for passengers and make the system more adequate and enforceable.

    The new clause introduces a new system of annual inspection of all public service vehicles. The Government have always contemplated that, and it is an innovation to which we are bound by an EEC directive—the so-called roadworthiness directive. This has not occurred to the Government during the passage of the Bill. We always intended to comply with our legal obligations under that directive and to bring in a new system of annual testing by 1 January 1983. That means that we must get the first tests going by January 1982.

    The only change of policy indicated by the clause is that, following representations made by the hon. Members for Holborn and St. Pancras, South (Mr. Dobson) and for Newcastle upon Tyne, Central (Mr. Cowans) in Committee, we looked at the possibility of using the Bill, while there is parliamentary time, as the appropriate vehicle for bringing in a system for the annual testing of vehicles.

    Given that we are all agreed that this is a desirable innovation, I think it is a pity that the right hon. Gentleman—though I understand that he will advise his hon. Friends to support the idea—feels it necessary to hedge that agreement about with qualifications concerning the chosen method, the precise way it will be introduced and its enforceability thereafter.

    Let me explain why, on the face of it, new clause 1 is expressed in rather obscure language and does not provide in terms that the annual inspection of public service vehicles will begin in January 1982. The wish was expressed repeatedly in Committee that the legislation could be framed in language of that kind. However, upon examination it will be found that the, clause is adequate to pave the way for the regulations. That will be the most appropriate means of fulfilling the terms of the EEC directive. The new clause and the consequential Government amendments bring public service vehicles within the ambit of sections 43 and 44 of the Road Traffic Act 1972 from which they are presently excluded.

    That Act ensures the annual testing of heavy goods vehicles. At the moment public passenger vehicles are excluded from those testing arrangements. The amendments bring passenger vehicles within the terms of that Act, and pave the way for the necessary regulations spelling out the details of the arrangements.

    The alternative way of proceeding as a matter of law would have been to draw up regulations under the European Communities Act 1972 implementing the United Kingdom's Community obligations in respect of public service vehicles. That would have given rise to considerable drafting and other difficulties and probably, for a variety of reasons, would have been a less attractive course, given the present mood of the House, to adopt. We welcome the opportunity, therefore, of paving the way through this Bill to bringing passenger vehicles within the terms of the 1972 Act and then making the necessary regulations.

    There is no policy difference between us and, though the statute will not contain details of the annual inspection, it will pave the way for the regulations. I give the clearest possible undertaking on behalf of the Government that we shall produce the necessary regulations to bring the new system into effect at the required time.

    There is the problem of the enforceability of the new system of annual inspection once it has been put into effect. As with the other safety requirements of the Bill, our view is that they are perfectly straightforward to enforce and that they can be enforced properly. It is obviously in the public interest that public safety regulations should be enforced as strictly as possible.

    Every operator will be required by regulations under this Bill to notify the traffic commissioners of the vehicles he owns and operates. Every vehicle which he possesses will be subject to inspection by the Department's vehicle inspectors. Inspection can take place in a wide range of circumstances and more or less at any place and any time to ensure that a vehicle is fit to be on the road.

    The means by which we shall make sure that an operator submits his vehicles for annual test are that, by bringing passenger vehicles within sections 33 and 34 of the 1972 Act, the test certificates to be issued under this procedure will be linked with vehicle excise duty. That means that the certificate will be producable at the time of paying the vehicle excise duty. There will thus be a ready means of ensuring that a vehicle has gone through the annual test to which it is liable.

    The other point of detail raised in debate was whether it would be possible to carry out these annual inspections on the premises of operators who had the right facilities or whether all buses would be required to go to an approved vehicle testing station elsewhere. I am happy to repeat the substance of what I said in Committee. The Government are quite happy to consider the possibility of operators' premises being designated as approved places for the test. The regulations will pave the way for that possibility. We anticipate that a number of testing centres will be the premises of some of the major operators.

    First, we shall need to consider—and the right hon. Gentleman anticipated this—whether the facilities at particular premises are adequate for the rigorous tests required. I believe that only the major operators will have the kind of depot, garage and maintenance facilities appropriate for the tests. My only caveat is that the adequacy of the facilities will not in itself be the only decisive factor. We must look at various other matters, including the cost of sending our examiners to obscure parts of the country or endless testing centres to chase up specific vehicles. We must have some economy of organisation.

    There must be a proper geographical spread of testing centres to ensure that the bus industry as a whole is properly served and is not inconvenienced. There must be a testing station within easy range of an individual operator. Although we have not proposed these particulars in our discussions, it is possible that, if an operator wants his own premises to be used as a testing station, approval may depend upon the facilities being available to other operators so that their vehicles may be tested at that same station. A station will thus serve a fairly wide geographical area and be of advantage to the bus industry as a whole.

    We are prepared to discuss all these matters. We do not anticipate any difficulties in practice and we envisage that when the system is set up some of the approved centres will be operators' own premises.

    I was asked about the standards of the tests, and how they would be achieved. The standards will be the equivalent of the present rigorous ones that we attempt to apply to heavy goods vehicles and to passenger vehicles as well. We have indicated a policy intention to return the testing of heavy goods vehicles to the private sector. We are still considering the position with respect to passenger vehicles. However, whoever carries out the testing, it is the Minister who bears the responsibility for ensuring that it is of the right standard and adheres to the policy of the Bill. That policy is to ensure that the best possible protection is afforded to the travelling public by way of a regular enforceable system of testing and inspection. We can thus ensure that, once tested and inspected, the bus fleet will be as safe as reasonable regulations can secure.

    4 pm

    With the leave of the House, may I say that I cannot understand why the Parliamentary Secretary insists that this matter must be left with the Minister. I understand that he has agreed that there should be an annual inspection of public service vehicles and that that should be prescribed in regulations. Why, then, will he not support me in recommending new clause 8, which seeks to provide precisely that?

    New clause 1 removes an impediment in the 1972 legislation. That impediment is the specific exclusion of public service vehicles from test certificate requirements. However, that is not good enough. I have no objection to removing that part of the 1972 Act so as to leave the regulation-making powers in the Bill as they stand. That may serve some useful purpose, but it does not impose a specific requirement under the Bill, as we seek, to ensure that the Minister provides for full annual inspection of public service vehicles. The requirement was not in the 1972 Act, but we should take the chance to put it in the Bill. There is nothing in new clause 8 to prevent the Minister from taking the time that he needs to prepare the regulations properly; nothing to prevent him from taking account of all the considerations which the Parliamentary Secretary has very fairly laid before us.

    New clause 8 is confined to public service vehicles. In our proposals we are taking wider powers than that, and our regulations will apply to all large passenger vehicles. The powers that the right hon. Gentleman is offering us in new clause 8 are narrower than those that we propose to take in the regulations.

    I do not accept that. I do not see one new clause as an alternative to the other. If the Parliamentary Secretary will support our new clause we shall happily join him in recommending both new clauses, but the House has an absolute right to demand regulations requiring an annual inspection.

    The Parliamentary Secretary does not need to tell me, given all our debates in Committee, when we pressed upon the Government the need for a wider definition of public service vehicle, that there are vehicles outside that definition which should be covered by it. As my hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) pointed out, there are buses conveying children to school which could be outwith the definition. However, conscious though we are of the public service vehicle definition in the Bill, that is not the point at issue.

    If my hon. Friends want the House to recommend an annual inspection by regulation rather than leaving the matter to the Minister, they must vote for our new clause. I ask them to support new clause 1 and new clause 8, and that is a perfectly proper approach because none of us would want to stand in the way of the Minister making wider regulations than those we propose. If, in his wisdom, the Minister decides that other larger passenger vehicles not within the public service vehicle definition should also be subjected to annual fitness tests, we would not wish to be seen, by anything that we said or did, to be opposed to that. We are not. However, we insist that the House should decide whether there should be such annual inspections and whether they should be written into the Bill at this stage.

    Question put and agreed to.

    Clause read a Second time, and added to the Bill.

    New Clause 6

    Carriage Services Competing With Operators Holding Road Service Licences

    "No express service or contract carriage service shall operate on a route which is served by public service vehicles operating under a Road Service Licence and supported by a transport supplementary grant and/or cross-subsidised under a passenger transport policy network agreement unless in the cases where cross-subsidy applies the agreement of the Traffic Commissioner is obtained and in the cases where transport supplementary grant applies the agreement of the local authority is obtained.".—[ Mr. Booth.]

    Brought up, and read the First time.

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

    The clause deals with a matter which is at once complex and far-reaching and relates to one fundamental issue. That issue is whether it is possible, within the combined effects of the Bill in terms of its delicensing, its definition of express service, its opening up of contract carriage, for local authorities to carry out their statutory duty to promote and coordinate efficient public transport systems within their areas.

    We hold that these combined effects will prevent local authorities from doing that. We also believe that, in order to rescue something from the devastating effects of the Bill, our new clause is necessary to inject into the much wider system of free enterprise operation a method of check and agreement as between local authorities and operators, and as between traffic commissioners and operators about what is necessary to maintain network and individual services where they are being supported by transport supplementary grant.

    As the Bill is now drafted, it would be possible for someone to set up a contract carriage operation within an area covered by a networking agreement. Even though the public are making their contribution to that agreement through the transport supplementary grant, and even though major operators in the area are making their contribution by cross-subsidisation as between their profitable and unprofitable routes, along could come another operator who could cream off certain of the profitable routes without regard for the effect that that would have on the public transport service, which is a statutory concern of the local authority, or for the public interest which is at the root of the statutory duty imposed on traffic commissioners.

    A great many services in local authority areas are making a valuable contribution to maintaining other services within those areas. Urban services are making a contribution towards rural services. Monday to Friday services are making a contribution towards Sunday services. Peak hour services are making a contribution towards slack hour services.

    The whole of our public transport network is based upon a complex balancing of financial factors that allow services to run on the basis of a mixture of considerations. There is the consideration of how much should be properly taken from one route to support another. There is the complicated consideration of how much taxpayers' and ratepayers' money should be provided to operators through supplementary grants for them to operate services that the local authorities consider necessary if they are to carry out duties laid upon them by Parliament to promote and co-ordinate efficient public transport systems.

    Many hon. Members are aware that the emphasis on the promotion of services needs to be highlighted. There are still too many areas which, several years after the introduction of transport supplementary grants, have not succeeded in promoting services on a considerable number of routes. There are still many people who complain bitterly about their difficulties in getting to work or attending social functions because of the absence of public transport in their areas.

    It is our experience that even after a few years of those statutory duties and of local authorities receiving transport supplementary grants, far from having an over-provision of public transport services, we are still suffering an under-provision. Those local authorities, shire county authorities and metro-county authorities that have been successful in bringing about an expansion of public services by promoting and co-ordinating the various transport operations are in a minority. Many have been struggling to hold together an existing system.

    Under the provisions of the Bill, a contract carriage operator will be able to take advantage of a lucrative end-to-end route that is being served by a stage carriage service for which a road licence has been obtained, and will be able to operate only at peak hours, and on Mondays to Fridays, or possibly Saturday mornings. He will be able to do so only on those identifiable occasions when it is profitable, and he will be able to cream off money from the route and leave the existing operator to carry out that part of the networking operation that is essential if it is to stand as an operation that can be fairly described as a co-ordinated, efficient public transport system.

    If that happens, we predict that we shall be presented with a number of unpleasant options. Local authorities may tell the Government that they can sustain the operation of bus services—in some cases train services that are supported under the transport supplementary grant system—only if considerably greater contribution can be made. They may tell the Government that they cannot continue sustaining services at the required rate.

    4.15 pm

    Another possibility is that the network operators will tell local authorities that they can no longer make the network agreement or the contribution from cross subsidy required to sustain the network. They will say that they are not prepared to work on that basis. Some local authorities are prepared to play the game by either set of rules. However, at present, operators cannot use one service to cross- subsidise another and simultaneously compete with that service. They can do one or the other.

    Having talked to a number of operators, I suspect that in those circumstances they will pull out of the non-profitable routes. They will say that the TSG support is about one-third of the subsidy that is required, and that they are having to find two-thirds or more by cross subsidy. They will not be prepared to give up the routes where they are now making a profit, even though they are using the profit largely for cross-subsidy purposes. They will pull out. They will cut fares on the few routes that are profitable—10 per cent. of the routes at most—and the overwhelming majority of services will close down. That type of contract carriage operation has not been envisaged previously. Up to now all contract carriage law has covered specific types of operation.

    Another threat that looms large is that of the new definition of the express services. Any operator who is prepared to run a 30 mph or faster service can do so without road service licensing approval. There is much argument about the length of express operation—25 miles, 30 miles, 35 miles or 40 miles—that will affect the ability of the major operators to make a contribution from their carriage operations to other services. The National Bus Company estimated that a difference of five miles would affect its income by about £5 million.

    Under new clause 6 we are pressing for a minimum that is required to bring about reasonable protection of the operations. We are not saying that a new operator should not be able to operate on a cross-subsidised route. There may be cases—this will appeal particularly to the Minister—where local authorities will welcome a new operator on a cross-subsidised route. They may find that a new operator is prepared to operate a substantial part of the service with a lower degree of subsidy. That will be welcomed with open arms. However, where the route is at present subsidised under the TSG arrangements, the local authority concerned must be consulted. Public money is being used to provide a service, and if a new operation can lead to the use of that public money in such a way as to provide as good or better services, with no more, or possibly, less subsidy, it is to be welcomed. However, it is feared that in many cases a new operator will not want to discuss that with the existing company, the traffic commissioners or the local authority, because he will want to operate in a way that does not take into consideration this major factor, which the House has decided must be a responsibility for local authorities.

    I cannot believe that Members of Parliament would seriously wish to pass legislation which would require the majority of operators on stage carriage routes within their constituencies to go through a road service licensing procedure which took account of the public interest through reference to the traffic commissioner and the considerations which he would apply to road service licences, as well as the local authority's careful regard to the provision of taxpayers' and ratepayers' money to operators in order to maintain a network, and at the same time wish to make it possible for a number of others to operate with total disregard for those major factors. To do that would be to make nonsense of the whole business which we are about.

    The Bill is an unhappy mess in this respect. It aims at two completely different objectives, and one so badly conflicts with the other as, in my view, to threaten the destruction of a good passenger transport system in a large number of areas.

    I believe that this new clause provides a mechanism which allows a fair balance of the considerations involved, allowing an operator who is carrying out a desirable cross subsidisation—which was desirable in the view of the traffic commissioner and was taken into account in the determination of his road service licence—to say to the traffic commissioner that he believes that the effect of having contract carriage operation over certain parts of his routes at certain times, would not only be detrimental to his maintaining those routes but would in fact require him to withdraw.

    A traffic commissioner who has granted a road service licence, having looked carefully and in detail at how far that licence and its form and conditions met the public interest, is, I believe, in a better position than are others to judge the effect of having contract carriage operation on such a route.

    It could be held that the operator is biased about it. It could even be held in certain circumstances, though I would not so contend, that local authorities may be somewhat partial in their attitude towards certain routes, having run their own services or having made arrangements with particular operators. But that cannot be said of the traffic commissioner.

    I believe, therefore, that the new clause is of great importance. It offers, as it were, a last chance for us to try to inject some logic, common sense and balance as between the express or contract carriage operations which at present are totally outwith road service licensing and the role of the traffic commissioner. It gives an opportunity to local authorities which have the statutory duty to try to promote good public services and which are spending public money for that purpose to be involved in agreements with those who will operate on routes which, under the proposals in the Bill, can be operated without any regard to these major considerations of the public interest.

    During the 110 hours of our work in Committee, when the right hon. Member for Barrow-in-Furness (Mr. Booth) and his hon. Friends spoke in those grindingly long debates, this question emerged, to a large extent, as the greatest divide between us.

    As I understand it, the right hon. Gentleman's argument is summed up in the belief that cross subsidisation is somehow a beneficial system which will result in the provision of services which otherwise would not be provided. In examining that argument, one has to look at the reality of services in Britain today. I find it strange that the right hon. Gentleman did not remind the House that in every county, every district and every area public bus services are declining.

    This is the second time that the hon. Gentleman has made that assertion, and it is not true. Let him make the comparisons and look at the facts, especially in the metropolitan bus authorities compared with the counties or, indeed, look at the facts even in Tory metropolitan areas. He will see that both the South Yorkshire and Newcastle areas, for example, have been increasing the number of people travelling on their buses.

    I hope that the hon. Gentleman will recognise that I did not speak of the number of people travelling on buses. I referred to the services offered, and this is an important distinction. It is vital to have services offered which are relevant to people's needs. I can only tell the hon. Gentleman that, right in the middle of our lengthy Committee stage, Midland Red, in my constituency, cut services. I hope that the hon. Gentleman will forgive me, therefore, if I find his remarks strange when my constituents tell me that right in the midst of this argument, in which he and his right hon. Friend have argued that cross subsidisation will somehow continue the magic of public bus services, in my constituency those very services were declining.

    My constituency is not the only one where that has happened. This brings me back to the real divide between us. Cross subsidisation and directed traffic under the present system just does not work. I re-emphasise that in North Warwickshire, Solihull and the rest of my area in the Midlands this need has now become a prime priority. There are old-age pensioners, disabled people and families who are abandoned and marooned by the lack of bus services. So we are not starting from the basis of an ideal situation which is beneficial to all.

    Secondly, is it right to define cross subsidisation as a necessity for the provision of bus services? What is cross subsidisation? It is the use of finances generated from one set of services to support another set of services. Is this genuinely sacrosanct? Is it not part of the duty of an elected authority, or of a non-elected authority—even a non-elected authority such as the traffic commissioners —to recognise that if socially needed services should be provided they should in fact be provided? Is it not a better financial discipline to recognise that by defining, without cross subsidisation, what each service provides in terms of its benefits to the customer?

    We are not talking about politics here. We are talking about people who want transport services to take them from one point to another. Could people not have a better service if we allowed ourselves to make judgments? I am sure that many passenger transport executives and bus companies would accept the argument that if they are there to provide services it is up to the elected authorities, whether Members of Parliament, county councillors or district councillors, to decide where and how the public money should be spent. I find it difficult, therefore, to understand why cross subsidisation should be regarded as sacrosanct.

    The right hon. Gentleman said that we should have to face some unpleasant options. Why should they be unpleasant? Under the Bill we are for the first time embodying in law opportunities which in many of our constituencies have already been shown to be genuine opportunities. Private enterprise can often provide at lower cost better services than those provided by public enterprise. This also is part of the great divide which took us over, as I recall it, 130 Divisions in the Standing Committee. By energising the forces of private enterprise we shall get people working at a cost lower than that shown by the passenger transport executives or the nationalised bus companies in the provision of services at times when people want them and in vehicles as they want them.

    We must all be familiar with the sight of huge buses with three people sitting in them. I am not so unsophisticated as to make that point without recognising that at peak times those very buses may well be full. But I put it to the Opposition that there could well be a place for buses run by private enterprise at certain times of the day to provide services which will make a profit for an entrepreneur, providing services for local residents, while at other times of the day on the same routes we could still achieve services in different buses for those of the population who require them. I believe that a complex mixed economy of transport provision, both private buses and public buses, is the only answer.

    Under the Bill, without new clause 6, which I sincerely hope we shall not pass, we have for the first time innovatory legislation which allows entrepreneurs to do just that. Many of us have in our constituencies entrepreneurs who have already battled through the lengthy process of arguing with the established bureaucracies of the National Bus Company, the passenger transport executives and the local authorities in order to get their services going. They are already providing services. In Committee I gave three examples from my own constituency where they are providing excellent services where the institutionalised public provision would just not succeed. I therefore urge the House to reject the new clause.

    4.30 pm

    I did not sit through the long, weary and tortuous hours in Committee, but I took part in the Second Reading debate. In looking at the new clause, I can imagine that it somewhat counters the substance of the Bill itself. However, it does not entirely throw out of the window the main purpose of the Bill.

    In endorsing the argument of my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth), it seems to me that the wording of the new clause—which I imagine has been drawn up very carefully indeed, and at first sight appears to be somewhat complex—can be the means of ushering in an element of planning in order partially to accept the fact that the Bill is now going through Parliament because of the inbuilt Conservative majority.

    The Government have applied their mind to transport according to their own light, and they genuinely believe that out of their proposals will emerge a much better service for the people and a much more efficient one than we have had hitherto. I do not think that that is the case at all. Without new clause 6, I believe that the Bill could rapidly lead to a state of anarchy on our roads.

    Like many other hon. Members on both sides of the House, I foresee the time rapidly approaching when more and more car owners will have to look to the passenger services of various kinds in order to get to work. If that is the case, it means that more workers will be involved in those services. There is real fear, particularly on the part of members of the Transport and General Workers Union, that an anarchistic situation will arise from the Bill's central provisions. It is up to the Minister to allay those fears, because it is upon the good will of transport workers and the way in which they go about their daily lives that at the end of his period the right hon. Gentleman will be judged to have been successful or to have failed.

    In addition, there is the question of road slaughter. If efficient public services are used by more people than use our existing services, obviously the question of slaughter on the roads diminishes a great deal, because it arises precisely from the various kinds of transport which at present use our roads.

    These questions are interlocked. I believe that as a result of the requirement in the new clause, whereby local authorities will be under the discipline of a cross-subsidisation system, local authorities will be able to play a greater role in the localities, and throughout the county complex, to ensure that the changes envisaged by the Government and the Minister are successful. I respect the Minister's views, but only the test of time will tell whether the basic Socialist philosophy as applied to public transport is better than his. The proof of the pudding will be in the eating. I believe that at the Tory Party conference the Minister described his proposals as somewhat revolutionary. In so far as his proposals spell out considerable changes, I suppose that they could fall into that category, although we are not accustomed to Tories talking about revolution.

    Nevertheless, the proposals spell out considerable changes that must be ushered in with a good deal of caution. I am open-minded about certain aspects of the proposals, because, as I said, the proof of the pudding will be in the eating. However, as my right hon. Friend said, there is a fear that there will be a wholesale creaming off.

    The trade unions which represent road passenger service workers in the public sector are well organised, but there is a fear that the wages and conditions of those workers will be put in jeopardy as a result of their being left with the Cinderella services. There is a fear that they will be left with the empty vehicles while the fly-by-night operation, which will pass under the sunny title of "private enterprise", will cater only for rush-hour periods or times when the vehicles are likely to be fully used. The danger is that if such an operator gets fed up, if someone goes sick or if a man's son does not wish to carry on with the service, many people will be bereft of any service whatever. That is a real fear.

    There is a need for a balance, and I believe that the terms in which new clause 6 is drawn will ensure that that balance is steadily applied and arrived at.

    I begin by declaring an interest in this matter. Having heard about the length of the Committee proceedings, I am not sorry that I missed them. However, there is one relevant question that should be asked, not only in regard to this part of the Bill but in relation to the new clause. Will what is proposed either halt the decline in services in some parts of the country or improve them? Surely, that is the only relevant question that we should ask this afternoon.

    My right hon. Friend the Minister has put forward what have been claimed to be far-reaching proposals, and the right hon. Member for Barrow-in-Furness (Mr. Booth) has rightly expressed certain fears about what could happen. I am sure that all of us would accept that the present situation is unsatisfactory. Indeed, I remind the right hon. Member for Barrow-in-Furness that over the years the Labour Government introduced new legislation because they realised that what was happening was totally unsatisfactory. For example, bus services were declining and more and more people in various parts of the country, particularly in the rural areas, were finding themselves without public transport.

    I do not entirely agree with what my hon. Friend the Member for Meriden (Mr. Mills) said about cross-subsidisation, because bus service operations are somewhat more complex than many people appreciate. It is not just a question of a driver starting off at point A, driving to point B and back to point A, and doing that throughout the day. Because of the complication of drivers' hours and other legislation which applies, it is often necessary for that driver to make two or three journeys from B to C, or even from C to D, before he reverts to B to A. That may confuse the House. I confess that I have always found the matter confusing. However, it means that in employing that bus and driver we are not dealing with just one service. If anything happens which undermines or removes the need for the service while the driver is operating, the coherence of the whole of the service is undermined. As I understand it, that is the main point that the right hon. Member for Barrow-in-Furness put forward.

    How does my right hon. Friend see the role of the local authorities and the county councils which have the responsibility for the co-ordination of public transport and, indeed, the job of subsidising public transport in the event of that type of situation arising? What will happen if, because of the creation of new contract carriage services, services that are subsidised are undermined? For example, what will happen if the local operator who is perhaps part of the National Bus Company says "It is not just a question of my doing away with the route from B to C. I must do away with the routes from C to D, D to E and E to F because they will no longer pay. On the other hand, in order to maintain those services I require a considerable amount of money from the ratepayer and the taxpayer"?

    Therefore, we must carefully examine the role that the county councils are expected to play. They have been anxious to take on the responsibility in the past. I remember my right hon. Friend and myself arguing vociferously that they should be given the right to control public transport, particularly in rural areas. If they have this responsibility, they should be consulted and have a strong say before we introduce a whole series of new services which could damage what already exists.

    There is one fear that niggles me about this part of the Bill. I do not doubt my right hon. Friend's intention to try to bring new services and life into public transport. For that he deserves every commendation. My fear is that the freedom to be given is likely to bring into public transport not just the fly-by-night operators—I do not go all the way with the hon. Member for Ealing, Southall (Mr. Bidwell)—but those who have not done their sums too carefully, who may think that they can operate an express service and then find that the economics are not going too well.

    The temptation to break the law—the temptation to try to get extra revenue—which existed before there was legislation on bus services could happen again. Because of that, there is a danger that these new services may siphon off passengers from existing services rather than create more passengers and services. If that happens, it will undermine the real purpose of the Bill—the creation of new services and help for people who are without public transport at the moment.

    I hope that, in reply to this short debate, my right hon. Friend will try to spell out for me and satisfy me that the Government are aware of this danger and that they have consulted the Association of County Councils on how they are to meet this need. The danger may not be immediate. It may not be next year or the year after. The real danger is that many of the new services may come in and prove unprofitable and that, in about 1983 or 1984, we shall find ourselves with less public transport than we have today.

    I listened as carefully today to the hon. Member for Welling-borough (Mr. Fry) as I did during the transport debates in 1978. I do not agree with everything that he said, but he introduced a note of realism into the debate today. Without doubt, the new clause tries to put a note of realism into the Bill. One could argue that it is a conservative clause, because it introduces a note of caution.

    Having heard the hon. Member for Meriden (Mr. Mills), one would have thought that entrepreneurs were queueing up to take over these services. The clause makes it abundantly clear that we are talking about rural services—the unprofitable parts of the transport empire. That is the fundamental difference between us.

    I turn to the cross-subsidisation argument. Whether we like it or not, people outside sometimes make the accusation that in this place A votes "Aye" and B votes "Nay" and never the twain shall meet. Put another way, Conservative Members vote "Aye" and Labour Members vote "No" and realism goes out of the window. I hope that that will not transpire in this debate, because there is real worry about this matter.

    As the hon. Member for Welling-borough said, the worry is not immediate. It will not happen the day after the appointed day. The worry goes beyond that point. It would appear that many people hidden away in many constituencies have suddenly discovered that they can run the transport system. One could argue that the opportunity is available to them now. Conversely, it can be argued, as no doubt Conservative Members will argue, that the transport commissioners grind exceedingly slow. But in the pursuit of profit, even when the rules of the game grind exceedingly slow, has anyone who can make that profit been put off before? The answer must surely be "No".

    4.45 pm

    There has been no queue of people to operate these rural services. This matter goes beyond party politics. We are talking about people in rural areas who rely on transport. There has been no queue of people to provide these services.

    The clause is carefully worded. It is cautionary. It urges us to look at the systems which have previously been subsidised before we introduce another system which may not exist for a very long time. One would think that a local authority would look into rural transport before pouring good money into it. Successive Governments have supported the view that rural transport should be subsidised.

    The fundamental issue between us is cross-subsidisation. I appreciate that to Conservative Members the National Bus Company is poison. However, it exists. There is also another clause on this matter, which, for fear of incurring your wrath, Mr. Deputy Speaker, I shall not mention. However, there is the prospect of £5½ million being lost, a percentage of which could be used in cross-subsidisation. If that percentage is taken away, that cross-subsidisation will not exist. It can be likened to a tree. The National Bus Company does not cross-subsidise out of the goodness of its heart. It cross-subsidises in the form of a tree. If the branches feeding into the trunk make the trunk profitable, it makes sense to support the branches.

    Our worry is that, not in the first instance but over a period of time, rural transport will be non-existent because people who have not done their homework will move in. Everything in the garden will look rosy for a short time, but they will kill off existing services, because of the cross-subsidisation agrument, and then move out. What will fill the gap? Perhaps the Minister, in replying to the debate, will take us beyond the appointed day, when this free-for-all is to transpire. If it does not work, will he tell us what he proposes to put in its place by way of rural transport? That is always assuming that the Minister and his hon. Friend are still in the positions that they now occupy.

    The essential point about the debate was put forward by my hon. Friend the Member for Wellingborough (Mr. Fry). He asked whether the new provisions would benefit the travelling public. I agree that, above all, that is the litmus test. It is about not what the lobbies, the operators or the unions want —all these bodies have a right to put their arguments—but what is in the best interests of the travelling public. Therefore, I should paint in the background to what we are doing.

    The aim and purpose of the Bill is to remove unnecessary restrictions on the bus industry and, at the same time, provide the opportunity for new services to develop. As my hon. Friend the Member for Meriden (Mr. Mills) rightly pointed out, some of the new services will undoubtedly be provided by private operators. The obstacles now put in the path of operators wishing to run long-distance coach services do not serve any worthwhile purpose. It is right to remind the House that essentially we are talking about express services which, by definition, are services covering more than 30 miles.. Such obstacles in the long-distance area restrict the choice of the public.

    There are those who want to travel by express bus and who prefer that option either to driving or to catching a train. If a man travels from Bristol to Birmingham he may want to travel by air, rail, car or coach, and the Government see no justification for seeking to restrict this choice of method of travel. That sums up my philosophy, but, what is even more significant, it sums up the philosophy of the Labour Government. In their White Paper on transport policy they said:
    "Provided the terms of competition are fair, if people choose to travel by coach rather than rail or air because lower fares are more im- portant to them than speed, they should not be prevented from doing so."
    That is a sentiment that I support entirely.

    The problem is whether those people will have the right of choice. I remind the Minister that there was an occasion during the Beeching era when the rail service between Scarborough and Whitby in Yorkshire was terminated as the result of an investigation by the traffic commissioner, who was assured that private bus operators would provide an alternative service. But within 12 months that alternative service no longer existed because it was totally unprofitable, and the people who lived in those rural areas were isolated from public transport as a consequence.

    I shall come to those points. We are dealing with contract carriage, but essentially we are talking about express services. In other words, we are dealing with services that are more than 30 miles in distance. That is the aim and purpose of what I am about to say.

    In the area of express services, it is fair to remove the present licensing restrictions that prevent bus operators from competing on equal terms. In other words, contrary to what has been said, there is a demand for travel which at the moment is not being met. I believe, further, that that new demand, and the fact that resctrictions can and will be removed, will lead to new operators coming forward in this area.

    I was attacked on the ground that new operators would not come forward and that there was no great demand for intercity coach services of for new coach services at all. But there are signs at present that exactly what I am predicting is taking place. An article in The Daily Telegraph on 21 January said:
    "New private enterprise companies are planning to challenge the National Bus Company on key express coach routes when unrestricted competition returns to the business later this year for the first time in half-a-century".
    Surely, that is in the interests of the public.

    What was the response of the National Bus Company? To do it justice, its express division controller was quoted in the same report as having said:

    "Competition is a spur; it is not a threat."
    That is surely exactly the approach and feeling that there should be in the bus industry.

    The first point that I make in refuting much of what has been said today, which I believe is not only alarmist but totally wrong, is that in this important area—this point was conceded by the right hon. Member for Barrow-in-Furness (Mr. Booth) in Committee—of inter-city travel there will be more opportunity and more providers. That will be in the interests of the public. Not one word that I have heard this afternoon challenges that.

    If the Minister reads new new clause 6 carefully, which I assume he has done, he will see that the key words are

    "under a passenger transport policy network."
    The fear is that, as with a jigsaw puzzle, many local authorities and the NBC have subsidised a number of branches of the tree in the overall network. If we take out one or two of those branches the network will collapse. That is the main point of new clause 6.

    I shall come to the points made by the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans).

    Basically, the Opposition are still concerned about the freedom that will be provided here. They wish to reimpose restrictions on these services. Indeed, they now wish to go further and extend those controls to services that are not even licensed at present. If the hon. Member for Newcastle upon Tyne, Central refers to the clause, he will see that those services are the private coach parties or contract carriers.

    The Bill does not change greatly the position of those services except in one small but important way. The Bill will make it easier for people to club together to solve their own transport problems. I am thinking especially of commuter clubs which are currently prevented from hiring coaches for journeys to work by the restrictions on the making of regular journeys. This restriction will go, but those which protect the ordinary local bus service will remain.

    Concern for the local bus network—I fully appreciate what the hon. Member for Newcastle upon Tyne, Central is saying—is at the heart of the clause. I have sought to make clear all along that it is no part of our desire to destroy that network. That is why I have retained licensing for all services which are part of the local network. The distinction that I have drawn in the Bill between express on one side and stage carriage services on the other does that. In other words, it preserves the distinction between the express services that are outside the licensing restrictions and the local services where I believe there is a need for control. Although we have changed the presumption of proof, we have accepted that.

    What I do not see is why a non-stop express bus from, say, London to Manchester should damage the local bus network. Contract carriages also serve quite a different market. They are privately run and are organised voluntarily. That is not unfair commercial competition. That kind of commuter coach service will supplement regular services at peak periods and will not damage the network.

    I believe that the Bill makes a proper distinction of the local network. My purpose is not simply to maintain and protect that network in its present form. The public would not be satisfied with that, just as they are not satisfied—as my hon. Friend the Member for Meriden rightly pointed out—with the present level or standard of local bus services. The Bill will change the balance of licensing in favour of the operator wishing to run new or better services. It will be for the established operator to prove that the competition will be detrimental to the public interest.

    Cross-subsidisation may be an important issue here. But the operator will be required to satisfy the traffic commissioners that it is of overriding importance. I understand, obviously, the arguments about cross-subsidisation, but I believe that it is necessary for those who claim that cross-subsidisation is taking place to justify the patterns of that subsidy. That is a healthy discipline for the operators themselves. When it comes to the local services—the services within the 30-mile threshold—as I have said, there is no question but that they will have to go to the traffic commissioners. The commissioners will have to judge whether that is an overwhelming argument.

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    It seems to me, therefore, that the thrust of the Opposition's new clause is to protect the present pattern of cross-subsidisation and local authority support. The thrust of the Bill is to encourage a new look at those patterns to allow competition to be a spur to improving services and efficiency instead of placing an automatic and ever-increasing reliance on subsidy paid for by the ratepayer and the taxpayer.

    When the hon. Member for Kingston upon Hull, East (Mr. Prescott) intervenes and tells me that South York shire is now the model upon which the Opposition's policy is based, I am bound to tell him that for three years I sat on the Opposition Front Bench and heard from the then Secretary of State for Transport in the Labour Government how iniquitous the policy of South Yorkshire was at the time and how it was that the right hon. Member for Stockton (Mr. Rodgers) wanted nothing else but to change that policy. Now we understand, with the change of management on the Benches opposite, that South Yorkshire, rather than being the villain of the piece, has become the hero of the piece.

    We learnt many things during the Committee stage. The great differences in policy that have emerged between the Labour Party in Government and the Labour Party in Opposition have been some of the most dramatic.

    The right hon. Gentleman is being less than fair to my right hon. Friend the Member for Stockton (Mr. Rodgers). Whatever the differences of attitude about bus policies, certainly when my right hon. Friend was Minister he was concerned about the proportion of rates that South Yorkshire might be getting, but he was also concerned about the same argument for Oxford. At that time it was a very difficult argument. Nevertheless, he reached agreement the following year with South Yorkshire, which maintained the very principle that it has today, which has gone from strength to strength in passengers and in the provision of services in that area, to a far greater extent than any other metropolitan authority.

    That strains the matter a bit. I think that anyone with any objectivity who had listened to what the former. Secretary of State said over the previous two or three years about the policies of South Yorkshire could not conceivably come to the conclusion that those were policies that he supported.

    Basically, however, I cannot accept the new clause to reintroduce controls in the way that it sets out. It would introduce new restrictions on contract carriage services, which under the present system are not licensed. The Opposition want to protect the local network. I understand that. I have made it clear—and I say this again to my hon. Friend the Member for Wellingborough, who made a thoughtful and critical speech—that I am in no way out to destroy that network. That is why I have retained licensing for all the services which are part of that network. But I am confident that the distinction that I have drawn between the express and the stage carriage services does just that. I see no reason why the express services should be a challenge to that, nor do I believe that contract carriages, which are serving a different market, should be a challenge to that. In other words, I believe that services such as commuter coach services will supplement regular services at peak periods and not damage that network.

    On a point of information, will the Minister let me know whether the sort of holiday excursions organised in parts of the country such as mine, where people offer services in a number of picturesque areas —say 10, 15, 20 or 40 miles away from the passengers' main residence during a holiday—are derestricted under the express licence regulations? Clearly, it could not be described as "express", but certainly the passengers, at one time on the trip, may be more than 30 miles away wrom where they started. Will that sort of service be derestricted under the Bill?

    The short answer is that if the journey itself is over 30 miles, an express service, it would be outside the restrictions, but there are different derestrictions in the case of excursions and tours. I should need to look at the question in detail if the hon. Gentleman has a particular point, but my straight answer is that I believe that what he is saying would be outside the powers of the traffic commissioners.

    Therefore, it is for operators and county councils to take an objective look at the patterns of cross-subsidisation that occur. I think, however, that it is not right to become obsessed with the subject of cross-subsidisation.

    I am sorry to persist, but it is clearly stated in the regulations outlining the provisions that a person must be set down 30 miles from where he started. The irony of these particular trips is that the passenger is set down precisely where he started from, in exactly the same spot. I am wondering, therefore, whether that is covered by the express service definition.

    As long as any point from which the passenger is taken is 30 miles away, that would take him ouside the ambit of the commissioners.

    With respect, it does say that. Also, with respect, the hon. Gentleman served on the Committee on the Bill and we have been debating it for about 110 hours. I shall not embarrass the hon. Gentleman by pointing out the time he spent on it during the Committee stage.

    Therefore, the greater competition that I hope to see within local services will be a better spur to improving the services and efficiency than automatic and ever-increasing reliance on subsidy. But I beg the House to understand that, when it comes to the question of express services, I hope that there is now, as I believe there was, the start of an agreement, when we were talking in Committee, and that the fact that we are derestricting these important inter-city services—the services between London and Birmingham, and between London and Manchester, intercity services of that kind—is something that is totally in the interests of the public. We look forward to new operators coming forward on these routes and providing low-cost transportation for the public.

    That, I believe, is in the interests of the travelling public. That is what we judge the criteria of the Bill to be.

    As a new Member, it strikes me that the response of Oppositions faced with Government measures falls into two categories. They either denounce them as being likely to have the most far-reaching and disastrous effects or, alternatively, they say that the Minister concerned is leading people on into believing that what he is introducing will have a dramatic effect, when it will have practically no effect at all.

    In an effort to resolve that problem for myself today, I think I can say that the delicensing provisions of the Bill will probably achieve both of those things, because it seems fairly likely that there will be parts of the country which will be very adversely affected by the delicensing measures and parts where there are scarcely any effects at all. I am prepared to concede that on a certain number of what may be described as privileged routes there will be services that will be improved as a result in an increase in the number of operators and, consequently, an increase in the number of services.

    I had not intended to speak until I heard the Minister refer to the boss of the express division of the National Bus Company saying that such competition was a spur, not a threat. Prior to that, I heard the Minister say that we should consider not the interests of various pressure groups, such as the management, unions and so on, but those of the travelling public. I can understand why the man from the express division does not regard the delicensing of the express services as a threat to that part of the company for which he is responsible. It is likely that the National Bus Company will respond to the new situation by concentrating a great deal of effort on the profitable express services.

    I do not know what the NBC will do with the services that are not on express routes and are no longer profitable and no longer capable of being subsidised from the profits of the express services. The manager of the express division may loom larger in the hierarchy of the National Bus Company as a result of the proposals.

    Is not the hon. Gentleman aware that the National Bus Company operates under various headings? It is hardly likely that express services will subsidise the operations of one of the company's sub-divisions. Although we can talk about the overall profitability of that company, the hon. Gentleman's recent remarks tend to mislead the House.

    I had not intended to mislead the House. I rely on the clause put forward by my right hon. and hon. Friends. It refers to the element of cross-subsidisation with transport supplementary grant or to a route upon which there is a cross-subsidy under a passenger transport policy network agreement. Perhaps I did not make clear that some areas may benefit from the Government's proposals. However, others will not. I tried to make a distinction. The clause seeks to protect those which are affected by the transport supplementary grant and by cross-subsidies under the passenger transport policy network agreements. I therefore do not accept the hon. Gentleman's point.

    If the hon. Gentleman refers to Hansard, he will discover that he said that it was the express services of the National Bus Company that would subsidise other bus services. As I said in my speech, it is possible that some express services may affect more services, but the National Bus Company operates through separate companies and those companies are accounted as such. As a result, the hon. Gentleman's forecast will prove incorrect.

    I accept that technical point. Nevertheless, the express services of the constituent parts of the National Bus Company will probably loom larger in the activities of the National Bus Company. The provision of rural services by that company will probably loom much smaller. Those waiting in country lanes for a bus to appear in the distance will probably have to wait much longer as a result of the proposal. Services will become less frequent.

    The same applies to the new contract carriage services. The Minister upbraided my right hon. Friend for wishing to extend coverage to contract carriage services. He would be right to upbraid us if we had wished to extend the limitation to contract services of the type already discussed. However, if one considers the contract carriage services that are to be provided by clubs or by those who club together allegedly to look after themselves, we can see that they will have an impact on those services. It is a matter of dispute whether that impact will be favourable or adverse.

    On Second Reading and in Committee we were concerned about protecting the bus network, particularly in rural areas. The Minister said that he would retain licensing in rural areas as that would help to preserve the network. If that is what he means, logic requires him to maintain a licensing system, or consultation with traffic commissioners, on those parts of the express system that are covered by TSG or provide an element of cross-subsidy for the rural network. The Minister conceded that that network needed protection in the form of licensing. However, he will chuck away part of that licensing. As a result, part of the provision of cross-subsidy from the express services into the rural services will be taken away. That is plain daft. It does not follow the logic of maintaining licensing for rural services.

    5.15 pm

    We therefore return to the fundamental question of whether a free-for-all in certain parts of the country will benefit the bulk of customers. We do not believe that it will. The Minister and his colleagues apparently hold a different view. However, there is little evidence that this burst of free enterprise on profitable routes will favourably affect the provision of services in rural areas. Those networks are already thin on the ground. We repeated one point ad nauseam in Committee. I hope that I shall not nauseate too many hon. Members if I repeat it this evening. The existing network of rural services is, on the whole, maintained by one form of subsidy or another. Such subsidies come from the taxpayer, the ratepayer or other users of the bus routes that pay. Rural networks cannot pay. Anything that lessens these subsidies to rural networks will damage them.

    The categories of express service and contract service that are mentioned in new clause 6 are involved in the cross-subsidy system. They should remain there. That provision should continue, to the benefit of the most deprived areas. We all accept that some routes may have four or five express coaches travelling on them each day. As a result of competition or of an additional operator, such routes may be used by five, six or seven coaches a day. Perhaps that would benefit those travelling on such routes. Such an occurrence may not prevail for long. However, it may pay and benefit the users on that limited number of high-paying express routes. If the clause is not accepted, that change—which may be beneficial in the area concerned—will damage rural networks.

    The hon. Gentleman has already spoken. He cannot speak twice on Report.

    I am greatly concerned, because the Minister has totally misunderstood the new clause. He has opposed it on the ground that it will tend to defend and maintain the existing system and he envisages a superior system emerging as a result of the Bill. We can have many arguments about the effects of the new clause, but it cannot be argued that it will maintain the existing system. It will not. If we had wanted to put down a new clause to maintain the existing system, we should have done so. We have not chosen to do that.

    We recognise that the Minister has a majority in the House and that he can therefore introduce a different type of contract carriage operation that will enable operators to run bus services over short distances within urban and rural areas on a regular basis—for example, every Monday to Friday at nine o'clock in the morning and five o'clock at night. That will be possible under the contract carriage provisions in the Bill.

    The new clause does not take that power away. It does not change the definition of "contract carriage". It provides only that a test—not a prohibition—shall be applied where a new type of service is introduced into an area not currently served under networking agreements or TSG support. Where the service is introduced on a route presently served under a road service licence, a test should be applied by the traffic commissioner who previously decided to grant a road service licence. When granting the licence, he believed that it would enable a service to be operated in the public interest. He decided that without any knowledge of any new contract carriage operations being introduced.

    If somebody proposes to introduce a new service, a new decision must be made by the traffic commissioner about whether it is in the public interest. That should operate only in cases where the traffic commissioner has to take into account whether that licence affects the degree of cross-subsidy in his area. The Minister cannot deny that the commissioner may have specified special conditions on the licence to maintain a certain level of public service within the area. The licence should be issued subject to those conditions.

    When the new contract carriage service is introduced those conditions may not apply, because there may no longer be any need for a degree of cross-subsidy. That is what the Minister and his colleagues want. Someone may be prepared to operate a contract carriage system that will relieve the need for a cross-subsidy.

    We think that such operators will come forward only on the highly profitable routes to cream off the profits. However, we do not know that that will be the case. We are speculating and making intelligent judgments about a service that has not existed for the past half century.

    We are not trying to change the provisions in the Bill. We are saying that where a contract carriage operator wishes to operate on a route where a road service licence has been issued and a cross-subsidy exists, the commissioner should consider the case. It is a matter of establishing protections for the road service licence holder.

    How would my right hon. Friend advise the Secretary of State to divide the services between the new operators, or the express operators, and the present licensed carriers? It is likely that a new operator will pick the most lucrative routes in the network. How can an unfair distribution of routes in the network be avoided?

    I shall try to answer those points later. At this stage I shall deal only with the one affected by contract carriage. If I were seeking to advise the Minister, I should tell him that the new system should operate only in those areas where its introduction would not damage the public interest, namely, where people were already operating subject to conditions of road service licence or with the aid of a cross-subsidy or TSG. In those areas the matter should be considered by the responsible authority. In the case of a cross-subsidy, it should be considered by the traffic commissioner. In the case of a TSG, it would be a matter for the local authority which made the grant.

    I understand the intention behind the new clause. I am not unsympathetic to it. Does the right hon. Gentleman accept that the way in which it is phrased will give rise to an enormous number of applications to the traffic commissioners, because a large number of routes are subsidised? For example, let us consider an express service between London and Manchester. For part of its journey it would run over part of the London Transport ordinary bus system. To refer that application to the traffic commissioner would create an enormous amount of bureaucracy and do nothing to help the freeing of public transport from bureaucratic interference, which many of us feel is necessary.

    It will lead to a great deal of additional work for traffic commissioners only if people seek to run contract carriage operations on routes that are presently subject to road service licences, to either cross-subsidy or TSG, or to a combination of both. It is my fear that some new operators will cut across those elements of the road service licence routes that provide substantial cross-subsidies. They may cover parts of routes at times that are profitable, leaving the remainder to be covered by an operator who is complying with a public interest requirement. The House gave the traffic commissioners the job of judging whether issuing a licence subject to certain conditions was in the public interest.

    On the contract carriage aspect of the new clause, the Minister is not entitled to claim that he is defending the existing position. We are attempting to write into the legislation a check on the first phase of a new type of operation but one that does not preclude its introduction.

    5.30 pm

    I am not sure what the right hon. Gentleman's policy is. His new clause reads as if it refers to giving protection, against the new contract carriages, either to those services supported by transport supplementary grant or to those which are cross-subsidised. Therefore, on the face of it, I thought that his new clause said that the traffic commissioners should be consulted if a new work service or a school bus under contract carriage arrangements competed with a loss-making service which was either receiving revenue support or being cross-subsidised. Now, he seems to be changing his mind and extending the new clause to a great extent. He seems to be claiming that a service should be referred to the traffic commissioners if it is receiving revenue support—that is, if it is loss-making—or if it is profit-making and is cross-subsidising other services. It seems as if the right hon. Gentleman, in his beguiling way, wants to go to the traffic commissioners over every bus service that one can imagine. If that is the case, he is seeking to undermine the whole policy of the Bill.

    It could be that certain operators who wanted to operate contract carriage services would have to go to a commissioner or to a local authority if they wanted to operate on a route already covered by either a loss-maker or a profit-maker. That is true. The limitations are such as to safeguard the wider public interest.

    It might well be that a contract carriage operator could persuade a local authority, and the local authority could quite reasonably agree, that he should cover part of an operation. In fact, the operator could persuade the local authority that considerable public good could result from having another operator on the route at a particular time. It would be for the local authority to judge whether the contract carriage operator was undermining an element of its profit, so that it would have to put back a large part of what he was taking out in order to sustain the route.

    I am not evading the issue. Under the terms of the clause it could well be that a certain operator might have to go to a local authority because he was seeking to operate on a profitable route, and in other circumstances an operator might have to go to the authority because he was seeking to operate on an unprofitable route. However, I stress that in those two cases the local authority's response would not necessarily be the same. It might welcome certain arrangements being made in certain circumstances.

    In Committee it was pointed out that one of the complaints that one received from certain authorities about the running of their services was that they had to maintain an unduly large fleet in order to cover certain peak hours. There might well be a case in the minds of those authorities for having another operator lifting some of the peak load from their shoulders so that the rest of the service load was capable of being covered by a smaller fleet.

    There are many aspects of this matter that must be considered. These things cannot be determined by the House. They must be determined by local authorities, the operators and, in some cases, the commissioners with their detailed and intimate knowledge of the problems of the area concerned.

    The other issue that is covered by the clause is that of express bus services. Here again, there is room for reappraisal. I agree with the Minister that there are some cases in which people may be better served by two or three operators competing for a bus service running from A to B. However, that would be in circumstances which paid no regard to those living in areas between A and B which were currently being served by a single operator who was prepared to stop at various points between A and B. On a 30-mile journey at present, many operators are prepared to stop 10 or 12 times at places where they can pick up or put down passengers.

    The issue at stake is whether that service could be sustained if, at certain times, another operator ran a service which went straight from A to B without stopping but took part of that route's traffic. In an ideal world where no financial considerations applied and there was as much money to support public transport services as operators could wish for, we would love to have an express operator from A to B alongside another operator stopping a dozen times between A and B. That would mean that both needs would be served. But the reality of the financial position of many operators is such that in certain parts of the country there is a genuine fear that such an ideal might not be possible. If there is competition between A and B, where the express operator is subject to no licensing procedure whatsoever, and at the same time a stopping service operator between A and B is subject to the ruling of the commissioners, who have to decide in terms of public interest, the commissioners' role becomes unrealistic. It is unrealistic for a commissioner to judge upon a situation in which there is no possible choice.

    It is possible that someone will come to a commissioner for a variation of the conditions of his road service licence in order to cut down the number of places at which he stops between A and B because he can no longer compete with the express merchant. He may seek a variation of the conditions of his licence so that he has to stop at only two places. That may well be the kind of decision that will come to the traffic commissioner. Under the terms of the Bill, the traffic commissioner cannot have any opportunity of considering the effects on that service and on the public interest. Therefore, it is proper for the new clause to say that where the effect of introducing new express carriage operations is such as to impinge—and only where it is such as to impinge—on network agreements or cross-subsidy arrangements, the commissioner should have a chance to look at the issue again. That is an important proposition.

    I urge one further consideration. We do not have a rigid, inflexible system in this country. Traffic commissioners do not meet week in week out, and month in month out, in order to turn down new applications. All the evidence that I have shows that there is a considerable degree of flexibility in the present situation. Many new road service licences are granted from year to year for all sorts of different services. Also, up and down the country there are a number of county authorities which are only too willing to look at alternative arrangements for passenger transport services in their areas if by any change there is a chance of improving the service or introducing new services. Therefore, the position is not rigid or sterile.

    There is great possibility for improvement or change, given a realistic appraisal of the delicate balance between the amount of public money that is put in and the extent to which those who are operating are prepared to do so in a way that will maximise the service rather than individual profit. It was basically to try to combine those considerations, and bearing in mind the Government's determination to introduce new services, that the clause was tabled.

    Order. It will be in order for the hon. Member for Truro (Mr. Penhaligon) to make a speech, but, as the Minister has replied to the debate, the hon. Gentleman may get an answer.

    That is a disappointment. I thank the right hon. Member for Barrow-in-Furness (Mr. Booth) for this interest in rural areas, but I wish to rebut much of what he said.

    It is not true that rural transport survives on a system of cross-subsidies. Tragically, virtually no bus routes in rural areas make a profit. The question facing the Government, in considering whether there is to be a transport system in those areas over the next five or eight years, is how much money they are prepared to pour in.

    We face a desperately difficult problem on which some difficult decisions will have to be made. I hope that the Government will put in money, otherwise a ludicrous number of people will be more isolated in their home communities than they have been at any time in the past 100 years.

    The hon. Gentleman's opening remarks were correct, and it is right that the House should be reminded of the situation that he outlined, but does he not agree that it is a matter not just of the amount of money but of getting value out of the investment that local authorities make?

    I accept that. Value for money is always a major concern, but I warn the Minister that it will cost quite a lot of money, whether he gets value for it or not, to keep going rural bus services in a county such as Cornwall where there are 100 recognised routes of which only two make a profit. Five or six routes break even—and on the slide rule aproach might make a small profit or loss—while many routes lose a lot of money.

    I took a particular interest in Cornwall during the Committee proceedings. It is clear that only one or two of the NBC routes are profitable and that the non-profitable routes are subsidised from the transport supplementary grant.

    Of course, when the bus company approaches local authorities for assistance from the grant, the authorities usually require that money made on the profitable routes should be ploughed back into non-profitable routes before the deficit on operating costs is made up from the grant.

    I do not deny that. There is some significance in that point, but it does not carry the weight that the hon. Gentleman and his right hon. Friend the Member for Barrow-in-Furness attached to it.

    There is only one profitable bus route in Cornwall, that between Camborne and Redruth, neither of which is in my constituency. Those towns are about four miles apart and a single bus travelling endlessly from one to the other could be quite a profitable operation. I can think of no other bus route of which that could be said.

    The right hon. Member for Barrow-in-Furness argued that the end-to-end merchants—a good description—on the 30-mile routes would take passengers from the stage carriage routes. I doubt that. The Bill refers to 30 miles in a straight line. No one could claim that the roads in Cornwall are anything approaching a straight line, and a 30-mile distance as the crow flies would involve a stage carriage route of about 35 miles.

    I should be interested to know how many people in Cornwall, Devon or other rural areas use stage carriages for journeys of 30 miles in a straight line. I suggest that it is incredibly few. Anyone contemplating such a journey would need to have an enormous amount of time to spare.

    For example, the journey from Penzance to St. Austell is more than 30 miles as the crow flies and the journey time is about three hours. Fortunately, there is still a train service between those towns and anyone making that trip takes the train.

    The amount of business that will be taken away by the end-to-end merchants will be remarkably small, though I must tell the Minister that the number of people who will operate such 30-mile routes in my area will also be remarkably small. I cannot think of a single such route on which a profit is made.

    I am concerned about one form of cross-subsidy in the South-West which may be ended. Many private operators in counties with a large tourist industry survive because of the lucrative trade for 10 or 12 weeks in the middle of the summer when they take thousands of visitors to seaside resorts and places of interest. There is no doubt that, as the Minister said, those who go beyond the 30 miles in a straight line from where they started will operate on an unlicensed basis. A number of operators in Cornwall point out that they survive because of the business of those few weeks, which, by chance, come at the time when there is no school transport business.

    5.45 pm

    For those few weeks they can operate profitably and keep a substantial fleet on the road, and that enables them to keep in business for the rest of the year a fleet of a size that they would not otherwise be able to operate. Under the present licensing system, all the coaches that flood into the South-West bringing tourists from Birmingham, London, Manchester and elsewhere are not allowed to operate journeys over 30 miles in my area unless they have a licence. In effect, the coaches cannot be used during the week and cannot ply for business on a trip from, say, New-quay to Land's End—a trip that tourists always insist on taking, though I cannot understand why.

    The operators in my constituency are worried that they will lose that sort of business to the tourist coaches, because they will ply for hire on the few routes that are more than 30 miles as the crow flies from the starting point.

    Surely, coaches from Manchester which deposit people in Cornwall usually take back the holidaymakers whom they left there the week before. Is not the hon. Gentleman exaggerating the risk?

    I am not making the point that strongly, but what the hon. Gentleman says is not wholly true. I could take him to car parks in Cornwall in the middle of the week where he could see an apparently endless sea of coaches. I am sometimes amazed at how many coaches there are in this country, judged on the evidence of a few weeks in the summer.

    Newquay is the main tourist resort in Cornwall. The native population is no more than 14,000, but in the middle of August there are perhaps 180,000 people in the town. In mid-week periods, there are coaches in Newquay with nothing to do and the local operators, who keep the private end of our transport system in being, are worried that the operators of those coaches will ply for hire in competition with the local operators in trips from Newquay to Land's End. The driver of the tourist coach is paid for the week and the coach has been hired for that time. The marginal operating costs of such a coach would be small and its operator would be able to undercut local services, at least on longer day excursions. I should be disappointed if that happened. The new clause would be a sledgehammer to crack a nut, and I believe that the substitution of 40 miles for the 30 miles in the Bill would remove many of the problems.

    Operators in the South-West have continually put the problem to me. I did not foresee it when the Bill was published. On the whole, the proposals outlined by the Government are reasonable and will do no harm, though only time will tell what good they will do. I mention that isolated example of cross-subsidy in the South-West because it can make a useful contribution to the transport system of the area. I shall not vote for the new clause, because it is too complicated to be true, but I ask the Minister to look at the problem that I have raised and consider whether there is some way of protecting that small industry.

    Mr. D. N. Campbell-Savours