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Orders Of The Day

Volume 15: debated on Monday 14 December 1981

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Civil Aviation (Amendment) Bill

As amended (in the Standing Committee), considered.

On a point of order, Mr. Deputy Speaker. I am concerned about Mr. Speaker's provisional selection of amendments and the fact that he has selected no amendments, particularly with regard to amendment No. 2, which is in, the name of myself and my hon. Friend the Member for Central Ayrshire (Mr. Lambie).

The amendment deals with a matter that was not raised in Committee and relates specifically to the Scottish airports division of the British Airports Authority. I ask for further consideration to be given to the possibility of the amendment being considered, because the topic has not been properly considered at any stage during discussion of the Bill. No detailed consideration has been given to any amendment that would require the British Airports Authority to spend a part—

Order. The amendments that were submitted have been considered very carefully. Mr. Speaker is not required to give reasons for any decision and no amendment has been selected.

7.1 pm

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

I can move the Third Reading fairly briefly, since the Bill was given a fairly good going over not only on Second Reading, but in Committee. When my right hon. Friend the Secretary of State introduced the Second Reading debate, he remarked that it was a straightforward Bill that contained only five clauses. It is exactly that—brief and straightforward—and it aims simply to increase the borrowing power of the British Airports Authority and British Airways to cover their investments and other needs for at least the next five years. It also enacts some overdue preconsolidation amendments.

The urgency behind the Bill arises because British Airways has come close to its limit, mainly as a result of exchange rate movements affecting the value of its foreign borrowings, which the Bill will stop. Otherwise, the Bill does not diminish parliamentary scrutiny or governmental control over the borrowings of British Airways or the British Airports Authority. It does not reduce the Government's determination to ensure that both bodies operate in the most efficient and commercial manner. Therefore, the implications of the Bill are no wider than the straightforward but necessary provisions that it contains.

Nevertheless, on Second Reading and in Committee there were rightly several wide-ranging debates that covered many topics of general interest in civil aviation. That was useful and refreshing and provided the Government with a welcome opportunity to hear and note the many views expressed on both sides of the House towards maintaining and improving a healthy civil aviation sector in the United Kingdom. The Government will continue to work towards that end and I therefore commend the Bill to the House.

7.3 pm

The Opposition recognise the urgency behind the Bill, as the Government have sought to increase with particular dispatch the British Airways' borrowing limits. For that reason, the Committee stage took only three sittings. However, that resulted in a less than satisfactory discussion on many issues concerning the British Airports Authority and British Airways and left the Opposition unhappy with many aspects of the Government's policies in those important areas.

A feature in Committee was the long time taken up by Conservative Members developing their views of the state of the civil aviation industry. Currently, in Conservative circles, "developing their views" is the parliamentary term for disagreeing deeply. The Under-Secretary was often as lonely as is the Chancellor of the Exchequer when he stands at the Dispatch Box defending his economic policies.

Hearing the hon. Member for Brentwood and Ongar (Mr. McCrindle)—who I do not see in the Chamber—developing the finer points of civil aviation economics and airline policy was similar to seeing the Minister being stabbed by a telegraph post. An unsatisfactory aspect of the debates was the Minister's unwillingness to respond to many important issues because of the current litigation about the British Airports Authority's landing charges and the recent discussions about air fares across the Atlantic. I understand the Minister's difficulties, but the House will feel that a Bill that lays down the legislative framework for an increase of £775 million worth of borrowing limits by two major nationalised businesses should have had the closest scrutiny of policy in financial terms.

The Secretary of State opened the Second Reading debate on 16 November by saying that the Bill
"is not a legislative earthquake, but a straightforward Bill with only five clauses which should not be the subject of major controversy." [Official Report, 16 November 1981; Vol. 13, c. 41.]
With £775 million of borrowing being involved, the Secretary of State has clearly changed his style since his days on the Treasury Bench.

Although there are many points that the Opposition are unhappy about concerning the British Airports Authority's increased borrowing limits—by up to £175 million in due course—I shall deal with only two. The first concerns the Government's financial policy towards the British Airports Authority and its effects on landing charges. As I understand it, the Government have set the BAA the target of a real rate of return on its assets in current cost accounting terms of 6 per cent. per year to be achieved on average over a three-year period. The twentieth report of the Public Accounts Committee in July 1980 said in paragraph 5:
"These changes were responsible for the substantial increases in the authority's charges effective from 1 April 1980".
Does the Minister still accept that that was the case? This is a classic case of the manner in which the Government have dealt with nationalised industries. The gas industry is another good example of the same trick.

First, the Government insist that the charges or prices are raised as a means of cutting the PSBR. The idea was that we would all pay lower taxes, but pay higher prices instead. However, all except the wealthiest now pay both higher taxes and prices. That more fundamental failing of the Government's strategy is now so well recognised that I suspect that even the Minister will not try to defend it.

Having forced the British Airports Authority to raise its charges sharply to its customers, the Government have found their own Back Benchers blaming the nationalised business for being a monopoly and charging what it—or rather the Government—sees fit. Therefore, the nationalised industry gets the blame for the Tory Government policy. Tory backwoodsmen come out of their woods calling for privatisation, which is the new "in" word for denationalisation, or rather, as I suspect is more often the case, calling for the creation of a private monopoly that will benefit private individuals rather than the nation.

What objections do the Opposition have to the freedom and the choice that is given to employees of the British Airports Authority to buy shares in the industry in which they work, which has proved successful in British Aerospace? I do not think that any trade union leader or any Opposition Member can be opposed to that policy. If there is such opposition, I should like to know why.

Order. I decided to allow the hon. Member for Preston, North (Mr. Atkins) to complete his intervention, but I remind hon. Members that we are confined to discussing the contents of the Bill. We must not widen the discussion.

I well understand that, Mr. Deputy Speaker. I shall deal only briefly with the intervention. If the important bodies to which the hon. Gentleman has referred were to be denationalised, employees would have as much right as anyone else to have a share in the undertakings. However, even if 50,000 put £1,000 each in an organisation of the sort that we are discussing, that would provide only a tiny fraction of the capital that would be required to buy it. The Government are attempting to line the pockets of individuals in the City with the cheap sale of a profitable nationalised industry. Their purpose is not to assist the workers in the industry.

The pressures upon the BAA and its charges to the users of its services are increased by the target of a 6 per cent. real rate of return and by the pressure to have a large part of its capital investment programme financed from internally generated revenues. In broad terms, the larger the proportion of external borrowing to internally generated revenues, the lower can be the charges to present consumers. There is considerable logic in that proposition because present consumers might reasonably be expected not to have to pay for future benefits. Almost every owner occupier has bought his or her house on that principle. They have borrowed to buy the asset that will provide benefits over the years ahead.

The BAA investment programme is expected to be over £700 million over the next six or seven years. We are being asked to approve an increase in borrowing limits of about £175 million or about 25 per cent.—that is an external financing ratio of about 25 per cent. That means that 75 per cent. of a large investment programme has to be financed by raising charges to consumers to a level that is higher than is necessary to run the present services. These considerations are always determined by applying the test of balance, but the Minister has been completely unforthcoming about his reasons for striking the balance that we are being asked to accept as an implication of the Bill.

There appears to be no' doubt about the ability of the BAA to finance its investment by external borrowing. It has a low debt-to-assets ratio, a good profits record and good profits prospects. If the Government want to hold down unnecessary price increases, there appears to be a sufficiently good case for them to find some room for manoeuvre.

The second unsatisfactory feature is the Minister's response to the Public Accounts Committee's twentieth report of July 1980, which called for the development of more clearly measurable performance criteria. I always treat allegedly precise and quantified measurements of non-financial performance with the greatest care. In my experience, a careful selection of criteria together with a judicious choice of the means of measurement and definition can usually produce whatever answer one wants. However, measures of performance there are, and the PAC specifically drew attention to them.

The Minister is responsible ultimately for the performance of the BAA and for the justification of the borrowing limits that we are being asked to approve. No doubt the Minister has studied the present measurements carefully and has considered what further aids to assessment he feels are necessary. We want to know ultimately whether he is satisfied with the performance of the BAA as it is revealed to him through his measurements, or where he considers any improvements are necessary on the part of the authority. When the Minister replies I hope that he will give the House his current assessment of the performance of the authority and what improvements, if any, he is still seeking.

I turn to the part of the Bill that deals with British Airways. We recognise the urgency of increasing British Airways' financial powers, and it is primarily for that reason that we have accepted the haste that has accompanied the Bill's progress. However, the Minister has failed to satisfy us on a number of issues. In Committee Conservative Members treated us to a display of mental gymnastics as they sought to decide among themselves whether the airline industry had too little or too much competition. Whether too little or too much, they then argued whether that was good, bad, inconvenient or contradictory or otherwise to their political aims.

When the discarded or disillusioned free enterprise economic advisers to the Government finally returned to their academic offices to play with their models and theories instead of inflicting them upon us, they could do much worse than turning up the speech of the hon. Member for Brentwood and Ongar in Committee. He mused on whether competition between airlines is always a good thing for all, for some, sometimes for some or for all. His advice to the Minister was as follows:
"Either we"—
that is the Government—
"build up British Airways ready for the sale that surely is preeminent in Government policy or we encourage maximum competition from independent airlines. The Minister must turn his attention again to whether we can continue with both sides simultaneously in the way that we have been trying to do since the passage of the Civil Aviation Act 1980."
Worse was still to come, because after pointing out in his view that none of the three major British associated carriers on the Hong Kong route is making much, if any, profit, the hon. Gentleman uttered what sounded like a text from a Yorkshire manufacturer's business philosophy or part of a first-year university examination paper in economics. He said:
"Competition is grand, but we must be realistic about it"— [Official Report, Standing Committee A; 10 December 1981, c. 77–8.]
That sums up the view of many Conservative Members about the problems that are facing the airline industry. The truth is that the Government do not know what they want. In any event, they do not know how to reconcile conflicting policies. The result is a real danger that British Airways may be made further to suffer in their own business and profitability as a result of the Government's pursuit of unfettered competition and conflicting aims.

Of course, we want low fares across the Atlantic, to the Far East, within Europe and within the United Kingdom, but in an industry in which overhead costs and lead times on investment decisions are high and long care is required to develop policies that can be sustained to the lasting benefit of consumers and to the country.

Many would say that too many risks have been taken in using British Airways as something of a moveable giant pawn as the Government have fumbled their way through an aviation policy. We could reasonably ask the Minister tonight for a firm assurance that he will condone no further significant change of routes that would adversely affect British Airways. This is a crucial period of recovery from the recession facing the world airline industry.

In Committee we touched upon the International Air Transport Association conference in Geneva dealing with the question of North Atlantic air fares. Now that the conference has apparently made some progress in the matter, could the Minister give the House his assessment of the position reached so far and its effects upon the finances of British Airways and other major British carriers? If he cannot go into detail tonight—the House will understand if he cannot—will he give an assurance that he will publish his views on this important matter when he has had time to appraise the position?

I come to the question of the pensions of British Airways employees. When this matter was raised in Committee the Under-Secretary said that the matter was currently under discussion—that is, between British Airways and the employees—but that it had nothing to do with the Government. I think that that strikes strangely against the kind of assurances given at the time of the Civil Aviation Bill Committee stage in 1980. At that time my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) put it this way to the present Secretary of State for Employment who was then the Minister taking the Bill through Committee:
"can the Government assure the employees of British Airways that as a result of this operation their pensions will not be adversely affected?"
The present Secretary of State for Employment replied then that
"possibly what would be most likely to damage industrial relations and the prospects of profitable operations of the company would be to interfere in some arbitrary manner to worsen the conditions of the pension fund."—[Official Report, Standing Committee B; 31 January 1980, c. 259–260.]
We have come a long way in just a few months. When further pressed at that time in Committee by myself and by my right hon. Friend the then Minister concerned gave repeated assurances that this was not under threat. He went so far as to say that the fund was in sound condition and he could see no reason why there should be any change in the pension scheme.

I raise this matter because the financial limits and the financing of British Airways are one reason why, apparently, British Airways have seen fit now to seek to change drastically the conditions of the pension scheme of their employees. It is no part of our policy, I well recognise, to get involved in details of negotiations between employer and employee, but equally it is our duty to bring matters to the attention of the House when assurances are given to Committees of the House that turn out not to be worth the paper on which they are written. When employees are given to believe that their pension rights are not under threat but in due course they turn out to be under threat, the Minister owes the House an explanation of what has changed in the meantime.

I ask again that the Minister give an assurance that there is no connection between the Government's wish to privatise British Airways and the moves of British Airways adversely to affect the working conditions of their employees.

Similar dissatisfaction was aired in Committee with the explanation given by the Minister on the financing of the redundancy and severance pay scheme, which is currently being implemented by British Airways. I pay credit, as I am sure will hon. Members on both sides of the House, to the way in which the trade unions have responded to the grave difficulties facing their members in the massive rundown of the work force at British Airways in recent months and which will face them in the coming months. About 15,000 jobs will have gone in well under three years.

We must ask tonight, however, as we did in Committee, what this scheme will cost and how it is to be financed. Is it £70 million or £100 million? Surely the Minister has asked about figures of this magnitude and will know the answer. How is the scheme to be financed? Will some part of the financial loan limit that we are being asked to approve go towards paying for this severance and redundancy pay scheme?

I come finally to the financial position of British Airways. During the passage of the Civil Aviation Act last year, we warned that the Government's wish to privatise British Airways was doomed to failure in the light of the severe problems facing the airline industry. Nevertheless, despite the fact that the Government had no mandate and it was no part of their election manifesto, they pressed ahead in a foolhardy fashion, trying to put British Airways into a postion where they could be denationalised.

Does the Minister agree with Sir John King, the chairman of British Airways, that he still expects British Airways to be making a profit at the end of the financial year 1982–83? If the answer is "Yes", can he tell us what is meant by "profit"? Is it an operating profit, or profit after offsetting interest payments and the like?

British Airways have a very substantial amount of external debt. At the moment they are seeking, along with many other airlines, to recover from a truly deep recession in the airline business. Is it credible that British Airways can or should be forced into a position of being sold off at what can only be a dangerously low price before the next general election?

In the journal Aviation Week and Space Technology of 19 October, Sir John King made clear that the Government have had—as one of their primary goals—turning British Airways into a private enterprise company before the next general election. Is it still the Government's intention to do that and, if so, how do they intend to overcome the financial problems of British Airways? What do the Government intend to do as regards the profit track record that would be required for going to the market? What do the Government intend to do, if anything, about the capital reconstruction of British Airways? If we are being asked to approve new high borrowing limits only to find in a few months' time that, in order to sell off British Airways cheaply, the Government come to the House yet again to seek a capital reconstruction programme, that would, in effect, give public money to private individuals, this House would have every right to be gravely concerned.

I detect an inconsistency between what the hon. Member is saying now and what he said in Committee. I was not a member of the Committee, but I have read the Official Report. In Committee the hon. Member said that he was in large measure in agreement with what was proposed in the Bill. He has already said that obviously part of what is proposed is to get British Airways over a very severe hump and bring it into a fit state to privatise. Would it not be appropriate for the hon. Member to state the Opposition's policy towards privatisation and say whether they would, if perchance they became a future Government of Britain, do what they have said they would do with regard to British Aerospace, which is to return it to the public sector without any fair compensation to the shareholders?

Order. Interventions should be short and relevant, and confined to the contents of the Bill.

Thank you, Mr. Deputy Speaker. I am happy to respond to that part of the intervention which was relevant to the contents of the Bill, which seeks to increase the borrowing of British Airways by about £600 million. The Labour Party believes that if such large sums are to be put into a nationalised industry by the taxpayer, the taxpayer has every right to see the benefit and return on that investment in due course. We object to hundreds of millions of pounds of public money being put into industries, only to see them flogged off at cut-price terms because of political ideology rather than in the true interests of the nation or the taxpayer.

Although the official Opposition do not oppose the Bill, we regard the Government's policies in relation to the British Airports Authority and British Airways as an increasing shambles. The Government are trying to point in several directions at once, and in the end they face the grave danger of satisfying no one.

If the Government attempt to privatise British Airways—although I do not expect that to happen—they will face opposition. Tonight, I do not ask my hon. Friends to oppose the Bill, but the Labour Party will oppose the Government vigorously if they try to sell off a national asset—British Airways.

7.32 pm

I congratulate my hon. Friend the Under-Secretary of State on an exemplary first solo. He has piloted the Bill with great skill through to Third Reading, and he showed sympathy and understanding in dealing with the points raised in Committee and on the Floor of the House. I hope that it is the last Civil Aviation (Amendment) Bill that we shall have to debate in this Parliament. If we have to debate another Bill, I hope that it will be to enact the denationalisation of the British Airports Authority.

I say "denationalisation" advisedly, because the hon. Member for Batley and Morely (Mr. Woolmer) suggested that the Conservative Party had advocated the privatisation of the British Airports Authority. I did not do so, either in Committee or the Second Reading of the Bill. I have always advocated the break-up of the British Airports Authority into constituent profit centres. That would be attractive to investors and prove the best means of bringing landing charges down and improving the service to customers and airlines.

The borrowing of the British Airports Authority will constitute about 30 per cent. of its finances for development, whereas 70 per cent. will come from charges, and that worries us. I know that we cannot go into the matter raised by the Transworld Airlines legal action. Nevertheless, we have learnt enough from this measure to realise that it is wrong for a nationalised industry such as the British Airports Authority to have to come to the House to increase its borrowing powers to fund its capital development programme. That is particularly so if the industry is one that could be denationalised and raise its capital on the market.

Does the hon. Gentleman agree that, while his proposal could fairly be described as denationalisation, there was an alternative suggestion from Conservative Members in Committee that could more properly be described as privatisation?

The hon. Member is right, but, as was mentioned earlier, it would be a matter of substituting one kind of monopoly—albeit a monopoly with private equity participation—for what is at present a pure State monopoly. That would not necessarily be a great improvement for the travelling public or the airline.

With regard to the proposed increase in the borrowing powers of British Airways, I have advocated that if Her Majesty's Government are in doubt, as they must inevitably be, about the timing of the flotation of the stock of British Airways on the market in order to achieve privatisation, they should float earlier rather than later, because the political considerations and the benefits to the corporation inherent in an earlier flotation outweigh the possibility—it must be a judgment—of raising more money by postponing the sale of the equity.

I am aware of the great sacrifices that have been made by the employees of British Airways in their valiant attempt to turn the corporation round to profitability—not least in my own constituency, where three major office complexes are to close. The hon. Member for Batley and Morley referred to the loss of jobs. It is interesting to note that a high proportion of the people who opted for voluntary redundancy under the scheme proposed by British Airways have been able to find other gainful employment.

Nevertheless, unless British Airways are able to restructure themselves and get their debt—equity ratio better balanced, they will require more capital, and it would be wrong, in the current economic climate, for there to be more public dividend capital. There should be flotation and the raising of capital through the market.

This is a useful Bill. It has enabled us to air one or two important civil aviation and air transport issues, and I shall support it. I particularly congratulate my hon. Friend the Under-Secretary of State on his part in it.

7.38 pm

I thought the Minister was rather casual in his opening remarks when he said that it would be a brief and straightforward debate. Labour Members do not feel that the Bill is as straightforward as the Minister seems to be suggesting to the House. On Second Reading and in Committee, we said that we would not oppose the Bill, but that does not mean that we have no reservations about it. We are not entirely confident about the Government's intentions.

The Minister will agree that on numerous occasions reference has been made to selling off. That is a very strange way in which to administer taxpayers' funds. There have been big handouts to make the operations profitable, but then the Government seem to be hell-bent on giving away the assets to the private sector. I cannot imagine any private business in which the owners of the shares and those enjoying the profit would suddenly decide to give everything away to strangers.

I have a great deal of sympathy with the British Airports Authority, because it is constantly being harassed to make more profits. The emphasis seems always to be on more profits rather than a better service. Pressure is constantly being exerted to reduce the labour force, but if, one day, there were to be a huge mishap, suddenly everyone would be running for cover and saying that he was not to blame because it was an act of God. There may be all kinds of consequences when there is extensive demanning.

The hon. Member for Preston, North (Mr. Atkins) said on Second Reading that if the London airports did not expand the business would go to Europe. I take issue with him on that. I realise that hundreds of millions of pounds are being pumped into the southern airports and that an inquiry is taking place. I feel compelled to draw special attention in this context to Manchester international airport, which has great potential and is indeed a money-spinner for the nation. I wish to add some flesh to the bones of this matter, as the Minister seems to believe that hundreds of millions still have to be spent down south.

In a letter to me the chief executive of Manchester airport, Mr. Gil Thompson, stated in relation to profits at Manchester airport:
"you will note that in every year except one since 1959, a surplus has been achieved. In the early years the Airport was supported by rate contributions, but in recent years there has been substantial contributions to the City and County rates."
In relation to the capital programme, Mr. Thompson says:
"In the current financial year £8·472 million will be financed from loan. Borrowing powers are available for this amount because it was the main part of the expenditure required for three major schemes which were designated by the Government as being of National/Regional importance. However, in 1982–83, the borrowing powers granted are only £4·7 million (at outturn prices) for the same three schemes, as no new schemes have been approved. This is only a small part of the total capital programme of £12·5 million and most of the remainder of the programme will have to be financed directly from revenue resources. This puts a severe strain on the revenue budget and pushes up charges to the airlines more than would otherwise be necessary."
In relation to Manchester international airport, I also briefly draw the Minister's attention to a document published in November this year on behalf of the North-West Development Association, referring to the economic problems of the North-West of England, in the form of a memorandum to the Prime Minister. With regard to airports and investment, the following statement is highly significant:
"Moreover, the British Airports Authority's proposals to expand Stansted as London's third international airport would, if implemented, add substantially to the imbalance of investment already evident between the South East and North West England and pose a substantial threat to the future of Manchester International Airport, one of the key growth points of the North West economy, yet still awaiting a direct rail link."
The Minister will recall that I said in Committee that we should be most grateful if he would consider sympathetically this very small link to the main line railway system, which would bring greater profitability not just to Manchester but to the whole North-West region extending as far as the Scottish coast.

I sincerely hope that the Government have no sinister intentions with regard to Manchester international airport. I give notice at once, so that the Minister understands clearly, that we say "Hands off Manchester airport". What the ratepayers have paid for, the ratepayers intend to keep. I assure the Minister that I should certainly find support among his Back Benchers if the Government had any ideas about capitalising upon something that has been so dearly paid for and nurtured over the years.

The Government are trying to give a respectable face to privatisation, but it seems to us to mean that taxpayers can keep the loss while private investors join in the looting.

I trust and hope that the employees will receive security and a decent wage, as in other industries. I do not necessarily believe that the employees of the British Airports Authority or British Airways are different from those of any other company such as ICI or GEC. One trusts that they are entitled to the best conditions, wages and prospects, but I do not believe that we need some kind of gimmick to keep them sweet by offering them assets being taken from taxpayers. Not all taxpayers can work for the British Airports Authority or British Airways, so that must be taken into account when considering the justice or injustice of the idea. The hon. Member for Preston, North constantly puts that forward as a solution, but I understand that the trade unions are very uneasy about the position. Nowadays there is less concern about buying interest in companies and more interest in keeping jobs.

The Government would gain greater credibility if they applied themselves to the task of keeping workers rather than killing them off in their thousands. They are managing the entire industry in a brutal and unwise fashion, and it will be no better for their interference. The Opposition are suspicious—and I believe that in due course we shall be proved right—that that is not in the interests of the industry or the airports, but only in the interests of Conservative Members' friends who hope to make some quick profits that they have not necessarily paid for. We believe that the taxpayers should reap the benefits of their investments, just as the ratepayers of the Greater Manchester area should reap the benefits of their investment. That is why we give notice that the Government should not get any sinister ideas about taking over Manchester international airport. If they do, there will be a real showdown in the House.

7.49 pm

I do not wish to delay the House, because I know that that would not be popular. I join by hon. Friend for Ruislip-Northwood (Mr. Wilkinson) in congratulating the Minister, who, to use a phrase close to both our hearts, opened the batting extremely well. At the other wicket the hon. Member for Batley and Morley (Mr. Woolmer) made his maiden appearance in Committee as spokesman on these matters. Those of us who are interested in aviation matters were thus able to discuss this subject in a way that we had not done for some time and to have an informed debate that was unique in my experience of these matters.

It also brought out some differences in attitude to the matter referred to by the hon. Member for Manchester, Blackley (Mr. Eastham) and by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), which is how we should continue to fund the British Airports Authority, and also British Airways. Hon. Members were united in their concern about the charges levied by the BAA, not necessarily in a critical or hostile fashion, but rather because the airlines, including British Airways, were experiencing great difficulties in a recession. It was felt that increased charges would not help.

As a result of that concern, two responses were made. Conservative Members expressed an interest in the provision of some sort of altered position for the BAA, based on our experience of British Aerospace—in other words, 54,000 people subscribing to the gimmick referred to earlier. The same can be said of other companies, such as British Telecom and the National Freight Company. There are examples of how we can provide an alternative financial structure for the BAA.

I strongly believe in the excellence of the people working within the BAA, from the chairman downwards, and am confident that they are well suited to meet this challenge. Such a challenge would create a new area of activity, and I am satisfied—

We heard the same arguments when parts of ICL were sold off, and we now know what a disaster that was. Will the hon. Gentleman reflect on some of the sentiments now being expressed by thousands of ICL workers who suddenly find themselves with no jobs?

I suspect that I should be ruled out of order if I were to take up that challenge. Perhaps we can discuss this matter outside the Chamber at some other time. Much as I should like to accept the challenge, I am sure that the Chair would rule me out of order.

There have been some misunderstandings about what Conservative Members have suggested, and the debate has provided an opportunity to spell out our interests. I hope that the Minister will consider the representations from Conservative Members about the privatisation of the BAA. As I said earlier this afternoon, I believe that the BAA is well run, and I am sure that the challenge laid down by Conservative Members will be met.

Finally, I believe that the difficulties experienced by British Airways as a result of the recession and overmanning have come about because of the pressure imposed on them by Conservative Members, who have invited them to submit a prospectus to the general public to buy shares, both within and without the company. To that extent I congratulate the management of British Airways on what it is doing and on the skilled and compassionate way in which it has appreciated the problems of its staff, not to mention the way in which it has got to grips with the managerial problems experienced by the airline.

In conclusion, although I referred to Schiphol and the loss to Europe if British airports were not expanded, like the hon. Member for Blackley I support the development of Manchester international airport. It has great potential and ought to be expanded in whatever way possible. I should not like the hon. Gentleman to be under any misapprehension in that regard.

Finally, I support the Bill, but, as my hon. Friend the Member for Ruislip-Northwood said, our wish is that it was not needed. Having said that, it has enabled us to discuss these matters, which we do all too rarely. I congratulate the Minister on the manner in which he has piloted the Bill through Committee and the House, and I ask him to consider urgently the suggestions made by my hon. Friends about privatisation. With those remarks, I wish the Bill a fair passage.

7.54 pm

Like the hon. Member for Preston, North (Mr. Atkins), I do not propose to detain the House for too long. The Bill is necessary because the Government are both the banker and owner of British Airways and the BAA. We are dealing with large sums of money—£175 million in the case of the BAA and £600 million in the case of British Airways.

As has already been said, British Airways face major financial, economic and social problems, but if we are to have an adequate presence in the North of England, the financial infrastructure must be satisfactory. Nevertheless, when looking at nationalised industries as a whole, one must conclude that some of the arrangements for parliamentary accountability are far from satisfactory.

Much of our legislation, although not necessarily this Bill, goes into too much managerial detail and does not give enough thought to financial priorities. Therefore, while I support the Bill because it is financially necessary, I hope that the Government will think about interposing a State holding company into which many of the nationalised industries could be absorbed so that our debates can concentrate on the major priorities.

I think in particular of financial matters. We should view this in the round, not merely in terms of the financial involvement of British Airways or the BAA, but the financial problems of the other industries as well. As it is, our piecemeal debates often interfere with the managerial discretion of the industries concerned. Having said that, I have no doubt that British Airways in particular now face a major financial crisis. It would, therefore, be wrong and churlish of the House to deny the Bill its passage.

7.58 pm

I underline what my hon. Friend the Member for Batley and Morley (Mr. Woolmer) said about the Government rushing the Bill through the House. We did not have much time to deal with many of the important issues in Committee. The third sitting was truncated, and my hon. Friend did not have an opportunity to make many of his points in criticism of the Government's policies. It is a pity that we have not had a greater opportunity to do so this evening.

It has been a pleasure to listen to a brief intervention from one of these new-fangled Social Democrat chappies. They seem just about able to creep in and interpose a few thoughtful words at this stage of a Bill. However, they do not seem all that enthusiastic about undertaking the hard grind in Committee. I understand from my hon. Friends that the SDP was recently offered places on several Committees but refused to accept them. It ought to be made clear that the SDP is not that enthusiastic about undertaking the day-to-day work carried out by other hon. Members.

The hon. Gentleman has made some rather general accusations. It would be more helpful if he would make particular ones.

Order. The hon. Gentleman must confine himself to the Bill rather than comment on interventions that go wider than its Third Reading.

Thank you, Mr. Deputy Speaker. I assure the hon. Gentleman that later outside the Chamber I shall give him a specific example.

One of the matters discussed in Committee—my hon. Friend the Member for Manchester, Blackley (Mr. Eastham) touched upon it today—was the question of the imbalance of British Airports Authority expenditure. There is an amazing amount of expenditure in the South-East of England but only a relatively small amount in Scotland. Reference to Manchester and other provincial airports, in terms of general Government spending, is valid but those airports are not directly affected by British Airports Authority expenditure because they are not controlled by the authority. It is the case, however, that the authority owns and controls four Scottish airports.

Over the next five years, the authority plans to spend only £11 million in Scotland, compared to £600 million in the South-East of England. It is not as though projects and plans for Scottish airports did not exist. I put a number of specific suggestions to the Minister in Committee. To his credit, the Under-Secretary of State took them on board and asked the British Airports Authority to investigate. I suggested a major link between Prestwick airport and Prestwick town station to enable passengers and their baggage to move easily from one to the other. It will be found, however, that money is not available to spend on Prestwick airport because so much has been allocated to the South-East of England.

I should also like to mention the imbalance that exists between the South-East of England and Scotland in relation to landing charges. I asked the Minister if he would give a positive boost to Prestwick airport. Such a boost could be provided if the British Airports Authority gave priority to lower charges at Prestwick to encourage flights to switch to Prestwick from the South-East of England. I had not realised the extent of the imbalance. I had the opportunity on Friday to visit Prestwick and to talk to Mr. Gilbert Gray, manager of the airport, and Mr. Graham Wylie, chairman of the airport consultative committee. I ask the Minister to investigate the information they gave me that landing charges at Prestwick airport are five times as great as the charges for an equivalent aircraft at Gatwick. This is quite the opposite to a policy of giving positive discrimination in favour of Prestwick. It discriminates against Prestwick and encourages more airlines to use Gatwick.

I was chided by the Minister and warned against being unrealistic about the possibilities for Prestwick airport. I agree that suggestions should not be unrealistic. I hope, however, that the Minister will be able to enter into discussions with the airlines and British Airports Authority to break the dangerous downward spiral in which landing charges lead to decreased use of the airport only to be followed by a further increase in charges and a still greater decrease in use of the airport. This vicious downward spiral needs to be broken.

As fewer airlines use the airport and the airlines that are using it do so to a lesser extent, the effect, combined with the break-even policy imposed on individual airports by the Government and the British Airports Authority is that charges can only go up. The spiral might be broken if the Government were able to reach some agreement with the airlines and the British Airports Authority leading to a commitment by airlines to use the airport for a new series of flights in return for reduced charges. I hope that the Minister will consider this a positive suggestion.

I should like to turn now to the issue of denationalisation or privatisation. This began to sound in Committee like an orchestrated chorus from the Conservative Benches. Time and again, there was the clarion cry from Conservative Members about privatisation or denationalisation. This causes great difficulties in relation to morale. Indeed, it leads to lowering of morale in all nationalised industries. The industries feel that they cannot win. If they make a loss, they are criticised by Conservative Members for being inefficient. Hon. Members throw back their arms and say that nationalised industries cannot make a profit.

When the screws are applied or, perhaps more importantly, when nationalised industries themselves see ways to improve efficiency, whether through demanning or other means, and make a profit in one sector or another, then the greedy eyes of Conservative Members and their friends are cast upon the nationalised industry concerned or a sector of it. The industry is immediately seen as ripe for plucking. It is suggested that it should be hived off, privatised or denationalised so that some person—some friend, in general terms, of Conservative Members—will make a profit out of it instead of that profit going to the taxpayer, who made the investment.

The Under-Secretary of State is an author of some repute. That brought a chorus of "Hear, hear" from the Government Front Bench that I would like put on record. The hon. Gentleman should go into the field of writing television thrillers like "Dallas" where, at the end of one episode, Sue Ellen is left with her lips quivering or J.R. is left in a state of absolute shock about what is to happen to him and his assets in the next episode. The same situation was seen in the Civil Aviation (Amendment) Bill Standing Committee. Believe it or not, drama does take place in Committees of the House of Commons. At the end of the first sitting, the Under-Secretary of State said:
"I shall leave the Committee on a cliffhanger. When we return to our deliberations on Tuesday, I shall reveal the Government's attitude to the very important question of the privatisation of the British Airports Authority".—[Official Report, Standing Committee A, 3 December 1981; c. 36.]
The hon. Gentleman built up this amazing tension. Until the next Tuesday morning, I could hardly bear the excitement. I am afraid that, like many cliffhangers, it turned out to be a disappointment. Whether, like the new Under-Secretary of State for Scotland responsible for health matters, whom I see on the Government Front Bench, officials told him that he should not say what he had intended to say or what he had said he should not have said, I am not sure. When hon. Members returned on Tuesday the Under-Secretary of State said:
"I am strictly constrained in what I can say".
The hon. Gentleman then referred to what his right hon. Friend had said on Second Reading, which, by that time, was old news. The only new development was the hon. Gentleman's remark:
"I shall study with the greatest attention the novel, important and constructive proposals put forward in Committee by my hon. Friends on that subject".—[Official Report, Standing Committee A, 8 December 1981; c. 37.]
When my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) used to say that to me in my local government days, I knew that I had had it. That was it—finished. I hope that that is what it means to the Under-Secretary of State. I make light of the matter but it is important.

The suggestion, which has been made again today by Government Members, is that each airport should be packaged, wrapped and sold to private enterprise. The hon. Member for Ruislip-Northwood (Mr. Wilkinson) made that suggestion today. He was talking about Heathrow Ltd. competing against Gatwick Ltd. and perhaps Stansted Ltd. I reject the concept of privatisation, but in the context of the South-East of England, and bearing in mind the philosophy of Government Members, that suggestion has some logic. For Scotland privatisation would be disaster. It is inconceivable that Aberdeen competes with any other airport. Stornoway cannot compete with Sumburgh. There is no alternative to Sumburgh if one wants to fly to the Shetlands.

In Committee it was said that Prestwick would compete with Glasgow. That is the danger. The Under-Secretary of State was equivocal in the extreme in Committee. I ask him to give an unequivocal statement today. If he does not, the Secretary of State, who should have a greater interest in Prestwick than I have—although sometimes I doubt whether he has—will be worried about the implications. I hope that we shall have an unequivocal declaration from the Under-Secretary, if not today, soon.

I hesitate to say this, but the example used by Government Members in favour of privatisation was the John F. Kennedy airport in the United States. Government Members have suggested that airlines should be able to run their own terminals, as they do at John F. Kennedy airport. I recently arrived at the British Airways terminal there and had to transfer to Eastern Airlines. The Eastern Airlines terminal was next to the British Airways terminal, but in an anti-clockwise direction. Unfortunately the buses operated in a clockwise direction so I had to go to Trans World Airlines, Pan-Am and Western Airlines terminals. It took an hour. When I returned to Heathrow I experienced a new-found appreciation, sympathy and feeling of commendation for Heathrow.

It is appalling and sometimes sinister when hon. Members praise the British Airports Authority and its management and then say "Although it might be doing a good job we, for our doctrine and dogma, will sell it off and let someone make a private profit out of it".

A recent incident at Prestwick causes the grave concern and I urge the Under-Secretary to look into it. Many of us have, for a number of reasons, expressed doubts about British Airways' borrowing consent. For some time we have been concerned about the negative attitude that British Airways adopts towards Scotland, and, in particular, towards Prestwick airport. Last night a British Airways jumbo jet from North America was diverted because it could not land in the South-East of England. It was due to land at Prestwick after permission had been requested for that. The British Airports Authority and air traffic controllers said that it was possible and, indeed, desirable for it to land at Prestwick. It did nor land at Prestwick but was diverted to Glasgow airport, causing annoyance to people in Glasgow. It was diverted to an airport—one which is unsuitable for jumbo jets—away from Prestwick which could have handled it properly. The reason was that British Airways staff were having an office party. The Under-Secretary draws a sharp intake of breath. For those of us who day in and day out, night in and night out are pushing for Prestwick and trying to provide a positive incentive for people to use the airport to be undermined by British Airways and its staff is a galling experience. The Under-Secretary has been very good. I have said that before and I have to swallow hard when I say it, but he has always taken up our points in Committee and I hope that he will take that up.

Finally—and I shall say that only once, unlike the hon. Member for Preston, North (Mr. Atkins) who said it on three occasions—I underline what my hon. Friend the Member for Batley and Morley said about the Government's aviation policy. I mean no disrespect to the Under-Secretary who took over only recently. I hope that he is able to sort out what ray hon. Friend described as a shambles. We do not know what is happening to British Airways and it does not know. In spite of requests by hon. Members, there is no information about the intended date of privatisation, what form it will take or about any other aspect. That we are considering this Bill shows that the Government have no immediate plans. Whatever hopes we had, I am sure that there will be another Civil Aviation (Amendment) Bill because British Airways is not ready for privatisation and will stumble through another year of uncertainty.

The Government are in a muddle over their airports policy. Two nationalised bodies, British Airways and the British Airports Authority, are locked in mortal combat about whether there should be a new airport at Stansted or a fifth terminal. That will cost thousands of pounds of taxpayers' money in addition to the cost of the inquiry. The Government have no clear policy.

The Government have a policy of laissez-faire, of free enterprise and of allowing the airlines to do exactly what they want, instead of the policy suggested by my hon. Friends the Members for Blackley, Central Ayshire (Mr. Lambie)—in Committee—and others of encouraging the maximum use of existing airports, some of which are underused. The Government prefer to spend millions of pounds on building in the South-East of England an extra airport which is unnecessary. When airports in the provinces and Scotland are underused the Government should positively encourage their use.

The Government's airports policy is in a shambles. I hope that we shall have the opportunity in the near future to return a Government with a more sensible, direct, positive and planned policy. In case there is any doubt, I refer to a Labour Government.

8.18 pm

I congratulate the hon. Member for Batley and Morley (Mr. Woolmer) on his first appearance at the Dispatch Box. He and I have faced each other in Committee for a number of weeks. I said that I was astounded at how quickly he had grasped the intricate details of this business. I am now astounded at the apparent confidence with which he delivers himself. On this occasion I wish that I could feel that confidence, or at least masquerade in it.

We are grateful to the hon. Gentleman for the manner and the speed with which he dealt with the Bill in Committee. As he said, the matter is urgent, at least for British Airways. It is vital to get the Bill through because otherwise British Airways would be in breach of the law by exceeding their statutory borrowing limits. We are under no misapprehensions about the fact that there are parts of our policies of which the Opposition do not approve. Nevertheless, we are extremely grateful for the general attitude and manner that the Opposition have displayed.

The hon. Member for Batley and Morley raised the vexed question—it should not be a vexed question—of the 6 per cent. CCA return. It has not been imposed on the British Airports Authority; the British Airports Authority has agreed to it. For some reason, hon. Members on the Opposition Benches seem to object to the whole concept of the British Airports Authority making a proper return. What is so extraordinary is that they enunciated it first. The 1978 Labour White Paper referred to:
"the principle that air transport facilities should not in general be subsidised by the taxpayer or ratepayer."
The official Opposition having enunciated the principle, the Government have gone a little further by putting flesh on the bones and saying that the taxpayer should not subsidise the ordinary airline or air traveller. We have said that a 6 per cent. CCA rate of return is the proper way to go about it. I would go further and defend that step in gross and in detail, but, unfortunately, as the House knows, I am constrained because the matter is currently before the courts. Otherwise, I assure the Opposition that we would explain in the tiniest of detail exactly why the policy is necessary and why it conforms exactly with the principles enunciated in the 1978 Labour White Paper.

My hon. Friend the Member for Hertfordshire, South-West (Mr. Page) and I heard time and again in Committee complaints from the Opposition about the BAA not being allowed to borrow more. We became weary of listening to them. However, the only Government ever to put a zero cash limit on the BAA's borrowing were the previous Government, when in 1979 the right hon. Member for Lanarkshire, North (Mr. Smith), who is now the Shadow Secretary of State for Trade, refused to allow it to borrow a single penny. It comes ill from the Opposition to say that we should be criticised because we have an EFL of only £14 million. That matter should be placed on the record.

The hon. Member for Batley and Morley has a good point about the performance criteria, and we agree 100 per cent. It is not necessary merely to give a nationalized industry a rate of return to achieve. It is necessary to have other performance criteria. We have imposed certain performance criteria that have been agreed by the British Airports Authority—for example, the ratio of employees to passengers and the ratio of operating costs to passengers. There are various other standards, which I explained in Committee. The question of the speed at which baggage is reclaimed and the volume of customer complaints are closely monitored by the BAA.

The hon. Gentleman switched his attention from the British Airports Authority to British Airways. Having lavished compliments on him earlier, I cannot continue in that happy vein. The first thing that he said was that the Government did not know what they were doing about competition policy. If there is one direction that the Government know 100 per cent. where they are going it is on competition policy. We are in favour of it. We removed specific guidelines currently imposed on the CAA. We are doing everything that we can to see that fair and free competition for our airlines is the order of the day.

The hon. Gentleman chose an unfortunate example in Hong Kong. In Committee I believed that I had made it clear that, although we had introduced competition on the Hong Kong route, the two airlines—Cathay Pacific and British Caledonian—are making profits on the route. Not only does the customer benefit by lower fares and an increased number of flights, but airlines benefit in their profits.

The hon. Gentleman asked for an assurance that we would not allow more competition that might adversely affect British Airways, but I can give him no such assurance. If necessary, through the good offices of the CAA, the Government are certainly prepared to grant further competitive routes.

The hon. Gentleman fairly made the point about pensions. It is not a matter for the House but for the management of British Airways. I give him the specific assurance for which he asks. Any changes that may be made in the pensions plan have absolutely nothing to do with our plans for the privatisation of British Airways.

In Committee on 31 January 1980 the then Minister stated:

"The investments have been well made and wisely placed, and if the Board had thought that there was any inadequacy in the fund I am sure that it would have brought it to the attention of Ministers."—[Official Report, Standing Committee B, 31 January 1980; c. 267.]
Was that done before British Airways started to reduce the scheme for its employees?

The management told the Government exactly what it was fitting for the Government to know about the detail of the plan. It said that it was going to retrench, and retrench it certainly has. It is only fair to compliment Sir John King and Mr. Roy Watts on their successful retrenchment.

My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) made another powerful speech in favour of privatisation and/or denationalisation. He courteously told me that he would not be able to stay for the debate but I pay tribute to the part that he played in Committee. I shall take careful note of the arguments that he and my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) put forward, although there might be a slight nuance of difference in the speed at which our privatisation goes ahead. [Interruption.] The hon. Member for Glasgow, Garscadden (Mr. Dewar) need not laugh. He will be laughing on the other side of his face when we begin to privatise British Airways. I hope that he will find it as amusing then as we shall.

Bearing in mind that the hon. Gentleman pressed not for privatisation but for denationalisation, will the Minister assure us that if he proceeds with the folly it will be to sell off only a minority of the shareholding and not 100 per cent.?

I am not sure whether the hon. Gentleman is talking about British Airways, but my mind is entirely open. I certainly do not rule out the chance of selling off more than a minority shareholding. As my hon. Friend said on 16 November 1981 at column 42, we are entirely open-minded about the British Airports Authority. That open-mindedness extends over all Conservative policy. We are extremely open-minded over all these matters.

The hon. Member for Manchester, Blackley (Mr. Eastham) made a valuable contribution in Committee, but I wish to take him up on a little semantic slip this evening. He said that he could not be confident of the Government. He can be absolutely confident that we shall privatise and/ or denationalise British Airways. There is no question about it. He can rest his confidence on us in that matter.

I go along with the hon. Gentleman in saying that Manchester is an excellent airport. Unfortunately, it is not a BAA airport, so I feel constrained from saying other than that I have taken note of what he says. As I said in Committee, I shall do all that I can to allow Manchester to develop as an extremely important and valuable international gateway for this country.

The hon. Member for Dewsbury (Mr. Ginsburg) welcomed the Bill on behalf of the Social Democratic Party—with the party's usual broad brush as opposed to a pointillist technique. The hon. Gentleman has now left the Chamber but I suppose that we should be grateful for the broad brush approval that the Social Democrats give to the Bill. Finally—

For the hon. Gentleman to say "Finally" like that is like being accused of lying by the former United States President, Richard Nixon. The hon. Gentleman probably speaks longer on almost every subject than any hon. Member.

The hon. Member for South Ayrshire (Mr. Foulkes) spoke a little unfairly about the imbalance of the British Airports Authority's spending between Prestwick and the London airports. He knows that I am anxious to do everything that is reasonably possible to promote the prosperity of Prestwick airport, but it is no use burldng the fact that Prestwick has about 360,000 passengers a year whereas the London airports have 36 million passengers a year. To ignore the sheer weight of passenger traffic and to say that the expenditure should not be related to it is to do little service to Prestwick. However, we have been over that ground fairly frequently in the past and I hope that the hon. Gentleman will accept that I am determined to do everything that can reasonably be done for Prestwick.

I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Housing (Amendment) (Scotland) Bill

Not amended (in the Standing Committee), considered.

8.32 pm

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

As the House will be aware, this is a small, two-clause Bill and has only one basic provision—to raise the borrowing limits of the Scottish Special Housing Association from the present maximum of £500 million to £600 million, with provision for a further increase of £150 million by order of the Secretary of State.

It is expected that the Scottish Special Housing Association will reach its present limit by early next year, and it is therefore desirable to allow this increased borrowing facility to enable it to continue its work. The Opposition have approached the Bill in a constructive spirit, both on Second Reading and in Committee, for which I congratulate and thank them. On that basis, am confident that the House will be anxious to give the Bill its Third Reading.

8.33 pm

I thank the Under-Secretary of State for his congratulations. I know that he means them. I assure him that I shall not live up to the reputation that was a little unkindly foisted upon me by the Under-Secretary of State for Trade. Obviously taking his own words seriously, he fled the Chamber as I rose.

I accept that this is a non-controversial Bill, in one strict sense. No opposition Member objects to the raising of the financial limits for the Scottish Special Housing Association.

It is common ground that housing finance is never noncontroversial in a political sense. We in Scotland are rightly worried about the effect of the Government's policies on housing. Local authorities and the SSHA are starved of the funds that we believe should be available to them. The Minister will be aware of the fundamental difference between a nominal borrowing limit and the consent and authorisation to borrow or to spend, which the SSHA, like any other public service agency, needs from Government. The fact that we are raising the financial limits from £500 million to £600 million, with a possible further £150 million, is of little consolation if the Government are to cut the resources that are in reality available to the SSHA.

In this week of very severe weather it is not a bad time to consider the state of housing in Scotland and the condition of the SSHA's own stock. Nothing affects the quality of life so fundamentally as the houses in which people live. In the 92,000 houses owned by the SSHA—and the same applies to local authority housing stock—we have seen under this Government's financial policies a steady and lamentable deterioration in the quality and choice of housing available.

I look at the SSHA's record, bearing in mind that it will be affected by the Bill, and I see that it is one of steady decline, not in the competence of the organisation, but in the range of activities that it has been able to undertake because of the financial limitations imposed upon it by the Government. It is a tragedy that we see a new build programme for the SSHA that is less than one-third of what it was in the mid-1970s. We see the necessity to update and upgrade the facilities available. According to the last annual report of the SSHA, it was possible to improve only half the number that was managed in 1979 and barely one-quarter of the number managed in 1977.

The Minister claimed credit, rather coyly, for not suggesting that there had been an increase in real terms of the finance available to the SSHA. If that is a matter for congratulation, it is one for very modest congratulation. In real terms the finance made available to the SSHA has been declining dramatically, and if the Minister came clean he would have to say that the real resources available to the SSHA would decline further at a time when the needs were as great as ever.

I feel very strongly about many of the Government's actions in their housing policy. The SSHA itself perhaps has not been in the eye of the storm. It has not been involved in the argument about the shabby manoeuvres of the Government in linking housing capital allowances to rent levels, where, for the first time, we see an allocation on the basis of need cut back in a form of administrative blackmail to force local authorities to push up their rents to levels that are seen to be acceptable by the Secretary of State but which have no reality in terms of the social hardship and the difficulties that many tenants experience.

Directly relevant to the financial limits is the fact that the Secretary of State has forced the SSHA—because its rent levels are a matter for the right hon. Gentleman's diktat—to increase average rents to £9·12 a week. That may sound modest, but in Scottish terms it is a substantial rise of 26·5 per cent. in the last financial year, and of almost 50 per cent. in the last two years.

If people are to be subjected to ever-increasing rents with a decrease in the service provided and with modernisation and new build programmes grinding to a halt, tenants and electors will be entitled to say that they are getting a very bad deal from the Government. During the last Scottish Question Time the Under-Secretary of State remarked that he had
"recently announced that an extra £38 million would be available to housing authorities in Scotland for house building and improvement in the current year."—[Official Report, 9 December 1981; Vol. 14, c. 853.]
I confess that I was surprised by that figure, because I had heard a number of others—£22 million and £23 million—and £38 million was a new figure to me. Perhaps the Minister will say what proportion of that will go to the SSHA, or whether it is included and will be part of the new financial ceilings being considered in the Bill.

It is clear—the Minister said this—that we do not yet know what the capital allocation will be for 1982. However, he stated clearly on Second Reading that the sale of council houses would have a considerable impact on the finances of the SSHA and on local authorities. For example, the Under-Secretary suggested that in the current year he expected about £17 million to come in through the sale of SSHA houses. As 55 per cent. of that figure would be financed by private resources or building societies, he expected that
"there will be a net revenue to the SSHA of about £9 million or £10 million. That reduces the SSHA's borrowing requirement from the national loans fund and is beneficial to the association. Next year and in future years, if the revenue from sales is greater than the figure estimated, increased power will thus be given to the SSHA to incur extra expenditure in a way that will be perfectly acceptable to the Government."
I want to be clear about what that statement means. The Minister stated that the figures for the capital expenditure programme for the current year would be £45 million. Let us suppose that the SSHA borrows £35 million and the rest comes in from the net revenue and proceeds of housing sales. If that sales figure increases, the association will clearly have lower interest charges to meet. However, the suggestion that seems to be coming from the Minister is that it is rather more than that. He used the phrase
"if the revenue from sales is greater than the figure estimated, increased power will thus be given to the SSHA to incur extra expenditure".—[Official Report, Scottish Grand Committee, 24 November 1981; c. 31.]
Does that mean that the ceiling that may be agreed for the current year—whether it be £45 million or another figure—can be exceeded if the sales are more extensive than the Minister expects? I wish to know that, because it will be of interest to the House when considering what the future holds.

It is an important point because, as the Minister appreciates, if he is still saying what he appeared to say on Second Reading, the areas where sales will be more frequent will benefit financially. We will be in a rather strange position. We all know, and it is self-evidently true from our experiences in Scotland, that the areas where sales are more common are those of higher amenity, more attractive socially and where the financial situation is a little easier.

If that is a way of ecaping from the stringent housing financial dictates of the Government, the areas without serious problems will benefit. The Minister shakes his head in an adamant way and I am glad to see that, because the consequence that I have suggested is not one which I would approve of or desire, but it is something that could be read into the words that he has used on many occasions. It would be useful if the Minister took this opportunity of explaining exactly where he stands on that matter.

If the Under-Secretary is right when he says that a high concentration of council house sales will bring financial advantages to the local authority concerned, he is self-evidently saying that the areas that do not have serious housing problems—or less serious housing problems—are those that will be advantaged by the new policy, while deprived areas that have multiple problems will be disadvantaged. That almost inevitably flows from the first proposition that the Minister has so proudly proclaimed in housing debate after housing debate.

I promised that I would not delay the House and I know that many of my hon. Friends want to contribute at least briefly to the debate. However, let me conclude by repeating the bold point—the real crux of the matter—that no one objects to raising the financial limits of the SSHA, but that is only a preliminary to the real decision about the resources that will be made available and the borrowing limits that will be allowed to the authority in the coming year.

We will want to hear from the Minister—perhaps not today, because I accept that there is a time table—that he is prepared to allow the SSHA and its staff to get on with the job that we know they can do. They have had an admirable record over the years, but they have been caught in the financial holocaust started by the Treasury.

The ability of the association to build and improve has been reduced, and that can be seen in its employment figures. There was, rightly, adverse comment on Second Reading about the fact that the last annual report of the SSHA stated that the association had not taken on one apprentice in the previous two years. A major public agency that ought to have a direct interest in producing training opportunities for young people has had to opt out because of what the Government have done to its financial parameters. That is the sort of sad message that comes through.

Even more important, the SSHA has not been able to carry out improvements and modemisations and to upgrade services for its tenants. That general decline has been part of the housing picture in Scotland. Under the Government the new build totals in the private sector are the lowest for a decade, and in the public sector they are the lowest since the war. That is a record of which the Under-Secretary should be thoroughly ashamed. To do him credit, he probably worries about it in private, however bravely he tries to dissimulate in public.

We should make a start on putting things right, and a generous allocation to the SSHA would be one part of a much-needed attack on housing deprivation in Scotland.

8.46 pm

We have the opportunity to assess again the work and role of the SSHA, especially in relation to the new borrowing limits proposed in the Bill.

Eighteen months ago, when I occupied the Front Bench post now held by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), I warned the Government that this form of primary legislation should be considered well before we reached the brink of the borrowing limits being achieved. I said that if there were a need for increased limits the Government should take quick action rather than delay the legislation.

It is important to underline the Opposition's support for the work that has been done and is being done by the SSHA, even in the difficult circumstances laid down by the Government—especially the financial arrangements provided for the association.

In Opposition, Conservative Members were loud in their praise of the interventionist role of the SSHA. Indeed, the hon. Member for Southend, East (Mr. Taylor), who was the principal spokesman on Scottish affairs at that time, and who is a notable absentee from our deliberations, said in the Committee considering the statutory instrument on this subject:
"The Minister will be well aware that the Conservative Party has always given great support to the Scottish Special Housing Association and regards it as an organisation making a useful contribution to Scottish housing, which we fully support."—[Official Report, Second Standing Committee on Statutory Instruments &c., 22 February 1978; c. 6–7.]
The Conservatives' record since they came to power, which was so well catalogued by my hon. Friend the Member for Garscadden, shows that their words in Opposition gave no flavour of the message given to the SSHA since they came to power.

In paying tribute to the association, I should like to deal with one of its activities in my constituency. Like many people in Scotland, the Minister will be aware of the association's work in the Laighstonehall area of Hamilton. The Laighstonehall project is one of the major projects undertaken by the SSHA in an area of multiple deprivation in the West of Scotland, and an area which has more than the average number of characteristics of decline. The association took on the problems of the area in an imaginative and hard-headed manner. The record of the Laighstonehall project has been one of which those responsible can be justly proud.

The only fly in the ointment is that the conclusion of the project has been delayed by the overall cutback in resources that has been experienced by the SSHA. It is a matter for profound regret that the success of the project has been placed in the balance because the association, despite its good intentions, does not have the resources to conclude the work that was so ambitiously started only a few years ago. If we are ever to get to the root of some of the serious problems that confront inner urban areas in Scotland, England and Wales, the type of project that was embarked upon at Laighstonehall must be seen through to success.

I read with care the debate on the Scarman report, which was confined to the problems and difficulties that arose in the summer in England. Happily, Scotland was spared the problems that were experienced in some parts of the inner cities of England. That was due in no small part to the work that has been done over the years by agencies such as the SSHA. The problems which have been experienced in some parts of Scotland, which were being tackled imaginatively, have been the subjects of experiments that we dare not allow to fail. If the experiments are allowed to go into decline, Scotland will experience some of the problems that have afflicted other parts of the United Kingdom.

I plead with the Minister to look afresh at the background to the Laighstonehall experiment. I ask him again to consider those areas where there is still a continuing demand for funds. The last phase of the modernisation project, which is so crucial to the overall completion of Laighstonehall, requires funds. We must find the extra funds that will enable the project to be completed.

I repeat the invitation that has been extended by the Laighstonehall tenants' association, by councillor Peter Grenfell, who is responsible for the area, by regional councillor Jim Irvine, by the regional council for the area and by myself as the local Member of Parliament, to come to see the successes of the Laighstonehall project, the achievements in the area, and the areas in which completion is being prejudiced by the continuing uncertainty about the timetable for the last phase of modernisation. I believe that the Minister will be impressed by the success of the project so far and may be convinced about the need to complete the experiment so that we may see the real success of an attempt at revitalising an area of multiple deprivation.

Another issue that needs to be considered on Third Reading is that of rents, which was taken up by my hon. Friend the Member for, Garscadden. We are seeing serious problems experienced in areas in which there is a mix of SSHA houses and local authority houses. Different approaches and attitudes are being taken by the two areas of the public sector. There is a growing disparity between the rent levels imposed by the SSHA on the immediate and direct diktat of the Government and rent levels in other parts of the public sector. That is causing dismay and distress, especially because in the SSHA area—this is for reasons totally outwith the association's control but for reasons that lie in the Government's lap—repairs and modernisation programmes are being delayed and tenants are being asked to pay greater and greater rents while they suffer real reductions in their standard of living. They are not getting the concomitant returns that they would normally except in the way of a natural repair programme and the natural progress in the modernisation programme that was promised in many areas. That is in an area that the Government should look at. The Bill fails to take it into account.

As has been said, the Bill is a fairly uncontroversial measure. It adds to the borrowing limits of an agency that most hon. Members regard as having a fine record. It still has a substantial job to do. If we have any reservation, it is about the amount of money that the Government are allocating. If the SSHA is to do its job properly in the future there is a need for even more primary legislation. The SSHA deserves commendation for the job that it is doing, but it is also a job that requires future resources if it is to be done as the people of Scotland expect.

8.56 pm

It is rare for me to take part in a housing debate, as hon. Members know, but I felt that I had to use this opportunity to congratulate the SSHA on the work that it has done and, above all, congratulate it on the way that it handled its relationship with elected representatives and on the help that it has given. I refer to two areas—there are others in my area and that of Renfrew district council—Linwood and Erskine. I hope that the Minister is aware of the careful and deep report that has just been prepared by Renfrew district council on the high incidence of lead tanks and lead pipes in that area. The report has been described as alarming, and certainly it is very serious. Renfrew district council takes the report seriously. The problem it faces, given the medical consequences of the high incidence of lead pipes and tanks, is that if it is to do the job that is required it will need all the assistance it can get in housing, housing support grant, capital allocation and, for that matter, rate support grant.

The district council has had the problem of the new town at Erskine without normal new town financing. Given the figures that we see here, we must ask whether that assistance is sufficient. Perhaps, as my hon. Friend says, the Bill is not controversial, but any increase from this Government, whether' or not it keeps pace with inflation, must be welcome. It is doubtful, however, whether it is anywhere near enough to meet the sort of problem with which we are faced. Therefore, I must ask the Minister to say whether he is to seek methods of assistance for the SSHA, or for Renfrew district council, which has taken on many of the tenancy allocations of the SSHA buildings in places such as Erskine, and whether the money necessary to implement the recommendations in that serious report will be forthcoming. Renfrew district council will be seeking that assistance. It will be right to do so, and I shall support it in its endeavours.

It will be useful, therefore, if the Minister, in talking of housing finance, even if it is limited to the SSHA, will say that he will treat the report seriously and give all possible assistance to Renfrew district council in its efforts to deal with the serious medical problem of lead pollution that the report has highlighted.

8.59 pm

I am pleased that we have this opportunity of debating the Scottish Special Housing Association and the work it has done and, we hope, will do in future.

Like most hon. Members, I have a fair representation of Scottish Special Housing Association type houses in my area and we are very grateful for them. I am worried that the balance of the finance for the SSHA has, perhaps, not been used as I would like. For example, while in my area we want new houses to be built, we also want the existing houses maintained at a level and at a standard that will allow them to continue as dwellings for the people in them for many years to come.

I find a niggling attitude towards repairs, particularly in some of the blocks that have flat roofs. We have never been able to conquer their problems in any part of Britain. We have never been able to build a flat roof that does not let in dampness, no matter what techniques the architects use.

In my area the tenants of some perfectly good houses are put to great inconvenience. In some cases they are decanted and moved because of repairs being delayed, or not carried out properly when they are done. That is largely due to the fact that inadequate money has been available for repairs.

In one part of my constituency, Fortrose Street, a model block was built many years ago. It was a good idea, although it turned out to be far too expensive. The general idea was that the SSHA, the local authority and the Scottish Office would get together and build a special block that would be easily adaptable for sites all over the country. It was seven or eight storeys high. It was thoroughly studied while it was being built. It was basically a well designed and well built block. However, it turned out that the standard was just too high for it to be profitable or practical to build such blocks all over the country.

It is a very good block. The people living there are concerned about penny-pinching in some of the repairs. Perhaps the Minister will tell the SSHA that there seems to be an inadequacy of supervision. There is provision for a caretaker in the block, but none is available because of shortage of money.

I can understand that the SSHA has a decision to make. If it is a choice of spending money on housing or on caretakers, obviously most people would want it spent on housing. But the difference in cost is not so very great. It would be a great pity if the homes in that block deteriorated for want of a proper caretaker to look after the building full time.

That leads me to the other thing that worries me about the way in which the SSHA has been squeezed for money. There have been criticisms throughout SSHA's existence, partly because of the point raised by my hon. Friend the Member for Hamilton (Mr. Robertson) about the disparity in rents between local authorities and the SSHA. I have experienced both sides of this matter, and no doubt my hon. Friend has done so. For a period the SSHA rents are much higher than council rents, and some people grumble, and then there is a change and the other tenants grumble.

One thing for which the SSHA had a good reputation was apprentice training. I understand that, partly because of the cuts in money to the SSHA, training has fallen to almost nil. That is dreadful. When I heard about this Bill for the first time, I hoped that it would be the beginning of a U-turn and that we would be starting something in the building industry. That is obviously the place to start—building sucks in very little in the way of imports. It is a place to start a U-turn or a capital advance in building. The Scottish Building Federation is desperate for a start to be made. Many more firms will go under if it is not made.

Will the Minister use his influence to persuade the SSHA to have a look at its apprenticeship schemes? The SSHA has produced many good apprentices of a very high standard, who have already taken jobs in the building industry when it was on the up. They were invaluable in building houses in Scotland. Will the Minister ask the SSHA to earmark at least a part of the £100 million and, later, the £250 million for this very valuable work?

The order is well worth while. We should like to have a great deal more, but with the help that the Minister is getting from the Opposition Benches, I hope that he will have some ideas to take to the SSHA the next time he meets its representatives to discuss finances.

9.5 pm

I, too, welcome the opportunity to say a few words about the Scottish Special Housing Association, partly because some of the points that I made in the Scottish Grand Committee were not answered by the Minister, and partly because the SSHA plays an important, and good, role in housing in Scotland.

My hon. Friends the Members for Hamilton (Mr. Robertson), for Renfrewshire, West (Mr. Buchan) and for Glasgow, Kelvingrove (Mr. Carmichael) all have SSHA houses in their constituencies. I have not, but I have the new chairman of the SSHA as a constituent. I could not say that he voted for me; in fact, he is far more likely to have campaigned actively against me. However, he is a constituent, and that gives me some interest.

My hon. Friend the Member for Hamilton reminded the House of what the hon. Member for Southend, East (Mr. Taylor) said when he was the shadow spokesman for Scotland and was demanding extra money for the SSHA. I hope that his close personal friend, Mr. Derek Mason, who is the chairman of the SSHA, will follow that up and demand from the Government the sort of money that the hon. Member was asking the Labour Government to provide. That is the role that the new chairman should play, and he should not accept all the Conservative Government policies.

The hon. Member for Hamilton also raised the matter of the Laighstonehall scheme, which is very worth while. Over the past three years there has been a decrease in the incidence of vandalism—which was a serious problem—because of the environmental improvements in that area. However, if improvements are not continued and the environment once more begins to decline, the money required to put right the vandalism will probably be greater than the money that could now be spent to ensure that the scheme is properly carried out. The Government should bear that in mind.

As the Minister said, this is a two-clause Bill, although on Second Reading he said that it was a one-clause Bill. I accept the Minister's correction, and I agree that the Bill is not controversial. However, somehow or other, the impression is being given that the Government are giving extra money to the SSHA. They are not doing so—there is not one extra penny in teens of what the SSHA will be able to do next year or the following year.

All that the Government are doing is increasing the SSHA's borrowing power. However, it has to come to the Government for permission to use the borrowing power and to spend the extra money if it so wishes. The Government have not shown that they intend to allow that increase in SSHA spending. Over the past two years while the Government have been in power the amount of money available to the SSHA and the amount of money that it has been able to spend on such things as repairs and improvements, and the rehabilitation of housing stock, has declined dramatically.

The figure for repairs and maintenance expenditure in 1979–1980, which was not a particularly good year, was £14,966,000. Between 1980 and 1981 the figure dropped to £12,846,000. There is a clear reduction in the amount of money being made available for repairs and maintenance of housing. Over the 12 months the tenants have faced a 50 per cent. increase in their rents. Those who happen to be old-age pensioners, or to be unemployed or on supplementary benefit, have not been allowed increases even to the level of inflation. yet they are having to face rent increases that are way above the rate of inflation.

The Government seem to be hoping that if the rents continue to increase more people will be forced to buy their houses rather than continue to pay higher and higher rents. The hon. Member for Edinburgh, South (Mr. Ancram) shakes his head. It is very interesting that on this occasion not even the hon. Member for Argyll (Mr. MacKay) has contributed to the debate. He is usually the one Conservative Member who has some sort of conscience about the part played by Conservative Back Benchers, and often makes a speech—

I apologise. I shall not tempt the hon. Gentleman too far, because I know that there are hon. Members who wish to speak on other matters later this evening.

Conservative Members seemed to be dissenting from what I was saying about high rents, but many tenants in local authority and SSHA housing believe that rents are being forced up by the Government to persuade them to purchase their houses.

On Second Reading the Minister made great play of the number of houses that the SSHA had sold. It has carried out a much more active selling policy than have many local authorities. Even so, it has managed to sell only about 4 per cent. of the total housing stock, although the Minister will probably say that this year the figures will rise to 6 or 7 per cent.

Our concern is for those—well over 90 per cent.—who will remain tenants of the SSHA and of local authority housing, and who will not purchase their houses. They are facing lower standards in regard to the time betwen repairs being reported and the work being done. Repairs considered not to be essential are not being done and modernisation programmes are being cut back, yet SSHA rents are rising by over 50 per cent. It is these tenants who are the concern of Labour Members, not the very small percentage who are purchasing their properties. The Government ought to be concerned with the people who are remaining tenants of local authority and SSHA, properties.

I hope that the Minister will say what extra money is to be spent by the SSHA, rather than simply giving it borrowing power. Let us be told there is to be an expansion of the SSHA programme to give the tenants a better deal and to increase the prospects of employment in the building industry, which is so desperately needed in Scotland.

I am impressed by the sudden interest that the official Opposition are taking in the Bill. In the debate it has been possible to go over some of the territory that should have been covered in Committee. The Bill is an important one, because it gives an opportunity for the Government to expand the resources available to the SSHA.

Some Labour Members spoke on Second Reading and our interest is not at all sudden.

I, too, spoke on Second Reading, but I do not think that it is necessary to go into that. There was a stage in between that does not seem to have been canvassed with the same degree of intensity.

The Government should look at the position of the SSHA because, despite what I have said, there is a real interest in the amount of work that it could and should be able to carry out. One of the prime functions of the SSHA was to build houses in areas of economic growth. It is sad indeed that one can now scan the country, with the possible exception of the Aberdeen area, and have great difficulty finding any economic growth requiring building for that purpose.

I wish to concentrate the Minister's attention on the role of the SSHA with regard to modernisation. Many of its tenants have been disappointed with the way in which modernisation schemes planned for two, three or four years ago have become more and more elongated and seem to be receding into the distance. I know of cases in which phase 1 has been carried out and plans laid for phase 2, when phase 2 seemed suddenly to disappear and phase 3 to vanish completely into outer space. Perhaps the Under-Secretary will tell the House how he sees the role of the SSHA in relation to modernisation.

The House should realise that a substantial number of SSHA houses suffer from very poor standards of insulation. I received a reply from the Minister today concerning the number of public sector houses falling below accepted standards of insulation, in which he stated:
"Approximately 400,000 public sector houses with loft spaces have less loft insulation than the current Building Standards (Scotland) Regulations requirement of 50 mm (2 inches). The average cost of providing loft insulation in a typical four-apartment house is about £100."
In another reply, he stated that some 236,000 public sector houses had been insulated since April 1978. Buried among the 400,000, there must be a good number of houses built by the SSHA that have deficient standards. It takes only some general surveillance of the work carried out by the SSHA to realise the improvement in living conditions that could be given to the tenants of those houses.

In view of the recent savage weather, many people—particularly the elderly—must find it difficult to live in comfort in unmodernised SSHA houses due to the inability of those houses to retain heat. The severe weather conditions should prompt the Minister to reconsider his attitude towards providing funds for the SSHA to go ahead with such modernisation. If he were prepared to live up to the expansion limit provided for in the Bill and to grant the wherewithal for the SSHA to carry out that work, substantially improved living conditions could be offered to many long-standing SSHA tenants who badly need a better deal.

9.18 pm

Like other hon. Members, I briefly pay tribute to the Scottish Special Housing Association and the work that it has done in Scotland since its inception in 1937. It is no exaggeration to say that it has probably been one of the most successful examples of public enterprise in Scotland. The fact that, through the growth of public sector housing in Scotland, we have managed to solve some of Scotland's housing problems over the years has been due not only to the efforts of local authorities but to the excellent work of the SSHA.

Unfortunately, for the first time in the history of public sector housing in Scotland, we are now in danger of seeing not just the end of expansion in public sector housing but a reduction in the number of houses in the public sector. That reduction will be the result of Government policy on two fronts. The first is the dictatorial powers taken by the Secretary of State to instruct local authorities and the SSHA to sell off their houses, irrespective of the needs of the local community and the demand for public sector housing in particular areas. The Secretary of State thinks that he knows best, and has given a general command to the local authorities and the SSHA to sell off their housing stock.

At the same time, he is not giving them enough money to replace the housing stock with new build. Despite the Bill's title and the explanatory and financial memorandum, the truth is that the Secretary of State is not giving the SSHA nearly enough money to do the job that it should be doing—in other words, to build more public sector housing in Scotland to cater for the needs of the thousands of people, including many young newly married couples, whose only chance of getting a house lies in obtaining one in the public sector.

The Government have jacked up the mortgage rate and will throw these young couples into the hands of the money lenders. Many of them have no chance at all of getting a house unless they get some form of Government help, but the Government are selling off houses and not giving the local authorities or the SSHA enough money to replace them with new stock.

My constituency is virtually unique, in that it contains five different housing authorities—Stirling district council, Falkirk district council, Cumbernauld and Kilsyth district council, Strathkelvin district council and the SSHA. The advantage of district councils as housing authorities compared with the SSHA is that if somthing goes wrong administratively or bureaucratically—be it house allocation, housing repairs or whatever—there are elected district councillors to whom the tenants can turn.

It is a pity that in this legislation the Government are losing a tremendous opportunity to bring about a greater degree of accountability on the part of the SSHA. I am not saying that we should dismantle the SSHA completely, but perhaps its role has changed. It may be that its role should be concentrated within the dynamics of housing construction, especially in areas of need or areas of economic growth—if there are any such areas left in Scotland. We should be looking at areas where there is

demand for public sector housing. If the local authorities are not getting the resources because of Government cuts, perhaps the SSHA should be the appropriate authority to work in liaison with the local authority to achieve development in the house building programme.

In the longer term, after the houses have been constructed, there may well come a time when they should be handed over to the local authorities. In other words, we should be thinking of a more decentralised and democractic style of management. I would not stop there, because I believe that there should be greater decentralisation and devolution through tenant control. I should like to hear the Government's views on how that can be achieved, either by encouraging tenants' cooperatives or other forms of communal housing management.

The SSHA has grown over the years until it has become a little too over-centralised, bureaucratic and non-accountable. An SSHA tenant looking for an elected representative to try to sort out a mess in which he finds himself may decide that the only answer is to turn to his Member of Parliament. A council tenant, who has a complaint about housing repairs, management or allocation, has his own elected district councillor at grass roots level to whom he can turn to try to solve the problem.

I should like to see the SSHA given a vastly increased budget as opposed to the paltry increase proposed in this legislation. It should be given the task of tackling the problems of housing and the lack of public sector housing. If the SSHA were decentralised through the district councils that already have statutory powers, as local authorities, this would produce a more democratic system of housing management that was in the best interests of SSHA tenants and council tenants.

9.26 pm

A number of excellent speeches have been made by Opposition Back Benchers. It is most unfortunate that none of those Members happened to be selected for the Committee that considered the Bill. There would have been opportunity to consider these matters in greater detail, with a greater amount of time available. It is unfortunate that those hon. Members selected for the Committee not only failed to turn up but have also not even thought it proper, with the honourable exception of the Opposition Front Bench spokesman, the hon. Member for Glasgow Garscadden (Mr. Dewar), to turn up for the Report and Third Reading stages.

The hon. Member for Glasgow, Cathcart (Mr. Maxton) suggested that pensioners, the unemployed and others on supplementary benefit would suffer hardship as a result of the SSHA rent levels that were proposed or might be proposed. The hon. Gentleman is clearly unaware that almost all those receiving supplementary benefit pay no rent at all. They are not affected by 1p of any increase in rents of whatever level. The hon. Gentleman might have checked his facts before making serious allegations.

The hon. Gentleman did not include old-age pensioners, many of whom do not take up rent and rate rebates which they are allowed and who, as a result, will suffer hardship, because they are often too proud to take rebates.

The hon. Gentleman cannot legitimately put forward that explanation. If successive Governments have rightly provided a rent rebate scheme to deal with people who cannot afford rent levels, whatever those levels are, the hon. Gentleman cannot argue that the Government must keep down rent levels because certain people entitled to rebates do not apply for them. I hope that the hon. Gentleman, like everyone else, would urge that everyone entitled to a rent rebate should apply for it. The vast majority do apply. It is desirable that the small minority who, for whatever reason, do not apply should do so. The hon. Gentleman suggests that rent levels cause hardship for pensioners and those receiving supplementary benefit. That is untrue, as I think he now recognises.

The hon. Member for Dundee, East (Mr. Wilson) made an interesting comment about the need for home insulation in houses owned by the SSHA and other organisations. It is a curious feature of Scottish housing over the last few years that the home insulation resources have not been fully taken up. While there has been no difficulty over the resources being utilised in England and Wales, there has not been sufficient interest in Scotland, although there is a need for insulation and many people would benefit if they used the grants available.

Is it not possible that the installation of insulation could be kept back through the inability of the SSHA to go ahead with general modernisation? If the Under-Secretary cannot guarantee that the modernisation work will go ahead, will he give an assurance that ample funds will be available to the SSHA to insulate all its houses?

We give a general allocation to the SSHA but we do not dictate how it should use it. If it wishes to use part of its resources for that purpose, that is for its discretion.

The hon. Member for West Stirlingshire (Mr. Canavan) made three curious remarks. He said that for the first time under this Government we were seeing a reduction in expenditure on housing. That is wrong. The reduction 3n housing expenditure began under the Labour Government. The hon. Gentleman suggested that the SSHA might have an exciting new role in dealing with areas of economic growth and liaising with local authorities. The SSHA already has that role and has had it for a number of years.

I shall come to that later. The hon. Gentleman is right to say that that is a desirable role for the SSHA. It has that role in Aberdeenshire, the city of Aberdeen and in other areas. Areas of economic expansion are the main priorities for the SSHA. It has a good record of providing assistance to individual local authorities in that respect.

The hon. Member also made a passionate call for decentralisation of control of SSHA houses to tenants. We are all in favour of that. For some reason, the hon. Gentleman wishes to stop that decentralisation to groups of tenants. We wish to take decentralisation further so that it reaches the individual tenant and gives him control over the house in which he lives by giving him the opportunity to buy his home. Why the hon. Gentleman should seek to prevent, prohibit or limit that form of tenant control is a mystery to most of us.

There is a big difference. Even the Minister is capable of appreciating the difference between decentralisation of management and privatisation of ownership. The latter would mean that the future occupation of that house would for ever depend upon free market forces rather than need. That is why I am against privatisation of houses that are already in public ownership.

It remains the case that if one wants to give people the maximum control over their environment, for the vast majority of the human race the opportunity to own the homes in which they live is a satisfactory way of achieving that. The hon. Gentleman may not share that view but in that respect he is in the minority among those who support his party as well as of those who have other political views.

The hon. Member for Renfrewshire, West (Mr. Buchan) referred to problems caused in Renfrewshire by lead in water. We have received the report submitted by the district council and we shall examine it. Lead in water is a serious matter. It is a health problem and therefore it is right and desirable that the maximum assistance is given to local authorities throughout Scotland. It is also a matter for local authorities, which must judge whether to give it priority in their expenditure. We accept that we have a responsibility. We shall examine the issue in relation to capital allocations to local authorities in the weeks to come.

The hon. Member for Glasgow, Kelvingrove (Mr. Carmichael) referred to the SSHA being able to take on apprenticeship schemes. I shall refer the hon. Gentleman's remarks to the SSHA. It is a matter for its discretion but I shall ensure that it is made aware of the hon. Gentleman's comments.

The hon. Member for Hamilton (Mr. Robertson) referred to the discrepancy between rent levels of SSHA houses and some local authority houses adjacent to SSHA houses. He must appreciate that the main difference between the two groups, as applied under successive Governments, is that, because SSHA rents have always been under central Government control, rent increases have been reasonable over the years. That is not always so in the case of individual local authorities. Some local authorities have deliberately pursued a policy of unreasonably low rents. The discrepancy between their rent levels and SSHA rents is most obvious and wide in such areas. No one could seriously argue that in United Kingdom terms SSHA rent levels are unduly high. The hon. Gentleman should recognise that.

I hope that the Minister will deal with the major issue that I raised with him. The SSHA is having directly imposed on it the full swingeing rent increases that the Government would like all local authorities to implement, but they are also making sure that the SSHA is starved of the resources to allow it to undertake the modernisation programmes that it has in many cases promised its tenants and the repairs that they should expect for the rent that the Government dictate that it should force them to pay.

The hon. Gentleman is wrong. I may be one or two pence out, but in the current year the Government reccommended to local authorities average rent increases of £2·33. Because in the previous year the SSHA had made reasonable rent increases, unlike the vast majority of local authorities, the figure for the SSHA was £1·90, which is close to the rent increases ultimately imposed by local authorities, on average, throughout Scotland. In this year, at the end of the day, the SSHA tenants' rent increase will not be significantly different from that of local authority tenants as a whole, although it may be different from certain increases in individual localities.

The Minister will be well aware of the fact that over the past two years SSHA rents have increased by a total of 50 per cent. Does he consider that that is reasonable?

The hon. Gentleman must appreciate that the rent base from which the increases were made was extraordinarily low, and that is so even at present. For example, local authority average rents in Scotland are £7·40, which is dramatically small. That fact must be taken into account. Even the SSHA rent level, although higher than that, is not particularly high by the standards of many other parts of the country. The hon. Gentleman should take account of that factor.

The hon. Member for Hamilton asked about Laighstonehall. He will be aware that of the original 518 houses in the scheme 75 have been rebuilt and the conversion of 32 large flats into 64 smaller flats has also been completed. The modernisation of 188 houses has been completed. I am aware of the concern of the hon. Gentleman and some of his constituents at the delay in the modernisation of the remainder of the stock, but he will appreciate that the Government's responsibilty is to give the overall allocation to the SSHA, and we do not tell it how it must use the allocation, so representations on the priority that should be given to the project should be directed to the SSHA. No doubt the hon. Gentleman has made such representations, but he must appreciate that it is a matter of the SSHA's detailed responsibility and it is not something on which the Government, either in respect of this or any other individual project, take a particular position.

In his usual helpful and constructive fashion the hon. Member for Garscadden raised two basic points. He expressed great concern at the level of capital allocations for the SSHA. It is true that they have declined over the past couple of years, but the hon. Gentleman has a tendency to exaggerate these matters.

Compared with the hon. Member for South Ayrshire (Mr. Foulkes), the hon. Gentleman does not exaggerate these matters. Nevertheless, viewed in isolation, there is an element of exaggeration from which I cannot entirely exempt the hon. Gentleman.

In the current year the SSHA's allocation is £45 million, which is a substantial sum and which in cash terms is close to previous years, although I appreciate that it is a difference in real terms.

The hon. Member for Garscadden also expressed confusion about the effect of the net allocations system so far as the sale of houses is concerned. His interpretation is that, because the Government would be making an estimate of sales of SSHA houses, in practice the system would be of benefit to areas with high amenity housing and against the interests of those with low amenity housing which might be expected to sell less houses. The hon. Gentleman seemed to misunderstand the scheme both in respect of the SSHA and the local authorities.

In each case—let us look at any individual local authority—we shall be looking at a reasonable estimate, given the number of applications that authorities have received from their tenants, as to what their expected income from the sale of houses should be in a given year. That estimate will obviously be a lot less in an area where, for whatever reason, there have been fewer applications than in an area where, for whatever reason, the applications have been far greater. In both cases—having made a reasonable estimate—if at the end of the day a local authority or the Scottish Special Housing Association has sold more houses than estimated, it will have the free use of the extra receipts from the sales. Therefore, it will be in its interests to maximise sales.

The Minister's statements are open to many interpretations. Is he saying that if we take a capital allocation of, say, £45 million for the local authority or the SSHA and it is assumed that included in that figure is a sum of £10 million, which will be found from the net proceeds of sales, and if, by means of sales drives, caravans and so on, the local authorities or the SSHA persuade more people to buy their homes so that the £10 million becomes £13 million, the resources available for new build will be £48 million rather than £45 million?

The difference between what we have estimated and the net receipts will be available to the local authorities or the SSHA to use as an extra capital allocation for whatever purpose they consider appropriate. It will be in their control, since the estimate will not be a vague figure plucked out of the air, but will be based on the number of applications received. We are now in a position to know the number of applications that a local authority or the SSHA has before it and we know the normal time that the processing of an application should take until the ultimate completion of the sale. Therefore, barring the unexpected, we are in a reasonably good position to be able to predict the likely minimum income that the local authority or the SSHA will receive from sales. If, in order to boost its resources it is able to encourage more of its tenants to purchase, it will benefit from that, and it is right and proper that it should do so. It is precisely because, in the current year, the estimates were much lower than had been expected that we were able to boost the allocations by the figure to which the hon. Gentleman referred.

I do not wish to detain the Minister, but it should be put on record that we challenge his statement that it should be "right and proper" for local authorities or the SSHA to encourage more tenants to purchase. We do not accept that it is "right and proper" that there should be a built-in incentive to sell council houses in order to obtain more resources on the capital side. We believe that the inadequate capital resources that are available should be allocated on the basis of the need of the people who live in the area.

Those comments could be described as good Committee points, which, unfortunately, the Committee did not have the benefit of hearing. They could have been expanded in greater detail in Committee. If the hon. Gentleman were to speak with the local authorities and the SSHA he would find that they realise that this is an opportunity from which they can benefit, and it is right and proper that they should be able to do so.

The Bill has had a fair passage throughout its stages, although this stage has been slightly longer than the others. Nevertheless, it has been equally constructive.

The hon. Gentleman could at least have turned up.

The debate today, although slightly longer than previous stages, has been just as constructive, and I therefore commend the Bill to the House.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Welsh Water Supply

9.43 pm

I beg to move,

That the draft Welsh Water Authority (Constitution) (Variation) Order 1981, which was laid before this House on 1st December, be approved.
The order gives effect to the proposals for varying the constitution of the Welsh water authority, which I announced to the House on 30 November. The draft is laid for Parliament in exercise of the powers conferred by sections 2(4), 3(10) and 36(2) of the Water Act 1973.

The House already has a good deal of information about my reasons for laying the order. I set them out in the consultative document published in July. I explained them in my statement to the House on 30 November, and my hon. Friend the Under-Secretary of State, the hon. Member for Conway (Mr. Roberts), discussed them with the Welsh Select Committee on Wednesday 2 December. Paragraph 8 of the consultative document explained the drawbacks of the present large and cumbersome structure.

The Monopolies and Mergers Commission report on the Severn-Trent authority explained the unsuitability of the local government committee system for the administration of the water industry. It said:
"The size of the authority has resulted in a complex committee structure requiring extensive administrative and other support services … despite its historical origins the authority is not an instrument of local government and does not therefore have to be controlled by a body which is largely composed of people who derive their membership from the electoral process of local government. Its policies and activities are in no way dependent on political issues within its particular boundaries. It is one of ten similar bodies which are virtually nationalised industries organised on a regional basis, responsible to Ministers and co-ordinated by the NWC. We recommend that the size of the authority should be substantially reduced and that its membership should not be based predominantly on local government representation".
Those comments apply as much to the Welsh water authority as they do to Severn-Trent.

I have to tell the House that in addition I had become increasingly concerned by the views expressed to me by those serving on the authority and by those whom I had invited to serve in the past. It was becoming very clear that we should find it increasingly difficult to recruit people of the calibre that we needed if they felt that their time was being wasted and their performance limited by a structure unsuitable for managing any kind of industrial enterprise.

Nor were consumer interests being properly represented under this system. Few people were aware that this was supposed to be the role of the local authority representatives, fewer still knew which local authority members from their own areas served on the authority, and the members themselves, not directly answerable to the electorate, even in their own parts of the country, were often placed in an unenviable position as they sought to act as consumer watchdogs, while at the same time they participated collectively in the decisions of the authority as a whole, and often in connection with local issues which were far outside their own immediate area of knowledge.

Does the Minister agree that it is a case not of a lack of expertise among local authority representatives but of a rapid turnover among those representatives? If the rapid turnover could be coped with, we could still have a fair local authority representation even on the new body.

I did not suggest that there was any lack of expertise among the local authority representatives. I am sure that they were all expert in their respective areas. They had great knowledge of the areas which they directly represented in their own local authorities. But that is not the position in which they found themselves in the Welsh water authority, where there were a handful from each part of the country, where their responsibilities were not related directly to those who immediately elected them, and where they were having to act as consumer representatives in connection with proposals, plans and suggestions from different parts of the country. It was not about their lack of expertise in their own areas that I was speaking, but they were placed and still are placed in an extremely difficult position if they are to carry out an effective watchdog role on behalf of the consumer.

I am sure that the hon. Member for Carmarthen (Dr. Thomas) will agree that very few of his constituents know that local authority representatives are members of the authority, and even fewer can identify the local authority representatives serving on the Welsh water authority.

Is the right hon. Gentleman making a valid point? On the old boards there were 10 representatives from the counties and 10 from the districts. Those figures will now be reduced to two from the districts and two from the counties. The 20 representatives, who constituted the majority on the old boards, had contact with all the local authorities of which they were members, and all the councillors on those authorities knew who were their representatives on the Welsh water authority. Therefore, there was a contact with the whole of the local authority organisation in Wales.

They may have had contact with the whole of the local authority organisation in Wales, but that is not contact with the consumers. If anyone believes that it is, he must have an odd view of events both in local government and in the water authority. However, I shall deal later with my proposals for increasing the local authority involvement in the decisions that most affect their own constituents and those taken in their immediate localities.

My original proposals contained in the consultation document were that county and district councils should no longer appoint members to the Welsh water authority and that the size of the authority should be reduced to about 10 members, including the chairman and land drainage and fisheries members, all to be appointed by the Secretary of State. I set out three options for alternative and more effective representation of consumer interests.

Taking account of the responses to that document and especially the points put to me at a meeting I had with the local authority organisations involved in October, I concluded that the new authority should be increased in size to 13 members including the chairman and land drainage and fisheries members with four members being appointed by me to represent the interests of county and district councils. The remaining six members would provide the widest possible management and business expertise. I decided also that the consumer interest should be catered for by five local consumer advisory committees approximating to the various Welsh water authority divisions or combinations of them, but with their boundaries coinciding with the district council boundaries.

As I told the House on 30 November, the six general members will provide the widest possible expertise, including expertise in management, finance, business—including agriculture—industrial relations and personnel matters. After listening to the local authorities, I was convinced that their interest should be directly represented, and that by having four members there was scope for adequately covering both county and district interests and the geographical interests of the whole area covered by the Welsh water authority, including the English districts. I emphasise that I will be consulting the appropriate local government associations before making these appointments and that I fully recognise that the interest of the English authorities has to be taken into account.

In my statement, I said that the chief executive would normally attend meetings of the board. Under existing legislation, he cannot serve as a board member and no payment can be made to the board other than to the chairman and to the member who is the chairman of the land drainage committee.

Some have seen that as a halfway house and have argued that if we want to move we should go the whole way to a fully paid board meeting in private. That may well be sensible in the longer term, but it would require primary legislation and, in the meantime, I think it right to move as swiftly as possible to a streamlined and more effective organisation that does not require a large number of headquarters committees—many of them consisting of about 25 people and costing in total, quite unnecessarily, about £130,000 a year to run.

I believe that the need for an improved organisation is urgent and that is why I felt right to lay the order on 1 December despite the fact that the Select Committee on Welsh Affairs had decided to include consideration of my proposals within the terms of reference of its current investigation of water in Wales. I have already explained that I want the new constitution to take effect in readiness for the appointment of a new chairman when the present chairman of the authority retires at the end of May. The two months between 1 April, when the new constitution is to become operative, and 1 June will provide an opportunity for the existing chairman, who knows the authority well and who has done very valuable public service since he succeeded Lord Brecon, to hand over to the new chairman and assist in smoothing the passage of the new arrangements.

Having come to those conclusions, and having completed the consultative process, it would have been extraordinary and wrong to have kept my decision from the Select Committee. Having a clear view of what I was to do, it would have been a gross discourtesy not to have told the Committee what that view was at the earliest possible opportunity. That was another factor that I took into account.

I ask the Secretary of State to recall the occasion when the Select Committee decided to investigate the fourth channel for Wales. He will remember that within a week the Government changed their policy. They said that there was not to be a fourth channel. As the right hon. Gentleman had issued a consultative document, the Select Committee decided to consider the reorganisation of the Welsh water authority. It has asked various organisations to submit evidence to it. At the same time, the right hon. Gentleman has acted in haste and brought forward the proposals that are now before us. If this reorganisation is being introduced because the chairmanship is ending in May, why cannot the right hon. Gentleman extend the chairmanship for 12 months and enable proper consultation to take place?

We are not discussing the Welsh fourth channel today. I published the consultative document in July and I made clear my intentions and the timetable for the consultation. It was not until 28 October that the Select Committee decided that it would include this issue as a subject for investigation. Once the Government have announced a proposal, have entered a consultative process for which they have set a time limit, and when they believe that the proposals are urgent and important, affecting as in this instance many people in Wales, surely they should not be obliged to delay the proposals for an indefinite and indeterminate period because subsequently the Select Committee says that it would like to examine the proposals and take evidence.

If the Select Committee has some suggestions to make on behalf of consumers, I shall welcome them because we are in the middle of a consultative process, but it has always been the system and the convention—this must be right—that the Government, having decided on their programme and priorities, must be free to seek the approval of the House and not necessarily delay until a Select Committee has investigated, especially if they believe that the priorities are urgent.

Will my right hon. Friend confirm that a Select Committee has no executive responsibilities and that the process of government cannot always wait for opinions to be expressed by a Select Committee?

I agree. I have executive responsibilities, and if I believe that urgent action is needed to improve arrangements it is my responsibility to present proposals to the House at the earliest possible moment., and that is what I have done.

I come to the arrangements for ensuring that consumers in the area of the authority are given full opportunity to express their views about the services and charges of the authority in an effective manner. These arrangements do not form part of the constitution order, because I am advised that the powers of section 3(10) of the Water Act 1973 do not extend to enable me to provide constitutionally for consumer advisory committees.

The position is that the water authority has power under section 68 of the 1973 Act to appoint committees to advise on any matter relating to the discharge of its functions, and after taking account of the views that have been expressed to me I have decided that the most effective way in which consumers' rights may be heard effectively is to establish five local consumer advisory committees based on local authority districts approximating to the areas covered by the Welsh water authority divisions.

I have decided that it should not be necessary to establish as many as seven divisions, having regard to the fact that the three Glamorgaris make up a concise area and that the boundary between the Wye and Usk divisions cannot be reconciled with local authority boundaries. I have decided to establish a single committee for Glamorgan and another single committee for Wye and Usk. The other three committees would cover the Dee and Clwyd, Gwynedd and the West Wales divisions.

I am preparing draft guidelines to the Welsh water authority relating to the constitution, functions and operation of the five committees and I am consulting about these guidelines. I have written to Welsh Members and those English Members with a direct interest, explaining that because I am engaged in that consultation process I can make available at present only the basic framework for the guidelines. A copy of that letter is in the Library.

Among the principal points that I make in it are these. First, I would welcome comments on the draft guidelines from hon. Members and, as I have said to the hon. Member for Aberdare (Mr. Evans), from the Select Committee on Welsh Affairs, and I shall take their comments into account. [Interruption.] Yes, I shall even take the comments of the hon. Member for Merthyr Tydfil (Mr. Rowlands) into account if he cares to make them in a more constructive and helpful fashion than sitting in his usual noisy, ill-mannered way, mouthing imprecations from the Opposition Benches. If he wants to say anything, I shall give way to him.

The whole of this order is irrelevant nonsense given the fact that the vast majority of the people of Wales are interested in Welsh water charges. When will the right hon. Gentleman come to the issue of Welsh water charges?

If the hon. Gentleman believes that the efficient organisation and management of an industry has no relevance to charges, it is hardly any surprise—

I think that we have heard enough from the hon. Member. Clearly he does not have much to say.

Order. Perhaps I might help. The order has nothing to do with charges.

Far be it from me to argue with you, Mr. Deputy Speaker.

I went on in the letter to make it clear that every district or county local authority would be represented on the consultative bodies. It is desirable that the committees should not be too large, but the numbers will be dictated by the number of local authority representatives, to which I have referred, and the need for consumer, agricultural, industrial, commercial and amenity interests to be represented.

The numbers represented on community health councils vary between 16 and 32, with the majority between 18 and 25. I see no difficulty in following a similar pattern for the consumer advisory committees, which would mean having a majority of local authority representatives in some cases.

Another point that I bring out in my letter is that the guidelines will make provision for the appointment of members and the election of chairmen, together with the essential practical arrangements such as travel and subsistence allowance and the provisions of secretarial support.

In these guidelines, clear advice will be given on the arrangements for access to the water authority and for liaison between the chairmen of committees and the authority, including the frequency and timing of their meetings. It would seem right for the five chairmen of the committees to meet together with the Welsh water authority, say, twice a year, or as frequently as they may think appropriate. There could also be provision for the five chairmen to meet together and for them to meet the chairman of the Welsh water authority, if that were thought desirable. These, again, are all points about which I shall welcome comments during the consultation process.

In laying the order, which deals only with the board appointments, I am not seeking to criticise the existing members. On the contrary, I should like to take this opportunity to thank the chairman, Mr. Haydn Rees, and all his colleagues for the immense amount of work that they have done. That should be on the record.

At the moment when I thank the chairman and the members for their hard work and their contribution to running the authority, the hon. Member for Merthyr Tydfil shouts "Sheer pomposity". I hope that the chairman and the members will note that the only constructive contribution that the hon. Member has made to the debate is to deride the people who have given so much by way of public service to the authority in Wales.

When the Welsh water authority was set up in 1974 it took over functions which for many years had been exercised by local authorities. It is understandable that the decision was taken to draw on the experience of local authority members and that the new management arrangements, particularly the committee structure, should have been based on the conventional local authority practice. As time has passed, this structure has increasingly come to be a handicap rather than a help. It is that handicap that the order seeks to remove, and I commend it to the House.

10.7 pm

The first question that the House ought to consider is whether there is any case for reorganisation. The second question is whether this is the right sort of reorganisation.

Paragraph 8 of the consultative document stated that it was the Secretary of State's view that there was a strong case for reorganisation, but neither in his consultative document nor in his speech this evening has he made out a case, let alone a strong case.

The Secretary of State makes a series of assertions about the weaknesses—or apparent weaknesses, in his eyes—of the present structure. He talks in the consultative document of management having difficulty about exercising tight financial control. There is no mention of that tonight. He does not talk about the present structure not enabling local government to play an effective part, yet he now proposes that local government should play a less effective part.

In the consultative document the right hon. Gentleman referred to the present structure as inhibiting quick decision-making and blurring the responsibility of officials and board members. It is no good his making those assertions unless they are backed up by facts, and those facts have been singularly lacking, not only in the consultative document but in the right hon. Gentleman's speech tonight.

There may be some evidence of the need for reorganisation, but so far the Secretary of State has completely failed to produce it to the House. He mentioned some matters concerning the Severn-Trent water authority and added "I think they apply as much to the Welsh water authority as to Severn-Trent". Everything he said tonight started with the word "I". It was all "I", "I", "I". The right hon. Gentleman might be God's gift to the Conservative Party, but he is certainly not God's gift to the people of Wales.

I refer the right hon. Gentleman to the speeches made by him and by his hon. Friends smiling so smugly behind him. When the Welsh Grand Committee discussed the matter, the hon. Member for Anglesey (Mr. Best) said:
"I think that the Welsh Water Authority is, in general, doing a very good job."
Yet today he will vote to reorganise it. The hon. Member for Brecon and Radnor (Mr. Hooson) said:
"There is no question but that the authority is doing a great deal of worthwhile work".

Is the right hon. Gentleman maintaining that because people say that an authority is working on the whole in a reasonable way it is impossible to improve its workings?

Not at all, but the Secretary of State has given not one reason for reorganisation except his determination to weaken local authority representation.

The right hon. Gentleman should read the rest of my speech.

The hon. Gentleman need not worry. I shall come back to him later. There are more beautiful quotations to come.

In the same debate, the Secretary of State said of the Welsh water authority:
"In short, it has completed an immense job of reorganisation and rationalisation and is now in a position to exploit to the full the advantages of the water reorganisation which the previous Conservative Government promoted in 1973."—[Official Report, Welsh Grand Committee, 18 July 1979, c. 13–23.]
If the 1973 Act was so wonderful, why do we now need this reorganisation without any explanation?

Not only is the case not made out. The Secretary of State is bulldozing his proposals through the House not with almost indecent haste but with genuinely indecent haste. The consultative period lasted 46 days, including the whole month of August when anyone in his right senses knows that most organisations are involved in holidays.

That applies especially to local authorities which, as is generally known, do not meet in August. The document was sent out on 28 July. Originally, replies had to be back by 11 September. Most local authorities in Wales would not have met during that time.

My hon. Friend emphasises my point. When this was raised in the House the Secretary of State said that the period had been extended for a large number of organisations and that late representations were taken into account, but organisations intimately concerned with the water authority in Wales were rushed into making their observations by 11 September and did not even know that late observations would be taken into account.

When the Secretary of State made his statement to the House on 30 November, he said:
"There will be a further opportunity for consideration before we debate the proposals."—[Official Report, 30 November 1981; Vol. 13, c. 32.]
Yet less than two weeks later we are asked to approve, without amendment, this major reorganisation of the water authority in Wales.

When I asked the Secretary of State on that occasion about the guidelines, he said that for the help and guidance of the House he would seek to publish the guidelines regarding the membership and function of the local consumer advisory committees.

It is not reasonable that hon. Members should have received notes on the guidelines today when the matter is being debated this evening. The Government are considering reorganisation of other water authorities, but I see no reason why we should rush into the reorganisation of the water authority in Wales when everyone knows that the fundamental principle of the 1973 Act was that the water industry was a United Kingdom industry and the two matters should therefore be intimately linked.

Be that as it may, the major change proposed by the right hon. Gentleman is a considerable reduction in local authority representation on the water authority. If the Secretary of State's original views had prevailed, that representation would have been eliminated. Instead of that, the order cuts their membership from 20 to four. On that basis, I suppose that it is slightly better than the original proposals, but those proposals regarding local authority representation were completely inadequate and do not meet the traditional and necessary involvement in the administration of water services that local authorities ought to have.

I agree with the Under-Secretary of State, who in the Welsh Grand Committee debate said that local authority members on the Welsh authority should have a knowledge and experience gained on either the water authority or the council likely to be of benefit to the other.

The hon. Member for Anglesey advocated that all district councils should have representation on the water authority. The Under-Secretary referred to
"membership of the authority—
not of any sub-committee—
"and the participation of local authority members".
He urged his hon. Friend the Member for Anglesey
"to consider their value as being indirectly elected people on the authority, and also the fact that they are familiar, as councillors, with local problems."—[Official Report, Welsh Grand Committee, 18 July 1979; c. 35.]
If local councils had that importance when this matter was discussed in the Welsh Grand Committee, they have that importance today.

The 1973 Act, which the Secretary of State extolled, specifically required certain criteria for membership of that committee. Members were required to have experience of fisheries, land drainage and agriculture. The order reserves the position on fisheries and land drainage but makes no mention of agriculture.

The Secretary of State's statement used the word "business" and added in brackets "including agriculture" as one of the qualifications necessary for membership, but there is no reference to agriculture in the order. Will agriculture have any sort of reserve position in the water authority? If not, why not? If it will, why on earth do the Government not say so? Now that we have a change in local authority representation, there is a significant shift towards centralisation at the expense of any form of local democracy.

Whatever our differences over the size of the water authority and the specialised interests that ought to be represented on it, I cannot believe that anyone can justify the proposal that every appointment shall be solely at the disposal of the Secretary of State for Wales.

I shall quote the hon. Member for Anglesey again so that he will have good value for money.

I know that it is naughty. The trouble is that your words are taken down and used in evidence against you—

I apologise, Mr. Deputy Speaker. The hon. Member for Anglesey said that the Welsh water authority was a quango which did not have the degree of direct accountability which people want to see. The order will make the water authority the biggest quango of all time. Why not reserve specific places on the water authority for a range of people? Why not reserve places for the CBI and the Welsh TUC? Why not allow, above all, the local authority associations to nominate their members? If necessary, the Secretary of State could select his chosen four from, say, eight that the associations would nominate. This was the pattern laid down in the Land Authority for Wales which has worked, so far as I am aware, extremely well. This would make some move towards the restoration of a degree of accountability.

When the Secretary of State was in opposition he gave the impression on numerous occasions that he was opposed 'to the idea of quangos whose appointment should be at the discretion of the Secretary of State. Now, in government, he is the strongest supporter of a quango and making it even tougher than before.

Consumer interests are the major issue in relation to the order. We are asked to pass the order without seeing the guidelines relating to local consumer bodies. All we have heard is the Secretary of State's thinking on the matter. I accept that individual complaints or complaints affecting one or two Welsh water authority divisions can be dealt with by the proposed five local consumer advisory committees that the Secretary of State proposes.

I would like the Secretary of State to show some evidence that he will save £130,000 as a consequence. The right hon. Gentleman is to set up five new consumer organisations. He is to give them secretarial assistance, which is right, but he believes that he will save £130,000. Irrespective of that argument, I believe that there are, and will be, consumer problems that affect all water consumers in the area of the Welsh water authority. There will not simply be localised problems. The major problem will be the pricing policy. I do not believe that local committees, five in number, will adequately express the view of consumers in Wales and those parts of England covered by the authority in relation to pricing. This is an issue that affects all consumers throughout the area covered by the water authority.

Apart from pricing policy the issue of direct billing will also arise. The method of collection is increasingly the issue that will affect consumers. It is vital to the whole argument on water charges.

I agree with my hon. Friend. I used pricing policy as my first example. My second is direct billing. I know from experience in my own constituency and from what I have heard in many parts of Wales that this has become a major issue with consumers. There are also sewerage charges and recreational problems that are not purely localised.

There is clear need for a strong consumer council able to play an effective role on these major issues that affect not simply small localities—for instance, Mid-Glamorgan or Glamorgan—but the whole of the water industry in Wales. It should be formally recognised that representatives of local consumer advisory councils can be indentified as a water consumer council with the duty—not the option or choice—to raise with the chairman and the water authority those consumer problems which are matters greater than those of local concern.

The hon. Member for Anglesey has moved further to the back of the Chamber where he is probably scanning as quickly as possible what he said in the speech to which I have referred. I can tell him that what he said is what I read out. In that debate the Secretary of State said that there was no question but that water charges were an issue of major current importance in Wales.

If that was true in 1979, it is even more true today. In 1979 at least the non-meter domestic consumer had the benefit of the Water Charges Equalisation Act which was passed when we were in government. Between 1975–76 and 1978–79 the average domestic water bill in Wales rose by 35·6 per cent. In the same period the average domestic water bill in England rose by 54·7 per cent. That shows that the Bill was having the effect of narrowing the gap. We had difficulty in passing that Bill because of the Conservatives' opposition to it.

When I have finished this argument the hon. Member for Flint, West (Sir A. Meyer) can read to me something given to him by the Minister's PPS because he cannot read it out himself.

In 1979 the hon. Member for Conway (Mr. Roberts) said:
"in principle we recognise that a system of equalisation is the right way to achieve a balance between water authorities, and the Government will be giving their consideration to the best way in which this can continue to be achieved."—[Official Report, Welsh Grand Committee, 18 July 1981, c. 23.]
When the hon. Member for Conway said that, I thought that he had been to Damascus. I thought that he had seen the light. We have had no recognition from the Government since then. The principle of equalisation which the hon. Member for Conway thought so essential in 1979 is of no consequence now that 1981 is here.

The right hon. Gentleman knows of the high esteem in which I hold him, and always have. He will therefore be aware of the feeling of disappointment and dismay with which I heard him attack my hon. Friend the Member for Anglesey (Mr. Best). The right hon. Gentleman knows, because he has had experience of a PPS sitting behind him, that my hon. Friend, whose championship of his constituents is the envy of us all, cannot possibly reply. I have checked what my hon. Friend said in those debates. I am satisfied that the right hon. Gentleman has grossly misrepresented what my hon. Friend said. I am sure that with his reputation he would not wish to mislead the House. I am sure that the right hon. Gentleman will wish to withdraw his misleading allegations.

If the hon. Member for Flint, West can say that I have misquoted what the hon. Member for Anglesey said, I should be willing to withdraw my remarks, but I read from Hansard. I believe that in general the Welsh water authority is doing a good job. The hon. Member for Anglesey advocated that all district councils should be represented. The hon. Member for Conway had to deal with the problem. In dealing with it the hon. Gentleman said how important it was that the expertise of local councillors should be used, and was being used, for the benefit of the water authority in Wales. That is why I am surprised that the hon. Member for Anglesey, who was such a great advocate of the principle of equalisation, should be willing to rush to the Lobbies to get the order through.

In 1979 the Conservatives were keen on equalisation. I remind the House that the annual report of the Welsh water authority for the year ending March 1981 states:
"The termination by the Government of payment of our £3 million a year under the Water Charges Equalisation Act and the absence of any long-term substitute for it adds 5 per cent. to the water service charges of our domestic customers."
If the order attempted to tackle the major problem of the charges and the unfair burden that we bear in Wales it would be of greater significance and value. However, it does not. Nor have the Government made out a case for the order. They will use it to move towards more centralised control of water and ignore local democracy, so I ask my hon. Friends to vote against it.

10.30 pm

We have heard much ado about very little. One might have expected the right hon. Member for Rhondda (Mr. Jones) to study the facts on which my right hon. Friend has brought the proposal forward.

The Monopolies and Mergers Commission undertook an extensive study of the Severn-Trent authority and reached a conclusion which last week in the Welsh Select Committee we heard commended by the chairman of the National Water Council for its excellence. The only dissent from that distinguished spokesman of the water industry was in challenging whether there was a case for local authority representation.

We also know of the experience of Mr. Haydn Rees, to whom a tribute is due for his excellent service on the authority. I am sorry that my right hon. Friend's tribute to him should have been cheapened by seated interjections from the Labour Benches. Mr. Rees has a distinguished record in Welsh local government. With his knowledge of the Welsh water authority and local government, it is particularly impressive that he commends the proposal.

The Minister has circulated a document which gives considerably more information on the situation than is acknowledged by the right hon. Gentleman. For all those reasons, I am astonished by the sheer ignorance of his attack on my right hon. Friend.

The right hon. Gentleman also seemed to believe that direct billing should be attacked. Is he aware that the Welsh water authority makes a clear saving of over £1 million by direct billing instead of making payments to the local authorities?

I did not attack direct billing. I merely said that it was of concern not only to small local groups of consumers but across the whole range.

I accept the right hon. Gentleman's explanation.

It is clear that there is considerable resentment at the sheer cost of water bills. A responsible Government should take every possible step to achieve greater efficiency. We hear of savings in the administration of the authority, but a much more difficult benefit to measure is that which comes from getting people of managerial quality to serve on the authority.

That is basic to the concept of this slimmed-down authority. There is no question in my mind but that the people of Wales and the areas touching on Wales that are served by the Welsh water authority are more interested in securing efficiency in the operation of the authority than they are in whether they are theoretically represented by people who are virtually unknown to them and of whose names and identities they are probably unaware.

Inefficiency invariably starts at the top in any large organisation, and the best way to start slimming down the Welsh water authority is at the director level of the members of the authority. To bring the number down from three dozen to a little over a dozen is a sensible step, which, in the words of the chairman,
"will lead to much more incisive discussion in the authority".
It is astonishing that such an obvious improvement in efficiency is opposed by the Opposition.

Would the hon. Gentleman apply the same principle to the House?

I have often thought that there would be a considerable gain in quality in the House if the number of Members was halved. I find that a highly seductive subject to pursue. However, it is not the subject that we are debating tonight.

Whatever one assumes on the absolute value of the local government representatives, the question then arises "Are they cut off from giving helpful advice to the authority?" The answer is that they are not. They are organised in five groups that include representatives of every district and county. For that reason, I am astonished that such an obvious step in improving efficiency should be opposed with a great deal of sound and fury, but very little sense.

10.37 pm

My right hon. Friend the Member for Rhondda (Mr. Jones) has demolished the argument put forward by the Government. When I tried earlier to illicit from the Minister an explanation of why the Government were reorganising the water authority in Wales, he said that it was because the chairman was to retire in May. Not only is the content of the order deplorable but its presentation is bad. The way in which the Secretary of State is treating the Select Committee on Welsh Affairs—a Select Committee of the House of Commons—is also deplorable.

My right hon. Friend referred to the fact that a consultative document was sent out to local authorities on 28 July and they were asked to respond by 11 September. Local authorities meet often every month, but they do not meet in August. The Secretary of State had the political impertinence to ask them to return their representations by 11 September. He extended the deadline later because he realised the stupidity of his action. What did the local authorities tell the Secretary of State? We should know their comments before this order is placed on the statute book.

I am surprised at some of the Conservative Members who served on the Select Committee. They have a Jekyll and Hyde attitude to politics in the House. Upstairs they seek to represent the people of Wales, but downstairs they are like puppets behind the Minister. On every occasion they fall in line with what the Minister says.

It was one of those who felt that perhaps we should not look at the water industry because the Secretary of State might be on the verge of taking a decision. But so informed are Conservative hon. Members in Wales that they have not a clue about what the Secretary of State will do next. They agreed to set up an inquiry into the reorganisation of the water industry and, of course, they are in the majority on the Select Committee, so we set about looking into the reorganisation.

Once the news got out that the Select Committee was to embark on that task, it received a flood of information. Every local authority in Wales wrote telling the Committee how bad it thought the consultative document was. But I want to be fair to the Secretary of State. One local authority said that he had at least made provision for four representatives, making the local authorities better off than they were. But they still—the Welsh counties, the Council for the Principality, the Association of District Councils and a wide range of organisations—deplore the action taken by the Secretary of State.

It would not be appropriate to enter into the discussions that preceded the decision of the Select Committee to embark on this inquiry, especially in view of the absence of the former Chairman of the Committee, but it is only natural, when an inquiry such as this is announced, that every local authority will write clamouring that it has been done out of its rights. The hon. Member for Aberdare (Mr. Evans) is carrying out his duty of representing the views of the local authorities, but do not let him pretend that he is giving a balanced view. He is merely echoing the views of one group of interests.

I was referring to the local authorities in Wales, and only to those local authorities. The way that the Government dismiss local democracy—

These are the democratically elected representatives of the districts and counties in the whole of Wales. I shall be happy to give way to the hon. Member for Flint, West (Sir A. Meyer) again if he can say what organisation has written to the Select Committee praising the Secretary of State. Can the hon. Gentleman name one body?

No. The hon. Gentleman has made his speech. I am prepared to give way to the hon. Member for Flint, West.

I must concede that the hon. Gentleman has named one organisation which supports the Secretary of State out of 40 which have written to the Committee.

This debate is about the creation of a quango. In fact, it is an aqua-quango. But it is a quango with a difference. It is a quango with a quirk, and the quirk is that the Government cannot reorganise the regional water authorities in England unless we have legislation. It is a quirk—it is almost queer—that the Secretary of State is able to do this by means of a statutory instrument, because some time ago we were talking about the reorganisation of government in Wales and certain powers were taken by the Welsh Office to deal with the Welsh water authority. The Secretary of State has seized upon that device, and he is bringing about the reorganisation of the water industry in Wales.

When things get bad and Tory Governments find that their policies are not working, they turn to reorganisation. The previous Tory Government reorganised local government and the NHS, and they made a botch of both. The present Government have introduced a Bill to deal with local government. They are having another go at making a mess of it, but they have already had to withdraw the Bill before it has had a Second Reading.

The previous Tory Government also reorganised the water industry in 1973 and made a mess of the job. Why are the present Government acting so hastily, when English water authorities are not being dealt with in the same way?

The Select Committee is taking evidence and examining the question of reorganisation, but as soon as the Committee decided to consider the matter the Secretary of State prejudged the issue and decided to go ahead with his reorganisation. Why is Wales being treated differently from the rest of the United Kingdom? Why are we being treated as a guinea pig while the Government experiment to see whether they can hit on a method that can be adopted for the rest of the United Kingdom?

It is proposed that the new authority should have 13 members—all appointed by the Secretary of State. Even the two representatives of the 37 districts and the two for the eight counties will not be elected by those councils. There is to be a substantial reduction in the number of members from local authorities.

I do not say that the authority is perfect or that we cannot make changes, but we must ensure that we do not get the sort of reorganisation of the water industry that we got in 1973. The present authority has 10 representatives of county councils and 10 members from district councils, with the other 14 members and the chairman being appointed by the Secretary of State. It has 15 members appointed by the Secretary of State, but 20 from local authorities. That is better than having the authority under the control of the Secretary of State.

When we consider the future of the industry, why do we not introduce an element of industrial democracy, as the Labour Government did in some industries, so that the workers have an opportunity to be represented on the new authority?

There has been inadequate consultation. Conservative Members accuse me of referring constantly to local authorities, but they are not the only bodies that feel aggrieved. The Wales TUC says that it
"has been unable to properly consult with its affiliated membership and we would argue that the issuing of such a document with an extremely limited consultation period effectively undermines the consultative process and causes us to doubt whether the Government is truly interested in receiving the considered views of those within the principality."
What an indictment from the trade union movement in Wales! The local authorities would have difficulty in assembling their opinions between the end of July and early September. The trade union movement would also have difficulty in ensuring that all its various affiliated organisations had a "feed-in" to a consultative document during August and be in a position to present its considered views on what the Government were doing by the beginning of September.

I return to the local authorities. The Association of District Councils—the 37 councils in Wales—said:
"The association is opposed to the order, which very substantially reduces local authority representation on the Welsh Water Authority."
It has issued a memorandum, which the Select Committee will discuss, although the die will be cast on the Floor of the House if the Government proceed with the order and put it on the statute book. As my right hon. Friend the Member for Rhondda said, we shall vote against it. But let us give the Government the opportunity to withdraw it. Let them take it back and not commit the folly of presenting it to the House for it to turn down. I hope that Conservative Members will not troop into the Lobby for the Ayes and vote for the order when no case had been made out for it.

The Secretary of State is empowered to act to alter the membership of the Welsh water authority by order. That applies only to the Welsh authority. English water authorities' membership can be altered only by legislation. This is a quirk of legislation. There is no factor that makes Wales unique. The Association of District Councils believes that the proper course is to proceed on an England-Wales basis as the membership issue is equally applicable in England. Instead, the Secretary of State has chosen to proceed unilaterally and in haste.

We talk about unilateral action, and sometimes Conservative Members condemn it, but on this occasion their Government are taking it. The Secretary of State is saying "We are going to do this". The Minister for Local Government and Environmental Services has received a report from the Monopolies and Mergers Commission on the Severn-Trent authority, which contains certain criticisms of the authority. The right hon. Gentleman's reaction is to say "We shall not rush into taking precipitate action. We must have a consultative process. Discussions will take place throughout England to find the best remedy." But for Wales the Secretary of State intends to go his own way. When the consultative process has come to an end in England, we may find that it is wished to increase local representation.

We must await the findings of the Select Committee. There is no urgency, save for tackling the problem of water charges. Ministers talk about administration, but they know that they will not deal with the serious problem in Wales, which is equalisation. The Labour Government introduced that concept, and this Government have abandoned it. They have imposed a water bill on the Welsh people that is much higher than they have had before. The Government propose to move the chairs around in the belief that they are making a radical change.

We should not take a decision until the Select Committee has deliberated. The Department of the Environment, which is responsible for local government in England, is issuing a consultative paper and we should know what that contains before we go ahead.

What do the Welsh counties have to say? Sometimes the districts go one way and the counties go another. That is not so on this occasion. There is unanimity among the districts and the counties. The counties have been "utterly dismayed" by what the Tory Government are doing. Local authority associations in Wales have expressed their unanimous opposition to the Government's proposals. One does not always get unanimity among local authorities, but—almost in the words of St. Francis of Assisi—the Government have united the people of Wales against the order. We did not have from the Secretary of State a mention of what the local authorities are saying.

The hon. Gentleman speaks about the unanimity of the people of Wales. Would he care to add that, apart from the local authorities, the majority of representations to the Secretary of State have been in favour of these proposals?

That is not my reading of a flood of correspondence. I challenge the hon. Member to name any responsible organisation in Wales that has given evidence that supports the Secretary of State. Why did the Secretary of State not mention it if there is such tremendous support for these measures? There is unanimity on the part of the local authorities.

The Welsh counties committee summarises matters thus:
"The Government's proposal represents a retrograde step of considerable significance to local government. It is an erosion of local democracy and accountability, and the creation of a nominated body along the lines proposed is deeply resented. There is no evidence that the consumer interest will be better served under the new proposal."
We were issued with a document containing guidelines for consumer representation. We knew that the debate was to take place today. The document was sent out by the Welsh Office on Friday. The Secretary of State undertook to send us the information. It is only today that we have received it. It is dated 11 December. It is now 14 December. There has been no consultation, although the document talks about consultation.

The Welsh counties committee does not say that the present arrangements are perfect. It welcomes the opportunity to participate in an examination. Some of the people who have served on these bodies have had long links with them. One can argue whether there should be quangos. I believe that there is a place for the quasi-autonomous non-governmental organisation in our governmental structure. The weakness arises when these nominated bodies are nominated entirely by the Secretary of State. Bodies to which local authorities nominate members represent a democratic expression.

The Welsh counties committee was strongly opposed to the chief executive becoming a board member, because that goes against the whole basis of local government and the way in which matters are handled, yet the Government are to give the chief executive a place on the board. The committee is dismayed that the Government are pressing ahead with their proposals, which are closely in line with those in the consultative document. That has been put to the people of Wales. There may not have been an initial reaction to that document, because people did not have time to consider it, but the more that they consider it, the more they dislike it.

The Secretary of State is in a peculiar position, because other Ministers can claim that they represent the people. We had a general election and the people elected a Conservative Government, but the people of Wales did not elect a Conservative Government. The people of Wales would never have elected the Secretary of State. Therefore, before he takes action he should realise that the majority of hon. Members in Wales are not of his party. He has put himself in the position of determining who is to serve on the new body.

We must seek a more democratic form of accountability in determining who serves on the various bodies in Wales. It could be done by bringing district councillors, county councillors and Members of Parliament together in Wales and determining the matter together, rather than having merely people who are appointed by the Secretary of State.

The Secretary of State has made no case for bringing the order before the House, and I shall vote against it this evening. The Government may win the vote tonight, but they will not win the argument. The argument will not end here tonight. Local government representatives of all political persuasions in Wales will oppose the order, and the time will soon come when we shall reverse what the Government are doing this evening.

11 pm

I feel something of an interloper on a peculiarly Welsh occasion, but the subject of hydrographics knows no boundaries. My constituency—and, indeed, most of Herefordshire and much of Cheshire—falls within the area covered by the Welsh water authority, and tonight's proceedings are very important to the citizens in my part of the country.

I am very grateful for the presence this evening of my hon. Friend the Member fo Pudsey (Mr. Shaw), the Under-Secretary of State for the Environment who has responsibility for English water affairs. It is important that English water should be looked after. In Hereford we fall within the aegis of the Department of the Environment for most things except water, although we fall under it partially for water.

The question of the structure of the water industry has been occupying the minds of hon. Members during the debate. The hon. Member for Aberdare (Mr. Evans) has been waxing lyrical about the status quo. I do not think that his eloquence and ecstasy will be matched by my constituents when they get their water rate demands. My mail is seasonally burdened by water rate correspondence, and there are expressions of anguish from all over my constituency at the steady increase in the demands.

I look upon the reorganisation of the Welsh water authority as an attempt to come to terms with the type of structure that is necessary to provide a more economical and efficient service. To a large extent, it will have to be judged by result and not by prejudice.

I remind the hon. Member that Herefordshire may not have the water falling on the county, even though it has to pay the bills.

If the hon. Gentleman can find some other way of storing the water we shall not charge him for transporting it to the sea.

It is absolutely right that we should look upon water as an industry and not as a service. It provides a basic utility, in the same way as the coal industry, the electricity industry and the steel industry. That is how we should look at water, and that should be our objective in considering how best to organise the water industry.

Hitherto in Herefordshire we have had some very good representatives on the water authority, and I should like to pay tribute briefly to their work. They have not necessarily been in political agreement with me, but we have together produced some good results from time to time for our constituents. We have not perpetually had good results. Nevertheless, we have in the tradition of Herefordians stood our corner over the generations and often done quite well.

I have one small complaint to make to my right hon. Friend concerning the manner in which the statement was made to the House on 30 November. He very kindly arranged for English Members with interests to be sent a letter saying that there was to be a statement. It was date-timed 2.15 pm for a statement at 3.30. It is not normally my practice to participate in Welsh questions, because that is a peculiarly Welsh affair, and, although I live only a mile outside Wales, I do not interfere too much in Welsh affairs or in Welsh questions. At that time, I had an important, long-standing constituency engagement which I would have had a chance of rescheduling if I had known the previous week that a statement was likely. I make that complaint, as it is somewhat galling to arrive at 4.15 to find a statement just winding up.

I wish to make some basic points about the way in which I must consider the cost of water and the way in which water is organised in Hereford. First, the average domestic rateable value is disproportionately higher in Herefordshire that that in Welsh districts. Consequently, average water charges are at least one-third higher. We pay more for water in relation to equivalent property.

The rate support grant domestic element for England is 18p in the pound, compared with 36p in Wales. When the difference was made by the former right hon. Member for Grimsby, the late Mr. Anthony Crosland, it was said that there was an element of rough justice in it. In Herefordshire, we felt that it was very rough justice. It was designed at that time to reflect the differences in the cost of providing water, and we do not benefit. It has been denied ever since, but that was said in the House. it is very difficult to get the point across.

In Herefordshire, there is a marked absence of the various industrial grants available in many parts of Wales.

Finally, every bit of trade effluent in Herefordshire must be treated in the sewage works. Most trade effluents in Wales go to sea outlets, producing a marked difference in industrial costs related to the cost of handling industrial trade effluents.

Those four points make Herefordshire very different from the West of England. I therefore ask my right hon. Friend to bear those points in mind when considering the structure of the board. I wonder, first, why he reserves the right to appoint the local authority members concerned. [HON. MEMBERS: "Hear, hear."] I am somewhat disappointed to hear cries of "Hear, hear" from the Opposition, but it is a fair question. Will there be a specifically English presence on the board to reflect the difference in requirements of England compared with Wales?

The draft order states in article 3(2):
"In appointing the members of the Welsh authority the Secretary of State shall have regard to the desirability of members of the authority being familiar with the requirements and circumstances of the authority's area."
The very big difference between England and Wales makes it important that there should be an English presence on the board.

In his consultations concerning appointments, will the Secretary of State reiterate loudly his assurance that English-based organisations and authorities will be consulted when local authority representatives for the board are being sought? It is also important that he take steps to ensure that, local authority members having been appointed to the board, the ordinary consumer may with the greatest possible ease and the minimum possible inquiry find out who is his representative on the authority? The Association of District Councils' submission, which most hon. Members will have received, states in subparagraph (e) on page 4 that the association wishes to
"Ensure that the name of the local district representative on the Water Authority is known to the district councils, parish and community councils, citizens advice bureaux, consumer advice centres, chambers of trade and commerce and libraries",
and so on. That is very important.

The community health councils have provided a valuable input into the operation of the health services in Hereford. If that kind of input can be translated to the water industry, I welcome the setting up of consumer advisory committees. It would be nicer if we called them consumer water councils, but I appreciate the point in the legislation.

Once again, the English differences must be taken into account. The requirements of Herefordshire and Cheshire are different from those of Wales. Although the hydrographical basin takes in the Wye and the one next door the Usk, it may be convenient from the Welsh point of view to run the Wye and Usk divisions together. On the other hand, it might be for the convenience of consumers in Herefordshire and Cheshire if there was a CAC based upon the English districts represented. That would recognise the difference between England and Wales in the provision of water.

Does my right hon. Friend's anticipated £100,000 saving on this organisation allow for the costs of the CACs? I was not certain whether it did.

That is good to know. We now have the firm knowledge that at least there will be a £100,000 saving if this reorganisation goes ahead. That is welcome.

I have tried to outline the points that make Herefordshire different from Wales. There is no doubt that it is different. I hope that the Minister will assure me that my fears about the proper representation of England on the new organisation are groundless.

I am confident that in the longer term the function of the Welsh water authority in relation to English consumers will be one of understanding.

Order. Before I call the next hon. Member, I remind the House that the debate finishes at half-past eleven and I understand that the Minister would like 10 minutes in which to reply.

11.12 pm

I assure the hon. Member for Hereford (Mr. Shepherd) that he has the full support of Plaid Cymru Members in arguing the case for English minority on the Welsh water authority. Perhaps that is some consolation to him.

I am not so sure that I agree with the rest of the hon. Gentleman's analysis, in particular his emphasis on water as an industry rather than a service. In a sense, the order represents the final, logical conclusion of the 1973 Act, because the Welsh water industry is removed from any semblance of democratic accountability and becomes another piece of corporate centralist management.

There is no time to go through the whole history of the development of water as a public utility in the United Kingdom, but it is a significant history. The development of the water service, its place in public health and housing policy, and their close integration with local government is finally destroyed. Water is now seen as a saleable commodity, with no democratic accountability and with little or no consumer consultation.

The whole exercise is cosmetic so as not to tackle the basic issue of the cost of water and where the burden of that increased cost falls. This exercise increases the charge on the consumer. Under the previous system, water charges were rebatable, but under this system the low income consumer bears a relatively higher burden, particularly the low income consumer in Wales.

The order does not quite take us back to the days prior to the Public Health Act 1875, when water was purchased from private water company stand-pipes at a cost of a farthing for every five gallons. The stand-pipe supply was available only at times convenient to the company. We are, however, going back to increasing privatisation in Government thinking as it relates to water as a basic utility.

Water supply and sewage disposal are essentials of life. In this sphere, as in so many, the Government are ensuring that the essential things of life are more expensive for the majority of working people. The 1973 Act and this logical conclusion of it are typical of the manner in which the Government now operate. I was saying to the right hon. Member for Cardiff, South-East (Mr. Callaghan), if I may quote a private conversation without going out of order, that, had his devolution proposals been successful, hon. Members would not have been wasting the time of the House tonight.

The 1973 Act, as put into effect, provided for a regional structure for the water industry in England and a national structure for Wales. It took the water service out of local government, turned it into an industry and under-funded it. I am sure that the social consumption expenditure by the State on the water service was reduced. This is confirmed by the withdrawal of rate support grant and the new capital investment ceilings introduced for the water service.

Within two years of the new water structure introduced in 1974, there were massive increases in water charges—as high as 56 per cent. for water supply and a staggering 90 per cent. for the general service charge in Wales. This has been the real cost of reorganisation. Whatever the Secretary of State says about the savings that he will make in the administration of the water service, this is nothing as compared with the loss borne by the consumers of Wales through his decision not to continue the equalisation policy of the previous Government. That is what concerns the people of Wales—not the cosmetic exercise of producing a new corporate structure for the water industry.

The order must be opposed. A serious point arises that the Secretary of State shrugs aside the manner in which the order has been introduced. As a member of another Select Committee, it is not for me to defend the Select Committee on Welsh Affairs. In my view, however, it demonstrates a contempt for Select Committee procedure if Governments take executive decisions when they know that a Select Committee is deliberating in that same area. If the Secretary of State is so sold on consultation, he should at least consult hon. Members as well as local authorities before coming to a decision.

I turn to the structure that the right hon. Gentleman proposes for his consultative committees. I ask him to spell out, by letter, if not in reply to the debate—provided that time is allowed to study the letter—what the consumer advisory committees will do. They strike me as similar to the consumer advisory committees in other nationalised industries and public utilities that are not among the most effective organs to defend consumers.

The right hon. Gentleman says in his guidelines or his thoughts about possible guidelines—the thoughts of our Chairman Secretary of State—that the consumer advisory committees will be able to consider various issues in their area including the variation of charges. Will he spell out whether the CACs will be able to make specific recommendations to the water authority in Wales about the charge it makes internally and any charge that it will make for water that is extracted from reservours such as Llyn Lelyn in my constituency and used outside the Welsh Water Authority area?

In the Secretary of State's thoughts about guidelines he tells us that
"the Committees are provided with technical and professional advice required for consideration of the matters in hand."
Can the Secretary of State spell that out in greater detail? If the advisory committees are to be effective they need to have expertise to respond and analyse proposals by the water authority. If they are to scrutinise the work of the authority on behalf of the consumer, they will need effective and technical advice.

The Secretary of State adds that it would be sensible for
" the guidelines to clarify the scope for Committees to be given information about the Authority's plans."
What type of information is involved? In what sense will it be an exercise in open government and in what sense will it be a cosmetic effort?

The order is typical of the conservative Government in Wales. It it the unacceptable face of corporatism yet again. It avoids the real issue—the cost of water to a country which over-produces water.

11.21 pm

I hope that when the hon. Member for Aberdare (Mr. Evans) listened to the speech of the hon. Member for Merioneth (Mr. Thomas) he was comforted by the reminder that if he had not helped to win a famous victory on devolution the issue might have been transferred elsewhere and he could not have made his valuable contribution to our affairs tonight or made his comments in this place about the proposals.

The hon. Member for Merioneth and the right hon. Member for Rhondda (Mr. Jones) spoke about water charges being the major issue and about the water equalisation measure. The trouble with the water equalisation measure that we inherited was that it was eccentric in its consequences and indefensible in its result. A Bill that takes resources from authorities that most need them and hands them to authorities that need them least cannot stand up for long. It was not possible for the previous Government, nor is it for us, to produce an equalisation Bill that does not have those unfortunate and eccentric consequences.

No. I want to respond to the debate. I wish to deal with the uncharacteristic, monstrously unfair attack by the right hon. Member for Rhondda on my hon. Friend the Member for Anglesey (Mr. Best), who is not in a position to defend himself.

My hon. Friend, in drawing attention to the possible representation of district authority interests, said that he hoped that some consideration would be given to trying to enable district councils to have a degree of representation, other than direct representation.

No. I have much more to say. Our proposals for consumer bodies enable district councils to have a degree of representation other than direct representation. It has been pointed out that it is difficult for councillors to discharge their functions efficiently and effectively on both local authorities and on the Welsh water authority.

My hon. Friend the Member for Hereford (Mr. Shepherd) spoke about the interests of the English authorities. I apologise to my hon. Friend for the late arrival of the notice of the statement. I can only say that the letter to him went out at the same time as those to all the other hon. Members to whom notice was given, and I am sorry if those letters arrived later than was desirable.

Why is the right hon. Gentleman apologising to his hon. Friend when we on this side were in the same position of not having received the document?

I gave notice to my hon. Friend—and I did so because he would not necessarily have been in the House for Welsh questions or have known that we were dealing with this Welsh matter—at the same time as I gave that notice to the right hon. Member for Rhondda and to the representatives of Plaid Cymru and the other parties in the House.

My hon. Friend spoke of the need—and he was right—to provide a more economical and efficient service, and that is the object of these proposals. He spoke of the need for the English authorities to be represented. I am not sure whether he was here for my opening speech. I emphasised particularly the fact that I would consult all the relevant local authorities to ensure that English interests were properly taken into account. He asked why I should make the appointments. By asking the question he identified one of the reasons for my doing so.

There are a number of local authority associations. Indeed, there is a split in the local authority association in Wales—

—which makes it extremely difficult to get a direct nomination from those authorities, and particularly to take account of the interests of the authorities. That is one of the reasons why I want to consult fully—

I want to move on to the other points raised by the right hon. Member for Rhondda. He said that no case had been made for reorganisation. A large majority of those, other than the local authorities, who responded made it clear that they generally favoured the moves that we are proposing. Of course, so did the Monopolies and Mergers Commission in its detailed study, to which my hon. Friend the Member for Brecon and Radnor (Mr. Hooson) drew attention—

—and the chairman of the National Water Council in his recent evidence to the Select Committee. There is no doubt about the serious concern among users about the need for more efficient organisation.

The right hon. Member for Rhondda spoke about what he called my indecent haste. We gave the local authority organisations the opportunity to make representations. We responded to those representations and we altered our proposals so that their interests should be defended—

As I listened to the hon. Member for Aberdare describing why it was impossible for local authority representatives to make any contribution during two and a half months of the summer—

Order. The right hon. Member for Rhondda (Mr. Jones) knows that if the Minister does not give way he must resume his seat.

Between July and the end of October I continued to listen to representations. The right hon. Gentleman might well have judged that perhaps it was not a terribly good idea to have them dominating the organisation of a major industry of this kind.

Then we had the right hon. Member for Rhondda pleading that agriculture was not properly represented, and that a number of other bodies did not have direct representation. The object of this reorganisation is to create a board that does not directly represent individual interests but provides the best possible service for water users as a whole; and it is on that basis that I commend the order to the House.

Question put:

The House divided: Ayes 104, Noes 46.

[Division No. 24]

[11.30pm

AYES

Alexander,RichardClark, Hon A. (Plym'th, S'n)
Ancram,MichaelCockeram.Eric
Beaumont-Dark.AnthonyCope,John
Beith.A. J.Cranborne, Viscount
Bendall,VivianDean, Paul (North Somerset)
Benyon.Thomas (A'don,)Dover,Denshore
Benyon.W. (Buckingham)Dunn.Robert(Darfford)
Berry, Hon AnthonyEdwards, Rt Hon N. (P'broke)
Best, KeithEllis, Tom (Wrexham)
Biggs-Davison,SirJohnFaith, MrsSheila
Blackburn,JohnFenner, Mrs Peggy
Bottomley, Peter (W'wichW)Fletcher-Cooke.SirCharles
Brinton.TimGarel-Jones,Tristan
Brittan.Rt. Hon. LeonGoodhew.Victor
Brooke, Hon PeterGoodlad,Alastair
Brotherton,MichaelGriffiths,PeterPortsm'thN)
Brown,Michael(Brigg&Sc'n)Grist, Ian
Buck.AntonyGummer.JohnSelwyn
Budgen,NickHawkins, Paul
Butcher,JohnHiggins, RtHon Terence L.
Cadbury,JocelynHogg, HonDouglas(Gr'th'm)
Carlisle, John (Luton West)Hooson,Tom
Carlisle,Kenneth (Lincoln)Hunt,John (Ravensbourne)
Carlisle, Rt Hon M. (R'c'n)Jopling, RtHon Michael

Kershaw,SirAnthonyRossi, Hugh
Lang, IanSainsbury.HonTimothy
Lawrence, IvanShaw, Giles (Pudsey)
Lennox-Boyd.HonMarkShepherd,Colin(Hereford)
Lester, Jim (Beeston)Skeet, T. H. H.
Lloyd, Peter (Fareham)Speed, Keith
Lyell, NicholasSpeller.Tony
MacGregor,JohnStanbrook.lvor
Major,JohnSteel, Rt Hon David
Marland,PaulStevens, Martin
Marlow,AntonyStewart, A. (ERenfrewshire)
Marten, Rt Hon NeilStradling Thomas.J.
Mather.CarolTaylor, Teddy (S'end E)
Mellor, DavidTebbit, Rt Hon Norman
Meyer.SirAnthonyThompson,Donald
Moate, RogerThorne,Neil(IlfordSouth)
Morgan,GeraintTrippier, David
Murphy,ChristopherWaddington,David
Neale.GerrardWaldegrave.HonWilliam
Needham,RichardWaller, Gary
Nelson,AnthonyWard,John
Neubert.MichaelWatson,John
Newton,TonyWells, Bowen
Onslow,CranleyWells.John(Maidstone)
Osborn,JohnWilliams.D.(Montgomery)
Page, Richard (SW Herts)Wolfson.Mark
Patten,Christopher(Bath)
Percival. Sir IanTellers for the Ayes:
Roberts, M. (Cardiff NW)Mr. David Hunt and Mr. Robert Boscawen.
Roberts, Wyn (Conway)

NOES

Anderson,DonaldJohn,Brynmor
Atkinson, N.(H'gey,)Jones, Rt Hon Alec (Rh 'dda)
Bennett.Andrew(St'kp'tN)Kerr, Russell
Booth, RtHon AlbertLamond, James
Bray, Dr JeremyLeighton,Ronald
Callaghan, Rt Hon J.McCartney.Hugh
Callaghan, Jim (Midd't 'n& P)McNamara,Kevin
Campbell-Savours, DaleMiller, Dr M. S. (E Kilbride)
Canavan,DennisMorris, Rt Hon J. (Aberavon)
Cocks, Rt Hon M. (B'stol S)Powell, Raymond(Ogmore)
Coleman,DonaldRowlands,Ted
Cowans, HarrySkinner.Dennis
Cryer,BobSnape, Peter
Cunliffe,LawrenceSpearing,Nigel
Davidson,ArthurThomas.Dafydd(Merioneth)
Davies, Rt Hon Denzil (L'lli)Thomas, DrR.(Carmarthen)
Dixon,DonaldTinn,James
Dormand.JackWainwright,E. (DearneV)
Eastham.KenWelsh,Michael
Evans, Ioan (Aberdare)White, Frank R.
Foulkes, GeorgeWilliams, Rt Hon A.(S'sea W)
G rant, George (Morpeth)
Hardy, PeterTellers for the Noes:
Haynes, FrankMr. George Morton and Mr. Allen McKay.
Hogg, N. (EDunb't'nshire)

Question accordingly agreed to.

Resolved,

That the draft Welsh Water Authority (Constitution) (Variation) Order 1981, which was laid before this House on 1st December, be approved.

European Community Document

Motion made, and Question put forthwith pursuant to Standing Order No. 73B (Standing Committees on European Community documents).

Stock Exchange Listing: Interim Reports

That this House takes note of European Community Documents Nos. 4356/79 and 8286/80: Draft Directive on Information to be published on a regular basis by companies whose shares are admitted to official stock exchange listing, together with Department of Trade explanatory memoranda of 16th February 1979, 16th July 1980, 23rd February 1981 and 4th

December 1981; and notes with approval the Government's policy of broadly maintaining the existing role and requirements of the Stock Exchange.— [Mr. Budgen.]

Question agreed to.

Social Security (Contributions) Bill

Ordered,

That, in respect of the Social Security (Contributions) Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—[Mr. Budgen.]

Industrial Deafness

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

11.40 pm

I do not think that there is a great difference of opinion between the Minister and I on this important issue. The matter has been debated before, and I have raised it again to see whether more can be done for these unfortunate people.

This is the International Year of Disabled People, and deafness is a soul-destroying disability. Many individuals have been made deaf because of the conditions in which they work, but if they are not in the occupations laid down by the Industrial Injuries Advisory Council they cannot claim disablement benefit. Those poor individuals do not even come under starter's orders. They cannot be considered for disablement, due to that anomaly.

In the Industrial Diseases Review, Cmnd. 8393, October 1981, the Industrial Injuries Advisory Council states:
"We recommend that the council also regularly review the terms of prescription of diseases already on the schedule so that restrictive conditions can be removed and the terms simplified as soon as there is justification of evidence".
There are many restrictive conditions covering deafness and I hope that they will be removed. If some are removed, many more people will be able to claim disablement benefit, which is to be welcomed.

The case of one of my constituents was brought before the Commissioners before 1975. If the case had been brought after 1975 it would have made no difference because the disability was not on the prescribed list. I shall not mention the name of my constituent, but the Commissioners' report stated:
"In the light of the medical evidence, I see no reason to doubt that the claimant's ear condition and his subsequent deafness and also the operation which he underwent are a tribute to his work. Accordingly, I have every sympathy with his claim to benefit".
Nevertheless, the claim could not be allowed because the disability was not on the prescribed list. The list should be reviewed and more industries and disabilities should be included in the schedule. My constituent's deafness was caused by his work; and that was accepted by the Commissioner, but because of the rules of the game he was not allowed to claim industrial disablement benefit.

I do not wish to deal with cases of industrial deafness that are before the courts. The Minister will agree that this is not the time or place. I am interested only in the disablement benefit that comes from the State.

I desire to bring to the notice of the Minister the shortcomings of the present scheme of disablement benefit for occupational deafness. The scheme came into being in 1975, when occupational deafness was added to the list of prescribed industrial diseases. The shortcomings are that many restrictions were made at the same time.

There are a number of restrictions, but I intend to confine myself to two of them, because it is necessary to make a start somewhere.

The outstanding restriction is the one known as the 20-year rule. It provides that a person must have worked for a period of no less than 20 years in one or more of the prescribed occupations. I want to spell out the bad effect that this 20-year rule has on workers.

No other country has this restriction of 20 years. Most other countries have schemes which have no requirement of specified minimum periods of work in a noisy occupation. There are a few exceptions which provide for 90 days, and there is a further country which has a longer period of two years. But we are the only country with a 20-year rule, and the result is terrible for the individuals suffering from industrial deafness. These men will be deaf for the remainder of their lives, but, because they have not worked for 20 years in that occupation, there is no way that they can claim benefit.

We live in an age when we are told by politicians of all political complexions that people may have to change jobs three, four, five and six times in their working lives. Progress and new technology means that that will be necessary. Yet the rule governing benefit for industrial deafness provides that a claimant must have worked in the same occupation for 20 years. There is something radically wrong about that. In a country that prides itself on fair play it cannot be right, and I ask the Minister to do away with this unjustifiable 20-year rule.

There have been 10,511 claims for industrial deafness benefit in the 25 months up to 29 September 1981. Only 1,850 have been allowed. It means that there were 8,661 cases disallowed. I assume that some of them were affected by the infamous 20-year rule. The number of disappointed claimants suffering from industrial deafness cannot be equalled by the numbers suffering from any other industrial injury. The magnitude is too great.

If a person is sent to a noisy occupation by his local jobcentre and he is, say, 50 years of age, no matter how deaf he becomes through his working conditions, there is no way that he will be able to claim industrial benefit. This injustice must be ended. If we believe in fair play and social justice, the 20-year rule must go, and I am sure that the Minister is sympathetic to my view.

There is also another rule that is unacceptable to those who wish to see justice done. It is the rule that a person must claim within 12 months of having developed a disability. It was introduced to limit the number of claims, and of course it did so. I appreciate the difficulties that existed at the time, but why should an individual who suffers the same disability as another not receive the same benefit? Is it not justice that two individuals who work together and suffer the same disability should get the same disablement benefit? I do not believe that any hon. Member would disagree with that.

Can the 12-month rule be brought into line with the 36-month rule that applies to other benefits? That would be a move in the right direction and it would help many people. It might mean more claims being allowed, but is it not better that people see that justice is done, even if it costs more?

It may be said that such a move would increase the demands on the aurological service. I concede that, but if we are to treat people with equity that will have to be done. Equity is involved in many issues and, if we will the end, we must will the means.

We could reach the terrible position of a person having worked in noisy employment for 18 years but not getting disablement benefit because he had not completed 20 years' service. If he has to finish that work because of his disability and is transferred to another job in the same undertaking, where he completes the 20 years, the 12-month rule would then prevent him from claiming. Such people are in a Catch—22 situation, they cannot win. There is something immoral about that. I do not blame any particular Government, but methods of working out benefits may have to be altered in the light of progress, and it is the duty of the Government of the day to help those who are affected.

I am sure that the Minister is as concerned as I am about the two rules. I now that the Industrial Injuries Advisory Council is keeping the scheme under review, but in its latest report in October this year, it did not go into the question of industrial deafness—I appreciate that it had to deal with a number of other issues related to the Common Market—and I should be grateful if the Minister would request the council to look into the various aspects of industrial deafness.

There are many shortcomings in this area, but it would be a start in the right direction if the Minister would request the council to consider the two vital issues that I have raised. I am sure that, like me, the Minister wishes to help the unfortunate individuals concerned and if he will meet my request and ask the council to report back in good time I shall be satisfied.

11.53 pm

I am grateful to the hon. Member for Don Valley (Mr. Welsh) for raising this subject and for the manner in which he has done so. His interest on behalf of those suffering from occupational diseases is well known to the House and there is little, if any, difference between us on the subject.

Because the loss of hearing is not fatal and does not cause physical disfigurement, the disability that it produces has not received as much attention as other causes of disablement. Noise at work, resulting in partial or total loss of hearing, has been a problem since the earliest days of the Industrial Revolution. Despite this, it was not until 1975 that occupational deafness became a prescribed disease attracting preferential benefits under the industrial injuries scheme. This is partly because the research that demonstrated clear connections between high noise levels at work and irreversible hearing loss is of comparatively recent date.

An important piece of research was Commissioned by the Industrial Injuries Advisory Council, after a preliminary investigation in 1961. It was carried out jointly by the Medical Research Council and the National Physical Laboratory and a report based on its findings was published by the council in 1969. It concluded that
"it is now possible to estimate the hearing loss that can be expected to result from exposure to a known noise level for a given length of time".
Working from that base, the council went on to consider in greater detail how an occupational deafness scheme might work. The result was its report, published in 1973, recommending the prescription of occupational deafness, and in consequence disablement benefit became available for occupational deafness from 3 February 1975.

The terms under which the disease was prescribed covered a comparatively small number of noisy processes—principally in the metal-working and shipbuilding industries and involving the use of pneumatic tools on metal or work in the vicinity of drop-forging machines. In 1979, following a review of the scheme by the Industrial Injuries Advisory Council, published in 1978, occupational cover was extended to workers using pneumatic percussive tools on coal or rock as well as metal, and to those supervising or assisting in the use of pneumatic percussive tools. In addition, those working in weaving sheds, in some parts of nail manufacture and those using plasma guns in metal spraying were newly covered.

As the hon. Gentleman knows, and as he has mentioned, entitlement to benefit is subject to three further conditions: first, employment in one of these occupations for at least 20 years; secondly, a claim for benefit to be made within 12 months of leaving the occupation; and, thirdly, a minimum hearing loss of at least 50 dB in each ear, being due to occupational noise in at least one ear. The complete terms of prescription, which I have attempted to summarise, can be found at item 48 in part I of schedule 1 to the Social Security (Industrial Injuries) (Prescribed Diseases) Regulations 1980, a copy of which is in the Library.

The hon. Gentleman has set out some of the difficulties and resentment that these conditions cause in practice. In particular, he has cited the two time limits. As I ant sure he knows, he is not alone in his concern. My Department has received criticism of the harshness of these limitations from a number of quarters. Indeed, it has always been recognised—and the Government fully accept—that the coverage provided falls far short of the ideal—that everyone whose hearing has been significantly damaged by his job should be eligible for compensation.

But, in order to set these criticisms in context, I should like to explain why the Industrial Injuries Advisory Council recommended the initial imposition of restrictions in 1973 and the retention of most of them following its review of the scheme in 1978. I shall then go on to look at the prospects for improvements in the scheme.

As regards the 12-months rule, part of the difficulty arises from the nature of occupational deafness and its diagnosis. To have to deal with claims from people who had worked in prescribed occupations and subsequently left them as long ago, perhaps, as 1948 when the industrial injuries scheme started, would clearly cause considerable administrative problems. There would also be problems of diagnosis, in relation to people who had retired for many years, especially since it would be very difficult to distinguish occupationally caused hearing loss from that which occurs naturally because of the ageing process.

As I am sure the hon. Gentleman knows, the diagnosis and assessment of deafness requires specialist skills—those of a consultant otologist and, in most cases, of a technician to carry out hearing tests. Unfortunately, such skills are in short supply. The council's main purpose in recommending restrictions on the scheme was therefore to limit its impact on the NHS audiological services which were, and are, under considerable pressure.

The council wished to produce a scheme that was workable and would not be too disruptive to the main functions of those services—the diagnosis and treatment of all hearing impaired people. To quote from the 1973 report,
"it became clear to us that, if noise deafness was prescribed for all noisy processes, the necessary technical, and medical resources to deal with the number of claims which could be expected at the outset would not be available now and could not be made available in the forseeable future. To get a compensation scheme off the ground it would therefore be necessary to impose severe limitations initially."
The council, on the advice of those in the Department of Health and Social Security concerned with the audiological services and of the major professional body involved, the British Association of Otolaryngologists, made an estimate of the available capacity. From the evidence, it was reckoned that it would be possible to carry out about 10,000 examinations annually in connection with the occupational deafness claims without diverting the audiological services from their primary task. The restrictions recommended—and accepted by the then Government in introducing the scheme—were designed to keep the number of examinations within that limit.

In practice, however, as the hon. Member knows the number of examinations carried out in connection with the occupational deafness scheme never exceeded a third of that figure in the early years. But I should stress that in practical terms the shortfall was not as large as it might appear, because claims tend to show a very uneven geographical distribution. Indeed, about 85 per cent. of all examinations are carried out in five of my Department's social security regions. As is only to be expected, they are those where heavy industry is concentrated, as it is in the area represented by the hon. Member.

Nevertheless, the striking difference between the actual number of claims and those expected was a major factor that led the Industrial Injuries Advisory Council to propose extensions to the scheme in 1978. The council, however, concluded that the maximum possible number of audiological examinations for occupational deafness purposes should remain at about 10,000 a year, and added
"it seems unlikely to increase significantly for a number of years to come."
It therefore recommended a fairly cautious extension, leaving the 20 years and 12 months rules untouched. But it said that it should be possible to make further extensions at
"regular and fairly frequent intervals"
and recommended that it should keep the scheme under continuous review.

The latest figures in relation to occupational deafness claims show that in the year ending 1 September 1981, 4,931 claims were received and 3,468 claimants were referred for examination. This figure compromises those new claimants who had met the occupational tests and a number of reassessment cases.

I accept that these figures show that the scheme is still not giving rise to as many examinations as was originally estimated and that this must give added weight to the criticisms of the present restrictions, such as those the hon. Member has very forcefully put to us tonight. As I hope I have made clear, I have considerable sympathy with his views, although I hope I have also made clear the reasons why these restrictions were imposed.

I understand especially the resentment caused by the fact that the specified period is as short as 12 months. I accept that its effect is particularly harsh when it bars claims from people who have been made redundant or have been retired for many years before their occupation became prescribed, and I have made this known to the Industrial Injuries Advisory Council. I have said that the council recommended in 1978 that it should keep the operation of the occupational deafness scheme under continuous review. This suggestion was accepted by the then Government and a year was allowed to elapse to give time for the extensions made in 1979 to take effect. The council then began to collect and consider evidence for its future review. I understand that it will be submitting a report to my right hon. Friend next year.

The council is, as the hon. Gentleman knows, an entirely independent body and he will understand that I cannot predict what recommendations it will make. However, I know that the sub-committee undertaking the review has sought evidence from a wide range of interested bodies and individuals, and that it has set up a working party, with expert advice from the technical inspectorate of the Health and Safety Executive, specifically to look into various noisy occupations which have been proposed as suitable for addition to those prescribed. It has also taken evidence on the present capacity of the audiological services.

The sub-committee is, I understand, also looking at the 20 years and 12 months restrictions. I shall be very glad to pass on to it the comments the hon. Member has made this evening, and I know that it will give them the most careful and sympathetic consideration.

I should like to take this opportunity to express my gratitude to the council for the patient and painstaking way it has carried out its duties. It has an endless task. It involves not only the regular examination of new processes and substances but the constant need to go back over old ground as new evidence of risks to health becomes available.

The Government and their predecessors have been fortunate indeed in being able to secure as members of the council distinguished medical and legal experts, as well as representatives of both sides of industry, who approach their work on the council in a non-partisan and constructive spirit. I am sure that I speak for the whole House in wishing the council well in its future endeavours.

I assure the hon. Gentleman that the recommendations that the council makes when its review is completed will be looked at with care and sympathy by the Government. As he, I hope, recognises, while it is not at present likely to be possible to remove or relax all the restrictions on the scheme, I share his concern about those who, in contributing to the nation's wealth—whether in the mines, in heavy industry or elsewhere—have paid the terrible price of losing their hearing. As this International Year of Disabled People draws to its close, I am glad that we have been so vividly reminded this evening of the plight of disabled persons.

Question put and agreed to.

Adjourned accordingly at six minutes past Twelve o' clock.