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Commons Chamber

Volume 31: debated on Wednesday 10 November 1982

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House Of Commons

Wednesday 10 November 1982

The House met at half-past Two o'clock


[MR. SPEAKER in the Chair]

Private Business

Writers To The Signet Dependants' Annuity Fund Order Confirmation

Mr. Secretary Younger presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to the Writers to the Signet Dependants' Annuity Fund; And the same was read the First time; and ordered to be considered upon Tuesday 16 November and to be printed [Bill 8.]

Oral Answers To Questions


Grand National


asked the Secretary of State for the Environment if he will make financial resources available to help to ensure that the Grand National horse race continues.


asked the Secretary of State for the Environment whether his Department has given any advice or assistance to ensure that the Grand National horse race continues to take place at Aintree racecourse.

Under an agreement signed on 5 November between the trustees of the Jockey Club's Grand National campaign and the private owner of the Aintree racecourse, the former has been granted an option to acquire the freehold of the racecourse and the permanent rights to the race for £4 million at any time up to 1 May 1983. The holding of the 1983 Grand National has been guaranteed under separate arrangements.

I sincerely hope that the long-term future of this great steeplechase can now be assured, although I fully appreciate that much depends upon the fund-raising ability of the Jockey Club to reach its target over the coming months.

If this assurance is not fulfilled, will the Government be prepared to give some financial support? Does the hon. Gentleman agree that this is not a parochial event, but a major event in world sport that is watched on television by 49 countries and therefore should not be allowed to die?

I echo the hon. Gentleman's final sentiments, but I can give the House no guarantees or assurances that the Government will provide any money. It is very much the responsibility of the racehorse fraternity. I understand that much will depend upon how these funds can be raised over the next few months. I draw the hon. Gentleman's attention to the press statement by the Jockey Club, which he might read and thereby understand a few further matters.

I congratulate the Jockey Club and the Merseyside county council on their efforts to ensure that next year's race will be run, and I hope that financial assistance will be raised to enable it to be run in future years. Will the Government consider providing financial assistance for a sports complex, which would be a tremendous boost to Merseyside and the North-West and would provide some urgently needed jobs?

It is difficult to hypothecate what might happen in future. Much depends on what happens between now and the middle of next year, but the future depends on the ability of the Jockey Club to raise funds. I am certain that many Government agencies are interested in the future of the steeplechase and will consider the observations and suggestions of local people.

At some future stage the regional sports council may receive overtures from people in this area, which it might consider. However, I make it clear—

Will my hon. Friend be a great deal firmer and tell the House that there is no intention of giving taxpayers' money to maintain the Grand National? Will he state that when a Tory Government are necessarily cutting back on public spending in the Welfare State it is wrong to give money to activities that ought to be no part of the business of any Government?

I thought that I had made it clear that the Government have not made any contributions. This is naturally a matter for the Jockey Club and the racehorse fraternity.

I appreciate the initiative of the Jockey Club, but how does the price compare with the known price of the district valuer? How will the money be raised, and how much will be needed to replace the stands under the provisions of the Safety of Sports Grounds Act? As there is a desperate shortage of play space in Merseyside, is not the greatest priority to get Aintree opened up to the people in the area?

The whole concept of the continuation of this race, together with the facilities and acreage, depend on its viability. Everybody must understand that the Government are not in the business of giving subsidies for this type of activity. I shall happily find some of the answers to the detailed statistics, but I should point out that the Home Office also has a major interest in organisations involved in racing in this country.

Local Authorities (Expenditure)


asked the Secretary of State for the Environment whether local authorities have taken up his invitation to increase capital spending.


asked the Secretary of State for the Environment if he will make a statement on the instructions he is giving to local authorities on capital spending limits for the year 1982–83.


asked the Secretary of State for the Environment what estimate he has made of capital spending plans by local authorities for the year 1982–83.

Returns from local authorities suggest that there will be an underspend on capital investment by English authorities by over £1 billion in 1982–83. I have urged local authorities to bring forward worthwhile capital schemes and have offered additional expenditure allocations for that. I have also asked my regional offices to approach individual authorities, as has happened many times in the past, to establish what schemes they may have available suitable for acceleration. I hope that will lead to a reduction in the underspend, with consequent benefit for the construction industry, but applications from local authorities are still being received and it is too early to forecast the extent of the response. For 1983–84, allocations will be made shortly in the usual way.

Has the Secretary of State had an opportunity to explain to the Prime Minister that, contrary to what she said in the House last week, money allocated for capital schemes cannot be transferred by local authorities to pay for wage demands? How are councils to deal with the revenue implications? Will they not face clawback if they spend money on capital projects and incur revenue implications? Does the right hon. Gentleman agree that taking decisions against the clock will result—

Order. I have twice this week appealed that when an hon. Member is called to ask a supplementary question he asks what is his right—one supplementary question—or he takes up the time of other hon. Members.

I believe that the hon. Gentleman was asking me about the jerry-building that local authorities will propose as a result of the schemes that they put forward. We shall ensure that local authorities do not do that. There is not the slightest evidence that they will.

My right hon. Friend the Prime Minister has expressed herself clearly. I see no reason for doubt.

Will the Secretary of State place on record that local authorities can use their capital receipts to pay interest charges on borrowings that arise from the use of the £1 billion that is being made available to them on a wider basis? Is he aware that my local authority is applying to him for £1,250,000 extra to pursue the programme that he has set as an objective, because it is worried about what will happen at the year-end on carryover? Will he introduce flexibility in that area?

It is early days, but the hon. Gentleman's local authority is one of those that have responded with a number of schemes. That proves that it is possible for local authorities to do exactly what we requested. No Minister has expressed the view that the total underspend predicted for this year can be made up on any significant scale. It is too large and too late. That is the difficulty facing the Government. Local authorities have underspent on such an enormous scale for this year that that capital resource is lost to the construction industry. The Government are doing their best to make up some of the shortfall that the local authorities have created.

If the Secretary of State's exhortations to local authorities are successful, will he give an assurance that any increased revenue expenditure arising from increased capital expenditure this year will be exempt from any future controls on local authority revenue expenditure?

The hon. Gentleman knows that we cannot separate the accounts of 420 local authorities to find the revenue consequences arising from any decisions in the way that he suggests. Local authorities understand that fully, as they have always done. They will use their own judgment. The real world is made up of a large number of local authorities, many of them represented by Opposition Members, which are now trying to find schemes to create jobs in the construction industry. If the Opposition would concentrate on helping those local authorities, as opposed to raising difficulties, more jobs would be created.

Has my right hon. Friend seen the proposal by the House-Builders Federation that local authorities should use part of their capital underspend this year to buy houses already built and to offer them to people on their waiting lists on a shared equity basis? Will he encourage that proposal?

That is a classic example of a constructive approach to what the Government are trying to do. I am looking at that idea.

After halving housing expenditure in three years and bringing council house building to almost nothing, is there not something indecent in the Secretary of State now telling local authorities to increase capital expenditure? If he is aware of the misery that he is causing, he is a stinking hypocrite.

Order. The hon. Member knows that it is out of order to refer to another hon. Member in those terms. One cannot say "If' and add that a man is a hypocrite, or we shall be crawling on the floor, without standards.

I withdraw that remark, Mr. Speaker, and say that this is a stinking hypocrisy.

I shall do my best to draw those interesting observations to the hon. Gentleman's local authority, which happens to be putting in one of the longest lists of bids.

Will my right hon. Friend continue to review the need to make a commitment to local authorities on future capital expenditure and borrowing powers, because the main deterrent is against sudden capital expenditure on fairly minor schemes. Anything that has happened during the past few weeks cannot change the position on major schemes, unless they have a greater expectation of support in future years on capital spending.

I understand the point made by my hon. Friend, but he will realise that as local authorities have £600 million of capital underused from last year, £1 billion capital underspent this year and substantial projected capital receipts next year, the level of allocation by the Government becomes less important in their forward capital planning.

First, will the right hon. Gentleman answer the question put by my hon. Friend the Member for Wokington (Mr. Campbell-Savours)—a question that he dodged—on whether local authorities can use capital receipts to service loans? Secondly, will he summon up the honesty to admit that his and the Prime Minister's new spend, spend, spend stunt is nothing but a phoney and a sham? He is simply asking local authorities to bring forward by four months next year's capital spending projects. If they are incautious enough to obey him, the revenue consequences, plus the abolition of the GREA amnesty and the planned reduction in their spending ceilings, will make them liable to savage penalties for doing what the Secretary of State is telling them to do.

The right hon. Gentleman is an expert in trying to frustrate any scheme that is to the benefit of the construction industry. It is fortunate that Labour-controlled local authorities take absolutely no notice of what he says. Significant numbers of local authorities are producing capital schemes to help the construction industry, and the right hon. Gentleman is deliberately trying to frustrate them.

Council House Sales


asked the Secretary of State for the Environment what proposals he has further to encourage the sale of council houses.

The Housing and Building Control Bill, published last Friday, will extend the right to buy to council tenants whose dwellings are on leasehold land and to certain tenants of charitable housing associations.

It will also further extend the right to buy by giving tenants who are not able to afford to buy outright the right to buy on a shared ownership basis instead. In addition, the Bill will remove certain obstacles which some councils have used to obstruct and dissuade tenants from exercising their legal right to buy their homes.

That will be a welcome extension to the right-to-buy provisions. Does my hon. Friend agree that, bearing in mind the substantial reduction in mortgage interest rates that has taken place this year and the fact that there is more to come on Friday, this is a propitious moment to draw to the attention of council tenants their right to buy under the Housing Act 1980?

My hon. Friend is right to draw attention to the success of the Government's policy in reducing inflation, interest rates and mortgage rates. He is also right to say that the weekly cost to many council tenants of buying their homes on a mortgage will be no more, and in some cases will be even less, than the cost of continuing to pay rent.

Will the Minister explain whether, under the shared ownership proposals for council houses, a tenant may join other members of his family resident in the dwelling to buy part of the house? If they can do that, in much the same way as they can buy the whole of the house jointly under the Housing Act 1980, what will happen if there is a dispute while half the house is owned and half is rented? Will the person who owns half of the house be able to ban a member of his family from that part of the house and make him live in the other half?

The rules on buying part of the equity on a shared ownership basis are the same as those on buying outright under the right-to-buy provisions. The provisions have applied satisfactorily in many voluntary sales under shared ownership arrangements.



asked the Secretary of State for the Environment when he expects the sections of the Wildlife and Countryside Act 1981 relating to footpaths to come into operation.

My right hon. Friend expects to bring the rights of way provisions into operation early in the new year.

Will the Minister give us an assurance that there will be sufficient staff, locally and nationally, to carry out the footpath provisions of the Wildlife and Countryside Act? In the past 10 years most local authorities and the Government have not had sufficient staff to carry out their responsibilities.

No, I cannot give that guarantee. The hon. Gentleman is aware of the guidelines and the requirements and he knows what our consultations with other organisations involve. I hope that we shall have the regulations before Parliament in January and that they will come into operation one month later.

Does the Minister appreciate that many local authorities have done much work on the preparation of their footpath review maps? Will he take the opportunity to clarify the Government's plans for the outstanding reviews?

No, I cannot do that now. I know what the hon. Gentleman is worried about. We have had a dialogue on the matter previously, both inside and outside the House. As soon as I have anything to report, I shall let him and the House know.

British Waterways Board


asked the Secretary of State for the Environment whether he has received the latest report of the British Waterways Board; and if he will make a statement.

The board's annual report and statement of accounts for 1981 were laid before this House on 23 June.

Is it not a fact that the Government had to send in their own auditors, because the financial affairs of the board were in a mess, and that the board is now bringing in its own auditors again to check on the Government auditors?

The general review by the Inbucon consultants into the affairs of the board includes an examination of the efficiency of management and the structure of the board. Publication of the report is expected shortly.

Is my hon. Friend aware of the importance of keeping the maximum mileage of waterways open at all times in this era of increased leisure? It is essential, particularly in the Midlands areas, which are remote from the sea, that people should have waterways available for fishing and other recreation.

I agree with my hon. Friend. It is indeed important that we should optimise the benefits that waterways can offer, but I remind the House that it is also necessary to increase the income.

Is it not astonishing that the affairs of the board have got into such a serious state, administratively and in respect of the lack of repairs to waterways, that outside auditors have had to be brought in? Is it not even more astonishing that bureaucratic arguments are taking place between the Government's auditors and the board's auditors? Will the Minister accept the Government auditors' accounts, as we would do, and agree that that means that urgent action must be taken to open up the whole canal system and repair it properly, for the benefit of the nation and to ensure that it is run efficiently in the public interest?

I agree with the necessity of ensuring that the affairs of the board are run with maximum efficiency. I remind the right hon. Gentleman that the Government have increased substantially the grant-aid available to the board to make good some of the backlog of work.

New Towns


asked the Secretary of State for the Environment what representations he has received on his proposals for responding to claims made by new town local authorities under section 51 of the New Towns Act 1981.

No representations have been received from the authorities concerned since the Department's letters of 13 October. I saw a group of hon. Members last Monday and had a most helpful discussion with them.

Does the hon. Gentleman not recognise that his refusal to meet more than a fraction of the cost of design defects in houses transferred to new town local authorities represents a gross breach of faith by the Government, in view of undertakings given in the past? Would not a commercial firm which attempted to renege on its liabilities be guilty of a flagrant breach of contract? Is the hon. Gentleman not prepared to make a more reasonable offer to the authorities which took over new town houses?

The Government have made a generous and realistic offer to the new towns. The problem with Harlow is that 85 per cent. of its claim relates to maintenance items and, under the criteria for the assessment of claims, normal maintenance is not eligible for grant.

Will my hon. Friend confirm that local authorities in second and third generation towns are unlikely to have to make such claims, because the design of houses in those towns is much more traditional?

I confirm that we do not expect the same problems on future transfers, for the reason that my hon. Friend has given. It is also worth saying that the new towns concerned have benefited financially from the transfer of the houses.

Will the hon. Gentleman confirm that the new town with the worst problems is Peterlee in my constituency? Does he agree that Easington district council has followed his guidelines on rent policy, and will he tell us where he thinks the money will come from to pay for the vast number of repairs that will be needed? Surely this is a national, not a local, matter.

The Government intend that expenditure that has to be incurred will be taken into account in the HIP allocations to the local authorities concerned. I think that the hon. Gentleman knows that I am meeting the Association of District Councils tomorrow, and I hope that the matter can be satisfactorily resolved.

Is my hon. Friend saying in relation to third generation new towns that where properties are not built in the traditional way there may be a case for a claim?

The Government hope that in many cases there will be management arrangements between the district council and the new town so that the council that takes over the properties will have experience of them before the transfer takes place. It will be able to assess the value of the properties and they can be repaired by the new town corporation before the transfer, thereby obviating the problems to which hon. Members have referred.

When the hon. Gentleman meets new town representatives tomorrow, will he temper his present mean offer with the reflection that the causes of the financial problems and disasters that will fall on local ratepayers and rent payers are no fault of theirs, but are due to a breach of faith by, among others, the Secretary of State for the Environment?

That is not the case. The Government are under no legal obligation to make any offer in respect of these properties. We accept that there is a moral obligation and, in discharge of that, we have offered to pay 40 per cent. of admissible expenditure. In the light of the overall benefit to new town councils of the properties to be transferred, our offer is generous.

Council House Rents


asked the Secretary of State for the Environment when he intends to give details of the level of council house rent increases devised by the Government in 1983–84.


asked the Secretary of State for the Environment whether he expects local authorities to increase council house rents in 1983; and, if so, by what amount.

I issued the statutory consultation paper to local authorities on Monday of this week, proposing that housing subsidy for 1983–84 should be calculated on the basis of an 85p increase in the local contribution. Actual rent increases are a matter for decision by individual authorities.

Is it not shameful that after three and a half years in office, during which time average council house rents have more than doubled, the Government should even contemplate the possibility of further increases? Ought not the Secretary of State to be thinking in terms of a rent freeze?

The hon. Gentleman will remember that the Labour Government believed that keeping rents broadly in line with the rate of inflation was a reasonable policy.

Is the Secretary of State aware that council tenants throughout the country are thoroughly fed up with being punished by the exorbitant rent increases of the past three years? Is it not a fact that council house rents have increased by more than double the increase in the retail prices index in the same period?

I am sure that the hon. Member is aware that the standards of maintenance on council estates—arising from the fact that capital projects were cut in half by the Labour Government—presented real difficulties, which we have had to put right. Now that we are in a position to get a better balance, we can ensure that council tenants gain from the fall in inflation.

Will my right hon. Friend join me in condemning the scaremongering tactics of the Labour Party, which, in the past two weeks, has circulated rumours about prospective excessive rent rises, which have caused unnatural and unfair concern to many people?

I understand why my hon. Friend raises the matter. It is not for me to apologise to the House for the shameless behaviour of the right hon. Member for Manchester, Ardwick (Mr. Kaufman), who cynically trudged round the country telling people that there would be a £2 a week council house rent increase. That was mainly to help the Labour Party in the by-elections—and what disastrous results it achieved.

Is the right hon. Gentleman aware that we are gratified to have scared him off the £2 increase that was proposed in his document? Is he further aware that even an 85p increase is twice as high as the Government's 3½ per cent. pay limit? As-no thanks to the Government—home-owners are at last to have mortgage interest payments reduced for the first time to below the level that the Government inherited from Labour, is it not unjust that council tenants are to have a 134 per cent. rent increase-five times as much as rents went up under Labour?

I think that we now understand the difficulty into which the right hon. Gentleman has got himself. The document to which he refers is a local authority document, and the figures in it were chosen by the local authorities. As those figures were not endorsed in any way by my Department, will he now have the grace to admit that the information on which he based his whole scaring attitude was phoney and that he has misled every council tenant in the land?

These were the right hon. Gentleman's proposals, and he knows it. If the Prime Minister had not got into a panic, preparing for the general election, it would have been a £2 increase.

I must tell the right hon. Gentleman that the proposals are not mine. It was his failure to understand that fact that caused him to indulge in this scare technique.

Did my right hon. Friend hear the Labour Party talking about rent increases of 134 per cent. over three and a half years, when the Labour-controlled Greater London Council increased rates by 97 per cent. in less than a year? Does he think that it is moral for the Labour Party to advocate rent freezes at the expense of the ratepayers?

I sympathise with my hon. Friend, but it is not just a matter of rent freezes at the expense of ratepayers; it is rent freezes at the expense of appalling housing conditions for people who live on council estates.

On a point of order, Mr. Speaker. I am sure that the Secretary of State would not wish to mislead the House about the document to which I referred. It has on it the words "Department of the Environment 18 June".

May I reply to that point, Mr. Speaker.

The assumptions in that document were produced by the local authority associations as a set of hypothetical calculations. They were their assumptions, not ours.

Bearing in mind the additional burden that high rates have on rents for council tenants and, indeed, many other house occupants, will the Secretary of State advise local authorities to use significant proportions of their capital receipts—to which he referred this afternoon—to reduce the rates burden; and possibly rents, too?

The right hon. Gentleman has a deep knowledge of these matters, but I am not sure how capital receipts could be used in that way. He was in the Department of the Environment long enough to know that the rules broadly divide the capital and current account programmes. I do not think that that has changed significantly in a way that would make his proposals possible.

Housing Improvement Grants


asked the Secretary of State for the Environment if he will introduce legislation to allow post-1919 houses to be subject to improvement grants; and if he will make a statement.

Of the four categories of grant, improvement and intermediate grants are already available for any dwelling provided before 2 October 1961. Special grants are already available to any house in multiple occupation, regardless of age. It is only repairs grants that are currently limited to dwellings built before 1919. I am however giving consideration, without any commitment at this stage, to making the cut-off date for repairs grants later than 1919.

Will the Minister bear in mind the position of householders and owner-occupiers in the Stockbridge area of Keighley, who have been blighted by motorway proposals since 1968 and have understandably delayed repairs for many years? In May 1982, when an alternative proposal was accepted, the blight was removed. Those people believe strongly that their properties have been blighted through no fault of their own and that their houses should be subject to grant-aid in some form, thus restoring them to the standard in which they would have been maintained had there been no blight. Will he consider the matter very carefully, because it is a just cause?

I am aware of the correspondence that the hon. Gentleman has had with my hon. Friend about the houses at Stockbridge, and I shall take it into account, with the representations that I have received from other hon. Members about the cut-off date for eligibility for repairs grants.

I welcome the Minister's statement to extend the time limit. Will he consider making those repairs grants obligatory on local authorities, rather than discretionary? People looking for house roofing grants find that many local authorities either do not have the staff to deal with them or are not prepared to make grants available.

As the hon. Gentleman will be aware, there are limited categories of repairs grants which are mandatory, as opposed to being discretionary. One has to decide as a matter of policy how far to circumscribe the freedom of local authorities in allocating money between the various types of grant. So far, the Government have taken the view that concentration should be focused on the provision of basic amenities—baths and inside WCs. Intermediate grants are mandatory, and local authorities are free to exercise their discretion on the remainder. I note what the hon. Gentleman has said.

Has my hon. Friend looked at the problem of those who commenced the purchase of Airey houses at high prices, at pre-Barnsley scare prices, but and where completion took place after the Barnsley scare, and who at present will be excluded from the help that he is offering?

The people who completed after the public statement was made about the defects in Airey houses should have had the valuation of their houses adjusted downwards to reflect the statement that was made. We have received representation from hon. Members—and, indeed, from individual owners of Airey houses—about people who bought at the inflated valuations after the date of the public announcement, and we are considering the matter further.

Is the Minister aware that 270 council houses, and houses built by the council and since sold to occupiers, in my constituency of Bradford have to be demolished because they are unsafe? What kind of grant will the council give to build the 330 new houses that are going up? What advice has he given the local authority on how to deal with the claims of tenants and owner-occupiers?

If the hon. Gentleman is referring to Airey houses, current owners can invite the local authority to buy back such houses. If that happens, the Government will meet the full cost to the local authority. If the local authority, of its own volition, demolishes dwellings, it is for the local authority to include in its HIP bid to the Department the capital implications of replacing such dwellings. That factor will be taken into account in making individual allocations to individual authorities.

My hon. Friend's comments on 1919 houses will be widely welcomed in the Midlands. When will he make a statement? That would be extraordinarily helpful to many householders in the Midlands.

I hope that we can shortly reach conclusions on that. However, as consultation with other Government Departments is involved, I cannot give a date today.

Council House Sales


asked the Secretary of State for the Environment what is his latest estimate of the number of families who have become house owners under the right-to-buy legislation.


asked the Secretary of State for the Environment if he is satisfied with the progress made so far with the sale of council houses to sitting tenants.

My right hon. Friend the Secretary of State is generally satisfied with progress. Between April 1979 and the end of June 1982 an estimated 370,000 public sector dwellings were sold in Great Britain, some 182,000 of which were sold under the right-to-buy provisions. There remain a minority of councils where progress with the right to buy gives cause for concern.

Is my hon. Friend aware what good news the figure of 370,000 is? Will he perhaps consider setting a target of half a million sales within the lifetime of this Parliament? To achieve that end, will he ensure that the laggard authorities are forced to get on with such sales, which are the right of British citizens?

My hon. Friend the Minister for Housing and Construction keeps a close watch on those authorities about which my Department receives complaints and will continue to do so.

The Government hope that the half million target will be achieved. The most welcome drop in mortgage rates, referred to a few minutes ago, will give a fresh impetus to the sale of council houses.

How many local authorities are still dragging their feet over the sale of council houses? Are they all Labour-controlled?

I have in front of me a rather long list of local authorities about which my Department has received complaints. The vast majority of them are under Labour control. My hon. Friend the Minister for Housing and Construction has regular correspondence and meetings with them to bring home to them the importance of making swift progress in giving people their statutory right.

In view of the Minister's claim to success in that regard, will he now extend the right to buy to tenants of privately owned houses?

That has already been dealt with at a previous Question Time. Those houses are already in private ownership and the Government's mandate extends only to those in public ownership.

Has the Minister instructed his Department, or asked housing authorities, to commission research into the social consequences for people who are frustrated because they live in deprived areas with difficult to let housing, with low incomes, and whose chances of transferring to decent houses have been reduced?

The social consequences speak for themselves. Three hundred and seventy thousand people have exercised their right. What more evidence does the hon. Gentleman need?

Rate Support Grant


asked the Secretary of State for the Environment if he will introduce proposals simplifying the arrangements for rate support grant.

I share the hon. Gentleman's concern to simplify grant arrangements as far as is possible, given the large sums involved and the importance of ensuring the fairest distribution for the more than 400 authorities involved. I am currently considering several options for simplification of the assessments of grant-related expenditure for the 1983–84 RSG settlement.

Are not the present rate support grant arrangements, which even the Minister has said are shrouded in complication and, I would say, excessive jargon, being used as a deliberate smokescreen to pass on to local authorities the blame for cuts in local services that are really being imposed by the Government?

No, Sir. The hon. Gentleman will recognise that the rate support grant has never been a simple matter. Substantial sums of money are involved and the formulae have always been complex. However, there is now a better understanding of the way in which the needs assessments are made for individual authorities and we should continue to simplify the system in that area.

Is my right hon. Friend aware that the increased imposition of rates upon industry year by year is becoming serious? It is creating financial and job losses. Will my right hon. Friend consider giving additional support to those local authorities that give special rate concessions to industry? That is important for jobs and for industry generally.

I endorse my hon. Friend's opening remarks. At a time of recession we should reinforce the importance of all authorities not adding to the burdens of industry and commerce. There seems to be an illusion fostered by some political parties that rate levels do not matter to industry. However, they are a matter of the greatest concern. While I cannot go along the particular line that my hon. Friend suggests, I can tell him that we are most concerned about the general theme that he has put forward.

Will the Minister confirm—or deny—press statements to the effect that the Secretary of State intends to claw back from local authorities any benefits that might accrue from the reduction in interest rates? If that is the case, will he advise local authorities such as Wear Valley and Sedgefield district councils, which would dearly like to spend capital on land reclamation, how to do that without having some flexibility on revenue expenditure?

The matter that has been referred to in the press, over which there has been some confusion, deals with the supplementary report, which is presently under discussion. It has been the practice of successive Governments to deal with what are called "variable items" at the supplementary report stage. If interest rates rise local authorities are compensated, and if they go down there is some clawback. That is the standard practice, which the hon. Gentleman will find was followed by the Labour Government.

Will my hon. Friend assure the House that his simplified guidelines on the rate support grant will also provide some measure of equity to those authorities that have tried faithfully to follow the Government's guidelines but have so far seen little compensation for their efforts?

If I were to answer that question fully I would incur your wrath, Mr. Speaker. It is my constant ambition to do what my hon. Friend suggests. When she fully analyses the proposals that we shall put before the House, I hope that she will see that justice has been done.

Inner City Policy


asked the Secretary of State for the Environment whether he proposes to take steps to modify the inner city policy of his Department.

We are continually seeking new ways, such as the urban development grant, of achieving urban regeneration. The urban programme is relatively new. It offers the opportunity for considerable flexibility. It is continually under review as a consequence.

Is the Minister aware of the reported remarks of his noble Friend and ministerial colleague, Lord Bellwin, on South Tyneside? Is he aware that Lord Bellwin is reported to have said that the Department is considering rejigging the inner city policy to take away the concentration of funds from the partnership areas? Partnership areas such as my constituency of Lambeth, and that of Liverpool, amongst others, while they are grateful for the concentration of funds in the past, still regard such funds as being sadly inadequate for their desperate needs. Is the right hon. Gentleman aware that they will regard such a switch in policy as a betrayal of past statements on the inner city areas?

If the hon. Gentleman keeps in mind the fact that his authority's allocation has been increased by 30 per cent. this year compared with last year, he will see the seriousness with which we treat the matter. He will already have a flavour of the fact—it cannot be more than that—that the urban development grant initiative, which is now under consideration, means that significant increased funds should be flowing in his direction if the scheme stands up to examination. I hope to say something further about that shortly.

Is the Secretary of State aware that over the past 12 months 10,000 trees have been planted in inner city Liverpool, that one job has been lost for every tree planted and that one crime is committed every four minutes? His remedies are wholly cosmetic and irrelevant to the basic problems of unemployment and crime.

I was not aware that 10,000 trees had been planted in Liverpool over the past 12 months. I shall give the deepest consideration to the implications of that.

Will my right hon. Friend ease planning restrictions in inner city areas, to try to encourage more private development?

I am very sympathetic to that view. The Government have amended the general development order. One of the consequences of that will be to help in that way. However, local authorities are now adopting a very practical approach—particularly in some of the industrially deprived areas and in some of our inner cities—to the need to attract industrial and commercial investment.

Local Authorities (Housing Revenue)


asked the Secretary of State for the Environment how many local housing authorities are currently showing a surplus on their housing revenue accounts; and how many are estimated for 1983–84.

Actual data on authorities' housing revenue accounts for the current financial year will not be available until the summer of next year. No estimates can yet be made for 1983–84.

Do not the Secretary of State's departmental calculations show that, as a result of the £1 a week rent increase from April next year, at least 305 out of 367 housing authorities will have a profit on their housing revenue account? Will he confirm that it is the Government's intention to make maximum profits out of council house tenants, as demonstrated by the 133 per cent. rise in rents since May 1979, compared with an average rise in earnings, by April 1983, of only 51·7 per cent?

The hon. Gentleman says that that is "the Government's intention", but I hope that he will look at the rent increases made by individual local authorities. In particular, I hope that he will consider the rent increases levied by several Labour-controlled authorities. If he bears in mind the details of what has happened on the ground, he will realise that a significant number of Labour-controlled authorities, in both the last financial year and this one, are voluntarily choosing to raise rents by an amount in excess of the assumption used by my right hon. Friend the Secretary of State.

Did not the Labour Government resolve to increase the proportion of the revenue account that is met by rents? If so, have we not had an example of the Labour Party saying one thing in Government and something else in Opposition?

My hon. Friend is right. Since we came to office it has been necessary to increase rents in real terms because, contrary to the protestations of the Labour Party there was a substantial decrease, in real terms, when that party was in Government.

As the Minister has accepted that Labour councils have had to increase rents because of the Government's direction, will he now have words with the Secretary of State? As the Secretary of State has changed his mind on the policy of local government spending, will he suggest to him that he should also change his mind on the "no profits" rule and reinstate that rule on housing revenue accounts, to ensure that the profits that he is forcing local authorities to make are ploughed back into council housing and that tenants derive some benefit from them?

I do not think that the hon. Member listened to my reply to the original question. Contrary to what she says, a significant number of authorities—as I have already made clear—including many Labour-controlled councils, have voluntarily chosen to increase rents by an amount greater than the assumption used by the Secretary of State.

Greater London Council


asked the Secretary of State for the Environment if he will place in the Library a list of all the statutory functions of the Greater London Council which relate to his responsibilities.

The Library already has, I understand, a copy of the comprehensive "Index of Statutes affecting Local Government in Greater London". This covers not only the London Government Act 1963 but the numerous local Acts in force in the GLC's area.

Does the right hon. Gentleman agree that the matters that are the responsibility of his Department and of his colleagues in Government have often, in the past 100 years or so, been the responsibility of London's local government, under the London County Council and its successor? Does he really believe that he can administer those matters without a uniform body covering the whole of London?

The hon. Gentleman will be aware that our primary concern is with local authority expenditure and the overall level of expenditure. Against that background, the hon. Gentleman would be singularly ignorant—which I know he is not—if he did not know that the GLC's recent performance has hardly contributed to the collective effort by local authorities to meet the Government's public expenditure target.

Will my right hon. Friend consider abolishing the GLC? Will he further consider letting that building as a multi-storey car park, as the corridors are wide enough?

As I have said, our first concern is with expenditure, not structure. However, I well understand my hon. Friend's concern—it is shared by millions of Londoners—that the GLC's behaviour serves only to increase the totals given on the GLC's banner. The rate burdens imposed by the GLC have undoubtedly added directly to the number of London's unemployed.

With reference to the disclosure about the Strongbridge housing association and certain Tory members of the GLC, the Minister will recall that I raised such matters with one of his colleagues in the House last July. May we have an assurance that the Minister will come to the House at the earliest opportunity and make a full statement, recognising that the effectiveness of the monitoring function of the Housing Corporation must now be in question?

That point does not arise directly from this question. However, whether the issues affect Labour, Tory or other councillors, they must be properly investigated.

Council House Sales


asked the Secretary of State for the Environment whether, following the success of such a scheme in Southampton, he will seek the assistance of building societies for funding council house sales to reduce local authorities' mortgage lending to house buyers and to release funds for new building projects.

I understand that the scheme under consideration would involve the re-financing of council mortgages by a leading building society, where the mortgagor consents. This can offer benefits for all concerned. A number of building societies have arranged or expressed interest in such schemes, and I have urged local authorities to consider them.

Does my hon. Friend agree that this is a gentler form of privatisation, which will result in a cheque in the council coffers of some £21 million? It also means a lower mortgage rate for the tenants and can do nothing but good. There will be a reduction in the number of staff needed to administer the council house scheme and there will be better administration of the houses by the building society concerned.

My hon. Friend has succinctly identified many benefits that would result from the proposal. I hope that the local authorities will read his remarks and take note of them.

As the Minister has been discussing this issue with the building societies, can he let us know their attitude towards funding the purchase of part of a council house? How many building societies are interested in funding the purchase of council flats, a few of which are apparently being sold?

I am certainly aware of building societies financing properties under shared ownership schemes, and that has been a great success. I am sure that building societies will consider mortgages on council flats if such a proposition is put to them.

Recreational And Sports Service


asked the Secretary of State for the Environment why his Department has failed to provide adequate staff to complete and publish the findings of the Yates committee on the training of management for the recreational and sports service; and when he now expects to publish the report.

The secretariat of the Yates committee was reduced two years ago when it seemed likely that its work would soon be completed. This forecast proved optimistic, but I now expect to receive the report before Christmas.

Given that a committee was set up seven years ago to consider the important subject of public management and that it completed its work five years ago, what justification can there be—other than inadequate provision in the Department—for the fact that we are still waiting for secretarial help to produce the first draft? Now that the matter has been drawn to the Minister's attention, will he deal with it speedily?

I shall try to assist the right hon. Gentleman. He set up the committee in late 1976 and it had its first meeting in May 1977. I am informed that the final draft is with the chairman of the committee, awaiting approval. I hope that it will be cleared speedily so that the report can be presented.

Construction Industry


asked the Secretary of State for the Environment what is the current level of bankruptcies in the construction industry.

There were 1,124 bankruptcies in the construction industry in the first six months of this year including both individuals and partnerships going into receivership and companies going into liquidation.

Is there not a clear and tragic message for the Government in that answer in terms of the number of jobs lost? The industry has no confidence in the Government and cannot believe that the Prime Minister and the Secretary of State can think that local authorities can turn on their capital investment programmes like taps.

I agree with the hon. Gentleman in so far as I regret the level of bankruptcies in the construction industry and any other industry. However, to maintain perspective, the hon. Gentleman should take into account the fact that under the Government the level of bankruptcies in the construction industry has never approached the numbers achieved by the Labour Government in 1975 and 1976.

Is my hon. Friend aware that the construction industry has considerable confidence in the Prime Minister? Will he give further and deeper consideration to the issue of construction bonds that will attract private resources into the construction industry? Will he also consider further projects that are advanced by private enterprise companies, such as Tarmac Ltd., for the funding of major roadways, which could be built initially with private resources to help public expenditure?

I assure my hon. Friend that we have considered those matters in detail and have produced some practical results. We have, for example, increased the proportion of construction activity that can be financed privately. We have achieved much wider building society lending on house purchases than previously and my right hon. Friend the Secretary of State has pioneered many other schemes in Merseyside and elsewhere using public expenditure to attract substantial private input. I endorse what my hon. Friend said about the construction industry's confidence. That is reflected by the net increase in construction companies in the past two years. Some 8,000 such companies have registered for VAT.


3.30 pm

With permission, Mr. Speaker, I should like to make a statement about the privatisation of Britoil.

The offer for sale of 51 per cent. of the shares in Britoil will be by tender, with special arrangements for small investors to apply for shares at the striking price without having to bid a specific price in advance.

The shares have today been underwritten at a minimum tender price of 215p per share. Payment for the shares will be in two instalments, a first instalment of £1 a share on application, with the balance due next April.

The prospectus and application form will be available in the Library from today and published in newspapers on Friday. Copies of the prospectus in book form will be widely available through main branches of the clearing banks, Trustee Savings Banks and main post offices from next Monday, 15 November. The application list for the shares now offered for sale will open at 10 am on Friday 19 November and may be closed at any time thereafter.

In order to encourage small investors to retain a long-term interest in the company, they will, subject to the conditions set out in the prospectus, receive one free share, known as the small shareholder bonus, for every 10 still held in three years time.

As I told the House a fortnight ago, the privatisation of Britoil will in no way effect the system of participation agreements, which will remain in place, under 100 per cent. Government control, as a means of safeguarding our national security of supply. But what it will do is enable the people of Britain to take a direct personal stake in the North Sea. It will create an independent British oil company free to seize the opportunities open to it; and it will substantially reduce the size of the public sector in an area where State ownership has no rational justification whatsoever.

The right hon. Gentleman's statement represents the final stage in the splitting up of BNOC. It involves the biggest sell-out of our national interests because it involves the sale at half the value of the assets and the dismantling of the instrument through which the United Kingdom has been able to exercise control and influence over the development and use of North Sea oil, depletion policy and so on. It bears no comparison with British Petroleum. BNOC served a different and modern purpose compared with the shareholding in BP of 70 years ago. BP was never the chosen instrument of Government control.

I welcome the statement, following my representations yesterday, but we have been told very little. The Opposition have made it clear that we will one day take BNOC back into public ownership. Moreover, we will keep the House fully informed—unlike the Government.

I accept that we have not had a copy of the prospectus for legal reasons. Nevertheless, I was offered a copy by the media this morning. Hon. Members did not receive a copy. The prospectus is being discussed outside the House. So much for legality.

Is the decision to sell by tender the Secretary of State's own? We shall carefully examine the price. No doubt the Public Accounts Committee will do so too. I shall be surprised if the sale realises anything like the estimate of £1 billion quoted 18 months ago. Will the right hon. Gentleman confirm that the net proceeds of the 51 per cent. sale will be less than half of the £1 billion that they are worth?

On the information that has been given to us, we cannot make a value estimate even on the underwritten price because we do not know how many shares are on offer. What value does the minimum tender price put on the entire company? We should know that so that we can judge what value the Government have set on it.

What does "small shareholders" mean? How small must a shareholding be to be defined as small? What are they promised in three years' time when Britoil will come back on to the market for the reasons that everyone has been talking about?

Why has the Secretary of State ignored the PAC's advice about underwriting? It said:
"We are concerned that, in the course of this re-examination, the Treasury should look again at the practice of underwriting such sales…We therefore trust that the adoption for sale of publicly owned shares of this aspect of normal City practice will be very carefully re-examined."
There is no need for underwriting. It would not matter in the short run if all the shares were not sold. In any event, the issue could have been handled by the Bank of England. What costs are to be paid to the merchant banks and underwriters for the preparation and sale of this asset?

The Secretary of State has decided to go ahead with part-paid shares. That will be risky if the share value rises quickly in the first week. We shall wait and see.

The statement is incomplete. We must discuss the matter again, in Government time, having seen the prospectus. There is no point in hypothetical questions. Everyone else knows what is in the prospectus, but we do not. We shall discuss profits, overseas investments and window dressing soon. [Interruption.] The statement may have been short but it is right that our reply should be long.

Will the balance sheet of the company that has been agreed between the Secretary of State and BNOC and has been the subject of much speculation be published in the prospectus? It will be possible to demonstrate that what the right hon. Gentleman said about window dressing is correct only if the balance sheet is included. We have been far too dependent on information from outside.

The Government and the Secretary of State, fired by ideology, have let the nation down. Only the speculators will rejoice at this Government policy.

I shall do my best to answer the many questions that the right hon. Member for Leeds, South (Mr. Rees) asked. I make no complaint about their number. I acknowledge that the matter is highly complex.

The right hon. Gentleman was right to point out that there have been several leaks today. I regret them deeply. I deplore the leaks that have occurred throughout. Nevertheless, the right hon. Gentleman has been only too happy to seize on those leaks on several occasions. I deplore all leaks. I certainly did not authorise any of them. Indeed, I have given strict instructions throughout that the House is to be informed first.

The right hon. Gentleman said that the sale was for half the value of the asset. That is nonsense. The right hon. Gentleman has no idea of the value of the asset. I challenge him to sustain that assertion. He said that we were losing control of depletion policy. That is untrue. Our powers over depletion policy remain intact and are not in any way affected by the privatisation. The right hon. Gentleman renewed the renationalisation threat. I am aware of the Labour Party's threat. It is referred to on page 4 of the prospectus. Potential shareholders will be free to make as much or as little of it as they wish.

The right hon. Gentleman asked whether the decision to go to tender was mine. Indeed, it was. I have long been a supporter of tenders. I was the Minister most closely responsible earlier in the Government's term of office for the innovation of selling gilt edged by tender. When the right hon. Gentleman examines the prospectus, he will see that we have sought to square the circle to achieve a method of sale by tender which does not deter the small shareholder. I believe that we have achieved that.

The right hon. Gentleman said that a year ago I estimated that the proceeds would be £1 billion. There is no truth in his suggestion. He can find no such assertion on the record. When asked a year ago, I said that the sum would be substantial but that it was impossible to say what it would be. The right hon. Gentleman said that the proceeds would be less than £½ billion. Again, he is wrong. [HON. MEMBERS: "What will they be?"] Given a chance, I shall explain. It is impossible to say what the proceeds will be because that depends on the striking price of the tender. The minimum proceeds, at the minimum tender price, will be £548 million gross for the equity, plus £88 million for a debenture, of which £55 million will be paid into the national oil account, giving total proceeds of over £600 million.

It is not bogus; it is genuine. It is the hon. Member who is bogus through and through.

The right hon. Member for Leeds, South asked for a definition of a small shareholder. A small shareholder is defined in the prospectus as anybody who applies for not more than 2,000 shares.

The right hon. Gentleman asked about underwriting. Of course, following the PAC report, we reconsidered whether the issue should be underwritten. We are confirmed in our belief that it is right to underwrite the issue, for two reasons. The first is that it is essential to complete the privatisation. The second is that the knowledge that the issue is underwritten assists in obtaining a better price for the taxpayer, about whom the right hon. Gentleman purports to be concerned. The total commission for underwriters and sub-underwriters is 1·55 per cent. [HON. MEMBERS: "How much is that?"] The figure in the prospectus is £8½ million. It is a substantial issue and hon. Members should be able to work out their percentages without aid from me.

The right hon. Member for Leeds, South asked whether the balance sheet appears in the prospectus. Of course it does. I am astonished that he should suggest otherwise.

Order. Many right hon. and hon. Members seek to take part in the main debate. I therefore propose, out of fairness to the House, to continue these questions only till 4 o'clock. I remind the House that we are asking questions, not debating the issue.

I congratulate the Secretary of State on the transfer of Britoil to private enterprise. How is the mean price established? Is it established by the number of applications put in or by the number of shares applied for? When the company is established in full operation, will it be able to apply to purchase shares in the British Gas Corporation's offshore oilfields?

The method of disposing of the British Gas Corporation's offshore oil interests has not yet been decided. The striking price for the tender will be determined in the normal way. The details are in the prospectus, but broadly it will be either the highest price at which applications totally cover the value of shares on offer, or such lower price as I may, in certain circumstances, decide. Anything that I say is qualified by what is in the prospectus.

I deplore the substance of the matter and the way in which it has been handled. It borders on contempt of Parliament, in view of the Minister's earlier statements. To what extent are foreign companies, and through them foreign Governments, being freely invited to take part in the sale of these national assets? To what extent will the Minister try to ensure that the proportion of shares going to small investors is large rather than small?

The prospectus is a large and bulky document, so the right hon. Gentleman will forgive me if I do not quote from it verbatim. The prospectus states clearly that it does not constitute an invitation to anyone outside the United Kingdom to apply for shares.

The right hon. Gentleman asked how we could ensure that small shareholders have a fair crack of the whip. Obviously that depends to some extent on the volume of applications from small shareholders, but the method of allocation is at my discretion. The Government's commitment to wider share ownership and the small shareholder is well known.

Is it in the best interests of parliamentary democracy that some hon. Members who earlier this year voted for the Bill which paved the way for the bonanza may make a colossal profit or enjoy a rake-off at the taxpayers' expense?

The taxpayer will receive a fair price for the asset. Of course, hon. Members will be able to apply for shares, just as any other member of the public will. Whether they will make a profit is not for me to say, because I do not possess a crystal ball.

I join my right hon. and hon. Friends in warmly welcoming the decision and, in particular, the bonus scheme, which has been cleverly devised to give incentives to small investors to buy and to retain the shares, which is extremely important. What measures are to be taken to restrict multiple applications?

I am grateful to my hon. Friend for his welcome. The prospectus states clearly that all multiple applications may be declared invalid.

Mr. Speaker, would you buy a second-hand car from this Minister?

Is the Minister satisfied with the way in which the Department has approached the sale in the past year? Does he agree that the public have been given the impression that he and his Department have displayed all the skill of players in a game of blind man's buff and that there has been a clear refusal to give the House any idea of what possible benefits the sale could bring and, in particular, what sum will go into the national Exchequer? In view of the vagueness about the proportion of the assets to go to small investors, what percentage would the Minister prefer it to be? If he cannot answer, we can only assume that this is a gift to the institutional investors and to no one else.

As I have said, I am anxious to see a significant proportion of the issue go to the small investor. As the size of that proportion must depend upon the number of applications from small investors, I cannot say at this stage what it will be.

Will my right hon. Friend ignore the squeals of the Opposition, who will object just as strongly if the sale is successful as if it is not, and will he accept our congratulations on the method that he has devised to help small investors?

I am grateful for my hon. Friend"s last remark. I entirely agree with his psychological analysis of the Opposition.

Does the Minister accept that to the extent that he has made a U-turn since 27 October, when he suggested that a tender issue was so difficult as to be virtually impossible, we welcome his conversion? As he is the sole shareholder in the firm, what value does he put on the nation's assets and what possible public benefit can be derived from flogging those assets in this way? What are his criteria with regard to the national interest? Does he accept that we see no case whatever for putting the nation's assets into the City at this time and that they should therefore be taken back forthwith?

I said previously that there had never been a tender of this size, and that is true. I also said that a straightforward tender would deter the small shareholder, which I did not wish to do. That is why I and my professional advisers have spent months working out—I think that we have now reached the right conclusion—a variant of the tender that will not deter small investors. That is entirely new and very important.

As for the hon. Gentleman's comments about flogging national assets, I deeply resent the implication that only the public sector is British, and the whole of the private sector of industry will deplore it, too.

What special arrangements have been made for the employees, or are they to receive no consideration whatever as they are not mentioned once in the statement?

The hon. Gentleman is right to stress the importance of the employees' share scheme. I said frequently in the debates on this that there would be an employee share scheme, and indeed there is. Employees will be entitled to up to £60 worth of shares entirely free and a further number free on a one-for-one basis—that is, for every share for which they apply they will receive a further share free. The offer contains a very generous employee shareholding scheme which I hope will commend itself to the hon. Gentleman and his party.

I welcome my right hon. Friend's efforts to weed out the multiple applications so that the genuine small investor will have a better chance of an allocation, but will he give an assurance that if the issue is oversubscribed the allocations will be heavily weighted in favour of the small applicant, who will not be subjected to a ballot or a scaling down?

If the issue is oversubscribed, preference will certainly be given to the small investor, as in all previous privatisation issues.

Will the Minister give a guarantee to the employees of Britoil in Glasgow that following this ludicrous sale the headquarters of the company will not be moved from Glasgow to the South-East of England?

So far as I am aware, the company has no intention of moving its headquarters, but if the hon. Gentleman is concerned about the company's welfare it is strange that he should talk about it in those terms.

I accept my right hon. Friend's assurances about sales to multiple and foreign applicants, but what assurance can he give that there will not then be subsales by the smaller purchasers to multiple applicants and to foreign interests?

In a free country and a free market, anyone is free to sell his share to anyone else. That is true in every company. My hon. Friend will be aware, however, as we debated this at some length in the House, that the articles of association provide for one special share to be held by the Government, which will ensure that control of the company or of its board cannot pass into unacceptable hands.

That is a tempting question, but I think that the hon. Gentleman will have to leave that to the discretion of the Government. I am aware of the point that he makes. I should have thought that my reply was sufficient for his purposes if he understands anything about the subject.

Although many of us wholeheartedly support and welcome my right hon. Friend's initial statement about the sale of the Government's interest in Britoil, is he aware that some of us believe that a far more desirable means of achieving widespread share ownership is not by having differential categories of share bonus schemes but by having an initial share offer as opposed to a tender, which would offer certainty and simplicity and thus attract far more widespread subscription?

I am aware of my hon. Friend's views and I took them into account when deciding on the method of sale. He is, however, wrong to suggest that the only help given to small shareholders is the special category of bonuses. In fact, there are two other important elements.

First, the small shareholder does not have to bid a price. In a tender, it is often confusing for the small applicant to know what price he should bid. That is why a fixed price offer has often been considered preferable. In the Britoil flotation, however, in the space where he would otherwise have to state a price the small shareholder may simply write "striking price". He will then be deemed to have bid whatever the striking price turns out to be, so he need not worry about that. Secondly, payment will be in two instalments. The first will be a fixed sum of £1. The second, which will not be due until April, will be the difference between that and the striking price. This means that the payment on application will be a fixed price, and the small shareholder will know exactly what it is as in a fixed price offer.

As the right hon. Gentleman talks about sales to the British people, would he care to forecast how many of my constituents in Smethwick are likely to take up shares?

I regret that I am not sufficiently familiar with the hon. Gentleman's constituency to answer that.

I congratulate my right hon. Friend and his team on actually making denationalisation work for once. May I reassure him that the British public behind him? As a member of the Public Accounts Committee, may I also welcome the method of sale? Finally, does my right hon. Friend agree that if anyone is responsible for trading down any price that we receive for Britoil it is the Labour Party, with its insistence on renationalisation of Britoil?

I am grateful for my hon. Friend's remarks. He is right to say that during the past few months Labour Members have done their best to talk down the sale and to obtain the worst possible deal for the taxpayers. Despite their efforts, the Financial Times actuaries oil share index today stands 16 per cent. higher than when I made the original announcement in October 1981.

As the Minister is so concerned to spread ownership, will he make a special needs payment to the unemployed, the low paid and those who receive supplementary benefit to enable them to purchase shares? Will he recommend that the Health Service workers who take home £50 or £60 a week should have an extra wage settlement to enable them to buy shares? Is it not true that the vast majority of working men and women will not be able to buy shares? The sale is a bonanza for City slickers, with a £9 million commission immediately for the right hon. Gentleman's friends. Does the Secretary of State agree that there are no safeguards for the sale because foreign-owned United Kingdom based companies are not excluded?

It is a great pity that the hon. Gentleman should have taken time that could have been given to those who wish to ask serious questions.

Is my right hon. Friend aware that there is everything to be said in Britain now for arranging that Government-controlled industries—this industry is still controlled by the Government—should have the widest possible shareholding among the people of Britain, including those who work in the industry?

On a point of order, Mr. Speaker. The Secretary of State is dealing with a serious matter. He does not have the right to shrug aside questions from hon. Members who have been duly elected, as he did with my question.

That is not a point of order. It has long been the case that Ministers answer when they wish to answer. That has always been a Minister's right.

On a point of order, Mr. Speaker. During my many years in the House I have not seen a Minister with such deplorable parliamentary manners as the Secretary of State. When he is asked for a definition of a phrase that he used, it is not sufficient to say "If the hon. Gentleman understands"—

Order. However strongly the hon. Gentleman may feel about the reply to his question, he knows that it does not raise a point of order for me.

Order. I remind the House that yesterday evening there was some feeling among hon. Members who were not called. Many hon. Members will not be called in today's debate, especially if the points of order are not genuine points on which I can rule.

Further to that point of order, Mr. Speaker. Is it not parliamentary abuse to add gratuitously "if the hon. Gentleman knows anything about it"? I spent many hours with my colleagues in Committee and I have a constituency interest—

Further to that point of order, Mr. Speaker. Would you be good enough to allow the Secretary of State further time to answer my hon. Friend's question properly, decently and honourably?

On a point of order, Mr. Speaker. As many Conservative Members who asked questions clearly have an interest to declare, would it not have been appropriate and certainly honourable of them to declare that interest?

Even though hon. Members may have an interest—I am unaware of any—at Question Time it is not obligatory for them to declare it.

On a point of order, Mr. Speaker. In his answer to my hon. Friend the Member for Keighley (Mr. Cryer), the Minister implied that he should like another question of a serious nature. May I ask it?

Order. We shall move on now in the interests of the House. It is very unfair—

Order. I am standing, so the hon. Gentleman must sit down. It is unfair to hon. Members who are desperately anxious to take part in the debate. If the hon. Gentleman wishes to waste the House's time further, I shall hear his point of order and we shall see what sort of point it is.

You said, Mr. Speaker, that you wished to protect the rights of Back-Bench Members in the subsequent debate. Do you intend to curtail the length of speeches in that debate?

That is a matter for hon. Members, who I hope will exercise discipline. I shall ask them to do so.

The hon. Gentleman's point of order is about something entirely different. We must finish this matter first.

My hon. Friend the Member for West Lothian (Mr. Dalyell) has been treated discourteously. He served on the Committee. My hon. Friend has a reputation for being a nuisance, which may be a good thing in the House, but perhaps I could ask the same question. We discussed the word "unacceptable" in Committee and it has not been hidden. Is the Secretary of State's reticence about the word something to do with the EEC? The point of having the word discussed on the Floor of the House is to enable other hon. Members to have a chance to know what the problem is.

The Secretary of State gave only a partial answer to the second question. What are the total costs of presentation, not just underwriting? Is the figure £20 million, of which the Government will pay £14 million? The right hon. Gentleman referred to some parts of the prospectus and it may be valuable to clear up that matter. Although it is not an authorised leak, is it correct that the prospectus estimates a profit of £90 million for the first year, with a £45 million dividend?

The right hon. Gentleman is approximately right, but he will find the precise figures in the prospectus that will be deposited in the Library within, I hope, half an hour. He will find in the full prospectus much that is of interest; it contains an invaluable amount of information. It is impossible to predict the full cost of the issue. Some costs will depend on the work to be done in processing the applications, which in turn depends upon the volume of applications. As soon as the figure is known, it will be made public in the usual way in the Department's estimates.

The right hon. Gentleman referred to the question raised by the hon. Member for West Lothian (Mr. Dalyell). We debated the matter at considerable length in Committee when both the right hon. Gentleman and the hon. Gentleman were present. We also debated it at some length in the House. The right hon. Gentleman and the hon. Gentleman can refresh their memories by reading the Official Report. It is for the Government to judge whether a potential change in control would be unacceptable. It is arrant nonsense for the right hon. Gentleman and hon. Gentleman to say that when they were in office they did not allow the Government any discretion. The right hon. Gentleman and the hon. Member for West Lothian—whose questions I always welcome—understand the position.

Order. Before I call the hon. Member for Brighouse and Spenborough (Mr. Waller), who has given me notice of a point of order although not its entire contents, I must apologise to the hon. Member for Workington (Mr. Campbell-Savours). He raised a valid point of order, and I am glad that he made it.

Parliamentary Proceedings (Broadcasts)

On a point of order, Mr. Speaker. It relates to a point of order raised by the hon. Member for Jarrow (Mr. Dixon) late yesterday evening before the winding-up speeches during the debate on the Loyal Address. I do not criticise the hon. Gentleman's point of order. The hon. Gentleman had waited during the debate in the hope of catching the eye of the occupant of the Chair. I speak with some feeling because I also hoped to do so, but was unsuccessful.

Before the final speeches in the debate, the hon. Gentleman, on a point of order, drew attention to the fact that he had not been called and used somewhat extravagant language. Although the expletive has not been deleted from Hansard, it would be described as unparliamentary. You, however, Mr. Speaker, naturally showed considerable kindness to the hon. Gentleman because of his strong feelings and because a constituency interest was involved.

It is not what happened last night but what happened this morning that leads me to raise this point of order. As may be known, the BBC has altered the format of its programme "Yesterday in Parliament". Rather than being a programme which simply records what happens in the House of Commons, there is now a considerable element which reflects the view of the person presenting the programme. On the programme this morning, although most of the contributions during the debate were not included, the hon. Gentleman's point of order was, with the expletive which was not deleted from Hansard.

If the BBC, in exercising its responsibility to record what is said in Parliament, gives precedence, as it seems to do now, to sensational behaviour on the part of certain hon. Members, it will encourage other hon. Members to raise bogus points of order and to act similarly. It could be the thin end of the wedge. Although I realise that you, Mr. Speaker, are not responsible for what the BBC presents, I hope that some guidance will be given so that behaviour in Parliament does not deteriorate.

Further to that point of order, Mr. Speaker. It is fair to say in support of the hon. Member for Brighouse and Spenborough (Mr. Waller) that the programme "Yesterday in Parliament" no longer exists. It is now subsumed in the programme "Today". The only programme of record that now provides for the BBC's charter requirements is "Today in Parliament" at 11.30 pm.

Further to that point of order, Mr. Speaker. I did not raise my point of order last night in order to get publicity. I sat through the debate last night because my constituency will be devastated by the denationalisation of British Shipbuilders. I raised my point of order not for publicity but on behalf of people outside. When I referred to hon. Members waffling on, I was referring to hon. Members, most of whom spoke during the debates, who had never seen a pair of overalls, let alone worn a pair.

Order. We have a Select Committee on Sound Broadcasting. The matters which the hon. Gentleman has raised should be examined by the appropriate Committee because of the feeling on both sides of the House.

My hon. Friend the Member for Jarrow (Mr. Dixon) has made a totally valid defence of his position last night, but, as one who has consistently supported the BBC throughout my term in the House of Commons, I have to say that there has been a marked decline in the standard, responsibility and quality of both "Yesterday in Parliament" and "Today in Parliament" over the past 18 months or so.

The House is still the master of its own affairs. It decides whether broadcasting should continue. The matter is in the hands of the House, and I hope that we shall all be reasonable about it and will count to ten. The Committee will examine the matter.

Ballot For Notices Of Motions For Friday 26 November

Members successful in the ballot were:

  • Mr. Peter Temple-Morris
  • Mr. John Wells
  • Mr. Ivan Lawrence

Bills Presented

Conwy Tunnel (Supplementary Powers)

Mr. Secretary Edwards, supported by Mr. Secretary Howell, Mr. Nicholas Ridley and Mr. Michael Roberts, presented a Bill to authorise the Secretary of State to acquire certain land and construct and carry out certain works, and to confer on him certain other powers, for or in connection with the construction, maintenance and improvement of a tunnel which he is authorised under the Highways Act 1980 to construct across the Convey Estuary as part of a special road; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 9.]


Mr. Jock Bruce-Gardyne, supported by Mr. Secretary Jenkin, Mr. Secretary Lawson, Mr. Leon Brittan, Mr. Nicholas Ridley, Mr. Barney Hayhoe and Mr. John Wakeham, presented a Bill to amend the Coinage Act 1971 and the law relating to issuing and writing off bank notes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 10.]

Orders Of The Day

Debate On The Address

[Sixth Day]

Order read for resuming adjourned debate on Question [3 November],

That an humble Address be presented to Her Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament—[Sir John Eden.]

Question again proposed.

Unemployment And The Economy

I have selected the amendment in the name of the Leader of the Opposition and also the amendment in the name of the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). As the House knows, under Standing Order No. 33A, on the last day of the debate on the Address, I am empowered to select two amendments for Division purposes, and I do.

4.15 pm

I beg to move, at the end of the Question, to add—

But humbly regret the continued failure of Your Government's economic policies; its stubborn refusal to learn from its own grievous mistakes; and the absence from the Gracious Speech of effective measures to reduce Britain's mass unemployment, to restore the competitiveness of our industries and to secure the living standards of the British people.
This was a remarkable Queen's Speech. Faced with the greatest economic crisis for 50 years, with a disastrous total of 3⅓ million registered unemployed, with a spreading industrial wasteland of silent factories and workshops, with record bankruptcies and liquidations, the Queen's Speech contained no proposals even remotely relevant to the clamant needs of the country, its industry and people. Instead we have statements, such as the one we have just heard, of Government proposals to sell off great national assets at knockdown prices—an act of wanton self-injury, of benefit only to those seeking capital gain.

Those are short-term benefits, because we shall take back Britoil shares and we shall pay not a penny more than the Government receive. Let that message be registered by all those hoping to make a killing on Friday.

Two days ago we heard the Chancellor's economic statement. I shall deal with the economic implications of that statement shortly. First, I want to register again the contempt and anger that we feel at the Chancellor's proposed treatment of pensioners, other social security recipients and, above all, the unemployed. Here is a Chancellor with at least £1 billion in hand for the 1983 budget—I suspect a good deal more—solemnly asserting that he intends to claw back—to adjust—the pensions uprating next year, because in his view and that of the Prime Minister the pensioners will be receiving an undeserved bonus of 95p a week in the 12 months ahead.

The Prime Minister and the Chancellor simply do not understand how people in the real and harsh world of social security and national insurance benefits have to struggle. Nor do they understand that a steady and differential improvement in their living standards is a major objective that every Government until their own have sought to pursue.

Worse still is the Government's treatment of the unemployed—the extra 2 million who, as a result of the Government's policy, are now on the dole. Two years ago, the Chancellor cut their uprating by five points on the ground that they were outside the tax net, but on the clear understanding that it would be restored when they were brought within it. They are now within it, but no restoration has been made. If the Government have a scrap of concern for the victims of their economic policies they should announce forthwith that the lost benefit will be restored.

The more one studies the content of the mid-year economic forecast that the Chancellor is obliged, under the Industry Act 1975, to present to the House, the more bleak and disastrous the outlook appears to be. This year will see a growth of our GDP of one half of 1 per cent.—almost too small to register—over 1981. The forecast made at this time last year, and again in the Red Book that accompanied the March Budget, spoke not of half of 1 per cent. but of a 1½ per cent. increase in GDP, in 1982 over 1981, rising to 2 per cent. in the first half of 1983.

The original forecast of the rate of growth, modest enough in all conscience, provided the persistent theme of countless ministerial speeches. We all recall the Prime Minister's confident assertion in the debate on the Loyal Address a year ago that:
"the Government have created the conditions in which out of the recession can come renewed confidence. It is in the coming year that our confidence will be rewarded."—[Official Report, 4 November 1981; Vol. 12, c. 29.]
We also recall the Chancellor's summary description of his 1982 March Budget—a Budget for industry, jobs and people. Who can fail to forget the scream of babbling optimism that issued from the Chief Secretary in speech after speech throughout the winter and spring of this year, culminating in his famous assertion that he could see signs of recovery everywhere? The then CBI president, Sir Ray Pennock, in his customary role of Little Sir Echo to the Chancellor, also welcomed the March Budget in extravagant terms.

The Opposition disagreed with the budget, for the simple reason that there was no evidence that any of the main components of demand would increase in the year ahead. Our view was shared, not by Sir Ray Pennock and his colleagues in Centre Point, but by the 1,700 CBI member firms in every region and industry in Britain that responded to the CBI questionnaire about economic prospects and economic activity. At the end of July, the CBI—as it was bound to do—published the result of its membership questionnaire and the judgment of its technical and expert sub-committee, as distinct from that of its obviously political leadership. The evidence was plain—there was no way in which the Chancellor's anticipated growth could be achieved this year.

Following the proposals that I put forward before the Budget, I wrote to the Chancellor in early August—before his annual escape to the sun—urging him to set in hand measures for corrective action this autumn. I outlined a five-point package, including a deep cut in interest rates designed to achieve a realistic exchange rate for the pound, the abolition of the national insurance surcharge, increased expenditure on construction and building, increased social benefits—with the unemployed at the top of the list—and a substantial easement of the restrictions on local government expenditure to help reduce the rates that fall so heavily on householders and industry alike, including a stop on the rating of empty business and industrial premises.

The response from the Treasury was predictable and negative. A junior Minister was given the task of chastising the CBI for daring to publish an objective report on the state of industry and even for having had the impertinence to talk to me. In a letter dated 12 August from the Chief Secretary, we were told:
"if there were any quick or easy solutions that would bring sustainable results we would obviously have adopted them"
So nothing was done, and precious months were wasted.

At the end of October, the CBI published yet another economic review, which strongly reinforced the findings of July review. The House now also has the Government's mid-year forecast. It is a bulky document, which in no way contradicts the two recent CBI surveys, but rather confirms and reinforces them. Worse still for the future of Britain, the Treasury forecast reveals an astonishing deterioration in our balance of payments account. As the forecast put it:
"So far this year, exports in total have been running about 4 per cent. below the level forecast at budget time…Import volumes this year have continued at close to the high levels reached in the second half of 1981."
It is the decline—and, at best, sluggishness—of exports, coupled with the remorseless rise of imports—by 4½ per cent. in 1982 above 1981, and by a further 5 per cent. next year—that will lead to the annihilation of our balance of payments surplus by the end of next year.

I ask the House to reflect upon that development. This year, for the first time since records were kept, Britain has ceased to be a net exporter of manufactured goods. We must search the annals of Tudor history before we can find a year in which that has previously happened in Britain. Even in the middle of a deep recession, with net oil exports running at £3½ billion this year, we can look only for a bare balance in our current account at the end of next year. On existing policies, any serious increase in activity in Britain will inevitably lead to a balance of payments deficit.

Faced with further deterioration this year, and with the truly daunting prospect ahead, what have the Government decided to do? Too late for an autumn Budget, they opted for a once-and-for-all three month reduction in the national insurance surcharge for the last quarter of the 1982–83 fiscal year. That is worth about £350 million. The Secretary of State for the Environment also made an amazing call to local government. After three years of urging them to cut, cut and cut again, under the threat of dire financial penalties, he urged them to spend, spend, spend during the remaining five months of the financial year. The Chancellor's response to the now confessed failure of his March Budget judgment is not only ineffective—it is pathetic.

Next year there will be a much-trumpeted 1 per cent. reduction in the national insurance surcharge—a benefit to private industry of £700 million. At any rate, that is what the press, the public and most hon. Members assumed when they listened to the Chancellor's statement on Monday. He referred to a table in the Vote Office—which no one had then seen—which purported to show not only by how much the national insurance surcharge was to be cut, but by how much it would be offset by increases in employers' contributions to the national insurance scheme. The table would have led any reasonably diligent reader to conclude that, after all offsetting factors had been taken into account, employers would gain by £686 million. However, under questioning in the House on Monday, the Chancellor said that the gain was not £700 million or £686 million, but £450 million after offsetting the additional ¼ per cent. employers' contribution and the increase in the earnings limit, also announced on Monday.

Now £450 million is not exactly £700 million—but that is not the end of the story. What the Chancellor omitted to tell the House, and what a sharp-eyed reader could deduce from the table in the Vote Office, was that there were other offsets to the £700 million reduction to be taken into account in the next fiscal year. Another £217 million was due to be paid by employers who opted out of the national insurance graduated pension scheme. It is reasonable to estimate that half of that will be paid by private sector employers—£109 million. If we take £109 million away from £450 million, the boost to private industry falls to about £340 million. That is no doubt useful, but set against the total private sector employers' national insurance and national insurance surcharge contributions of some £8,000 million a year, it is a reduction of well under 4 per cent.

I have not mentioned—because I am not sure that it is fair—that with increased earnings yet another £130 million in employers' national insurance contributions will have to be paid. If that is deducted from the national insurance surcharge concession, employers are left with a net sum of £210 million for the coming year. That is some boost to industry—is it not?

The Chancellor could say that all of us, including Sir Terence Beckett—who had a positive frisson of delight last Monday afternoon—should have known that all those offsets to the £700 million national insurance surcharge reduction were in the pipeline and due to emerge at precisely the same moment as the cut. But the Chancellor of the Exchequer did not go out of his way to alert or remind us of that, so I say to the right hon. and learned Gentleman yet again—because there was a similar oversight in the presentation of last year's Budget and similar confusion over national insurance figures in November 1980—that he should be much more careful about what he puts to the House of Commons. A cheerful headline in the press the following morning—I do not blame the press for that—is not worth it if 48 hours later a substantial downward revision must be made.

It is against the background of that paltry measure that one looks in vain to the Queen's Speech for any other sign of an effective policy to match the truly desperate needs of the British economy. There is the ritualistic reference to
"the anxieties and distress caused by unemployment."
Anyone who believes that the Government feel anxiety and distress at unemployment should have listened to the speech made last night by the Secretary of State for Employment—or rather unemployment—when he replied to the debate. It was one of the most brutal, vulgar, abusive, unworthy and irresponsible speeches that I have ever had the misfortune to hear. It was not improved by the happy and smiling patronage that the Prime Minister bestowed upon it from its nasty beginning to its still nastier end. The Queen's Speech tells us that the Government's
"economic and other policies will be determined by the need to secure a sustainable growth in output, and thus a lasting reduction in the numbers out of work".
We can only rub our eyes at such an assertion. The forecast admits that unemployment will rise yet again—by another 300,000—during the coming year. Already in the three years from June 1979 to June 1982 2,850,000 jobs have been wiped out. Britain has now the lowest number of people at work since 1950.

What are the Government's proposals? None whatever, except to sell Britoil and other nationalised industries such as British Shipbuilders, British Airways and British Telecommunications. What possible benefit can there be, except to those who hope to make a profit from the sales, and to the Treasury, which, because it is trapped into a definition of the borrowing requirement that includes, unlike those of all other industrial countries, the borrowings of public industry, hopes to reduce the PSBR by raising money on the capital market If that happens, it will no doubt crowd out the existing private sector as much, or rather as little, as public sector borrowing does today. However, I can leave the privatisation decisions until another time.

The truth is that on present policies, reinforced by the attacks on the publicly-owned industries, there will not be
"a sustainable growth in output",
as the Queen's Speech proclaimed, and there will be no reduction, let alone a lasting reduction, in the numbers out of work. The rate of inflation has fallen a good deal faster than the Government anticipated. Why? Not just because the Government have been willing to sacrifice employment and output in the United Kingdom but because, as the world recession has deepened, inflation has fallen almost everywhere. The Government's forecast states:
"Inflation in most industrial countries has fallen from 12 per cent. in 1980 to about 7 per cent in 1982. Interest rates have fallen very broadly in line with inflation but remain positive in most countries."
If economic policy was simply about inflation, the Chancellor of the Exchequer would have earned some modest applause, but economic policy is not simply about inflation. It is about employment and industrial output. What must be clear by now, not only to the House and industry, but to the country, is the appalling exorbitant and shocking price that we have already paid in unemployment and lost output.

Now we come to the real test. Inflation here, as elsewhere in the world, has fallen well into single figures. According to the Government's oft-stated philosophy, when inflation comes down, employment and real jobs begin to grow. Yet the Chancellor of the Exchequer confesses that he is now anticipating next year not a check on unemployment, let alone a fall, but growth of a further 300,000. The idea that a low rate of inflation will lead to spontaneous growth is a myth. In the lifetime of many hon. Members there have been protracted periods, in the 1920s and 1930s, when prices, far from rising, fell year on year, yet those years were disfigured by consistently high unemployment, culminating in the great slump and disaster of the early 1930s.

The Government no longer believe in their own doctrine. We all know about the leaked Think Tank report that was put before the September Cabinet, containing odious proposals for dismantling a large part of the Welfare State. Those proposals were in no way abandoned by the Government but have been shelved until the general election is out of the way.

The most important thing about the Think Tank report is the Government's estimate, which underlies it, of growth between now and 1990 of just on 1 per cent. per annum in GDP. That is the prospect ahead as the Government see it. That is the prospect on their own assumptions of success in dealing with the problem of inflation.

The problem that besets us in the 1980s, not only in Britain—although here the problem is in a still more aggravated form—but in the world, is an obvious and massive lack of effective demand. The capacity to produce goods is there. Human wants in the West and human needs in the vast impoverished areas of the world are as strong today as they ever were. However, purch