London Regional Transport (Amendment) Bill
Considered in Committee
[SIR PAUL DEAN in the Chair]
6.48 pm
On a point or order, Sir Paul. The circumstances of the Committee stage are a little hurried. I wish to raise a point of order on the selection of amendments. New clause 1, which some of my hon. Friends have tabled, relates to sums payable under the Act to be put into a special fund for the direct enhancement or improvement of the services provided by London Regional Transport.
I had hoped that there would be an opportunity to discuss that because yesterday, during the Second Reading debate, I put a question to the Secretary of State which bore directly on this matter as I regarded a statement that he had made on 7 February as incompatible with some of the things that he said yesterday. I cannot go further than put it to you. Sir Paul, that it is only through the selection—Order. I am sorry to interrupt the hon. Gentleman. I realise that he and the Committee are in difficulty, but new clause 1 is not on the Amendment Paper because it was out of order. Therefore, I cannot allow him to develop points about a new clause which was out of order.
Clause 1
Grant By Glc For Initial Year Of Lrt
I beg to move amendment No. 2, in page 1, line 11, at end insert
Normally when we move amendments we have had sufficient time to study the implications of the speech by the Secretary of State on Second Reading and also to ensure, with the assistance of the Clerks, that our amendments are within the rules of order. One of the problems about the debate on this shoddy little Bill has been the propensity of the Secretary of State to throw around various sets of figures, as though he were Will Hay in one of his madder sketches. This has caused considerable difficulty. We are still not clear exactly what the GLC will be required to provide and whether the Secretary of State is prepared even to accept the arrangements that have already been entered into. It is important to remember that we are talking about large sums of money and about an authority which has to raise that money properly. The GLC will be asked to pay London Regional Transport £258,179,588 for the remaining part of 1984–85, which is called the initial year after the transfer of control of London Transport to the Secretary of State, between 29 June 1984 and 31 March 1985. We must make certain that, as the GLC has already paid £177 million, the Bill will not add to that sum but will give the GLC credit for the amount that has already been paid. There is doubt about it, because the Secretary of State said on Second Reading:'after deducting therefrom any money paid pursuant to the said section 49 and in anticipation of a direction under the section being money paid prior to the passing of this Act'.
"Subsection (2) provides for the phasing of payments by the GLC. Its intention is to avoid requiring the GLC to pay money to LRT in advance of when it would have had to do so under the section 49 direction.
That may be factually correct, but the basis is wrong. The figures that should have been used are the current cash flow needs of LRT, not what was estimated last June. Had we been given more time to consider the Bill, we would have tabled amendments relating to this point. The narrowness of the amendment has been dictated by the narrowness of the Bill and the speed with which it has been dealt. It is a fundamental consideration. We should ensure that credit is given for the £177 million that has been paid by the GLC since the appointed day for the operation of the London Regional Transport Act 1984. It has been noticeable throughout the entire battle—a word which I use deliberately because it has been a battle; the Secretary of State has tried to ride roughshod over the interests not only of London's ratepayers but of Members of Parliament — that the GLC has behaved properly. It explained to the Secretary of State in the first instance that it did not believe that the sums of money that he was demanding were accurate. However, because of LRT's operating needs the GLC continued to pay the money, explaining that it was doing so without prejudice. The GLC also made it clear that it would appeal against the actions of the Secretary of State. Since that is the case, the Secretary of State has a responsibility to write into the Bill a much clearer undertaking that he has taken account of the £177 million that has already been paid over. If the GLC had been seeking to cause untold difficulty, it could have withheld, until the court case was over, the amount of money that the Secretary of State was demanding. Because it knew that the money was needed for the operating costs of LRT, it behaved properly by warning the Department of Transport what it was doing, but nevertheless continuing to make the payments. Therefore, it is all the more dispiriting when there is no clear indication from the Secretary of State that he will take account of the money that has already been paid. So far the Secretary of State has shown no intention to take account of the needs of the passengers of London Transport, the wishes of elected London councillors or the needs of the House of Commons. The Secretary of State would show a welcome and astonishing degree of flexibility if he were to accept that his calculations were done on the wrong basis. The figures that should have been used were the current cash flow needs. Therefore, I ask the Secretary of State to accept the amendment.It allows for two possibilities. If Royal Assent is received before 25 March, the first instalment of grant is payable on the day following Royal Assent. That instalment is the amount which would have been due under the section 49 direction by 25 February, less the two sums of £10·2 million and £12·9 million now conceded to the GLC. A second instalment will then fall due on 29 March and under the section 49 direction this was divided into two payments, due on 25 and 29 March." —[0fficial Report, 19 February 1985; Vol. 73, c. 874.]
7 pm
It may be convenient if I intervene now because I can give the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) a categorical assurance that the money paid by the GLC to LRT since 29 June will be taken into account in calculating what the GLC owes in future.
To help the Committee, perhaps I may be allowed to take the hon. Lady through the figures. She took me to task for what she described as throwing around sets of figures. I am certain that she would have been even more critical if I had not tried to give the maximum information during our many discussions about the Bill. I think that I can give her a little more information, provided that she does not then blame me for having done so and accuse me of throwing around even more figures.I do not think that the right hon. Gentleman quite understands my argument. I am happy that he should give accurate information. However, we are extremely worried because, during our different debates, different sets of figures have been given to the House at different times. We are told that this is simply a case of interpreting them in different ways but, frankly, everyone would be happy if we knew the basis on which the Department was doing its calculations.
I do not think that that is sustainable. All the figures that I have given are totally compatible. I think that the hon. Lady is trying to say that the GLC would have preferred to work them out in a different way and to have got a different answer.
Before 29 June of this year, the GLC had paid, taking into account the £10·2 million, a total of £88·9 million. Section 49 and this Bill do not apply to that. We leave that on one side, because it was before the date of the LRT Act. Since the Act, the GLC has deposited £177 million with LRT. We agree about that. The Bill requires that £258 million-odd should be paid when the Bill becomes an Act. The difference which will have to be paid is the difference between £177 million and the £258 million — £81 million-odd which is not yet paid. It has to be done this way because the section 49 direction that I made in June was quashed by the court and is therefore invalid. That means that there is no basis for regularising the money which has already been deposited by the GLC. As the hon. Lady said, the GLC has behaved correctly in this respect and has left the money there, but it cannot be said that that money is there as part of any instalment or debt or obligation which lies upon the GLC. There would be such an obligation only if the direction had been upheld and had come into force. With the quashing of the direction, that money was left by the GLC as an instalment of what it expected to have to pay either when there was a new direction or, as it turns out, when this Bill becomes law. To have specified in the Bill that the £177 million had to be paid would have been retrospective, and retrospectivity is an accusation which has been thrown about frequently in these debates and which I deny. But if I had so drafted the Bill that the £177 million which the GLC has already paid was included as if it was required to be paid, it would have been retrospective because, when the GLC deposited it, it did not know that it would have to pay it. The GLC now knows that the total will be £258 million-odd and I give the Committee the categorical assurance that under the Bill, as drafted, there is no suggestion that the £177 million already deposited will not be counted against the total sum that is owed. That means that the amendment is unnecessary. The Bill is drafted exactly to take account of the hon. Lady's point. The amendment is also defective. As it is neither correctly drafted nor necessary, I hope that the hon. Lady will feel able to ask leave to withdraw it.Since what in this case is sauce for the gander should be sauce for the goose, if the amendment is neither necessary nor well drafted, it appears to be in line with all that has happened in relation to London Regional Transport ever since these debates began. But having a degree of graciousness which is not always found on the Government Benches, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
I beg to move amendment No. 3, in page 1, line 13, leave out from 'paid' to end of line 16 and insert
'on the third day upon which banks are open for business after that on which this Act is passed'.
With this, it will be convenient to discuss amendment No. 4, in page 1, line 13, leave out
and insert'on the day after that on which this Act is passed'
'on the third day upon which banks are open for business after that on which this Act is passed'.
These are two inconsequential amendments in respect of the main purpose of the Bill. They have been tabled merely to make sense of a measure which we thoroughly oppose.
You, Sir Paul, will not permit me to go into the argument conducted up until 10 minutes ago about the way in which we have arrived at this position. It is a great pity that only three Opposition amendments have been selected. That is not my fault. I was not a party to the usual channels negotiations last night, and I have to tell the Minister of State that it was the Opposition's wish to table a great many other amendments of much more substance if we had had the opportunity to do so. I was one of those hon. Members who spoke at great length and in great detail in last night's debate. The Secretary of State had some very serious questions addressed to him which he answered by bringing in new figures which we are not allowed to challenge. I feel that I ought to make that protest even though I may be out of order. The amendments are designed to assist the GLC if this measure is carried into law. I was reminded of the speech made by the Secretary of State for Transport at the annual dinner last week of the Bus and Coach Council, when he referred to another Transport Bill and said:I hope that we can fashion a better Bill in Committee today. If these amendments are accepted, in my view the Bill will be marginally better. The amendments attempt to ensure that the GLC is given two working days in which to arrange to have available the money that the Secretary of State is about to take from the GLC, money which a court of law found to be unlawful. The Secretary of State has not accepted that judicial decision. He has introduced legislation to overturn that decision. That being the case, having secured a Second Reading for his Bill, he will appreciate that the GLC is anxious to be given time to provide him with the money. Simply because the GLC may have budgeted for the money does not mean that tomorrow morning it can lay its hands on £80 million. It cannot. It needs time to do it. That is the reason for these amendments. The GLC needs time to ensure that the Secretary of State cannot require the money to be paid on a non-banking day. If the amendments are defective in drafting or inhibiting in any way, I have no doubt that the Minister of State will say so, but I hope that she will take on board the spirit behind them. It is simply to ask that, if the Bill is passed, having been rushed through the House tonight, at least she will be gracious enough to allow the GLC time to marshal its forces and come up with the money."We should really try to fashion a better Bill in Committee."
I understand what the hon. Member for Wigan (Mr. Stott) said about the spirit behind the amendments, but I hope that I can assure him that there is no difficulty here.
I assume, although he did not say so, that the hon. Gentleman considers the amendments as alternatives. If he does not, they can be shown to be contradictory. I shall not discuss that point. I understand the hon. Gentleman's difficulty only too well. If I understand his intentions aright, amendment No. 3 makes the whole sum payable to LRT on the third working day after Royal Assent and amendment 4 retains the framework of the stage payments as set out in clause 1(2)(a) and (b), but also involves payment by the third working day. The two amendments are exclusive rather than to be taken together.indicated assent.
I see that the hon. Lady and I understand each other, on that point at least.
The amendments are unnecessary. There is nothing in law to prevent the GLC from paying up on the day after Royal Assent, which may well he some time away. It does not need more time. The money could be paid by electronic transfer within a single day, or the GLC could write—[Interruption.] It is perfectly possible to transfer money in a single day.If you have it.
We are discussing these sums and it is obvious, from other decisions that it has been making, that the GLC has the money. It has undoubtedly been warned in the past and by means of the passage of this short Bill. As the Bill progresses, it will be up to the GLC to have the money ready to pay over in good time. There is no way in which amendments such as these could be made in terms of other transactions that pass between public bodies, referring to a specific third banking day after the due date. The whole process is designed to take place when the sum becomes payable.
I think that, if the Bill is passed before 25 March, there will certainly be enough time — that is the reason for bringing the Bill forward now — for that money to be raised and paid over as agreed in clause 1(2)(a) plus the remainder at the end of March. My right hon. Friend explained just now why the total figure was in the Bill. We are really talking about a remainder figure.It is a big remainder.
I do not dispute the fact that it is a large figure. The figures have been around for a long time. They were fully known during the court case. There is no reason why the money should not be available when it is required to be paid over.
I shall not indulge in any nit-picking over the wording of the amendments. I could do so, but that is not my purpose. I understand the spirit behind the amendments, but I assure the hon. Gentleman that there is no need for the concern that he has expressed, and no need to press the amendment.7.15 pm
The Minister graciously tells us that she is not going to involve herself in nit-picking about the details of the amendments which have had to be cobbled together by the Opposition. We do not in fact regard that as especially gracious on her part, because it was only because we were not given sufficient time to consider the matter that we had to produce the amendments in a rush. Still, perhaps we should be thankful. No doubt, had the Secretary of State dealt with this part of the Bill, he would have made nitpicking criticisms.
The GLC may have the money in its budget. It may have raised the money. However, that does not mean that the money is instantly available to be handed over to someone else without damage to the ratepayers' interests. Conservative Members — there are not many of them here — know more than I do about having money on account. They are probably aware that local authorities, other organisations and rich individuals may invest money in such a way that an instant withdrawal to meet the needs of instant payment will damage the person who has invested the money. It is quite conceivable that, like other local authorities, the GLC invests the sums at its disposal that are not needed at once in such a way that an instant demand to hand money over to LRT would result in a loss of interest to the ratepayers. There might be genuine difficulties and genuine losses as a result of what the Government are demanding, if they will not accept either amendment or something on these lines. I am sure that my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) is not slavishly committed to the wording of the amendments and would be happy to accept a Government amendment on Report—Hear, hear.
—that was better than the ones that she was able to devise in the few minutes available to her yesterday.
Given all their resources, the Government do not seem to have done very well up to now.
It is true that most faults discovered in legislation spring not from things that happen in the House or in Committee but from the parlous standard of parliamentary draftsmanship. It may well be that our innocent efforts will produce better and more accurate legislation than the Minister could achieve.
We have to have this debate, either because the Bill that became the London Regional Transport Act 1984 was a mess or because the Secretary of State has administered the Act badly. In either case, as the right hon. Gentleman was responsible for both the Act and its administration, he takes responsiblity. The drafting of my right hon. Friend the Member for Crewe and Nantwich may be better than anything that the ministerial advisers could produce for Report. There is one further point to be made on the Bill, if the Government will not either accept the amendment or produce a variation of their own. If the crucial stage of the Bill were taken late on Friday, the GLC might have to find the money to hand over to LRT on a Saturday. Even using electronic means to shift money, the Minister must accept that Britain's financial institutions are not usually at their best on a Saturday. In practice, the demands might be difficult to meet. We are merely saying that we want to avoid such practical difficulties for the GLC to stump up the money on the instant, and the financial losses to London's ratepayers that might be suffered as a result of the precipitate withdrawal of GLC funds. One would have thought that a touch of humility would have been appropriate from the Government now. It ought not to lie in their power, still less in their desire, to pass legislation which might prove difficult for the GLC, as all the difficulties that have led to the Bill spring from shortcomings on the part of the Government. Just this once, the Government might listen to what the GLC is saying. If the Secretary of State had taken one minute's notice of what the GLC said about his direction under section 49, the courts would not have found that he had acted unlawfully, irrationally and procedurally improperly. In those circumstances, we should not have to put up with listening to him again. I hope that the Minister will be able to accept the spirit of the amendment and do the decent thing.My hon. Friend made an excellent point when he said that it would be difficult for the GLC to stump up the money at a moment's notice from the Government. Does he agree that it is not beyond the Government, who have been vindictive to the GLC all along, to insist that the money be stumped up at a most inconvenient time?
Yes. It beggars the imagination that any hon. Member should be expected to say that he is willing to accept the Government's good faith in their dealings with the GLC. The Government have had the ultimate in bad faith in their dealings with the GLC since the Prime Minister precipitately introduced at a late stage into the Tory manifesto a draft commitment to abolish it. As my hon. Friend the Member for Leyton (Mr. Cohen) said, the Government might deliberately time the demand to cause maximum embarrassment and difficulty. They have always done that in other respects. The same is true of rate capping for other local authorities in London.
It is preposterous for Ministers to expect us to accept that they will act reasonably and in good faith. They sit there having been found guilty by Mr. Justice McNeill of having acted unlawfully, irrationally and procedurally improperly. The trouble is that in all three respects he found them acting characteristically. If we no longer accept their word or that they will act in good faith, they have only themselves to blame. I hope that the Minister will accept the amendment or agree to come up with a better Government amendment on report. Without such an amendment, we shall leave the GLC and the ratepayers of London vulnerable to more of the Government's malignance.The amendments are contradictory simply because, at 10 o'clock last night, my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), after spending the whole day in the Chamber debating the Bill's Second Reading, had to cobble together some amendments to enable us to debate the matter today. We had no time for preparation, or to consult anyone, or to consider the Secretary of State's responses, and the amendments were put down as a marker to give the Committee something to talk about. If my hon. Friend had not had the foresight to table these amendments at the eleventh hour, we should have not one amendment to debate.
I accept that, in the circumstances that I have described, the amendments might be badly drafted or contradictory, but the spirit behind them is worthy of discussion. By virtue of his huge majority the Secretary of State will get his way and his money—well, not his money, but the money of London ratepayers. Unfortunately, we cannot prevent him from getting his way because we do not have the troops in the Lobby to stop him. We are merely asking that, once the Bill receives Royal Assent, the Minister should please listen to advice that we have received from the GLC about getting the money together. The Secretary of State is requiring £80 million of it. Amendment No. 4 says that he should be able to do thatWhat is unreasonable about that? It gives the GLC time to marshal its resources and to give the Secretary of State his ill-gotten gains."on the third day upon which banks are open for business after that on which this Act is passed".
Not me.
Well, LRT, but some of that money will be filched away to the Treasury, because LRT does not need it all.
No.
The Secretary of State ought not to lead me down that line of argument. I am trying to concentrate on the amendments.
My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) asked the Minister a simple question — whether, if the Bill became an Act of Parliament on a Friday, the following day, logically, being a Saturday—Not necessarily with this Secretary of State.
I have to take each point slowly so that the right hon. Gentleman understands. If it were to be a Saturday, the Secretry of State could demand that the Greater London council should pay over this money to him.
7.30 pm I want to draw the Committee's attention to the fact that it is in Committee that hon. Members get down to the nuts and bolts of altering, changing, amending and improving legislation. If the Standing Committee that considered the London Regional Transport Bill had done what it should have done, or if the Secretary of State had responded to the suggestions made by my right hon. and hon. Friends, legislation of this kind would not have to be debated tonight. We are engaged in writing legislation, and it is beholden upon the Committee to get it right. The Secretary of State must not be forced to introduce another Bill because he cannot get the money from the GLC on a Saturday. That might appear to be ludicrous, but unless this legislation is corrected that is what might happen. I do not wish to labour the point. Both the Minister of State, Department of Transport and I want to make progress. We have both been involved in many transport Bills, and no doubt there will be many more. I ask the Minister of State to look carefully at the amendment and at least to take on board the spirit of it. If it is inadequately drafted, perhaps she will be able to say that in the other place she will meet the point that I have made.Because of the complicated nature of the days when the money might be paid, I suspected that we might spend a little longer on this amendment than upon the previous one. However, since the amendments are based upon the advice that the hon. Gentleman and his hon. Friends have received from the GLC, I believe that it is unreasonable that the hon. Gentleman should have referred to the time that was needed to draft the amendments. This problem has been known for quite some time and the hon. Gentleman knows that. There is no reason why the GLC should need two extra days in which to transfer funds to London Regional Transport.
The GLC has already been given notice that it will be required to pay this money. If the payment has to be made on a banking day which, for the purposes of any Bill, including this Bill, is Monday to Friday inclusive under the terms of the Banking and Financial Dealings Act 1971, it can be made immediately, on the same day. That is how the GLC has made payments to London Regional Transport during the past six months. If the due day is at the weekend, the GLC can discharge its liability to pay by dispatching a cheque on that day. The money would not necessarily have to be received on that day — [Interruption.] I am certain that the GLC would not do such a thing. The hon. Lady knows that only too well.What about American Express?
I believe that the hon. Gentleman's limit on his credit card might be exceeded by this particular sum. It is no part of our intention that the GLC should suffer any financial penalty by having to have the money ready for payment on the due date. When the Bill passes through the other House, the GLC will know when it has to have the money ready. Until that date there is no reason why the GLC should not continue to receive interest on the money that it will eventually pay over. The hon. Member for Holborn and St. Pancras (Mr. Dobson) suggested that Royal Assent might be given on a Friday or a Saturday.
I did not say Saturday.
The hon. Member says that he did not say "Saturday". However, for the sake of argument, let us take either a Friday or a Saturday, in particular a Friday. The hon. Gentleman's fear is unfounded, because the Commission for Royal Assent hardly ever sits on a Friday or a Saturday. I can give that assurance to the hon. Gentleman and to the Committee.
Will the hon. Lady accept that if a measure is not urgently required to be passed into law the House of Commons very seldom sits on a Wednesday to debate the remaining stages of a Bill that received its Second Reading on a Tuesday?
If I were to stray back to the last business of the House I think that you, Mr. Chairman, would rule me out of order. Nobody has made any bones about the fact that this is an unusual situation. As the hon. Member for Wigan (Mr. Stott) said, had the Committee which considered the London Regional Transport Act drafted that Bill in a different way, probably a far greater sum, namely £23 million, more would have been paid over during the year than will be paid over as a consequence of this amending Bill. There is no reason for Opposition Members or for the GLC who briefed them to believe that there will be any problem over this payment. The GLC can discharge its obligations by drawing a cheque or another payable instrument whenever it wishes to draw it. When the other place has considered the Bill, the GLC will know what sums will be owing and those sums can be drawn in due time.
These amendments are unnecessary. This procedure is designed to do no more than rectify the manner and the timing of the payments before the end of the financial year. The Bill enables the GLC and London Regional Transport to know exactly where they are over the payments due to LRT.The only saving grace is that our proceedings are being recorded by Hansard and that their Lordships will have more time than the Opposition have had to study what has been said before they debate this Bill. I hope that their Lordships will take note of what the hon. Lady has said. At least they will have more time to consider what has been said than the Opposition have had between Second Reading and today's proceedings. Since the other place will have more time in which to study the response of the hon. Lady to these amendments, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
In a two-clause Bill, in which the second clause simply relates to the name, clause 1 is almost inevitably at the heart of the Bill. Before we allow such a measure to be put on to the statute book we must look closely at its provisions. This entire saga has been a disgrace from beginning to end. It is appalling that we have had to sit through the proceedings on a Bill which ought to have been unnecessary. We should not be wasting the time of the Committee by debating clause stand part. It is putting right not only the sums of money that should be paid but the way in which they should be paid and the liability or otherwise to the interest payments to be made by the GLC if the sums are not paid on the due date. The Bill is the result of the Secretary of State's desire to push ahead with improperly drafted and ill-thought-out legislation.
This clause is part of the Bill for one reason alone—because the Secretary of State pushed through a Bill which was so badly drafted that he was found to be in default of his proper responsibilities. We cannot reiterate that too often. I know that we are not supposed to use foreign languages in the House, although occasionally some of the gobbledegook that goes through in the form of legislation constitutes practically a different language, but from the beginning to end of the Bill the Secretary of State has acted as if he had droit de seigneur over the entire transport system. He says what he wills will be done and then, irrespective of the needs of the ratepayers, the elected councillors, the House of Commons and anyone else involved in the legislation, what the Secretary of State wants shall be done. If that means bringing in the odd Bill every now and then to amend the Bill that he originally thought of before he got it wrong and had to redraft it and bring it all back, that is unfortunate. It becomes a rather complicated game. We are told that we must discuss the clause today because the money is urgently needed. There is considerable doubt about that. LRT may go into deficit by the end of February, but it has considerable borrowing powers — of up to £10 million — given to it by the Secretary of State. Yet he stands at the Dispatch Box and says that he must push the Bill through because if he does not LRT will not be able to cope. It may well be that LRT's borrowing powers need to be extended, but there is nothing to stop the Secretary of State extending them. He could do that if there were any question of LRT not being able to pay its operating costs. If there really were any urgency, why would this Bill say that there is a possibility of the Bill becoming an Act after 25 March? In other words, when the Secretary of State was having the Bill drafted by his own infallible means he wrote into it the assumption that if the Bill were not passed before 25 March it would be passed afterwards. That is the general level of assessment that we have had all the way through this bit of nonsense. Nevertheless, we should take account of it.Does not that suggest that LRT would, if it were a commercial organisation, be trading illegally if the Bill were not passed by 25 March? Is not that what the Secretary of State and his departmental officials must have anticipated and therefore must have also anticipated that LRT would be able to use the borrowing powers which the Secretary of State asked the House to approve last year? What other reason is there for the borrowing powers?
My hon. Friend has hit upon it. The reality is, as the Secretary of State knows, that we do not have to push this completely inadequate two-clause Bill through tonight. He understands better than anyone that there is no real urgency because he has the powers to give LRT the right to borrow the money to keep itself solvent. That would not be difficult for him to do. Indeed, it would not be an unusual thing for him to do.
The Bill is being raced through the House with what can only be called indecent haste. It would not be unusual if the Secretary of State were to say that if LRT wants to extend its borrowing powers it shall do so. He knows that that is almost the norm. It has been done many times before. What has not been done many times before is for a Secretary of State to produce a measure which is found by the British courts to be illegal and irresposible and then to compound the difficulty by bringing forward another Bill in which he seeks for a second time to do that which he was not able to do legally on the first occasion. The Secretary of State has done that with no apology and very little explanation to the House of Commons. He says that we debated the Ways and Means Resolution and have had a debate again today so why should we go through the whole affair again? We need to go through the whole affair over and over again because the message behind clause 1 and the arrogant way in which it has been shoved through the House of Commons is that the Secretary of State's political view of transport, which bears a strong resemblance to Dante's "Inferno", is that if he wants to change the system he will. It does not matter whether he is talking about finance for LRT, about the services that are provided for London ratepayers or even about levying extra sums on the ratepayers, which is what he has been doing in advance of this nasty little Bill. As far as the Secretary of State is concerned, his word is law and anything else must be subsidiary to his narrow and blinkered view. 7.45 pm The Bill ought not to go through the House of Commons. It ought not to be pushed on to the statute book. The House should not be examining it today and we should not be asked to accept it. The Secretary of State will get it through, of course he will, because although Conservative Members are not prepared to make speeches about the Bill they will be prepared to vote for it tonight. If he is not ashamed of his behaviour, I hope that some of his hon. Friends will be. The Secretary of State's entire decision-making process on the Bill has been defective. It has been a disgrace from beginning to end and I am appalled that we should be asked to accept it tonight.I congratulate my right hon. Friend the Secretary of State on presenting this clear, simple Bill which requires no amendment. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) talked about the droit de seigneur. She is certainly the dame aux camellias tonight. The hon. Lady has bored us to death, as did her hon. Friends in the tedious repetition of the same shabby little argument. My right hon. Friend was wise and sensible to introduce the Bill and we welcome it tonight.
After the speech of the hon. Member for Harrow, West (Sir J. Page), I hesitate about addressing the Committee because that which the hon. Gentleman supports with such exaggerated and baseless language is so manifestly invalid that it needs no one to oppose it. I shall confine myself to a single point and make it shortly.
Does my hon. Friend accept that the description, la dame aux camellias, is more apt for the Secretary of State than for my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) because the tragedy of the heroine of "La Traviata" was that she could not get her accounts right?
If I followed that line of thought, I should not get far before I was ruled out of order. Therefore, I shall not follow that line.
As my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) pointed out, the Bill seeks retroactively to validate an Act which was invalid at the time that it was passed. That is the obverse of a method of which the reverse is retroactively to criminalise something which was not a crime at the time that it took place. One has only to say that to show how repulsive it is to democrats that, except in emergencies, retroactive legislation should be introduced. Such legislation is a common feature of police states. Totalitarian Governments who do not like what a chap is doing, but discover that it is not a crime, pass laws to make it a crime and make them retroactive for a couple of years to catch him. That is bad, but it is as bad to validate retroactively an action that was invalid. When I first became a Member, everyone was horrified at the idea of retroactive legislation. A Minister who had to introduce it — it happened only when something drastic or deadly had to be coped with — came to the House in sackcloth and ashes, as a humble penitent, begging the pardon of the House for not having anticipated matters well enough to ensure that he did not need to be forced to legislate retroactively. It was considered to be a very nasty thing which Ministers should do only as a last resort, in a great emergency and on a matter of grave importance. It was also considered that they should apologise to the House for having to do it. The mores of ministerial behaviour have changed since 1979. We saw some of that this week. I do not know whether the Secretary of State for Transport was an hon. Member when Sir Thomas Dugdale, who was an hon. Member in every sense of those words, was Minister of Agriculture, but someone in Sir Thomas's Department committed a not very grave impropriety. The Minister of Agriculture was not involved, but, being an honourable man, he took responsibility for the actions of his subordinates and resigned. There were later cases, one or two of which were painful, and on that account I shall refrain from mentioning them. The standards of morality and decency that used to characterise the Conservative party and others have evaporated in what my hon. Friend the Member for Crewe and Nantwich rightly called the arrogance of Ministers, especially in their dealings with the House. Ministers in this Government have ceased to see themselves as servants of the legislature, putting its decisions into practice. They now see themselves as masters of the legislature — deceiving and lying if necessary and, whether necessary or not, brazening and railroading things through the House. Today has been a prime example of that. The Secretary of State is introducing legislation retroactively to make him an honest woman. He went whoring after false gods; he did not realise that they were false until a judge told him so. Now he has introduced legislation to make himself honest. It is a smelly business from start to finish. If I were in his place, I would be ashamed of it.Clause 1, which the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) says is all that we are left to debate, is not, as the hon. Member for Harrow, West (Sir J. Page) claimed, before us without amendment. It is an amendment itself.
The basis of the argument—if it can be accorded that description — of the hon. Member for Harrow, West is that this is a wonderful, tidy little Bill. I was able to be in the House only briefly for last night's Second Reading debate, because I was upstairs in Committee on the Local Government Bill. The Government spend so much time interfering with local government that many of us have to occupy most of our time in Parliament on local government matters rather than national Government issues. However, I have read the arguments adduced on behalf of the Government yesterday and they do not begin to persuade me that the sum set out in the Bill is the right sum. The Secretary of State said:The "just that" was the amount that the Secretary of State regards as reasonable in relation to LRT's requirements. He said:"The sum of £258·2 million roughly achieves just that."
I am not a mathematician, but the figures in that paragraph alone do not justify the sum for which the Secretary of State is asking the House. I remember the discussion in Committee on last year's London Regional Transport Bill. The reason for the clause empowering the Secretary of State to seek a direction was that when the governance of London Transport was broken in the middle of a financial and accounting year, the right hon. Gentleman would be allowed to do two things. Mr. Justice McNeill made clear what those things were. The first was to consult, and the second was to agree an appropriate figure to balance the books. Clause 1 of this Bill seeks to produce that right figure; it is an accountancy figure. Yesterday's debate on Second Reading and today's debates on the business motion and the amendments were about whether we should agree a clause that gives a certain sum, under the control of the Secretary of State, from one authority to another. Is the sum that the right hon. Gentleman has determined is the right sum to go to the GLC and on to LRT to make up the balance for this year? In considering those questions, we have to go on the evidence. There is no other way in which we can be persuaded. The only argument that we have been given and the only evidence presented to us is that contained in my quotation of what the Secretary of State said on Second Reading. That is not convincing. We are being asked to agree the budget of LRT for this year. We need to know more about its liabilities for voluntary redundancies and whether they are attributable to the Capitalcard or are connected with the policies that LRT has implemented. We also need to know about its unfunded liabilities. I have a duty to my constituents, who pay rates and travel by LRT, to find out whether we are providing the right sum. The money does not come out of the Secretary of State's pocket; he merely acts as the authority. The money comes out of the pockets of my constituents. Every extra pound paid to LRT means that my constituents have a pound less for something else. We are talking about a substantial sum. The Minister of State says that she is not used to dealing in millions of pounds. We are talking about £258 million, which is a large sum. If it is divided equally among London citizens, of whom there are about 7 million, we are paying more than £10 each. Even if we knocked off a bit for the people outside London who use London's transport, we are still paying pounds as opposed to pence."It will leave a cash surplus of some £30 million at the end of the year. But LRT has liabilities of £21 million for voluntary redundancies and a further £15 million for other unfunded liabilities. Thus, the £285 million is certainly not more than LRT needs to balance its books this year."—[Official Report, 19 February 1985; Vol. 73, c. 873.]
It is £30 each.
8 pm
Is is more than £30. That means that I and other London ratepayers and residents are paying more than £30.
It is £37.
The computations are being ever bettered around me. The further east we go the more accurate the accounting becomes. The amount has gone up to £37 per Londoner.
I should have liked to have time, without doing six other things simultaneously, to read all of last night's debate. I am not the transport spokesman for my party, but this is a London matter, and I should have liked to be able to consider amendments. Normally I would table amendments to Bills that relate to London. We know that it has been impossible to table amendments because we were sitting in Committee upstairs until midnight and then had to participate in a debate on fluoride, which continued until about 2.30 am. The hon. Members for Wigan (Mr. Stott) and for Crewe and Nantwich said that it would be useful to talk about what will happen. It would be useful to check with officials whether or not the sums are correct. All political parties have their own advisers and are given the good offices of independent officials in the GLC, local councils and transport authorities to check figures. Accountants are also available to give plenty of advice if we ask for it. We have not been given a moment to ask for advice. I shall not go on at great length, although I recall that last year when I was on a Committee I was able to speak, without any trouble, for 80 minutes. I am well minded to continue, because I am sufficiently angry about this matter. I have rarely been as angry in my time in the House, and I shall have been here two years this week. I am angry because I have seen what the Government are doing to justify this clause and this money. The Government Front Bench have given muddled arguments with different figures. The Government want to rush through all the stages in the same day with no opportunity for proper consideration. This is all to do with the nationalisation of a public service by a Government who do not believe in nationalisation. It is all to do with handing over powers from local authorities to the present incumbent in the Department of Transport, who should never have had the powers in the first place. As a member of the legislature my primary job is to control the Executive. My second role is as a member of a political party. The arguments I have been given do not begin to persuade me that this is the right sum. What do I do? I have one option — to vote against the clause. That option will be exercised when other hon. Members vote against the clause. I must register my grave dissatisfaction in being asked to vote for this financial measure, which is what Governments are all about, without the assistance or safeguards which we would normally have when financial measures come before the House. Taxation measures go through a special procedure with special examination in Committee upstairs. We normally have an ample opportunity to consider any measure of financial relevance, but for this measure we have been given no opportunities at all. An amount of £250 million-odd is asked for as the last stage of the saga. As we have often been reminded, the Secretary of State got it completely wrong the first time around. I have no reason to believe that this figure is any more accurate than the first figure. Unless and until the Government's procedures improve to show that they believe that their duty is to prove the case, there is no option but for Committee members to do all that is left in their power—I wish that they could do more—and make it thoroughly difficult for the Government to get such business through the Committee, and later through the House. There are only a limited number of options available to delay the Bill. If it were in the Committee's power, I would not be at all reluctant to delay well beyond 25 March, because that is the reward that the Secretary of State deserves for the appalling way in which he and his colleagues have treated the House of Commons in this small, but significant, piece of legislation, which has already, for no reasoned argument, broken two principles.I believe that the Committee would like me to reply briefly to the points that have been made. The hon. Member for Southwark and Bermondsey (Mr. Hughes) has seen a misprint in Hansard. The figure of £285 million should be £258 million.
Ha, ha.
The hon. Gentleman laughs, but I may have something to say about him later. I do not think that the Committee would hold me responsible for a printer's error.
This may be a rushed job, but the hon. Members for Southwark and Bermondsey and for Bow and Poplar (Mr. Mikardo) have misunderstood the position. The hon. Member for Southwark and Bermondsey got himself into a lather of bogus information and used the rest of his speech to mouth adjectives which he thought might hurt. I must include in that charge the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). I must make clear the errors of the hon. Member for Southwark and Bermondsey. In the passage to which the hon. Gentleman referred I was talking about the balance at the end of the existing financial year, 1984–85. I was answering points put by hon. Members, including the hon. Member for Newham—Which one?
Both, the hon. Members for Newham, North-West (Mr. Banks), and for Newham, South (Mr. Spearing). I was referring to the surplus of cash and whether that sum was roughly equivalent to the accrued liabilities. I was doing so to justify my pledge that LRT's needs would be met—no more, no less. I cited figures showing that, roughly speaking, within the margins of error, that had been achieved. The hon. Gentleman mixed that up with LRT's total cash needs for the year and the amount in the Bill that should be taken from the GLC to fulfil the objective of financing LRT for the year.
The hon. Member for Southwark and Bermondsey failed to understand that because of all the other things that he says he is doing. Why does he not do the other things and stop getting mixed up in matters that he does not understand? Having made his mistake, the hon. Gentleman started to abuse me. It is easy to do that, but he would have been right if he had leased his argument on the correct figures. The hon. Member for Bow and Poplar made a similar mistake. He said that the legislation was retroactive and proceeded to castigate the Government for bringing in retroactive legislation. The hon. Gentleman failed to prove his point. The legislation is not retroactive. The GLC knew, when the London Regional Transport Bill was published in December 1983, that its exposure under section 49 was £360 million in toto for the year. That figure, less the amount that the GLC had already paid, was put into the direction made in June. Until that moment, the GLC had no doubt that that was the amount it would have to pay. The judgment went against the Government and in favour of the GLC. That same morning I said that I intended to appeal. At no time did the GLC have any doubt that it could be liable for the full £360 million. In the event, it is asked to pay £23 million less than it was always on notice it would have to pay. The hon. Member for Bow and Poplar must withdraw the charge of retroactivity, because there is nothing about that series of events that is retroactive. If he does so, as he must, he must withdraw the adjectives.I thought that I had made myself clear. The element of retroactivity arises from the fact that the Minister got it wrong the first time and is introducing this nasty little Bill to correct his error.
The hon. Gentleman has not heard the precedents that I cited either. It is better to read previous debates. He will know the two precedents that I cited. They are cases where local authorities, one of which was the GLC, were busily paying concessionary fares, were taken to court and were found not to have the powers to pay them. Immediately the House legislated and overturned the illegality. There is no difference between those precedents and what I have done.
There are two reasons for urgency. First, London Regional Transport will be running out of money soon, will go into deficit and will have to pay interest on borrowings. The hon. Member for Crewe and Nantwich picked up that reason. The second reason is an important one, which she conveniently ignored. The GLC needs to know what will be in the Bill in order to make its rate. It is typical of the hon. Lady to pick up one argument and ignore the other. Obviously, the two arguments go together, and are strong reasons why the Government wish to make progress with the Bill. Although we have had the debate about the day on which this matter is being taken, I wanted to put her right on that.Has the right hon. Gentleman at any point said to the GLC in reply to its queries that it does not matter what happens with the Bill and that it can proceed on the figures because it should assume that the Bill will become law? Or has he given the GLC to understand, during the many months of argument, that it will have to make its calculations without any clear indication of the sums of money involved? I believe that there is considerable doubt whether he has made the position as clear as he suggests.
The position is now totally clear—
Now.
8.15 pm
Now. The sum of money is on the face of the Bill. I made it clear earlier that the £177 million deposited will be taken into account. If the House gives the Bill its Third Reading tonight, there will be no way in which the Bill can be amended, especially in relation to the sum or, indeed, to anything else. At the close of play tonight there will be certainty for the GLC. It will know what sum to work on for its budgetary purposes.
The hon. Lady had made a meal of these debates and heaped adjectives upon me, which I have taken in good part. I must tell her that she even made a slip tonight when she referred to the measure as a two-clause Bill. It is a one-clause Bill. If she cannot get even that right, it does not say much for her competence.It is a two-clause Bill.
It is a one-clause Bill.
On the Bill it says clause 1 and clause 2.
There are two clauses.
It is a one-clause Bill in so far as what matters and the hon. Lady knows it. The hon. Lady has conducted her opposition with all the venom that she can muster, but she knows in her heart of hearts that this is the only possible way to redress the interests of the ratepayers versus the GLC. However much she may have enjoyed opposing the Bill, the ratepayers and travellers of London will not thank her for all the efforts that she has made.
Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 221, Noes 157.
Division No. 117]
| [8.15 pm
|
AYES
| |
Alexander, Richard | Garel-Jones, Tristan |
Atkins, Robert (South Ribble) | Glyn, Dr Alan |
Baker, Nicholas (N Dorset) | Gower, Sir Raymond |
Beaumont-Dark, Anthony | Grant, Sir Anthony |
Bevan, David Gilroy | Greenway, Harry |
Boscawen, Hon Robert | Gregory, Conal |
Bottomley, Mrs Virginia | Griffiths, Peter (Portsm'th N) |
Brandon-Bravo, Martin | Grist, Ian |
Bright, Graham | Grylls, Michael |
Brittan, Rt Hon Leon | Hamilton, Hon A. (Epsom) |
Brooke, Hon Peter | Hamilton, Neil (Tatton) |
Brown, M. (Brigg & Cl'thpes) | Hanley, Jeremy |
Bruinvels, Peter | Hannam, John |
Buchanan-Smith, Rt Hon A. | Hargreaves, Kenneth |
Budgen, Nick | Haselhurst, Alan |
Burt, Alistair | Havers, Rt Hon Sir Michael |
Butcher, John | Hawksley, Warren |
Butterfill, John | Hayes, J. |
Carlisle, Kenneth (Lincoln) | Hayhoe, Barney |
Cash, William | Hayward, Robert |
Chalker, Mrs Lynda | Heddle, John |
Chope, Christopher | Henderson, Barry |
Clegg, Sir Walter | Hickmet, Richard |
Cockeram, Eric | Hicks, Robert |
Coombs, Simon | Hind, Kenneth |
Cranborne, Viscount | Holt, Richard |
Crouch, David | Howard, Michael |
Douglas-Hamilton, Lord J. | Howarth, Gerald (Cannock) |
du Cann, Rt Hon Sir Edward | Howell, Ralph (N Norfolk) |
Dunn, Robert | Hubbard-Miles, Peter |
Durant, Tony | Hunt, David (Wirral) |
Fairbairn, Nicholas | Hunt, John (Ravensbourne) |
Farr, Sir John | Hunter, Andrew |
Favell, Anthony | Jackson, Robert |
Fletcher, Alexander | Jenkin, Rt Hon Patrick |
Fookes, Miss Janet | Jones, Gwilym (Cardiff N) |
Forman, Nigel | Jones, Robert (W Herts) |
Forsyth, Michael (Stirling) | Jopling, Rt Hon Michael |
Forth, Eric | Kellett-Bowman, Mrs Elaine |
Franks, Cecil | Kershaw, Sir Anthony |
Freeman, Roger | Key, Robert |
Gale, Roger | King, Roger (B'ham N'field) |
Galley, Roy | King, Rt Hon Tom |
Gardner, Sir Edward (Fylde) | Knight, Gregory (Derby N) |
Knowles, Michael | Ridley, Rt Hon Nicholas |
Knox, David | Ridsdale, Sir Julian |
Lamont, Norman | Rifkind, Malcolm |
Lang, Ian | Roberts, Wyn (Conwy) |
Latham, Michael | Robinson, Mark (N'port W) |
Lawrence, Ivan | Rossi, Sir Hugh |
Lee, John (Pendle) | Rost, Peter |
Lightbown, David | Rumbold, Mrs Angela |
Lloyd, Ian (Havant) | Sainsbury, Hon Timothy |
Lord, Michael | Sayeed, Jonathan |
Luce, Richard | Shaw, Sir Michael (Scarb') |
Lyell, Nicholas | Shelton, William (Streatham) |
McCrindle, Robert | Shepherd, Colin (Hereford) |
McCurley, Mrs Anna | Skeet, T. H. H. |
MacGregor, John | Smith, Tim (Beaconsfield) |
MacKay, Andrew (Berkshire) | Soames, Hon Nicholas |
MacKay, John (Argyll & Bute) | Speed, Keith |
Maclean, David John | Spencer, Derek |
Madel, David | Spicer, Michael (S Worcs) |
Major, John | Stanbrook, Ivor |
Malins, Humfrey | Stevens, Lewis (Nuneaton) |
Malone, Gerald | Stevens, Martin (Fulham) |
Marland, Paul | Stewart, Allan (Eastwood) |
Marlow, Antony | Stewart, Andrew (Sherwood) |
Marshall, Michael (Arundel) | Stewart, Ian (N Hertf'dshire) |
Mates, Michael | Stokes, John |
Mather, Carol | Stradling Thomas, J. |
Maude, Hon Francis | Sumberg, David |
Mawhinney, Dr Brian | Taylor, John (Solihull) |
Maxwell-Hyslop, Robin | Taylor, Teddy (S'end E) |
Mayhew, Sir Patrick | Temple-Morris, Peter |
Mellor, David | Terlezki, Stefan |
Meyer, Sir Anthony | Thomas, Rt Hon Peter |
Miller, Hal (B'grove) | Thompson, Donald (Calder V) |
Mills, Iain (Meriden) | Thompson, Patrick (N'ich N) |
Mills, Sir Peter (West Devon) | Thornton, Malcolm |
Moate, Roger | Thurnham, Peter |
Monro, Sir Hector | Townend, John (Bridlington) |
Montgomery, Sir Fergus | Townsend, Cyril D. (B'heath) |
Moore, John | Tracey, Richard |
Morrison, Hon C. (Devizes) | Trippier, David |
Moynihan, Hon C. | Trotter, Neville |
Murphy, Christopher | Twinn, Dr Ian |
Neale, Gerrard | van Straubenzee, Sir W. |
Needham, Richard | Vaughan, Sir Gerard |
Nelson, Anthony | Waddington, David |
Newton, Tony | Waldegrave, Hon William |
Nicholls, Patrick | Walden, George |
Normanton, Tom | Wall, Sir Patrick |
Norris, Steven | Waller, Gary |
Onslow, Cranley | Ward, John |
Oppenheim, Phillip | Wardle, C. (Bexhill) |
Page, Sir John (Harrow W) | Watson, John |
Page, Richard (Herts SW) | Wells, Bowen (Hertford) |
Parkinson, Rt Hon Cecil | Whitfield, John |
Parris, Matthew | Whitney, Raymond |
Patten, J. (Oxf W & Abdgn) | Wilkinson, John |
Pawsey, James | Winterton, Mrs Ann |
Peacock, Mrs Elizabeth | Winterton, Nicholas |
Pollock, Alexander | Wolfson, Mark |
Porter, Barry | Wood, Timothy |
Portillo, Michael | Yeo, Tim |
Powell, William (Corby) | Young, Sir George (Acton) |
Powley, John | Younger, Rt Hon George |
Proctor, K. Harvey | |
Raffan, Keith | Tellers for the Ayes: |
Renton, Tim | Mr. Mark Lennox-Boyd and |
Rhodes James, Robert | Mr. Peter Lloyd. |
Rhys Williams, Sir Brandon |
NOES
| |
Alton, David | Beith, A. J. |
Anderson, Donald | Bell, Stuart |
Archer, Rt Hon Peter | Bennett, A. (Dent'n & Red'sh) |
Ashdown, Paddy | Bermingham, Gerald |
Atkinson, N. (Tottenham) | Bidwell, Sydney |
Bagier, Gordon A. T. | Blair, Anthony |
Barnett, Guy | Boothroyd, Miss Betty |
Barron, Kevin | Boyes, Roland |
Beckett, Mrs Margaret | Brown, Gordon (D'f'mline E) |
Brown, N. (N'c'tle-u-Tyne E) | Kennedy, Charles |
Brown, Ron (E'burgh, Leith) | Kirkwood, Archy |
Bruce, Malcolm | Lamond, James |
Buchan, Norman | Leighton, Ronald |
Caborn, Richard | Lewis, Ron (Carlisle) |
Campbell, Ian | Lewis, Terence (Worsley) |
Campbell-Savours, Dale | Litherland, Robert |
Canavan, Dennis | Lloyd, Tony (Stretford) |
Carlile, Alexander (Montg'y) | Loyden, Edward |
Carter-Jones, Lewis | McCartney, Hugh |
Cartwright, John | McDonald, Dr Oonagh |
Clarke, Thomas | McKelvey, William |
Clay, Robert | Mackenzie, Rt Hon Gregor |
Clwyd, Mrs Ann | McNamara, Kevin |
Cocks, Rt Hon M. (Bristol S.) | McTaggart, Robert |
Cohen, Harry | McWilliam, John |
Coleman, Donald | Marek, Dr John |
Concannon, Rt Hon J. D. | Marshall, David (Shettleston) |
Cook, Frank (Stockton North) | Mason, Rt Hon Roy |
Cook, Robin F. (Livingston) | Maxton, John |
Corbett, Robin | Maynard, Miss Joan |
Corbyn, Jeremy | Meadowcroft, Michael |
Cowans, Harry | Mikardo, Ian |
Craigen, J. M. | Millan, Rt Hon Bruce |
Crowther, Stan | Mitchell, Austin (G't Grimsby) |
Cunliffe, Lawrence | Morris, Rt Hon A. (W'shawe) |
Cunningham, Dr John | Nellist, David |
Davies, Rt Hon Denzil (L'lli) | Oakes, Rt Hon Gordon |
Davies, Ronald (Caerphilly) | O'Neill, Martin |
Davis, Terry (B'ham, H'ge H'l) | Orme, Rt Hon Stanley |
Deakins, Eric | Park, George |
Dewar, Donald | Parry, Robert |
Dobson, Frank | Patchett, Terry |
Dormand, Jack | Pike, Peter |
Douglas, Dick | Radice, Giles |
Dubs, Alfred | Randall, Stuart |
Duffy, A. E. P. | Redmond, M. |
Dunwoody, Hon Mrs G. | Rees, Rt Hon M. (Leeds S) |
Eadie, Alex | Richardson, Ms Jo |
Eastham, Ken | Roberts, Allan (Bootle) |
Evans, John (St. Helens N) | Robertson, George |
Ewing, Harry | Robinson, G. (Coventry NW) |
Fatchett, Derek | Rogers, Allan |
Faulds, Andrew | Rowlands, Ted |
Field, Frank (Birkenhead) | Sheldon, Rt Hon R. |
Fields, T. (L'pool Broad Gn) | Shore, Rt Hon Peter |
Fisher, Mark | Short, Ms Clare (Ladywood) |
Flannery, Martin | Short, Mrs R.(W'hampt'n NE) |
Forrester, John | Silkin, Rt Hon J. |
Foster, Derek | Skinner, Dennis |
Fraser, J. (Norwood) | Snape, Peter |
Freeson, Rt Hon Reginald | Soley, Clive |
Gilbert, Rt Hon Dr John | Spearing, Nigel |
Gould, Bryan | Stott, Roger |
Gourlay, Harry | Strang, Gavin |
Hamilton, James (M'weil N) | Straw, Jack |
Hamilton, W. W. (Central Fife) | Thomas, Dafydd (Merioneth) |
Harrison, Rt Hon Walter | Thompson, J. (Wansbeck) |
Hart, Rt Hon Dame Judith | Wainwright, R. |
Haynes, Frank | Wardell, Gareth (Gower) |
Hogg, N. (C'nauld & Kilsyth) | Wareing, Robert |
Holland, Stuart (Vauxhall) | Welsh, Michael |
Home Robertson, John | White, James |
Hoyle, Douglas | Williams, Rt Hon A. |
Hughes, Dr. Mark (Durham) | Winnick, David |
Hughes, Robert (Aberdeen N) | Woodall, Alec |
Hughes, Roy (Newport East) | Young, David (Bolton SE) |
Hughes, Simon (Southward) | |
John, Brynmor | Tellers for the Noes: |
Johnston, Russell | Dr. Roger Thomas and |
Jones, Barry (Alyn & Deeside) | Mr. Allen McKay. |
Kaufman, Rt Hon Gerald |
Question accordingly agreed to.
Clause 1 ordered to stand part of the Bill.
Clause 2
Short Title
Question proposed, That the clause stand part of the Bill.
It is important that we have a debate on this clause, given that about 10 minutes ago the Secretary of State did not know that it was in the Bill. In my two years in the House I have never known a Bill to have clauses that were not known to its drafters. I remind the Committee that the right hon. Gentleman told the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) that it did not say much for her confidence if she did not realise that it was a one-clause Bill.
I know that we have descended to personalities, but it is important that the world should know that the Secretary of State for Transport introduced a Bill and did not spot one of the clauses. If we did not have the clause, the Bill would have no name. If the Bill had no name, it might have no consequences. If the Bill had no consequences, many of us might be a great deal happier, because clause 2 says something important. It states:Most Bills have something like that at the end because they like to have a name when they become law. The significance of the name of this Bill is that it is important that the history books should record that the Secretary of State needed to introduce not just one London Regional Transport Bill but two, the second being the London Regional Transport (Amendment) Bill. That is the title of the Bill, but not the name of the clause. It shows that the first time around the Secretary of State got it wrong. Out of respect for the Committee, I shall reserve my remarks about the other things that the Secretary of State said in reply to the hon. Lady on the earlier clause until Third Reading. That means, as I understand it, that I shall not have to reserve my remarks for long. It is a pretty odd state of affairs when 50 per cent. of a Bill is unknown to its master. Perhaps the arguments have been put so badly because, as some hon. Members believe, 50 per cent. of them are also unknown."This Act may be cited as the London Regional Transport (Amendment) Act 1985."
Question put and agreed to.
Bill reported, without amendment.
Motion made, and Question proposed, That the Bill be now read the Third time.— [Mr. Ridley.]
8.30 pm
Today's The Standard carries an interesting editorial. It says:
That well-known Socialist newspaper, the The Standard, is expressing in fairly calm terms the sentiments of every hon. Member who has sat through the passage of the London Regional Transport (Amendment) Bill. The Bill was created out of chaos, it has been prosecuted with prejudice and it passes on to the statute book with a distinct odour of disgrace. It is not often that the House is asked to deal with badly drafted legislation that has been taken to court almost as soon as it has passed on to the statute book, that has a specific and damaging effect on the ratepayers of London yet is presented to them by the Secretary of State for Transport as amending legislation that is saving them from the rapacious and all-embracing Greater London council. The reality behind the Bill is a simple one, but it bears repetition simply because the House has a responsibility to make sure that when Ministers make radical and serious mistakes they do not rewrite the legislation but come to the House and admit, first, that they have got it wrong. The Secretary of State asked for more money than he had a right to ask for. He persisted, when a court of law found that he was acting illegally, in demanding that the House should not discuss the matter, because, he said, it was sub judice. He said that not once but four times. When I suggested that he had no intention of appealing, he said that I was misreporting him. The Secretary of State claimed that he had said that the matter was sub judice because it was sub judice to him. From the beginning of the debate the truth is that the GLC has been asked to hand over money that it has raised from the ratepayers, which belongs to the ratepayers and which should go back to the ratepayers if it is not required for the operating costs of London Regional Transport. But the Secretary of State has been prepared to accept neither that he made a mistake nor that he should now no longer demand that the mistake be put right by legislation, in whatever form it is written, the intention of which is to have retrospective effect. He is seeking to put right something which a court of law found was based on an illegal demand. I can think of no other way of expressing it. The Secretary of State says that we claim that the legislation is retrospective, but we never expand on the point. The crux of the matter is that the Secretary of State asked for something to which he was not entitled. When he was found out and taken to a court of law he said that it did not matter and that he intended to create a new Bill to cover what he had not done in the first instance. That is a shameful way to proceed. Hon. Members representing London constituencies have consistently asked him not to rush the Bill through Parliament. They have asked him to give us time in which to table amendments that would at least explore some of the extraordinary reasoning behind the Bill. The Secretary of State has made a number of speeches, everyone of which has given a different set of figures, sometimes amended because he says there has been a printing error. Sometimes he has claimed that we have not understood the full implications and sometimes he has done this simply because he is shifting the grounds of the argument as we proceed. I believe that this incident has been one of the most shabby in which I have been involved since I was elected to Parliament. It has demonstrated the will of a Government who are no longer prepared to concern themselves with the interests of the ratepayers or the taxpayers. The Secretary of State has encapsulated that view in his attitude to the Bill. Tonight we have not had sufficient time to debate the few inadequate amendments that have been tabled. Tonight the House has moved from Committee to Report to Third Reading without the chance to amend or even fully to explore some of the figures that the Secretary of State has given. Tonight we have seen as fine an example of completely arrogant disregard for the interests of the people of Britain as we are ever likely to see even from a Conservative Government. This has been a shameful episode. I am deeply depressed that the Secretary of State will use his majority to push this nasty little measure on to the statute book."Mrs. Thatcher's terrible twins were at it again yesterday: Mr. Patrick Jenkin and Mr. Nicholas Ridley reminding us that, for some Ministers, banana skins don't have to be special, just part of life's routine. Mr. Ridley was involved in what one MP happily described as a piece of legislative Tippex, to correct a court ruling that had unfortunately gone against him. … Mr. Ridley, in other words, broke the law. So yesterday he used the full weight of the law-and-order Party to change it. … The problem with both Ministers is that these are not isolated blunders. Mr. Ridley's recent record features own goals on Stansted, heavy lorries in London, and private buses. What each man has in common (apart from a certain baffled charm) is an unerring ability to turn a perfectly logical case into an unholy mess. Mrs. Thatcher's Cabinet would be stronger without them."
8.37 pm
On 12 February the Minister of Transport at 11.55 pm introduced to the House a debate on the draft London Regional Transport (Levy) Order 1985. That order sought approval for the budget for London Regional Transport for the coming financial year. In remarks relating to the year that is about to begin the Minister of Transport explained to the House, in answer to a question, that the matter was difficult, complicated and complex. After a debate which lasted one and a half hours, the Minister of State, in reply to the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), said:
The House was of course asked to decide on that matter before we had sorted out the budget for this year, so it was an illogical order. It was even more illogical when one considers what the Secretary of State said on 7 February:"I agree wholeheartedly … that the order is complicated." —[Official Report, 12 February 1985; Vol. 73, c. 306.]
The right hon. Gentleman then said:"LRT has to budget and plan ahead for 1985–86 and beyond, as well as to settle its 1984–85 accounts. The GLC is at the crucial final stages in its annual budgetary and rate-precepting processes. Legislation is the only way to resolve the uncertainties and give Parliament the opportunity to determine the outcome in a way that is reasonable as between the parties concerned."
We should have done things in the right order. We should, first — to use the Secretary of State's words — have settled the 1984–85 accounts. We should have been given the opportunity to determine the matter, as the right hon. Gentleman said, in a reasonable way as between the parties concerned. To have had to go through this process in two days has been unreasonable and not in keeping with what the Secretary of State said, for he claimed:"This matter must be urgently resolved, if possible, before the end of the financial year."
He did not say that it had to be resolved within a week or by the end of February, or that the LRT could not go ahead unless the issue was resolved by a date in March, or that it had to be finalised by the end of the financial year. He simply said:"This matter must be urgently resolved, if possible, before the end of the financial year."
A steamroller has brought in an alteration of the Secretary of State's own making, getting all stages of the Bill through in two days. No wonder there have been protests. No wonder hon. Members complain when the figures do not add up—I am not talking about a printing error—when statistics given in the last 24 hours are not explained and when the right hon. Gentleman does not give the statistical detail to justify the Bill. The Secretary of State told me not to interfere in matters that I did not understand. The job of hon. Members is to examine legislation, and the Government have a duty to provide us with an opportunity to examine legislation in a responsible way so that the people whom we represent get a decent service, by the legislature tempering the activities of the Executive. I do not pretend to be an expert in transport subsidy matters. Does the Secretary of State believe that he improves the chances of hon. Members understanding such issues when he pushes legislation through in 24 hours? Does he think that Parliament passes better legislation by that means? Are members of the Government now forbidden to apologise to Parliament? Cannot a Minister say, "I am sorry, I got it wrong. I will see if we can agree a procedure that we should have sorted out in the first place." Do the Government presume that, because they are in office, they always get it right and need never be criticised? Governments all over the world make mistakes, sometimes fatal ones, occasionally involving millions of people being killed. Compared with some of the world's catastrophes, this Bill can be described as a minor mistake. Nevertheless, it is expensive and it is important. Hon. Members might have been more sympathetic to the Secretary of State had he apologised and said, "Mr. Justice McNeill said that I was unlawful, irrational and procedurally improper. He was right and I apologise to the House. I made a mistake. I shall try to do what I failed to do at the beginning. I shall now try to consult; I shall try to do what I said on 7 February, and resolve the issue in a way that is reasonable." What the right hon. Gentleman has done has been wholly unreasonable. Not only is the procedure unreasonable, but it is unconstitutional and unacceptable. Only because the Government, by our electoral system, have a majority in Parliament — though they have a gross minority of votes in the country—can they get a measure such as this on to the statute book. [Interruption.] Conservative Members should accept that their party is in power on the basis of a minority of votes. I do not know whether the occupants of the official Opposition Front Bench were consulted through the usual channels about the business statement that was made last night. If they were—and I guess that they were—they must be considered to have been a party to today's exercise. I know that my colleagues were not consulted. [Interruption.] My colleagues are in the building and will come in later to register their disapproval; they trust me to make these points. There is probably a greater percentage of my party present now, personified by me, than of the Conservative party as personified by the occupants of the Government Benches. If there was an agreement with the Labour party that all stages of the Bill should be taken so quickly, it should never have been made, for it goes against constitutional precedent and the right of hon. Members to have time to reflect and discuss so that they can do their job properly. That is why I say that the official Opposition must take their share of the blame. The real blame, however, must be laid at the door of the Government and the Secretary of State. Once they decided to take over transport in London, they were asking for trouble. When they decided to nationalise London Transport, against all their declared policies, they were interfering. Having done it, they had a duty to try to do a better job than those who had been running London Transport previously. If this Bill is the first evidence of the Government running transport in Britain, and it is, it is a pathetic, sorry and bad example. I hope that we learn the lesson never again to commit local authority functions to Government, because the Government are not worthy of the trust that they usurped when they took over those functions. Their interference has been shown by the courts to have been a disgrace, and by the high court of Parliament saying that the Bill is disgraceful and should not be passed. Only because the Government, for the time being—I hope for not much longer—have sufficient troops to get it through are they likely to succeed in doing so. We do not wish the Bill any success. I hope that the Secretary of State and his Department learn never to treat the House of Commons with such cavalier disrespect and lack of apology."This matter must be urgently resolved, if possible, before the end of the financial year." —[Official Report, 7 February 1985; Vol. 72, c. 1198.]
8.48 pm
The Bill seeks to give authority to the Secretary of State to receive £258 million from the ratepayers of London to pass to LRT. During our debates there has been some argument whether that is £50 million or £30 million more than it should be.
We have had little time to probe the technical complexities of the matter. Anybody who doubts that needs only to read the speech made yesterday afternoon by the Secretary of State. In the debate yesterday, at column 903, I asked the right hon. Gentleman a question, but he did not, when he replied, answer me specifically. I shall put it to him again. I referred to the proceedings in Parliament on the money resolution which we passed on 7 February, and said:The right hon. Gentleman said:"I assume that all the additional revenue over and above the requirements for this year will be used for improving the service or reducing fares. I hope that the right hon. Gentleman can give me that assurance."
The right hon. Gentleman has used that adjective several times today. I gave grateful responses, but said that people would always be suspicious of the right hon. Gentleman whenever there was a bus around. I am afraid that I had to ask further questions about that yesterday. I asked what the money was being spent on, and the Secretary of State said that the surplus was not £50 million, but £30 million, and that the liabilities would be £37 million, so there would be a deficit of £7 million. He said:"I am happy to give the hon. Gentleman that assurance categorically "— [Official Report, 7 February 1985; Vol. 72, c. 1214.]
I take it that that is before 31 March—"The expected current cash surplus at the end of this financial year is not £50 million, as he said, but £30 million. As I said, it is necessary to provide for the needs of LRT, and they are, including the accrued unfunded liabilities, the following sums: £21 million for voluntary severance payments already agreed and accepted"—
the Jubilee line opened some years ago, so I cannot understand why it is still being paid for—"£6 million for insurance claims against LRT, which it will in due course have to pay; £4 million for claims outstanding on the Jubilee line"—
That does not tally with what the right hon. Gentleman told me on 7 February, when he said that the funds would be used for improving services and reducing fares. Is there compatibility between those two statements? I ask the Minister of State, who sometimes has to field the awkward balls for the Secretary of State, to reply to that point. There may be an explanation for it. I may have missed the vital clue, and the Minister knows what I mean by that. Whether or not the answer is satisfactory, this is an unhappy Bill."£5 million in relation to development land tax which it owes and will have to pay; and £1 million for land compensation claims. That makes a total of £27 million".
The understanding that I gave in the money resolution debate remains. Not one penny of this money goes to the Exchequer. It will all go to LRT. There has not been a change, and there will not be one. The hon. Gentleman asks whether the items that he has read out are compatible with improving the service and reducing fares. I listed those items in the context of the accrued liabilities and needs of LRT for the financial year ending 31 March 1985. It was an accountant's balancing that I gave. They are needed because the efficiency of London transport is going up and the costs are coming down. That means things such as redundancy and other costs that LRT will have to meet. I do not see the inconsistency that the hon. Gentleman is suggesting.
I am grateful to the Secretary of State, and I hope the House will be indulgent, because this is the problem of rapid legislation. The extract from which I have just quoted continues to say that "auditors will certify" the £37 million
That may include redundancy, but one can have two views of this. Whether or not these sums are paid, the quality of services and the level of fares will not be affected one whit. I leave it to the House, the readers of Hansard, and perhaps the other place to judge between us on this matter. The whole Bill has a whiff of impropriety about it. I shall go further and, in great seriousness, say that it has a whiff, slight though it be, of the Reichstag. We have only to think of the Secretary of State's behaviour at Question Time on this matter a little time ago and his statement yesterday excusing his sub judice gaff by saying that it was sub judice to him. When he was subjected to a genuine sub judice constraint, the result was a phrase which I hope will go into parliamentary language—it deserves to be written to some catchy tune—"as being due and having to be covered in this year's accounts." —[Official Report, 19 February 1985; Vol. 73, c. 945.]
Had the Secretary of State taken the trouble to consult before making the direction, he might not be in this mess. Consideration before legislation is the historic watchword of this place and of parliamentary democracy. The right hon. Gentleman is not in tune with that, otherwise he would not have broken that law. As there was no proper consultation, the whole affair was conceived without consultation. It was born out of illegality, brought before the House irrationally and is being passed by improper procedure. It will be remembered for the injury that it has almost certainly done to parliamentary democracy and if, as I very much hope, it has not done that, it has certainly done an injury to the Secretary of State and to the Government who have put him where he is. We have not had proper time, but we are not the only people who have not had proper time. Because we did not have much time last night, and perhaps because he did not consult as widely as he might have done, the hapless Leader of the House had to accept the Prime Minister's motion earlier today, which means that there will be a plundering of London's ratepayers of £30 million to £50 million over what they should justifiably pay. This is a contemptible Bill, and that is not surprising because it comes from a contemptible Government and from a Prime Minister who has contempt for the House. It may be that today, in two great democratic Assemblies across the Atlantic, both of which owe a great deal to the procedures of the House, the right hon. Lady will be praised for making a speech which she did not write. At home, that motion in her name has ridden roughshod over the procedures of the House. Even if she did not personally approve it, it is redolent and typical of the hon. Lady's attitude to this place. It is not only typical of the right hon. Lady's attitude to this place, but typical of her attitude to the ordinary people of London—the least well-off people of London, mostly from Newham. It is mostly east London that has carried the debate today, and in previous stages, and that is no accident, because the Government do not understand ordinary people. There is anger in the country and it is being expressed in a way that Conservative Members do not understand."unlawful, irrational and procedurally improper".
Nonsense.
The Minister says "Nonsense". She is entirely out of touch.
It is a big act. The hon. Member deserves an Oscar for that performance.
I am grateful for the attribute. This is not an act, because there is growing anger among many people, particularly those who are the least privileged and who have to pay more and more taxes that are required by this unjust Government. The Government say stupidly to the electorate that they want to reduce rates, yet, as a result of the Bill, people will have to pay more rates. The Bill is contemptible because it is in contempt of Parliament and, therefore, in contempt of the British people.
8.59 pm
Perhaps I might begin by referring to the diversion caused by the hon. Member for Southwark and Bermondsey (Mr. Hughes). Had he listened to what the shadow Leader of the House said in the lengthy debate on whether all the remaining stages of the Bill should be taken today, he would have heard that the Labour party was not a party to any agreement to take the remainder of the Bill today. We were simply told that that was what the Government had decided. Had the hon. Gentleman been here at some ungodly hour this morning, at around 2.30 am—
I was.
He may have had his eyes closed—he might have seen me sitting on the Front Bench shouting "Object" when the Government Whip moved that the Question be put.
The only reason why we had an opportunity to debate the business motion this afternoon, according even to the Leader of the House, was that I shouted "Object" at that time. I do not recall any brilliant Liberal or alliance contribution then. Instead of trying to suggest that there was collusion between the Labour party and the Government to try to smuggle the remaining stages of the Bill through today, the hon. Gentleman should get the facts straight. There was no collusion. Our response was complete opposition and we made use of the opportunities that were available, in a way that alliance Members did not.rose—
I am not giving way.
The Bill is unnecessary. The Secretary of State, following the decision of Mr. Justice McNeill that his original direction in the matter wascould have issued a new lawful direction that would have met the operating needs of London Regional Transport in 1984–85. He did not choose to do that because he wanted to go beyond the law that he had proposed in 1984. Section 49 of the London Regional Transport Act 1984 permitted him only to meet the operating needs of LRT. He told the Committee on that Bill that he would call only for the sums that were strictly necessary. We have to consider the Bill in this shabby and hurried way because the Secretary of State wants to do more than that. He wants to require the GLC to pay to LRT a sum that will mean that it will have £50 million surplus to its operating needs. That is why the law has had to be changed and why the Secretary of State has not relied on making another direction. The Bill is not about redrafting, but about changing the law. The Secretary of State is going back on a solemn undertaking that he gave in Committee on the London Regional Transport Bill. My hon. Friend the Member for Newham, South (Mr. Spearing), not a man given to making impassioned speeches, made an impassioned contribution. Conservative Members should ponder for a moment why he feels so passionately. It may be that, despite all their cant, he is upset about what has happened and feels that the people whom he was elected to represent are being robbed by the Secretary of State. They are sick of it, and my hon. Friend is sick of it. He is sick of being totally ignored by the Government when he is attempting to represent the interests of Londoners."unlawful, irrational and procedurally improper,"
Let us get the facts straight. It is one thing for the Government to do things legally and properly to the disadvantage of my constituents, immoral though the Government may be; it is quite another to do them by adopting an improper parliamentary procedure. That is why I was angry.
That is right, and I do not think that my hon. Friend need explain his anger.
If we started awarding Oscars, perhaps the Secretary of State would get a few nominations. In 1984 he might have been Legislator of the Year, having introduced his own apparently inadequate section 49, or perhaps he might have been Issuer of Directions of the Year that have been found to beTonight we have his final effort, presumably as Parliamentary Mathematician of the Year. He sought to upbraid my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) by asserting that the Bill had only one clause. I can only plead that the Chairman of Ways and Means then proceeded to call a clause stand part debate on clause 2. I shall always defer to Mr. Speaker or to the Chairman of Ways and Means if there is any dispute about the number of clauses in a Bill. But if we have a Secretary of State who cannot even get that right, the chances of this legislation proving to be up to the job are not very good, and it is conceivable that we shall be back here again considering the London Regional Transport (Amendment) (Amendment) Bill if the right hon. Gentleman's track record is anything to go by. In Committee, the Secretary of State said, and people took him at his word, that the GLC had asked that LRT's auditors should be requested to certify what its operating needs would be. The officials of the Department of Transport—democrats all, apparently—no doubt under instructions from the Secretary of State, refused that reasonable request on the ground that is was not germane to the issue. However, it was germane to the issue because, as the judge pointed out, the right hon. Gentleman was entitled to direct the GLC only to hand over money which was directed to meeting those operating needs. If he had been prepared to direct the GLC to hand over money to meet the operating needs, it would not have been necessary to bother the House with changing the law. The right hon. Gentleman could have made a lawful direction, but that is not what he has tried to do. That is why my right hon. and hon. Friends representing constituencies in London have been most perturbed. We believe that if money which was paid by ratepayers to the GLC is not needed for the operating needs of LRT, it should not be handed over to LRT. It does not need it. If the money stayed with the GLC, it could be used for one of two purposes, or a combination of both—either to reduce the rate precept on Londoners, or to improve its services. In that way the ratepayers of London would gain 100 per cent. from the money staying with the GLC. There is a further point which should appeal to the Secretary of State, who appears to believe that the paymaster should have some control over those to whom money is being paid. Both under the present Labour-controlled GLC and under previous Tory-controlled GLCs, it has always been the practice to hand over money raised by the rate precept to London Transport against performance by London Transport. If London Transport failed to carry out what the democratically elected GLC from year to year decided were its obligations, the GLC used to withhold some of the money. That is what the Tories normally call an incentive. It is wholly proper therefore that the GLC should not hand over money to LRT if LRT has not done everything that it was supposed to do or if the programme laid down by the GLC has not been carried out. The ratepayers are entitled to that degree of protection. On the other hand, because of the relationship between central Government finance and rate finance for LRT, if the surplus goes to LRT, the ratepayers' maximum benefit can be only two thirds of the sum involved. Far from London ratepayers paying twice, it is in their positive interests not to pay over money surplus to the needs of LRT, as they will under the Bill. If the Secretary of State was willing to accept that the money to be paid over to LRT should meet only its operational needs, he could make a valid directon under the present law and would not need to change the primary legislation. That is our case against this squalid little measure. We deeply deplore the way in which the measure has been put before the House. The situation is quite extraordinary. The ways and means resolution, which normally flows from a public Bill, was introduced and debated 10 days before the Bill itself. We then had the Second Reading debate yesterday. Today we have been expected to respond as best we can to the points made by the Secretary of State yesterday and to give proper and detailed consideration to the Bill. It would not necessarily have taken a long time to give proper and detailed consideration to a two-clause Bill. What would take time—if we were properly to represent the Londoners who elected us and who pay taxes and rates —would be proper consideration of the detailed drafting and of what the Secretary of State has said, and the tabling of amendments which would explore further the points that the right hon. Gentleman has raised or perhaps make changes to the Bill. We have been denied the opportunity to do that job properly. Having sat through the whole Committee stage of the Bill today, I do not think that we have done our job properly. I am not proud of the quality of debate this afternoon. The debate has been a mockery of the legislative process. If the Secretary of State does not agree, I do not know what he thinks would constitute a mockery of that process. We are all entitled, especially the London Members, to give proper consideration to these matters. We have been denied that opportunity. We deplore what has happened. What the Secretary of State has done is damaging not only to himself—I do not mind that—but to the interests of those who elected me and my hon. Friends. For that reason, we reject both the Bill and the Secretary of State who introduced it."unlawful, irrational and procedurally improper."
9.14 pm
The Secretary of State has told us that the money is to go to LRT, not to the Government. We know that that is correct, not because the Secretary of State told us, but because that is what the Bill says. However, he did not tell us that the Government plan to cut their subsidy to LRT progressively and that if the Bill was not passed there could be no such subsidy reduction. Moreover, if the sum in the Bill had been reduced by the £50 million that my right hon. and hon. Friends wanted the level of subsidy cut would have been affected.
The Bill displays two types of incompetence — incompetence in the reasons for the Bill, and incompetence in the handling of it. The Government have anticipated the possibility of further incompetence by clause 1(2), which provides that if the Act is passed before 25 March one set of provisions will apply, and that if it is passed after that date there will be different proceedings for the transfer of money. There could be no better example of the state that the Department of Transport and the Government have got into. With their large majority, the Government are in charge of the parliamentary timetable. The Bill was given a Second Reading on 19 February and refers to the Act receiving Royal Assent on 25 March. Why should the five weeks between those dates pose any problem for the Government? Nevertheless, the Government have panicked and included clause 1(2). Legislation undertaken in panic is rarely good. Like many other things, the Bill shows that the Government are losing their grip and, I suspect, their reason. That is one reason why the House should reject the Bill.Question put, That the Bill be now read the Third time:—
The House divided: Ayes 229, Noes 155.
Division No. 118]
| [9.17 pm
|
AYES
| |
Alexander, Richard | Jenkin, Rt Hon Patrick |
Atkins, Robert (South Ribble) | Jones, Gwilym (Cardiff N) |
Baker, Nicholas (N Dorset) | Jones, Robert (W Herts) |
Beaumont-Dark, Anthony | Jopling, Rt Hon Michael |
Bevan, David Gilroy | Kellett-Bowman, Mrs Elaine |
Boscawen, Hon Robert | Kershaw, Sir Anthony |
Bottomley, Mrs Virginia | Key, Robert |
Brandon-Bravo, Martin | King, Roger (B'ham N'field) |
Bright, Graham | King, Rt Hon Tom |
Brittan, Rt Hon Leon | Knight, Gregory (Derby N) |
Brooke, Hon Peter | Knowles, Michael |
Brown, M. (Brigg & Cl'thpes) | Knox, David |
Bruinvels, Peter | Lamont, Norman |
Buchanan-Smith, Rt Hon A. | Lang, Ian |
Budgen, Nick | Latham, Michael |
Burt, Alistair | Lawrence, Ivan |
Butcher, John | Lee, John (Pendle) |
Carlisle, Kenneth (Lincoln) | Leigh, Edward (Gainsbor'gh) |
Cash, William | Lester, Jim |
Chalker, Mrs Lynda | Lightbown, David |
Chope, Christopher | Lilley, Peter |
Clarke, Rt Hon K. (Rushcliffe) | Lloyd, Ian (Havant) |
Clegg, Sir Walter | Lloyd, Peter, (Fareham) |
Cockeram, Eric | Lord, Michael |
Conway, Derek | Luce, Richard |
Coombs, Simon | Lyell, Nicholas |
Cranborne, Viscount | McCrindle, Robert |
Crouch, David | McCurley, Mrs Anna |
Dorrell, Stephen | MacGregor, John |
Douglas-Hamilton, Lord J. | MacKay, Andrew (Berkshire) |
Dunn, Robert | MacKay, John (Argyll & Bute) |
Durant, Tony | Madel, David |
Fairbairn, Nicholas | Major, John |
Farr, Sir John | Malins, Humfrey |
Favell, Anthony | Malone, Gerald |
Fletcher, Alexander | Maples, John |
Fookes, Miss Janet | Marland, Paul |
Forman, Nigel | Marlow, Antony |
Forsyth, Michael (Stirling) | Marshall, Michael (Arundel) |
Forth, Eric | Mates, Michael |
Franks, Cecil | Mather, Carol |
Freeman, Roger | Maude, Hon Francis |
Gale, Roger | Maxwell-Hyslop, Robin |
Galley, Roy | Mayhew, Sir Patrick |
Gardner, Sir Edward (Fylde) | Mellor, David |
Garel-Jones, Tristan | Merchant, Piers |
Glyn, Dr Alan | Meyer, Sir Anthony |
Gower, Sir Raymond | Miller, Hal (B'grove) |
Grant, Sir Anthony | Mills, Iain (Meriden) |
Greenway, Harry | Mills, Sir Peter (West Devon) |
Griffiths, Peter (Portsm'th N) | Moate, Roger |
Grist, Ian | Monro, Sir Hector |
Grylls, Michael | Montgomery, Sir Fergus |
Hamilton, Neil (Tatton) | Moore, John |
Hampson, Dr Keith | Morrison, Hon C. (Devizes) |
Hanley, Jeremy | Moynihan, Hon C. |
Hannam, John | Murphy, Christopher |
Hargreaves, Kenneth | Needham, Richard |
Haselhurst, Alan | Nelson, Anthony |
Havers, Rt Hon Sir Michael | Newton, Tony |
Hawksley, Warren | Nicholls, Patrick |
Hayes, J. | Normanton, Tom |
Hayward, Robert | Norris, Steven |
Heddle, John | Onslow, Cranley |
Henderson, Barry | Oppenheim, Phillip |
Hickmet, Richard | Page, Sir John (Harrow W) |
Hicks, Robert | Page, Richard (Herts SW) |
Hind, Kenneth | Parkinson, Rt Hon Cecil |
Holt, Richard | Parris, Matthew |
Howard, Michael | Patten, J. (Oxf W & Abdgn) |
Howarth, Alan (Stratf'd-on-A) | Pawsey, James |
Howarth, Gerald (Cannock) | Peacock, Mrs Elizabeth |
Howell, Ralph (N Norfolk) | Pollock, Alexander |
Hubbard-Miles, Peter | Porter, Barry |
Hunt, David (Wirral) | Portillo, Michael |
Hunt, John (Ravensbourne) | Powell, William (Corby) |
Hunter, Andrew | Powley, John |
Jackson, Robert | Prentice, Rt Hon Reg |
Proctor, K. Harvey | Terlezki, Stefan |
Raffan, Keith | Thomas, Rt Hon Peter |
Renton, Tim | Thompson, Donald (Calder V) |
Rhodes James, Robert | Thompson, Patrick (N'ich N) |
Rhys Williams, Sir Brandon | Thornton, Malcolm |
Ridley, Rt Hon Nicholas | Thurnham, Peter |
Ridsdale, Sir Julian | Townend, John (Bridlington) |
Rifkind, Malcolm | Townsend, Cyril D. (B'heath) |
Roberts, Wyn (Conwy) | Tracey, Richard |
Robinson, Mark (N'port W) | Trippier, David |
Rossi, Sir Hugh | Trotter, Neville |
Rost, Peter | Twinn, Dr Ian |
Rumbold, Mrs Angela | van Straubenzee, Sir W. |
Sainsbury, Hon Timothy | Vaughan, Sir Gerard |
Sayeed, Jonathan | Viggers, Peter |
Shaw, Giles (Pudsey) | Waddington, David |
Shaw, Sir Michael (Scarb') | Walden, George |
Shelton, William (Streatham) | Wall, Sir Patrick |
Shepherd, Colin (Hereford) | Waller, Gary |
Skeet, T. H. H. | Ward, John |
Smith, Tim (Beaconsfield) | Wardle, C. (Bexhill) |
Soames, Hon Nicholas | Watson, John |
Speed, Keith | Wells, 'Bowen (Hertford) |
Speller, Tony | Wheeler, John |
Spencer, Derek | Whitfield, John |
Spicer, Michael (S Worcs) | Whitney, Raymond |
Stanbrook, Ivor | Wilkinson, John |
Steen, Anthony | Winterton, Mrs Ann |
Stevens, Lewis (Nuneaton) | Winterton, Nicholas |
Stevens, Martin (Fulham) | Wolfson, Mark |
Stewart, Allan (Eastwood) | Wood, Timothy |
Stewart, Andrew (Sherwood) | Yeo, Tim |
Stewart, Ian (N Hertf'dshire) | Young, Sir George (Acton) |
Stokes, John | Younger, Rt Hon George |
Stradling Thomas, J. | |
Sumberg, David | Tellers for the Ayes |
Taylor, John (Solihull) | Mr. Archie Hamilton and |
Taylor, Teddy (S'end E) | Mr. Mark Lennox-Boyd. |
Temple-Morris, Peter |
NOES
| |
Alton, David | Crowther, Stan |
Archer, Rt Hon Peter | Cunningham, Dr John |
Ashdown, Paddy | Davies, Rt Hon Denzil (L'lli) |
Atkinson, N. (Tottenham) | Davies, Ronald (Caerphilly) |
Bagier, Gordon A. T. | Davis, Terry (B'ham, H'ge H'l) |
Barnett, Guy | Deakins, Eric |
Barron, Kevin | Dewar, Donald |
Beckett, Mrs Margaret | Dobson, Frank |
Beith, A. J. | Dormand, Jack |
Benn, Tony | Douglas, Dick |
Bennett, A. (Dent'n & Red'sh) | Dubs, Alfred |
Bermingham, Gerald | Duffy, A. E. P. |
Bidwell, Sydney | Dunwoody, Hon Mrs G. |
Blair, Anthony | Eadie, Alex |
Boyes, Roland | Eastham, Ken |
Brown, Gordon (D'f'mline E) | Evans, John (St. Helens N) |
Brown, N. (N'c'tle-u-Tyne E) | Ewing, Harry |
Brown, Ron (E'burgh, Leith) | Fatchett, Derek |
Bruce, Malcolm | Faulds, Andrew |
Buchan, Norman | Field, Frank (Birkenhead) |
Caborn, Richard | Fields, T. (L'pool Broad Gn) |
Campbell, Ian | Fisher, Mark |
Campbell-Savours, Dale | Flannery, Martin |
Canavan, Dennis | Forrester, John |
Carlile, Alexander (Montg'y) | Foster, Derek |
Carter-Jones, Lewis | Fraser, J. (Norwood) |
Cartwright, John | Freeson, Rt Hon Reginald |
Clarke, Thomas | Gilbert, Rt Hon Dr John |
Clay, Robert | Godman, Dr Norman |
Clwyd, Mrs Ann | Golding, John |
Cocks, Rt Hon M. (Bristol S.) | Gould, Bryan |
Cohen, Harry | Gourlay, Harry |
Coleman, Donald | Hamilton, James (M'well N) |
Concannon, Rt Hon J. D. | Hamilton, W. W. (Central Fife) |
Cook, Frank (Stockton North) | Hart, Rt Hon Dame Judith |
Cook, Robin F. (Livingston) | Haynes, Frank |
Corbett, Robin | Hogg, N. (C'nauld & Kilsyth) |
Cowans, Harry | Holland, Stuart (Vauxhall) |
Craigen, J. M. | Home Robertson, John |
Hoyle, Douglas | Park, George |
Hughes, Dr. Mark (Durham) | Parry, Robert |
Hughes, Robert (Aberdeen N) | Pavitt, Laurie |
Hughes, Roy (Newport East) | Penhaligon, David |
Hughes, Simon (Southward) | Pike, Peter |
John, Brynmor | Radice, Giles |
Jones, Barry (Alyn & Deeside) | Randall, Stuart |
Kaufman, Rt Hon Gerald | Redmond, M. |
Kennedy, Charles | Rees, Rt Hon M. (Leeds S) |
Kirkwood, Archy | Richardson, Ms Jo |
Lambie, David | Roberts, Ernest (Hackney N) |
Lamond, James | Robertson, George |
Leadbitter, Ted | Robinson, G. (Coventry NW) |
Leighton, Ronald | Rowlands, Ted |
Lewis, Ron (Carlisle) | Sheldon, Rt Hon R. |
Lewis, Terence (Worsley) | Shore, Rt Hon Peter |
Litherland, Robert | Short, Ms Clare (Ladywood) |
Lloyd, Tony (Stretford) | Short, Mrs R.(W'hampt'n NE) |
Loyden, Edward | Skinner, Dennis |
McCartney, Hugh | Snape, Peter |
McDonald, Dr Oonagh | Soley, Clive |
McKelvey, William | Spearing, Nigel |
Mackenzie, Rt Hon Gregor | Stott, Roger |
McNamara, Kevin | Strang, Gavin |
McTaggart, Robert | Thomas, Dafydd (Merioneth) |
McWilliam, John | Thomas, Dr R. (Carmarthen) |
Marek, Dr John | Thompson, J. (Wansbeck) |
Marshall, David (Shettleston) | Wainwright, R. |
Mason, Rt Hon Roy | Warden, Gareth (Gower) |
Maxton, John | Wareing, Robert |
Maynard, Miss Joan | Welsh, Michael |
Meadowcroft, Michael | White, James |
Mikardo, Ian | Williams, Rt Hon A. |
Millan, Rt Hon Bruce | Winnick, David |
Mitchell, Austin (G't Grimsby) | Woodall, Alec |
Morris, Rt Hon A. (W'shawe) | Young, David (Bolton SE) |
Morris, Rt Hon J. (Aberavon) | |
Nellist, David | Tellers for the Noes: |
Oakes, Rt Hon Gordon | Mr. Allen McKay and |
O'Neill, Martin | Mr. Lawrence Cunliffe. |
Orme, Rt Hon Stanley |
Question accordingly agreed to.
Bill read the Third time, and passed.
Trustee Savings Bank Bill
As amended (in the Standing Committee), considered.
9.30 pm
On a point of order, Mr. Speaker. On Second Reading, I questioned the legality of the Bill in a paraphrase of the Latin expression nemo dat qui non habet—you cannot give what you have not got. The Economic Secretary to the Treasury did not deal with that point, but he admitted that there was no detailed knowledge about the ownership of the trustee savings banks and that ownership could not be determined.
Therefore, I refused to serve on the Standing Committee that considered the Bill, but I have carefully considered what was said in Committee, because, although I concede immediately that Parliament is sovereign, I do not accept that the House can authorise the TSB to enter what is clearly an illegality — to sell something that it does not own. The Bill is nonsense and should be withdrawn. The Government ought either to include in the Bill an authorisation for the TSB to become possessed of all its assets and proceed from there towards the sale, or to create a mutual company. Parliament is being asked to pass nonsense and I ask you, Mr. Speaker, to rule that the matter should go back to the Government for reconsideration.I am grateful to the hon. Member for St. Helens, South (Mr. Bermingham) for having given me notice that he would raise the point of order. I have considered carefully the point that he has made and I have to rule that it is not a matter for the Chair. If the Bill is defective, as the hon. Member claims, it is for the House to decide whether to pass it. It is not a matter for me.
Further to that point of order, Mr. Speaker. I have been approached by a number of people who have asked whether Parliament is able to legislate in this way. I appreciate that it does not fall within your purview to take these decisions, but surely the Leader of the House should make a statement dealing with the accusations that have been levelled against the Government and with the suggestion that the Government do not have the right to legislate. Before the Bill comes before the House, the Leader of the House should clear the way. The Bill is consuming parliamentary time and that is a matter not for the Economic Secretary to the Treasury, but for the Leader of the House who protects the interests of all hon. Members.
That is not a matter for me. The hon. Gentleman can table an amendment on the matter —indeed, the Government could table an amendment—or vote against the Bill. It is certainly not a matter for the Chair.
New Clause 1
Share Flotation
'On the vesting day employees of the TSB Group and holders of deposits in the TSB Group shall be offered 55 per cent. of the shares of the Group.' — [Dr. McDonald.]
Brought up, and read the First time.
I beg to move, That the clause be read a Second time.
The purpose of the new clause is to take account of the history and traditions of the TSB, which has been closer to a mutual organisation than to a public limited company, and of what was once the expressed hope of the TSB. The banks gave evidence to the committee that reviewed the functioning of financial institutions in 1979. The summary of evidence stated:The TSB not only acknowledged its traditions, but outlined what it hoped that its future would be: it hoped that it would not be devoted entirely to commercial interests. That theme has been continued in the comments on the TSB's change of status and in the TSB's own hopes that depositors and employees will wish to take up shareholdings. The Sunday Times on 11 November 1984 referred to the need to resolve the TSB's legal structure. The article stated:"The Trustee Savings Banks have demonstrated a will and ability to adapt to modem commercial requirements and the changing needs of their customers, whilst retaining a fundamental purpose which is not dictated by purely commercial interests."
others would say many—"The first preference (and one to which some"—
I do not believe that the term "official" is intended to refer to the Government's attitude. The Government's role in the Bill is to facilitate the changes that the TSB's management wishes to bring about. The management has stressed the problems faced in setting up a mutual organisation. The TSB's existence as a mutual organisation is not clearly defined in the way in which building societies are.The Sunday Times article went on:"members of the TSB adhere) was to retain mutuality. But this received an official thumbs down, because of accountability problems."
"For a start, by abandoning its mutual status, the TSB jettisons its basic difference from the high street clearing banks. Other attractive babies, too, could disappear down the plughole with the mutual bathwater.
More interestingly, and certainly more surprisingly to Conservative Members, the Financial Times leader of 17 January echoed and developed that theme. It accused the Government and the management of the TSB of being too unimaginative in their consideration of the TSB's future status and organisation. When the Financial Times puts the matter as a choice between a mutual organisation and a public limited company, it is being unimaginative. The new clause says that, even if the future organisation has to be a public limited company—first, because of accountability and, secondly, because of the need to raise capital—it does not have to conform exactly to the form taken by other high street banks and other companies. We believe that consideration should have been given to forming a plc in which the majority of shares are held by the employees and holders of deposits. To some extent, that would have taken account of the TSB's traditions, the hopes that it would not be a purely commercial enterprise and the fact that, until now, the TSB has been different from the high street banks in its relationship with its customers. Personal customers account for much of its business. If the majority of the shares were offered to employees and depositors, they, too, would have an opportunity to continue those traditions. The Banking Insurance and Finance Union, 98 per cent. of the membership of which are employees in the TSB organisation, would like to see a preferential share issue of this kind. They would regard it as being similar in some ways to the British Telecom and Jaguar flotations. However, when we discussed a similar issue on Second Reading the Economic Secretary to the Treasury said:The TSB's great strength has always been the traditional loyalty of its 6 million customers. Personal customers account for over 95 per cent. of its customer base."
"I do not think that it would be appropriate for the legislation itself to include specific provisions about the flotation or about the subsequent conduct of the TSB as a private sector company …
Opposition Members must part company with the Minister on that. There is no reason why shares should not be offered in the way suggested in new clause 1. It could be done within the scope of the normal mechanisms of share flotation and transfer. There would be no particular problems if all of the 55 per cent. laid down in new clause 1 were not taken up, because the unsold shares could be the vested property of the board. It may be suggested that there may be pricing difficulties about insisting that the share flotation should take place in that way. That is true if one accepts the view that institutions are prepared to pay more for shares than individuals are. The TSB may lose out on the sale of shares, if it has to sell a significant percentage of them to individuals. However, that is not an unavoidable outcome. If individuals and, in this case, the employees and depositors, to whom the issues involved could be spelt out, as the TSB can easily inform them, realise that institutions have been rationed on the flotation, they can expect the value of their shares to increase in future. To suggest that the TSB should be treated and should operate like every other high street bank is to ignore the history, traditions and importance of its personal customers. It is not like another bank, and many people would argue, as the Opposition argue, that every effort should be made to ensure that the TSB continues to offer a different sort of service. That was in part meant in the Page report in 1973, which referred to a third force in banking. By tabling the new clause in this way we are saying, "If the TSB must become a public limited company, it does not need to be wholly commercial in its purpose, and shares need not be distributed as they are distributed for other banks and public limited companies".I believe that the overall purpose of the Bill is helpful to the TSB and its depositors."—[Official Report, 14 January 1985; Vol. 73, c. 71.]
My hon. Friend is making an excellent speech and many important points, as expected. Is she aware that not only is the TSB being regarded as yet another clearing bank, making a total of five instead of four clearing banks, but that the clearing banks see it as a main competitor? I have had discussions with a number of banks, and it is clear that eventually there will be a merger either between the TSBs and the other banks, or between the clearing banks because the United Kingdom cannot accommodate five large clearing banks.
9.45 pm
I thank my right hon. Friend for his intervention. Some of his points will be relevant to new clause 2 which is designed to limit individual shareholdings to prevent such a take over. We can see why other high street banks regard the TSB as a competitor. The Midland's position is a little shaky. Following the flotation of its shares, the TSB will have roughly the same value or even a little more than the Midland bank, and no doubt the Midland bank will be watching the TSB's operations somewhat nervously.
I want to focus on the difference in the shareholding and the fact that it could make a difference to the way in which the TSB operates in the future. It is essential to preserve what should be preserved from the TSB's past. The matter has been discussed with representatives of the TSB management. Those discussions do not leave one unworried, for two reasons. I received the impression that the TSB management regarded a wide shareholding, spread among the large number of individuals, as extremely expensive to operate. The bank would be required to inform each shareholder about its accounts. They would have to be informed of the date of the annual general meeting, the agenda and such matters. That reaction makes one fear that the TSB is moving somewhat away from its 1979 statement when it said that its future would not be dictated by purely commercial interests. I was sorry to have that response and a lack of commitment to as large and wide a spread of shareholders as possible among depositors and employees. I understand the reasons for that, but nevertheless I was worried at that response. Although the TSB has offered its depositors priority pink forms, it does not expect there to be a large share take up from them. It does not see that the majority of its depositors can take up the shares. That is a pity. The TSB should be going all out to encourage shareholdings by its employees and depositors. The new clause will ensure that that happens and that the bank can have a public limited company structure which is rather different from that of other commercial organisations and the banks with which it will compete.I support the new clause which was so ably moved by the hon. Member for Thurrock (Dr. McDonald). My party has had a long and honourable record of supporting and seeking to promote measures to encourage workers and participants in industry to own their own jobs.
It will come as no surprise to anyone in the House that the new clause is one which my right hon. and hon. Friends in the Social Democratic party support. In Committee we were represented by the hon. Member for Stockton, South (Mr. Wrigglesworth). We find the clause advantageous and we support it. Judging by the Government's rhetoric, it is odd that they cannot support the new clause rather more readily than appeared to be the case from reading the report of the Committee stage. On Second Reading, the Minister said:That is a sentiment with which we would agree. It seems that the Minister on that occasion was only paraphasing, perhaps restating, the commitment given in the White Paper, of which it may be worth reminding ourselves. It said:"I welcome the opportunity that this Bill will provide for spreading share ownership more widely and, in particular, for enabling those who have been involved in the business of the TSB as customers and employees to invest more directly in their future."—[Official Report, 14 January 1985; Vol. 71, c. 31.]
The clause calls for no more than that to be put into effect. When the Bill was considered in Committee, the Minister said:"Customers and staff will have priority in subscribing for shares."
Again, the clause asks for no more than that the Minister put into effect the rhetoric of his speech on Second Reading, his speeches in Committee and the statements in the White Paper. The Minister also said in Committee that fixing a figure to how the Government would put their commitment to wider share ownership into practice would be rather difficult. He then said:"it would be a good idea if depositors and staff were to have a really substantial holding in the TSBs."
What the Minister did not state was the conclusions that he had reached. Since the Minister said that it was impossible to talk figures when he was discussing these matters with the TSB, it may be possible for him to give us an indication now of the percentage of shares he envisages being offered to the employees and to the contributors of the TSB. If he were able to mention some figure—no doubt less than 55 per cent., but at least an indication of how far the Government wish to make a commitment to honour their own rhetoric — many Opposition Members would doubtless feel satisfied without pressing the clause. I ask the Minister to clarify his statement that he did not see it as appropriate to offer figures then, although he implied that at some time in the future he would be able to say how far he was able to commit himself. However, if the Minister cannot do that, I think that we are entitled to believe that what the Government are expressing in terms of wider share ownership and all the great ideas that we now hear them articulate are hollow rhetoric. Rhetoric comes cheap. It is by the actions of the Government in the matter that we will determine their true intentions. As the hon. Member for Thurrock said, there can be no clearer case for a commitment to the concept of wider share ownership than the TSB. No cause was ever more suitable for the Government to show their sincerity than in respect to the TSB, an organisation founded on the concept of mutuality, which is at the heart of the organisation, and one which has involved itself in group and community activity in a unique way — to use the Minister's words:"it is impossible now to mention figures. I have talked figures with the TSB".—[Official Report, Standing Committee D, 31 January 1985; c. 91.]
Under the proposed clause, the Minister has the opportunity to preserve and build on that uniqueness and to give the work force, the contributors and those involved with the TSB a chance to begin to own the estate in the future of the TSB. The Government claim that they want to see wider share ownership. If they reject the clause, hon. Members will suspect that they are giving not wider share ownership to employees and those involved with the TSB, but a wider opportunity for the established banks to own a chunk of the TSB and to do with that chunk what they will. What has the Minister to lose by accepting the clause? It is drafted in a reserved fashion. It does not require that members of the work force of the TSB or, indeed, contributors of the TSB should own 55 per cent.; it asks only that they be offered 55 per cent. If the Minister means what he has said consistently throughout the debates on the Bill, he should accept the new clause. If not, will he allay some of our suspicions by at least indicating what proportion he means to allow to be offered to the work force and contributors of the TSB? In the absence of such an assurance, many of us will believe that the Government's rhetoric on the matter is hollow and that they have no intention of putting their assurances into practice in a realistic fashion."a unique organisation in today's world."—[Official Report, 14 January 1985; Vol. 73, c. 36.]
I, too, support the new clause, which is a modest proposal. It merely suggests that on vesting day employees and holders of deposits in the TSB should be offered 55 per cent. In view of what the Government have said about the notion of wider share ownership—about the so-called property and share-owning democracy that they want to see—it would make sense for them to accept the new clause.
The TSB has been an unusual banking institution. Historically, it provided merely a mechanism by which people could save. They deposited money on which interest accrued, but the organisation did not make a profit and did not have shareholders. It existed solely for the activities of those who held accounts with the TSB. As my hon. Friend the Member for Thurrock (Dr. McDonald) pointed out, many of the 6 million account holders are in the lower income groups. Those are the people the bank has aimed to serve. I fear, therefore, that something important could be lost in the shift away from the traditional mutual type of organisation to the new plc arrangement. The TSB has changed considerably, away from its previous personal form of banking and into the new range of services about which we have heard so much since the mid-1970s. The banks have moved into cheque accounts and Trustcards, thus putting themselves into high interest lending and connections with UDT, an organisation for financing consumer spending. The whole range of banking is broadening. I do not know what will happen when flotation takes place and the bank receives the money from that flotation, perhaps £500 million to £600 million. What it does with it will be within the prerogative of the new management. For those who have been account holders, and the employees who have served the TSB ably in the past, it seems not unreasonable to give them the opportunity to buy shares in the bank. I should like to see the organisation, because of its mutual roots, providing the basis for a democratic form of management. In particular, I should like to see the employees having a say in the types of service that the new plc group will provide, especially in relation to the way in which it will fit in with the current joint stock banks. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) made an interesting point about the possibility of mergers. I cannot see where this will go. Will the TSB become part of the joint stock banks, or will it be absorbed? We know that in the 1960s—It being Ten o'clock, the debate stood adjourned.
Business Of The House
Ordered,
That, at this day's sitting, the Trustee Savings Banks Bill may be proceeded with, though opposed, until any hour.— [Mr. Peter Lloyd.]
Question again proposed, That the clause be read a Second time.
A matter of great concern is how the new TSB will fit into the banking system. My right hon. Friend the Member for Ashton-under-Lyne expressed his concern about a merger, and the Midland bank was keen on developing what it called the cloth cap accounts. It pushed this hard in the late 1960s and early 1970s, and is still interested in that. Similarly, it encourages student accounts, although these are not the cloth caps accounts. These are people whom they hope and expect will have substantial deposits in the future. We do not know what will happen. We do not know whether this ready-made organisation of cloth cap accounts could be sensibly absorbed into the joint stock bank arrangement, particularly bearing in mind the investment that the joint stock banks have made in their technology, networks, terminal systems, data bases and all the other stuff that is needed to provide a payments and other financial systems.
There is a big question mark, and because of the traditional background of the TSB, to which other hon. Members have referred, the people who are employed in the banks should have a say in how the organisation should develop. The only mechanism for this is through the holding of deposits. I am still a little suspicious about the possibility of a merger. I am concerned that the big institutions will come in and buy up substantial shares. There is a tremendous risk, and I know that hon. Members share my concern. Many hon. Members, particularly Labour Members, would be concerned if the Minister were to waste this opportunity to provide a broader share of ownership and decision-making in the TSB group. The Labour party believes that the original idea that we had at the time when the Page report was produced, of a banking system that exists merely to serve people, is a laudable concept. We know that the clearing banks found it difficult to compete with the TSB group because it did not have to make a profit and did not have any shareholders. The TSB arrangement has valuable attributes and it would be sad to see them go. I hope that the Minister and the Government will support this new clause, because the opportunity of retaining this important structure, serving the people that it does, could be lost for ever unless we provide a mechanism for sharing the management and the ownership of this group between the employees and the account holders.I am in favour of new clause 1 because half a loaf is better than nothing. On Second Reading I took strong objection to the whole Bill. I do not believe in making long speeches at funerals and effectively we are burying the TSB and interring the prospects of transforming it into a mutuality.
Reference has been made to the significance of the 55 per cent. initial controlling interest for depositors and staff of the TSBs. It is important to have that provision, to prevent a merger or a takeover by a domestic or a foreign bank of the trustee savings movement. It will be difficult to prevent the TSB from becoming A N other bank. Although new clause 1 aims to preserve distinctiveness in the operation of the bank, its objective is by its nature limited. It would be useful to know the probable apportionment of the 55 per cent. shareholding among the top management and the remaining staff of the bank and depositors generally. As my hon. Friend the Member for Thurrock (Dr. McDonald) pointed out, the view of the top brass in the TSB was that it would be too much bother to deal with 7 million or 8 million depositors. This makes me wonder how other organisations and, indeed, the country are run when we consider how large the population is. It is the view of the Government that, so far as possible, this should be a property-owning democracy and now, apparently, a bank-owning democracy too. I hope the Minister will accept the new clause; otherwise there is a danger that the shareholding possibility that is opening up as an Aladdin's cave will end up as an exclusive club for a few shareholders. I hope the Minister will tell us that he was correct all along in his interpretation that the Government were taking essentially a neutral stance. Those may not be quite his words, but I think they were the sentiments of the Treasury. The Government were distancing themselves from, dare I say, the mechinations of the powers that be in the TSBs. It was the TSB that wanted the Bill. The Government were merely the willing handmaiden in the whole process. I hope the Minister will tell us that he is accepting the new clause because, as I said, half a loaf will at least guarantee an element — hopefully a controlling element—of depositor and employee shareholding interest in the new PLC. That is very important. I hope the Minister will put his commitment where his brief at Second Reading lay.The new clause is fulfilling for the Government the intention that they said that they had in this legislation of trying to turn the Trustee Savings Bank if not into a mutual bank, which the Oppostion would like, at least into something as near a mutual bank as possible within the scope of the legislation. We are taking that intention and attempting to embody it in the legislation.
It was the intention of the Page report that the TSB should be a third force in British banking. It was the assumption that prevailed throughout the 1970s, the assumption that was dominant in the TSB itself and the assumption embodied in Labour's own legislation in 1976 that the TSB should be a mutual bank. The Government have decided that we cannot fulfil that intention with the totality that we would like, but that we can come somewhere near it, and this new clause reserving 55 per cent. of the shares for the customers and employees of the TSB, comes as near as we think we can get. It is important to come that near, because the TSB was different, is different and should be different from the other high street banks. It is a bank run in mutual fashion, the profits of whose operation go to those who provide them—the customers. This is as near as we can get to that. It is a novel principle. It is an important principle to maintain, because the TSB has been much more like a people's bank than any other bank. It is part of the community, and that is how our amendment tries to keep it. I also speak not only out of concern for that principle but on the basis of another very basic human emotion. I am motivated by the purest altruism and concern for my fellow man. That motive is pure, simple and unadulterated hatred of the commercial banks. They provide us at our expense with their marble halls and their sanctimonious lectures from bank managers to customers burdened by a crippling rate of interest that the banks choose to impose. They spend enormous sums to put self-congratulatory advertisements on television telling us what a marvelous job they are doing, whether the advertisements come from inside the cupboard or from the soaring spaces that the NatWest chooses to embody in its commercials. They go in for endless public relations to tell us what a marvellous job they are doing. They support Tory Members of Parliament as consultants. They provide endless sermons for customers. All these are paid for by the crippling interest rates that customers are having to carry. The banks have been the only beneficiaries of this Government's policy of high interest rates. They have encouraged those rates to go ever higher for their own benefit and enrichment and not that of their customers. Every time there has been a threat or even a minor stirring on the exchanges against the pound sterling, there has been a Gadarene rush of banks, usually led by Barclays, to hike up interest rates and impose even more crippling burdens on their customers. Since 1979, there have been four occasions when the banks have brought about high interest rates subsequently endorsed by the authorities, so one assumes that the banks are acting with some nod or wink from the authorities in response to exchange rate pressures. The first was in autumn 1981, the second in autumn 1982, the third in July of last year and the fourth this January. On each occasion, the use of interest rates by the banks prompted the dominant impression that they were being used not simply to convey concern about the state of the money supply or of the interest market but to shore up the pound sterling, and to do so for their own benefit. The only beneficiaries of high interest rates are the banks themselves. They determine the high interest rates from which they are the only substantial beneficiaries. That is the approach, in a market economy, of the high street banks. There was a classic example on 7 January, when the December money supply figures were announced. The authorities were clearly relieved that sterling M3 had fallen by 0·5 per cent., bringing the annual growth rate down to the top end of the target. There was no reason for interest rates to rise. However, the clearing banks took the initiative once again and there was a Gadarene rush to raise interest rates. That is the approach of the high street banks to our economy and the people who pay for it are their customers. The banks act directly against the interests of the nation, of anyone with an overdraft and of anyone who borrows. That is what their concern for the community amounts to. It is important that the TSB should not become just another of that crew of condottieri who are doing well out of high interest rates at the expense of their own customers. 10.15 pm Furthermore, without the safeguards embodied in new clause 1, the TSB, as a high street bank, would be a prey to inevitable takeover bids. There are now four high street banks. The TSB would be a fifth. The competition is so intense that the TSB would be bound to be sat on or taken over. There would be bound to be some onslaught on its integrity and independence. The TSB is in acute danger or becoming just another high street bank, pushing up interest rates and ruining British industry. The banks are notorious for their lack of concern for the basic productive capacity of this country. They lend umbrellas to people when the sun is shining —driving up the inflationary pressures by enormously increasing borrowing capacity—and then screw up the economy by taking the umbrellas back as soon as it begins to rain. We do not want the TSB to become another such bank. We want it to continue to be run in the interests of its own customers. The banks take the people's credit and use it for the profit of the plutocrats who own them. That profit should be used, for the people who helped create it by using the bank's credit and providing it with the opportunity to extend that credit. Only if the profit returns to the customers of the bank is the principle legitimately fulfilled. We cannot keep the TSB mutual — that pass was sold by the Government, though it should have been defended—but we want to keep it as mutual as it can be within the framework of the legislation.Accepting new clause 1 is the only way of safeguarding the future of the TSB. I reluctantly accept that the Bill is likely to be given its Third Reading later tonight. I shall certainly vote against it, but one must face facts. Because of the majority on the Government's side, the Bill is likely to be passed.
That being so, we can only protect the future of the TSB and respect its history and traditions by ensuring that, at least in the initial stages, the staff and account holders have a majority shareholding. The Government tell us that it is really the TSB—not the Government — that wants the Bill. Whom, at the TSB, have the Government consulted? Have the staff, down to the cashier at the local branch, been given an opportunity to express their views? Have customers been consulted? I am fairly certain that the answer to both of those questions is no, as I have seen nothing to that effect in branches in my constituency. I worked in a bank for the first 10 years of my working life and I know something about joint stock banks. There were the big five in the 1950s and the mergers of the 1960s. I have no doubt that, if the Bill goes through and there are no safeguards to protect the TSB, it will soon be taken over. If the staff have been consulted and said that they support the Bill, my comment must be that they have not looked to their future job security. If there is a merger or a takeover, whatever the assurances, there will be branch closures and changes. In many parts of the country there are too many building societies fighting for customers in the high street, and the same is true for banks. With increasing mechanisation and changes, there will be closures. When the Burnley building society was taken over by the Provincial building society to become the National and Provincial, assurances were given about job security for at least two years. The merger is not two years old and yet there are rumours this week that 300 jobs are to go in the Burnley area because dual head offices are no longer to be kept. I have no doubt that the same will happen with the TSB. The only way in which to protect its identity, to respect that identity and to respect local traditions is to allow staff and customers to have a majority shareholding. That will ensure that the TSB remains the TSB and does not become just another clearing bank.10.22 pm
I welcome the opportunity for this debate. The hon. Member for Yeovil (Mr. Ashdown) referred to what I said on Second Reading. He noted, and others have accepted, that I expressed myself then, as I did in Committee, as being favourable to the idea that customers and staff of the TSBs should have the greatest practical possibility of becoming shareholders in the new public limited company. I still hold that view.
The hon. Member for Thurrock (Dr. McDonald) spoke of the history and traditions of the TSBs, which she respects, and which the hon. Member for Burnley (Mr. Pike) has just endorsed. All of us who have been involved with the Bill feel strongly about that. She drew attention to the long tradition of TSBs attending to the needs of personal customers. I am not sure that the joint stock banks should be regarded as such financial ogres as the hon. Member for Great Grimsby (Mr. Mitchell) painted them to be. I am sure that the manner of business of TSBs is appreciated by those who have used them. They are valued and respected in the financial community as having a special place because they have a wide spread of depositors among many groups who might otherwise not have bank accounts. The hon. Member for Great Grimsby said that the trustee savings banks were and should be different from other high street banks. I hope that they will retain a great deal of their individuality. The hon. Member for Kingston upon Hull, West (Mr. Randall) said that the trustee savings banks serve the people. I am sure that that is one of the reasons why they have been so successful. The changes that the Bill will bring about will increase, not hinder that development. A few years ago the trustee savings banks found it difficult to maintain their customer base. They were unable to offer the kind of facilities that were provided by other high street banks, but they have been successful in providing for their customers the facilities that they need. The proposals contained in the Bill should enable the trustee savings banks to improve the facilities that they offer to their customers. I accept that employees and depositors should be encouraged to hold a substantial part of the share capital when the new TSB group becomes a public limited company. I draw the attention of hon. Members to paragraphs 7, 8, 9 and 13 of Sir John Read's letter to my right hon. Friend the Chancellor of the Exchequer which is included as an annexe to the White Paper. In his letter of 6 December Sir John Read emphasises that the issue of shares to the public would be madeHe goes on to say:"in a manner which will achieve wide ownership of the new TSB group among our customers and staff."
The question is whether it would be right to put into statutory form the specific figure of 55 per cent. Although I am in sympathy with the spirit of the new clause, I do not believe that it would be in the interests of the trustee savings banks or of a successful flotation for that figure to be spelled out."We are firmly set on the principle of wide ownership of our shares, with priority for our customers and staff."
If the Minister is turning down the inclusion of the 55 per cent. provision in the Bill, why was Sir John Read's letter so convincing? It would be far better if Sir John Read's proposal were enshrined in the Bill rather than that one should have to interpret a letter from the chairman of the Central Board of the Trustee Savings Bank.
I take the hon. Gentleman's point. It is one that not only he but other hon. Members have raised and I shall try to answer it. The hon. Member for Yeovil said that if I did not think that 55 per cent. was right I ought to suggest another figure. The hon. Member suggested that a figure ought to be included in the Bill as evidence of the Government's commitment to that principle.
I have considered the matter most carefully. The question falls into two parts. First, is it right that the Government should specify details relating to the issue of shares? I have come to the conclusion that it would not be right for the Government to do so. One of the reasons for that conclusion is the nature of the provisions that would have to be made. I accept what Sir John Read said in the letter. I take those assurances at face value. It is a subject which I have discussed with him at considerable length. I am sorry that the hon. Member for Thurrock received a worrying impression. It certainly is not the impression that I have received from discussions with the TSBs. It is for that reason that I said that I particularly welcome this debate. 10.30 pm We had a lively debate in Committee on the same point. I said at the time that I thought that it was helpful that it should be on the record that there was a strong wish by those who were dealing with the Bill in Parliament that Sir John Read's expressed intentions should be carried into effect by means of the share issue. I endorse that today in the wider forum of the Floor of the House of Commons. When we consider the provision that 55 per cent. of the shares of the group should be offered to employees and depositors in TSBs we come up against exactly the sort of problem which has convinced me that it would not be right for the Government to try to set out the precise details of the proposed issue.rose—
I shall give way, but would it not be better if I were to continue the argument?
I want to intervene on that particular point. The hon. Gentleman has said that he does not think it right for the Government to give figures. In Committee he said:
Is there not an implication there that it would be possible some day to mention figures? If he cannot honour that commitment at this point, will he tell us when he will mention figures?"Although it is impossible now to mention figures". — [Official Report, Standing Committee D, 31 January 1985; c. 91.]
No, the hon. Gentleman has misunderstood what I said in Committee. He assumes that when I said that it was not possible a few weeks ago to state a precise figure that I might be able to do so today. The point that I made in that debate in Committee, which I readily repeat now, is that it is not possible in advance of the circumstances of the issue to establish the exact arithmetic.
Perhaps I was unwise to give way because I was about to come to the reasons why it is difficult and would not be helpful to insert a precise figure. Before I come to those points let me make a further general remark which may help the hon. Gentleman. I think that I quoted half and half in Committee as being the sort of figure that I would like to see. I shall not quibble whether it is 45, 50 or 55—something of that kind. I should like to see a substantial proportion of the shares of the issue being so allocated. I have given the range of the sort of figures that would be acceptable. But it is not right to pick on a single figure here and now regardless of the circumstances of the market, the demand for this type of share and the amount that depositors and staff will be able to provide at the time in the light of those conditions to apply for shares. If one tried to introduce a provision of the kind set out in new clause 1 the terms of the issue would be made so rigid that they could hardly be carried out. I shall not fall back on the well-tried method of Treasury Ministers in turning down an amendment or new clause on the grounds of drafting. That would not be in the spirit of the Bill and the way in which we have discussed it. But sometimes drafting questions contain the essence of the difficulty. In this case the essence of the difficulty is contained in the fact that the way in which shares will be offered will not be that a precise number of shares will be available, neither more nor less, for depositors and staff, but that priority in application will be given to employees and staff for a certain proportion of the shareholding. The amount allocated to them will depend on the amount for which they apply and on the amount for which other potential shareholders apply. It is possible—indeed, I should like to see this—that if a certain percentage were allocated for depositors and staff, they might also get some of the remainder. It is because we cannot determine the circumstances of the issue that I concluded that it would be wrong for the Government to set out precise conditions for the issue. Some Opposition Members may not be convinced that that is an obstacle to accepting the new clause. The issue was raised in Committee and I have thought about it carefully. It would undoubtedly limit the freedom of action of the TSBs if a specific formula were included in the Bill. I am keen that a substantial percentage of the shareholding should go to depositors and staff, and I hope that the TSBs will encourage that. They have undertaken to grant priority and we expect that undertaking to be fulfilled. However, to say that a certain percentage of shares—neither more nor less—shall be allocated to depositors and staff, regardless of how many they wish to apply for and regardless of how many other potential shareholders wish to apply for would make it more difficult, rather than easier, to achieve the objectives that I believe are shared on both sides of the House.Question put, That the clause be read a Second time:—
The House divided: Ayes 82, Noes 183.
Division No. 119]
| [10.37 pm
|
AYES
| |
Alton, David | Clwyd, Mrs Ann |
Archer, Rt Hon Peter | Cocks, Rt Hon M. (Bristol S.) |
Ashdown, Paddy | Cohen, Harry |
Bagier, Gordon A. T. | Cook, Frank (Stockton North) |
Barnett, Guy | Cook, Robin F. (Livingston) |
Barron, Kevin | Cowans, Harry |
Beckett, Mrs Margaret | Craigen, J. M. |
Beith, A. J. | Cunliffe, Lawrence |
Bennett, A. (Dent'n & Red'sh) | Davies, Ronald (Caerphilly) |
Bidwell, Sydney | Davis, Terry (B'ham, H'ge H'l) |
Blair, Anthony | Deakins, Eric |
Boyes, Roland | Dewar, Donald |
Bruce, Malcolm | Dormand, Jack |
Buchan, Norman | Dubs, Alfred |
Campbell-Savours, Dale | Duffy, A. E. P. |
Canavan, Dennis | Eastham, Ken |
Carlile, Alexander (Montg'y) | Evans, John (St. Helens N) |
Clarke, Thomas | Fatchett, Derek |
Clay, Robert | Fields, T. (L'pool Broad Gn) |
Fisher, Mark | Millan, Rt Hon Bruce |
Godman, Dr Norman | Nellist, David |
Hamilton, James (M'well N) | Park, George |
Hattersley, Rt Hon Roy | Parry, Robert |
Haynes, Frank | Penhaligon, David |
Hogg, N. (C'nauld & Kilsyth) | Pike, Peter |
Holland, Stuart (Vauxhall) | Prescott, John |
Home Robertson, John | Randall, Stuart |
Hughes, Simon (Southwark) | Redmond, M. |
John, Brynmor | Short, Ms Clare (Ladywood) |
Kennedy, Charles | Skinner, Dennis |
Kirkwood, Archy | Snape, Peter |
Leadbitter, Ted | Stewart, Rt Hon D. (W Isles) |
Lewis, Ron (Carlisle) | Thomas, Dr R. (Carmarthen) |
Lewis, Terence (Worsley) | Thompson, J. (Wansbeck) |
Lloyd, Tony (Stretford) | Wardell, Gareth (Gower) |
Loyden, Edward | Wareing, Robert |
McDonald, Dr Oonagh | Welsh, Michael |
McWilliam, John | Wilson, Gordon |
Marek, Dr John | Winnick, David |
Mason, Rt Hon Roy | |
Maxton, John | Tellers for the Ayes: |
Maynard, Miss Joan | Mr. Allen McKay and |
Meadowcroft, Michael | Mr. Austin Mitchell. |
NOES
| |
Alexander, Richard | Hamilton, Neil (Tatton) |
Baker, Nicholas (N Dorset) | Hampson, Dr Keith |
Baldry, Tony | Hanley, Jeremy |
Beaumont-Dark, Anthony | Hargreaves, Kenneth |
Boscawen, Hon Robert | Haselhurst, Alan |
Bottomley, Mrs Virginia | Havers, Rt Hon Sir Michael |
Brandon-Bravo, Martin | Hayes, J. |
Bright, Graham | Hayward, Robert |
Brooke, Hon Peter | Heddle, John |
Brown, M. (Brigg & Cl'thpes) | Henderson, Barry |
Bruinvels, Peter | Hickmet, Richard |
Budgen, Nick | Hicks, Robert |
Burt, Alistair | Hind, Kenneth |
Butcher, John | Holt, Richard |
Cash, William | Howard, Michael |
Chope, Christopher | Howarth, Alan (Stratf'd-on-A) |
Cockeram, Eric | Howarth, Gerald (Cannock) |
Conway, Derek | Howell, Ralph (N Norfolk) |
Cranborne, Viscount | Hubbard-Miles, Peter |
Dorrell, Stephen | Hunt, David (Wirral) |
Douglas-Hamilton, Lord J. | Hunter, Andrew |
Dunn, Robert | Jackson, Robert |
Fairbairn, Nicholas | Jones, Gwilym (Cardiff N) |
Favell, Anthony | Jones, Robert (W Herts) |
Forsyth, Michael (Stirling) | Jopling, Rt Hon Michael |
Forth, Eric | Kellett-Bowman, Mrs Elaine |
Franks, Cecil | Key, Robert |
Freeman, Roger | King, Roger (B'ham N'field) |
Gale, Roger | Knight, Gregory (Derby N) |
Galley, Roy | Knight, Mrs Jill (Edgbaston) |
Garel-Jones, Tristan | Knowles, Michael |
Greenway, Harry | Knox, David |
Gregory, Conal | Lang, Ian |
Griffiths, Peter (Portsm'th N) | Latham, Michael |
Ground, Patrick | Lawrence, Ivan |
Hamilton, Hon A. (Epsom) | Leigh, Edward (Gainsbor'gh) |
Lennox-Boyd, Hon Mark | Robinson, Mark (Nport W) |
Lester, Jim | Ross, Wm. (Londonderry) |
Lightbown, David | Rowe, Andrew |
Lilley, Peter | Sayeed, Jonathan |
Lloyd, Peter, (Fareham) | Shaw, Giles (Pudsey) |
Lord, Michael | Shaw, Sir Michael (Scarb') |
Luce, Richard | Shepherd, Colin (Hereford) |
Lyell, Nicholas | Silvester, Fred |
McCrindle, Robert | Skeet, T. H. H. |
McCurley, Mrs Anna | Smith, Tim (Beaconsfield) |
Macfarlane, Neil | Soames, Hon Nicholas |
MacGregor, John | Speed, Keith |
MacKay, Andrew (Berkshire) | Speller, Tony |
Major, John | Spencer, Derek |
Malins, Humfrey | Stanbrook, Ivor |
Malone, Gerald | Steen, Anthony |
Maples, John | Stevens, Lewis (Nuneaton) |
Marland, Paul | Stevens, Martin (Fulham) |
Marlow, Antony | Stewart, Allan (Eastwood) |
Mates, Michael | Stewart, Andrew (Sherwood) |
Mather, Carol | Stewart, Ian (N Hertf'dshire) |
Mawhinney, Dr Brian | Stradling Thomas, J. |
Maxwell-Hyslop, Robin | Sumberg, David |
Mayhew, Sir Patrick | Taylor, John (Solihull) |
Mellor, David | Taylor, Teddy (S'end E) |
Merchant, Piers | Terlezki, Stefan |
Meyer, Sir Anthony | Thomas, Rt Hon Peter |
Miller, Hal (B'grove) | Thompson, Donald (Calder V) |
Mills, Iain (Meriden) | Thompson, Patrick (N'ich N) |
Mills, Sir Peter (West Devon) | Thornton, Malcolm |
Mitchell, David (NW Hants) | Thurnham, Peter |
Moate, Roger | Townend, John (Bridlington) |
Montgomery, Sir Fergus | Tracey, Richard |
Morris, M. (N'hampton, S) | Trippier, David |
Moyninan, Hon C. | Trotter, Neville |
Murphy, Christopher | Twinn, Dr Ian |
Neale, Gerrard | van Straubenzee, Sir W. |
Needham, Richard | Viggers, Peter |
Nelson, Anthony | Waddington, David |
Newton, Tony | Walden, George |
Nicholls, Patrick | Waller, Gary |
Normanton, Tom | Wardle, C. (Bexhill) |
Norris, Steven | Watson, John |
Onslow, Cranley | Wells, Bowen (Hertford) |
Oppenheim, Phillip | Wheeler, John |
Ottaway, Richard | Whitfield, John |
Page, Richard (Herts SW) | Whitney, Raymond |
Patten, J. (Oxf W & Abdgn) | Wilkinson, John |
Pawsey, James | Winterton, Mrs Ann |
Portillo, Michael | Winterton, Nicholas |
Powell, William (Corby) | Wolfson, Mark |
Powley, John | Wood, Timothy |
Proctor, K. Harvey | Yeo, Tim |
Raffan, Keith | |
Rhodes James, Robert | Tellers for the Noes: |
Rhys Williams, Sir Brandon | Mr. Tony Durant and |
Ridsdale, Sir Julian | Mr. Tim Sainsbury. |
Roberts, Wyn (Conwy) |
Question accordingly negatived.
New Clause 2
Share Ownership
'During the first five years following the vesting day no one individual may own more than five per cent. of the Group's ordinary shares nor after a five year period has elapsed may any one individual own more than 15 per cent. of these shares.'. — [Dr. McDonald.]
Brought up, and read the First time.
I beg to move, That the clause be read a Second time.
Hon. Members who have studied the Bill and the White Paper will be aware that new clause 2 is part of the letter which the chairman of the Trustee Savings bank wrote to the Chancellor of the Exchequer. In it he made it clear that when the TSB had been set up in its new form the draft memorandum of association would contain these provisions. We have transferred them to the new clause in an effort to include them in the Bill. There are two reasons for that. One of them, the future of the TSB, has been discussed at great length in the press. Views were expressed as far back as last July. In a typical example, the Glasgow Herald stated:That quotation illustrates that the Government should erect some kind of ring fence against a possible takeover. No ring fence against a takeover is contained in the Bill. The Government have accepted the assurances about the nature of the draft memorandum which were contained in the letter from the TSB chairman. The Opposition's disquiet about that arises from the fact that, although we accept that it may be difficult to change the draft articles of association, it is not impossible to do so. Although that seems to be a long-term guarantee against a takeover, it is not as secure as at first appears. My first point therefore is that we need to include the ring fence in the Bill rather than depend upon the assurances in the chairman's letter. My second point relates to the speculation about a takeover. In the earlier part of last year it seemed that the TSB would be ripe for a takeover. Its attractions were spelt out, for example, in the Glasgow Herald article. The TSB has wide outlets and a large number of personal customers, which could prove attractive to an American bank trying to find a secure foothold in British personal banking. Many people felt that the TSB was in danger of being taken over. I find it interesting to note that towards the end of the year, when it was fully appreciated how much the share flotation was likely to raise—between £700 million and £1 billion is most consistently quoted—it was felt, as the Daily Telegraph put it:"Quite how the TSB empire with total assets above £9·5 billion and owners of United Dominion Trust, TSB Trustcard and TSB Trust Company (insurance services and unit trusts) can be guaranteed against a future takeover bid, is unclear. If first-time buyers should prove amenable to a buy-out, then what kind of ring-fence would the Government erect to stop them?"
The speculation changed towards the end of last year when it became apparent that the TSB would have spare cash and might consider taking over another company. That would not be excluded by new clause 2. To sum up, the reasons for introducing the new clause are to provide a secure ring fence against a takeover and to ensure that the history and traditions of the bank, which have been firmly rooted in this country, continue. It has been a domestic bank. That is especially true of the bank as it exists in Scotland, where 45 per cent. of bank outlets are controlled by the TSB. The bank has involved itself with the local community and we would not wish to see it taken over by one of this country's major financial institutions or by an American bank, which would use it solely to gain a foothold in this country's banking sector. Whereas the Minister is prepared to accept assurances, for which we respect him, of course, we prefer to include them in the Bill because we feel that this will ensure a more secure future for and be better way of preserving the history and traditions of, the TSB."that the TSB will suddenly have a lot of money to spend, and may go on a City shopping spree to pick up, say, a fund management company and a stockbroker to go with existing banking, trustee and insurance business."
I wish briefly to support my hon. Friend the Member for Thurrock (Dr. McDonald). It is always pleasant to hear one's own words of wisdom quoted, and the article in the Glasgow Herald happens to have been written by me.
The flotation of the TSB is one of the give-aways of the decade. It is essential for the Committee to approve the proposed clause in order to avoid the TSB being parcelled out to the various institutional interests that want to buy the shares. I have heard reference to cloth caps in connection with the TSB. I personally have never worn a cloth cap or, indeed, a bowler hat. I am simply a bare-headed Scot. It is important for the Committee to recognise the community of interest that has developed in the TSB and to ensure by acceptance of the clause that there is a safeguard for the development of greater customer satisfaction, at the same time avoiding the potential dangers of a takeover. I want to see this provision enshrined in the Bill. I am not taken in by letters from chairmen and the optimism of the management about what is likely to happen with regard to the flotation. I had the impression earlier in the debate that the Treasury had moved from its position of neutrality into one in which it was utterly neutered by the TSB management. I therefore hope that the Minister in reply will accept the principle behind the proposed clause.I support the proposed clause and commend hon. Members for their restraint and skill in drafting it. The wording is substantially that contained in the White Paper, as reflected in the letter from Sir John Read. Indeed, it takes its words almost directly from the Minister's mouth. I seem to have the habit of quoting the Minister in Committee, but it is important that he should be invited to honour what he said by the action that he takes in the Bill. On Second Reading, the Minister said:
Thus the Minister agrees in detail with the wording of the proposed clause. In that sense, the clause enacts the Minister's own rhetoric. Unhappily, the Minister said in Committee and on Second Reading that he considers the matter to be one for the TSB and not for the Government. Indeed, in Committee he said that it did not require legislation. His arguments for supporting that conclusion, judged by my reading of the Committee proceedings, are deeply unconvincing. If the safeguard is so important as to be expressed as a cardinal principle in the White Paper and referred to by the Minister as a matter to which he gives weight, why not enshrine it in the Bill? What has the Minister to lose by inserting it in the Bill? I hope that he will explain why it can be included in his statements but cannot be enshrined as a safeguard in the Bill. The Minister has claimed that as a result of the general belief that he has expressed, it would be many years before the TSB might be taken over. I am not sure that I share that view. At 15 per cent., it would require only 11 investors at a modest £50 million or so to reach the point at which they could control the TSB. Indeed, some of them might be the very banks with which the TSB will be in competition. The Minister has said that he wants safeguards against takeovers. Let him prove it by accepting the new clause."for the first five years … there should be a limit on a shareholding by any one shareholder of 5 per cent. of the capital, and thereafter a limit of 15 per cent."—[Official Report, 14 February 1985; Vol. 71, c. 33.]
11 pm
We have a paradox in the way in which the world economy is moving. It is that the banks grow fat when the world goes wrong. Because under the Conservatives the world has gone more wrong than ever before, the banks—thanks to the Government's policies of high interest rates and an emphasis on money—have grown fatter than ever before.
The world is full of predatory banks, and that is the phenomenon that the new clause attempts to control by erecting a ring fence round the TSB. Just as our banks are taking over banks in other parts of the world — most notably the Crocker bank in California, which must have been the purchase of the century; how anybody could ever again believe the advice of the Midland on investment policy, given its astuteness in respect of the Crocker bank, is a question we might ask in this context—so foreign banks want to get into Britain. They want access to a banking world which is at present closely controlled and dominated by the big four. In that situation, the TSB must present an object as desirable as the Prime Minister at Holyrood House on a wet Friday. The TSB is a desirable bank for a takeover because it has a large number of high street outlets, the trust of a large body of customers who are accustomed to a close and satisfactory working relationship, and because the Government are treating it as if it were a piece of lost property being sold at police auction to make a bob or two. They are sending it out into the world cash rich with all those desirable characteristics. In that situation, it is almost certain that foreign banking organisations which want to get not just a toehold but a major position in the banking world in this country will find it a most desirable object. It would be a disastrous outcome of our deliberations if the loved and trusted TSB, the people's bank, became the Manhattan TSB or the Jihad TSB.It occurred to me, when my hon. Friend was referring to the Prime Minister at Holyrood, that the right hon. Lady is at present in the United States. Does he foresee a situation in which the flotation of the TSB could be a dollar earner for the economy, given how well the dollar is doing?
I must not be tempted to go down that path, given how well our competitors, particularly West Germany and Japan, have done with the over-valued dollar and how badly we have done, and we could do with the dollar earnings. I acquit the Prime Minister of the charge that my hon. Friend levies against her, of the desire to flog off British assets, but I do not acquit foreign bankers of an insight into an opportunity such as the TSB group presents, unless protected by provisions such as those in the new clause. I would not want the TSB in Grimsby to be hoisting a sign saying, "The Gaddafi Bank of Grimsby", which is possible without the protection afforded by the new clause.
It is essential that this banking group is kept in a close relationship not only with the customers but with the country. It should be kept free of foreign control and takeover.New clause 2 is an extension of new clause 1, in which we offered preference to employees and account holders to ensure that the small man has a say in the TSB group. New clause 2 proposes an arrangement whereby big institutions would not be able to control the TSB arrangement. It is important to enshrine this in the Bill. I hope that the Minister is able to accept it.
To prevent the big battalions of the City institutions from coming in and doing all that they are bound to do, because the TSB group is an attractive organisation, we must say not only that we shall not allow that at the beginning but must maintain the principle. This is why I support the laudable suggestion of the 50 per cent. figure after five years. The great advantage of ensuring that there are small investors is that it will add to the protection of the TSB plc after the legislation has gone through the House. It will protect it from being taken over by the other domestic banking institutions. Therefore, TSB plc will retain the traditions of the TSB group, which have been valuable to the country and its customers, and therefore should be retained. Although the TSB group has extended its services, it has not invested in the technology and all the other things that are needed to run a fully comprehensive service. In that respect, as the TSB group has a comprehensive range of branches, it is attractive to all the other institutions. It would plug in nicely to the clearing banks which have invested so much into the payment systems and the large computer networks, into which the TSB group has not invested to the same extent because the extension of its services has taken place more recently. Logically, it would make sense to plug the two groups together, but if that happens, it would have serious effects. In addition, the international aspect needs to be looked at. If there is a takeover, it will be because of the traditional background of the TSB, and it would be undesirable to allow the TSB plc to fall into foreign hands. It will be an attractive banking organisation for foreign banks to take over. The liquid assets of the bank will be considerable if the flotation is successful. Therefore, the bank would be able to embark on a new programme of extension of services and even acquisition. That would be attractive to the big institutions. I do not mean that in a negative sense. We all want to see our financial institutions being successful because they are a crucial part of our economic, business and commercial system. But let us retain the personal element. I hope the Government will support the ring fence around the TSBs to which my hon. Friend the Member for Great Grimsby (Mr. Mitchell) referred. It is a valuable mechanism which would be appreciated by the 6 million customers who have traditionally banked with the TSBs.The debate has focused on the provisions for maintaining the independence of the TSBs for the longer term future. During the debate on the last new clause we were talking about the provisions in the Bill as they might affect the TSBs beyond vesting day and the reorganisation which was covered directly by the Bill. I said that I thought it was not right for the Government to lay down specific arrangements for the flotation itself.
New clause 2 would provide a set of rules for the TSBs for the indefinite future. There is perhaps a greater difference between the Government and the Opposition on this new clause. I understand the point made by the hon. Member for Thurrock (Dr. McDonald), who was supported by the hon. Members for Glasgow, Maryhill (Mr. Craigen), for Great Grimsby (Mr. Mitchell), for Kingston upon Hull, West (Mr. Randall) and for Yeovil (Mr. Ashdown). They thought that absolute protection against any shareholder acquiring more than 15 per cent. of the shares should be set down in a statute for ever. They feel that the TSBs should be kept by statute in a special position, which could be changed only by another trustee savings bank measure. The Government's purpose in the Bill is to ensure that TSBs can have an independent future and not be dependent, as they have been for so long, upon Parliament whenever changes need to be made in the structure under which they operate. I accept that the aim of the new clause to prevent a shareholding greater than 15 per cent. is more limited than the arrangement stipulated in statute up to now. Nevertheless, it would restrict the actions of the banks in areas apart from those about which Opposition Members have spoken.The Minister is really saying that he is prepared to accept the assurances given in the White Paper. What does he think—
On a point of order, Mr. Deputy Speaker. I am trying hard to listen to the important points that are being made. I know that it is difficult at this time of the evening, but could hon. Members pay more attention to what is being said?
If conversations are to take place, I hope they will take place outside the Chamber.
How would the Minister view the takeover of the TSB by another bank or financial institution, particularly a foreign bank?
The hon. Lady has asked a question which was raised by herself and other hon. Members in their contributions to the debate on the clause. My view is that the 5 per cent. limitation for five years is desirable because there should be an absolute form of protection for a period after the TSBs acquire PLC status.
11.15 pm I also think that there ought to be a substantial obstacle to takeovers beyond that time. I do not think that it ought to be an absolute obstacle, as the Opposition suggest. A takeover cannot arise for many years, so we are discussing conditions in the 1990s. After the issue, which perhaps may take place in the early part of next year, there will be the five-year period, taking us into the 1990s. There will then be a requirement for a special resolution with a 75 per cent. majority to change the articles to enable any one shareholder to own more than 15 per cent. of the shares. That is very difficult to surmount. The fact that it is not impossible is important, otherwise the TSBs will be permanently set apart with a form of protection which will dilute the degree of accountability, and it could limit other activities in which they might want to engage. They might want to link with another body. They might want to have a new holding company holding the TSB roup and some other undertaking. They might wish to have a link with a major shareholder. I shall not speculate on the kind of shareholder that that might be, but I remind the House that a large insurance company recently took a significant minority holding in a British bank. That would be impossible if a 15 per cent. limitation were placed on any shareholding. It might be that, say, a 26 per cent. share holding was thought desirable. That would block any special resolutions and provide an effective means against any unwelcome bidder. There is a difference of substance between the views of the two sides of the House. The Government do not believe that the TSBs should be held permanently in a special status which does not apply to any of their competitors or to other public limited companies. That is why I ask the House to reject the new clause.Question put, That the clause be read a Second time:—
The House divided: Ayes 68, Noes 168.
Division No. 120]
| [11.17 pm
|
AYES
| |
Alton, David | John, Brynmor |
Ashdown, Paddy | Kennedy, Charles |
Barnett, Guy | Kirkwood, Archy |
Barron, Kevin | Leadbitter, Ted |
Beckett, Mrs Margaret | Lewis, Ron (Carlisle) |
Beith, A. J. | Lewis, Terence (Worsley) |
Bidwell, Sydney | Lloyd, Tony (Stretford) |
Blair, Anthony | Loyden, Edward |
Bruce, Malcolm | McDonald, Dr Oonagh |
Campbell-Savours, Dale | McWilliam, John |
Canavan, Dennis | Marek, Dr John |
Carlile, Alexander (Montg'y) | Maxton, John |
Clay, Robert | Maynard, Miss Joan |
Clwyd, Mrs Ann | Meadowcroft, Michael |
Cocks, Rt Hon M. (Bristol S.) | Nellist, David |
Cohen, Harry | Park, George |
Cook, Robin F. (Livingston) | Parry, Robert |
Cowans, Harry | Pike, Peter |
Craigen, J. M. | Prescott, John |
Cunliffe, Lawrence | Randall, Stuart |
Davies, Ronald (Caerphilly) | Redmond, M. |
Davis, Terry (B'ham, H'ge H'l) | Short, Ms Clare (Ladywood) |
Deakins, Eric | Silkin, Rt Hon J. |
Dormand, Jack | Skinner, Dennis |
Duffy, A. E. P. | Smith, C.(Isl'ton S & F'bury) |
Eastham, Ken | Snape, Peter |
Evans, John (St. Helens N) | Stewart, Rt Hon D. (W Isles) |
Fatchett, Derek | Thompson, J. (Wansbeck) |
Fields, T. (L'pool Broad Gn) | Wardell, Gareth (Gower) |
Fisher, Mark | Wareing, Robert |
Godman, Dr Norman | Welsh, Michael |
Hamilton, James (M'well N) | Wilson, Gordon |
Hattersley, Rt Hon Roy | |
Haynes, Frank | Tellers for the Ayes: |
Hogg, N. (C'nauld & Kilsyth) | Mr. Allen McKay and |
Home Robertson, John | Mr. Austin Mitchell. |
NOES
| |
Alexander, Richard | Burt, Alistair |
Baldry, Tony | Butcher, John |
Beaumont-Dark, Anthony | Chope, Christopher |
Boscawen, Hon Robert | Cockeram, Eric |
Bottomley, Mrs Virginia | Conway, Derek |
Brandon-Bravo, Martin | Cranborne, Viscount |
Brown, M. (Brigg & Cl'thpes) | Dorrell, Stephen |
Bruinvels, Peter | Douglas-Hamilton, Lord J. |
Budgen, Nick | Dunn, Robert |
Fairbairn, Nicholas | Mills, Sir Peter (West Devon) |
Fallon, Michael | Mitchell, David (NW Hants) |
Favell, Anthony | Moate, Roger |
Forsyth, Michael (Stirling) | Montgomery, Sir Fergus |
Forth, Eric | Morris, M. (N'hampton, S) |
Freeman, Roger | Moynihan, Hon C. |
Gale, Roger | Murphy, Christopher |
Galley, Roy | Neale, Gerrard |
Garel-Jones, Tristan | Needham, Richard |
Gregory, Conal | Newton, Tony |
Griffiths, Peter (Portsm'th N) | Nicholls, Patrick |
Ground, Patrick | Normanton, Tom |
Hamilton, Hon A. (Epsom) | Norris, Steven |
Hamilton, Neil (Tatton) | Onslow, Cranley |
Hampson, Dr Keith | Oppenheim, Phillip |
Hanley, Jeremy | Page, Richard (Herts SW) |
Hannam, John | Pawsey, James |
Hargreaves, Kenneth | Portillo, Michael |
Hayes, J. | Powley, John |
Hayward, Robert | Proctor, K. Harvey |
Heddle, John | Rhodes James, Robert |
Henderson, Barry | Rhys Williams, Sir Brandon |
Hickmet, Richard | Ridsdale, Sir Julian |
Hicks, Robert | Roberts, Wyn (Conwy) |
Hind, Kenneth | Robinson, Mark (N'port W) |
Holt, Richard | Rowe, Andrew |
Howard, Michael | Sainsbury, Hon Timothy |
Howarth, Alan (Stratf'd-on-A) | Sayeed, Jonathan |
Howarth, Gerald (Cannock) | Shaw, Sir Michael (Scarb') |
Howell, Rt Hon D. (G'ldford) | Silvester, Fred |
Howell, Ralph (N Norfolk) | Skeet, T, H. H. |
Hubbard-Miles, Peter | Smith, Tim (Beaconsfield) |
Hunt, David (Wirral) | Soames, Hon Nicholas |
Hunter, Andrew | Speed, Keith |
Jackson, Robert | Speller, Tony |
Jones, Gwilym (Cardiff N) | Spencer, Derek |
Jones, Robert (W Herts) | Stanbrook, Ivor |
Jopling, Rt Hon Michael | Steen, Anthony |
Kellett-Bowman, Mrs Elaine | Stevens, Lewis (Nuneaton) |
Key, Robert | Stevens, Martin (Fulham) |
King, Roger (B'ham N'field) | Stewart, Allan (Eastwood) |
Knight, Gregory (Derby N) | Stewart, Andrew (Sherwood) |
Knight, Mrs Jill (Edgbaston) | Stewart, Ian (N Hertf'dshire) |
Knowles, Michael | Stradling Thomas, J. |
Knox, David | Sumberg, David |
Lang, Ian | Taylor, John (Solihull) |
Latham, Michael | Taylor, Teddy (S'end E) |
Lawrence, Ivan | Terlezki, Stefan |
Leigh, Edward (Gainsbor'gh) | Thomas, Rt Hon Peter |
Lennox-Boyd, Hon Mark | Thompson, Donald (Calder V) |
Lester, Jim | Thompson, Patrick (N'ich N) |
Lightbown, David | Thurnham, Peter |
Lilley, Peter | Townend, John (Bridlington) |
Lloyd, Peter, (Fareham) | Tracey, Richard |
Lord, Michael | Trippier, David |
Luce, Richard | Trotter, Neville |
Lyell, Nicholas | Twinn, Dr Ian |
McCrindle, Robert | van Straubenzee, Sir W. |
McCurley, Mrs Anna | Viggers, Peter |
Macfarlane, Neil | Walden, George |
MacGregor, John | Waller, Gary |
MacKay, Andrew (Berkshire) | Wardle, C. (Bexhill) |
Malins, Humfrey | Watson, John |
Malone, Gerald | Wells, Bowen (Hertford) |
Maples, John | Wheeler, John |
Marland, Paul | Whitfield, John |
Marlow, Antony | Whitney, Raymond |
Mates, Michael | Wilkinson, John |
Mather, Carol | Wintertpn, Mrs Ann |
Mawhinney, Dr Brian | Winterton, Nicholas |
Maxwell-Hyslop, Robin | Wolfson, Mark |
Mayhew, Sir Patrick | Wood, Timothy |
Mellor, David | Yeo, Tim |
Merchant, Piers | |
Meyer, Sir Anthony | Tellers for the Noes: |
Miller, Hal (B'grove) | Mr. John Major and |
Mills, Iain (Meriden) | Mr. Tony Durant. |
Questions accordingly negatived.
Clause 1
Preliminary
11.30 pm
I beg to move amendment No. 1, in page 1, line 9 after 'banks', insert
The effect of the amendment is to exclude Trustee Savings Bank Scotland Limited from the Bill. It will retain Trustee Savings Bank Scotland as a trustee savings bank, but the prime effect of the change will be to secure the independence of Trustee Savings Bank Scotland. The amendment seeks to do what a Scottish Government would have done: to veto any attempt whatsoever to take this very important banking enterprise out of Scotland and subject it to alien control. Although the Treasury Bench cannot, for once, be criticised quite so strongly as I would normally criticise it, it should accept that there is a valid reason why in this instance it should not seek to follow the advice given to it by the Trustee Savings Bank group. Trustee Savings Bank Scotland — so far an independent banking enterprise that operates within the confederation of the TSB group—will be incorporated in the TSB Group plc. The shareholding of the TSB Group plc will be a United Kingdom shareholding and the Scottish element of control over Trustee Savings Bank Scotland will be eradicated. The Government ought to consider the importance of Trustee Savings Bank Scotland within the Scottish financial structure. It is unnecessary for Trustee Savings Bank Scotland to be made into a limited liability company. Within Scotland's financial network there are mutual companies like Scottish Widows and Standard Life which operate very effectively as mutual combines and which are respected not just in Scotland but elsewhere. If the Government decide that the banking structure would be improved by making trustee savings banks individually as well as a whole into public limited liability companies, Trustee Savings Bank Scotland ought, by this amendment, to be allowed to retain its independence. If doubt is cast upon the ability of the bank to stand on its own feet, let me spell out some of the information about it. Trustee Savings Bank Scotland operates about 2 million separate accounts; it has 1·25 million customers; it has 25 per cent. penetration of the personal savings market in the banking fraternity; and, unlike the other trustee savings banks in the British Isles, it has a larger proportion of AB social classifications than most. Therefore, it cannot be classified, as the TSB group might be in the English context, as a poor man's bank. It is a very big bank. As the hon. Member for Thurrock (Dr. McDonald) said, it holds a substantial proportion of the banking premises in Scotland. Moreover, nobody can doubt that, since the amalgamations, Trustee Savings Bank Scotland has been under very good and effective management. It has a good reputation. It has responded to new technology in banking. It has expanded its customer clientele and it has also been very productive. For example, on the overall working profit divided among the employees of the group, the Clydesdale bank, which is a fully owned subsidiary of the Midland bank and has no independence whatsoever within the Scottish banking context, produces a profit of only £2,600 per employee, whereas the Royal Bank of Scotland and the Bank of Scotland alternate between £6,500 and £7,500 profit per employee. I am told that the most recent figures show that TSB Scotland has a profit of £10,600 per employee, so it is clearly a substantial, efficient and effective bank in the Scottish financial scene. However, it seems to have made no attempt to regain some measure of independence or even quasi-autonomy. The Trustee Savings bank on the Channel Islands, perhaps because of the different taxation regime there, and certainly because of the society in which it will function, will allow 49 per cent of the shares to be taken over by local Channel Islands people. That is a formula that TSB Scotland could have adopted. However, I submit that that would not be adequate, as it would have left overall control with the TSB centre in London. The TSB could have said that TSB Scotland Ltd., as the representative of the progenitor of the Trustee Savings bank movement in the United Kingdom—it originated in Dumfriesshire when the first bank was opened—and bearing in mind its size and success, could have remained a trustee savings bank to continue the work which it has undertaken over the years. Secondly, it could have operated as an independent unit like the Royal Bank of Scotland or the Bank of Scotland. The Bank of Scotland has been an efficient bank. It was owned partly by Barclays Bank plc until recently. The Standard Life Assurance Co. bought out the 30 per cent. share that Barclays Bank had in the Bank of Scotland, so returning the Bank of Scotland to full Scottish ownership. The Royal Bank of Scotland is an interesting example. Three or four years ago, a tremendous fuss was kicked up when two foreign banks—the Standard Chartered Bank plc and the Hong Kong and Shanghai Banking Corporation — came in like predators with the aim of acquiring control of the Royal Bank of Scotland. It could be said that at that time the Royal Bank badly needed a kick in the behind, because it had slipped behind in its development. It was not showing the same degree of enterprise as the Bank of Scotland. One of the effects of the report of the Monopolies and Mergers Commission, which prevented the takeover of the Royal Bank of Scotland, was to transform the Royal Bank. It is now showing activity, energy and initiative that it failed to show hitherto. It is my contention that TSB Scotland could have filled a similar slot. The third option is much more interesting. We have discussed the money that will be made available in the TSB Group as a result of the flotation of the shares. Apparently the flotation will realise something between £500 million and £700 million. If the Scottish bank had been floated separately, it would have had less free capital becoming available because of its size. However, it would have a considerable amount of capital arising from its deposits. Now that Barclays bank has moved out of the Scottish banking scene, there is nothing to stop the TSB from entering into a merger or other arrangement with the Clydesdale bank, which has a low profit per employee. It should have been reintegrated into a new banking institution in the Scottish market. That is a great opportunity missed, and it will remain missed if the Government do not accept the amendment. I have no doubt that the Midland bank, which controls the Clydesdale bank, is somewhat stretched for cash because of the Crocker bank fiasco. It would do no harm if the Midland bank were to dispose of the Clydesdale bank, especially when we consider its overall activities in the rest of the United Kingdom. Those three options could still be available to TSB Scotland if the Minister were to accept my amendment. I notice that the Under-Secretary of State for Scotland, the hon. Member for Eastwood (Mr. Stewart), is present and I am sure that he will appreciate another reason why my amendment is desirable. Hon. Members on both sides of the House believe that it is important to build up the financial sector in Scotland. Unlike the north of England, which used to have an independent financial sector which has been eroded and taken over by the City of London, Scotland still has a large area of financial activity which can be useful from time to time in providing investment locally. I fear that if TSB Scotland, which already has substantial penetration in Scotland, is taken over under the Bill, which will happen if my amendment is not carried, the funds which are raised in the flotation will not be spent in Scotland through the medium of TSB Scotland, but will be used for the expansion of the TSB group in those areas where it is not strong. Obviously, one of those areas will be the south-east of England, where the group may want to set up in competition with the other joint stock banks. Another will be taking over finance houses or becoming involved in stockbroking and other such areas. The profits that come from those areas will be available not to TSB Scotland but to the group as a whole. It will be operated from London and the employees of TSB Scotland will not see much benefit from it. In a strange way, by taking this rather cowardly decision, in copping out and selling out, the trustees of the TSB Scotland have, in a sense, stunted the growth of the company that they themselves have built up. I should not like the House to countenance that at all. Another factor that must be mentioned is that we are faced with encroaching centralisation in the financial markets. It does the Scottish banking sector no good whatever if a major enterprise such as TSB Scotland is to be taken out of the control of interest within Scotland. It is a weakening of the overall fabric. For the financial strategy of the Scottish Development Agency and the Scottish Industry Department, it would be desirable if TSB Scotland were able to retain its independence and full autonomy. Another reason why the amendment is vital is that there is no guarantee whatever of the jobs of the headquarters and other staff of TSB Scotland. Pledges have been given before — for instance, in connection with insurance companies which were taken over. After a number of years, insurance companies that had operated in Scotland for many years lost their independence then lost their identity and the jobs that went with the head offices of those companies were obliterated. With the passing generations, the promises and pledges which had been made at the time of takeover were seen to be completely and utterly empty.'(other than Trustee Savings Bank Scotland Limited which is hereby excluded from this Act)'.
The hon. Gentleman talks of centralisation and the obliteration of jobs. One new independent bank has been formed in this country in the past 100 years and that is Adam and Company in Edinburgh. Several merchant banks have been formed, such as Noble Grossart and it is in Edinburgh. Far from centralisation and anglicisation, those are independent bodies. Why cannot the hon. Gentleman ever give any credit to the country that he pretends to represent?
11.45 pm
I am glad that I have prompted the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) to participate in the debate; he has been absent for most of the evening.
Some small — in United Kingdom terms — banking institutions have been established, and I congratulate those who showed initiative there, but if the hon. and learned Gentleman studies the Monopolies and Mergers Commission report on the attempted takeover of the Royal Bank of Scotland he will appreciate the pressures facing the financial sector in Scotland. Many of his friends in the Conservative party in Scotland will tell him about their worries. [Interruption.] The noise from the Government Back Benches reminds me that some English yobbos are present. I do not expect them to be interested in the banking scene in Scotland. They will not get directorships from it, so they are not interested in it. We are talking about a major bank which has operated in Scotland, through independent branches, for a considerable time. It has been amalgamated into a successful unit. I have given the figures and spelt out a strategy, which is not mine alone, but is the strategy favoured by the Scottish community, which is worried about the future and sees the opportunity for jobs in the financial sector. I am worried that, if the Economic Secretary to the Treasury does not accept the amendment, TSB Scotland will disappear from sight. If it loses its identity, jobs at the head office will be lost. We are taking out one of the props of the Scottish economy. The Bill has been reasonably uncontroversial, but it will have a serious impact in Scotland.That was the most parochial and short sighted speech that I have ever heard. The hon. Member for Dundee, East (Mr. Wilson) does not seem to realise, though he touched on it, that the savings movement began in Dumfries. Dr. Henry Duncan, who began it all, set up the savings movement throughout the United Kingdom. His lead in banking and commerce shows today in the great success of the TSB.
It is beyond the comprehension of most people who know anything about banking why the hon. Member for Dundee, East should wish to split up something which has been peculiarly successful. He ought to know that Scotland has led the banking and commerce world over the past few hundred years in innovation and strengthening banking through amalgamations. The amendment is contrary to movements in banking over the past 50 years. The strength of the banks, achieved through amalgamations, has enabled them to develop banking services, aid for industrial development and commerce and banking practice. The amendment would deny those advantages to the TSBs. That shows how out of touch the hon. Member for Dundee, East is with the direction of banking today.Will the hon. Gentleman give way?
I hope that my hon. Friend the Economic Secretary to the Treasury will strongly oppose the amendment.
I listened with interest to the hon. Member for Dumfries (Sir H. Monro). The savings movement was started in Scotland in the hon. Gentleman's constituency by the Rev. Henry Duncan. The hon. Gentleman will appreciate that the savings movement in Scotland is light years removed from the sort of commerce and industry that pervades today's banking world. The savings movement in Scotland was unique. It was a working-class institution. People put their bawbees and shillings into bank deposits that were locked away in caskets and were not lent out at high rates of interest in the capital centres of the world. That was the unique flavour of the Trustee Savings bank, and the Bill is destroying that flavour.
The concept of mutuality is destroying the uniqueness, character, acceptability and approachability of these banks in the high streets of Scotland, and the hon. Member for Dumfries knows it. I understand that the hon. Gentleman is a sponsor of the Royal Bank of Scotland Bill. If that does not give his game away, I do not know what does.I think that the hon. Gentleman is under a misapprehension when he says that the hon. Member for Dumfries (Sir H. Monro) knows it. The hon. Member for Dumfries would not give way when I was about to ask him whether he had read the Bill. The Bill proposes to do away with the existing TSB Scotland. It is proposed to subsume TSB Scotland within this new TSB plc. I can only assume that the man who represents Ruthwell did not read the Bill.
Having listened to the speech of the hon. Member for Dumfries, I believe that that is not an unreasonable inference.
I have had experience of the Trustee Savings bank. I remember going as a schoolboy to my first secondary school in Glasgow—[HoN. MEMBERS: "When?"]—more than five years ago! Every Friday I used to buy post office stamps with my half crown. When I had saved enough half crown stamps, I took my post office book to the savings bank around the corner. In that way I built up a credit balance. It was only when I went to university and the joint stock banks got hold of my money that I started to run up an overdraft, and I am still doing it. The Trustee Savings bank is unique, because it is a savings institution. A savings institution is not like a bank; it is supposed to promote savings actively. It is important in rural areas such as that of the hon. Member for Dumfries and mine that savings are promoted, because people are remote from the centres of commerce and the captains of industry who are the hon. Gentleman's friends. They have special needs in the savings market which have not been fulfilled in any other way. It is true, therefore, to say that in the past the Trustee Savings bank has fulfilled a need. I fear for its future. The difference between a savings institution promoting savings and the type of animal that we shall end up with when the Bill is passed is not appreciated by the Government. We shall suffer because of that. I do not like the Bill. It is one of the worst pieces of legislation that the Government have brought forward. There is a lot of logic in the amendment moved by my hon. Friend the Member for Dundee, East (Mr. Wilson). He said that there was no doubt about the quantitative basis on which the bank is founded. It could stand on its own with any other banking institution. It could also prosper, as it has done. Cogent arguments can be put about Scotland's peculiar legal system and financial environment. My biggest fear—I know that this point does not apply only to this amendment—is that the concept of mutuality—the basis of the Page report—will go out the window in Scotland, as in other parts of the country. Many of the present membership and management of the bank in Scotland are deeply worried that the concept of mutuality has been sold short. The Page committee talked about the need for the bank to be run for the benefit of its staff and customers, as opposed to the benefit of outside shareholders, for depositors to elect a board and for the bank to retain its assets. That is the essence of the matter, and the Government have got it severely wrong. The former right hon. Member for Orkney and Shetland, now Lord Grimond, suggested, for the first time in my experience, that there was great scope for having local banks that invest in their local communities. In the Borders area and my own constituency, banks such as the TSB would be cheek by jowl with the people in whom they invested. The Government should be moving in that direction, but, instead, they are moving 180 degrees in the opposite direction. That is to be deeply regretted. My experience in my constituency suggests that the TSB has been providing a unique service in such communities. The need for a bank such as the TSB as it is presently constituted in the Scottish financial services set-up is greater than ever. The Bill is bad. I hope that the hon. Member for Dundee, East will, if necessary, press the amendment to a Division, because if he does I shall be the first to follow him through the Lobby.I should state my credentials by saying that when the Trustee Savings Bank movement was founded in the constituency of my hon. Friend the Member for Dumfries (Sir. H. Monro), my family lived in Fife. I took the opportunity recently to return to Scotland with my hon. Friend the Member for Fife, North-East (Mr. Henderson) and to visit TSB Scotland. We found, not a declining organisation, in which jobs were being threatened, but an expanding bank, which embodied both some of the best traditions of the TSBs and the particular independent strain in the financial field which Scotland has contributed.
The complaint made by Opposition Members, as the hon. Member for Dundee, East (Mr. Wilson) in part admitted, should be addressed, not to me, but to those who are responsible in the TSBs for the arrangement made possible by the Bill. The arrangement was not forced on the TSBs by the Government. The TSBs in Scotland amalgamated in 1983 to form TSB Scotland, and it was their wish then to join the other TSB bodies in England, Wales, Northern Ireland and the Channel Islands. The Bill makes their plans possible.Does the Minister accept that just as the Bank of England has the duty of supervising the banks overall in the United Kingdom, so the Treasury, in promoting this legislation, is doing so because it does not run foul of public policy? In other words, if the Government had disagreed with the intention of privatising or changing the status to plc, they would not have produced the legislation, even if the TSB group had requested them to do so? If that is the case, and given the fact that in Scotland there are good public policy reasons why TSB Scotland should be excluded, would the Minister agree to accept the amendment?
It is not a matter of public policy whether TSB Scotland is excluded or separated from the rest of the group. If the amendment were to be accepted, TSB Scotland would be left in an entirely separate form from any other bank. It would be maintained under the old constitutional arrangements.
Having brought TSB Scotland into the group with the other trustee savings banks, there is nothing to stop it continuing its own independence to whatever degree it cares to negotiate and arrange with the central board and management to which it has contributed. Nothing in the Bill will stop TSB Scotland from seeking such a form of separate activity or independence.12 midnight
If the Minister studies the White Paper he will find that after the date upon which the Bill becomes an Act the TSB Scotland is subsumed into the TSB group. Its board of trustees is extinguished from then on. The local board of TSB Scotland will be appointed by the TSB group centrally. Any vestige of independence there might be virtually disappears from then.
The arrangements were known a long time before the amalgamation took place in 1983. Those plans were put forward in 1982. All the arrangements that have taken place in the past couple of years and the future plans for TSB Scotland have been known and agreed by those involved. If it were otherwise, I am not saying that I would have tried to force a monolithic structure on the TSB. It is not for me to do that.
I understand my hon. Friend's point. The Scottish TSB will continue its tradition within the context of the group, but if he believes in that why did he not seize the opportunity presented by the Bill to allow it to have its own note issue in Scotland? That would have underlined its status within the context of the group.
The Government are not doing that, because they are not extending the right of note issue to any further banks. Those who possess it do so by virtue of a historical right which has not been removed. It has not been the policy of successive Governments for many years to extend the right of note issue.
I am puzzled by the Minister's line of argument. The implication is that we, as Members of Parliament, are wasting our time tonight. We might as well have accepted the TSB's proposals in their entirety, but the purpose of the debate is to scrutinise and amend proposals if need be. That is why we suggest that there should be an autonomous TSB Scotland.
I understand the hon. Gentleman's view, but, as I explained on Second Reading, the Bill is most unusual in that it contains some matters of public policy such as the vesting of assets which cannot be done in a group without ownership and the supervision and tax implications. That can only be done by a Minister on behalf of the Government through Parliament. The Bill also has, in many respects, the characteristics of a private Bill when Parliament is approached for legislation by a banking group which wishes to rearrange its structure.
It would not be proper for Ministers to come forward with legislation forcing bodies to reorganise themselves in a way which the Government or Parliament might think right but which those bodies do not wish. We do not have an autocratic system of that kind for bodies in the private sector. It would not be right to apply that to a TSB any more than it would be—rose—
Will the hon. Gentleman allow me to finish my sentence? It would not be right for us to single out the TSB for that type of treatment.
If the argument is as the Minister states it, why is it that in the last year we have had the Royal Bank of Scotland Bill, the Barclays Bank Bill and the Lloyds Bank (Merger) Bill? Is it not because the Treasury recognises its responsibility in regard to banks and, indeed, if it wished to do so, it would support the amendment?
Those are private bank Bills. I tried to explain, but I think that the hon. Gentleman cannot have been listening, that this is a Government Bill because there are matters of public interest separate from private interests. The public interest matters are not those parts which are the internal interests of the TSBs, and it has never been suggested that they should be. Some Opposition Members wish that that was the case, but I do not think it would be proper for Government to decide what sort of internal reorganisation the TSBs or any other banking group ought to have forced upon them. Therefore, the Bill deals with those matters which are of direct concern of Government such as supervision, tax and the question of vesting and ownership, which can be resolved only by Parliament.
On that basis, I recommend the Committee to reject the amendment.I am disappointed that the Minister has not accepted the amendment. He admitted that the Bill affected the public interest. He may well argue that point, although I think not very successfully, in relation to the Royal Bank of Scotland Bill and the other Bills to which the hon. Member for Gordon (Mr. Bruce) referred.
In this case, however, we have to put it clearly on record that we are dealing with a request from people who do not own the bank. There is no ownership of the bank; it is mutually owned by the depositors. The people who have come to this decision are the trustees and managers who are culpable in selling out what is the heritage of the Scottish people. They were given a trust in this matter, and they have not observed it. We have a role to scrutinise and criticise legislation and to try to amend and improve it. If we think that there is a fundamental flaw in any legislation, it is not for the Minister, for me or, indeed, for any other hon. Member to accept that what we are told we have got to do. I was elected to Parliament to use my own judgment in these matters, as are all hon. Members. The judgment I make is that the Bill is wrong, particularly in relation to the Scottish element within it. I ask the Minister, even at this late stage, to change his mind.Question put, That the amendment be made:—
The House divided: Ayes 29, Noes 137.
Division No. 121]
| [12.07 am
|
AYES
| |
Alton, David | Loyden, Edward |
Ashdown, Paddy | Maxton, John |
Barron, Kevin | Meadowcroft, Michael |
Beith, A. J. | Nellist, David |
Bruce, Malcolm | Parry, Robert |
Carlile, Alexander (Montg'y) | Penhaligon, David |
Clay, Robert | Pike, Peter |
Cohen, Harry | Rogers, Allan |
Craigen, J. M. | Skinner, Dennis |
Davies, Ronald (Caerphilly) | Snape, Peter |
Evans, John (St. Helens N) | Stewart, Rt Hon D. (W Isles) |
Faulds, Andrew | Welsh, Michael |
Home Robertson, John | |
Hughes, Simon (Southwark) | Tellers for the Ayes: |
Kennedy, Charles | Mr. Gordon Wilson and |
Lewis, Terence (Worsley) | Mr. Archy Kirkwood. |
Lloyd, Tony (Stretford) |
NOES
| |
Alexander, Richard | Lilley, Peter |
Beaumont-Dark, Anthony | Lloyd, Peter, (Fareham) |
Boscawen, Hon Robert | Lord, Michael |
Bottomley, Mrs Virginia | Luce, Richard |
Brown, M. (Brigg & Cl'thpes) | McCurley, Mrs Anna |
Bruinvels, Peter | Macfarlane, Neil |
Budgen, Nick | MacGregor, John |
Burt, Alistair | Maclean, David John |
Butcher, John | Major, John |
Chope, Christopher | Malins, Humfrey |
Cockeram, Eric | Maples, John |
Conway, Derek | Marland, Paul |
Cranborne, Viscount | Mather, Carol |
Dorrell, Stephen | Maxwell-Hyslop, Robin |
Douglas-Hamilton, Lord J. | Mayhew, Sir Patrick |
Dunn, Robert | Mellor, David |
Durant, Tony | Merchant, Piers |
Fairbairn, Nicholas | Meyer, Sir Anthony |
Favell, Anthony | Miller, Hal (B'grove) |
Forsyth, Michael (Stirling) | Mills, Iain (Meriden) |
Forth, Eric | Mills, Sir Peter (West Devon) |
Freeman, Roger | Mitchell, David (NW Hants) |
Gale, Roger | Moate, Roger |
Galley, Roy | Montgomery, Sir Fergus |
Garel-Jones, Tristan | Moynihan, Hon C. |
Gregory, Conal | Murphy, Christopher |
Griffiths, Peter (Portsm'th N) | Neale, Gerrard |
Ground, Patrick | Newton, Tony |
Hamilton, Hon A. (Epsom) | Nicholls, Patrick |
Hamilton, Neil (Tatton) | Norris, Steven |
Hanley, Jeremy | Onslow, Cranley |
Hargreaves, Kenneth | Oppenheim, Phillip |
Hayes, J. | Page, Richard (Herts SW) |
Hayward, Robert | Portillo, Michael |
Henderson, Barry | Powley, John |
Hickmet, Richard | Proctor, K. Harvey |
Hind, Kenneth | Raffan, Keith |
Holt, Richard | Rhodes James, Robert |
Howard, Michael | Rhys Williams, Sir Brandon |
Howarth, Alan (Stratf'd-on-A) | Roberts, Wyn (Conwy) |
Howarth, Gerald (Cannock) | Robinson, Mark (N'port W) |
Howell, Rt Hon D. (G'ldford) | Rowe, Andrew |
Howell, Ralph (N Norfolk) | Shaw, Sir Michael (Scarb') |
Hubbard-Miles, Peter | Shepherd, Colin (Hereford) |
Hunt, David (Wirral) | Skeet, T. H. H. |
Hunter, Andrew | Smith, Tim (Beaconsfield) |
Jones, Robert (W Herts) | Soames, Hon Nicholas |
Jopling, Rt Hon Michael | Speed, Keith |
Kellett-Bowman, Mrs Elaine | Spencer, Derek |
Key, Robert | Stevens, Lewis (Nuneaton) |
King, Roger (B'ham N'field) | Stevens, Martin (Fulham) |
Knight, Gregory (Derby N) | Stewart, Allan (Eastwood) |
Knight, Mrs Jill (Edgbaston) | Stewart, Andrew (Sherwood) |
Knowles, Michael | Stewart, Ian (N Hertf'dshire) |
Lang, Ian | Stradling Thomas, J. |
Leigh, Edward (Gainsbor'gh) | Sumberg, David |
Lester, Jim | Taylor, John (Solihull) |
Lightbown, David | Taylor, Teddy (S'end E) |
Terlezki, Stefan | Whitfield, John |
Thomas, Rt Hon Peter | Whitney, Raymond |
Thompson, Donald (Calder V) | Wilkinson, John |
Thompson, Patrick (N'ich N) | Winterton, Mrs Ann |
Thurnham, Peter | Winterton, Nicholas |
Tracey, Richard | Wolfson, Mark |
Twinn, Dr Ian | Wood, Timothy |
Walden, George | Yeo, Tim |
Waller, Gary | |
Wardle, C. (Bexhill) | Tellers for the Noes: |
Watson, John | Mr. Tim Sainsbury and |
Wells, Bowen (Hertford) | Mr. Mark Lennox-Boyd. |
Wheeler, John |
Question accordingly negatived.
Clause 2
The Cnetral Board And The Reorganisation
I beg to move amendment No. 2, in page 3, line 11 leave out
and insert'is to be paid or left unpaid'
'for the transfer or for shares or rights to shares disposed of under subsection (1) above in connection with the reorganisation is to be paid or left unpaid for any period or, in the case of shares or rights to shares, is to be full consideration or discounted'.
With this it will be convenient to take Government amendments Nos. 3, 4, 5, 6.
This and the related group of amendments are purely technical. Their object is to ensure that the Government do not receive part of the proceeds of the issue. Because of the curious structure of the TSB group and its legal position, the central board could acquire the shares and, when selling them on to the public, become liable to capital gains tax because of the method that was followed. It is not the intention of the Government to obtain tax revenue in that way; the proceeds of the issue should go to the TSB. This amendment to schedule 2, with accompanying amendments to clause 2, will ensure that that does not happen.
Question put and agreed to.
Amendments made: No. 3, in page 3, line 13 after `above', insert
'relating to the transfer of assets by virtue of section 3(1)(b) or (c) below'.
No. 4, in page 3, line 17 after 'of', insert 'or in connection with'.
No. 5, in page 3, line 19 leave out from 'Treasury' to first 'the' in line 21 and insert
'(if they have not already done so under subsection (1) above), dispose of any shares or rights to shares in the new holding company which are held by or, as the case may be, vested in'.— [Mr. Ian Stewart.]
Schedule 2
Taxation
Amendment made: No. 6, in page 15, line 33 at end insert
'4A. For the purposes of the Act of 1979, gains arising on the disposal by the Central Board of any shares, or rights to shares, in the new holding company shall not be chargeable gains.'.— [Mr. Ian Stewart.]
Motion made, and Question proposed, That the Bill be now read the Third time.
12.19 am
I do not intend to detain the House on the Third Reading; I want to make only one or two remarks. As has been clear from the debate on the new clauses, the Opposition have sought to alter the Bill in such a way as to lead to the reorganisation of the TSB so that it might the better represent its traditions. We regret that the alterations were not made.
We know that the chairman of the TSB has given assurances that he intends to maintain the tradition of the TSB as personal banks which will continue to serve the local communities in which they were established. The Opposition will be watching the progress of the TSBs after flotation to see whether they fulfil the commitments which the chairman gave in his letter which accompanied the White Paper. We wish them well.12.20 am
I must express a degree of amazement—the hon. Member for Crawley (Mr. Soames) is doing his usual business of sitting in his seat and making some kind of intervention— [HoN. MEMBERS: "Withdraw."] No doubt he has once again dined too well— [HoN. MEMBERS: "Withdraw."] I make the assumption—
Order. I want to hear what the hon. Gentleman is saying.
I make the assumption, Mr. Deputy Speaker, that since you do not take interventions from a sedentary position, the hon. Member for Crawley wants to intervene. To satisfy my curiosity as to whether he is as good when speaking on his feet as he is when sitting on his backside, I shall give way to him. It seems that he does not wish to intervene.
As I was saying, I must express a degree of amazement after listening to the hon. Member for Thurrock (Dr. McDonald), who has indicated that the official Opposition will not vote against the Bill. The safeguards for which they asked in Committee and on Second Reading have not been provided by the Government. We are surprised that they have decided not to oppose the Third Reading, because the Government are seeking to change fundamentally an institution which has its roots in the working-class areas of Britain and which has been famous in the past for serving those areas in a way which, as the Minister said, was unique. Now that the Government intend to change the nature of that institution, the Labour party does not intend to vote against them. The Government have claimed during the passage of the Bill that this is a great advance towards wider share ownership and towards property owning. In reality it is revealed as a move in the opposite direction. The TSB sat uncomfortably in the banking sector and provided competition which the clearing banks could not meet. The London clearing banks obligingly said just that in their evidence to Page. The committee of the London clearing banks put forward to Page the argument that trustee savings banks represented unfair competition. The Page committee rejected that outright. What the London clearing banks meant when they said that was that the TSBs were reaching parts of the nation which they could not reach, that the TSBs were providing a service which they could not provide and that they were getting at a market which the clearing banks could not get into because of the low operating costs. In the Bill a new principle is being established. It is not the well-known principle, "If you can't beat them, join them," but rather, "If you can't beat them, get the Government to make them join you." In the absence of the safeguards which we have sought from ther Government and which they have consistently refused to give, the Bill is revealed finally as no more than a mechanism for the Government to do the bidding of the clearing banks, and of the management of the trustee savings banks as well, to the cost of many of their depositors and some of their employees. The Page committee said that there was a requirement in the banking sector for a third arm. It said that the TSBs could have become that third arm and fulfilled the need that it identified. All right hon. and hon. Members who have followed the issue closely recognise that some of that pass —perhaps all of it—was sold in the 1976 Act. My hon. Friend the Member for Stockton, South (Mr. Wrigglesworth), who had some dealings with the Act, generously admitted as much in his Second Reading speech. He said:The Bill could have reversed what happened after the 1976 Act. It could have gone a long way towards restoring that mutuality which Page thought so important and which it wished to see encouraged. It could have maintained what the Minister described as the unique character of the TSBs. It could have fulfilled the urgent need that Page identified for a third arm in the British banking sector. Instead, it has taken a noble and in some senses unique institution, founded in the community with the capacity to offer banking to some of our poorest and most deprived areas, and made it into yet another faceless financial conglomerate in the City of London. My hon. Friend the Member for Stockton, South said on Second Reading that at that stage he would not vote against the Bill, but he called for a number of safeguards. He asked for stronger guarantees about ownership. Those have not been provided. He asked for details of the amount of shares to workers and depositors. We again asked for those in new clause 1. Those, too, have not been provided. He asked for further details on the flotation. Those, too, have not been provided. The Page committee called for the TSBs to be made into mutual organisations. That has not been done. The committee called for the development of a third force in banking. The Bill will not do that, either. The committee believed that the customer first, profits later ethic that gave cheap banking facilities to the less well off should be preserved. The Bill will almost certainly destroy that unique quality of the TSBs. The Government had a unique opportunity with the Bill to give a new dimension to an old and proud tradition. They have not taken it, and it is an opportunity that has, sadly, been missed. There is a need for new types of institutions to stand between the great corporate financial structures so loved by the Tory party and the great corporate state structures beloved by the Labour party. We need community-based institutions serving individuals rather than either profit or the state. That is what the TSBs could have become. The Bill destroys that opportunity, and the alliance will vote against it."The Bill would not have been before us … had we clarified ownership of the banks in the 1976 Act … it might have been better had we gone down the road of mutuality in 1976."—[Official Report, 14 January 1985; Vol. 71, c. 50.] That is true. That is how we see it.
12.28 am
I intend to vote against the Third Reading because I believe the Bill to be wrong. I have opposed all its stages, and the only way now to express opposition to it is by voting against the Third Reading.
If the amendments had been carried, they would have provided safeguards for the future of the Trustee Savings Bank, and I regret that they have been rejected. But, even if they had been carried, they would still have provided a bad solution, the Bill would not have been a good one, and I would still have voted against it. My hon. Friend the Member for St. Helens, South (Mr. Bermingham) raised an important point of order at the start of Report stage. I respect the view of Mr. Speaker, and accept that his ruling was correct. He ruled that it was not for him to determine whether the Bill was legal. However, he did not say that the Bill was legal. He gave no interpretation of that point. I believe that my hon. Friend's point may well have been important. How can one privatise something that, at present, is owned by no one? The Bill is suspect and questionable. Those who vote for it tonight may be voting for a Bill that will be found to be illegal. What will their position be then? I said, when speaking on one of the amendments, that the trustee savings banks have a long tradition of service, providing a personal banking service for the ordinary working people. I started work in the Midland bank in 1954. The Midland bank then owned the Clydesdale and North of Scotland bank, now the Clydesdale bank. At that time the TSB was playing its traditional role. Since then it has developed rapidly with the introduction of cheque book accounts and Trustcards, and many other developments. I am not opposed to the TSB developing to meet the 1990s and the years to come. No doubt certain changes need to be made to give the TSB the powers and freedom to develop and meet the demands both of present and future customers. But I do not believe that the Bill is the right way forward. It is regrettable that the Government have brought it in. Once again, the Government express their belief that the employees in an industry should have the right to buy shares, but they are not prepared to make any concession to ensure that there will be worker directors within the organisation. We have not debated that point tonight, but it was debated in Committee. The same thing happened in the case of the royal ordnance factories and in other cases. The Government talk of giving greater participation to the employees of the organisations that they privatise, but they are not prepared to give them any special position on the board of directors. That is something that could have been done. The Bill is a bad Bill and this is a sad day for the TSB. I hope that it will continue to prosper, but I feel that it will not be many years before it is taken over. Whatever assurances are given by the chairman now, he may soon be replaced. His assurances are not worth the paper on which they are written. Some years ago there was a local brewery in Burnley, Massey's brewery, which had been there for more than 100 years. It brewed a very good pint of beer. It was taken over by Bass Charrington. An assurance was given that there would be no closure of the brewery in Burnley. Surprise, surprise—the chairman of Massey's brewery suddenly became chairman of Bass North-West. He was also at that time the hon. Member for Morecambe and Lonsdale. As soon as he became chairman of Bass North-West, the Burnley brewery was closed down.Is it not true that many of his right hon. and hon. Friends are not prepared to join the hon. Member for Burnley (Mr. Pike) in the Lobby because one of the unions involved has done a deal? It is sad that, on so important an issue, hon. Members should be inhibited from supporting the hon. Gentleman by such a factor.
I am not aware of any such undertaking and am certainly not party to it. I am also sure that my hon. Friends on the Front Bench are not party to any such agreement or undertaking.
The brewery I was talking about closed, despite all the undertakings. The identity of and the service provided by the TSB will not survive for long as it will soon be merged and its employees will find themselves out of work. Technology and the existence of too many banks and building societies on the high street mean branch closures in the future. If the TSB is taken over, its employees will find themselves out of work. I hope that the House will think seriously about the Bill and vote against it receiving a Third Reading.12.35 am
I do not want to rehearse the issues in the Bill, as they have already been dealt with. Before the Bill leaves the House, I should like to thank all those who have been responsible for arranging a complex and technical Bill that will provide an important basis for the future of the TSBs. I should also like to thank the hon. Member for Thurrock (Dr. McDonald) and her team for their generally constructive approach to the Bill.
On Second Reading, I spoke of the TSBs' long history and distinguished past. I also said that we were confident that they had an important future. The Bill releases the TSBs from the restrictions of direct parliamentary accountability and opens the way for their further development as they have chosen. On behalf of the Government and, I hope, most if not all hon. Members, I should like to wish them every success in the future. Question put, That the Bill be now read the Third time:—The House divided: Ayes 130, Noes 25.
Division No. 122]
| [12.36 am
|
AYES
| |
Beaumont-Dark, Anthony | Douglas-Hamilton, Lord J. |
Boscawen, Hon Robert | Dunn, Robert |
Bottomley, Mrs Virginia | Durant, Tony |
Brown, M. (Brigg & Cl'thpes) | Fairbairn, Nicholas |
Bruinvels, Peter | Favell, Anthony |
Budgen, Nick | Forsyth, Michael (Stirling) |
Burt, Alistair | Forth, Eric |
Butcher, John | Freeman, Roger |
Chope, Christopher | Gale, Roger |
Cockeram, Eric | Galley, Roy |
Conway, Derek | Garel-Jones, Tristan |
Cranborne, Viscount | Gregory, Conal |
Dorrell, Stephen | Griffiths, Peter (Portsm'th N) |
Ground, Patrick | Neale, Gerrard |
Hamilton, Hon A. (Epsom) | Newton, Tony |
Hamilton, Neil (Tatton) | Norris, Steven |
Hanley, Jeremy | Onslow, Cranley |
Hargreaves, Kenneth | Oppenheim, Phillip |
Hayes, J. | Page, Richard (Herts SW) |
Hayward, Robert | Portillo, Michael |
Henderson, Barry | Powley, John |
Hickmet, Richard | Proctor, K. Harvey |
Hind, Kenneth | Raffan, Keith |
Holt, Richard | Rhodes James, Robert |
Howarth, Alan (Stratf'd-on-A) | Rhys Williams, Sir Brandon |
Howarth, Gerald (Cannock) | Roberts, Wyn (Conwy) |
Howell, Rt Hon D. (G'ldford) | Robinson, Mark (N'port W) |
Hubbard-Miles, Peter | Rowe, Andrew |
Hunt, David (Wirral) | Sainsbury, Hon Timothy |
Hunter, Andrew | Shaw, Sir Michael (Scarb') |
Jones, Robert (W Herts) | Shepherd, Colin (Hereford) |
Jopling, Rt Hon Michael | Smith, Tim (Beaconsfield) |
Kellett-Bowman, Mrs Elaine | Soames, Hon Nicholas |
Key, Robert | Spencer, Derek |
King, Roger (B'ham N'field) | Stevens, Lewis (Nuneaton) |
Knight, Gregory (Derby N) | Stevens, Martin (Fulham) |
Knight, Mrs Jill (Edgbaston) | Stewart, Allan (Eastwood) |
Knowles, Michael | Stewart, Andrew (Sherwood) |
Leigh, Edward (Gainsbor'gh) | Stewart, Ian (N Hertf'dshire) |
Lennox-Boyd, Hon Mark | Stradling Thomas, J. |
Lester, Jim | Sumberg, David |
Lightbown, David | Taylor, John (Solihull) |
Lilley, Peter | Taylor, Teddy (S'end E) |
Lloyd, Peter, (Fareham) | Terlezki, Stefan |
Lord, Michael | Thomas, Rt Hon Peter |
Luce, Richard | Thompson, Donald (Calder V) |
McCurley, Mrs Anna | Thompson, Patrick (N'ich N) |
Macfarlane, Neil | Thurnham, Peter |
MacGregor, John | Tracey, Richard |
Maclean, David John | Twinn, Dr Ian |
Malins, Humfrey | Walden, George |
Maples, John | Waller, Gary |
Marland, Paul | Wardle, C. (Bexhill) |
Mather, Carol | Watson, John |
Maxwell-Hyslop, Robin | Wheeler, John |
Mayhew, Sir Patrick | Whitfield, John |
Mellor, David | Whitney, Raymond |
Merchant, Piers | Wilkinson, John |
Meyer, Sir Anthony | Winterton, Mrs Ann |
Miller, Hal (B'grove) | Winterton, Nicholas |
Mills, Iain (Meriden) | Wolfson, Mark |
Mills, Sir Peter (West Devon) | Wood, Timothy |
Mitchell, David (NW Hants) | Yeo, Tim |
Moate, Roger | |
Montgomery, Sir Fergus | Tellers for the Ayes: |
Moynihan, Hon C. | Mr. Ian Lang and |
Murphy, Christopher | Mr. John Major. |
NOES
| |
Alton, David | Loyden, Edward |
Ashdown, Paddy | Nellist, David |
Beith, A. J. | Parry, Robert |
Bruce, Malcolm | Penhaligon, David |
Carlile, Alexander (Montg'y) | Pike, Peter |
Clay, Robert | Skinner, Dennis |
Craigen, J. M. | Snape, Peter |
Cunliffe, Lawrence | Stewart, Rt Hon D. (W Isles) |
Davies, Ronald (Caerphilly) | Welsh, Michael |
Evans, John (St. Helens N) | Wilson, Gordon |
Home Robertson, John | |
Hughes, Simon (Southwark) | Tellers for the Noes: |
Kennedy, Charles | Mr. Michael Meadowcroft and |
Lewis, Terence (Worsley) | Mr. Archy Kirkwood. |
Lloyd, Tony (Stretford) |
Question accordingly agreed to.
Bill read the Third time, and passed.
Milk Supplementary Levy
12.47 am
I beg to move,
As the Ministry's explanatory memorandum makes clear, tonight's debate concerns proposals for three Council regulations brought forward by the Commission. The proposed regulations are an attempt to satisfy requests from various member states for amendments to the present Community rules on milk quotas to cater for problems that have emerged in implementation. The regulations are—like the quota system itself—rather technical. However, the Scrutiny Committee has rightly identified them as being of importance in some of the changes that they make to the impact of quotas. The proposals were first outlined at the January Council of Agriculture Ministers and I referred to them in my subsequent report to the House. Discussions have been taking place since then at official level between representatives of the member states and the Commission in Brussels. This is to enable texts to be prepared for consideration and I hope that we shall be able to agree them at the February Council on Monday 25 and Tuesday 26 February. But I have to tell the House that several member states still have important reservations and it may be that the proposals will be difficult to agree in advance of this year's price-fixing negotiations. I shall certainly be pressing for the earliest possible adoption of the measures. The first of the draft regulations contains four proposals to amend Council regulation 857/84, which is the main regulation on milk quotas. The first of these proposals would allow 1980 to be used as an alternative base year for the purpose of allocating milk quotas to producers affected by exceptional events. At present the regulations provide that a producer whose production has been adversely affected during 1983 — the base year for determining milk quotas in the United Kingdom — by one of the exceptional events listed in article 3(3), can apply to have his quota determined on 1981 or 1982 production instead. The new provisions would allow 1980 to be chosen as well. I am bound to say that we would not welcome this proposal, as all producers would, quite naturally, want to be able to reconsider their positions. It would mean reopening tribunal and local panel cases which were already decided and going back to scratch in calculating individual quotas.That this House takes note of European Community Document No. 4421/85; and supports the Government's intention of securing administrative modifications which in the light of experience would enable the milk supplementary levy to operate more efficiently and fairly throughout the European Community.
indicated assent.
I fully support what my right hon. Friend has said, but will he tell the House roughly how many cases have been considered by the tribunals and what has been the total cost of running them and paying the enormous costs of those who have taken part in them? Will he give us an assurance that he will resist the proposal which could reopen the matter?
I shall be coming to that point. I shall be resisting the proposals. Speaking from memory, I think the tribunal has been considering between 9,000 and 10,000 cases. Of course, I cannot say how much the affair will cost, because the tribunal has not finished its work.
As I have just said, we have made it clear that we would not want to apply the provision at this stage. Most other member states are in a similar position. Indeed, the Germans, who originally asked for this change last summer, have now, like us, progressed too far in implementing the rules for the change to be of any help to them. Against that background, I understand that the Commission has now said that it is its intention to withdraw this part of the proposal. The next proposal in the first of the Council Regulations is in two parts. The first part deals with the problem of producers who have both direct and wholesale quota. Under the Commission proposals, a producer who, for example, had not enough direct sales quota but too much wholesale quota for his needs could simply transform some of his wholesale quota into direct sales quota. Thus, so long as he did not sell more than his total quota, of both types, he would not be liable for levy. Unlike the existing swap shop arrangements, a producer is not limited in the amount of his spare quota that can be transformed in this way. Since the Community legislation lays down the national totals of direct and wholesale quota on a continuing basis, the switch to which I have referred would take place for no more than one year at a time. Formally, one would revert to the previously allocated quotas for the next year, although the switch could be made again if necessary. That proposal was brought forward as a result of the strenuous efforts that I have been making to get changes to help mixed businesses in this country. If adopted, it would prove extremely useful to our producers in removing unnecessary restrictions on direct sales. I am pleased to report that some other member states see that problem in much the same way as we do. But there are other member states that are not so clearly in favour of the proposal. Although we can administer the proposal effectively here, there is real concern that it could result in a weakening of controls in some member states. I shall be doing all I can to meet those criticisms and to persuade all the other member states to accept it. In order to forestall the many questions which I am sure hon. Members will have about how the mechanism will work in practice, let me say only that the technical arrangements and the wording of the proposals are still very much under discussion. The proposal is likely to undergo yet further changes before it is adopted. For the moment, we have made clear to the Commission and the other member states the nature of the problem and will be insisting that any regulation adopted will tackle the problem effectively. A second feature of the change to article 6 of the regulation is a proposal to permit member states to use the calendar years 1982 and 1983 adjusted by a percentage to keep within the overall quota instead of calendar year 1981 plus 1 per cent. for the purpose of establishing direct sales quotas. That proposal would allow the same choice of base year for direct sales as presently applies to wholesale deliveries. Although the arrangements would have been desirable had they been introduced at the start of the scheme, it is difficult to envisage adopting them in the United Kingdom now, when the work on allocating direct sales quotas is virtually completed. As with the first of the proposals which I have already described, it would entail starting the system again from scratch with new parliamentary regulations, completely new applications from producers and a repeat of the appeals procedure. Therefore, we have obtained an assurance from the Commission that the proposal will be optional and if it is adopted we would not make use of it here. The next proposal is an amendment to article 7 of regulation 857/84 to meet a problem in Germany where 40 per cent. of the land is let on short-term leases. They feel that when the tenancies come to an end, tenants could be in an unfair position in negotiating new leases, as the landlord could demand much higher rents if the tenant had no other way of acquiring quota. The provisions could provide some protection for tenants in those circumstances, but would be optional for the member state to apply. Again, this text is being examined carefully because it may not meet the difficulties in Germany adequately. Of course, in the United Kingdom, short-term lettings are very much the exception as a result of the lifetime security of tenure provisions in the agricultural holdings legislation. As the proposal is both limited and optional, we have said that we would not wish to stand in the way. We do not see it as prejudicing our own position for the future, which we are currently considering in discussions with the industry.Is the right hon. Gentleman aware of the Conacre system in Northern Ireland? Has that been taken into account during his consideration of the German position and short-term lettings?
As far as I am aware, the position in Northern Ireland is not relevant to this point, but I shall have another look at the matter and if there is something in it, I shall let the hon. Gentleman know.
What does my right hon. Friend have in mind as regards short-term tenancies in Germany? Would that have any applications to the British market? Might the amendment to article 7 enable us to install in the United Kingdom a more realistic form of transferability of quota and a recognition of the rights of ownership of quota which ought to belong to the tenant who has invested in the infrastructure of the farm?
My hon. Friend raises a difficult and important matter. The NFU is coming to see me in the morning to discuss the subject. I do not think that the Commission's proposed amendment is likely to affect the vast number of tenancies in this country and we do not see it as prejudicing our position for the future, which we are considering in discussions with the industry.
The last of the proposals in the first regulation would amend article 12 of regulation 857/84 to enable groups of small dairies to be treated as a single purchaser. The proposal has been brought forward to deal with problems in mountain areas in France. They say that the pattern of sales in those areas varies as a consequence of the weather conditions and whether the cows can be fed in the mountain pastures or need to be brought down into the valleys and this affects the uptake of these dairies. By banding together and pooling their quotas, they would be better organised to operate within quota. An alternative for France, at least in principle, would be to set up regional milk marketing boards which offer producers and consumers a range of advantages. But in the context of a satisfactory package of amendments to the quota regulations, we would not be opposed to that element. The second draft regulation would allow Belgium to switch 25,000 tonnes from its national direct sales quota to wholesales. As a similar regulation was adopted last May to deal with a statistical problem in the United Kingdom, I feel that it would be right to accept this modest proposal for Belgium. The last of the draft regulations has been undergoing drafting changes since it was put before the Scrutiny Committee, although the intention behind it has not changed. It is to allow member states, for the first year of the quota arrangements, to switch unutilised quotas between producers and purchasers in the same region and between different regions. We have made it clear that the proposal must apply to direct sales as well as wholesale deliveries. The effect of the proposal would be similar to treating the milk industry of each member state as if there were a single purchaser applying formula B. In the United Kingdom it would permit a temporary movement of quota between the milk marketing boards. If adopted, it would reduce levy liability both where formula A applied and where formula B applied. So far as wholesale producers in the United Kingdom are concerned, this proposal would probably remove all liability for levy this year, since spare quota from Great Britain will become available to offset the present liability in Northern Ireland. I am sure that the hon. Member for Londonderry, East (Mr. Ross) is pleased to hear that. I can see advantage to the United Kingdom in this proposal, although I am bound to say that the Germans and Dutch have very strong reservations about it. The Dutch see it as undermining the fundamental purpose of quota arrangements, which is to curtail milk production by penalising those who over-produce. The Germans say they would find it embarrassing, given the lengths to which they have gone to implement the regulations to be in a position of having to refund levies they have already collected. Some other member states might, without such a measure, find it difficult to apply the quota system in its first year. I consider it most important that the quota system is applied effectively. Milk production must be contained, and I would not wish to undermine this. We want the levy to be applied effectively throughout the Community as soon as possible. This measure could help in that and provide some alleviation in Northern Ireland, and I am sure it is right to support it for application this year. These proposals are a package with some elements of important value to the United Kingdom. They are as yet subject to further negotiations and some member states have significant difficulties with some elements. I regard it as the highest priority to ensure that the United Kingdom's interests are secured in the way I have described and shall press for adoption of the measures at an early stage. On this basis, I can commend the proposals to the House.1.2 am
We are asked to take note of yet another European Community document and to support the Government's intention to make the superlevy system work more efficiently and fairly. I am reluctant to take note of anything at this time of night after the events of the past couple of days, but we are always willing to support good intentions to make European Community schemes operate more fairly and efficiently. I speak as an increasingly disillusioned pro-European.
As the Minister knows, we have been critical of the Government for the way in which they were stampeded into accepting a quota system on terms which are manifestly unfair to British milk producers. I do not like to embarrass the right hon. Gentleman, but I remind the Minister of State that on 1 March 1984 in a written reply he said:Evidently not, because the Minister of Agriculture, Fisheries and Food came back two weeks later, on 14 March, not with a package of price cuts, but to announce the immediate introducion and imposition of milk quotas on the dairy industry. For some time the Labour party has been advocating a quota mechanism to control dairy production. We have consistently stated the case for a fair distribution of quota between member states and a reasonable period to allow the industry to adjust."The Government consider that the preferable route to achieve a better market balance in the milk sector is through price policy. But the necessary price cuts to achieve a balance in the market have not so far proved negotiable in the Community."—[Official Report, 1 March 1984; Vol. 55, c. 327.]
I apologise to the hon. Gentleman for interrupting him in full flight. He referred to statements by myself and my hon. Friend the Minister of State. I ask the hon. Gentleman to look at a speech that I made in the House on 1 December 1983, when I made it perfectly clear that we might have to accept quotas instead of our preferred option of price control.
I understand why the right hon. Gentleman is a little sensitive about this issue. We know that he did not want this system, but he was saddled with it, and the industry is now saddled with it. We have consistently said that there is merit in the principle of a quota system, but we would like to ensure that the distribution of quota among member states is seen to be fair and that our industry is given time to adjust.
What happened was different from what we would have liked. It was agreed that the scheme would reduce EC milk production by 4·1 per cent., but for reasons best known to the right hon. Gentleman, he surrendered 6·2 per cent. of British production, despite the fact that the United Kingdom was not contributing significantly to European overproduction. Our producers were pitched headlong into panic measures to cut their production during the current year. The consequence has been a disgraceful and damaging shambles, without the original objectives being achieved. British production is likely to fall significantly short of the quota. That demonstrates the turmoil into which our industry has been pitched. Incidentally, that is in marked contrast to what is happening in other member states. The EC is still producing far too much milk — 20 million tonnes more than is required. That excess costs the Community taxpayer £2 billion. Our dairy industry has been put through all that agony, yet we are nowhere near achieving the original objective of bringing production near to the level of demand. The latest proposals appear to accept the continuing burden of overproduction in Europe, most of which is coming from other Community countries. The Minister has excelled himself. He has accepted a deal which does the maximum damage both to British producers and to British and European taxpayers. He has even managed to fall out with the National Farmers Union. He is bound to have noticed, as other hon. Members have, what the president, Sir Richard Butler, said at the annual general meeting last week. He is not renowned for attacking the Conservative party, but he said:Amen to that. The Opposition want a quota system that will work and be fair. The present signs are that the system is neither working nor fair. The first proposal will apparently be withdrawn by the Commission. It would have made it possible for 1980 to be treated as an alternative base year for calculation of primary quota, in addition to 1981, 1982 and 1983. That might have been eminently sensible if it had been suggested in the first place, but to introduce it into the calculation now would be plain daft. It would encourage producers to return to the tribunals to appeal again, it would prolong the agony, and it would achieve little. In passing, it should be said that the whole tribunal procedure has been discredited, because producers are being allocated less than two thirds of the extra quota that has been recommended by the tribunals. I agree that we should probably do more about special cases, but the proposal would not have made sense. Therefore, I am glad that it is unlikely to see the light of day. The second proposal provides for interchangeability of quota between direct sales and wholesale categories. We support that form of flexibility and cannot understand why it was not permitted in the first place. I hope that it will come into effect as soon as possible. I shall be grateful if the Minister will tell us in his reply whether the proposal will be made effective for levy collection purposes for the current year. The Minister made it clear that the third proposal was entirely for the benefit of short-term lets in Germany. It could create potential for new rights for tenant farmers in respect of their quotas. If so, we would wholeheartedly support that objective, not least because of evidence that landlords in parts of England have been abusing their powers over tenants with regard to quotas in the outgoers scheme. The proposal also raises the issue of transferability of quota. I shall take this opportunity to comment on the responses that the Minister has received to his consultation paper on that subject. There seems to be a general consensus that quota should be transferable. We agree with that. However, obviously there is no merit in keeping quota on farms that are not using it, when other farms desperately need additional quota. The question seems to be whether quota should be transferred by sale or lease in a free market or in a regulated market, or whether it should be done through a purely administrative scheme. We recognise that a purely administrative scheme would not work, because there would be no incentive for producers to relinquish quota, but we are equally unhappy about the idea of a free market in the new commodity of quota. If we are to have unregulated buying, selling and leasing of quota, it will inevitably follow that bigger dairying concerns will be able to pay the price to acquire whatever quota might come on the market, while small farmers and people coming into the industry will find it increasingly difficult to obtain additional quota. By the same token, there is a risk that quota which might come on to the market in the less prosperous areas will be bought by producers in the richer areas. The Welsh quota might tend to be purchased by English dairy farmers. I notice that in its submission to the Government the English Milk Marketing Board said:"The British government has added to our misfortune. It has been ineffective in negotiation in Europe. It has been inept in administration at home. And it has not thought enough about the future."
That sounds a little like shutting the buyer door after the cows have gone. Powers should be established at the outset to control the price of quota and to prevent excessive accumulation of quota in some areas or businesses."The Minister should have powers to limit the rate of movement of quota between areas and to limit the acquisition of quota by an individual business but these powers should only be invoked if monitoring of quota transfers showed it was necessary to do so."
The hon. Gentleman mentioned the excessive accumulation of quota. In modern farming practice, what would he consider to be an excessive number of cows and an excessive quota?
I am not foolish enough to be drawn into defining what is and what is not excessive. I am not qualified to do so. Someone in authority who can consult the various parts of the industry should have the power to make such an assessment and to regulate that kind of thing.
In its submission to the Minister on that point the National Farmers Union said:That is the objective, and I think that there will be consensus that that is what the Minister should seek to achieve. The proposals from the Farmers Union of Wales on that point seem to be helpful and relevant. I am attracted by its proposal, which is aimed at creating a pool of quota for distribution to people coming into the industry. While we accept the principle of flexibility and transferability within the quota scheme, we believe it essential to ensure that those movements are subject to reasonable control in the interests of the whole industry and the people who work in it. We also agree with all involved that a system for transferring quota should be established as soon as possible. I hope that the Minister will take the opportunity to say something about that. The final proposal to which I wish to refer and about which the Minister spoke would make it possible, at least for 1984–85, for under-used quota, for example in England and Wales, to be transferred to areas of overproduction within the same member state; for instance, Northern Ireland. The Minister, as we know, has created such a degree of alarm and despondency in British dairy farming that production has fallen much further than even he intended, and we are now likely to fall 200 million litres below quota in the current year.. That is the equivalent of a year's production by 40,000 cows. In those circumstances, it would be perverse to require farmers in Northern Ireland to pay superlevy while the United Kingdom as a whole is well below its quota restriction. Some commentators are unhappy about that proposal. The Financial Times on 16 January described it as"All transfers would take place through a central industry authority with powers to safeguard the structure of the industry and to provide assistance to young new entrants."
So what? It seems to us perfectly logical to fix quotas for individual nations and to penalise those nations which over-produce. Some hon. Members have been advocating that kind of strategy all along. The Commission should make sure that the quotas are enforced and the levy collected as soon as possible in those nations which are over-producing. The Minister must realise that he has got the dairy industry into a fine old mess. He has given away too much, he has created mayhem in the British dairy industry, yet, despite all that, there is still massive over-production in the European Community. We are not impressed; nor, indeed, is the industry impressed. Nevertheless, we recognise that the measures represent some gestures in the right direction, so we accept them for what they are worth. The Minister will have to try much harder in the coming months if he is to impress us, and harder still if he is to impress the NFU."a move dangerously close to the institution of national quotas".
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I welcome the regulations and the opportunity to debate them. It is important that we do so. The saga of milk quotas continues with all its problems and difficulties, although I do not think it is as bad as the exaggerated views of hon. Opposition Members suggest. These small proposals will help and will bring about some advancement. I am sorry that the Minister thinks that there should be some delay in putting the regulations into operation. I hope that he will urge them forward. They are an advancement, so let us go forward and help the industry as quickly as possible.
I also regret, although it is not unexpected, that the hon. Member for East Lothian (Mr. Home Robertson) took the line that he did. I thought that his arguments were particularly weak. I am sorry that he brought in the president of the NFU. I thought that the president of the NFU used rather unfortunate rhetoric, and we know why. From my knowledge of the industry, I know that there has been the closest co-operation between the Minister and the NFU and, indeed, consultations are always taking place. The NFU has said that it wishes those consultations to take place in future before any hurried decisions are made. I put the hon. Gentleman's attitude down to his ignorance of what goes on behind the scenes between the NFU and the Minister. The hon. Gentleman, in his remarks about the failure of the Minister with respect to the drop in milk production, omitted to mention the weather, which I would have thought was obvious to everybody. Has not the weather played a part in this? Of course it has. Indeed, the drop in production was mainly due to the weather. The amendments to articles 5 and 6 are to be welcomed, and are essential. But much more needs to be done. I hope that we can move forward so that there will not be any penalties applicable to producer-retailers for the past year. Here we come to the nub of what ought to be done. At a time of large surpluses, the objective must be to get rid of them, for people to consume them, and not to store them away in intervention. The consumer should have the benefit of the surpluses. If a producer-retailer has the opportunity to get rid of these surpluses, I believe that he should be encouraged in every way and there should be a switch from wholesale to retail outlets. In the south-west, we want to take advantage of this with our famous Devonshire cream which can be sold at the farm gate. We want to see some of the surplus Devonshire and Cornish cream sold at the farm gate. Sales are increasing. It is important for our holiday industry that we provide the facility of cream, farmhouse cheese, yoghurt and the various products that farmers can produce and sell over farm gates and on retail rounds. That is the right way forward, rather than products being put into storage and intervention, finally to be sold to the Russians or others at knockdown prices. We must move forward in that area, and the whole House should support the Minister in these proposals. Indeed, because of his efforts in Brussels, many of the movements that I have described have been started. [Interruption.] Do any Opposition Members wish to intervene? Would the hon. Member for Pontypridd (Mr. John) like me to give way? Of course not. He has nothing to say. He cannot even sit upright in his seat. I assure Opposition Members that I do not belong to a fan club for the Minister, though he has been one of my best friends for a long time. We appreciate what it means to be loyal to each other, which is more than can be said of hon. Members on the Opposition Benches. As for the proposal affecting Northern Ireland, speaking as a former Minister with responsibility for that part of the nation, I welcome what is proposed, which will be of great benefit to Northern Ireland. The amendment to article 7 is intriguing because it refers to the quota attached to the holding being retained by the outgoing tenant. We might be able to build on that. The Minister should see whether it is possible to use that to assist with the whole problem of landlord and tenant in relation to quotas. I welcome this small move forward and hope that the Minister, using his strength and power, will endeavour in Brússels to build on what has been achieved so that we can avoid the stupid business of putting dairy products into storage and intervention. If those products can be sold and consumed, that must be the best way forward.1.22 am
As the Minister spoke of the difficulties that were being faced by every European country, I reflected that at least some of us foresaw that they were bound to arise as Europe moved from food deficit to food surplus. Once we entered the Common Market, the United Kingdom found itself in that position, and many of the problems that have arisen can be attributed to that occurrence.
Milk, from the cow's udder to the teapot, is tightly controlled in every way. It was not possible for the milk industry to go into reverse in the way in which it was asked to do in the last year without severe difficulties being caused for every producer. The Minister said that he was afraid that we would have to go in for quotas. I have never been able to understand why, if the Government were aware — as they must have been — of that possibility, they did not signal those fears more clearly to farmers by starting to withdraw the grants that were being paid to enable production to go on at an ever-increasing pace. Had the Government taken that action a year or so earlier, fewer people would have gone into production and many of the difficulties that we now face would have been avoided. Many of those who have been hurt, and those who have yet to be hurt, would have come out of it in a much better position. As the Minister pointed out, we started with two different systems, one for Great Britain and one for Northern Ireland. I understand that some farmers in Great Britain wish that they had adopted the Northern Ireland system. That is the case only because Britain ended up with 200 million litres less. I believe, as a practical farmer, that that will cause considerable difficulties for farmers in Britain when we come to work out the quotas and incomes for individual farmers. We are all glad about the progress that has been made and hope that the Minister will continue with the good work. When the matter is brought to a satisfactory conclusion, we will have a common system of quotas throughout the United Kingdom. I do not think we can reach a reasonable end result without a common system. It is all very well for folk to say that there is some leeway but, as the hon. Member for Torridge and Devon, West (Sir P. Mills) pointed out, much of that was because of the weather and the rest was the fault of the farmers who took panic measures and cut production too much. I am pleased that the Minister will use that leeway to sort out Northern Ireland's problems, if only for this year. I ask the Minister and the farming community to look further ahead. The quota system has severe shortcomings. I fear that it will last only for a short period. So many points of friction are built into it that I cannot see it lasting for more than a few years. At the end of the way we will have a system of price governing production. If that is tied to national standard quantities, so much the better. I will be much happier; I am glad to see that the Minister agrees with me.1.26 am
It is unfortunate that we are spending time at this late hour discussing possible amendments, which will probably not be agreed in Brussels, to a scheme which is not working and which is not achieving its objective. Even if the scheme were to work, we all know that we would still have a horrendous surplus which it will be impossible to dispose of, even with the aid of the remarkable and costly subsidies through which we are trying to dump the surplus abroad. It is sad that we are discussing, in effect, a sick joke which was put forward as the first move towards restraint of production at a time when the Government were promoting plans to put an extra 40 per cent. of public expenditure into the Common Market.
In view of the reference which has been made to the National Farmers Union and to Sir Richard Butler, and the attempts by my hon. Friend the Member for Torridge and Devon, West (Sir P. Miles) to draw a distinction between the bad Sir Richard and the good NFU, it is only fair to point out that at its annual conference the NFU passed unanimously a motion which blamed the structural imbalance on the Minister, but it did not put forward one specific, constructive proposal as to how the horrendous problem of over-production and the vast amount of public funds being put into surplus disposal could be tackled. We cannot regard this as a small matter at a time when, in all our constituencies, health authorities and councils are having to cut expenditure. It is outrageous that the NFU should not have put forward one specific proposal about how to deal with the problem. It is costing us £100 million every single week simply to store and dump abroad surpluses, with the Russians and the east Europeans being the main beneficiaries. I have three questions for the Minister. First, does he welcome the extension of the transferability of quotas by means of a market mechanism, whether through a central agency or not? Is there not something squalid and very un-Conservative in the buying and selling of quotas which are simply giving people the right to produce at substantial cost produce which nobody wants and which cannot be disposed of? Has the Minister inquired about how the income from the selling of quotas will be regarded? Can we regard it, for example, as earned income for taxation purposes, because the quotas are being given and can be sold? Will it be unearned income, or will it be subject to capital gains tax? I ask the Minister that simple question on the transferability of quotas. Secondly, will the Minister back up the regulations in the discussions on Monday by resisting at all costs, in accordance with the Conservative manifesto, any increase in the price of milk which could disrupt the arrangements in the regulations? The Minister knows what was in the manifesto. Can he give us this clear assurance on price? Thirdly, will the Minister say whether, on balance, the proposed amendments will have the overall effect of increasing or reducing milk production? It has been clear that we expected an underspend or under-production. Will not these amendments have the effect, while not increasing quotas, of increasing production? Finally, as regards the possible changes to the tribunal organisation which would stem from the adoption of the amendment to article 3, can my right hon. Friend say what has been the cost to date of the operation of the tribunals and who is to pay for it? Does it come from the British taxpayer or from Community funds? The regulations, like the arrangements on the quotas, which are not working because we know what is happening in other countries, will have exactly the same result as happened with steel production, when we carried out our obligations in more than halving the numbers employed on steel production while other countries increased their capacity. We know what is happening, and it is absurd to give the impression that if these amendments are adopted, somehow the scheme will work and be effective. We all know in our hearts that it will not. The regulations and the milk quotas themselves demonstrate to British agriculture, which up till now has done pretty well out of the common agricultural policy, that it will not be possible to solve the problems of European over-production without doing immense damage to British agriculture. It is becoming more and more clear — those engaged in agriculture are just beginning to realise it—that it will be possible to solve the problems of agriculture within a United Kingdom framework but that if we are to solve the problems of over-production in the EEC it will only be done by having a violent and pretty vigorously deflationary effect on agriculture in Britain, which will do us immense damage.
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I join other right hon. and hon. Members in welcoming the general objective of the amendments, though perhaps with not too much enthusiasm.
The amendment to article 3 gives us the opportunity to use 1980 as an alternative base year for producers affected by an exceptional event. I welcome the Minister's statement that he regards the possibility of reopening the topic of special cases as one which would not be welcomed by him. However, in the brief from the Minister of State, we read that this one may be withdrawn or it may be optional. The Minister said that he regarded it as most likely that it would be withdrawn, but that it could be optional. I think that we may take it, from what the Minister said, that if it was optional it would be the Government's policy not to apply it.indicated assent.
That is the most sensible way forward, and it would help the House if the right hon. Gentleman would make it quite clear that if it was optional he could not see the Government applying it.
As for the amendments to articles 5 and 6, I think that we can take some pleasure from obtaining interchangeability between direct and wholesale quota. I was almost tempted to join the hon. Member for Torridge and Devon, West (Sir P. Mills) in congratulating the Minister on his achievement, because he has striven very hard to get something along these lines. All that stops me congratulating him as fulsomely as the hon. Gentleman is that those of us who read the Select Committee report will recall that the Committee was of the view that the right hon. Gentleman did not get it in the first place because he had not asked for it, and that he might have obtained interchangeability earlier if he had asked for it. Can the Minister clarify one matter? At one point he said that it was possible for some of the quota to be exchanged as between direct and wholesale, but I believe that later he said later that it was possible for all of it to be exchanged. There is a slight contradiction there. May I assume that there is no limitation on the amount of quota that can be exchanged? It seems unlikely that someone would want to interchange 100 per cent., but I would be grateful if the Minister could clarify what he meant. We have always made it clear—as, I believe, has the NFU — that we would have preferred a single quota covering milk production, whether wholesale or direct sale. However, though second best, a system that allows the farmer to choose at the end of every marketing year is welcome, and I believe that that is what is proposed. Again, I would be grateful if the Minister could confirm that, under the Commission's proposals, each individual could choose at the end of every marketing year about the interchangeability. The hon. Member for East Lothian (Mr. Home Robertson) called for an assurance that such proposals would be made effective for levy collection purposes in the United Kingdom during the present marketing year. It is important that that should be put on the record. I very much agree with those hon. Members who have expressed the hope that the Minister will view the amendments to article 7 as amendments which, if not totally applicable to Britain at present— one wonders whether that is the case—might enable a much more effective structure to be built up in future. However, I believe that the amendments reveal what the Minister has strenuously denied for some time, namely, that quota is not viewed by the Commission as being immutably attached to land. Many of us believed that that was so, and we are now proved to be right, whereas the Minister's judgment has not been entirely correct. The amendments provide some basic recognition of tenants' rights to quota, and they are welcome for that, but I still believe that the wider question of the ownership and transfer of quota has been tackled in a somewhat superficial way. The NFU has produced a comprehensive package on ownership and quota which would provide a proper framework for the consideration of the interests of landlords and tenants, and could provide the framework for the future development of the industry. It would be useful if the Minister could make clear his general attitude to the NFU proposals. It would be preferable for quotas to be owned by producers and to be transferable separately from the land by sale or lease, perhaps, as I believe the NFU proposes, through a central industry authority. I believe that in the end we will need a mechanism to arbitrate between tenant and landlord in order to ensure the proper recognition of the genuine interests of both parties. We can support this measure as a first step towards solving the immediate crisis. We hope that the Minister will be able to build on it. It is the first step towards putting together a more permanent structure capable of accommodating changes in ownership and transfer arrangements that will be necessary if the industry is not to become trapped within unchangeable regulations, in a way that would permanently damage it.