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New Clause 1

Volume 81: debated on Monday 24 June 1985

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Duration Of Act

'(1) The powers of this Act shall cease to have effect if the profit income to the City from the road race does not exceed the annual revenue and capital repayment costs by 1991.

(2) Separate accounts shall be published each year on the exercise of powers under this Ace.—[ Ms. Clare Short.]

Brought up, and read the First time.

8.54 pm

With this we may discuss the following amendments: No. 7, in clause 4, page 5, line 24, at end add—

'(3) The powers of this Section shall be exercised after the Council has arranged external financial sponsorship to cover its capital expenditure involved in providing motor races.'
No. 16, in clause 9, page 8, line 39, at end insert—
'(3) The powers of this section and section 4 shall not be exercised if the capital expenditure to be incurred in 1986 exceeds £1,700,000'.

The purpose of the new clause is to hold the council to the financial projections that it continues to put before us to justify the road race. We are in a quandary because, whenever we ask how the finances will work, we are given a set of figures which show that £1·5 million capital expenditure will be involved initially, that £1·5 million revenue expenditure will be involved each year that the race is run and that the returns for the city will at best be £2·5 million and at worst will cover costs. Nothing in the Bill holds the city council to those projections. It will be possible for the council to spend considerably more and to receive considerably less, and never have to do anything about it.

As I said during the speech by the hon. Member for Birmingham, Hall Green (Sir R. Eyre), at a meeting recently with the leader of the city council, one of the officials argued that even if the road race were not profitable it might be desirable for the city because a road race might make Birmingham as famous as Indianapolis. That was an extraordinary comparison. I know nothing about Indianapolis except its name. Birmingham is Britain's second city and the place where the industrial revolution began. It can already claim more fame and glory than Indianapolis.

Does not the hon. Lady think that there is something vaguely insulting in suggesting that the city of Birmingham—which manages to handle hundreds of millions of pounds of expenditure each year and look after, as is its duty, more than 1 million people—really needs this House to act as a nanny and tie down the city to a sum of money? Would it not be better for it to decide for itself? Does this House think that it can take Birmingham's place and do its job for it?

9 pm

It is extraordinary that the hon. Gentleman belonging to the Conservative party, has the cheek to stand up and say that. Since 1979 we have lived with his party constantly taking away financial powers from local authorities and tying them down in the way in which they can spend money.

I am grateful to my hon. Friend.

There are two views. It is not simply a matter of trying to tie down the city of Birmingham on how much it can spend on a road race. Underlying the amendment is a policy decision on whether it is worth while Birmingham having a road race that does not cover its costs.

The purpose of the new clause is to require the city to cover its costs, but to give it five years to do so. It should be acceptable to anyone other than those who, like that official, want to argue that the road race is worth while in any event. It is a fairly low level race. The number of international visitors who will go to Birmingham to attend the race has been exaggerated and will be nothing like the number that would be attracted to the grand prix that Birmingham thinks it will get but will not get. It is an entirely reasonable clause. Indeed, yesterday I received a letter from the leader of the city council intimating that it might be acceptable. I do not doubt that the hon. Member for Hall Green will give us a detailed account of the city council's attitude to it. I shall listen to him with considerable interest. As matters stand, I shall seek a vote on it.

The second part of the new clause seeks information for the people of Birmingham on the amount of money involved each year—the cost of the race and the money being returned—which will enable them to exercise their democratic rights through local elections and in discussions and to determine whether the road race is costing them money or bringing money to the city.

Amendment No. 16 is a different amendment with a similar purpose. It refers specifically to capital expenditure. In the estimates that we have been given, the city council says that there will be an initial capital expenditure of £1·5 million and thereafter £1·5 million revenue every time that the race is run. As my hon. Friends the Members for Birmingham, Perry Barr (Mr. Rooker) and for Birmingham, Hodge Hill (Mr. Davis) made clear, capital expenditure in Birmingham is very short because of the limitations that the Government have imposed on the right of Birmingham to spend capital. Therefore, if expenditure of £1·5 million is made on the road race, that £1·5 million cannot be spent elsewhere. The amendment seeks to hold the council to its projections. If it believes in its figures, both of our proposals should be acceptable. The amendment would require the council to spend no more in initial capital than £1·7 million in 1986. Therefore, it cannot claim that inflation has speeded up—which it has—and that £1·5 million is no longer realistic.

I hope that both proposals will be acceptable to the promoter of the Bill. I make it clear that, unless undertakings are given. I intend to push both of them to a vote.

I am grateful to the hon. Member for Birmingham, Ladywood (Ms. Short) for the forthright way in which she moved the amendments. I appreciate the underlying principle that both she and the hon. Members for Birmingham, Hodge Hill (Mr. Davis) and for Birmingham, Perry Barr (Mr. Rooker) have advanced in asking for detailed study and consideration of the point encompassed in both amendments.

In principle, a requirement that the race would not continue—that is, that the powers to operate the race would cease—if the event could not be staged without incurring annual losses, is accepted. The city council would not want to continue running the race if it had to require support from the ratepayers each year.

However, the wording of the appropriate legislation needs to be carefully considered to achieve that objective. I can illustrate the drafting difficulty by pointing out that the words "profit income" do not represent a precise accounting phrase. The intention is to introduce an amendment in another place to deal fully with the principle of the new clause.

The hon. Member for Birmingham, Perry Barr (Mr. Rooker) asked whether we could make any necessary amendments in this House. I understand that it is not procedurally possible at this stage to do that. In any case, it is necessary to arrive at the precise form of words to meet the principle of the amendment. On that basis, I ask Opposition Members to accept my assurance that a suitable amendment will be introduced in another place.

Clearly, the hon. Gentleman is making great efforts to meet the arguments that my hon. Friends and I have adduced. Why is it not procedurally possible to amend the Bill in this House?

I am not fully acquainted with all the mysteries of the procedural difficulties that apply in Parliament. I understand that if we were to seek to make the change now, a manuscript amendment would be necessary and that there would not be time to incorporate the points made by the hon. Member for Ladywood in a suitable form of words. I am giving an undertaking of equivalent value in that such an amendment will be introduced in another place. I give that undertaking on behalf of the city council.

I am grateful to the hon. Gentleman for the undertaking that he has given. However, the promoters are, in charge of the Bill. It is their measure and they are paying for it. Indeed, they have probably paid the legal profession a fortune to get it this far. The promoters are therefore entitled to promote any amendment that they wish and to do so at any stage of the Bill. I feel sure that if those with the expensive and expert advice necessary to frame such an amendment were to do that and present to the hon. Member for Birmingham, Hall Green (Sir R. Eyre) a manuscript amendment, and he sought approval to put it before the House, the matter could be settled here and now.

I appreciate the hon. Gentleman's impatience to settle the matter promptly. He will know that I am not in charge of the detailed professional handling of the Bill. I am faced with the technical fact that while I am able to accept the principle of the amendment, consideration must be given to it so that a suitable form of words, from the accounting and legal point of view, may be devised. I cannot introduce such an amendment at this stage. It is with complete honesty that I am trying to ensure that the amendment is achieved in a correct form. I ask the hon. Member for Ladywood and her hon. Friends to accept my assurance.

I accept the hon. Gentleman's assurances and I am grateful for them. It would be generous if he were to agree not to oppose the new clause and, if it needs correction, to correct it when it goes to another place.

I have had much experience of piloting legislation through the House. I have given an undertaking without reservation on behalf of Birmingham city council. I hope that the hon. Lady and her hon. Friends will be kind enough to accept it. I assure her that no damage will be done to her argument and that the result will be exactly the one that she wants to secure.

Amendment No. 16 raises more difficult issues. It is directed to the proposed limit on initial capital expenditure. The new clause seeks to introduce a requirement that the race should be conducted for a specified period—five years—without loss and amendment No. 16 seeks to provide a more limited time. Birmingham city council is not able to accept the amendment. The city is confident that the costs can be kept within a proper ceiling but there could be an unforeseen additional cost. For example, road surfaces could be displaced and urgent expenditure would be required to put the road in a satisfactory condition within the required time. Such an unforeseen additional cost would mean that the race could not proceed. The amendment includes a certain figure and the item of unforeseen expenditure could take the city only slightly over that limit. If the need for such expenditure were to arise at the last minute and to cause the capital limit to be breached, the race would have to be cancelled and the city could incur huge compensation payments that would be far in excess of the additional capital spending required.

After earnest discussion, and with a great desire to meet the arguments that are being raised by the hon. Member for Ladywood and her hon. Friends, Birmingham city council cannot commit itself to cancel the race if there were to be some slight extra expenditure beyond its control which would affect annual expenditure. The council has no reason to believe that costs will escalate and, indeed, it is sure that they can be contained.

The hon. Member for Ladywood has referred to annual accounts. As I said on Second Reading, the annual accounts must make clear exactly what the position is in respect of the race. The hon. Lady's argument will be met by the provisions that turn on five-yearly expenditure and by annual accounting. For the reasons that I have offered, the council cannot accept a limitation on expenditure each year. However, it believes that it will be able to ensure that it keeps within its planned expenditure.

The hon. Gentleman may be confusing new clause 1 and amendment No. 16. In his earlier response, he referred to the annual expenditure and the problems that might be created if there were a limit on the annual expenditure. At that point he was referring to amendment No. 16. The amendment is concerned only with capital expenditure, which is by definition once-for-all-expenditure. I think there was confusion there in the hon. Gentleman's mind.

My hon. Friend the Member for Birmingham, Ladywood (Ms. Short) would not wish to be so inflexible as not to provide for the possibility of some unforeseen capital item taking the cost above the limit which she has suggested, but the limit that my hon. Friend has suggested seems to be the council's own estimate of £1·5 million, adjusted for inflation. Is the hon. Gentleman saying that there is nothing in that estimate for contingencies?

9.15 pm

I am grateful to the hon. Member for Hodge Hill, who has clarified a possible misunderstanding arising from what I said earlier. He is right in saying that amendment No. 16 relates to the initial capital expenditure, which, as we know, has been said to be £750,000 a year for two years, totalling £1·5 million.

I suppose that it would be difficult to ask any councillor or any public body to say that it had taken complete account of the possible inflationary consequences in any transaction over the period in question, but the council believes that it can ensure that the costs are contained. I think we would all want to say that some account must be taken of inflation. The latest estimates are that the rate of inflation will be falling again towards the end of this year. We all know the difficulties where inflation is governed by world trading and financial circumstances. Therefore, although I understand the hon. Gentleman's point, I do not think that the council can commit itself to meet his point completely.

I am trying to emphasise to the hon. Gentleman and to the hon. Lady that, with regard to the initial capital expenditure spread over two years, the council can ensure that it will be kept within the limit estimated. It accepts the point that the hon. Lady has emphasised about the importance of annual accounting, which we all accept. Furthermore, I am delighted to emphasise that the council is able to accept fully the principle set out in new clause 1. I am putting that total package to the hon. Lady, because the council has done as much as it can in capital terms to accept her amendment.

Will my hon. Friend agree that Birmingham city council has taken immense trouble over a long period? There were many doubters at the outset. Am I right in saying that the financial conclusions were not reached without the burning of much midnight oil?

My hon. Friend is right to make that point. The sceptical view taken by some people, in a quite healthy way, has caused much care to be taken in the preparation of the Bill, and the degree of care has increased as time has passed.

Perhaps my hon. Friend will excuse me for just a moment. I was describing the preparation to Opposition Members. My hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) is right—none of us believe that the city of Birmingham would be anything other than responsible when calculating such expenditure. The issues of sensitivity which the hon. Member for Hodge Hill mentioned are well understood because there is a desire to use the money in other ways which it is believed would be advantageous to the city.

I have listened carefully to everything that the hon. Gentleman has said. The trouble with acceptance of new clause 1 but rejection of amendment No. 16 is that it would be possible to spend massively over the capital projection, to find within five years that the whole thing is losing money and close it down. It is surprising that the city council is not prepared to accept the amendment, or something like it, if it has any confidence in its cost projections. A document prepared for the city council on the financial implications of a motor race in Birmingham told us that a contingency of 35 per cent. to allow for inflation and unforeseen difficulties had already been included in the capital figure. We are now told that the capital will be spent over two years, but that a limit of £1·7 million in one year is not acceptable. That seems quite extraordinary.

I am not saying that capital expenditure of £1·7 million is not acceptable. I am saying that the strict terms of amendment No. 16 would be difficult for any responsible body to accept. As I have explained, the job will be phased over two years, during which time there might be some unforeseen event. It might cost only £300,000, but if that sum took the total over the limit, the city council would be in far greater difficulties than any of us would like. That is the difficulty with specifying a figure. The reason is a business reason.

The council is being terribly responsible in responding to the amendment. It has given full reasons why it cannot accept the amendment in strict detail, but it has declared that it will do everything possible to ensure that planned expenditure is not exceeded and that the job is done in two years so that it can conduct the business effectively. In view of that attitude, acceptance of new clause 1 and acceptance of annual accounting, I hope that the hon. Lady will be able to accept this as a reasonable package.

Has my hon. Friend considered what I said about payments of compensation and damages? Has he insisted that the Bill provide that such claims be settled in 12 months? How would they affect the profit income?

I believe that, in regard to compensation and the involvement of the Lands Tribunal, my hon. Friend does not accept a principle that has been established in much legislation in which power is given to a public authority to carry out major works.

The Lands Tribunal has always been accepted as the eventual appeal body for calculations of compensatory damages. The matter was carefully considered in Committee and an obligation was placed on the city council in regard to the acceptance of liability. The rights of anyone who may have a claim will be much improved; he will not have to go through the usual process of law, but it follows that a claim will have to be initiated within a shorter period. I ask my hon. Friend to consider the balancing legal points. They secure the interests of individuals and put a severe responsibility on the city council.

Order. Before we proceed too far down this line, may I draw the hon. Gentleman's attention to the fact that I think this matter would be more correctly discussed under amendment No. 12, which deals with compensation.

I did not realise that the hon. Member for Birmingham, Hall Green (Sir R. Eyre) had finished. He has completely ignored amendment No. 7, which is obviously a non-runner. The thought of getting the necessary capital expenditure from a source other than the repair bills of my constituents obviously never crossed the minds of those who wrote the hon. Gentleman's brief.

Amendment No. 7 is an alternative to amendment No. 16, which is also unacceptable to the city council. The hon. Member for Hall Green made a telling observation when he said that the city council was beginning to think about the problems as time runs out. Even at this late stage, I cannot see why the council cannot seek some external financing sponsorship for the capital expenditure involved. A total of £1·5 million at 1984 prices—most of the calculations were put together in 1984 — is chickenfeed to big business.

On Second Reading, the hon. Member for Hall Green told us about the influential organisations that supported the Bill. He read out a list of home-grown and foreign-based multinationals in the motor industry in and around Birmingham. The list included Austin Rover—I would not include that company as a top profit-maker; Shell UK Oil—as far as I am aware, that company is making no losses; Cadbury Schweppes, a home-grown multinational, based, for all practical purposes, in Birmingham; IMI, a massive multinational which, to its credit, retains its headquarters in the inner city of Birmingham and puts its money into industrial units; GKN, one of the most profitable companies in the land, with its headquarters and many plants in the west midlands; and Davenports, the local brewers — I do not know much about their financial position, but I do not think that they are making a loss. The Holiday Inn kept writing to hon. Members asking them to support the Bill. It will make money for the hotel and create an occasional job for an apprentice.

Why cannot those big companies put their hands in their pockets? I suggest that £200,000 apiece would do the trick. They could lose such a sum in adding up the third column of figures beyond the decimal point. It would be that small. The scaffolding, crash barriers, new lamp standards and seating could be adorned with their names, and rightly so. What is wrong with that? At this late stage, why cannot the city council try to obtain the initial capital expenditure from elsewhere? The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) wants the ratepayers to put their hands in their pockets to provide the spin-off for all the companies to which I have just referred. I believe, however, that they ought to make a contribution to the city, and it is not too late for them to do so.

9.30 pm

We accept the sincerity of the hon. Member for Hall Green. Nobody disputes his integrity. However, we cannot control what happens in the other place. The hon. Gentleman said that he has experience of legislating. I acknowledge that he has been a Member of Parliament longer than I, and he has also served as a Minister. However, I have been a Member of Parliament sufficiently long to know that not every statement made in this House is translated into legislation in the way that was originally envisaged.

I should prefer new clause 1 and amendments Nos. 16 or 7, which are alternative amendments, to be included in the Bill without a Division. If the figures are wrong, I should be prepared to allow indexation in the case of amendment No. 16. We are endeavouring to insert the intention behind the background briefings that were provided by the city council. We do not want runaway spending—

That is right; we do not want another Concorde.

The city council says that the project will cost only £1·5 million in 1984 prices, or £1·7 million in 1986. The council has built into its calculations massive variations of the money that it will get from television rights. They amount to as much as 35 per cent. The financial department of the city council runs a fairly tight budget and ship under Councillor Dick Knowles, so I am confident that if it says that the price will be £1·5 million in 1984 prices, it can be accepted. I shall keep the council to it.

Financial discipline must be imposed not upon the city council but upon the people with whom it does business. Contract after contract will be let to the private sector. I want extra jobs to be created, but the private sector must be told that this is not a gravy train. It must not be led to believe that no financial ceilings will be imposed, just because this new tourist venture has been sanctioned by Parliament, and that it must be got on the road at all costs because the council does not want to lose face and therefore an extra 5 per cent. on this or an extra 10 per cent. on that, or an overrun on something else, will be met by the city council. If the private sector realises that a financial ceiling is set upon the city council's expenditure, it will be forced to keep within financial limits.

The feasibility study which has been circulated to hon. Members by the RAC demonstrates that considerable road works will take place. There will be road widening and the removal of roundabouts. The RAC also says that further discussions will take place and that further requiremens may be imposed. Does my hon. Friend agree that it might help if the city council said that there was a limit upon the amount of capital that it could spend and that the road race project could go ahead only within those financial limits?

Yes, that is right. If there were problems of unforeseen expenditure and of expenditure going out of control, the city council could say that Parliament had limited the expenditure. It would be open to the city council to obtain money from elsewhere if there were an overrun for some reason. Big, profitable businesses based in Birmingham, living off the motor industry and its component suppliers, such as hotels, would put their hands into their pockets if they believed the venture to be viable. It is in the interests of the city council and of its contractors to see that there is no bottomless pit and that a limit is built into the capital expenditure allocation.

Is there any limit that the city council will accept? Will it accept a limit of £2 million, for example? That figure is way above its original estimate. Does the council say that to have any limit in the Bill would be unacceptable, for the reasons that the hon. Member for Hall Green gave? If the council is not prepared to accept a limit, that throws into doubt all the calculations that have been made.

I do not know whether that matter was covered in the opinion polls and the report sprung on us at the last moment by my hon. Friend the Member for West Bromwich, East (Mr. Snape). None of us had seen a copy of the report. He seems to be the only person to have a copy. I do not know whether money was mentioned in the opinion poll or whether questions about capital expenditure were included. I do not know whether my hon. Friend asked for the report or whether it was offered to him. I should like to know whether the financial side of the race is dealt with in the report.

Does my hon. Friend agree that the cost of the report, which has been quoted by my hon. Friend the Member for West Bromwich, East (Mr. Snipe), should be included in the costs of the motor race?

Opinion poll companies do not work for nothing. Even those that work for the Labour party do not work for nothing. Someone has to pay for their work. The city council must be paying the bill.

We are talking about £1·5 million of capital expenditure. Like my hon. Friend, I question the city council's priorities. I do not believe that the race is a suitable priority. I intervened during the speech of my hon. Friend the Member for West Bromwich, East only to make the narrow point of whether we need the Bill. The need for a Bill gives us an opportunity to question the city council's priorities. Normally I should not consider doing that. I disagree a great deal with the city council's priorities, whichever party is in control. It is not within my competence, however, to tell the city council that its priorities are wrong and that it should do what I say. In this case, however, it requires the approval of the House of Commons. I am prepared to say that the city council's priorities are wrong. I have the opportunity to do that, and, what is more, I have the opportunity to influence its priorities. It is an opportunity that I do not normally have.

Birmingham does not spend all its capital receipts from housing on housing. This is a highly technical subject, and I do not claim to understand the ins and outs of it all. We could spend all those capital receipts on housing. There is nothing in the legislation to stop us from doing that. Indeed, we should be doing that. That was one of the manifesto commitments upon which the Labour party won the last city council election. We are not doing that. Therefore, I question the expenditure of £1·5 million that could be spent on maintenance and remedying defects in some of the worst housing conditions in Birmingham.

A distinction is drawn along party lines. It is not too late to ask the private sector to put its hands in its pockets. It does so for the greater good of Birmingham and for the benefit of its companies, and I believe that the House should ask it to do so this time. The city council should not be given carte blanche—in effect, an open cheque—by a refusal to accept amendment No. 16. I would not argue with the idea that the other place can include an indexation provision in the Bill, but I should like this House to insert such a proposal.

I accept what the hon. Member for Hall Green said about new clause 1. I accept his integrity. There is no reason why we cannot include new clause 1 and let the other place mess about with the wording and change it. We all agree. The promoters say, "We accept the thrust of the new clause." What is there between us? If things go wrong in the other place, there will not be the opportunity that the House needs to put this right. I am not prepared to leave this provision to the other place. Some Members of the other place are root and branch opposed to the Bill, whatever concessions are given. Others favour the legislation. Who is to say how the votes will be carried?

If we agree on the thrust of the new clause, we should include it in the Bill and make progress with the other amendments. I hope that this will be done with the same friendliness as has been shown so far in the debate.

Presumably, my hon. Friend received a letter from the leader of the city council, Councillor Dick Knowles, in which he gave an undertaking that

"the race shall not take place if an operating loss is still made in the fifth year of the event."
That gives added importance to the question that my hon. Friend has just posed to the hon. Member for Birmingham, Hall Green (Sir R. Eyre): what are we arguing about?

We are arguing about very little. We are arguing about whether to include the provision now or to do so later. I believe that it should be included now. The city council has woken up to some of the points that my colleagues have been making for months. The council has left it until the last minute to seek a meeting of minds. If Conservative Members had taken the same view, either before or just after Second Reading, instead of giving a blank cheque with respect to financial provisions, we would probably not be in this position now. Members of Parliament representing Birmingham and elsewhere agree that there is nothing between us on the point of principle. Therefore, there is nothing to stop us doing the deed and having the technicalities corrected in the other place. After all, the House of Commons is really the upper House, whatever the terminology used by the press to describe the two Houses.

I support the new clause and the amendments.

As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) has explained, there is little difference between us on the new clause. According to its wording, it will be incumbent upon the city council to stop holding a motor race if it is not making a profit after five years. The hon. Member for Birmingham, Hall Green (Sir R. Eyre) says that he accepts the spirit of the new clause. He knows that the city council is anxious to accept it. As my hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) has mentioned, we have received a letter to that effect from Councillor Dick Knowles. There is no disagreement on that point.

There is also no disagreement on the need for separate accounts. Separate accounts are essential if we are to know whether the race is making a profit during those five years. A few months ago, the chairman of the general purposes committee gave us an assurance that accounts would be kept. I am not clear whether accounts have already been kept and whether we can see 1984–85 accounts on the expenditure that has already been incurred, for example, on entertainment of Members of Parliament. I hope that cost is included in the accounts as well as a contribution towards the cost of the survey conducted by some organisation of behalf of the city council. Apparently, the survey's findings have been communicated only to my hon. Friend the Member for West Bromwich, East (Mr. Snape).

9.45 pm

All right, I shall give way to my hon. Friend because he seems so upset. Obviously he has more information than hon. Members representing Birmingham.

I should like to make two points. First, I have no idea what has been spent on entertaining hon. Members on either side of the House with regard to the Bill. I hope that my hon. Friend will accept that not a penny has been spent on entertaining me, and that that is not the reason behind the attitude that I have taken. Secondly, I have only just noticed that, although the survey was conducted in May, the date on the document is June. I can assume only that it has been published today or recently.

I accept my hon. Friend's assurances. I had already guessed that he went to the council house for a briefing this morning, and obtained the document during that meeting.

I have to ask my hon. Friend to accept that I did not go to the council house for a briefing this morning. I met somebody from Birmingham city council after a meeting of the west midlands Trades Union Congress that I had attended. It was only because I happened to be in Birmingham this morning that the document became available to me.

I knew that my hon. Friend was in Birmingham this morning because he told us how he drove through the constituency of Ladywood. But let that point rest. The important matter is the new clause.

I also leave on one side the need for annual accounts, which is a serious point because the expenditure that has already been incurred should be accounted and set against the income from the motor race.

I agree strongly with the argument advanced by my hon. Friend the Member for Perry Barr. The hon. Member for Hall Green has assured us that the city council will seek to amend the Bill in the other place. But it is not within the power of the city council to amend the Bill. That responsibility rests with the other place. Therefore, it is important for the hon. Gentleman to accept the new clause. If he does not, it will be possible for the new clause drafted by the promoter of the Bill to be rejected by the other place. If it is rejected, the issue will not come back to the House of Commons. The only way in which the House of Commons can be sure of our joint wishes being put into effect is by accepting the new clause, so that, if a different view prevails in the other place, the matter must come back to the House of Commons because the Bill will have been amended since it left the House of Commons.

In no way am I casting aspersions on the integrity of the hon. Member for Hall Green or his assurances. Nevertheless, I cannot understand why the hon. Gentleman cannot accept the new clause. Then it can be amended in another place to give effect to the accounting expression that he described as being slightly different from the wording that has been used by my hon. Friend. If we accepted the new clause, we could make the progress that hon. Members on both sides would like.

Amendment No. 16 would restrict the city council to a capital expenditure of £1·7 million in 1986.

I should like to deal first with a detailed point because the hon. Member for Hall Green said that the city council told us that it wishes to incur its expenditure over a period of two financial years. That point was not relevant because the expenditure would be in the calendar year 1986 to which the amendment refers. I recognise that the expenditure would fall into the financial years 1985–86 and 1986–87, but it would almost certainly be in the calendar year of 1986. We shall not quibble if some items of capital expenditure are incurred before the end of the calendar year.

An important principle has been advanced by my hon. Friends concerning the confidence that we can have in the figures that have been advanced. I must correct my hon. Friend the Member for Perry Barr, who referred to the estimate of £1·5 million as being at 1984 prices. In fact, that estimate is not given at 1984 prices. It is clear from the information that we have been given that the city council estimated the capital expenditure at August 1984 prices and added 35 per cent. to cover the contingencies and inflation between 1984 and 1986. Therefore, one quarter of the capital estimate of £1·5 million is to cover contingencies and inflation. My hon. Friend the Member for Ladywood is generously adding a further £200,000 to that estimate.

I wonder how much leeway the city council requires. I accept the point of my hon. Friend the Member for Perry Barr, when he asked whether the council would accept a limit of £2 million. What figures does the council have confidence in? There must be a figure which the city council is not prepared to pay for a motor race. I am prepared to accept whatever figure it gives, unless it says £20 million, which is not realistic. It may set the figure at £2 million, £1·7 million or £2·5 million, but there should be a limit.

Alternatively, the city council could accept amendment No. 7 because it goes to the heart of our objections, which relate to the use of the capital allocation by the city council for a motor race. Personally, I would not press amendment No. 7 because the city council has moved a long way towards meeting us. Indeed, it has moved much further towards our position compared with its previous position. It has virtually accepted 90 per cent. of our argument about the need to ensure that £1·5 million will remain available for all the priorities which I share with my hon. Friends the Members for Ladywood and for Perry Barr. Therefore, I urge my hon. Friend the Member for Perry Barr to withdraw amendment No. 7. Although I agree with his original intention to tell the city council to look for external money for capital expenditure, the objective was to meet our objection to the Bill. It was a good idea, but now the city council has gone past that point in its offer to us this afternoon.

On amendment No. 16, I cannot understand why the city council will not accept a limit. I recognise the force of the argument of the hon. Member for Hall Green about unforeseen contingencies and that in the normal course of events it would be unwise to limit the city council in this way. Nevertheless, it shows a remarkable lack of confidence in the council's figures that the council can conceive that the expenditure will be so much more than the estimate. The council must have estimated that the cost would be about £1·2 million. It increased the figure to £1·5 million, and we are adding £200,000. In other words, we are providing a 50 per cent. contingency and inflation fund. How much more inaccurate can the estimates be? If they are more inaccurate than that, I do not think much of the figures, and I would be surprised if the city treasurer thought that he had produced such loose estimates.

I ask the hon. Member for Hall Green, who has been most accommodating in his approach to our amendments, to reconsider the possibility of accepting them.

I wish to reply to the points raised by Opposition Members. I begin by apologising to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) for not having referred to amendment No. 7. I did not hear it called and did not think that it was grouped with the amendments; otherwise I would certainly have spoken to it.

The hon. Member for Birmingham, Hodge Hill (Mr. Davis) showed a degree of reservation about the amendment. It would require the city to raise the initial capital cost externally from sponsorship. It is extremely difficult for the city to accept the amendment because it would prove difficult to raise such funding in advance of the facilities being available to run the race. Sponsorship is much more likely to be related to special events at specific times when such matters as television coverage, timing and races are arranged. A large part of the initial capital cost would not relate to expenditure with which sponsors could identify easily. Sponsorship and advertising income would help to ensure that the race is run at a profit each year, after allowing for the financing of the initial capital cost.

The aims are agreed in the city council's proposal. The initial cost will effectively be funded over a period from race proceeds. I assure the hon. Gentleman that the principle of his amendment is fully accepted. The intention is to recoup the cost of setting up the event from the income that it generates. I ask the hon. Gentleman to accept that it is simply a matter of timing. He is keen to take this money from a sponsor or industry, and I believe that it will be possible to recoup the cost, but it is a matter of timing. The city council believes that it cannot raise that funding in advance of the scheme proceeding and sponsorship beginning to operate.

I should tell the hon. Member for Hodge Hill that amendment No. 4, which is to correct a drafting error, is accepted. The hon. Gentleman says that we must accept amendment No. 16 although we know that it is inaccurate.

I am urging the hon. Gentleman to accept a new clause 1 despite the fact that it is inaccurate.

The hon. Gentleman is saying that we should accept new clause 1 and amend it in another place. I am sorry, but I believe that that procedure would be without precedent. It would reflect badly on the House, especially when one considers that there is a difficulty in using the terms of the definition. However, I have given an undertaking on behalf of the city council. I believe that we have settled the matter. I ask him and the hon. Member for Ladywood to accept my undertaking that the matter will be dealt with properly in another place.

I believe that we should vote on new clause 1 and on amendment No. 16. I accept the hon. Gentleman's integrity and commitment, but undertakings have been given in the House before by Governments, not by Back-Bench Members, which have not been fulfilled. That is why I wish the House to vote on the new clause and the amendment, but I make it clear that I accept the hon. Gentleman's integrity and commitment to accepting the amendments.

I understand the hon. Lady's point, although I am sorry that she wishes to press the matter to a vote.

There is not much more for me to say, except to explain my reasons for rejecting amendment No. 16. The hon. Member for Perry Barr (Mr. Rooker) wants the amendment to be accepted. The difficulty in answering his point, at my present stage of instructions and present responsibility, is the unforeseen incident which might push up the figure. Opposition Members have won substantial concessions, including yearly accountability, a two-year limitation agreed, although not inserted in detail, and five-yearly full accountability. I have done my best to construe those matters in terms that are acceptable to the Opposition, and in view of what the hon. Lady said, I can go no further.

Question put, That the clause be read a Second time:—

The House divided: Ayes 20, Noes 127.

Division No. 245]

[9.59 pm


Boyes, RolandPavitt, Laurie
Callaghan, Jim (Heyw'd & M)Pike, Peter
Clwyd, Mrs AnnPowell, Raymond (Ogmore)
Cocks, Rt Hon M. (Bristol S.)Rooker, J. W.
Cook, Robin F. (Livingston)Skinner, Dennis
Davis, Terry (B'ham, H'ge H'l)Smith, C. (Isl'ton S & F'bury)
Eastham, KenThompson, J. (Wansbeck)
Evans, John (St. Helens N)Weetch, Ken
Fatchett, Derek
Holland, Stuart (Vauxhall)Tellers for the Ayes:
Lloyd, Tony (Stretford)Ms. Clare Short and
McDonald, Dr OonaghMr. Robin Corbett.


Alexander, RichardBottomley, Peter
Aspinwall, JackBottomley, Mrs Virginia
Atkins, Robert (South Ribble)Brandon-Bravo, Martin
Baker, Nicholas (N Dorset)Brinton, Tim
Batiste, SpencerBrooke, Hon Peter
Beaumont-Dark, AnthonyBruce, Malcolm
Beith, A. J.Bruinvels, Peter
Best, KeithBuck, Sir Antony
Blackburn, JohnBudgen, Nick
Boscawen, Hon RobertBurt, Alistair

Butcher, JohnMaude, Hon Francis
Butler, Hon AdamMaxwell-Hyslop, Robin
Butterfill, JohnMitchell, David (NW Hants)
Carlisle, Rt Hon M. (W'ton S)Monro, Sir Hector
Cash, WilliamMontgomery, Sir Fergus
Chalker, Mrs LyndaNeale, Gerrard
Chapman, SydneyNeubert, Michael
Coombs, SimonPollock, Alexander
Cope, JohnPowley, John
Currie, Mrs EdwinaProctor, K. Harvey
Dorrell, StephenRoberts, Wyn (Conwy)
Douglas-Hamilton, Lord J.Robinson, Mark (N'port W)
Durant, TonyRoe, Mrs Marion
Fenner, Mrs PeggyRowe, Andrew
Fookes, Miss JanetSainsbury, Hon Timothy
Forman, NigelSt. John-Stevas, Rt Hon N.
Forth, EricSayeed, Jonathan
Fox, MarcusShaw, Giles (Pudsey)
Franks, CecilShepherd, Colin (Hereford)
Freeman, RogerSims, Roger
Gale, RogerSkeet, T. H. H.
Garel-Jones, TristanSmith, Tim (Beaconsfield)
Golding, JohnSnape, Peter
Gorst, JohnSoames, Hon Nicholas
Gower, Sir RaymondSpeller, Tony
Greenway, HarrySteen, Anthony
Gregory, ConalStern, Michael
Ground, PatrickStevens, Lewis (Nuneaton)
Hamilton, Hon A. (Epsom)Stevens, Martin (Fulham)
Hargreaves, KennethStewart, Allan (Eastwood)
Harris, DavidStradling Thomas, J.
Haselhurst, AlanTaylor, Rt Hon John David
Hawkins, Sir Paul (SW N'folk)Taylor, John (Solihull)
Heathcoat-Amory, DavidTemple-Morris, Peter
Heddle, JohnTerlezki, Stefan
Henderson, BarryThomas, Rt Hon Peter
Hicks, RobertThompson, Donald (Calder V)
Howarth, Gerald (Cannock)Thornton, Malcolm
Jackson, RobertThurnham, Peter
Johnston, Sir RussellWaddington, David
Jopling, Rt Hon MichaelWakeham, Rt Hon John
Key, RobertWalker, Bill (T'side N)
Knight, Dame Jill (Edgbaston)Wall, Sir Patrick
Knox, DavidWallace, James
Lang, IanWardle, C. (Bexhill)
Lawrence, IvanWatts, John
Lee, John (Pendle)Wells, Bowen (Hertford)
Lightbown, DavidWiggin, Jerry
Lloyd, Ian (Havant)Winterton, Mrs Ann
Lloyd, Peter, (Fareham)Winterton, Nicholas
McCurley, Mrs AnnaWood, Timothy
MacKay, John (Argyll & Bute)
Maclean, David JohnTellers for the Noes:
Madel, DavidSir Reginald Eyre and
Major, JohnMr. Gregory Knight.
Mather, Carol

Question accordingly negatived

It being after Ten o'clock, further consideration of the Bill stood adjourned.

To be further considered on Thursday.

European Communities (Definition Of Treaties)

[ Relevant documents: European Community Documents Nos 9910/82, Commission memorandum on the Community's development policy; 4126/83 on operations of STABEX in 1981; 10505/83 on mining in the ACP States; 7382/84 on the community and Africa; 10677/84 on operations of STABEX in 1982 and 1983; 6380/85 Draft Decision on the conclusion of the third ACP-EEC Convention of Lomé; and the unnumbered Report of the Court of Auditors on aid to third countries.]

10.10 pm

I beg to move

That the draft European Communities (Definition of Treaties) (Third ACP-EEC Convention of Lomé) Order 1985, which was laid before this House on 23rd May, be approved.

As hon. Members will be aware, the Lomé convention is the treaty which governs economic relations between the European Community and the African, Caribbean and Pacific group of developing countries. The third ACPEEC convention, or Lomé III as it is commonly known, was signed on 8 December last year and covers the period 1985 to 1990.

The draft Order in Council, to which the motion refers, allows effect to be given to the provisions of the convention in United Kingdom law. This in turn opens the way for ratification of the convention by the United Kingdom. The convention will come into force when it has been ratified by all the member states, the European Community and two thirds of the ACP states. This will probably be early next year.

I am grateful to the Select Committee on European Legislation for agreeing that the debate on the draft order also provides an opportunity to consider other Community documents which it has recommended for debate. I shall not take up the time of the House discussing each of those documents in detail, though I shall deal with points that hon. Members raise when I reply to the debate. However, there are a few general aspects of the documents to which I should draw attention.

By and large, they have been overtaken by, or been subsumed in, the new Lomé convention. This is particularly the case with the Commission memorandum on the Community's development policy, which came to be known as the "Pisani memorandum."

On a point of order, Mr. Deputy Speaker. Because of the discussion that is taking place among hon. Members assembled just beyond the Bar of the House, I am having difficulty in hearing what the Minister is saying.

I, too, am having some difficulty in hearing the Minister. If hon. Members who are standing beyond the Bar will leave or come into the Chamber, we will get on with the debate.

Perhaps they would care to join the debate.

What came to be known as the "Pisani memorandum" was thoroughly discussed by Development and Foreign Ministers in 1982 in preparation for renegotiating the Lomé convention. Some of its main ideas, such as that the Community should promote food security in developing countries and hold a policy dialogue with aid recipients, were pursued in the Community's mandate for the Lomé negotiations. Others, such as improved co-ordination, were the subject of separate Commission proposals.

Similarly, the 1983 review of EEC-ACP relations in the mining sector concluded that, in negotiating the third Lomé convention, the Community should seek to help the ACP to develop its mineral resources and thus also ensure security of supply for Europe.

The Commission's paper on the European Community and Africa did not require Council decisions but provided a timely analysis of recent African experience and the barriers to growth there. The problems of Africa have remained very much to the fore in Community discussions, and the Development Council, on 23 May, reviewed the Community's response to the present crisis.

It is perhaps appropriate for me to clarify the role of the Lomé convention in meeting both the immediate and longer term needs of Africa. For the most part, the Community's role in providing food and emergency relief is financed from the Community budget and does not, therefore, come under the Lomé arrangements. However, one ingredient in the Dublin summit's commitment to provide at least 1·2 million tonnes of cereals was the allocation of £45 million from the emergency provisions of the second Lomé convention. This is now being implemented.

The main contribution of the convention is long-term development. Ninety four per cent. of commitments from the fifth European development fund, under Lomé II, have been made to Africa. These include projects like that at Jebel Marra in the Darfur province of Sudan, which I visited in February. As Commissioner Natali reminded the ACP-EC Council of Ministers in Luxembourg last Friday, the new convention will give added emphasis and finance to such schemes.

The Court of Auditors report on the co-ordination of Community aid to third countries is a useful reminder of the benefits which increased co-ordination of aid can bring. I share the Commission's hope that the policy dialogue provided for in Lomé III will improve aid co-ordination.

The Development Council has devoted continued attention to co-ordination, adopting at its meeting on 23 May a 'format for joint aid reports by the missions of Community member states and the Commission in developing countries.

Finally, I should mention specifically the decision enabling the Council and the Commission to conclude the third Lomé convention on behalf of the EEC itself and of the European Coal and Steel Community. This must be approved by the Council before the convention can enter into force. The Government have no difficulty with the proposal, which is a matter of common sense. As I have said, I should be happy to deal more fully with these documents in winding up if hon. Members wish.

Ten years since the first Lomé convention was signed, this is a good time to take stock. Ten years ago the convention was seen by many as a new way of organising and managing relations between rich and poor countries. What has been the record? We have to recognise that development in many ACP countries has slowed or gone into reverse. The proportion of the Community's trade going to the ACP compared with the rest of the world has diminished. The share of ACP exports taken by the Community market has also dropped. We have ourselves expressed concern about the quality of aid from the European development fund.

Against this, it is clear that the convention constitutes a form of co-operation that is valued on both sides. It cannot guarantee that world trade will grow. But it does offer the ACP states free access to the Community market for 95 per cent. of their exports to the Community, and they receive assurances of substantial long-term aid commitments. For the member states, Lomé provides a European dimension to our overseas aid programmes. Moreover, 35 of the 66 ACP states are members of the Commonwealth, which thus gain privileged access to European markets and European aid through the convention.

Against this background one of our main goals in negotiating the new convention was to get a more effective instrument of development, and I think that this is reflected in the third convention.

The main objectives are clearly set out in a new introductory section: there are tighter procedures for planning EDF aid; stronger provisions for appraising and evaluating projects; a new provision to allow for fast disbursement of aid to maintain existing investments; a new chapter on drought and desertification; more stress on promoting investments; and throughout there is a strong and welcome emphasis on food production and agricultural development. That reflects the priority I gave in the negotiations to food security, and the final text incorporates most of the substance of what I proposed.

Underlying those improvements is the basic thrust of the arguments in Mr. Pisani's memorandum: that the Lomé partners share a common interest in following policies which lead to much better rates of economic growth and more balanced forms of growth than we have seen in the past. There is no sense in pouring large sums of money into projects which are plainly unsuited to the economic, geographic or climatic conditions of the country concerned—"building cathedrals in the desert," as Commissioner Pisani once put it. Nor is it productive to provide aid in sectors where mistaken policies are being pursued or where overall economic policies counteract the potential benefits of an aid project.

This is a sensitive area. The ACP states rejected the Community's initial proposals for a "policy dialogue", fearing that they would result in what they felt to be unwarranted interference in their internal policies. I cannot pretend that the wording eventually agreed is ideal. Whether or not it enables the Community to concentrate its aid on those countries and on those sectors in which viable economic policies are being pursued still remains to be seen. We have made clear to the new Commissioner, Mr. Natali, our strong commitment to the principles on which the Community negotiated, and he has assured me of his own commitment to them. The first missions to programme EDF funds will leave Brussels in July, and we shall support and encourage them to the best of our ability.

But the task of making the convention a more effective instrument for promoting the development of the ACP states cannot rest with the EEC alone. Many of the ACP states themselves now realise that their inability to feed their own populations and their consequent dependence on imported food is a major handicap in their struggle to improve living standards. That handicap can be overcome only by developing coherent long-term policies and strategies, and that must be the responsibility of the Governments concerned,. The Lomé relationship, as has been frequently stressed, is one of partnership—a team effort in which all participants share responsibility.

The emphasis in Lomé III on the greater effectiveness of Community aid has resulted in a move towards Community support for key sectors or policy programmes rather than individual projects. Food strategies are one example—we have them for Mali, Zambia, Kenya and Rwanda. The fight against drought and desertification is another. Both areas are given prominence in the convention with a complete new chapter being devoted to long-term efforts to combat drought and desertification.

As a corollary to the shift of focus from individual projects to policy programmes, the convention also stresses the importance of regional co-operation and programmes intended to help more than one ACP state. The Community—itself a group of sovereign states—may often be better placed to provide assistance for such schemes than individual member states acting alone.

The total financial allocation for the sixth European development fund has been established at 7·5 billion ecu, or £4,438 million. The size of EDF VI was, not surprisingly, a central feature of the negotiations for the ACP states, and they felt bound to express their disappointment at the outcome. I think, however, that they will soon come to realise that the offer is remarkably generous. EDF VI will be 60 per cent. larger than EDF V. That represents more than maintenance of value in real terms at a time when most other multilateral aid organisations have been obliged to restrain or cut back their budgets. In addition, up to 1·1 billion ecu—£651 million—will be made available to the ACP states in the form of loans from the European Investment Bank's own resources.

As hon. Members are aware, the Government are firmly of the view that no amount of development aid can substitute for improving trade links between the developed and the developing world. The long-term economic security of the ACP states depends on their ability to increase trade flows by finding new markets for their goods. The ACP states themselves realise this. The income earned by the ACP states from trade with the Community is two to three times greater than the financial flows resulting from aid from all sources, and more than 30 times great as EDF aid alone. We therefore argued throughout the negotiations for further improvements in access to Community markets for ACP goods and for the removal of all remaining duties on agricultural products.

Most member states were prepared to see a relaxation of controls on some products, though not in cases where member states' agricultural produce competed most directly with that of the ACP countries. We were able to achieve agreement that in future ACP requests for improved access for particular products will receive a more rapid response. In considering those requests the Community will take account of concessions granted to other developing countries. We shall work hard to make a reality of that undertaking. It would have been better for the ACP had we been able to do more. Nevertheless, the existing Lomé trade arrangements are probably the most liberal on offer to any group of developing countries.

One significant improvement which we were able to obtain was relaxation and simplification of the convention's rules of origin.

I should also mention that the special trade arrangements for sugar, bananas, beef and rum—which are of particular importance for Commonwealth ACP states—have all been consolidated or improved in the new convention. On sugar, bananas, beef and rum, we had to fight hard to maintain the preferential access for our Commonwealth partners to the Community market which was provided under Lomé II. We were successful. Indeed, on rum we managed to obtain a substantial increase in the growth rate of duty-free quotas for the rest of the Community and a minimum Community import level of 170,000 hectolitres at the expense of a slight decrease in the growth rate of the quota for the United Kingdom market.

In addition to trade and aid, private investment has an essential role to play in developing ACP economies. I was delighted to find greater awareness than ever before amongst the ACP states of the need to create and maintain a stable investment climate. This attitude is reflected in the provisions of the investment chapter of the convention which is much more substantial than its predecessor.

Lomé III, like its predecessors, offers British business an opportunity to participate in the development partnership. Over the past few years, British business has won a growing share of EDF contracts. For the first time, in the first quarter of this year the percentage of EDF V contracts placed in Europe which were won by British businesses rose above 20 per cent. That is a good achievement. It recognises the quality and expertise which this country has to offer, but we can do better still. As they become better acquainted with administrative procedures in Brussels and in the ACP states, British firms will be better placed than ever to improve their performance under EDF VI. Firms which have not yet tendered for EDF contracts should not be deterred by unfamiliar procedures and requests. Their perseverance will, I am sure, be well rewarded.

Before concluding, I should like to take this opportunity to extend a welcome to the new members of the Lomé partnership. Angola and Mozambique played a full part in the negotiations and both countries have now signed the new convention. An additional protocol to the convention will drafted to provide for the accession of Spain and Portugal, both of which have agreed during the enlargement negotiations to shoulder their share of the financial burden.

I should like to end on what I am sure will be a point of particular pleasure for the House, especially the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). One of the innovations contained in the new convention is the amalgamation of the ACP-EEC consultative assembly and its joint committee into a new joint assembly, composed of Members of the European Parliament and Members of Parliament or designated representatives of the ACP states. I am delighted to inform the House that the United Kingdom Members of the European Parliament have persuaded the joint assembly to hold its first meeting in Inverness this summer. It will be the first time that a meeting of this type has been held in the United Kingdom, and we very much look forward to welcoming delegates to this country.

10.28 pm

It is widely recognised that the first Lomé agreement was a successor to the Yaoundé agreements, which were dominated by the need to accommodate the interests of former French and Belgian colonial territories in Africa. The agreement was widely criticised at the time, but Lomé I was seen as a major and path-breaking step forward. It is of some relevance to the criticisms that we shall make of the Government's attitude to Lomé III to observe the conditions under which Lomé I was achieved.

There was considerable confidence among commodity producers following the success of OPEC in raising oil prices, and there was some disarray among some Community countries at the time, which were not sure to what extent other commodity producers might manage to gain similar advantages. There also was political support for Lomé I and the interests of Third world countries, such as that shown by my right hon. Friend the Member for Clydesdale (Dame J. Hart)—then Minister for Overseas Development—who very much regrets that she cannot be with us tonight, Claude Cheysson of the EEC commission and Jan Pronk, the Minister for Development in the Netherlands. In other words, there was a pull from the ACP countries and a push from Europe.

However, those high hopes were not fulfilled. They did not work out, for various reasons. There was not enough money and the Stabex commodity scheme was too small and had too limited a range of products. By the time of Lomé II, optimism had faded. In the event, Lomé, II closely resembled Lomé I in form, but not in substance. The only substantial innovation was the introduction of the Sysmin scheme for financing the rehabilitation of ACP mining industries. There was no specific fund for industrial development and in real per capita terms, the decline in European investment bank and European development fund money was about 20 per cent.

The Minister stressed that as we approach Lomé III, the economies of several of the countries concerned are in a precarious state. It also is worth stressing that the group contains more than two thirds of the world's least developed countries. Key social indicators such as literacy, school enrolment, life expectancy and child death rates are among the worst in the world.

The size of the Lomé countries is not so great in the global economy. They represent about 12 per cent. of the Third world's population. India alone has about twice the population of the ACP countries. However, the deprivation, poverty and backwardness of those countries and their lack of productive structure is recognised on both sides of the House as a severe handicap. Therefore, it is critical that in facing the challenge of the global crisis, the challenge of trade and the challenge of a renewal of the Lomé agreement, there should have been more than an adequate response from the EEC to the needs and demands of the ACP countries.

As the Minister said, the EEC response has been 7·5 billion ecus, with about 1·1 billion from the EIB. But the total of 8·6 billion ecus will only just preserve the Lomé II levels, taking inflation into account. It will not preserve those levels if population increase is recognised. It would need 10 billion ecus to get back to the levels of Lomé I. That is against a background in which the ACP countries, as illustrated by the Lords Select Committee report and other sources, have been asking for 11 billion ecus. Therefore, there have been cuts.

Have the Government been pushing for the higher sums or arguing for the lower sums, as they recently pressed for a £22 million cut in the EEC food aid budget for next year? What has been the Government's role during the negotiations? Did they fight in the Community for the higher figure or were they—as we understand that they were—the mean men of Europe, paying lip service to the problems, but not putting the resources where they are needed?

There is also the key issue, to which the Minister did not address himself, of the pace of Lomé procedures—slow, slower and stop, as they are widely known in many countries. Despite what the Minister said, funds remain unspent from the days prior to Lomé I in 1975–80. In March 1984, just one year before Lomé II expired, only 20 per cent. of its aid funds had been spent and only 50 per cent. had been committed.

The fund established under the Sysmin scheme in Lomé II for assisting the mining industries of ACP states has been notoriously slow. At the beginning of this year, only one third of its 282 million ecus had been committed and only a very small amount spent.

We recognise that Lomé III introduces a range of measures to speed up the aid cycle of EC, and those are to be welcomed. We trust that they will also be adhered to. European Economic Community procedures are certainly over bureaucratic, and the understaffing of the directorate general for development of the Commission certainly does not help.

We also recognise that some of the responsibility for slow aid spending rests with the ACP states, but we trust that the Minister also agrees that in many cases they are administratively weak and that recently they have been overwhelmed, especially in Africa, by the scale of the drought crisis. Technical assistance to some extent can overcome this constraint, but a better relationship between ACP programmes and other programmes and the adequate funding of some other programmes is also important if the ACP framework and the Lomé convention are to succeed.

The Minister referred to ex-Commissioner Pisani's reference to cathedrals in the desert—not original for ex-Commissioner Pisani. Many such cathedrals in the desert have been found in southern Italy by some critics. But we recognise the point. In many cases the preference for mega-projects versus micro-projects has done little to help agricultural development. The sectoral focus of the new Lomé convention is very much open to question. Precisely how the strategic approach will work is not yet clear. The European Community is involved in the pursuit of food sector strategies already, with the Governments of Mali, Ruanda, Zambia and Kenya. This approach may hold the promise of poverty-focused, better quality aid, but to be effective it is essential that the community should get the backing of individual member states rather than that the Government should drag their feet, as they have, over providing resources for those projects.

I am very much a tyro in this debate and am learning as it proceeds. If the Labour party were to form the next Government and took Britain out of Europe, would that strengthen or weaken our contribution to Lomé?

I think the hon. Gentleman said that he is an amateur in this kind of debate. If he followed Labour party policy he would see that it wishes to work with other European countries not only to counter the drought problem but to promote economic recovery and trade with Third world countries. I have just been to a conference in Sweden that was attended by many other parties, several of which are in Government. Those parties — for example, the Italian Government — have been pushing for an increase in aid programme resources at a time when the British Government have been dragging their feet and proposing cuts in European food aid.

Returning to the link between emergency aid and development aid, it is important that there should be a proper link. Lomé II had an emergency aid budget of about 202 million ecus. During Lomé II the European Commmunity refused to use this money for longer term rehabilitation and development after the emergency had passed, and a period of six months was stipulated. In Lomé III the energency aid is split into 210 million ecus for emergencies and 90 million ecus for refugees. The latter can be used for the long term integration of refugees, through the provision of tools and equipment, seeds and so on.

This is to be welcomed, but it does not go far enough, not least because the finance is a pittance. It is just over 4 ecus per head for Africa's refugees. Both the ACP and European non-Governmental organisations want the concepts and procedures of emergency aid to be modified to include long term developments and activities. At a more general level, given the drought situation in parts of Africa, the transition from emergency to development aid is one of the key problems of the day. But the Government are not adequately addressing it. They have not been supporting the Commission's proposals for food aid and are not supporting the ACP countries over the higher resources that they wish to be allocated to longer term agricultural development.

We also have to question the sector strategies. The food strategies, especially with their reliance upon small-scale farming, are excellent in themselves but do not admit the kind of problems that ACP countries are facing over some of the commodities to which the Minister referred at the end of his speech. For example, one of the problems with bananas is that that product is distributed on the world market by a handful of companies, and very little of the income goes to the producers. On average, producers receive only just over 10 per cent. of the final value of the bananas that are sold in the shops. The ripeners receive over 20 per cent. and the retailers receive 30 per cent. The income that goes to those who produce the bananas is a fraction of the 10 per cent. That is the underlying type of problem with commodities. It is not just STABEX or commodity stabilisation. It is a great problem for the ACP countries and is not addressed adequately by Lomé.

Lomé also is contradicted by the EEC's common agricultural policy. One of the ways in which Lomé is designed to promote the development of the ACP is through supporting both trade with the Community and ACP exports to the rest of the world. But that objective is undermined by the operation of the CAP.

Agricultural protectionism bars a range of ACP exports to the Community market. The United Kingdom Government have failed to have those barriers removed during the Lomé III negotiations. Botswana in southern Africa and Burkina Faso in western Africa claim to have lost regional markets for beef exports due to subsidised EEC beef exports. I have been to Burkina Faso, and I trust that the Minister has been there. It is, as the Minister will be aware, one of the poorest countries of Africa. It is wracked by drought and desertification. For the EEC's beef exports to be undermining the export trade of that country contradicts the objectives of Lomé.

Similarly, the annual sale of about 5 million tonnes of EEC beet sugar on world markets has contributed to the decline in world sugar prices to their lowest level for 15 years. That has robbed acutely dependent traditional ACP cane exporters in the Caribbean of their markets. Those policies are detrimental to the development of EEC, ACP and intra-ACP trade and should be reviewed as a matter of priority.

The EEC has also produced large grain and dairy surpluses which, in the form of food aid, have contributed to the undermining of Africa's food self-sufficiency. The directorate general for development of the Commission has been trying to reduce the negative impact of non-emergency food aid. The development council adopted a policy in 1983 which would introduce into Lomé III a stipulation that food aid must be integrated into the recipient's development policy, that financial assistance can replace food aid in some circumstances and that the EEC will continue a policy of triangular operations—in other words, buying foodstuffs in Third world countries to supply other Third world countries.

Those measures are to be welcomed. However, when the exceptional demand for food aid caused by the famine subsides there will be a strong temptation to keep food aid at the exceptionally high current levels. That must be resisted and the adopted policies must be adhered to.

More importantly, the growing EEC-US trade conflict over subsidised grain sales has crucial implications for the prospect of food self-sufficiency in Africa and the ACP in general. Should a price war break out and the international market become flooded with cheap grain, it will undermine the will of Governments to undertake the difficult reforms of agriculture designed to increase the participation of peasant farmers in national food production.

In that respect, it is relevant to refer to the role of other agencies which operate in ACP territories. That refers especially to the International Food and Development Agency. Granted that IFAD does good work—I am sure that is admitted by both sides of the House—that every £1 the United Kingdom puts into that IFAD leads to a procurement in the United Kingdom of £2, granted that Great Britain has the highest rate of procurement and that one third of IFAD's work is in Commonwealth countries, why are the Government not supporting IFAD and aiming for at least a $30 million replenishment over a four-year period?

If lip service is paid to the general objectives of the ACP arrangements, whereas in reality the Government are not prepared to put their money where their mouth is for long-term agricultural development, the Government will be taking with one hand while giving with the other.

The hon. Gentleman has given us a catalogue of suggestions for increased resources. If I read his criticism of the agreement that has been put together correctly, it is that the Government did not argue strongly enough in many sectors for additional increased resources. Is it the Labour party's policy that there should be increased resources for all the sectors to which the hon. Gentleman referred? This is only a small part of our overall aid package. Is this the focus of the Labour party's policy, or does the hon. Gentleman believe that this should be extended across the aid board? Would the Labour Government have the funds to achieve this aim?

It might have been a good idea if the hon. Gentleman had attended the recent debate during which I was asked basically the same question by a Conservative Member. He asked what the Labour party was going to do. It is the Labour party's policy to increase aid as a proportion of GNP to 0·7 per cent. within the lifetime of one Parliament and to aim at 1 per cent. Granted the way in which the Conservative party has cut the aid programme to 0·33 per cent., which is the lowest level recorded since we started a development and aid programme in Britain, that would give us tremendous resources to disperse in other countries. It would amount to an increase in spending in current terms of about £1 billion over the lifetime of the Parliament. We certainly would have no problem in supporting the replenishment of IFAD and IDA. As for food aid and agricultural programmes in ACP countries, we certainly would meant to be able to match the Socialist-led Government in Italy and their increase in the aid programme within the Community framework rather than follow the lead of this Government who have introduced cuts.

I do not want to delay the House long on a detailed analysis of the various proposals in Lomé III, but STABEX is especially important. Under Lomé III, it has received 925 million ecu, but only three new products have been added to the list of 45 ACP products covered by the scheme. The ACP—the Minister did not point this out—had demanded that more than 40 new products should be added. In line with the EEC's line on financial rigour, the administration of STABEX has been considerably tightened—at least on paper—and ACP is now required to furnish much more information, reporting on the use to which STABEX funds are put. We recognise that there is the so-called "fangibility problem", which was popularised by Hans Singer, about the tracing of the precise use of STABEX resources. In practice, STABEX has been benefiting only some commodity producers. Over the years, these have tended to be the more affluent among the ACP countries.

There are basically three problems with STABEX. First, it is useful because in principle it rapidly responds to genuine needs arising from fallen export revenues in export states. But the introduction of bureaucratic procedures is likely to slow down the process and dilute the value of its transfers. Secondly, although the Government recognise that there is the fungibility problem, it is not clear how the EEC will in practice monitor the use of STABEX funds. Thirdly, the wisdom of investments in export commodities, currently in structural surplus in the international economy, has to be questioned. Emphasis in many of the ACP states has to be on the use of resources for diversification rather than on continued commodity support.

Also, STABEX provides no more than partial compensation for falling export revenues. In 1980 and 1981, the available funds met only 52·8 per cent. and 42·8 per cent. respectively of legitimate ACP claims, that is a 50 per cent. success record. The ACP is still seeking to be reimbursed for the shortfall. STABEX cannot replace commodity agreements designed to stabilise prices and does not undermine the rationale for increasing the size of straight loan compensatory finance facilities. UNCTAD work on a global compensatory fund requires the serious attention of the European donor states and should command the Government's support.

There are a number of interesting dimensions to Lome III that certainly were not in Lome II or Lorne I. One concerned the role of women in the Third world and the ACP countries. Several resolutions in the European Parliament, and the resolution adopted by the development council in November 1982, have recognised the crucial role played by women in the economies of the Third world, especially in the rural sector where they work as unpaid labour. Article 123 of Lorne III for the first time specifically recognises that, and proposes that women in the ACP should gain access to training, technology, credit and co-operative organisations themselves, of their own right, and not simply through the male head of the household, or through male peasant farmers. That is welcome, since EEC aid, along with most aid, has tended to ignore the critical, indeed overwhelming, role played by women labour in the rural sector in Third world countries.

If the EEC is serious about supporting efforts towards food self-sufficiency in the ACP states, women will have to be the main beneficiaries of aid programmes. However, the Minister was talking about the progress that some of the ACP countries could make by better acquainting themselves with EEC procedures in Brussels. The women may have some difficulty. A women's unit was introduced in DG8 in 1982, but with only one woman member of staff. Only a handful of the 58 EEC delegates abroad are women. The participation of women in the EEC aid programme both in the EEC itself, in Brussels, and in the ACP, must now be strengthened, as I am sure my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) will agree.

There is also the attitude that Lomé has taken in relation to apartheid. Despite the opposition of the British Government—I stress that—article 4, annex 1, of Lomé III pledges the ACP member states
"to work effectively for the eradication of apartheid, which constitutes a violation of human rights and an affront to human dignity."
Since Lomé III was signed, pressure has been mounting in Europe and the United States for Governments to take a firmer stand against apartheid. The United States Congress has proposed economic sanctions against the Pretoria regime. At the April plenary session of the European Parliament, a Socialist-sponsored motion was adopted by the 434 members of the advisory assembly. The resolution advocates the ending of investment in South Africa, the halting of state guaranteed bank loans for export financing and the reducing of commercial contacts and relations. The resolution also advocated strict adherence to the United Nations arms embargo and the suspension of sporting and cultural contacts.

The EEC Commission has declared itself willing to consider any measure
"that will bring South Africa to its senses."
It has formally requested the EEC states to consider appropriate action against South Africa. EEC Foreign Ministers have also agreed to meet their counterparts in the front line states of southern Africa. It is crucial that this Government, the British Government, with the special links that we have had with South Africa in the past, should be seen to be supporting such sanctions against South Africa, and give substance to the commitments made by the EEC Governments in Lomé III.

A further point concerns the ACP and EEC enlargement. While the Minister welcomed new members to the ACP, and while I welcome new members to the European Community, it is clear that there will be problems. Spain and Portugal signed the treaty of accession on 12 June this year. The EEC tends to emphasise the positive opportunities for ACP trade with the Spanish and Portuguese markets, although in practice it is doubtful whether those countries will switch from traditional Latin American suppliers of raw materials and commodities.

However, the ACP is concerned that Spain will displace a range of ACP exports in the EEC market, particularly fruit and vegetables, leather goods, wood products, textiles and aluminium. One particular problem concerns the export of ACP sugar to Portugal. The ACP currently supplies about 120,000 tonnes of cane sugar to Portugal, and Portugal requested an import quota of 200,000 tonnes during the initial seven-year transition period. However, the Community has insisted upon 75,000 tonnes of cane sugar at a reduced levy over those seven years. Thus a large proportion of ACP sugar exports to Portugal will be wiped out at a stroke, while Portugal comes under increasing pressure to consume EEC beet sugar. It is possible that ACP sugar exports to Portugal will disappear altogether after the transition period.

As we understand it, the United Kingdom Government tried to increase the 75,000 tonne quota allocated to Portugal—where we observe that Tate and Lyle has four refineries—but failed to do so. The lip service that the Minister is paying regarding those commodities appears to be contradicted by the facts.

Lomé III introduces a consultative mechanism for discussing such ACP concerns about EC enlargement. It is essential that the EC enters into a meaningful dialogue with and gives a sympathetic hearing to ACP countries on these matters.

Overall, Lomé III has been mixed. It has had items of remarkable interest, not pressed by this or other Conservative Governments in the EC, but demanded, as in Lomé I, by third world countries, in this case ACP countries themselves. The Minister ended his speech by referring to the role of Commonwealth countries within the ACP. Certainly, at a time when the global multilateralists approach through the United Nations has been blocked in too many cases by the United States, whether regarding IDA replenishment, the law of the sea or other measures, it is especially important that regional groupings such as the ACP and the Commonwealth, play a positive role in bridging the gap that has been left by the derogation of the United States of its international responsibilities for development.

The Minister referred to the importance of trade, and to the fact that trade alone is 30 times the EDF aid contribution. But we need a recovery programme to promote that trade. The Government have responded with a low Lomé. They have opted for the lower figures, and the cautious and inherently conservative approach. When it came to proposals from the Commonwealth, as made, for example, at New Delhi in 1983, the Government did not even say yes to a low recovery programme, but no. That is why in practice we have reservations about Lomé III and are critical of the role that the Government have played in its negotiation. There has been no response to the genuine needs of Third world countries, such as was shown in the negotiation of Lomé I, by Claude Cheysson, Jan Pronk and my right hon. Friend the Member for Clydesdale. For that reason, although we shall not oppose the order and although we wish the ACP countries well in achieving the ambitious objectives of Lomé III, we criticise the Government's response to those demands and the way in which they have negotiated during the past 14 months.

10.57 pm

It is sad that this seems to be the only debate that we shall have on the Lomé convention and its signature. I sincerely hope that the Opposition and my right hon. Friend the Minister will press for a longer debate. Although I do not criticise the hon. Member for Vauxhall (Mr. Holland) for taking fully half an hour of a one and a half hour debate on this important subject, the time allotted to the House is too short for this important question.

Although the Lomé conventions have anticipated trying to increase trade with the ACP countries, they have succeeded in reducing the volume of trade that the ACP countries have enjoyed with the European Community. In 1974, 17 per cent. of the European Community's imports came from ACP countries. By 1982, only 13·8 per cent. of total imports into the EC came from ACP countries. Therefore, despite the intent of the Lomé agreements entered into by the right hon. Member for Clydesdale (Dame J. Hart) and others, the agreements have failed to increase trade with ACP countries. That is a stark fact, and from that background we should approach our approval or lack of it for Lomé III.

Unfortunately, Lomé III does not alter the position. Indeed, the trade provisions have been translated straight from Lomé II into Lomé III and, therefore, there has not been much improvement on that.

I shall confine my remarks to one or two observations rather than try to make an overall assessment of the Lomé III agreement. First, I mention the promotion of dialogue by the EC and the rejection of that by the ACP countries on the grounds that we were interfering in their internal affairs. If there is to be a relationship between the EC and the countries that we are trying to help, there must be agreement on the economic backgrounds at which they are aiming so that the projects financed by the EC fit into the pattern that is agreed between the partners in the development of trade and infrastructure. To reject that sensible approach is a retrograde step.

The way in which human rights are dealt with in those countries was severely watered down by the ACP countries' negotiators, although my right hon. Friend managed to get into the preamble of the convention a reaffirmation of the contracting partners' adherence to the United Nations charter and their faith in fundamental human rights. During the three Lomé agreements, EC aid persisted to countries which were in flagrant violation of human rights conventions and all decent human behaviour. I remind the House especially of Uganda under President Amin, when EC assistance persisted unabated to that regime. More controversially, EC aid continued to the Grenada revolutionary government.

Hon. Members are in serious difficulties when they try to find out what is happening to the administration of the EDF by DG8 in Brussels. All that we get from my right hon. Friend in answer to questions is that he does not know, because these are the responsibilities of the European Community, not his. We allocate a large sum from our ODA budget to those people in Brussels and then forget about it. We do not ask, nor do we know, how it is being administered. We cannot ask questions or get sensible and properly detailed replies.

I was interested to hear the hon. Gentleman's comments about the aid given to Uganda during Idi Amin's regime, but I expected him to deal with the present position there. I hope that he will not disappoint the House in that respect.

I am being invited to take more of the House's time. I hope that it will not be to the disadvantage of the hon. Member for Monklands, West (Mr. Clarke), who will wish to speak in the debate. The present position in Uganda is equally horrific, as far as I can gather, especially from reports in The Sunday Times this weekend. We must re-examine our bilateral aid in that connection, and the fact that we are stepping up bilateral aid to a regime that is obviously unable to control what is happening in terms of human rights.

I should deal briefly with co-ordination. It is terrible that, in some overseas countries, the EC representative is often in competition with bilateral aid representatives, such as the ODA development division or the diplomatic mission from France, in respect of funding projects. If the host country cannot get money from anywhere else, it will go, reluctantly, to the EC, which gets the worst projects that no one else will pick up. Of course, the EC picks them up with alacrity. However, the host country does not go to the EC in the first place, because the administration of programmes by Brussels is, to say the least, Byzantine. Indeed, the word "Byzantine" could be overtaken in modern parlance by the word "EC-tine", if that is not too horrible a word.

It takes endless time to negotiate money out of the Community. I refer the House to the extraordinary behaviour of the Community on replacement aircraft for the Leeward Islands Air Transport. After immense investigation, it recommended that it would not supply the aircraft requested—the British Aerospace 748—but that it would supply an aircraft which had not yet been built or tested-and in two years' time, although the Caribbean islands wanted it to support their tourist trade this year. Extraordinary administration and rules can result in extraordinary decisions. I hope that my right hon. Friend will increase his supervision of the programme and sort out the administration in Brussels so that it works properly.

What is meant by the new chapter on sociocultural co-operation? I have no idea what it means. If it means that more money will seep into the sand by spending it on beautiful girls dancing with hoolahoops in the Pacific or under flaming swords in the Caribbean, I do not think that is a proper way to spend money.

I support what the hon. Member for Vauxhall said about sugar. Events in connection with Portugal are a disgrace. We export sugar and depress the world market, so not enabling countries to earn their own living. That is something that we must redress, and it is worth far more than the money coming through the EEC.

The multi-fibre arrangement is a restriction on trade by the Community which is unjustified by the figures. The EEC may fear competition from within its ranks, in particular in Britain or from north America, but not from Commonwealth countries or the poorest countries in the world.

We must consider the whole of the package in relation to our whole aid budget. We are in extreme difficulty because of the contraction of the budget. The effect of that contraction is serious. The amount of money devoted to multilateral aid, including EEC aid, has increased from about 19 per cent. of our bilateral aid budget five years ago to nearly 45 per cent. That explains why we have had to be a little parsimonious in relation to the agreement. It also explains why we are pushed in every other way in our bilateral aid programme.

We have no alternative but to press the Government to increase the resources available to the ODA budget. The way to start is to replace the £100 million spent extraordinarily last year on aid to sub-Saharan Africa so that that extra amount is available for bilateral aid.

Much more could be said about the Lomé agreement, but I cannot sit down before congratulating my right hon. Friend on the way in which he has negotiated the agreement, which will provide major benefits to some of the poorest countries in the world.

11.8 pm

I pay tribute to the hon. Member for Hertford and Stortford (Mr. Wells). His knowledge and concern about such matters are special and deserve recognition. Time is short and I shall try to be brief. The hon. Member is right to criticise the usual channels, or the Government—or whoever determines the length of our debates.

I have no reason to dispute that the Government determine the length of debates.

As the hon. Member for Vauxhall (Mr. Holland) said, the sad aspect of the debate is that, despite the reference to women and other matters, Lomé III is not fundamentally different from Lomé II. The EDF is much the same, allowing for population growth and inflation. ACP exports are not in a notably more favourable position. Indeed, as the Minister said, they have even declined. However, in fairness, it must be said that the United Kingdom adopted a more flexible position than other countries—partly as a reflection of our less significant agricultural sector. I admit to a certain amount of cynicism in these matters. I suspect that if we faced the same agricultural pressures as the French, we would probably take the same attitude. Therefore, it is not really all that fancy to take a superior view.

The Alliance believes that the Community has failed in the negotiations to respond to the gathering Third world crisis that has been so well summed up in Brandt 1 and Brandt 2. We have had caution where a certain amount of boldness was required and prudence where generosity was needed.

The Minister said—and I agree with him—that trade is the touchstone of a genuine wish to help the developing countries within the ACP to achieve progress in a developing world, and it was certainly a prime objective of the negotiations. There was the resistance of France, Italy and the other southern European countries to any openness about CAP product competition. That is understandable, but it means that the trade balance between Lomé and the EEC has moved very much towards the EEC.

I understand that the ACP countries were looking for 10 billion ecu for aid, but received 7·4 billion. That reduction was, in the main, due to the resistance of the British and the Germans. That is regrettable. The Minister has his perpetual look of slight puzzlement—

How the hon. Gentleman can talk about a reduction when there was a 60 per cent. increase baffles me. That was why I was looking puzzled.

Statistics can be made to prove almost anything. I certainly do not think that, in real terms, aid has been increased by 60 per cent. If we take into account population growth and inflation, that sort of figure is not real. For a Minister who is part of a Government who have cut back the United Kingdom's aid contribution to its lowest point to say that is not to be reasonable.

I wish to make two brief points to underline what has been said by other hon. Members. First, I hope that the Minister will say something about the pace of procedures, which the hon. Member for Vauxhall rightly criticised. As we are supposed to be the efficient part of the world, surely we should be able to do something about that.

Secondly, I admit to being equivocal about the issue of dialogue and human rights raised by the hon. Member for Hertford and Stortford. It is natural to say when looking at Amin — or, now Obote — that we should not be helping such a tyrannical Government. At the same time, I find it difficult to accept the argument that some poor peasant's irrigation will be stopped because he is unlucky enough to be saddled with a tyrannical Government. This is not a simple issue and it will never have a pat solution. I appreciate the Government's difficulty but that difficulty would exist in any event.

Although the hon. Member for Vauxhall was right to say that general commodity agreements would have been better, STABEX was an inspired concept. It made a notable difference and could have made more of a difference. Only a minority of ACP countries have been major recipients, and the fund, as has been said, has been severely under-financed.

It is regrettable that there has been no evident improvement as a consequence of Lomé III in the funding and extent of STABEX, and that also represents a criticism of the commitment of the EC countries to the the development of trade, because the two aspects are inextricable.

I said that the Lomé concept was good, even if many of the poor countries were excluded for historical reasons, but I cannot say that we have succeeded in seeing a sustained advance through Lomé I to III, and part — I agree not all—of the responsibility for that rests on Her Majesty's Government.

To end on a positive note, I respond happily to the Minister's reference to the impending Lomé assembly in Inverness. It is greatly to be welcomed that such international conferences are not to be confined to the metropolitan centres of the United Kingdom. At Eden Court, Inverness has the most modern theatre in the United Kingdom and I know that the ACP and European Parliament representatives will find in Inverness not only a warm Highland welcome but facilities second to none.

11.17 pm

I, too, will be brief, because at least two of my hon. Friends wish to speak before the Minister replies.

We are dealing tonight with an agreement which, although it relates to many Third-world countries, concerns about only 15 per cent. of the Third-world population. Most of the countries are former colonies and what we have seen in the institutionalisation of Lomé I, II, and III is the creation, as it 'were, of a network of client states gathered around the EEC. Many of them might wish to be doing something else in terms of their trade with the rich countries, but they are stuck with the Lomé system, and most of them are too scared and not in an economic position these days, in view of world recession, to escape from it.

The impetus, therefore, is on the rich countries of the EEC — the 10 member states — to try to improve the terms of Lomé from one Lomé convention to another. That has not happened on this occasion.

As the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) rightly said, the amount of aid is roughly equivalent to Lomé II, allowing for inflation. I am not certain that it has allowed for population increase—indeed, I do not think it has—but I shall return to that shortly.

A disturbing feature of the aid package is the increased emphasis on programme aid. I have grave reservations generally about programme aid to developing countries, partly because we cannot monitor it sufficiently well and partly because, in principle, it is objectionable. We should be concentrating on development projects, and they should be responsible for raising the revenue. If they cannot do that, we must look more fundamentally at their production, agriculture, and so on, rather than just give them money on a temporary basis.

There is also great emphasis on private capital. That may be part of the Government's general economic policies in relation to the rest of the world. We are dealing with some of the poorest countries, and I cannot believe that there are many profitable opportunities for private capital in many of the 65 or so Lomé convention countries. To believe that private capital would make up the differences is to indulge in wishful thinking.

One of the factors that is worsening conditions, apart from the general world recession, is the rapid growth in population, especially in African countries. Does the Lomé convention say anything about the need for appropriate population policies in such countries? Is any part of the aid programme geared, as is part of our own programme, to mother and child health care, family planning and the provision of contraceptive facilities, for example?

Lomé III is not better than Lomé II, and it might be slightly worse when it comes to trade. As the Minister fairly observed in his opening remarks, the proportion of trade between the ACP countries and the Community has declined. The Community has probably benefited slightly in that its share of trade has fallen less than that of the ACP countries in Community markets.

There is a difficulty, because many of the countries with which we are concerned are basically agricultural communities, and they come up against the protectionism of the CAP. That is a major factor which inhibits the growth of exports and their means of earning sufficient foreign exchange to enable them to pay for essential imports and to improve their living standards generally. It is regrettable that, unlike Lomé II, no sugar arrangement has been negotiated. I do not know whether that is still on the cards and may come about subsequently. Sugar arrangements are important to a number of countries, not only those in the Caribbean. For example, they are important to Fiji and Mauritius.

The Lomé agreement is supposed to be a marvellous example of North-South co-operation, but it has become institutionalised. It is concerned solely with trade and aid; but I recognise that both are important. However, the ACP countries have not been able to get the 10 member states to change their policy at the World Bank and the IMF. Such institutions have a much greater impact on the life and economic development prospects of ACP countries than anything which happens under Lomé I, II or III.

The debt problems of many of the countries that come within the debate have not been addressed by the convention. If it provides a forum for some sort of North-South discussion, these matters should be alluded to, discussed and referred to in a communiqué with continuing discussions after the ratification of the convention. The agreement is not a good one, but it is probably the best that could be hoped for from the EEC. There is a danger that Lomé agreements will become increasingly in-stitutionalised, bureaucratic and set in their ways. That is unfortunate, because we need above all greater openness and flexibility and a willingness to consider the point of view of the other side. I do not think that we are seeing signs of that at present.

11.24 pm

I shall not detain the House long because I know that Opposition Members wish to contribute to the debate. I welcome the fact that the agreement has been reached and that the order is before the House.

The point made by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) is worth repeating. The Government showed considerable flexibility in the negotiations compared with some of our European partners arguing their case both strongly and strenuously for improvements, not all of which they were able to achieve at the end of the day.

Having listened to the speech of the hon. Member for Vauxhall (Mr. Holland), I could not help thinking—this case was advanced eloquently by my hon. Friend the Member for Hertford and Stortford (Mr. Wells)—that the Lomé agreement is not the handle upon which to hang the case for increased development assistance.

We are well aware of the problems in Africa—the drought and the need for food aid. I agree with the hon. Member for Vauxhall that as soon as practicable we must move the emphasis from emergency food aid and look seriously at the medium and long-term programmes for giving support in the drought-affected countries, and also learn the lessons of the second major drought in 10 years. We must find a way to provide additional resources for such programmes, in the hope that, as the years go by, we can help to prevent a recurrence of that sort of tragedy. I do not think that the Lomé agreement is necessarily the means to achieve that aim.

We have heard this evening about the slowness of procedures within the EEC and the difficulties that the signatories to the Lomé convention have in battling their way through them. Although some Lomé signatories may be disappointed with the end product of the agreement, I still believe that our Commonwealth friends will welcome the third agreement as the best that could be achieved in the circumstances. Certainly it should be seen as yet another important landmark in the continuing co-operation with our Commonwealth partners.

11.26 pm

The hon. Member for Newport, West (Mr. Robinson) made a very telling point, not so much in his speech as in his intervention, when my hon. Friend the Member for Vauxhall (Mr. Holland), certainly to my satisfaction, was able to remind the House of the importance of resources. It is not enough to talk about new means of negotiating, agreeing, getting together, drawing up future structure plans, and so on, if the resources are not to be made available. To that extent, the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) was right to mention the Government's record on aid, but an increase of 60 per cent. to a country with inflation running at 800 per cent. does not represent very much.

My hon. Friend the Member for Walthamstow (Mr. Deakins) was right to remind us that the ACP countries represent 65 Third world countries, and only 15 per cent. of the population of the Third world. That is a very limited number of people in relation to the full potential available to the EEC and the challenge that lies before us.

I am grateful to the hon. Member for Hertford and Stortford (Mr. Wells) for his references to Uganda. I appreciated the fact that he reduced the length of his speech to enable some of us to take part in the debate. I wholly endorse what he said. There is a growing worry about current events in Uganda. If the recent report of Amnesty International in yesterday's Sunday Times is only half right, we should be worried.

Is there not a danger that, with the press publicity given to Uganda, we shall concentrate too much on Uganda and ignore some of the other signatories to the Lomé agreement? It may be that in Uganda the Opposition parties are not being dealt with in accordance with the standards that are accepted as normal and reasonable in Western Europe, but, after all, they do have an Opposition. There are other Lomé countries, such as Mozambique, Angola and Ethiopia, which do not even allow an Opposition to exist.

I have never believed that one ought to be selective about human rights. If the right hon. Gentleman takes that view, he will join us in saying that, leaving aside the Opposition in Uganda, there seems to be clear evidence of the type of unacceptable oppression that took place under Idi Amin. That must be just as unacceptable today.

Lomé has funds, but it is not yet appearing as an instrument for development to the extent that we should all like. The Minister is in danger of being oversensitive yet again—I remind him that he has the right of reply—as he told the House of the words of Edgard Pisani, who also said:
"The fact remains that without major changes ACP/EEC co-operation will soon appear to be useless through its failure to get to the roots of the ills that it sets out to cure."
That is a fair comment. When considering these matters, it is reasonable to bear in mind the immediate problems and how much progress is being made in development policies and in encouraging the countries involved to take development seriously.

I accept some of the Minister's criticisms about duplication in projects and too many prestigious projects. I have said much the same in earlier debates. I accept his anxieties about food self-sufficiency, but we should remember what the President of Botswana said about the need for a new international economic order. My hon. Friend the Member for Walthamstow rightly reminded us of the problems of the world debt crisis, inflation, recession and the decline in exports and the falling commodity prices of Third world countries. I regret that Lomé III does not appear to address itself to those problems.

Nevertheless, I wish Lomé III well in the spirit of urging an end to the political in-fighting so that a strategy for the future might be prepared. The important role of agriculture, food production and development should not be forgotten. If the ACP countries take that view, there can be a genuine response from Europe, which will therefore accept some criticism about its policies, especially about protectionism and the growing food surpluses. If we can achieve that, we shall have made tremendous strides.

11.33 pm

With the leave of the House, I should like to reply to the debate. I cannot take up every point tat has been made—there have been many—and I shall write to hon. Members about matters that I am unable to deal with.

The response of the House has been a little too niggardly. I realise that party politics occasionally enter our deliberations and sometimes lend a certain colour to the attitude of the Opposition to what the Government are doing. I have been frank about the weaknesses of Lomé. I have not tried to pretend that it has all been perfect, but we are discussing something of real importance in respect of which the balance of advantage is clear.

Lomé III is different from the predecessor conventions in a number of worthwhile respects, some of which were mentioned in the debate. The trade provisions have been strengthened, and that was brought about by the British effort. We made the running in trade matters.

There are other ways in which the new convention is an improvement on its predecessors. One is the so-called policy dialogue. We did not get all that we should have liked, but I was closely involved in the negotiations and the new provisions will ensure that we can have a more thorough discussion about the policy context in which aid is given than has been possible in the past. The Government believe that that is necessary and I believe that it will make the new instrument more effective than its predecessor. It will include an emphasis on sectoral matters, a topic that the hon. Member for Vauxhall (Mr. Holland) queried. Sectoral discussions are at the heart of the policy dialogue—moving on from a discussion of the project in isolation to look at a whole area, whether farming, mining or whatever.

There are also other respects in which the new convention is better than its predecessors. In terms of the resources made available, the ACP countries have got a very good deal.

The Minister in his opening speech said that provisions for sugar, rum and banana crops had been improved. Would not it make sound sense to the ACP cane sugar producing countries if Portugal took much more cane sugar and much less EEC-produced beet sugar?

I do not dispute what the hon. Gentleman says. It would be better for the ACP countries if Portugal took more than the 75,000 tonnes that was agreed. But no one fought harder than the United Kingdom on behalf of the ACP sugar producers. If we had not fought the battle, they would not have got the 75,000 tonnes. We can again claim that the British contribution was one of considerable importance.

It is not possible for me to cover everything in the three minutes that remain, but the important matter of human rights was mentioned by a number of hon. Members, including my hon. Friend the Member for Hertford and Stortford (Mr. Wells), who, as always, made a thoughtful and interesting speech. The issue was looming throughout the negotiations, but it was not settled until the end. It was unquestionably one of the difficult aspects of the negotiations.

The United Kingdom and a number of other Community member states felt that it would be wrong entirely to dissociate the granting of Community aid from respect by recipient countries for human rights. It is well known that a number of ACP countries objected to that, because they claim that the basis of the Lomé convention is that it is a treaty between equal parties and that it imposes a contractual obligation to give aid, regardless of anything else.

However, we are concerned about human rights, and the final text agreed with ACP states clearly reaffirms the contracting parties' adherence to the principles of the United Nations charter and their faith in fundamental human rights. That is a firm basis on which we can build. We are also able to reach agreement with the ACP states on a joint declaration reiterating our deep attachment to human dignity and reaffirming our commitment to work to eliminate all forms of discrimination. That includes apartheid.

Those texts will not, in themselves, bring about a radical improvement in human rights in many states. The contractual nature of the convention and the need for predictability in planning development mean that the disbursement of aid cannot simply be a function of changes in the degree to which human rights are observed. Nevertheless, the texts are contained in the covention and can therefore be invoked in the most flagrant cases in which elementary human rights are abused. They are important and reflect the concern that has been expressed this evening by hon. Members.

The multi-fibre arrangement was referred to by my hon. Friend the Member for Hertford and Stortford. My right hon. Friend the Minister for Trade has told the House that the Government, while favouring a further multi-fibre arrangement, want it to be more liberal, with improvements concentrated upon suppliers who themselves have liberal import regimes and, of course, upon the poorest suppliers. That has always been the point of view of this country—

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business).

Question agreed to.


That the draft European Communities (Definition of Treaties) (Third ACP-EEC Convention of Lomé) Order 1985, which was laid before this House on 23rd May, be approved.

Scottish Institute Of Agricultural Engineering

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

11.40 pm

I am initiating a debate on a proposed cut in funding of £1·1 million from a budget of £1·7 million for the Scottish Institute of Agricultural Engineering at Bush estate, Penicuik. This is part of the overall reduction of about £4 million in agricultural research expenditure.

The lunacy of cutting back upon agricultural research in Scotland is compounded by the swipe that is being taken at the Scottish Institute of Agricultural Engineering, to be found in the consultative document. Mr. David Hinton, convenor of the labour and machinery committee of the Scottish National Farmers Union, said:
"Our initial reaction to this document"—
he was referring to the consultative document—
"is one of concern. The Scottish Office have proposed massive cuts in the funding of the Scottish Institute of Agricultural Engineering. The engineering work carried out at the SIAE has concentrated on the special needs of the Scottish industry, many sectors of which are markedly different from those in England and Wales. Provision must be made to continue an adequate basis for Scottish Research in this important field … The union is in the process of assessing the complete Agricultural Research and Development picture in Scotland. We will—in due course—be submitting detailed suggestions on the future of Research and Development in Scotland. We recognise the need for increasing efficiency but we reiterate our opposition to the scale and timing of these proposed cuts which owe more to dogma than logic."
I suggest that dogma and logic are a regular hallmark of this Government's actions. When challenged one can only describe their answers by using Edmund Burke's classic descriptiion: the economy of truth.

It was a classic example of hamfistedness when the staff of the Scottish Institute of Agricultural Engineering at Bush estate, Penicuik, read in The Scotsman that their jobs were under threat. The policy of "shoot first, tell later", was confirmed on 18 May when they learned that the Department of Agriculture and Fisheries for Scotland, which finances the seven Scottish agricultural research institutes—the Bush estate, Penicuik section being one of them—had published a discussion paper entitled "A Strategy for Agricultural Research and Development." It detailed the financial cuts to be made in applied agricultural research in Scotland.

At present, only 7 per cent. of the £31 million Scottish agricultural research and development budget is spent on engineering. The proposed cuts would reduce this figure to less than 2 per cent., a cut of 70 per cent. The annual budget of the Scottish Institute of Agricultural Engineering of £1·7 million will thus be reduced to about £500,000 or £600,000. One would damage one's eyesight if one tried to find any reason in the document for singling out engineering for such a savage cut. That outrageous proposal is made to stand on its head when one realises that just three months ago the Department of Agriculture and Fisheries for Scotland published a document entitled "Agricultural Research and Development 1985" in which much of the work of the Bush estate institute was highlighted as being topical and of high priority. Within two months, the Department of Agriculture and Fisheries for Scotland did an about-turn. Long-term research programmes given priority in March were discarded in May.

Today, I have received a letter from the Scottish NFU. It will be making a submission. The union will be pointing out that over four months the Department of Agriculture and Fisheries for Scotland has completely altered its view of the value of agricultural research in Scotland. I do not want to go into the letter in detail, but it is a powerful indictment of the Government's policy and attitude.

A study of the consultation document reveals a number of striking inconsistencies, omissions and errors of logic in addition to a number to debatable statements and conclusions.

One criterion put forward by the Department of Agriculture and Fisheries for Scotland for the allocation of research and development funds is that output at present in surplus should receive less support. However, a respected committee of the Royal Society headed by Professor Bernard Crossland showed recently that a lack of research and development in the agricultural engineering industry between 1966 and 1980 led to a 2·6 per cent. decline in exports and a 112 per cent. increase in imports. Applying the logic of the Department of Agriculture and Fisheries for Scotland, the industry merits the additional funding recommended by that committee rather than the proposed cuts.

The Department of Agriculture and Fisheries for Scotland states its intention to support high quality research, some parts of which serve as the United Kingdom's focus of excellence. It fails to acknowledge that section of the Bush estate as a United Kingdom centre of research into the mechanisation of the potato crop in which it has an international reputation.

The Scottish Institute of Agricultural Engineering on the Bush estate is also internationally recognised for its work on soil compaction, and on the behaviour of agricultural machinery on sloping ground.

The potato crop and soft fruits are singled out as important commodities in Scottish agriculture and yet those are the sectors of the Scottish Institute of Agricultural Engineering expertise which in the past have received a low priority, or have been discouraged by the agricultural heads in New St. Andrew's house in Edinburgh.

I wish to deal with some of the economic benefits of the Scottish Institute of Agricultural Engineering. There are considerable potential economic benefits from the application of its research programmes. For a modest cost to the Department of £1·7 million per annum as well as reductions in input costs those benefits include, first, increased cereal yields through a combination of optimum soil structure, the elimination of losses due to compaction effects from straw disposal, adoption of a zero traffic system with broadcasting, and subsoil loosening. These have a potential worth of £177 million per annum in Scotland alone. The use of soil engineering to limit forest windthrow could be worth £7 million per annum in Scotland.

Secondly, grazing improvements in Scotland through strip seeding have an estimated potential value of £39 million per annum. Improved straw incorporation techniques could save £1·8 million per annum while gains from shallow ploughing could be £5 million per annum. Examples of the value to Scotland of ad hoc development work are the chicken feeder, with a saving of £2·5 million per annum, and crop deflectors, with a saving of £500,000.

Thirdly, the introduction of the institute's developed equipment and techniques to reduce potato damage could save up to £126·7 million per annum.

Fourthly, the elimination of tractor overturning accidents could save United Kingdom resource costs of £3·8 million per annum.

Fifthly, optimal forage conservation in the cool wet climate of Scotland could increase the value of home-produced forage for this region by up to £190 million per annum.

Sixthly, agriculture energy savings of £5 million per annum could be achieved in Scotland simply through efficient management based on the institute's work at the Bush estate.

Seventhly, the machine loads investigation could lead to savings for the United Kingdom in material costs of non-rotary soil working tools of £1·4 million per annum.

Eighthly, adoption of mechanical harvesting of raspberries by Scottish growers, based on the institute's machine specification, would increase profitability by £1·4 million per annum.

The benefits identified for Scotland alone would total £424 million per annum. For northern Britain, this figure could be doubled. Addition of the benefits identified for the United Kingdom as a whole — £101 million per annum—gives a total of £949 per annum. The potential benefit:cost ratio from the application of that programme in asingle year would be 500:1. If even 20 per cent. of the benefits were achieved to give a benefit:cost ratio of 100:1, this would be excellent value for public money by any standards. The benefits that are achieved will continue far beyond the duration of the projects on which they were based. Meanwhile, the cost resources can be devoted to new work to generate new potential benefits. The scale of benefit projected for the present programme is broadly similar to that obtained for completed past projects—for example, the x-ray separator—and for similar work elsewhere.

In amplifying my case, I want to quote an unsolicited letter that I received from Findlay, Irvine Ltd. It is captioned:
"Scottish institute of Agricultural engineering."
The letter states:
"The proposal to cut the budget of the S.I.A.E. by a figure (according to the Press) of £1·1 million out of a budget of £1·7 million is a very damaging one. We have worked with The Bush for nearly twenty years, and although we cannot judge the quality of all their work, the projects with which we have been involved have been relevant to the needs of agriculture, and their research has produced useful devices.
For instance, the Bush Recording Soil Penetrometer which is made here and sold worldwide, was originally designed at The Bush. Sales are steadily growing and make a worthwhile contribution to employment by a small local manufacturer. Research institutes in the USA, Australia, New Zealand, India, Malaysia, and Iran have all bought this instrument simply because it is the most advanced in the world.
Cuts in civil service expenditure have my full support but one has to be selective. Cuts at the S.I.A.E. would strike at precisely the kind of wealth-creating process the Government is trying to foster."
I should like to call in aid a report on tractor safety, for the saving of lives should have the same priority in the agriculture industry as in any other industry. The institute's work on safety is unique in Britain. It is of vital social concern, and has a worldwide reputation. The United Kingdom focus of excellence on that subject is at the institute. It is a proper research topic for public funding. The institute's work is highly valued by the Health and Safety Executive, which respects its independent position and is unable to commission similar work at any other centre in Britain, including its own research laboratories.

There are an estimated 85,000 farm accidents annually in Britain, of which 1,244 are tractor overturning accidents. The total resource costs to the British economy of those accidents is £94·3 million and £3·8 million, respectively, but the average cost of tractor overturning accidents is disproportionately high at four times the average cost of other accidents. Small and medium-sized farms account for more than 85 per cent. of total unreported accident costs. Those farms are situated predominantly in less favoured areas, and the clear relevance of tractor safety on slopes research to the hill and upland areas points to the acute need for funding such research in Scotland. The work is directly applicable to other land uses in the upland areas, especially forestry.

The institute has been conspicuously successful so far. The comprehensive research on the causes of tractor overturning accidents now provides standard training material used by colleges of agriculture, the Health and Safety Executive, the agricultural training board and the advisory services throughout the United Kingdom. The institute slope monitor and four-wheel drive engagement alarm have both been taken up commercally. The main goal of the institute's work, however, is yet to be reached—determining when a tractor is being operated safely on a slope and when it is not. Currently the tractor driver still has to operate in total ignorance of his degree of safety. If the institute's work is interrupted or terminated now, the real benefit of its achievements will be largely lost to the farming community.

The Department of Agriculture and Fisheries for Scotland proposes to set up a form of contingency fund. The annual cost of that will eventually almost match the slash in the engineering budget. But the Department has no idea what it wants the fund for. Perhaps it is following too closely the example of our southern neighbour, the Agricultural and Food Research Council, from which it takes scientific advice. It has found a need for a contingency fund, probably because it is an organisation that stands alone. However, the Department is part of the Scottish Office and has always benefited from the flexibility—to the extent that it has never needed a separate contingency fund at any time in the past 40 years. It is therefore totally inappropriate to set up such a fund when drastic cuts in the budget are proposed.

The Department of Agriculture and Fisheries for Scotland has declared a set of priorities for agricultural research in Scotland. Engineering has a vital, often fundamental, contribution to make to each and every one of them. All that potential is put at risk by the ambition to have a contingency fund·the latest status symbol. Now it may be argued that the Department has been obliged to prepare its consultation document at short notice to satisfy the demands of the Chancellor of the Exchequer to reduce expenditure. However, the manner in which engineering has been selected to bear the brunt of those costs betrays a lack of knowledge and appreciation of the serious long-term consequences for Scottish agriculture. The indecent haste associated with the consultative document published in May — a response has been demanded for June—makes it vital that the Secretary of State should be made aware of the serious consequences that can only be described as senseless agricultural vandalism in Scotland.

All those concerned with the welfare of Scottish agriculture should ensure that their views are known to the Government. The Scottish Institute for Agricultural Engineering at Bush estate in Penicuik should be expanded, not contracted.

When I led a deputation on Friday to meet one of the Minister's hon. Friend's, and I argued that the consultation period was inadequate, he said that we had nothing to worry about and that the consultative period would be extended. Will the Minister confirm that the consultative period will be extended, and that we will not be involved in decision-making at the end of June after a May publication?

12.1 am

I congratulate the hon. Member for Midlothian (Mr. Eadie) on raising this debate and on the way he has presented his case. I have listened carefully and with interest to the points he has made.

The Scottish Institute for Agricultural Engineering is one of seven Scottish agricultural research institutes which are funded by my right hon. Friend the Secretary of State for Scotland through the Department of Agriculture and Fisheries for Scotland. These institutes, together with those of the AFRC, constitute the agricultural and food research service which is an extremely powerful scientific capability available to meet the needs of the United Kingdom agriculture industry.

The programmes of research and development, which are commissioned by the Department of Agriculture and Fisheries for Scotland, aim to advance scientific understanding and to improve the cost-effectiveness of the output of plant and animal production systems, taking into account social, environmental and animal welfare considerations. The Scottish agricultural research institutes are centres that significantly contribute to, and in some cases lead, the agricultural research and development effort in the United Kingdom.

Our financial commitment is significant. For the current financial year the maintenance allocation to the seven institutes will total £20·1 million, with a further £3·5 million for capital, a total of £23·6 million, while a further £7·4 million of the Department's funding of the agricultural colleges goes to support research and development, comprising £6·9 million for maintenance and £0·5 million for capital. Since we came to office we have increased the level of maintenance grant to the Scottish research institutes. In 1978–79, the year before we came to power, Government allocations towards the maintenance costs of the Scottish agricultural research institutes totalled £9·4 million. In the current year we have allocated £20·1 million, an increase in real terms of 13 per cent. The corresponding figures for the Scottish Institute of Agricultural Engineering were £0·7 million in 1978–79 and £1·7 million in the current year—an increase of 26 per cent. in real terms.

If the hon. Gentleman had listened, he would have realised that I gave the prices at the sums spent in that year, and that the percentage increase was in real terms.

It does not matter what year, because the figures were expressed in real terms.

In last year's public expenditure survey, the Government decided to reduce the public funding of agricultural research and development in 1986–87 and 1987–88. That decision, which was announced in the public expenditure White Paper published in January, reflects our aim that the industry should make a greater financial contribution to the funding of the research and development from which it benefits. The reductions are being shared by the Ministry of Agriculture, Fisheries and Food and the Department of Agriculture and Fisheries for Scotland in the ratio of their expenditure on research and development. That means that, in Scotland, the planned provision for expenditure of about £32 million on research and development work at the Department's funded institutes and colleges will be reduced by about £3·1 million in 1987–88. That means that, in 1987–88, expenditure will be £28·94 million, which is a considerable sum to spend on research and development, and which does not merit some of the hon. Gentleman's lurid descriptions.

Having sketched the background, may I move to the consultation paper issued by the Department. Good management of any enterprise requires that its activities be monitored and reviewed to ensure that the essential objectives and needs are being met, and that it is responsive to shifts in the patterns of need and the demand for the services. The needs of the agriculture industry do not stand still. The industry would generally acknowledge the contribution which the work of research has made to efficiency and profitability today. In terms of yields and efficiency, the industry has developed at a tremendous rate since the end of the second world war. But the position is constantly changing. We are all familiar with the problem of surpluses; there is greater public concern for the future of the environment and its interface with agriculture; there is pressure to improve the welfare of farm animals; and there is considerable interest in the relationship between diet and health.

Against that background, it is essential that we review our strategy for the future of agricultural research and development, and that we assess the extent to which our resources are being devoted to the priorities that we consider most deserving of attention. It is also necessary to ensure that our priorities are right and that the taxpayer is getting good value for his money. In this context, it does not seem at all unreasonable to expect the prime beneficiaries from the fruits of agricultural research and development to make a contribution towards the costs. This is a matter which the Agricultural Departments are pursuing with the industry.

The present pattern and distribution of research institutes has existed for many years. Obviously there have been modifications in their programmes of research over time, but from time to time it is necessary to stand back and take a good, hard look at what is going on and to assess carefully how we should go forward. The consultation paper does just that, and proposes a strategy for the future, having regard to future reductions in public funding. It has been distributed widely to all interested parties, including the trade union interests. All the comments made will be thoroughly considered before final decisions are taken on the strategy for the future and on any organisational changes which may be required in the structure of the present research institutes.

The Scottish Institute for Agricultural Engineering, which is the subject of immediate concern to the hon. Gentleman, is one of the more recent institutes, having been founded after the war. It has close links with the National Institute of Agricultural Engineering at Silsoe in England; indeed, both institutes are governed by the same governing body, the British Society for Research in Agricultural Engineering. However, the governing body has appointed a Scottish committee to advise on the programme, staff, finances and management of the SINE and on matters relating to activities in Scotland.

The hon. Gentleman raised several specific points about the proposals affecting the institute in tonight's debate and in a letter to my right hon. and noble Friend the Minister of State, who will be responding by letter to the hon. Gentleman. I also have a copy of the response to the consultation paper from the staff of the institute. The latter document is lengthy and comprehensive, and I assure the hon. Gentleman that all the points that he and the staff have made will be fully considered. Indeed, the Secretary of the Department has told the staff representatives that he will be glad to met them early in July to discuss their representations in detail before putting the overall position to Ministers for their further consideration.

However, I wish to comment on a few points. The hon. Gentleman alleged that insufficient time was allowed for the submission of comments on the proposals. I cannot accept that we are proceeding with undue haste. A period of more than six weeks was allowed for the submission of comments, which is surely not unreasonable, as is borne out by the fact that the staff at the SIAE were able to put together such a comprehensive response as the one they sent to us within one month.

I should make it clear that the consultation paper proposes reductions in funding of research on engineering, but it should not be taken as implying that there will be a cessation of research in engineering in Scotland. We fully accept that agricultural engineering has an important role to play in improving the efficiency of farming practice, and we intend to maintain an engineering capability in Scotland. But the scale of the effort must be assessed in relation to the competing claims on our scarce resources. Other areas of work will have to be covered to meet the required targets. It is essential that the Department concentrates its funding within engineering and other areas on the most productive research opportunities.

I refer now to the developing relationship between the agricultural engineering industry and the Government. The commitment of Government to support the industry has been clearly demonstrated by the creation in 1984 of the agricultural machinery partnership. This is a new initiative aimed at creating—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at ten minutes past Twelve o'clock.