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Opposition Day

Volume 82: debated on Tuesday 2 July 1985

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National Health Service

I must announce that I have selected the amendment in the name of the Prime Minister.

4.36 pm

I beg to move,

That this House condemns the net reduction of 13,000 hospital beds in the National Health Service since 1979; anticipates with alarm a further loss of beds, especially in view of the inadequate provision for the elderly, the chronically sick and the mentally ill; deplores the Government's insistence that the nurses' pay award be funded at the expense of health service jobs or with cuts in services to patients; considers that these policies, together with the huge rise in unemployment, the cuts in housing investment, the weakening of health and safety controls and reductions in research funding are undermining the health and well-being of the nation whilst being neither efficient nor compassionate; and calls upon the Government to halt its policies of privatisation, promotion of private health care schemes and cuts in provision in order to provide patients and medical, nursing and ancillary staff in the Health Service with the means of gaining and administering improved treatment more quickly.
Those who 37 years ago this week founded the National Health Service—the greatest monument to Socialism, which is enduringly prized and valued by the overwhelming majority of British people, like most doctors today, let alone most patients — are deeply disturbed by the almost unrelieved catalogue of cuts that has been the history of the NHS for the past few years.

The hon. Gentleman should contain himself until he hears the trend of my speech.

It is not just money that is involved. I agree with the Government that the criterion for judging the Health Service is not and should not be the level of expenditure alone. I stress the word "alone". It is the adequacy and quality of medical care, in the widest sense, and its distribution strictly according to need without barrier of income, class or geography. On those criteria, the Government claim that the NHS is safe in their hands. They even issued a leaflet in January of this year entitled "The Health Service in England" to prove it. That leaflet was misnamed. It should have been entitled "Selective Fibs and Fowler's Howlers".

The flagship of the Government's defence in that leaflet —no doubt it will be repeated today by the Minister for Health—was that there had been a 12 per cent. increase from 1978 to 1983 in the number of in-patient cases. For misleading propaganda, that takes the biscuit. First, that may merely reflect the fact that more people are ill under this Government, as a result—[Laughter.] Before hon. Gentlemen laugh, perhaps they will listen to the consequences of their actions — of the trebling of unemployment, the halving of housing investment, the doubling of poverty, the weakening of controls over health and safety at work, and the huge extra burden placed on women forced involuntarily by the Government to care, unpaid and unsupported, for ill or elderly relatives under the fiction of community care.

Secondly, it involves no credit, even if true, to the Government. It simply is an index of overworked nurses, ancillary workers and doctors. But, thirdly, it is not even true. It is a measure not of more in-patient cases but of episodes—the number of discharges from hospital added to the number of deaths in hospital. Indeed, if more people die in hospital or more people have to be readmitted twice or more in the same year, that is scarcely an indication of greater medical progress.

The leaflet says that 35 new hospitals have been built. What it does not say is that 220 hospitals have been closed. The leaflet says that 11,000 new beds have been brought into service. What it does not say is that the overall average number of available beds in the National Health Service has decreased by 12,900. The leaflet says that waiting lists have been reduced since 1979 by 8 per cent. What it does not say is that every other comparison made in the leaflet is with 1978, and that on that basis waiting lists have increased by 15 per cent.

The leaflet says that there are more nurses and midwives working in the National Health Service. What it does not say is that most of that is accounted for by the reduction in the working week which automatically increases the number of whole-time equivalents in post and the rest of the increase, given that the birth rate has increased by about 5 per cent. over these same years, is no more than necessary simply to keep pace with extra demand and so on. Far from the National Health Service being safe in Tory hands, not even National Health Service statistics are now safe in Tory hands.

Anxious as I am sure the hon. Gentleman is that there should be a constructive debate on the National Health Service, will he recognise that under this Government resources in the National Health Service have increased by 20·5 per cent. in real terms, measured against the retail price index? Is he saying that, had a Labour Government been in power, the resources would have increased beyond that point?

Will the hon. Gentleman also take note that the RPI is an extremely inappropriate indicator of the growth of National Health Service resources, as the Minister of State will be the first to admit, because National Health Service pay and prices increase faster than the RPI? When that is taken into account, and 1 per cent. extra resources are needed each year over and above inflation because of the greater number of elderly people, plus an extra 0·5 per cent. over and above inflation for the costs of medical technology, he will realise that the increase, if it exists at all, is almost nothing. But that is the past, with which I will deal later.

One does not have to be a statistician to know that things are going badly in the National Health Service. Just ask anybody in the street. Ask the 3·5 million people living in north and west London, Hertfordshire and Bedfordshire, where more than 2,000 beds and nearly 5,000 Health Service jobs are to go in the next 10 years in order to cut no less than £47 million from the budget of the north-west Thames area. Ask the 180 patients on Guy's hospital waiting list for open heart surgery who were told that the quota for operations was already overshot so they would have to wait until the end of a financial year. I know that they were reprieved at the last moment by a private donation from America, but the National Health Service should not have to depend on private philanthropy from wealthy foreigners. If the Government are so keen on private charity, why do they not cut defence expenditure in the way that they have cut expenditure on the National Health Service and introduce instead some flag days for Trident?

Does the hon. Gentleman not realise that the picture which he is painting was completely contradicted last year by a publication called "Cost containment in health care"? It is clear from that publication that the picture which the hon. Gentleman is painting of increased queues and cuts is completely wrong. That publication was not written by a Tory supporter but by Professor Abel-Smith, a former special adviser to two Labour Secretaries of State. Is the hon. Gentleman going to address that sort of evidence as well?

I suggest that the hon. Gentleman should ask members of the public what they feel about the state of the National Health Service. He should ask them whether they feel that the National Health Service in their area is expanding or contracting. I do this regularly and each experience leads me to believe that there has been a continual catalogue of cuts, that 220 hospitals have been closed, that the number of beds — even taking into account the extra beds that have certainly been created —is decreasing and that the National Health Service is in decline. That is the national view, and it is correct.

Will my hon. Friend remind the Tories, when they talk about facts in the National Health Service, that 1,000 people died last year because they could not get a kidney machine in this starved Health Service? They did not get a reprieve. Two thousand people died of cervical cancer. They did not get a reprieve. Five thousand people died of breast cancer. They did not get a reprieve. Those are facts that have been brought about because the Government are prepared to spend more money on Trident, cruise missiles and so on than they are on the National Health Service. Those are the real facts.

My hon. Friend is absolutely correct. Indeed, he anticipates much of my speech. I therefore suggest that Conservative Members might ask the views —this is precisely the point my hon. Friend has been making—of the 1,000 women who, as my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) has very tellingly revealed, die needlessly each year because the Government have lamentably failed to establish a national comprehensive call and recall system for cervical cancer screening, or ask the views of those patients, often in pain and discomfort, who have to wait for more than a year to get treatment. According to the College of Health, there is no less than 75 per cent. of patients needing orthopaedic treatment in Southampton today, 62 per cent. of patients needing gynaecological treatment in Northamptonshire, 71 per cent. of patients needing ENT treatment in Grimsby. They should ask the views of patients who die of old age before they can get to the top of the hip replacement waiting list.

Order. It is quite clear that the hon. Member for Oldham, West (Mr. Meacher) is not giving way.

I am suggesting the number of persons whom right hon. and hon. Conservative Members might find it profitable to consult about their attitudes towards the National Health Service today, because their attitudes are very clear. The Minister might like to ask for the views of the parents of some of the 6,000 premature babies born each year who need intensive care to survive, but who are turned away because financial cuts prevent the employment of sufficient nurses to look after them; or, as my hon. Friend, the Member for Bolsover (Mr. Skinner) rightly said, the 1,500 kidney patients who each year have their death warrant signed when they are denied access to the kidney dialysis machines that they need to keep alive.

These people are denied assistance on the ground that insufficient money is available to provide all the machines which are needed, while at the same time the Government are spending £13 billion on the Trident nuclear weapons system. I could go on with examples, because the list of cuts and those affected is indeed a long one.

The hon. Gentleman is not normally seen as one with much experience of the NHS but, as he is pressing me, I shall give way.

On a point of order, Mr. Deputy Speaker. Would you remind hon. Members that it is the normal convention and courtesy of the House to listen to other hon. Members who are speaking? If hon. Members choose to intervene, as the hon. Member for Grantham (Mr. Hogg) is doing, they should be present at the beginning of the debate. That is a convention of which most of us approve, and we should like hon. Members to be reminded of it.

I do not know how hon. Members regard the conventions of the House. The hon. Member for Oldham, West (Mr. Meacher) did give way to the hon. Member for Grantham (Mr. Hogg).

Why does the hon. Member for Oldham, West (Mr. Meacher) spend such a long time grumbling about expanding waiting lists when he supported the strikes that contributed to their expansion?

The Government should recognise that £50 a week is a disgracefully and unacceptably low wage for any person when the average wage is £160 or £170 a week. The hon. Gentleman should recognise that we are defending a principle of minimum pay. If he has any decency, he would regard that as a sum that other people deserve to have.

Is my hon. Friend aware that many NHS workers, despite being the lowest paid workers in the public service, have sought first and foremost in every dispute that they have had with their employers to defend the NHS and its service, despite the Government's efforts to split health workers from the NHS and from the patients that they are there to look after?

I must make progress with my speech. I shall confine myself to one point. For all the reasons that I have given, we insist, in contrast to the Government, that, although better value for money is desirable and should be striven for, it is not and never can be a substitute for adequate funding. The Government have preferred to lavish huge increases in real expenditure on defence and law and order, even if it means starving the NHS.

The Government like to pretend that they have safeguarded the NHS, but their figures show that they have not. According to the Government, between 1978–79 and 1984–85 real input volume expenditure — which is a relevant measure—on hospital and community health services grew by 5·7 per cent. The Government have estimated that, over the same period, demographic changes increased the demand for hospital and community health services by 4·7 per cent. and that the implications of technological advances involved a further 3 per cent. increase in expenditure — a total of 7·7 per cent. Because hospital and community health services expenditure has not been increased over the past six years to keep up with the dual demographic and technological pressures, we are right to insist that NHS spending has been cut in real terms since 1979. That is all according to the Government's data.

The figures given to me three weeks ago on 7 June by the Minister of State revealed that, in five of the six years under this Government, real expenditure in terms of NHS pay and prices has declined in comparison with demographic and technological demands. I hope that Conservative Members note those facts, because they are the Government's case.

The public expenditure White Paper contained a series of measurements of efficiency and output in the NHS. There are 24 separate measurements of activity in the NHS. Can the hon. Gentleman mention a single one in which the record is not substantially better than it was in 1978?

Certainly — the one that I was quoting, which is table I from the DHSS's evidence to the Select Committee on Social Services whose fourth report for 1983–84 was entitled, "Public Expenditure on the Social Services".

That is the past, but the future is bleaker still. The Government's public expenditure White Paper reveals that the proportion of the nation's resources spent on health will decrease over the next few years. By 1987, the Government may well be spending not even the present inadequate 5·7 per cent. of GDP—which compares with 8 per cent. for France and Germany and 9·5 per cent. for America—but probably less than 5 per cent. That is the measure of the shortfall in expenditure on the NHS under this Government, when each 1 per cent. of GDP amounts to £3·4 billion. If we instead spend the same proportion of national resources on health as the United States, there would be an extra £14 billion in the Health Service budget this year. I am not saying that that can be done immediately, but it is a measure of the shortfall and puts into perspective some of the Government's niggardly penny-pinching on the NHS.

The Government have one more shot left in their locker. They like to insist that efficiency savings—or cost improvement programmes, as I think they are now equally euphemistically called—have added considerably to the resources available for health care. Last year, that amounted to £100 million, which is 0·5 per cent. of the total NHS budget. What is so specious about that argument is that these so-called savings are often achieved at the expense of reductions in maintenance and repair work, land sales and the postponement of new projects. In other words, savings are secured today but only at the expense of storing up greater problems tomorrow. That is especially serious for the NHS which, unlike industrial corporations, makes no budgetary provision for capital depreciation. The need to replace buildings and equipment as they wear out is becoming an increasing burden on the same budget that pays for new developments.

We are witnessing what operation candle-ends has brought us. Morale among staff has plummeted. Last week, the Nursing Mirror published a stress survey which stated:
"The replies came thick and fast showing many nurses feel overtired, inadequately trained and unsupported in the current climate of NHS cutbacks."
It reported that, in the past year—[Interruption.] I hope that Conservative Members will pay attention to what nurses feel, because they are the backbone of the NHS. The Nursing Mirror reported that, in the past year, two out of every five qualified staff had often reported to a senior member of staff that resources or staffing were dangerously low. It reported also that one in every three learners said that they often had been left in charge of a ward with no qualified staff present. That is intolerable.

An equally serious consequence of operation candle-ends is that no, or virtually no, new funding is ever made available for the whole range of new needs that are steadily uncovered—for research and treatment to counter AIDS, for well women's clinics, for the build-up of a genuine community care network of services, for preventing fresh outbreaks of legionnaire's disease, for a proper cervical screening recall scheme, for strengthening primary health care where it is needed in the inner urban areas, for containing and treating the spread of hard drugs, for reducing class differentials in infant mortality which are still far too wide, and so on.

I am grateful to the hon. Gentleman for giving way. He knows that I always listen carefully to what he has to say. The hon. Gentleman has produced what he believes to be a compelling catalogue of alleged cuts in services and a catalogue of areas in which he believes that the Government are guilty of not providing resources. How many of those things would he intend to put right if he became a Minister and how much extra money would he plan to spend on doing so?

The Opposition have made it clear that we would not have increased defence expenditure by 3 per cent. in real terms for the past six years. If that money had gone to the Health Service, there would have been about £3 billion extra health provision. We would redistribute from the rich to provide public services for all citizens. We are also committed to reducing the dole queue by at least 1 million within a five-year period. That would release a further £7 billion to £10 billion.

A candle-end philosophy gives no leeway for redressing long-standing grievances such as the unduly low pay of nurses and ancillary workers without drastic redistributary consequences for the rest of the Health Service, which is already stretched to breaking point. It is moral blackmail to insist that a 5·6 per cent. pay award to nurses, inadequate though it is, shall be funded in as much as it exceeds 3 per cent. either by cuts in nurses' jobs or by cuts in services to patients. For most district health authorities this will mean a budget reduction next year of between £1 million and £1·5 million. That cannot be achieved without a significant and damaging reduction in services to the public.

In Brecon, such a reduction would have led to the closure of St. David's geriatric hospital, but this hospital was mysteriously reprieved three weeks ago. It appears that a by-election is the only device known to man which offers protection against closures by the Government—a by-election which the Tories look like losing. I hope that the electorate is aware of that.

It is no accident that the Government have adopted this candle-end policy towards the NHS. Such a policy deliberately opens the way for the Government to hive off the Health Service bit by bit to the private sector and to create a two-tier service. That is the whole purpose of Toryism. Such a policy allows the Government to commercialise the NHS and to appoint bankers as general managers, as the Secretary of State did in West Sussex; to appoint business men instead of general practitioners as chairmen of family practitioner committees, as the Secretary of State did in Newcastle; to flood health authorities with Tory party hacks, as the Secretary of State has done almost everywhere; and to appoint as chairman of the new NHS management supervisory board Mr. Victor Paige who, at his first press conference, said that he and his family never used the NHS because they had private health insurance. When Mr. Paige was asked what he knew of NHS management, he replied that he had been chairman of the National Freight Corporation and the Port of London Authority.

The Government's policy is ugly and has ugly consequences for the NHS. Widespread corruption in private medicine has been revealed by the Comptroller and Auditor General, and standards have been skimped in many privatised services. There is profiteering by Tory Members from consultancies or directorships in companies now making lucrative pickings in the Health Service market. Indeed, the list of those with a place on the privatisation gravy train reads like a roll call of the modern parliamentary Tory party. We despise such a philosophy.

The Government are soft on private medicine. They have built up the private sector so that it now undermines the National Health Service. Our commitment is wholeheartedly and unequivocally to support a Health Service which provides the best possible medical care for all citizens, not just a privileged and pampered few. The Government are obsessed with cost cutting and with greater managerial efficiency even if the patient dies. Our commitment is to a new, wider vision of health care with more emphasis on prevention and public education. The Government have ruthlessly deployed patronage to destroy democracy in the National Health Service and they have centralised decision making in Whitehall. Our commitment is to a new democratic structure which will make local management and local services directly accountable to the local electorate.

The Government have done their best to dismantle the NHS. Our commitment is to making it once again the provider of the best possible medical care in the western world—and that is what we shall be voting for tonight.

5.5 pm

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:

'applauds the improved levels of service to patients achieved by the National Health Service and its staff under this Government; congratulates the Government on making this possible through its record of increasing expenditure on the Service; welcomes the fact that improved levels of service have been achieved while the pay of nurses has been raised by 23 per cent. in real terms; and supports the Government's determination to ensure, through improved management and greater efficiency, that maximum benefit is derived for patients from the resources available to the Service.'
I am sorry that the hon. Member for Oldham, West (Mr. Meacher) gets such a rough ride when understandably he is in a rather more subdued mood than on previous occasions. It should be obvious to him that he is causing increasing annoyance by wheeling out the same speech and the same motion so regularly. I suspect that he is also causing increasing tedium among the Opposition. The motion has such a familiar air that in my view it comes close to being an abuse of this House.

The motion is a travesty of the facts. It is based on the fiction, constantly and persistently repeated by the Opposition, that the Government have been making cuts in the National Health Service. I realise that the Opposition believe that there is political value to be gained from repeating that fiction and no doubt the hon. Gentleman believes that he has created a mood that is receptive to that in some parts of the country. However, the Opposition should reflect on the fact that their continued assertion and ingenious use of statistics to support their claim actually lowers the morale of staff who are achieving a great deal and causes dismay, anxiety and considerable fear among the public.

I shall use the kind of statistics that Governments have always used to show that the National Health Service has greatly improved in recent years, that it has expanded its services to the public under the Conservative Government and that services continue to develop and improve.

I shall give two simple facts to the Minister, which are not statistics and can be easily checked. Is the Minister aware that an eminent doctor arrived in Aberdeen recently to take up a post and was shocked to discover that in the Aberdeen hospital cleaning was done daily whereas the hospital in England which he had left was lucky if there was enough money to have it swept once a week?

Secondly, will the Minister comment on the situation at the Royal Free hospital where the kitchens are in a disgusting state and infested with cockroaches? The hospital administrators say that they cannot improve the kitchens because there is no money available. How can the Minister say that the Government have a commitment to the Health Service in those circumstances?

The Opposition are scraping the barrel by resorting to an anecdote about the report of a man in Aberdeen to substantiate what is meant to be an Opposition Supply day motion. The deplorable state of affairs in which cockroaches infested a kitchen arose from a low standard of hygiene. The Opposition must be desperate to try to make politics out of cockroaches. Plainly kitchens where cockroaches occur need to be cleaned with more care and efficiency.

The hon. Member for Oldham, West did not merely resort to anecdote. He continually strives to produce factual support for his assertions. He uses strange statistics, which must be read with the greatest care to discover the footnotes which surround them, and he goes in for partisan descriptions of particular local circumstances. I can tell when a debate such as today's is about to take place because written parliamentary questions begin to flow in to my Department while the hon. Gentleman tries to find his version of the figures. He and his research assistant occasionally make errors because sometimes I am asked the same question twice. I then have to refer him to the earlier answer. The subject matter of the question is a guide to the hon. Gentleman's intentions.

The hon. Gentleman always stipulates his measure of inflation, relies on particular notional figures for demand, for which he wishes measurements, and concentrates heavily, as in this motion, on beds and the number of bed closures. His motion glides over the fact that the Labour Government closed 15,000 beds as part of their rationalisation and modernisation of the service. The number of beds in the NHS is affected by changing medical practice. Historically and nationally, individual patients stay in hospital for shorter periods. Moreover, there is more day surgery. Therefore, more patients are treated with fewer beds.

We are not concerned with hospital furniture, spurious notional statistics or solely with money, as even the hon. Gentleman said. His pages and pages of Hansard questions and speeches try to get round a few incontrovertible facts about spending. He must face the fact that there has been an increase in NHS spending as a whole of 20 per cent. above the general level of inflation since the Conservative Government came to office. If spending is compared with the general level of inflation —the GDP deflator—it shows that we are spending one fifth as much again as the Labour Government were in 1979. The nearest that the hon. Gentleman got to conceding that that was the bedrock behind his arguments which he could not shift was to say that the increase in spending was "almost nothing". We are spending one fifth as much again as the Labour Government, and all his wriggling will not enable him to get round that fact.

Does the Minister understand that some hon. Members are greatly concerned not about mathematical proportions, but about whether or not sufficient money is being put into the NHS? He has just rejected the argument about furniture. I regret that rejection because in the Rochdale health authority 54 beds must be closed in acute specialties, in addition to the 56 which were closed last year. Further, 82 members of staff must be made redundant in the next 10 months, if the north-west regional manpower statistic is to be achieved. Whether or not the Government have increased expenditure on the Health Service, is it not a fact that there is insufficient money in the NHS to deal with present needs?

I agree with the hon. Gentleman that we should be discussing whether sufficient resources are going into the NHS and, like the hon. Gentleman, I refute the absurd statistical maze into which the hon. Member for Oldham, West keeps leading us.

I must finish with one intervention before I listen to another.

Reductions in beds have taken place continually under successive Governments as surplus facilities in a locality are closed, either because modern medicine can deal with the same number of patients faster or because those facilities are being replaced. That is inevitable, if the service is to change, evolve and keep up with modern medicine.

Regarding staff, our manpower targets for all regional health authorities are being undershot because greater efficiency and productivity is in some places producing staff savings and in others greater deployment of staff, especially nurses. The north-western manpower figure is far above the figure in post at present, and I assume that any reductions in Rochdale result from the better deployment of manpower. The Government's manpower targets are not below the present number of people employed by health authorities but above it. We want reductions in unnecessary staff, and administrative and clerical staff. We are glad about the continuing increase in the number of nursing, professional and technical staff in the service.

The best answer to the hon. Member for Rochdale (Mr. Smith) about how we should measure whether adequate resources are being made available, which is what matters everywhere, is not to argue about beds and notional levels of demand, but to examine patient services in England. Yet the hon. Member for Oldham, West never asks me about patient services. Patients are irrelevant to his written questions. I shall show the hon. Gentleman our success by comparing the 1978 and 1983 figures. Today, he made a ludicrous attempt to get round them to support his case about so-called cuts.

There are 650,000 more inpatient cases in our hospitals now than five years ago. The hon. Gentleman tried to knock that fact down by saying first that perhaps more people were ill, which is a preposterous proposition, and secondly that the measurement used was of deaths and discharges, which, as he well knows, is always used for the number of inpatient episodes and cases. There is no other measurement of the number of patients in hospitals. Most patients are discharged, but a few, unfortunately, die. The two figures are added together to establish the number of inpatient cases. Both the Labour and Conservative Governments have done this calculation. If the number of patients who die is ignored, the measurement will be different, but it will not measure hospital activity. It is absurd to try to escape the fact that 650,000 more patient cases are now treated in hospital each year and to say that the service is being cut.

Similarly, there are 250,000 more day cases each year than when the Labour Government were in power. There are 2·5 million more outpatient attendances than under the Labour Government. Heart bypass operations — a priority operation which the hon. Gentleman often cites —have trebled since we came to power. In 1978 the figure was 3,191, whereas in 1983 it was 9,443. Hip replacements— an operation which is waited for with impatience — have increased by 30 per cent. in five years. New renal patients admitted for treatment have increased by more than 60 per cent. In 1984, kidney transplants totalled 1,470, which was an increase of 35 per cent. over the previous year alone, and is the highest figure in western Europe. Regarding service in the community, health visitors and home nurses visited and treated 650,000 more people each year, 250,000 of whom were elderly, than under the Labour Government.

It is preposterous in the light of those figures to assert that we are cutting the services because plainly we are increasing the volume of services to patients. My hon. Friend the Member for Horsham (Sir P. Hordern) intervened, and I join him in challenging the hon. Gentleman or the hon. Member for Holborn and St. Pancras (Mr. Dobson) to find a significant part of the service where the quantity of service has diminished. They know that they cannot. The challenge mounted by the Opposition depends on ignoring those national figures, which show a substantial growth in the national service, and on resorting to anecdotes about a kitchen here, a ward there, a man in Aberdeen and ear, nose and throat cases in Grimsby. That is all held together with placards and banners of support for the NHS, and the assertion that a rapidly expanding service is being cut.

Is it an anecdote or an official DHSS figure that the hospital waiting list in the Bloomsbury health authority, part of which I represent, is 12,697 people long, while his Department urges that health authority to reduce its acute beds by 150?

I shall come to the question of Bloomsbury after I have dealt with London generally. The Opposition must face the policy of regional allocation of resources, which they started and which the Government have continued. The problem of the surplus of acute beds in London, identified under the Labour Government and this Government, cannot be dealt with simply by cutting patient services. We must follow the logic of the policy and alter the allocation of services, especially in London. The hon. Member for Holborn and St. Pancras—as a London Member — constantly challenges the regional allocation of resources and the policies of successive Governments in seeking to achieve a fairer distribution.

If we are to have a reasonable debate, the Opposition parties must decide what their position is on the RAWP formula. It was introduced by the right hon. Member for Plymouth, Devonport (Dr. Owen) when he was Minister for Health in the Labour Government. It has usually been supported in general terms by the spokesmen of both Opposition parties. The distribution of resources should be based on an all-party approach. I regret to say that most Labour spokesmen tend to be in favour of fairer allocation of resources when they speak in the north of England and against it when they come down to London. The hon. Member for Holborn and St. Pancras has a special interest in resisting its implications.

Those of us who represent the Medway towns are especially grateful for the way in which the allocation procedures are working. For the first time for many years we are beginning to see the necessary improvement in the services that is consonant with our growth in population. That has been achieved because London has been persuaded to disgorge some of its surplus.

I am grateful to my hon. Friend. My hon. Friend's constituents are benefiting from a policy started under the Labour Government but pursued with more vigour and consistency by the successor Government. It is still supported by the alliance as far as I am aware. The all-party consent on that policy has produced a fairer distribution of resources between the south-west and the north and, as my hon. Friend the Member for Mid-Kent (Mr. Rowe) rightly pointed out, between London and the rest of the south-east where there is an unfair distribution.

Contrary to the allegations of The London Standard and Labour Members, the policy is producing a change in the way in which services are provided to the inhabitants of the home counties and not a cut in patient services. If we are to have RAWP—I challenge anyone to say that they will abandon RAWP or some equivalent, and certainly I challenge him to say that in Bolton, Wigan or Sheffield —we must face the logic of the policy. If it is pursued, there will be a change in the pattern of services in London.

London services have improved under the Conservative Government. The number of inpatients treated in London hospitals is up 10 per cent. The number of day cases is up 70 per cent. Since 1979 the number of outpatient attendances in London is up by 250,000. But we shall not continue to provide the same services that were provided in over-resourced inner London.

We must preserve London hospitals, especially the teaching hospitals, as centres of excellence. The country looks to centres such as St. Thomas's, Guys and Westminster as examples for national services. London hospitals should also provide local services to central London constituents who are on waiting lists which they share with others from all over the country who are diverted for treatment to London hospitals. Routine services should no longer be provided in central London for these other patients. They should be provided in new hospitals that the release of resources enables us to provide in the home counties. The people of the home counties would prefer to have their services closer to hand and would rather not use the southern electric or other train services to central London, as long as they are satisfied that the right service of the same quality is available near their homes. That was the logic of the policy that the Opposition introduced when in government and the logic of the studies that they carried out. Our studies show a surplus of acute beds in central London and a need to redistribute. Now that we carry out the policy, the Opposition make shallow party political capital and cite anecdotal evidence about changes in Bloomsbury which have inevitably followed the more sensible redistribution.

The surplus of acute beds can be reduced because we have restored the capital programme. We are providing the new district general hospitals needed to deliver services where the patients live. The Labour Government cut the capital programme by one third. They caused huge delays to the hospital building programme throughout the country. We have restored the capital programme and we are building hospitals all over the country, especially round London.

Some of the hospitals that we have started and opened as a result of the restoration of the capital programme are in London and the home counties. I will cite some of the hospitals and major schemes that have been carried out under this Government since 1979. Apart from all the places in the north and elsewhere, we have carried out major schemes at Hemel Hempstead, Watford, Colchester and Homerton in Hackney. I include in my list the new phase 1 of the Newham hospital. Other major schemes include Lewisham district general hospital, Maidstone district general hospital, Orpington, the new Mayday hospital at Croydon and the two blocks at St. George's hospital at Tooting.

The capital programme has provided spanking new high-quality district general hospitals in parts of the home counties from which previously patients had to go to Guys, St. Thomas's and Barts. Inevitably that has enabled us to rationalise the service in central London and has enabled Bloomsbury and others to release money for the home counties and for the community services, which the inhabitants of Holborn and St. Pancras also desperately require.

Will the Minister tell us when the average capital spending of this Government per year is expected to reach the average capital spending per year of the previous Labour Government?

The hon. Gentleman is learning quickly from his hon. Friend the Member for Oldham, West. He has chosen to ask me about a marvellous statistic. He knows that the Labour Government inherited a high-spending capital programme from the Conservative Administration who preceded them. The level was rising in 1975 and 1976 as the Heath Government's programme came on flow. However, the Labour Government cut that programme by a third in 1976 in real terms and it never recovered until 1979.

The hon. Gentleman wants me to produce the average between the high level of the programme initially and the level to which it dropped. The present Government inherited a low-spending Labour programme——

The level of the programme went down first when the Conservative Government took office.

The pipeline was showing a decrease. I accept that at first the level of the programme went down. Since then, as the hon. Gentleman knows, it has steadily gone back to what it was. The pattern of capital spending is a high capital programme cut by the Labour party and a low capital programme increased by the Conservative party, with a Labour trough in the middle. And what does the hon. Gentleman want to know? He wants to know the average.

I wish to inquire why the hon. Members for Croydon, North-West (Mr. Matins) and for Lancashire. West (Mr. Hind) are standing and holding up their hands. Will the Minister tell them that they may leave the Chamber if they wish to do so?

I prefer that intervention to anecdotes about a man in Aberdeen.

I return to the capital programme, which has benefited London and the rest of the country. It cannot be denied that capital spending is vastly higher now than it was after the Labour Government's cuts in 1976. We have started major schemes on site during this year alone at Bridlington, Goole, Staincliffe, Stoke, Walsall and Oldham. Phase 1 of the new district general hospital is about to start at Oldham after the programme had been delayed by the Labour Government. We have 15 more schemes for the remainder of the year. I believe that I am entitled to assert that against that background it is nonsensical to claim that cuts are being made. It is unscrupulous nonsense for the Opposition to continue asserting it, using such fancy figures and denying the plain evidence of growth in patient services and the construction of new buildings to make a better service for the future.

Not all the money is going to new services. Some is going to pay, and particularly nurses' pay, which the hon. Member for Oldham, West chooses to make a cause of complaint in his motion. The Government can be proud of the way in which they have dealt with the nurses. The creation of the review body arrangements for them will be one of the major achievements of the Government in this sector, and a lasting achievement. When the nurses look back at the history of their pay settlements, they look to Halsbury, the benefits of which were entirely eroded after it was implemented during the period of Labour Government, when the real income of nurses fell extremely sharply, to 1979 and Clegg, although the nurses did not benefit so much from that.

Both those settlements were pre-election exercises implemented shortly post-election. Neither gave the nurses a lasting resolution of their problem. They now have an objective system. The Government have made it available to them, because we recognise their abstention from industrial action and the fact that the country, the Government, and the patients in particular owe them a great obligation. It is irrefutable that it is good news for nurses to have major pay increases, in the second instalment, particularly for the staff nurses and the ward sisters. It is irrefutable that it is a major advance for the nursing profession to have a lasting system.

There has been argument about how this award is to be paid for. I can give the English figures, which show that the cost of the entire settlement is £240 million in 1985–86. Health authority allocations in England alone have an increase in cash of over £500 million. The cost improvement programmes that we are achieving from greater efficiency—an object that the hon. Member for Oldham, West supports in theory but the products of which he derides in practice—will release at least £150 million in the estimation of the health authorities.

We paid the review body award in two instalments because that was our calculation, after some discussion with those in the field, of what could be afforded in this year out of the large budgets that we have given health authorities. It is obvious, apart from anecdotal evidence that the Opposition have produced from a few places, that pay for nurses and improving the services can go hand in hand if one continues to improve the way that the service is delivered, as the Government have.

The right hon. and learned Gentleman referred to the nurses' award being in two stages. Does he deny that using this method will cost a staff nurse £300 and a sister £700? He lauds nurses for the fact that they do not take industrial action. I am suprised that they do not.

If the hon. Gentleman is encouraging nurses to take industrial action, that is even worse than the activities of his party in recent years. The settlement for the nurses this year means that all of them will immediately get 5 per cent. or up to 5 per cent. if their award is less. When the second instalment is paid in February, staff nurses will get an increase of more than 11 per cent. on last year's pay and a ward sister will get up to a 14 per cent. increase. Those are substantial pay awards, and it is ludicrous for Labour Members to suggest that that is an unsatisfactory settlement. That is not the view of nurses.

The Minister keeps dismissing any criticism as being purely anecdotal. I appreciate that the figures that he has given are for England only, but the principle at stake is the same throughout the country. My health authority has told me that it is particularly worried about the potentially more serious financial problems for it because of

"the lack of knowledge about the Government's plans for funding the costs of these awards in 1986–87."
What will the Minister do by the autumn to fund those awards, because what he is claiming is a real increase now will shortly turn into a real cut?

Health authorities will say things like that because they are firing the preliminary shot in this year's public spending round. They do not know what the total allocations will be in 1986–87, and never have known such figures. Under no Government have firm allocations for future years been announced in advance. The published plans in last year's White Paper show the Government planning to increase spending on the NHS by £2 billion over the next three years. This year's budget spending round in the autumn will settle the allocation to health authorities next year, and it is then that the Government will have to take into account everything, including the nurses' pay settlement.

It is no novelty when people do not know what their firm allocations will be. Each year, it is true of the entire public service that we have to say that next year's problems will have to be addressed when the Government address the question of public spending and produce the public expenditure White Paper.

One important aspect of service should be dealt with amidst all these statistics. I have concentrated on the volume of service that we are delivering and have tried to show how the changing pattern in service is taking place. I have concentrated on geography, but I shall also touch on the way in which we are trying to deliver a more modern pattern of service all the time. We are concerned about preventive medicine as well as curative medicine, and in particular about female cancers, a subject upon which the hon. Member for Oldham, West touched.

The hon. Member for Holborn and St. Pancras has run a great campaign about cervical cytology. He has used great skill, and he has done extremely well to make any political mileage out of an essentially non-political subject. As he knows, screening was introduced in 1966, since when there has been a national screening policy, which has been based at the national centre at Southport more or less ever since.

As far as I can see, during the period of the last Labour Government, no move of any kind was made on cervical cytology. No improvement was made in the screening or treatment services. One reason why this country is backward compared with many others is that 1974 to 1979 was a period of benign neglect of the subject. It was not tackled until 1981, when we had a look at the national screening system and replaced it with a local screening system.

The mileage that the hon. Member for Holborn and St. Pancras has made out of the subject comes about because, by careful research, he has shown that a number of health authorities were not following the Government's policy or the efficient care and the guidelines that we laid down two years ago. Every time we produce improvements in those guidelines or accelerate the process of computerisation or the introduction of call and recall schemes, the hon. Gentleman tries to turn that to his advantage by finding places where they are not yet up to the standards on which the Government are insisting and that we are about to begin achieving in practice.

Will the right hon. and learned Gentleman confirm that the committee on gynaecological cytology advised the Government to set up call and recall schemes in every part of the country and that the Government ignored the word "call" and did not mention it either in the House or in the circular? The failure to get health authorities to establish call and recall systems has condemned more than 1,000 women to death each year simply because the Government did not accept the principal part of the committee's recommendations.

The Government concentrated on local recall schemes to replace the national recall system at Southport. At the same time, we introduced the computerisation of patient registers, and age-sex registers, which are essential before one can have a call and a recall system. The hon. Gentleman is aware that a substantial number of family practitioner committees now have such systems and he knows that our policy is to have such systems in all FPCs.

I agree that there are 2,000 avoidable deaths, but numbers are coming down, although I should like them to come down more quickly. It is tasteless to pluck out of the air the figure of 1,000 people whom the hon. Gentleman claims are dying needlessly because of neglect by us. We are introducing a system into an area in which the Labour party when it was in office showed monumental inactivity and disinterest. The hon. Gentleman has latched on to two tragic cases in Oxfordshire to get greater publicity for his views.

With the greatest respect, Opposition Members cannot start cheerily talking about 1,000 needless deaths — using the language of the hon. Member for Bolsover (Mr. Skinner)—and then say it is cheap when I accuse them of making political capital out of tragic cases.

Breast cancer is another area where we must take action to protect women against a serious health hazard. The problem is not, as the hon. Member for Bolsover seems to believe, one of neglect on our part. The trouble lies in finding a reliable method of screening for breast cancer to protect women. There have always been scientific doubts about the effectiveness of the various screening methods. Therefore, the Government have been financing a multi-centre United Kingdom trial as part of the search for a worthwhile screening method. But events have overtaken us. The recently-published findings of a study carried out in Sweden have removed many of the doubts previously attached to the value of mammographic screening for breast cancer, especially for women over 50.

Therefore, in accordance with our policy of keeping services up with modern technological developments, we have to take practical steps to formulate a policy. We have therefore asked Professor Pat Forrest, regius professor of clinical surgery at the university of Edinburgh, to chair a working group which will examine the information available in support of breast cancer screening by mammography. I have asked the group to consider the extent to which policy changes are needed towards the provision of mammographic facilities.

The group has also been asked to suggest a range of policy options and to assess the service planning the manpower and the financial implications associated with these options. I have asked Professor Forrest to let me have a report as soon as possible. We are issuing today the precise terms of reference and membership of the working group.

This should be the sort of issue which unites the House. We should, as the hon. Member for Rochdale says, be anxious to know whether we are spending enough on the Health Service and not get lost in a maze of figures. We should examine what is produced for the patients and consider whether we are catching up with the needs and expectations of the people. We should also be ready to change, and should not be defending old workhouses such as Thornton View, which the staff occupied for a time to try to stop the patients being moved to better accommodation. We should not defend every vested interest of the National Union of Public Employees, the National Association of Local Government Officers or some local interest group. We should be trying to get a better and more up-to-date service that can cope with the big demands such as the rising number of old people or the demands of changing modern technology.

Our concern is for a better and more modern welfare state. This Government are a reforming Administration in the best sense of the word. We are bringing to the National Health Service the qualities of better management, cost-effectiveness and clear decision-taking. These qualities are needed to support the efforts of doctors, nurses and all staff.

Our efforts, coupled with all the extra cash that we, on the taxpayer's behalf, are putting into the service, are producing a Health Service which supports our amendment and utterly refutes this ridiculous attack which has been mounted yet again, but probably for the last time on behalf of his party, by the hon. Member for Oldham, West.

5.43 pm

(Wolverhampton, North-East): I take a dim view of the Minister's attitude—he is not willing to listen to criticism from this side of the House.

If he accepted that we are just as enthusiastic as I hope he is that the Health Service should be improved, we might make more progress.

When he says that nurses have left the service, he ought to be aware that 3,000 nurses left the service between March 1983 and March 1984. That is quite a large number. If he were to look at the reports that were produced by the Royal College of Nursing, for example, he would see why nurses have left the service.

The research commissioned for the Royal College of Nursing commission on nursing education gave clear evidence of the manpower crisis that will occur in nursing in the early 1990s unless something is done. The college has written:
"We believe that the inadequacy of the education and training of nurses is one major contributory factor to the high wastage rates among nurses."
Another survey, carried out by Nursing Mirror, said that many nurses leave because they feel too tired or stressed to work, but carry on anyway until they have to leave. More than 50 per cent. of respondents admitted that they had taken time off sick when they were not really ill. They felt that they could not carry on, as they were too fatigued and stressed to work.

Those are important contributory factors to nurses leaving the service. The Minister ought to find out why he cannot offer better salaries to nurses and recruit more nurses so that the burden and stress are reduced. Until that is done, the crisis in the nursing profession will continue. That crisis has a considerable and damaging effect on patients.

In regard to the Royal College of Nursing report, does my hon. Friend remember the recent statement: in Nursing Standard that nurses are getting tired of the privatisation of auxiliary services as, in addition to their nursing duties, they are having to clean wards?

That is clearly not a nurse's job, and the Minister should do something about it.

The Minister criticises us for pressing for more resources in the NHS, but expenditure on health care continues to rise in all Western countries. If our expenditure is rising, we are not unusual. We are certainly not the leaders, as we are well below the OECD average and only Greece, which is much less wealthy than we are., spends less on the health service. That is a sobering comparison.

The hon. Lady occupies an important position in the House. With the knowledge that she has accumulated in that position, can she tell us how much, in extra resources, should be devoted to the Health Service to meet the demands that she has in mind?

I shall not be led down that path because so many considerations must be taken into account. We are not the Government at the moment. I hope that, after the next general election, we will be, and that we shall be able to devote a greater proportion of gross national product to the Health Service.

Medical research has made massive and exciting progress in the past 50 years. As a result, many of the diseases that were killers have been eliminated or can be controlled. Tuberculosis, pneumonia and diabetes can all be controlled. However, because of this development, many people live much longer and greater demands are put on the Health Service. Cost effectiveness has therefore become more important than cost benefit. In this decade, cost utility analysis, or the assessment of how modern treatment affects the length and quality of life, is more important, so of course the Minister has to be prepared to spend more on the greater number of patients who are living to 80 or beyond.

I am sure that the Minister is conversant with the Nottingham health profile, which is used to assess patients' progress and reactions to their condition. The method was used to assess women's health during pregnancy. Similar methods have been used in America to assess new methods of treating rheumatoid arthritis with oral gold preparations, for example. More recently, the method has been used to evaluate heart transplants at Harefield and at Papworth, as well as coronary artery bypass patients. The results of those assessments will be interesting.

When asked, women are found to be most anxious about the lack of adequate screening for breast and cervical cancer, to which my hon. Friend the Member for Oldham, West (Mr. Meacher) has referred, when safe and sure techniques to detect both serious conditions early enough for successful surgery have been well known for years. This is not a new development, yet more than 2,000 women die each year from cervical cancer, including—and this is alarming—an increasing number of younger women. More than 20,000 women die from breast cancer each year. Yet proper screening and recall systems are not available. Why not?

Many thousands of people suffer from smoking-related diseases such as lung cancer, bronchitis, coronary heart disease and so on. The facilities for diagnosis and treatment are grossly inadequate. The Government are unwilling to forgo the money they receive from cigarette manufacturers—tobacco tax boosted by sales resulting from constant and specious advertising. I find it unacceptable and disgusting that the Government are willing to rely on funds from tobacco firms to supplement, for example, resources for the arts. The Government should take on board the question of tobacco advertising. Singers and dancers should not smoke, but many of them would be out of work were it not for the conscience money paid by tobacco firms to opera and ballet companies. It is difficult to reconcile that.

I hope that the Minister will respond positively to those serious matters. I hope that he will tell us what proposals he has to extend cancer screening for women, whether through general practitioners, well women's clinics, the Women's National Cancer Control Campaign, or the financing of a national call and recall system. Other than that, will he provide more resources for those organisations working within the community to provide a measure of screening for women?

The Parliamentary Under-Secretary of State for Health and Social Security
(Mr. John Patten)

The hon. Lady was listening as carefully as I was to the remarks of my right hon. and learned Friend about cancer screening. He outlined clearly our women's health policy. I am sure that she will agree that one of the problems is not the provision of services but trying to persuade women of all ages—especially elderly women—to make use of the services. I hope that there will be bipartisan agreement across the Chamber this afternoon that we must all do more to ensure that women make use of the services. Any advice that the hon. Lady can give us about that will be very welcome.

It is all very well to say that we must persuade women to use the services, but unless facilities are available they cannot be persuaded. I am closely related with the Women's National Cancer Control Campaign. When our caravans go around the country, we do not find that we are short of women coming forward for screening. The Minister should look rather more carefully at that point and not assume that it is the fault of women for not coming forward, when resources and services are not available.

Screening is very much cheaper than treating a patient for deep, invasive carcinoma of the cervix or for breast cancer. The Minister should bear that in mind because it is cost-effective. The Select Committee's 11 members are closely watching the expenditure of the Department and the results of that expenditure in the NHS week after week, year after year. Over the years it has provided the Secretary of State with much more valuable ammunition to use in his battles with the Chancellor of the Exchequer for more resources for the care and treatment of patients. We would like some sign that that ammunition is being used.

Let us consider the problem of babies who die from serious handicap each year, many of whom need not die. Thousands survive serious handicaps that could be prevented. The rates in 1980 were a disgrace, when 9,000 to 10,000 babies died, but one third to one half of those deaths could have been prevented. Most of those babies were born to mothers in the lowest socio-economic groups and many to mothers in the ethnic minority groups. Poor nutrition, unwanted pregnancies, smoking and drinking alcohol were identified as causes.

In June 1984, the Select Committee published its first monitoring report on perinatal mortality. The rate has fallen — three cheers for that — but it has not fallen enough. The Government must do better — [Interruption.] I am telling them that they cannot sit back because there has been a decline and say that they have solved the problem — they must do better. We must provide the resources needed for the acceptance and provision of minimum standards of nurse staffing in the specialist intensive care units.

The Government must stop the enticement of nurses trained by the NHS away from intensive care units to private hospitals. That leaves NHS consultants with no alternative but to close some of their intensive care cots. That is scandalous. It means that they have to refuse to accept ill babies recommended by obstetricians in the peripheral hospitals. In other words, the Government should pay nurses decent salaries and generously recognise additional skills in specialised areas of the NHS. The Government are not doing that. Because the private sector offers higher rates, the nurses are enticed away.

Interesting proposals for the training of nurses have been made. The Judge report and the report of the English National Board for Nursing, Midwifery and Health Visiting show the need for reform and for a closer relationship between nursing education and higher education. Unless urgent steps are taken to improve nursing training, we shall face a serious crisis by the early 1990s. The present high wastage among nurses appears to be closely related to dissatisfaction with their training, their working conditions and their career prospects.

If higher education were to embrace education for nursing, as the reports propose, the pessimistic view of the Secretary of State for Education and Science about the decline in applications for higher education in the 1990s would prove unjustified. More women would be brought into the higher education system and the general level of training for the nursing profession would be greatly enhanced.

The Select Committee's report dealing with medical education and the career structure which was published in 1981 highlighted serious shortages in certain specialties of medical practice. It recommended a considerable increase in the number of consultants and a reduction in the number of juniors. I am glad to say that there was some improvement between 1980 and 1984, when the number of consultants throughout the country rose by 1,148. However, the British Medical Association said that that was not enough, and the Select Committee wanted progress to be made more rapidly.

Pathology is related to the problem of cervical cancer and breast cancer screening because specimens have to be examined by pathologists. The Select Committee identified that area as a shortage specialty in 1981, yet it still has a low rate of expansion—6·3 per cent. overall. There is still a shortage of those specialist scientists in the NHS to carry out the work that would accrue if more women were screened.

Obstetrics and gynaecology levels increased by 8·1 per cent., and both Royal Colleges recently expressed concern to the Select Committee about the slow rate of progress in those areas. In psychiatry, radiology and anaesthetics, expansion has been better—between 13 per cent. and 16 per cent. Therefore, there is a considerable difference between the specialties, with some making better progress than others. There still needs to be an increase in the number of consultants and a reduction in the number of juniors—then, the career imbalance will be rectified and we can realise the savings that will be made when many more patients are treated by fully trained doctors. We have reiterated that on many occasions, but I am not sure whether the Minister has taken that point on board. The savings in outpatient departments will be seen readily—with considerable relief to patients as well as relief to the expenditure of the hospital—when the Government fully implement the Select Committee's proposals.

Few junior posts have been closed or replaced by consultant posts following a loss of recognition for training purposes. Will the Minister now act on what we in the Select Committee said in 1981, and freeze all new senior house officer posts in England and Wales? Although he supported that proposal in the House of Commons 82/4 paper the number of SHO's rose by 5·1 per cent. between 1980 and 1984, contrary to what the Committee recommended, and contrary to what he said he would accept. Only between September 1983 and September 1984 has there been a tiny fall of fewer than 16 posts out of a total of 10,000. Clearly, there is a long way to go.

What is the Minister proposing to do now, in the light of our monitoring report, to bring about changes that will give better service and better value for money in the Health Service as a whole, and to individual patients who will be treated better by fully trained doctors?

What does the Minister intend to do to recognise alternative medicine — for example, chiropractic and homeopathic medicine — which has made so much progress in treating many difficult cases that orthodox medicine seems unable to treat? I refer particularly to all sorts of back conditions and back pain which result in millions of lost working days per annum and cost the Health Service a great deal of money. General practitioners are not able to deal with those patients adequately.

Before the hon. Lady leaves the subject of homeopathic and alternative medicine, I should like to ask my right hon. and learned Friend the Minister for Health whether he will pay particular attention to providing the same level of financial support, and perhaps increasing financial support, to homeopathy within the Health Service in view of the great consumer demand for that treatment. The hon. Lady has mentioned the need to review some hospital doctor posts. That is particularly important within homeopathy, where there is a grave danger of a decline in the number of hospital posts in that specialty. The hon. Member for Holborn and St. Pancras (Mr. Dobson) touched upon some giggly points about the Bloomsbury health district in an earlier intervention, but my right hon. and learned Friend will be aware that the Royal London Homeopathic hospital is within the Bloomsbury health district. The failure of that health district to give clear support to that specialty is a grave problem at present.

The hon. Gentleman has made his point very clearly and very well. I hope that the Minister was listening.

Order. Many hon. Members are still waiting to speak, and interventions are made only at the expense of other hon. Members' speeches.

I shall stick to your ruling, Mr. Deputy Speaker, and not give way to the hon. Gentleman.

It has been estimated that back pain alone costs £156 million each year to treat, and it is not being treated successfully within the Health Service at present. I hope that the Minister will give more consideration to recognising homeopathic medicine, a matter referred to by the hon. Member for Maidstone (Sir J. Wells), and chiropractic medicine for treatment within the National Health Service.

I am glad that the Minister has taken steps to reduce the number of overseas doctors who have been brought into this country simply as pairs of hands who are being used particularly in the Cinderella specialties. We want to bring those doctors to Britain for postgraduate training, particularly in the specialties that their own people need. We must not exploit them here.

I hope that the Minister will show that there are ways in which we can save the existing resources that are spent on the National Health Service. I believe that we can give better treatment to patients if we listen to the good advice that comes from the Opposition and to the joint voice that comes from the Select Committee. Two of the members of that Committee are now in the Chamber.

Order. This is a short debate. Short speeches will reduce the number of disappointments.

6.4 pm

Anybody listening to a debate that is ostensibly about Government cuts in the National Health Service would expect the Opposition to prove conclusively that there was a forced reduction by the Government either in the financial support that they were providing or in the physical structure of the service in terms of fewer doctors, surgeons and nursing staff. In fact, exactly the opposite has been proven. Therefore, in those terms alone it seems that the Opposition motion fails.

The description by the hon. Member for Oldham, West (Mr. Meacher) of the National Health Service is very different from the one that looks after me three times a week. His description and his speech failed to deal with the real question, which is the continuing and evolving nature of the Health Service and what resources will be required as that evolution continues. The hon. Member for Oldham, West will probably remember the words of the annual report for the Health Service in England for 1984 that
"Needs will always be running ahead of what can be generally available and the pattern and organisation of care will always be evolving".
Because the Health Service is not a static service, we will continuously have to recognise that more and more resources will be required. We shall have to find ways of finding those resources other than by simply saying that the Government will spend more.

The advances in medical care — many have been referred to already in the debate, and I am the recipient of one of those advances — are expensive in terms of capital costs and the trained personnel needed to operate them. But they are all-important to the particular sufferers from the particular diseases. It is a brave man who will choose his priorities as to which disease should take pride of place when money is allocated.

I think that the House knows that I am personally involved in the treatment of kidney failure, having been on dialysis for the past 18 months. I am fortunate in being looked after in the Oxfordshire health authority area at the Churchill hospital. I am particularly fortunate in coming under the able leadership of Dr. Desmond Oliver. He has demonstrated that dialysis can be successfully given to children and through all age groups, even to those over 70. His example should be an example to all regional authorities of what can be achieved.

I am one of the lucky ones. I get dialysis. But, as we know, in many regional authorities, somebody of my age —I am now 54—would be refused dialysis, not because the Government said so, but because the regional health authority has chosen to allocate its resources in other directions. Now we are insisting that regional health authorities should treat 40 kidney patients per million on dialysis. The real figure should be 100, but to get there many more resources will be required, and if they are to be found they will have to come either from services already being provided or by more money going into the Health Service in that direction.

Put in those terms, can anyone say what the total sum is that should be spent on the NHS to achieve all the objectives that are worthy of support? The hon. Member for Oldham, West did not attempt to answer that. He did a bypass operation, and talked about other things that he would not spend money on. The fact of the matter is—and he knows it as well as I do—that this Government are spending more that his Government spent on health care. He knows as well as I do that if there is a shortfall in dialysis, it is not because this Government have decided to deny resources to kidney dialysis; it is because Governments of each party decided that resources had to be spread widely over a whole range of projects, so certain resources that were required did not necessarily go in the direction of any one treatment. I do not think that anyone would argue that that should be so.

So the question of resources seems to me to be the real argument in the Health Service, and to some extent it should not be a party political argument, for where is the gain? I have been treated by the National Health Service, as I have said, for the past 18 months. I spent at least eight of those months in hospital. I can only say to the hon. Gentleman that I have not noticed the cuts that he talks about. I have been in general wards. I have been having the same treatment as anybody else, and I can tell him only that there was no sense of scarcity of resources, of care, of consideration or of medical staff. I can speak only from my experience which I know is limited but which must be worth something, perhaps something more than the annecdotal evidence that we have heard in this debate.

Just the same, I agree with my right hon. and learned Friend the Minister for Health when he says that what is required is the channelling of resources towards patient care and away from administration. In the Oxfordshire health authority 36 per cent. of expenditure goes on administrative services. Overall in England the figure is 45 per cent. Anyone might argue that those figures are too high, that we should try to reduce that national figure of 45 per cent. to the 36 per cent. that Oxford achieves. In fact, Oxford might be able to reduce its figure still further.

The hon. Gentleman shakes his head. I suggest he looks at the annual report for the Health Service in England and he will see, I hope, that what I have just told him is borne out by the facts. If I believe that administration is still taking too big a share of resources — and when I say "administration" I mean anything other than jobs done by consultants, doctors, nurses, physiotherapists, radiographers and scientists — I also believe that we ought to consider the nursing staff in the words of the hon. Member for Wolverhampton, North-East (Mr. Short). I am thinking in terms of raising the levels of that profession by recognising that qualifications should bring higher salaries and thus give nurses the incentive to obtain those qualifications and therefore greater skill.

We must consider the nurses' pay settlement because whereas we may say that an average of 8·6 per cent. is higher than anything that one can think of in the public sector to date, in fact it is 5·6 per cent. between April 1985 and February 1986. If the city editor of The Times is to be believed in the article he wrote on Saturday, inflation looks like turning out at 7 per cent. for the year. In those terms I find it difficult to see how nurses pay will stay abreast of inflation, which is surely a minimum requirement.

Will the hon. Gentleman, in considering nurses, also please link—because he has experience of it—the technical people and the paramedical professions who have to undergo long training periods and who start with minimum standards? I hope he will agree that they at all times should be linked to nurses' pay. Does the hon. Gentleman agree?

I shall leave that question to one side. I do not know enough about their pay scales to talk with any objectivity. If I may, I will just stay with the nurses for the moment at least and refer to extra duty payments. There is uncertainty in the nursing profession about whether these payments will continue, whether they are going to be increased in line with inflation or whether there is any danger of them disappearing. Nurses wonder why there are payments made to doctors for what are called distinction awards when the same money is not made available to them. If one looks at the criteria governing the committee which makes these awards, it is difficult to see why nurses have been excluded from benefiting from the £52 million annually which is spent on these awards. I would ask my right hon. Friend to consider that point.

Before I leave nurses' pay, may I point out to him that district nursing officers, senior nurses, senior nursing officers and sisters, all earn less, according to the pay scales supplied to me by the Oxfordshire health authority, than the three level administrators: the district administrator, the principal administration assistant and the general administration assistant. As a patient I know which of those groups matters most to me and I suggest to my right hon. Friend that something might be done to bring nurses' grades more into line with those of the administration staff.

I should like to see my right hon. Friend's policy of channelling resources to patient care carried as far as it can go. I know there is controversy about privatisation most of which is spurious. Two of the hospitals I have been in have been privatised while I have been in them. I can only say as a patient that I have noticed no variation in the service provided. The service will be as good as the motivation of those providing it, not as good as the employer. If the motivation is there, the patient will benefit. If it is not, he or she will suffer.

Because I believe that the future funding of the NHS is such a key question, I want to refer to a personal experience within the last six weeks when I entered the Radcliffe infirmary in Oxford for two further operations. When I came to the admittance office I was asked whether I wanted to be treated on the NHS or as a private patient. I am a member of a private medical insurance scheme. I replied that I wished to be treated on the National Health Service. My answer was prompted partly by my admiration of the service, for it is a superb service, as I have said many times, but also because of that insidious propaganda which the Labour party has managed to convey, that to be treated as a private patient is to do something which is anti-social. It is to seek a privilege denied to lesser mortals, and, as a representative of the people, I should share the same treatment as the poorest of my constituents. During the weeks I lay in hospital I had time to reflect on my decision and I now realise that I made the wrong decision, not because I would have been treated better as a private patient—as it happens I would have been treated in the same ward in the same way—but because, by selecting the NHS rather than the private scheme, I denied the NHS the resources it would have derived from the private scheme, resources that could have gone towards treating somebody else. I believe that that denial of funds in my own terms was to me at least a turning point in my thinking about the funding of the NHS.

Recently I was reading some remarks by Mr. Bob Graham, the chief executive of BUPA. He said:
"Where locally there are NHS waiting lists and also spare capacity in private hospitals it is surely right, in order to relieve suffering, to bring the supply and demand together. It also makes sense for each sector to concentrate on what it can do best. The NHS does many things superbly well which the private sector could not hope to emulate, but which the NHS alone must do —casualty and emergency services for instance. But on the other hand a quarter of all hip replacements in Britain are now carried out privately, and the proportion is increasing. The stimulating combination of co-operation and competition between the two sectors is in my view a most practical step towards solving some of the health care problems in Britain … If a political party wants to provide the best health care for the electorate it must now take into account the growing resources and potential of the independent sector in its overall planning … Not to do so would be to defy logic, to frustrate freedom of choice, and would be a futile attempt to stem the tide of consumerism."
I find myself wholly in agreement with those remarks and I hope from now onwards we will not draw this artificial line, this line of animosity between the private and the public sector, but see one as complimentary to the other and both about the care of the patient.

6.19 pm

Whatever the feelings of hon. Members on the issue, there can be no doubt about the respect with which the hon. Member for Newbury (Mr. McNair-Wilson) was listened to, given his personal experience. We all wish him good health and a continuing recovery from his illness. I will follow in a moment his theme—the general question, almost the philosophical question, of funding for the NHS.

It is worth reflecting first on some of the things that the NHS has had to grapple with in just the two years since the last election. In July 1983 the Chancellor announced the manpower and resources cut that caused great difficulty. A tier was abolished and we had the Griffiths report with all its implications and at times the controversy to which it has given rise. There has been rate capping, with its effect on joint funding of projects, particularly in the care and community programme.

Community care itself is now partially referred to in the social security reviews and will be used partly as a pump-priming exercise. We have had the limited list controversy, the privatisation of ancillary services and the recent decision on the pay review boards. I can understand the Secretary of State being anxious to bring forward another Green Paper on the reorganisation of primary care before the House rises for the summer recess.

That is an immense catalogue of things for any service, particularly one as fundamental and as complex as the National Health Service, to assimilate and carry through in the course of two years. Without doubt it is a mark of what the Minister was talking about, which is the radical approach that the Government have taken.

There are many sensible ideas incorporated in all those changes. This is very much a man-in-the-street opinion bin I wonder if so many changes in such a short period can in the end be productive. With further changes and radical departures being promised, and indeed heralded by the Minister this afternoon, one wonders if health care will benefit.

On the question of funding the Health Service and the cuts that it is experiencing, I think the House would be at one with the Minister when he says that there is infinitely rising demand, by definition, because of demographic changes, particularly with the growing number of elderly people, and because of the excellent but nonetheless straining pace of the growth of medical technology. People have greater aspirations and therefore make more demands on the system. Because of the ability of the Health Service to provide more sophistication in curing, new avenues of health provision are opened up.

All those things place demands on the system which any Government would find it difficult to meet. I know that the Labour Opposition do not agree with this, but I have said before that their promises about funding are not to be taken even at face value, far less with any seriousness. It is reasonable for any Government to try to set a target of 1·5 per cent. real growth per annum—in other words, to keep pace with the demands of the system and to try to find a bit extra to expand the frontier zone.

The Minister is also on reasonable ground to argue, as he does, that cuts in the number of beds do not always mean that there are cuts in health care. That is a blinkered approach that the Labour Front Bench would like us to believe. I would, not deny for a moment that if a hospital ward can be organised more efficiently or if health provision can be made in such a way that, for example, geriatric beds are no longer occupied because people are being cared for in the community, that is a welcome development. On the geriatric front, I find it hard to believe that of the 10,000 beds that have been cut since 1979 — these are 1984 figures — every one of those signifies in the locality where the reduction has taken place a welcome corresponding provision in the community. The facts do not bear that out.

In relation to that, I was grateful that the Minister mentioned the resource allocation working party formula. He was right to point out that the RAWPing approach continued to command support. The figures are worth considering.

That was introduced by the right hon. Member for Plymouth, Devonport (Dr. Owen).

I am glad that we have been reminded that it was my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) who introduced it. Let us look at the figures to see what has been achieved. In 1979–80, the poorest health region was 9 per cent. below its RAWP target and the richest 13 per cent. above. That is a major disparity. By 1984–85, the range was 5 per cent. below to 9 per cent. above. The disparity is still there but the Minister is to be credited for continuing the implementation of a policy that is slowly bringing closer together within a narrower spectrum the disadvantaged and the more advantaged areas.

The hon. Gentleman will be replying to the debate and he can pick up the point then.

The RAWP formula was carried through before the International Monetary Fund crisis. At that point it was dependent on and envisaged economic growth. Clearly, in times of recession or economic stagnation, such as we have at the moment, it will cause the more advantaged areas not just to help disburse their above average quota but to suffer in the process. That is one of the reasons why the Minister spent some time defending his policy in regard to London.

In the longer term, as we move into the post-RAWP period there is a need to decentralise the Health Service further and to move towards an equalisation pool for funding so that we do not just use the RAWP formula as it stands but leave the way open for perhaps democratically elected health authorities themselves to consider ways of raising revenue locally on top of what would be available centrally.

Two other points have arisen on the motion and the amendment and on the topical issues under consideration. First, in regard to the pay award for nurses, midwives and health visitors, I appreciate that the Scottish health Minister is not present—I am not criticising him for that — but perhaps my remarks will be communicated to him. The principle involved is typical elsewhere in the country.

The Highlands health board has issued a consultative document which envisages major cuts in a variety of services, particularly maternity services, and also affects two hospitals. One geriatric hospital is to be closed down and another general needs hospital in my constituency is to be downgraded, because two new hospitals are being opened, one in Inverness and one in Wick. However, they are not receiving a penny extra from the Scottish Home and Health Department to provide the revenue costs to run the new buildings. Therefore, the revenue savings have to be found in other aspects of health care to run the hospitals that are coming on stream. We all want to see improved medical technology and welcome it without qualification but it is a "Yes, Minister" state of affairs to find that we can run new hospitals only by axing other facilities that are needed elsewhere in the community. That is unsatisfactory. It is similar in principle to the problem that my hon. Friend the Member for Rochdale (Mr. Smith) has been experiencing locally as well.

The problems faced by the health board in my constituency are likely to be accentuated because of the uncertainty of the nurses' pay award and its future funding, particularly in 1985–86. It is not enough for the Minister to say that this has always been the case, because it has not always been the case in the past that independent pay body awards have been thrown entirely on to the backs of health authorities and health boards — in other words, that a welcome and much-needed increase justly deserved by some sectors of the Health Service should be funded by cuts at the expense of patients and that health authorities should be left with unpalatable decisions. I do not think that the Minister can take responsibility on the one hand and then shrug it off on the other.

Looking to the Green Paper which we are expecting, it is surely unacceptable that the Government would ever consider moving towards privatisation of a general practitioner, family-based service. It is the backbone not just of the Health Service but in many ways of the whole structure of the family within the community. Although there may be a strong case to be made for some private health care, given the commitment which is at least expressed— I assume sincerely—on both sides of the House towards the National Health Service, free at the point of use and funded out of general taxation, I cannot see, in the medium term at least, any more than marginal room for private health provision.

Therefore, in many respects the Government are to be held guilty for their handling of the Health Service, and the nurses, midwives and health visitors' pay award proves it. They are doing good things and they are doing some radical things and are to be congratulated on that, but on balance they are not showing sufficient responsiveness or understanding of the needs and the lack of resources in the Health Service. On that basis, along with my hon. and right hon. Friends, I will be voting for the motion this evening.

6.31 pm

I find this motion extraordinary. After the case put forward from the Opposition Front Bench—I devoutly hope that the hon. Member for Oldham, West (Mr. Meacher) stays in that position — the call that faces the House in this motion must come under the head of special pleading, because it mentions cuts in funding, when all the Government do is pour more and more money into the Health Service. The hon. Member for Oldham, West said that the Government had put a bit more in, but said it was almost nothing — £10,000 million per annum almost nothing! The motion mentions reductions in hospital beds, yet there are apparently more new hospitals being designed and built than at any time in the history of the NHS. The motion says that the nation's health is being undermined, but more patients are being treated and getting much more advanced and complicated treatment than ever before. Reflecting on this extraordinary catalogue of claims, it seems to me there can be little doubt that the Opposition are suffering from paranoia, schizophrenia, deafness or blindness. Whichever it is, they certainly need more money to be spent on the NHS for their own purposes.

The record of improvements in the NHS is far too long to go into in a short speech, so I want to mention just two things. The waiting lists are coming down, and this is a matter of great satisfaction, but may I suggest that my right hon. and learned Friend looks into the possibility of using more computers in waiting lists? I know that, in Birmingham, there are vacancies at once for some types of treatment for which patients in other hospitals are waiting needlessly. I should be pleased if he could look at that.

Then I should like to ask my right hon. and learned Friend to look at a matter which has been touched on in several speeches this evening — the question of spending. Every penny we spend in the NHS should be spent as wisely and as sensibly as possible. Would he therefore look again at what has perhaps been an unpopular policy in some parts of this House—the possibility of bringing in hotel charges for those who can afford them in National Health Service hospitals? I find as I go round the hospitals that many people warmly recommend these charges. They could be quite modest and I would not wish them to fall on people who could not afford them. They would have to pay for the cost of their food if they were still at home.

Other countries certainly use the system of hotel charges. I have some details about France but I will not weary the House with them now. Other countries have found great savings there. If there are 6 million patients a year, even if we charge five pounds a week, which wound be a most modest amount of money, we should surely get more than £1,000 million a year from that alone. I know it has been said there are difficulties with administration, but I am simply asking my right hon. and learned Friend to look at it again. Many people in the Health Service want money spent wisely, and feel that there are savings to be made there.

6.35 pm

I shall be brief because this is a short debate. It is regrettably short and I should say at the outset that my interests in the debate are the interests of someone who represents an inner city constituency suffering badly from cuts in the National Health Service expenditure and also as someone sponsored in this House by the National Union of Public Employees. I make no apology for that and it would be nice if all Conservative Members with shareholdings in private cleaning and catering companies also declared their interests during the debate.

The Minister mentioned the way that the RAWP formula operates. What he fails to understand is that the formula operates in London and the south-east to create a continual outflow of essential capital and revenue from the inner city areas to the suburban and outer suburban areas in the home counties. When Conservative Members mention that new hospitals are being built in the home counties, nobody wishes to detract from that, because we are all glad if health services are improving in those areas. But they should consider what is happening to an area such as mine which will suffer a 15 per cent. cut in real terms over the next decade in Health Service expenditure. Every few years another hospital is up for closure, and we are now going through the process of closure of the acute wards of the Royal Northern hospital after the Minister's predecessor assured us that the hospital's acute services would be preserved, despite the closure of the accident and emergency department.

We see a continual erosion of health care in the area and that, compounded with the closure of the Friern Barnet psychiatric hospital outside my constituency, means there is greater and greater pressure on the centralised Whittington hospital, which in the long run will have fewer beds and longer waiting lists for local people. The pattern there is not very different from that in all the other inner London health areas. If the Minister examines the length of the waiting lists and the long-term provision of acute and geriatric and psycho-geriatric beds in those areas, he will have to concede that the major point I am making is absolutely true. We are seeing a long-term decline in Health Service prospects in those areas.

I should like briefly to mention the nurses' pay award and the pay awards of all Health Service workers. I am a former organiser for the National Union of Public Employees in the Health Service and a former member of an area health authority. I know therefore that when health workers are accused by the Government of being greedy, grasping people trying to take as much money as they can out of the Health Service, when they are already among the lowest paid public sector workers anywhere in the country, they find it offensive in the extreme. They also resent the way that Health Service budgets are so made up that the wage claims of health workers are falsely set against the service that may or may not he provided to patients.

The Government are attacking the lowest paid people in the Health Service instead of looking at the overall levels of expenditure or, indeed, the profits that are made out of the Health Service by private contractors, by drug companies or by others. Recently I received a letter from a constituent who wrote:
"I am fortunate in that as a Senior Clinical Nurse I am not one of the lowest paid members of the nursing staff. I do, however, continue to work weekends and Bank Holidays, having total responsibility for all medically ill and elderly patients at all times and spend the majority of my working day as the sole nurse responsible for care throughout the hospital. After 12 years' experience I consider that my take-home pay of little more than £100 per week as totally inadequate."
He is doing a major and very responsible job for that kind of money and that is typical of how nurses are now being treated. NUPE, my union, told the pay review board meeting:
"The Government defrauded nurses to the tune of £109 million. The PRB's recommendations were costed at £283 million but the Government's insistence on staging means the award is now worth £173 million.
The Government has compounded this deceit by its dishonest claims that the award amounts to an increase of 9%. With nurses held to a 5% rise for ten months, and the balance of the full rates applying for just two months, the real increase over the year will be on average 5·6%."
Nurses are being very badly treated and undervalued, as are other health workers.

Because of the merit awards system for consultants announced in the last couple of months the NHS is about to spend £42 million on such awards to a very small number of Health Service consultants. I question a sense of priorities which gives that amount of money to consultants but which treats nurses and ancillary workers so badly.

My union recently surveyed the way in which contract cleaning has been introduced into hospitals. It also looked at the terms and conditions of the workers. It concluded:
"Widespread use of part timers below the 16-hour threshold for national insurance contributions and benefits was found. One cleaning contractor—Reckitts Cleaning Services—lists all its 9,500 part time staff as working below this level. This represents a saving of employers' National Insurance Contributions as well as taking away from employees their employment protection rights. Virtually none of the contractors offered any improvement on the statutory provision for maternity leave, pensions and sick pay."
It goes on to list a category of disasters, bad employment practices and the abuse of low-paid cleaning workers in the NHS. The Government are handing a large part of the NHS over to the lowest form of profit motive in private cleaning and catering companies. The motive of profit making by contractors within the NHS cannot be reconciled with the basic motive of the NHS, which is to provide the best standards of health care for all people irrespective of their wealth or ability to pay. I want to see a return to the basic principles of the NHS, not its continuing destruction in which this Government are taking part.

6.41 pm

Anyone who listened to the Minister will have concluded that we were living in some sort of medical demi-paradise. Whatever the Minister may say, or whatever the odd friendly news editor may say on his behalf, people around the country know from what is happening in their localities that what the Minister is saying is not true.

It is not just people in the Labour party who are saying that. The right hon. and learned Gentleman must remember that the British Medical Association, most of the royal colleges, all the trade unions involved, the Royal College of Nursing and the community health councils throughout the country are all saying that the Government are cutting and damaging services that are vital to local people.

Ministers claim that they are putting more money into the NHS. In fact, they are not keeping up with the combined effects of inflation, the extra costs of medical technology and the increased health needs of the growing number of older people, the unemployed and the impoverished. That is obvious to people living in practically every part of the country.

In an inner-city area such as my own the Government's response to a hospital waiting list of no less than 12,697 is to call for the closure of 150 acute beds. In a rural area such as Powys, the health authority is meeting on the day of the Brecon and Radnor by-election to consider cuts of more than £1 million to help pay for the nurses' pay award. In Birmingham, where the Minister lives, and part of which is represented by the Secretary of State, 23,662 people are awaiting operations, and the figure is increasing.

In Hereford, which provides a district hospital service for people from Brecon and Radnor, the waiting list totals nearly 3,000, yet the Hereford district is proposing to pay for part of the nurses' wage increase by postponing the opening of a unit that has cost £2·5 million to build.

In Milton Keynes, the new district hospital had not been open for a year before beds were closed because there were not enough nurses to staff them, and patients, including injured children, were diverted to hospitals elsewhere.

The story is the same around the country. There are cuts for patients and demoralisation for staff. To save money, health authorities are rejigging work rosters to cut money that they pay to the better trained and more senior staff. The result is that at nights and weekends more and more of the burden of work and responsibility is being borne by the most junior staff. The recent Nursing Mirror survey showed that 92 per cent. of learner nurses had been left in charge of a ward with no qualified staff present. Most instances related to late shifts, nights or weekends. A total of 70 per cent. of nurses said that they were tearful because of the stress to which these new regimes subject them. To hear Ministers, including the Prime Minister, crowing about the output of these overworked, underpaid, overstressed, tearful but still dedicated nurses, is sickening in the extreme.

The position is no better for senior nurses. They feel responsibility for what is happening to their staff, but they do not have the power to do anything about it. What influence they had in the past is being eroded by Griffiths' general managers who are downgrading nursing. Unlike Ministers, nurses are not fooled by grandiose management titles such as "director of patient relations and quality assurance", which is a title used in Wirral. They would be happier just to be called "chief nurse" if they were assured that proper weight would be given to their professional advice and that they would have the resources to do the job. The same applies to many other dedicated people who have devoted their lives to the NHS. They are being downgraded and degraded by the Government's priorities.

When the Oxford regional health authority issues a document that lists "front line functions" as
"strategic planning, personnel management, finance, information and estate management",
the people who work in the Health Service do not think that it was the one they joined. They wonder what happened to the Government's earlier motto, "Patients First".

They see the ill effects of privatisation at first hand. At Addenbrookes hospital in Cambridge, they know that a contractor's employee recently had to be sacked for selling booze to patients suffering from alcohol-related diseases. They also know that, according to the health authority, cleaning standards in acute surgical wards and operating theatres at that hospital sank to 63 per cent. of the required level in June this year. They are also aware that post-operative infection cases have increased nationally by 14 per cent. under this Government.

They wonder at the priority of Ministers. Who can blame them when they know that some 50 DHSS staff are involved in promoting privatisation? They also know that, when the Bromley health authority terminated a contract with the Care Services Group because of repeated poor performance, representations from Richard Clements, a former DHSS employee, and the hon. Member for Shipley (Mr. Fox) were so effective that within 24 hours every district health authority was telephoned and told not to terminate such contracts without first consulting the DHSS. They contrast that with the five days that elapsed before the DHSS sent letters to remind health authorities about measures to guard against legionnaire's disease after the Department was told of the suspect water system at Stafford hospital.

It goes wider than that. The Government's general policies are making our people sick. That is why the numbers of people visiting their doctor or being treated in hospital are at record levels, without any substantial reduction in waiting lists. We all know that people's health will suffer if they are impoverished, under-nourished, badly clothed, badly housed and unemployed. Previous Governments recognised that and improved the nation's health by better living standards, better housing, better food and less unemployment.

Under this Government, all that progress has not just been halted, but reversed. Record levels of homelessness have been matched by record levels of failure to build new houses. The school meals service, described by The Lancet as the sheet anchor of child nutrition, used to provide a meal for two thirds of our children. It now provides a meal for only half of them. If the Secretary of State has his way, free school meals will be available only to the children of parents who are on supplementary benefit. When the Secretary of State talks of targeting, can he think of any more accurate or effective way of filling the belly of a hungry child than by giving that child a meal, because I cannot?

For a long time the Government denied that unemployment leads to ill health. They cannot deny it any longer. Reputable surveys show that general practitioners face higher demands for primary health care from people who are out of work, that school leavers are more likely to suffer psychological strain if they are on the dole, that death rates among unemployed men can be over 20 per cent., that para-suicide is nine times more likely among the unemployed and that unemployment affects their families, too. Above all, it undermines the health of their children. They are underfed, badly housed, ill-clothed, provided with no new toys and have no holidays. All this affects children whose parents feel humiliated and whose love for one another and their children is soured by the feeling that they have failed. That characterises the life of the child who lives in a home where unemployment reigns.

But it is not the parents who have failed. It is the rich, the greedy and the powerful who have failed. It is this Government of the rich and the greedy who have failed. Because they are powerful, they visit the consequences of their failure upon others, but they will not get away with it. Those who create a hungry generation will find that it treads them down. The Government believe that they can succeed for ever in their appeal to greed and selfishness. They are wrong. Given the chance, the vast majority of the British people will work together to help to sustain one another in sickness, adversity and old age.

The British people believe that the best kind of health service should be made available to everybody and that all of us have a responsibility to bring that about. The Labour party founded the National Health Service and treasures it. It believes in a National Health Service and a society which will make people healthier.

6.51 pm

The Parliamentary Under-Secretary of State for Health and Social Security
(Mr. John Patten)

When the hon. Member for Oldham, West (Mr. Meacher) got up to start his speech, the Leader of the Opposition left his place. There were six hon. Members sitting behind the hon. Gentleman—some improvement on the three hon. Members who were behind him last week when he began his speech on child benefit.

The speech last week on child benefit of the hon. Member for Oldham, West was characterised by contradiction after contradiction. First, tax relief on mortgages was going to taken away; then it was not. Secondly, child benefit was going to be taxed; then it was not. At one moment we were told that it was official Labour party policy; then we were told that it was only a Labour party Green Paper. At one moment we were told that it had been accepted by the Shadow Cabinet; then we were told that it had been rejected. There have been exactly the same contradictions in the hon. Gentleman's speech this afternoon.

First, the hon. Gentleman admitted that there had been a small increase in expenditure under this Government. He said later that there had been cuts. What does he mean? Has there been an increase in expenditure, or have there been cuts in expenditure? At one stage he said that the Labour party would increase expenditure. A sum of £3 billion was whistled out of the air and then rapidly put back into the locker. He produced no costed plans of future expenditure. My hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) does not often indulge in wishful thinking, but when she said that she hoped that the hon. Member for Oldham, West would for ever lead for the Labour party on social services. I am afraid that she was indulging in wishful thinking. In the first world war there was a song:
"We don't want to lose you,
But we think you ought to go."
Amidst all the rumours about reshuffles in the Labour party, the hon. Gentleman's monument when he leaves his position, as surely he will this autumn, will be that he made his predecessor as spokeswoman on social services, the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), seem by comparison to be an intellectual giant and prodigy.

At least the hon. Member for Holborn and St. Pancras (Mr. Dobson) who wound up for the Opposition has the merit of consistency. He is utterly consistent in his total and blanket condemnation of everything that this Government have done about the National Health Service. During the two years that I have sat opposite him, I have never heard the hon. Gentleman admit that there has been any improvement whatsoever in any part of the NHS. His attitude contrasts very much with that of the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy), who takes a much more balanced view. I hope that the Social Democratic party and the Liberal party will not go into the Lobby tonight to support this absurd motion.

The hon. Member for Oldham, West is absolutely consistent in his condemnation of the ways in which this Government are setting about trying to improve patient care and getting waiting lists down and better value for money. We are saving a substantial sum of money—about £13 million a year—on competitive tendering. That money can be spent upon patient care. What is the hon. Gentleman's policy? Will he go to a hospital like the St. Helier hospital, which is under the Merton and Sutton regional health authority, and say, "I understand that you have saved £800,000 through improved cleaning services carried out by a private company. If we came to power we should ask you to take that money away from patient care and spend it again upon inefficient and over-expensive cleaning services." Is that Labour party policy? Is that what ought to happen in the drive towards greater efficiency? That seems to be the Labour party's way of attempting to improve patient care.

I should very much like to give way to the hon. Gentleman but I have very little time in which to reply to the debate.

I very much welcome the contribution of my valiant hon. Friend the Member for Newbury (Mr. McNair-Wilson). He made a constructive speech about competitive tendering. It was based upon his personal experience of cooperation with the private sector. I welcome the speech of the hon. Member for Ross, Cromarty and Skye. He supported our resource allocation working party proposals. I hope that his compliment to the Government will keep him out of the Labour party Lobby.

I welcome also what my hon. Friend the Member for Edgbaston said about the need to experiment with computerised forms of care so that patients can go from one part of the country to another for the operations they need. After some local opposition—even, surprisingly, from the West Midlands regional health authority, to which the Government had given money—a bed bank experiment is taking place. It is examining exactly this problem.

We hear a great deal about waiting lists. My right hon. Friend the Secretary of State for Social Services and my right hon. and learned Friend the Minister for Health receive many letters from the hon. Member for Oldham, West. His last letter dealt with waiting lists. First, he asked us to validate the waiting lists, which we are doing.

Secondly, he asked us once every six months to publish the results of waiting lists and to set out what patients are being treated, and where. We are doing that.

The hon. Gentleman then asked us to set maximum levels for waiting lists. The maximum waiting lists in this country were to be found in March 1979, when 752,000 people were waiting for operations. Waiting lists went up by 250,000 under the last Labour Government. If waiting lists had continued to increase at the rate at which the last Labour Government—of which the hon. Member for Oldham, West was a member—left them, they would now stand at more than 1·5 million. In the event, waiting lists are going down and waiting times are going down. That is one measure of the success of the National Health Service under this Government.

At a time of great medical advances and an increasingly elderly population the NHS is dealing triumphantly with the care of the British people. The quality and the style of medical care has greatly increased. My right hon. and learned Friend the Minister for Health referred to this. We are improving the quality of life for the elderly and the way in which they are looked after. To do so when medical costs are increasing and the number of people being treated is increasing is a major achievement. This Government's achievements since 1979 have wiped out the dereliction in the National Health Service with which the Labour party left us.

The Government's record on the NHS stands on its own feet. We have nothing to say about the Labour party's record except that it failed, as was shown by the way it left the NHS in 1979. I invite my right hon. and hon. Friends to vote firmly against the motion.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 135, Noes 235.

Division No. 254]

[7.00 pm


Abse, LeoConlan, Bernard
Alton, DavidCook, Frank (Stockton North)
Anderson, DonaldCorbyn, Jeremy
Archer, Rt Hon PeterCowans, Harry
Ashdown, PaddyCraigen, J. M.
Ashley, Rt Hon JackCrowther, Stan
Ashton, JoeDewar, Donald
Atkinson, N. (Tottenham)Dixon, Donald
Banks, Tony (Newham NW)Dobson, Frank
Barnett, GuyDormand, Jack
Beckett, Mrs MargaretDouglas, Dick
Beggs, RoyDubs, Alfred
Bell, StuartDuffy, A. E. P.
Benn, TonyDunwoody, Hon Mrs G.
Bennett, A. (Dent'n & Red'sh)Ewing, Harry
Bidwell, SydneyFatchett, Derek
Boothroyd, Miss BettyFaulds, Andrew
Boyes, RolandFlannery, Martin
Bray, Dr JeremyForrester, John
Brown, Hugh D. (Provan)Foster, Derek
Brown, R. (N'c'tle-u-Tyne N)Freeson, Rt Hon Reginald
Brown, Ron (E'burgh, Leith)Gilbert, Rt Hon Dr John
Bruce, MalcolmGodman, Dr Norman
Campbell, IanGolding, John
Campbell-Savours, DaleGourlay, Harry
Canavan, DennisHamilton, W. W. (Central Fife)
Carter-Jones, LewisHarrison, Rt Hon Walter
Cartwright, JohnHealey, Rt Hon Denis
Clark, Dr David (S Shields)Hogg, N. (C'nauld & Kilsyth)
Clarke, ThomasHolland, Stuart (Vauxhall)
Clay, RobertHughes, Robert (Aberdeen N)
Clwyd, Mrs AnnHughes, Roy (Newport East)
Cocks, Rt Hon M. (Bristol S.)Hume, John
Cohen, HarryJanner, Hon Greville

Jenkins, Rt Hon Roy (Hillh'd)Pavitt, Laurie
John, BrynmorPowell, Rt Hon J. E, (S Down)
Johnston, Sir RussellPrescott, John
Kaufman, Rt Hon GeraldRandall, Stuart
Kennedy, CharlesRees, Rt Hon M. (Leeds S)
Kilroy-Silk, RobertRichardson, Ms Jo
Kinnock, Rt Hon NeilRoberts, Allan (Bootle)
Kirkwood, ArchyRoberts, Ernest (Hackney N)
Lambie, DavidRobertson, George
Lamond, JamesRoss, Stephen (Isle of Wight)
Leighton, RonaldRoss, Wm. (Londonderry)
Lewis, Ron (Carlisle)Short, Mrs R.(W'hampt'n NE)
McCartney, HughSkinner, Dennis
McDonald, Dr OonaghSmith, C. (Isl'ton S & F'bury)
McKelvey, WilliamSmith, Cyril (Rochdale)
MacKenzie, Rt Hon GregorSmith, Rt Hon J. (M'kl'ds E)
Maclennan, RobertSoley, Clive
McNamara, KevinSpearing, Nigel
McTaggart, RobertStott, Roger
Madden, MaxStrang, Gavin
Marek, Dr JohnTaylor, Rt Hon John David
Martin, MichaelThomas, Dr R. (Carmarthen)
Mason, Rt Hon RoyThompson, J. (Wansbeck)
Maxton, JohnTinn, James
Maynard, Miss JoanWainwright, R.
Meacher, MichaelWalker, Cecil (Belfast N)
Michie, WilliamWallace, James
Mikardo, IanWhite, James
Mitchell, Austin (G't Grimsby)Wigley, Dafydd
Molyneaux, Rt Hon JamesWilliams, Rt Hon A.
Morris, Rt Hon A. (W'shawe)Wilson, Gordon
Nellist, David
Nicholson, J.Tellers for the Ayes:
Orme, Rt Hon StanleyMr. James Hamilton and
Park, GeorgeMr. Ray Powell.
Patchett, Terry


Adley, RobertFarr, Sir John
Amery, Rt Hon JulianFletcher, Alexander
Ancram, MichaelForman, Nigel
Atkins, Rt Hon Sir H.Forsyth, Michael (Stirling)
Atkins, Robert (South Ribble)Forth, Eric
Baker, Nicholas (N Dorset)Fox, Marcus
Banks, Robert (Harrogate)Franks, Cecil
Beaumont-Dark, AnthonyFraser, Peter (Angus East)
Best, KeithFreeman, Roger
Biggs-Davison, Sir JohnGale, Roger
Body, RichardGalley, Roy
Bonsor, Sir NicholasGardiner, George (Reigate)
Boscawen, Hon RobertGarel-Jones, Tristan
Bottomley, PeterGilmour, Rt Hon Sir Ian
Bottomley, Mrs VirginiaGlyn, Dr Alan
Braine, Rt Hon Sir BernardGorst, John
Brandon-Bravo, MartinGow, Ian
Bright, GrahamGreenway, Harry
Brittan, Rt Hon LeonGregory, Conal
Bruinvels, PeterGriffiths, Sir Eldon
Buchanan-Smith, Rt Hon A.Griffiths, Peter (Portsm'th N)
Budgen, NickGround, Patrick
Carlisle, John (N Luton)Grylls, Michael
Carlisle, Kenneth (Lincoln)Hamilton, Hon A. (Epsom)
Carlisle, Rt Hon M. (W'ton S)Hamilton, Neil (Tatton)
Cash, WilliamHannam, John
Chapman, SydneyHarris, David
Clark, Sir W. (Croydon S)Harvey, Robert
Clarke, Rt Hon K. (Rushcliffe)Haselhurst, Alan
Clegg, Sir WalterHavers, Rt Hon Sir Michael
Colvin, MichaelHayes, J.
Coombs, SimonHayhoe, Rt Hon Barney
Cope, JohnHayward, Robert
Couchman, JamesHeathcoat-Amory, David
Crouch, DavidHeddle, John
Currie, Mrs EdwinaHenderson, Barry
Dicks, TerryHeseltine, Rt Hon Michael
Dorrell, StephenHickmet, Richard
Douglas-Hamilton, Lord J.Hicks, Robert
Durant, TonyHiggins, Rt Hon Terence L.
Dykes, HughHind, Kenneth
Emery, Sir PeterHirst, Michael

Hogg, Hon Douglas (Gr'th'm)Portillo, Michael
Holland, Sir Philip (Gedling)Powell, William (Corby)
Howard, MichaelPowley, John
Howarth, Alan (Stratf'd-on-A)Price, Sir David
Howarth, Gerald (Cannock)Proctor, K. Harvey
Howell, Ralph (N Norfolk)Rathbone, Tim
Hubbard-Miles, PeterRenton, Tim
Hunt, David (Wirral)Rhodes James, Robert
Hunt, John (Ravensbourne)Rhys Williams, Sir Brandon
Hunter, AndrewRidsdale, Sir Julian
Irving, CharlesRippon, Rt Hon Geoffrey
Jessel, TobyRoberts, Wyn (Conwy)
Jones, Robert (W Herts)Roe, Mrs Marion
Kellett-Bowman, Mrs ElaineRossi, Sir Hugh
Key, RobertRost, Peter
King, Rt Hon TomRowe, Andrew
Knight, Greg (Derby N)Rumbold, Mrs Angela
Knight, Dame Jill (Edgbaston)Ryder, Richard
Knowles, MichaelSackville, Hon Thomas
Knox, DavidSainsbury, Hon Timothy
Lamont, NormanSayeed, Jonathan
Latham, MichaelShaw, Sir Michael (Scarb')
Lawrence, IvanShelton, William (Streatham)
Lee, John (Pendle)Shepherd, Colin (Hereford)
Leigh, Edward (Gainsbor'gh)Silvester, Fred
Lennox-Boyd, Hon MarkSims, Roger
Lester, JimSkeet, T. H. H.
Lord, MichaelSmith, Tim (Beaconsfield)
Lyell, NicholasSoames, Hon Nicholas
McCurley, Mrs AnnaSpeed, Keith
Macfarlane, NeilSpeller, Tony
MacKay, Andrew (Berkshire)Spencer, Derek
Maclean, David JohnSpicer, Jim (W Dorset)
McNair-Wilson, M. (N'bury)Squire, Robin
McNair-Wilson, P. (New F'st)Stanbrook, Ivor
McQuarrie, AlbertStanley, John
Madel, DavidSteen, Anthony
Major, JohnStern, Michael
Malins, HumfreyStevens, Lewis (Nuneaton)
Malone, GeraldStokes, John
Maples, JohnStradling Thomas, J.
Marlow, AntonySumberg, David
Mates, MichaelTaylor, John (Solihull)
Maude, Hon FrancisTaylor, Teddy (S'end E)
Mawhinney, Dr BrianTemple-Morris, Peter
Mayhew, Sir PatrickThomas, Rt Hon Peter
Mellor, DavidThompson, Donald (Calder V)
Merchant, PiersThompson, Patrick (N'ich N)
Meyer, Sir AnthonyTownend, John (Bridlington)
Mills, Iain (Meriden)Townsend, Cyril D. (B'heath)
Mills, Sir Peter (West Devon)Trippier, David
Mitchell, David (NW Hants)Trotter, Neville
Moate, RogerTwinn, Dr Ian
Monro, Sir Hectorvan Straubenzee, Sir W.
Montgomery, Sir FergusWaddington, David
Moore, JohnWakeham, Rt Hon John
Morrison, Hon C. (Devizes)Waldegrave, Hon William
Morrison, Hon P. (Chester)Walden, George
Moynihan, Hon C.Walker, Bill (T'side N)
Neale, GerrardWaller, Gary
Needham, RichardWalters, Dennis
Nelson, AnthonyWard, John
Neubert, MichaelWardle, C. (Bexhill)
Newton, TonyWatson, John
Nicholls, PatrickWells, Bowen (Hertford)
Normanton, TomWells, Sir John (Maidstone)
Norris, StevenWhitfield, John
Onslow, CranleyWhitney, Raymond
Oppenheim, PhillipWiggin, Jerry
Osborn, Sir JohnWilkinson, John
Ottaway, RichardWolfson, Mark
Page, Richard (Herts SW)Wood, Timothy
Parkinson, Rt Hon CecilYeo, Tim
Patten, J. (Oxf W & Abdgn)
Pawsey, JamesTellers for the Noes:
Peacock, Mrs ElizabethMr. Ian Lang
Percival, Rt Hon Sir IanMr. Peter Lloyd
Pollock, Alexander

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No.33 (Questions on amendments), and agreed to.


'That this House applauds the improved levels of service to patients achieved by the National Health Service and its staff under this Government; congratulates the Government on making this possible through its record of increasing expenditure on the Service; welcomes the fact that improved levels of service have been achieved while the pay of nurses has been raised by 23 per cent. in real terms; and supports the Government's determination to ensure, through improved management and greater efficiency, that maximum benefit is derived for patients from the resources available to the Service.'.

British Steel Corporation (Borrowing Powers)

7.12 pm

I beg to move,

That the draft British Steel Corporation (Borrowing Powers) Order 1985, which was laid before this House on 20th June, be approved.
The subject of the draft order is the British Steel Corporation's statutory borrowing limit. All the corporation's borrowing, whether from the Government or from other sources, together with payments of public dividend capital from the Government, count towards the limit. The Iron and Steel Act 1982, the principal statute governing the BSC, provides that the limit shall be within the range £2,500 million to £4,500 million and provides that the limit may be varied by order, subject to an affirmative resolution of the House. The limit presently stands at £3,500 million, having been set at that level in July last year by the British Steel Corporation (Borrowing Powers) Order 1984.

The draft order proposes that the present limit be raised by £700 million to £4,200 million. It is important to emphasise that, as with all such orders, it is permissive only. It does not, of course, commit the Government to providing that sum to the corporation, and the future funding of the corporation will be subject, as always, to external financing limits and to the procedures of the House.

In the debate on the previous order in 1984, I said that as a result of the dispute in the coal industry there was a possibility that a further order might be necessary earlier than the two-year period normally elapsing between orders. That in this case has proved to be true. The direct financing impact of the miners' strike upon the BSC was about £180 million. This enormous unnecessary additional cost, together with the BSC's final external financing limit of £343 million, more than absorbed the £500 million increase in the corporation's borrowing limit approved by the House last July. The EFL for the present financial year of £360 million will push the BSC through its current borrowing ceiling.

At the end of March, the BSC's actual and potential borrowings stood at £3,390 million against the present limit of £3,500 million. Now that the strike is behind it, the BSC's cash needs so far in 1985–86 have been relatively modest, but an increase in the borrowings limit will certainly become necessary some time after the end of July. The BSC's forward cash needs are at present subject to uncertainty for a number of reasons. However, it is clear that, whatever decisions are taken, the BSC will continue to need outside funding for a few more years.

With the miners' strike behind it, the BSC is now trading profitably. To cater for these needs, we have set an EFL of £360 million for 1985–86, which is well below the £523 million of external finance provided for last year. The best estimate that we can make at present for external funding in the period after 1985–86 is that it will continue to diminish from year to year, but that slightly more than a further £300 million will be needed over the following two years taken together, and public expenditure projections are currently on that basis. The figure of £700 million should, therefore, be able to cover the requirements for up to three years and to give us a degree of flexibility to deal with current uncertainties. But it remains our firm policy to end the BSC's dependence on the taxpayer as quickly as possible, and decisions over the period covered by the order will be taken very much with a view to reducing the BSC's external funding needs as quickly as possible.

I should like to comment briefly upon the corporation's performance during the last financial year, and then to consider the future. The year 1984–85 was, of course, very much dominated by the miners' strike. The BSC was set a demanding target of breaking even before interest. It must therefore have been particularly galling for the management and the work force to see the attainment of that target frustrated by the employees of an industry which was the second largest customer of the BSC. Opposition Members, many of whom represent steel constituencies, might reflect upon the much stronger position in which the BSC would find itself today but for that disruption.

I pay the warmest tribute to the management of the BSC for its ingenuity in keeping plants operating and, of course, to the workers for their courage and common sense in perceiving their long-term interest and that it could in no way be served by adding to the disruption.

The BSC's annual accounts are expected to show that, but for the intervention of the miners' strike, the corporation would have made a small profit after interest. This represents the best operating result for 10 years, and exceeded the Government's target for the year of break-even before interest.

The corporation has entered the current year at a trading profit and, if expectations are borne out, this year will see the first accounting profit since 1974–75. This very encouraging performance, which is masked by the cost of the strike, has been achieved in conditions of intense competition in Europe and elsewhere. It is a measure of the great improvements in productivity and quality which BSC has made in recent years. I should perhaps underline to the House that in the past five years the BSC's selling prices have risen by half the rate of its input costs. Against this background, I think that the improvement in its operating results is all the more remarkable.

During the past year the BSC has continued to pursue another target set by the Government, that of privatising those areas which overlap with the private sector and those activities which are outside the main stream of the BSC's steel business. Two major disposals took place. First, 75 per cent. of the shares of Stanton and Staveley were sold to Pont à Mousson and RGC Offshore plc was sold to the Trafalgar House Group. A number of smaller disposals also occurred, most notably Pipework Engineering to Babcock Power Ltd. and Coated Electrodes Ltd. where a management buy-out was completed.

During the year, two important joint ventures were established with the private sector. I draw the attention of the House to United Merchant Bar Ltd., which was created with Caparo Industries plc which holds a 75 per cent. interest in the new company which was formed to roll flats and light sections.

The hon. Gentleman talks about small issues. Does he realise that 500 men at Jarrow and Warrington will lose their jobs? That is not a "small" issue to them.

If the hon. Gentleman wants to make a speech about the steel industry in his constituency, I am sure that he will do so. He knows that measures and decisions about particular plants are matters for the BSC'. There has been an enormous contraction in the industry's labour force.

It is not a small issue. I did not say that the closure of plants or the shedding of labour were small issues. But that has happened throughout the Western world and Europe.

I am sure that the House has followed with great interest what my hon. Friend said about disposals during the past year. What further disposals does he expect during the year ahead? How much money is that likely to bring in to the BSC to relieve the burden on the taxpayer?

It is extremely difficult to answer those points, because we are a long way from the time when the BSC's basic steelmaking business will reach a state of enduring viability that would make it capable of being privatised. As Opposition Members who take an interest in these matters know, Phoenix 2 — the engineering steels—was an area where we very much hoped that privatisation could occur. That is one of the most important areas of overlap between the public and the private sectors. It is closely linked with a number of other decisions that must be taken within the corporation

I wish to emphasise how much privatisation has already occurred. Since 1980, the total book value of assets disposed of has been £349 million, which is 16 per cent. of the total book value of the BSC's assets in 1980. Land and property sales have realised £78 million. Since 1980, 14,000 BSC employees have been transferred to companies that were set up or disposed of as part of privatisation policy. I hope that my hon. Friend the Member for Surrey, North-West (Mr. Grylls) agrees that much has already happened in this direction.

Does the hon. Gentleman realise that there is tube manufacturing in my constituency? Many rumours have been circulating for a long time on this matter. I and my hon. Friend the Member for Motherwell, South (Dr. Bray) have met the management at the BSC's premises at the Clydesdale works. The management did riot deny that, if a suitable offer were made, privatisation would occur. Do the Government intend moving in that direction?

It is the Government's intention that as much of the corporation as possible should be privatised and that, to a large extent, it should be done through joint ventures with the private sector. That is the way that is likely to be most practicable in the areas of overlap with the private sector.

Does the right hon. and learned Member for Monklands, East (Mr. Smith) wish to intervene?

Ministers do not often invite me to intervene, but the hon. Gentleman has kindly asked me to do so. He has just said that joint ventures will be a method of privatisation. Does that mean that Phoenix 2 is not a joint venture but a method of privatising?

Phoenix 2 is a project on which decisions have not yet been made. I must emphasise that decisions on Phoenix 2 must be related to other decisions about the corporation. Phoenix 2 would be likely to be a joint venture. In my terminology, a "joint venture" could also be called a measure of privatisation. I hope that that makes the position clear to the right hon. and learned Member for Monklands, East. I invited him to intervene because, as some of my colleagues were talking, I was not sure that I had answered the question addressed to me by the hon. Member for Motherwell, North (Mr. Hamilton).

I refer to transferring part of the BSC to the private sector and also to Phoenix 1 and Allied Steel and Wire. Is it not a fact that ASW is now highly competitive and highly profitable? If we are concerned about the steel industry's stability and future, should we not look at ASW which has proved that, if the steel industry operates in the private sector, it will operate more effectively and efficiently and its long-term future will be secured?

I entirely agree with my hon. Friend. ASW has demonstrated that a privatised company can operate successfully and can offer greater job security. Above all, because it is a privatised company decisions about the steel industry are made on a commercial basis and are not wrapped up in political considerations which, despite all the current controversies, do not serve the long term interests of the industry or of those who work in it.

Another important feature of the past year was the decision taken by the BSC with its overseas partners to terminate an arrangement for the supply of iron ore which had become uneconomic. This decision resulted in the closure of the Firelake mine in Canada and the subsequent repayment of loans used to finance the mine at a total cost of £130 million. The BSC's external financing limit was increased by £70 million on this account. The remaining £60 million was provided from the BSC's own resources. This transaction will result in a saving to the BSC of £40 million each year.

It is clearly not possible to view the BSC's performance in the United Kingdom context alone. The European and world steel markets need to be taken into account. I think that every hon. Member would agree that the corporation's anti-crisis measures have continued to stabilise the steel market. This has resulted in improvements in prices in the second half of 1984 and in 1985, although in real terms steel prices are still well below 1979 levels. These anti-crisis measures are designed to support the Community market while excess capacity is removed and to pave the way for the ending of steel aids by the end of 1985. This is a policy that the United Kingdom Government have supported, and our industry has been in the forefront of those implementing it.

It must be emphasised, as the Government have emphasised before in these debates, that the restructuring of the industry was necessary irrespective of the European regime. Although we started the process earlier than some other Community countries, the current steel aids code requires other member states to play their full part in the restructuring process as well.

Does the Minister have recent information about whether there will be pressure from other EC countries to keep state aid in existence beyond the present closing date? There are rumours to that effect.

I am afraid that I cannot anticipate that. At the last Steel Council, the decision to end steel aids at the end of 1985 was accepted by all members. There will be a further meeting of the Steel Council on 26 July to consider the quota regime and what will happen after 1985. The ending of state aids does not mean that it will be impossible for Governments to make investment or loan capital available to their steel industries in certain circumstances. Further discussions will have to take place on 26 July about the whole apparatus—not just of the steel aids but of the quota regime that goes with it.

Does the Minister intend to press on 26 July for a continuation of some aspects of the quota and price regime?

Our view tends to be that a sudden removal of the quota regime might have extremely drastic consequences. Representations to that effect have been made to us by the BSC and the British Independent Steel Producers Association. Our final position has still to be determined. I believe that we should look at the possibility of a phased withdrawal or gradual reduction. Our position will depend a little on what other Governments do and their position on state aids.

That must be considered on July 26. No decision has been reached about how long the system will remain in existence. That is a decision not simply for us to take, but for all other member states.

I do not wish to prolong this short debate, so I shall not give way again.

All member states will achieve at least the reductions in steel capacity that they have promised for the end of 1985. Between 1980 and 1985 at least 28·4 million tonnes of capacity will have been shut in the Community as a whole. The final figure could well reach 30 million tonnes. The United Kingdom's promised share is 4·5 million tonnes, but our final figure will be rather higher.

Despite the additional difficulties in cost imposed on the BSC by the coal strike, the corporation's continuing efforts to improve efficiency and reduce costs will be seen to have paid off not only in the past year but in future years. The BSC now ranks among Europe's most competitive steel suppliers. Since 1979 the United Kingdom's productivity in tonnes of steel per worker has doubled and is now on a par with the best comparable levels prevailing in Europe. The BSC started from a very much worse position and we cannot assume that its competitors will stand still, but clearly the BSC is now in a much stronger position to face the future than would have been thought possible by those who doubted the resolve of the BSC and the Government in recent years.

Sir Robert Haslam has said that the corporate plan will be published at the end of July. Will the Minister confirm that?

The corporate plan will be received by the Government at the end of July. We have no intention to publish that plan. It has not been published in the past.

The BSC's progress results from a determined effort by management to respond to market demands and competitive pressures and from the Government's acceptance of the need to back the corporation's effort. It results also from the skill and determination of the work force. The world does not stand still and the Government must look to the BSC to make further progress in the future.

I acknowledge the point made by the hon. Member for Motherwell, South (Dr. Bray). The Government have accepted the EC system of quota and price controls, although it has imposed limitations on market initiatives by producers, because it is necessary to allow time to eliminate the need for subsidies. The other major European producers have recognised the need to make this regime work to bring some stability to the market. If a further extension of the quota system is proposed, our willingness to accept it will depend, as on previous occasions, on our judgment as to whether it is in the best interests of the United Kingdom steel industry. Any proposals will need to recognise the substantial improvements in our performance over the past few years both in absolute terms and relative to the rest of the industry in Europe.

Unfortunately, the improved performance in both the United Kingdom and the EC steel industries does not mean that the problem of overcapacity has been solved for all time. The Commission has recently produced a report on Community steel industry output up to 1990, which says that output in 1990 is unlikely to be significantly higher than in 1984, and may well be lower. Despite the substantial progress that has been made in removing excess capacity in the past few years, the Commission estimates that further substantial capacity closures will be needed in Europe. Only then will the industry return to levels of capacity utilisation consistent with profitability.

All member states are committed to ending state aids by the end of 1985. This was reaffirmed at the Industry Council on 26 March. The BSC will continue to need state finance, borrowings and capital after 1985, but I believe that no subsidy element will be needed after that date.

That is the background against which the BSC and the Government have to consider the corporate plan. It has proved a difficult task for the BSC to develop its view of the situation in the wake of the coal strike. The BSC chairman said in evidence to the Select Committee that a dialogue on planning matters had resumed between the BSC and the Government and that it was hoped that matters would be clear enough for a submission to be made by the end of July.

It would not be right for me to speculate on what the BSC may propose either in respect of any particular works or more generally, nor on what view the Government may take of the plan. The plan will need to show that the BSC is on the path to full commercial viability. That is necessary to show not just that further investment of capital in the BSC is an investment on commercial terms and not a state subsidy, but to satisfy the Government that the BSC's main operations will in due course be capable of being returned to the private sector.

The BSC has made progress in the privatisation of many of its activities. To make it possible to return the core activities to private ownership is a further challenge that the Government and the BSC do not underestimate. World prospects and existing levels of overcapacity suggest that it cannot be achieved overnight, but it is the Government's objective, which is fully consistent with the EC agreement to create a viable and secure steel industry.

This draft order will enable further funds to be provided to support the encouraging process of recovery of the BSC and will ultimately facilitate privatisation. I commend the order to the House.

7.35 pm

The Opposition do not oppose the order and we do not expect a Division, but it provides a timely opportunity to discuss the British steel industry and the Government's handling of their policy towards that crucial industry.

It is remarkable that the Minister of State can come to the House in the light of recent controversy over the future of the steel industry and not mention Ravenscraig or Llanwern. The Minister knows the deep concern throughout the industry about recent speculation by the chairman and chief executive of the British Steel Corporation in evidence to the Select Committee. It is not satisfactory for the Minister to say that he cannot speculate on the future of any plan within the corporation before he receives the corporate plan. We always seem to be awaiting a plan from the British Steel Corporation.

If the Minister cannot speculate on the future of Llanwern and Ravenscraig, how is it possible for the Secretary of State for Wales to speculate about Llanwern and for the Secretary of State for Scotland to speculate about Ravenscraig? In recent weeks, the Secretary of State for Wales has assured us that he will fight like hell to save Llanwern, but against whom? Is he fighting the Secretary of State for Trade and Industry or the Minister of State? Most people should fight as hard as possible against what they have in mind. I do not know what the Secretary of State for Wales has in mind, but the Secretary of State for Scotland has not been behindhand in telling us that he is committed to Ravenscraig. Indeed, he and other Conservative Members turn up at meetings in Scotland to tell us that they are solidly behind the future of Ravenscraig.

How can the Secretaries of State for Scotland and Wales tell us that everything is all right when the Minister of State says that he is unable to speculate? I believe that he is able but unwilling to speculate—I give him credit for competence. It is the duty of the Secretary of State for Trade and Industry to come to the Dispatch Box and to repeat what his colleagues have said—that the future of Llanwern and Ravenscraig is assured. Nothing less will do.

I am interested in my right hon. and learned Friend's remarks. Does he, like me, fail to understand how the chairman of BSC, Sir Robert Haslam, could tell the Select Committee on Trade and Industry that the BSC and the Government were actively discussing the possible closure of either Ravenscraig or Llanwern? That was widely quoted in the media.

My hon. Friend keeps a close watch on what is said about Llanwern. His deep concern is shared throughout Wales, where the matter is of great importance to a much wider community than that which he so ably and tenaciously represents. He makes the valid point that, in evidence to a Select Committee, BSC officials speculated about cutting losses, and the one extra plant. That has been a feature of the evidence given every time that the matter has come before the Select Committee. Yet, when we confront the Ministers responsible, they blandly evade the matter by saying that they are not willing to speculate. As the Minister knows, there is deep anxiety in the industry and the communities that are most directly affected by the future of both Llanwern and Ravenscraig, because the chairman of BSC keeps telling them—he does not even hint—that if BSC is to meet the Government's targets, especially privatisation, both plants cannot remain open. That is not good enough.

Perhaps the hon. Gentleman will give me the assurance that his Front Bench will not give, in which case I welcome his intervention.

I shall give the right hon. and learned Gentleman that assurance when I speak from the Dispatch Box, which I do not expect to do soon. Does he accept the Government's injunction to BSC to achieve viability, and the injunction of the European Commission to end state aid by 1985? If so, what are his comments on Llanwern and Ravenscraig?

I do not accept Government injunctions to BSC, even if I knew more clearly what they were.

I hope that the hon. Gentleman will allow me to develop my argument. He wants answers from me, although the Minister does not answer questions. The Minister certainly does not give the Opposition answers. The Opposition oppose the regime which the Government wish to put on BSC because it is based not so much on viability as on moving towards privatisation. When in an important part of his speech the Minister said that the plan must move towards full commercial viability, he meant towards a level of profitability which would ease the sale of coal, iron and steel making to the private sector. While that remains part of the Government's policy for BSC, we shall resolutely oppose it.

According to the Minister, at present BSC is trading profitably. In that case, the only reason to close either Ravenscraig or Llanwern is to assist the move towards privatisation. Therefore, the threat to those steel plants comes from one quarter alone—the Government who wish to privatise our steel industry. There is no pressure from any other quarter, and there cannot be pressure to move towards viability, if the corporation is already trading profitably, as the Minister said.

The Government talk about privatisation as if every privatisation exercise in which they indulge were intrinsically creditable. It is as if every Minister must produce a report card at the end of term to tell the Prime Minister what he has privatised. I am sure that the Minister of State will not be behindhand in saying how much he privatised last year. It is as if the Government's only purpose in their stewardship of the steel industry is to move the industry as fast as possible and on any terms into the private sector. It is not difficult to sell public assets. Indeed, it is easy to make a success of doing so, especially if they are sold below their value, as was the case with British Telecom. If assets are sold cheaply, the sale will obviously be a success.

We are fearful for the future of the steel industry, because the parts which become capable of making substantial profits will be sold, while the other parts, which are necessary for the breadth of support that we must give our manufacturing industry, and which are loss making, will be kept in the public sector. All the loss-making parts will remain in the public sector and the profit-making parts will be sold to the private sector. The Government's relentless pursuit of that policy in the steel industry and in other areas does not benefit taxpayers because they are selling the profitable element, which would benefit taxpayers, and continually saddling taxpayers with loss-making elements.

My hon. Friend the Member for Motherwell, North (Mr. Hamilton) was right to mention the anxiety of workers in areas such as the tube works at Clydesdale in his constituency, which is an extremely efficient operation. They are worried that if they co-operate in making the enterprise successful, they will assist the process of privatisation, to which they are deeply and firmly opposed, as I hope both the Government and the corporation know.

The truth is that the worrying rumours about Llanwern and Ravenscraig, which includes the Gartcosh complex, will continue. They are not healthy for the industry or the communities dependent on it, and the Government could put them to rest immediately. There is nothing to stop the Minister coming to the Dispatch Box and telling us that those two plants are secure, and that the Government do not intend to assist in any proposal from BSC to close them.

I challenge the Minister to give us a specific answer to that question before tonight's debate finishes. He did not do so in his introduction. The people of Wales and Scotland deserve a clear answer, especially as the respective territorial Secretaries of State have not been behindhand in issuing those assurances. Those assurances need to be corroborated by the Minister responsible, who is present tonight. I am happy to sit down at any stage if the Minister is willing to answer our direct and specific questions about the future of Ravenscraig and Llanwern. His failure to answer them directly is sad. I assure him that the fight to maintain those works will continue as relentlessly and effectively as it has since the threat to their future was first raised.

I should like to ask the right hon. and learned Gentleman a question. Would he make a decision about BSC, regardless of the views of its management?

I would find it awkward to avoid expressing an opinion when senior colleagues in the Government—two Cabinet Ministers—felt free and able to do so. I would believe that the Government's integrity was so much in question that, before I saw the details of the corporate plan, I would make it crystal clear that, whatever it contained, there would be no question about the closure of either plant. I am willing to say that clearly and specifically.

The Minister's desire to ask me that question shows that there is some doubt in his mind. Will he rise to his feet now and tell us whether those plants will remain open? Why cannot he do that? I am willing to give way. I have answered his question. Will he now answer mine? I answered the Minister by saying that I would anticipate the corporate plan by giving assurances that Llanwern and Ravenscraig would not close. That is a decision for the Government, and they should make it clear that the parameters within which BSC should operate are those that keep the major steel plants open. I hope that the Government's silence, reluctance and evasion will not pass unmarked in the areas which depend on those plants.

My question was not whether the Government would be involved in the decision, but whether the right hon. and learned Gentleman would make the decision regardless of the advice of BSC management.

The Minister must come to terms with reality. We know that the British Steel management, as the chairman has made clear, would like to close one of the plants. That is the only construction that we can put on the evidence given to the Select Committee.

It is no secret in the steel industry that there is a desire, on the part of at least some of the management, to eliminate — I use the word carefully — one of the strip mill plants. The Minister is not so naive that he does not know of the struggle that took place a while ago, which resulted in the decision that neither plant would close. He knows also that the issue has re-emerged because of evidence given to a Committee of the House by senior management of the British Steel Corporation.

The question returns, as it always must, to the lap of the Government. The Government must make up their minds whether Ravenscraig and Llanwern will remain as permanent features of the British steel scene for the foreseeable future. That assurance has been given by the Secretaries of State for Scotland and Wales. Why can the assurance not be given by the Minister of State whose direct responsibility it is? Perhaps the Minister can tell us why he cannot give the same assurance as his colleagues.

I wish only to repeat my question. Does not the view of the BSC management count?

As the ultimate owner of the corporation, the Government should of course listen to what the management has to say. But the Minister knows perfectly well what the management said to the Select Committee. We have listened to the evidence also and we know where it leads and recognise its import. The Government must not listen to any recommendation from the management to close Ravenscraig and Llanwern. The Minister must not quibble about words. It is clear that the Government have responsibility. If the Minister will not say that Llanwern and Ravenscraig will remain open, we are entitled to cast doubt upon the integrity of the Secretaries of State for Scotland and Wales, who gave emphatic commitments which the Minister is unwilling to endorse.

The Minister will have to fight his own corner without help from the hon. Gentleman. The Minister with responsibility for these matters is unwilling to agree with senior colleagues who airily gave assurances — it seems as though they were airily given — to the communities and counties which they represent that the works would remain open. My hon. Friends and I live in these areas and know what goes on in the communities. The Minister must know that some of his hon. Friends, who significantly are not here tonight, have attended conferences organised by the Scottish Trades Union Congress. We have been told that Scottish Conservative Members will fight. The hon. Member for Banff and Buchan (Mr. McQuarrie) said at a meeting on a different matter that he would fight vigorously to maintain Ravenscraig. The hon. Member for Strathkelvin and Bearsden (Mr. Hirst) told us how vigorously he would fight for the future of Ravenscraig. Where are they tonight?

Where are the Secretaries of State for Scotland and Wales? They are conveniently absent in case their remarks would be brought home to roost. We have the undignified picture of a junior Minister from the Department of Trade and Industry wriggling because he cannot answer simple questions put to him by the Opposition. He cannot confirm that the Secretaries of State for Scotland and Wales are to be believed. We shall draw our own conclusions. There is doubt, uncertainty and confusion in the areas affected by Llanwern and Ravenscraig. It is time that they were put to rest.

The Minister knows that it is not enough to say that there will not be a closure. Ravenscraig needs investment in the coke ovens if it is to be kept up to date as a first-class plant. Llanwern needs investment in concast production methods. I hope that the Minister, when he replies, will make a definite commitment instead of the evasions to which we have been subjected.

The underlying problem, which the Minister fails to recognise, that has faced the British steel industry over past years is the collapse of manufacturing industry. Because of that collapse, there has been a collapse in the demand for steel. When the Government took office, production was 20 million tonnes. Production has not exceeded 15·5 million tonnes since that time.

The reason for this drop in demand is the catastrophic decline in manufacturing industry. There are gloomy predictions about the future of the industry because of the catastrophic predictions for the future of manufacturing industry. British Steel documents show a continuing level line for manufacture and production. The corporation is contracting its capacity to meet the bottom curve of a dip in demand. If we expand our manufacturing industry — that will be the intention of the next Labour Government — we shall find ourselves, perhaps, without the steel capacity that will be necessary to provide the raw materials for manufacturing industry. The present Government will then be exposed to the serious charge of neglect. They continue to cut and they show no concern for the future of manufacturing industry.

Yes, I shall give way to the Minister. Unlike him, I am willing to answer directly important questions about the steel industry.

Are the comments of the right hon. and learned Gentleman about steel production borne out by the fact that, in 1984 and 1983, United Kingdom steel production was higher than in 1981 as a proportion of demand in the EEC?

I am not interested in the selective presentation of statistics. I am interested in a simple fact, which is that much less steel is produced now than in the years when the Labour Government were in office. The reason for that is the great decline in manufacturing industry since the days of the Labour Government. The Minister can wriggle this way or that but that is a fact from which he cannot escape.

The Minister of State knows perfectly well the answer to his question. In 1981, steel production in the United Kingdom was severely affected by the steel strike, from which the industry had not recovered. The Minister is an inveterate distorter of statistics.

I am grateful to my hon. Friend for setting the record straight. It might stop the Minister seeking to mislead others in future. At least, my hon. Friend's intervention should have that effect but I do not know whether it will.

My right hon. and learned Friend is right in saying that there has been a serious drop in steel production, and that is the result of the Government's policies. Steel consumption industries — I worked in one before I became a Member of this place — are in a worse state than they have ever been since the 1920s. We need new bridges, schools, hospitals and other items of infrastructure, and if such projects were implemented the demand for steel would be considerably greater.

My hon. Friend advances the argument compellingly. The steel industry is dependent on manufacturing industry, and some sectors of the steel industry are especially dependent upon the construction industry. If the market is removed, which the Government have been so careless in allowing by their neglect of the manufacturing sector, it is no surprise that the steel industry finds difficulty in securing markets for its products. The best tonic that we can give the British steel industry is to revive manufacturing industry. That is at the heart of the economic policies that are advocated by the Opposition, which will be implemented by the next Labour Government.

It would be wrong not to mention Tinsley Park, another matter which the Minister failed signally to mention. He knows that the proposal to close Tinsley Park was made by the BSC. The workers have fought a vigorous campaign to seek to persuade the corporation to abandon its proposals, but it seems that they have been forced, reluctantly, to accept the closure proposals. It is sad that another important plant is to be closed.

The latest information that I have suggests that the work force is likely to accept the plant's closure. It is a sorry day when these plants go out of existence. I compliment those who have worked so hard to try to persuade the corporation to change its mind. As the Minister knows, there is a great deal of suspicion because it was elicited in December 1983 in the Select Committee on Trade and Industry that the closure of Tinsley Park was included in the Phoenix 2 proposal. That hardly squares with the constant assurances which the corporation gave that it was a self-standing decision that had nothing to do with the Phoenix 2 proposal.

When I asked the Minister whether a joint venture was the road to privatisation, he more or less admitted that it was. That was a revealing part of his speech. It appears that joint ventures are an exercise in the privatisation option. We have always suspected that. They are a particularly bad exercise of the privatisation option because they usually involve a large amount of public sector resources and capital and a small amount of private sector capital and resources, but both private and public sectors share the profits equally. Once again, there is a large contribution by the taxpayer and a disproportionate benefit going to the private sector. That is the pattern of the Government's approach to the British steel industry.

I am sorry to say at this stage in the debate that, without the assurances that we have sought from the Minister, we must remain deeply dissatisfied about the Government's conduct and their policy towards this crucial and important industry. That is, first, because our manufacturing industry continues to languish, and, secondly, because important plants are left in the doubt, uncertainty and confusion that it would be easy for the Government to resolve but which, for their own reasons, they curiously refuse to do.

8 pm

I listened to the speeches of my hon. Friend the Minister and of the right hon. and learned Member for Monkslands, East (Mr. Smith) with interest. The debate gives hon. Members a chance to obtain the Government's view on what is happening in the steel industry. I shall make a few observations about steel in general, a few more about special steels and engineering steels in particular and specifically I shall touch on the scene in Sheffield, involving Sheffield Forgemasters and Phoenix 1 and 2, and including Aldwarke and Stocksbridge, as well as the Tinsley works.

As hon. Members will know, I have been involved in the steel industry all my life. There is no need for me to declare an interest now other than that of my constituents. I welcome the observations made by my hon. Friend about hiving off, and the growth of the private sector. Those in the private sector of the steel industry who have survived in Sheffield are looking forward to the future in the private sector with optimism. It is a pleasure to see the vigour coming back to the few who have survived.

I read with mixed feelings that the order extends the borrowing powers to £4·2 billion. After this debate, I shall have even more mixed feelings because the nation is faced with a £700 million increase in the extent to which taxpayers must divert their funds from other priorities to sustain disastrous decisions taken 18 to 20 years ago.

Earlier today, my right hon. and learned Friend the Minister for Health had to defend the Government's decision to expand the Health Service but not to provide as much taxpayers' funds as they would wish. If there is a need to provide taxpayers' funds for the steel industry, as has been done consistently for 20 years, that must mean that other priorities have to fit in with the priority of sustaining an industry that has made a series of disastrous decisions which have been mainly under Government pressure and from which it is now pulling out. I thank my hon. Friend the Minister for his optimistic forecast for the steel industry.

It had been my intention to use the annual accounts of the British steel industry for the current year. However, I have only the accounts for the last year. Therefore, I will have to deduce how well the steel industry is doing. I have attended the Select Committee that heard from Sir Robert Haslam, Mr. Scholey, Mr. Stambrook, Mr. Evans and others. They say clearly that, but for the coal strike, the BSC had hoped to break even this year. I welcome the fact that it is running profitably now and I welcome the optimistic forecast of requiring less and less money, as put forward my hon. Friend the Minister.

The BSC's leaders speak to all-party committees as well as to the Select Committee. Last year's accounts show that the BSC has written down a huge amount of taxpayers' money in the past 20 years. Assets of £2·6 billion in the steel corporation are thin compared to the required borrowing power of £4·2 billion. I welcome the sales to the private sector that my hon. Friend the Minister has been able to suggest, and the fact that they are worth about £349 million. I welcome the joint ventures. I shall not say too much about Sheffield Forgemasters but, as the Conservative Member in Sheffield, I wish that project well. Sheffield Forgemasters has grown in spite of trade union opposition and opposition from the city council, and therefore the task of the management has been that much more difficult.

I hope that Phoenix 2 will materialise. I understand that it could involve Brymbo, Aldwarke and Stocksbridge. From what I heard in the evidence given to the Select Committee, the closure of Tinsley Park could be part of the package that will go with Phoenix 2. I hope that when the project is launched, it will be adequately funded. The coal strike has been a great tragedy. It has cost the British steel industry £180 million.

The science and technology committee of the Council of Europe inspired the sixth scientific and parliamentary conference in Tokyo early in June. Scientists and politicians from all over the world, particularly from the OECD countries, were there. Because of my interest in new technology, the Japanese car and steel industries and robotics, we went to the Nippon Ohgishima steelworks, or the Keihin works. That factory is on an artificial island 5 by 3 kilometres, which has been built and decided upon in the past 10 years. Ships can bring in iron ore at one dock on the island and coal at another. The capacity of 6 million tonnes a year, with bar, plate and strip, includes a pipe-making plant. I sensed an optimism at this new site that I wish I could sense in Britain and many sites elsewhere in Europe. It has been possible in other parts of the world to construct something which gives courage.

The Sheffield steel industry grew up on the fact that 30 or 40 years ago it could rely on electricity from coal-fired power stations at highly competitive prices. Now, that electricity is far too costly compared to the prices charged for electricity to Sheffield's competitors throughout the world. Those with a nuclear or hydroelectric capacity are able to provide electricity more cheaply to these vital works. Therefore, I shall be pressing my hon. Friend the Minister in due course for an examination of the electricity costs in Sheffield.

Turning to the Tinsley Park works, I am reported in a Conservative newsletter, with a history of involvement in the steel industry behind me, as pledged "to oppose closure". That is not accurate. I deplore the fact that so much has happened but I am asking why it is necessary, and so is the Select Committee. I note that the Iron and Steel Trades Confederation has threatened to take court action and that it has been looking at a blueprint for a four-day week in Sheffield. I cannot ask my hon. Friend the Minister to answer all these questions now, but I am having meetings, as far as the BSC management will allow me, as a Back-Bench Member of Parliament, to have them, to find out the options, and the reasons for any decision.

A Member of Parliament cannot run a private sector steelworks or claim to have inside knowledge of that or a public sector works. Management must have authority to manage but, as consultation is announced in the case of what is happening at Tinsley, Stocksbridge and Aldwarke, I very much hope that it will be extended to Conservative Members of Parliament. As I understand that my hon. Friend the Minister will be making an announcement to the Select Committee on Tinsley this week, I will not pursue the matter further.

I can only conclude, after listening to this debate, that, if Opposition Members had their way, they would keep uneconomic steelworks in operation, taxpayers would have to dig even deeper in their pockets and other priorities—the Health Service and education—would suffer. The figure which the Minister has gauged is about right.

I listened from these Benches to the decision to set up Llanwern and Ravenscraig. It is tragic that they are loss makers. In view of the current market for home and overseas contracts, it is hopeless to run a plant on too few shifts. It is much better to have fewer plants running full shifts so that costs can come down and steel can be competitive. Surely it is up to the BSC to decide to do that. If my hon. Friend the Minister is drawn into making a decision, I wotrld suggest that he does not have the information at his fingertips to take the right decision. I hope that he will not be tempted by the right hon. and learned Member for Monklands, East (Mr. Smith).

8.12 pm

No doubt the hon. Member for Sheffield, Hallam (Sir J. Osborn) will forgive me if I do not comment directly on his speech but, in truth, I do not think there was much meat in his speech.

I am pleased to hear the Minister refer to the fact that the productivity of the British Steel Corporation is now comparable to the best prevailing in Europe. That is not the average but the best. It is against that background that I want to urge certain courses of action upon him. I wish to make a brief reference, as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) did at greater length, to the wide strip mills. I appreciate that my hon. Friend the Member for Motherwell, South (Dr. Bray) will no doubt have a lot more to say on the question of Ravenscraig, should he catch your eye, Mr. Deputy Speaker. The British Steel Corporation still wishes to close one of the three and I do not think there is any doubt that Ravenscraig is its favourite candidate for closure. The Minister was repeatedly putting to my right hon. Friend a hypothetical question because he asked whether my right hon. and learned Friend would make a decision regardless of the views of the BSC. I think I can help him on this matter, because a former Secretary of State, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), did precisely that.

In 1982 the right hon. Gentleman did not wait for the corporate plan to come into his office. He merely told BSC, in advance, that he would not accept a corporate plan which did not keep open all the five integrated plants which, of course, includes the three wide strip mills. Therefore, if the Minister is looking for a precedent he has got one. The Minister has told us that he cannot speculate or comment until he has seen the corporate plan. Yet there was a Secretary of State who made a sound political decision, understanding the social consequences of closure and he told BSC what it had to do. He showed who was the boss.

My first appeal tonight is that the present Secretary of State will show the same courage. After all, the Government, as representatives of the taxpayer, are the owners of BSC. It does not belong to Sir Robert Haslam and Mr. Bob Scholey. It belongs to the public, and the Government, as representatives of the public, must take into account the public interest. The previous Secretary of State's decision has been amply justified by events. He told the House that he had instructed BSC in that way because:
"it would be wrong to take a decision to close one of the plants on the basis of forecasts made in the trough of a recession and before the European Communities state aids regime had had a chance to have a significant impact on excess capacity elsewhere in Europe".
In our recommendations to the Government, the Select Committee on Trade and Industry said in March 1984:
"now is not the time to close a strip mill. We also recommend that BSC should retain as many options as possible in its approach to the freer market of 1986."
I cannot anticipate what will be in our report which comes out later this week, but that was our view then and nobody can argue that, in the middle of 1985, things have changed so much that we ought now to start closing options before 1986. I thought that I would remind the Minister of those points in case he is looking for an element of consistency in Government policy. I do not know whether he is, but it is sometimes helpful.

Mr. Scholey told the Select Committee that he would rather have two wide strip mills operating at full capacity than three operating at two thirds capacity. It does not take a mathematical genius to calculate that a plant operating at full capacity is incapable of taking any more orders. He wants to close capacity to the point at which any significant increase in demand cannot be met in the United Kingdom. That would necessarily increase imports.

I do not wish to comment on Ravenscraig, but does the hon. Gentleman believe that capacity at the two strip mills that would remain if Ravenscraig were to close would not be sufficient to absorb present demand or any reasonable anticipated increase in demand? Is not the problem the fact that there is massive overcapacity in the home market?

I have quoted what Mr. Bob Scholey told the Select Committee. It is a mathematical fact, is it not, that two plants operating at full capacity are equivalent to three operating at two thirds capacity? He said that he would prefer to have two operating fully. That must mean that they could not take a substantial increase in demand. I cannot quite see the hon. Gentleman's point.

The hon. Gentleman might have a chance to make his own speech.

The case that was previously accepted in regard to wide strip mills should be accepted now in that sector of the industry and also apply to the engineering steels sector. In that sector, British Steel's special steels group represents 82 per cent. of present capacity—the rest is represented by the only remaining private sector company, GKN Brymbo. BSC has announced that it wants to close the Tinsley Park works, which is in the constituency of my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy), although I understand that at least half of the work force are my constituents.

BSC has described that plant as Europe's premier producer of quality special steels, and yet it wants to close it. There seems a certain illogicality in that, to say the least. As with the strip mills, now is not the time to close a special steels plant. We are told that there is still excess capacity in the special steel sector. Looking at existing demand, I do not doubt that that is true, but will the present low level of demand exist for ever? Are we to accept the notion that British manufacturing will for ever be in the doldrums and that we shall never have a revival of manufacturing? Are we to accept that we shall never again produce enough wealth to maintain a reasonable standard of living for all of our people? That is what the Minister would be saying if he accepted BSC's view. Of course, he has carefully avoided telling us whether he accepts that view. That would be a doctrine of despair. If it is true — and I hope that it is not — this country will never again be able to produce wealth at the level we need to pay for the services that should be provided for the sick, the elderly and the handicapped, to provide better education, to house the homeless and to provide money for the arts and so on—all the things that a country needs to do if it is to be called civilised, but which we cannot do if we are for ever committed to the present low level of manufacturing output. That is something that I cannot accept. If there is to be an improvement — and as my right hon. and learned Friend said, the next Labour Government will ensure that there is — we are now in serious danger of reducing steelmaking capacity to the point where it cannot accept any substantial increase in orders.

Some hon. Members are aware that I am a student and, indeed, from time to time a performer of folk songs and similar works. The tragedy of Tinsley Park irresistibly reminds me of a song that I have known for many years about a nice young man called William Brown:
"Who worked for a wage in a northern town.
He worked from six till eight at night,
Turning a wheel from the left to the right."
I appreciate that it would be out of order for me to sing that song, but it may be appropriate to remind the House of the gist of it. The song tells us:
"One day the boss to William came,
He said, 'Look here, young whatsyername,
We are not content with what you do,
So work a little harder or out you go.'
So William turned and he made her run
Three times round in the place of one.
He turned so hard that he soon was made
Lord high turner of the trade.
The nation heard the wondrous tale,
The news appeared in the Sketch and the Mail.
The railways ran excursions down and all to see young William Brown.
But sad the sequel is to tell,
He turned out more than the boss could sell.
The market slumped, the price went down,
Seven more days and they sacked young Brown."
That is precisely the story of Tinsley Park.

We have been told time and time again by the Minister that, as long as British industry gets rid of its surplus manpower and becomes more efficient and competitive, everything will be fine. The BSC got rid of two thirds of its work force. Tinsley Park has achieved the almost incredible productivity increase of 73 per cent. since the beginning of 1982. Now the BSC has decided to close it with a net loss of 800 jobs. Like the unfortunate William Brown, the workers turned out more than the boss could sell. Where is the incentive for people to become more productive if all that happens is that they are sacked? I do not know what more people could do to carry out the Government's recommendations for productivity than what has been done by the people at Tinsley Park.

The BSC says that it will save £12 million a year by closing Tinsley Park, and that is its only concern. But surely the Government's concern must go further—they must consider the social costs that will go very deep, quite apart from the obvious cost of redundancies. Those 800 people will be permanently out of work, and, as there are 21,000 on the dole in Rotherham and Mexborough travel-to-work area, there is not much hope of those 800 people finding employment. That will be a continuing cost of £5 million a year. Sheffield city council will lose £3 million a year in contributions to the rates, and the other ratepayers will have to meet that because the closure of Tinsley Park does not reduce the need for the services that the council has to provide.

Many small contracting firms in Rotherham and Sheffield will face severe problems because they work for the BSC at Tinsley Park. They are the very small firms that the Prime Minister continually says she wants to help. She will put them out of business by closing Tinsley Park. There will be many other ripples throughout society in that area.

The Prime Minister tells us twice a week that recovery has come, that everything is working out better and that in no time at all we will be round the corner and everything will be fine. Despite what my right hon. and learned Friend said — and he was right — about manufacturing industry still operating at a much lower level than in 1979, it is nevertheless improving. Steel output is rising — in the first five months of this year, it was 4·7 per cent. higher than in the first five months of last year. Lest anyone suggest that the coal strike was a factor in this, I remind the House that the coal strike similarly affected both the periods under comparison.

In a recent report, the Select Committee drew attention to the decline of manufacturing and, in effect, asked what we should live on when the oil ran out if we had no manufacturing industry. It urged the Government to take the necessary steps to sustain and revive manufacturing industry. Recently I heard further sad news of the decline in manufacturing industry. I understand that Philips, the multinational, is to close its factory making washing machines in Halifax in the Yorkshire and Humberside region, with the loss of 660 jobs. It is transferring that production to Naples — not because of any problems with industrial relations or quality, but apparently because it has reached an agreement with the Italian Government. Our Government should be looking seriously at that because we cannot afford to keep losing such jobs.

If there is a reverse in the fortunes of manufacturing industry as a result of policy changes by either this Government or the next, we must have a steel industry that is adequate to meet any substantial increase in orders. I calculate that if the automotive industry were able to recapture just half of the market share that it has lost since 1970, that would increase the demand for engineering steels equivalent to the total capacity at the Tinsley Park works. Are we to abandon hope of ever getting our manufacturing industry back on its feet in that way? I hope not. Do Ministers really mean it when they talk about the need for our industries to become more competitive, to defeat imports and to get out and export their goods throughout the world? If they do, they must not throw away the tools to achieve that, and the most essential tool is the steel industry.

8.27 pm

In considering the order to increase the borrowing powers of the BSC, it is legitimate to examine its performance during the past 12 months and before. When the right hon. and learned Member for Monklands, East (Mr. Smith) responds to the debate, it behoves him to stress the fact that the BSC now poses a major threat not only to the steed producers of Europe but to the steel producers of the United States of America. We should remember that there has been a remarkable turnround in the performance of the BSC; its progress on productivity has been dramatic. We have equalled and surpassed levels of productivity in most of our competitor countries of Europe—and that is after successive Governments have injected into the BSC more than £12,000 million during the past 15 years.

Not only has the BSC achieved remarkable levels of productivity; it is on the verge of breaking even —despite the miners' strike, which cost the corporation £180 million. If any one questions the need for such increases in the borrowing powers, it is legitimate to remind him of the ruinous cost of that strike.

In their efforts, the militant Left and Mr. Scargill were not helping to keep open Ravenscraig steelworks, about which there has been much debate this evening. They were trying to bring about their closure, as well as the closure of Llanwern and Scunthorpe steelworks, in my constituency. It lies ill in the mouths of Opposition Members to criticise the Government's policy when the Leader of the Opposition failed to respond to a letter that I wrote to him on 9 May last year. In the letter I asked whether he supported Mr. Scargill's efforts to put 10,000 men out of work in my constituency. I received no reply. That is the regard that he had for the jobs of steel workers in my constituency.

In Scunthorpe, we were obliged to endure millions of lorry movements of ore and coal from the port at Immingham and ore from the wharves on the Trent. At Orgreave we had the most amazing scenes of violence directed simply to putting men in my constituency out of work. The rail unions made an effort to combine with the miners' union in that endeavour. With great respect, we did not hear much from the Opposition when those jobs were at stake. It is legitimate to bear it in mind that, despite all those factors, the profit performance of the British Steel Corporation has increased by £400 million over the past two years.

We are constantly told, both through the media and in the House, that Mr. MacGregor butchered the steel industry. It is a sort of litany that butcher MacGregor butchered steel workers' jobs and has now moved on to the mining industry to butcher miners' jobs. The only people who butchered the steel industry were those who insisted on maintaining manning levels and production techniques that were completely unrealistic. In 1979 we operated the most unproductive steel industry in the world. Britain produced less steel per man than the United States, Korea, Japan, France, West Germany, Italy, Belgium and so on. Steel production was not just marginally less; it was dramatically less. Is any credit given by Opposition Members for turning the British Steel Corporation into a major threat to its European competitors? No, none at all.

What is the best thing that will secure the jobs of steel workers and the future of the British Steel Corporation, if it is not the fact that it is a highly competitive and productive organisation with productivity improving from approximately 14 man hours per tonne of liquid steel in 1980–81 to 6·9 man hours per tonne in the third quarter of 1984? No industry can hope to survive when it is so hopelessly unproductive, uncompetitive and uneconomic. It is to the credit of this Government, British Steel Corporation management, those who are employed in BSC and, I believe, the trade unions after the strike in 1981, which lost us so many markets and jobs, that we have faced those difficulties and taken steps that have enabled BSC to survive. Britain is now producing more steel than in June 1980, when BSC was recovering from that steel strike.

Those enormous improvements in the corporation's position are in stark contrast to five years ago when BSC was terminally ill and about to go down the tube, with our European competitors licking their lips at the prospect of picking up BSC's United Kingdom and world markets. In my view, it is absurd to suggest that we have cut out so much steelmaking capacity. Let me pick up the point about Ravenscraig, that if it were to close, we would cut out so much steelmaking capacity that we would be unable to respond to any reasonable increase in demand. Last year BSC produced 15 million tonnes of liquid steel. The hon. Member for Rotherham (Mr. Crowther) will know that when it comes to debating with the Commission on manned capacity and quotas, there is absolutely no point in talking up one's manned capacity — one does the reverse. If one bears that in mind, the fact is that BSC can produce about 21 million tones — that is to say, more steel than it has produced in the past 10 or 12 years. Those are the facts. BSC is currently operating at about 70 per cent. of capacity. That figure is not consistent with its target of financial viability.

The hon. Member for Rotherham referred to the closure of Tinsley Park. In my constituency, we lost 11,000 jobs when Normanby Park closed in 1981. Between 1981 and 1983, the industry was slimmed down and made more productive. As a Member of Parliament with a constituency that has about 20 per cent. unemployment as a direct consequence of the rationalisation in the steel industry, I am well aware of the problems associated with that, and the heartache and tragedy that such levels of unemployment cause.

BSC must pursue policies which, in the long term, protect the jobs of all those who work in the corporation. The special steels division of BSC has suffered from the remarkable decline in the British car industry. What was that decline promoted by? It was promoted by restrictive practices, manning levels and the trade unions' attitude towards employment, which brought British Leyland to its knees. Does the House remember Red Robbo, the shop steward who could bring out BL and the rest of the work force at the drop of a hat? Frequently he did so.

Why not? He is not there because of the policies towards trade unions pursued by the Government. Those policies have been condemned time and again by Opposition Members, but they are welcomed by the trade unionists who work in the industries concerned.

The consequences of the decline in the car industry have meant that United Kingdom car and commercial vehicle manufacturers have contracted by over 50 per cent., with imported cars now taking 60 per cent. and imported commercial vehicles 40 per cent. of the United Kingdom market. Throughout, the Labour party has condemned our efforts to promote trade union reform. In fact, it has fought it tooth and nail all the way.

The hon. Gentleman does not strike me as being terribly well-informed on the motor industry, because it is generally recognised throughout that industry that the reason for its decline was, first, very poor management and, secondly, a lack of investment.

Nobody can condemn this Government for failing to invest in the car industry when only two weeks ago the Secretary of State announced support for a £1·8 billion corporate plan. Throughout the lifetime of this Government they have stood by British Leyland and have attempted to inject proper management techniques into that corporation. It is idle to suppose or to promote the argument that restrictive practices and trade union practices within the car industry in this country had no effect on the position. The policies of the Government have, in fact, arrested the decline of British Leyland and the British car industry with the corporate plan announced by my right hon. Friend two weeks ago, enabling the development of a new British Leyland engine which will be of direct significance to the special steel divisions of the British Steel Corporation. When only 70 per cent. of capacity is utilised in special steels, when we have tried to hang on to our markets both at home and abroad and when special steels exports represent 24 per cent. of BSC's product, it has had to remain competitive in this highly competitive sector of the market. We have to match the competitiveness of our European rivals, who will shortly be producing steel at 9·5 man hours per ton compared to our 10·5 man hours.

Over the last 12 months the records of the British Steel Corporation have been remarkable. The British Steel Corporation has not only survived but is now breaking even. The Minister is to be commended for the Government's policies in this regard. I very much regret that Opposition Members give no credit whatsoever for what has been a remarkable success for British industry.

8.42 pm

At the outset of my contribution, may I first register my disgust at the fact that the Secretary of State for Wales is not on the Front Bench today. Nor has any Welsh Minister appeared throughout the debate. The people of Wales will make their own judgment about that, particularly because of the importance of steel to the Welsh economy.

In discussing the steel corporation's borrowing powers those of us who have taken an interest in the steel industry over many years will realise that an independent British steel industry is vital to us as an industrial nation. Without such an independent industry we would be at the mercy of overseas suppliers, with all that this can mean in terms of pricing policies and delivery dates. It has been said many times before that an independent steel industry is vital for Britain's defence needs. That is the basic premise from which I start.

Having listened to the Minister of State, I believe that it is becoming more apparent every day that the Government's policies are bringing neither stability nor confidence to the industry. Last year he said:
"We have made it clear that we wish the corporation's activities to be returned to the private sector." — [Official Report, 23 July 1984; Vol. 64, c. 739].
He was clear, and explicit. Understandably, though, such a declaration sent shock waves throughout the industry. Today he reiterated his position, but he was just a little bit more reticent, political considerations perhaps now having an effect on the Government. The Opposition believe in a publicly owned steel industry. It is too important an industry to be left to the machinations of private operators, because we recall quite vividly how the steel industry was starved of investment when under private ownership. I repeat, the Government's policies are not bringing stability or confidence to the industry.

For clarification and emphasis of this point I turn again to the evidence of Sir Robert Haslam, chairman of the British Steel Corporation, to the Select Committee on Trade and Industry a fortnight ago. His words were widely reported in the media. He said that the Government are actively discussing closure of either Llanwern or Ravenscraig with the British Steel Corporation. The manner in which that statement was reported is pretty clear and explicit, because, they argued, existing plants like Ravenscraig and Llanwern were operating to only 70 per cent. capacity. This under-utilisation is understandable, bearing in mind the considerable amounts of steel we are still importing. Secondly, we have to consider the very low level of economic activity in the country as a whole, particularly when about 4 million people are out of work.

Surely, as my hon. Friend the Member for Rotherham (Mr. Crowther) has argued so lucidly, this under-utilisation of capacity will eventually be needed when there is an economic upturn. Some of us believe that the Government expect no such economic upturn; nevertheless, they wish to return the steel industry to private hands. To make the Steel Corporation attractive to possible buyers the British Steel Corporation's assets have to be shown to be operating at capacity and, perhaps even more significantly, profitable. Sir Robert Haslam told the Select Committee that this over-capacity, to use his words, was an albatross around the neck of the British Steel Corporation.

Here I want to declare my constituency interest because the Llanwern steelworks is in my constituency. My first reaction to that statement was to say "What an albatross", because Llanwern is now universally recognised as one of the most competitive plants in Europe. Since the slimline operation some five years ago, in terms of output and overall efficiency it has won admiration far and wide. With such a spendid record, why should the management and, more particularly, the work force, be again thoroughly demoralised with the threat of closure?

This is the issue about which the people of Wales are so rightly concerned. It is with good cause, then, that I turn to the ignominious role that has been played in this whole affair by the Secretary of State for Wales. He has repeatedly praised the workers of Llanwern who have brought about such a remarkable transformation. On other occasions, notably in a speech to international business men in London on 12 January 1983, he denied any threat of closure and strongly hinted that new investment at Llanwern would be forthcoming. This has been his theme throughout, yet a fortnight ago the chairman of the British Steel Corporation told the Select Committee on Trade and Industry that the Government were discussing with the Steel Corporation the closure of either Llanwern or Ravenscraig. In other words, the ground has been taken from under the feet of the Secretary of State for Wales. He has deceived the workers of Llanwern. He is becoming recognised increasingly as a man who cannot be trusted.

The revelation of Sir Robert Haslam has caused dismay and outrage throughout the whole county of Gwent. I have here a letter from Mr. John Murphy, the secretary of Llanmartin and district labour party. I propose to read the letter, which is not politically biased. The housing estates in that district were built to house Llanwern steel workers. People flocked there from all over the country. Mr. Murphy himself, for instance, is a Glaswegian and a redundant steel worker into the bargain—a victim of the so-called slimline operation. He writes that members of his party
"are greatly concerned about what is happening in the steel industry and what effects it will have to our area if Llanwern had to close when this new corporate plan is published. We would be grateful if you could come to a special meeting of your calling before this plan is published. All I would need is (at the most) 24 hours notice".
That shows the urgency and concern felt in that area. That concern is understandable, bearing in mind that at the end of the March quarter, according to the figures released by Gwent county council, unemployment in the county stood at 17 per cent. Closure would spell disaster. What a poor reward that would be, in view of the remarkable efforts of the work force in recent years.

Llanwern requires two specific things — first, an assurance from the Government and the British Steel Corporation that the works will have a long-term future, and, secondly, a go-ahead from those two bodies for a concast scheme in the works at a cost of approximately £100 million. The works has been crying out for such a scheme for years. Concast is recognised as a more efficient way of producing sheet steel. As a country we lag behind our European competitors in concast capacity. Germany has four times the amount that we have and France and Italy have double or more our capacity. Investment in concast at Llanwern can be more than justified by the performance of the works.

Britain cannot afford any further cutbacks in its steel making capacity. Ultimately it is this country's long term interest that should prevail. The Government have for too long been slaves to political dogma.

8.53 pm

The hon. Member for Newport, East (Mr. Hughes) will have noted that his eloquence has drawn into the Chamber my hon. Friend the Minister of State, Welsh Office to listen to his strictures. I shall be agreeing with the hon. Member for Newport, East about the efficiency of the Llanwern steelworks but about precious little else. Certainly I shall not be agreeing with what he said about my right hon. Friend the Secretary of State for Wales, who has fought magnificently within the Cabinet for the interests of Wales and who would require a great deal of convincing if eventually the decision was to be against Llanwern, although I do not think for a moment that it will be.

It was no doubt shortness of time that obliged the hon. Member for Newport, East not to sing his familiar song about the ills of the British steel industry being entirely the fault of the Common Market. The fanatics against the Common Market, such as the hon. Gentleman, like to pretend that it is the Community that has obliged Britain, and particularly Wales, to shut down so much of its steelmaking capacity and to lose so many jobs in the steel industry. This is, of course, to stand truth on its head.

The Community has done what any intelligent, modern Government have to do. It has cushioned the process of inevitable change. If there is one thing on which all those who have studied the question are agreed it is that there is enormous overcapacity of steel production in the world as the developing countries come on stream in steel production. Existing steel producers in Europe have the choice either of protecting their high cost production, which means not only massive subsidies to be borne by the taxpayers but imposing a crippling burden on the rest of the steel-using industry, or they can try to become as efficient as the developing countries. What the Davignon plan did was to ease the process of transition towards efficiency which inexorably means the loss of a very large number of jobs.

I am glad that the steel industry in Wales at Llanwern and at Port Talbot is efficient, judged by any standards. The Shotton steelworks, at one time one of the great producers of steel but sadly alas no longer, is now the most efficient coking plant in western Europe.

It has been recognised that Welsh steel producers, and Llanwern in particular, have achieved total competitiveness. They have eliminated overmanning, which was notorious. They then dealt with all kinds of demarcation disputes. If a fuse blows in the works, anyone can mend it. The production record is equal to any but — and I cannot stress this enough — the pursuit of competitiveness is unending. One never gets to the point where one is competitive enough to leave things as they are.

Two factors govern the future of Llanwern. The first is the question already raised on both sides of the House as to whether Llanwern is to get the continuous casting plant that it needs. Without that facility the most heroic effort of its workers will not enable it to stay in the competitive race for much longer. The second question — not yet mentioned — is whether Llanwern is to continue to be handicapped by having to buy more expensive coal than its competitors overseas.

For so long as the Coal Board is unable to push ahead with its strategy of making the coal industry as competitive as the steel industry has become, by closing down uneconomic pits and concentrating on the good ones, Llanwern, having committed itself to buying Welsh coal, is imposing a £2·5 million a year burden on its production costs. But the whole future of the coal industry in South Wales is bound up, in turn, with the survival of Llanwern and Port Talbot, though one would hardly have thought so from the conduct of the miners and, I am sorry to say, the railwaymen—who equally depend on the steel industry in South Wales—during the coal strike and their efforts to bring production at Llanwern to a halt. If the price of Welsh coal could be brought down, as it will be if the uneconomic pits are taken out of production, Llanwern will be able to remain competitive and to go on using Welsh coal. This obviously beneficent chain of events was too much for Mr. Scargill to swallow, and, sadly, the miners' union in South Wales went along with his wrecking policies.

One would have thought that the Labour party in South Wales, and especially the hon. Member for Newport, East, would have found the courage to stand up for their constituents and their supporters in the steelworks at Llanwern. Not a bit of it. The hon. Member for Newport, East went along uncomplainingly, proudly indeed, with the mineworkers and the railway workers trying to stop production at Llanwern. It was a moment of crisis, because it was touch and go whether Llanwern would have to shut down altogether and the furnaces go cold, their linings cracked, and the chance of revival gone for ever.

If they pulled through it was no thanks to the hon. Member for Newport, East. It was his colleague, my hon. Friend the Member for Newport, West (Mr. Robinson), who emerged as their champion. My hon. Friend is not here tonight; he has gone to help confound the pollsters in Brecon and Radnor. I want to pay my tribute to his heroic efforts on behalf of his constituents. Behind his quiet and diffident manner my hon. Friend has the ferocity of a tiger defending its young. I am sure that at the next election the voters of Newport will remember what my hon. Friend did for Llanwern and will remember what the hon. Member for Newport, East did not do.

After all this, the steelworkers of Llanwern must feel they deserve well of the Government. They have made themselves super-efficient. They have kept going through a strike designed to cripple them and now they look to the Government to make a gesture of confidence and gratitude, in particular, to give them the concast plant they so desperately need. I do not envy the Government their choice. Despite what the Select Committee on Trade and Industry said in its report the other day, there is no doubt that there is still overcapacity in steel production in this country. Three strip mills is probably one too many.

The Government have to weigh all the facts, but they have also to weigh, and weigh very heavily, the encouragement that a massive investment in Llanwern, or for that matter in Ravenscraig, would give to workers in coal, or steel or on the railways or throughout British industry who have had the courage to understand they must modernise or perish, and that strikes designed to halt modernisation do not delay death; they merely make it much more painful. The steelworkers at Llanwern, Port Talbot and Ravenscraig have given a lead to other workers in British industry and the Government need to weigh that fact very heavily.

It would not be reasonable to expect Ministers to give a firm commitment tonight about the future of Llanwern or Ravenscraig, but the workers at those two plants and all who are concerned with their future would do well to reflect on what the future of those plants would be if it lay in the hands of the Labour party who, in government as in opposition, have always lacked the guts to stand up to unions fighting against modernisation. Without a continuous process of modernisation, Llanwern, Ravenscraig and indeed Port Talbot are doomed.

9.3 pm

The hon. Member for Clwyd, North-West (Sir A. Meyer) touched on the question of managing change. I think he used the words "cushioning the necessary change". That is a matter to which I should like to return later.

We must welcome the order, because, within the structure by which we fund our nationalised industries—agreed between the Government and the Opposition — we have no choice. It is the way in which we can provide the funding that the British Steel Corporation needs in order to be able to make the changes that are necessary. But it is reasonable and pertinent to discuss why we have such an order before us and why we have to constrict, ossify if we like, the mechanisms by which we fund our nationalised industries in a way which brings this order before us tonight.

We all know that our nationalised industries are, by statute and by agreement between the two major parties, not permitted to borrow in any sense upon the open market. They must get their money from the Government. That seems to be a product of the kind of tunnel vision that afflicts the two major parties in the way that they view our nationalised industries. Both suffer from tunnel vision about the chasm that both seem to insist shall exist between the private and national sectors. Both pay tribute to the mixed economy, but they cannot mix within the economy. There is a massive chasm between them, and the way in which we fund our nationalised industries is a perfect example of that. The BSC and our other nationalised industries must go exclusively to the Government to receive their funding. Hence the reason for the order.

One of the reasons evinced by the Government for this curious policy, on which they agree with the Labour party, is that to allow more liberal structures by which the nationalised industries could raise funds would somehow starve the funds available to private industry. We are led into the ludicrous situation where, in order to get more flexible funding, the Government believe that they must go the whole hog and sell off assets such as British Telecom. That produces the very starvation of funds that they seek by this system to avoid.

It is equally ludicrous that, as a consequence of this kind of structure for financing our nationalised industries, the BSC borrows from the Government and ends up as a net lender of money to non-Government sources. That is revealed in table 5·4 of the BSC's expenditure plan for 1985–86. Although it borrows from the Government, it lends £86 million to non-Government sources, an admittedly very small sum compared with the sums that we are now discussing.

The Government have told us that they believe in wider share ownership. We have always supported them, because we have always believed in the need to move towards wider share ownership. But why cannot the British people also share in that by helping to provide the funds in their own nationalised industries? We wish to see much more autonomy for our nationalised industries within a broader, longer term plan, part of which would be a more flexible system of funding than at present.

If that serves to break down the barriers between nationalised industry and private industry, well and good. Those barriers should be broken down in a mixed economy. It is much more sensible to have such barriers broken down naturally by a more liberal programme of funding the nationalised industries than to stick to a system that merely preserves the chasm between the nationalised industries and the privatised industries.

When we wish to share with the people the industries that they already own, under the present system we must go through the ridiculous exercise of, for example, flogging off British Telecom, which merely converts a public monopoly into a private monopoly.

The background to funding is in our opinion narrow and afflicted with tunnel vision. But we are also discussing funds that in another way are crucial to the BSC. As the Minister and the right hon. and learned Member for Monklands, East (Mr. Smith) have said, the BSC has now moved significantly and commendably into a much more profitable and productive phase. Had it not been for the miners' strike, the BSC would probably have broken even in the near future, not just because of rationalisation but also because productivity has increased. That was eloquently touched on by the hon. Member for Elmet (Mr. Batiste).

The House has rightly paid tribute to that fact, because as a result unions, work force and management have good reason to be content with the current operating direction. However, it is one thing to make a small profit for a year or so but quite another to set a new long-term trend towards profitability.

Here we come up against the longer-term problems of BSC. Its large expenditure during the 1970s allowed for the modernisation that has resulted in increased productivity as well as some rationalisation. We are investing too little in plant and machinery, particularly in research and development.

I see the hon. Member for Elmet shaking his head. There are significant individual exceptions to that rule, but the corporation as a whole is investing too little. It is hiving off its modernisation investment in the 1970s. I have heard it said with a good deal of justification that the South Korean industry is technologically as advanced as our own. Present funding policies are failing significantly.

As for Llanwern, Ravenscraig and Port Talbot, we are of course referring to Llanwern and Ravenscraig. I share the concern of the right hon. and learned Member for Monklands, East not so much that the Minister of State cannot give an answer tonight as that he has boxed himself into a position——

The right hon. and learned Gentleman asks, "Why not?" The reason is that he has called for a report from BSC. He referred to the central problem when he said that it would have been much more honest and reasonable for the Government to draw up the parameters within which the report should have been submitted. They should say that they want a report from BSC which states whether or not it wants those three plants to remain in operation. But that is not what the Minister of State said. Since he has got himself into that position, we recognise why he cannot tonight give the answer that is being sought.

Last year the Select Committee reported — I see little reason why its report should be different this year, although we must wait until later this week to discover whether it is — that there is room for all three plants. It was said earlier in the debate that the three plants are operating at two thirds capacity. That means full capacity at two plants. What room is there for expansion? That must be what the Government want. I have heard it said that if production were to increase by as little as 10 per cent., the capacity of the two remaining plants would be significantly increased. I am told that last year productivity went up by 9 per cent. Will not the Government be looking for a similar increase in the years to come?

Sir Robert Haslam said that he is preparing for privatisation. No doubt there will be another exercise in which we shall flog off the good bits and kill off the bad. We shall be left with a rump that will serve British industry ill in the primary supply of one of its key raw materials. The proposed privatisation programme of the Government is nonsense, but the real point is that this is a classic and symbolic case of the steel industry being treated as a political football by the two major parties. They have damaged one of our great industries. BSC is the key example of political ideology: privatisation versus nationalisation. The question is answered on purely dogmatic, not reasonable, grounds and it has greatly damaged this great British industry.

The record is well known to those who have studied it. BSC was nationalised by the Labour party in 1951, denationalised by the Conservative party in the late 1950s, and renationalised by the Labour party in 1967. There was also talk of denationalisation by the Heath Government in the 1970s. Now it is back again. What a climate in which to foster one of our great industries. It is a typical example of the dogma that inflicts the two major parties and that so damages British industry. It is a symbol of how a great industry can be destroyed by political ideology and dogma on the central question of nationalisation or denationalisation.

BSC needs a climate of political stability in Britain. It does not seem likely to get it, at least not under the present two-party system. BSC needs an economy that has been restored to full fitness. I agree with the Labour party's strictures and criticisms on that. BSC needs a Government who are prepared to invest in Britain in rebuilding some of the major parts of our infrastructure.

The Channel tunnel may be part of that. We are talking not just about the restitution of our existing infrastructure but about the building of an infrastructure which will be suitable for a modern industrial nation moving into the 21st century.

BSC needs a climate of political stability and an economy restored to more permanent fitness. Unhappily, until we see a change of Government, or until we can persuade the Government to change direction, none of that seems likely. BSC will have to stumble on making the best of an unhappy and unfortunate situation with great dedication, skill — the Minister is right — and commitment from its work force but, nevertheless, in a climate that will always stultify rather than encourage growth.

9.15 pm

Employment possibilities in Sheffield have been severely hit by the decline of the British steel industry. In 1971, there were 45,000 workers employed locally in the steel industry, of whom 54 per cent. were employed by the British Steel Corporation. By 1983, there were only 18,000 employees — a decline of nearly 60 per cent. Since then, redundancies have brought the number of steel workers to well below 17,000. At the end of the present financial year, BSC special steels division will employ only a few more than 8,000 people.

Against that background, on 28 March, the management of BSC special steels division announced its intention to start consultations on the possible closure of the Tinsley Park billet producing works in my constituency. The closure would affect 1,114 workers, with an estimated net job loss of 805, on the assumption that 300 jobs would be created at the Stocksbridge and Aldwarke sites in south Yorkshire.

On 4 June, it was confirmed that the closure of Tinsley Park would take place. The Iron and Steel Trades Confederation, the Tinsley Park multi-union committee, which is acting as a campaign closure unit, and the Sheffield city council were not satisfied that sufficient consideration had been given to the issues raised by the closure announcement, and they asked me to draw their anxiety to the attention of the House.

First, if implemented, the proposal would result in the largest closure of a plant in Sheffield in the past five years, and it would be the first local closure of a BSC plant. Secondly, there is considerable doubt locally that the 300 jobs can be created at Aldwarke and Stocksbridge as projected by BSC. The implication is that at least 805 jobs will be lost within BSC but that the final figure will be much greater.

Thirdly, also immediately affected but not included in BSC's estimates are the employees who work for contractors on the Tinsley Park site on bricklaying, cleaning and other services. In answer to questions from the city council, BSC said that it had not yet discussed the impact of the closure with those contractors.

Fourthly, the long-term effect will snowball through the rest of the local economy. Estimates produced by the city council's employment department show that every 1,000 jobs lost will mean that more than £2·5 million will be lost in local consumer spending.

Fifthly, the likelihood of those made redundant at Tinsley Park finding alternative work is limited. In May this year, nearly 44,000 people were registered as unemployed in the Sheffield travel-to-work area, a rate of nearly 16 per cent. At that time, there were 817 notified vacancies in Sheffield so that there was only one vacancy for every 56 people.

BSC special steels justified the projected closure by reference to its estimates of market prospects. As the House will know, its forecasting record has come under severe criticism in the past.

Does my hon. Friend remember that we went for a meal with the leadership of BSC, Sir Robert Haslam and Bob Scholey, whom we now know very well? I asked, as I think my hon. Friend also did, whether the Sheffield area had anything pending of any size, and I asked about the Stocksbridge works to which I understand about 300 people from Tinsley Park are going. They replied that nothing was going to happen in Sheffield. A week after that, the closure of Tinsley Park was announced.

I remember that meeting very well, and I am grateful to my hon. Friend for bringing it to the attention of the House.

My hon. Friend will know that this is not the only aspect of Tinsley Park which causes us grave concern. It is rumoured that there has been involvement over several years in Phoenix 2 which, despite repeated questioning of the Minister of State, has never been clarified to the House. Even at this late stage we do not know. The Minister, in his opening speech, refused to be drawn by one of his hon. Friends. I say no more about that, although I am very concerned. Because of the time, I wish to reserve my main remarks for the impending closure of Tinsley Park.

Sheffield city council is not convinced that the forecasts made by BSC have taken adequate account of the expected rate of growth in British manufacturing industry in 1985–86. Nor is the multi-union committee at Tinsley Park convinced. Its secretary, Mr. Geoff Stronach, is reported as saying:
"We are working in the dark because no one outside BSC senior management knows what the financial situation has been at Tinsley Park. No profit and loss account is ever published; indeed, some of us suspect that our works has often been well into the black."
The multi-union committee is convinced that the closure decision is purely political and part of a long-term plan to cut back and privatise the UK special steels industry, and that its plant faces the axe solely because the Government desperately need to cut the asset value of BSC's special steel operations if they are to justify handing over control to the private sector under the Phoenix 2 plan.

Mr. Roy Bishop, who is divisional officer in Sheffield for the ISTC, notified the Select Committee on Trade and Industry last month of rumours abounding in south Yorkshire that the announcement concerning the formation of the new company, code-named Phoenix 2, is to be made in Parliament before the summer recess. This means that before the Select Committee has the opportunity to investigate and report to the House in depth on the crisis in engineering steels on the basis of evidence presented to it only the week before last by BSC as well as by ISTC, including Mr. Bishop, the production capacity in engineering steels will have been reduced from nearly 2·5 million tonnes a year to just over 1·5 million tonnes, a 33 per cent. decrease. The Select Committee will have been faced with a fait accompli, and the total capacity of engineering steels will have been reduced to a level lower than the present 1984–85 total sales of 1·7 million tonnes.

As Mr. Bishop argued not only in his written submission last month to the Select Committee Chairman but in his oral evidence a week before to the Select Committee, this means that, faced with a monopoly in engineering steels, customers would seek second sourcing from imports. Such increases of imports would reduce demand on the home industry to a level incapable of supporting such an industry, leading to the demise of the engineering steels industry and the dependence of the engineering industry on imports to maintain its production.

BSC special steels has given insufficient consideration to the wider social and economic implications of the closure of Tinsley Park. Its projections on the future need for engineering steels are too pessimistic. I therefore urge the Minister to delay the closure of the Tinsley Park works and the announcement in Parliament of the Phoenix 2 project until at least the Select Committee has had the opportunity to investigate and report in depth on the crisis now facing in particular the engineering steels industry and in general the supporting manufacturing industry.

9.25 pm

I think that my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) will agree that today's events in the House which started with the Prime Minister's report on the Milan conference, and moved to the statement by the Minister of State in opening this debate, reveal the end of the resolute approach. There was nothing resolute about the weak and feeble responses from the Government Dispatch Box—especially those made to the reasonable questions of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith)—or about the speeches by Conservative Members. They did not show that the Government were prepared to accept that our steel industry has little future if we accept the inhibitions pressed on it by a Government who are not prepared to stand up for themselves, for Britain's interests in Europe and for an industry which could thrive and has much to contribute to our manufacturing base. My colleagues have offered not only great hope for the future but the only hope for the future in recognising the role of steel manufacturing in the future of our industry and our economy. In spite of the Government's record, the steel industry has a great deal to offer.

When do the Government intend publishing the corporate plan? Sir Robert Haslam has said that it will be available in July but, in replying to my question, the Minister did not say when the Government intend taking their decisions. Because of the urgent need for action to be taken and the representations on the steel industry's behalf by hon. Members from all parts of Britain, I hope that major decisions will not be taken during the recess.

I sometimes believe that the House should pay more attention to Conservative contributions. In this debate we have seen yet again the type of divisions that Britain could well do without. Conservative Members have attacked the trade union movement and attempt to create geographical divisions. One of the greatest tributes paid to the trade union movement during all our recent steel debates has been that paid to its steadfast refusal to allow trade unions to be divided — Wales against Scotland and England against Scotland and the rest. Trade unions are rightly putting up a robust fight in the interests of the steel industry. I certainly want to lend them my support.

The Minister has every reason to be proud of the steel industry. He told the House on 1 May:
"The progress on productivity has been dramatic. We have equalled and surpassed the levels in France and Germany and done our restructuring."—[Official Report, 1 May 1985; Vol. 78, c. 254.]
That is certainly true, so why does he not offer the men in the industry the fruits of their achievement and their labour? In his speech today, instead of praising the employees' productivity and achievements he talked about privatisation, knocking the heart out of the men in the industry. They did not achieve productivity records to see their industry sold off to private speculators. They have achieved those records because they believe in their industry, they want to see a future for it and they are proud of their contribution to it.

Like my hon. Friends, I regret that the Minister did riot find it possible to say anything about Ravenscraig or Llanwern. I was delighted to hear my hon. Friends draw attention to the fact that the former Secretary of State felt free to make an announcement about Ravenscraig in 1982. Significantly enough, that was in the middle of the Coatbridge and Airdrie by-election campaign. Yet two days before the Brecon and Radnor by-election the Government are so lacking in courage that they will not tell the Welsh, the Scots or the English their proposals for the industry.

I was delighted, too, that my right hon. and learned Friend the Member for Monklands, East referred to the Gartcosh works in my constituency, which he represented until the last general election. The workers there are grateful to him for his efforts both before and since then. Like so many sectors of the industry, Gartcosh needs investment. No industry can thrive without investment in modern plant and without looking to the future. I met Sir Robert Haslam at the beginning of the year and argued for an investment of £2 million or £3 million to make Gartcosh competitive in recognition of the efforts of the work force, which has achieved such high productivity. Sir Robert could give no assurance even about the future of Ravenscraig. Moreover, he said that even if Ravenscraig survived that did not mean that Gartcosh will survive: If that works does not survive it will be a tragedy in terms of unemployment in my constituency and in Lanarkshire generally. We should be giving that plant the utmost encouragement.

What is the difficulty about making that small investment? The other day I put down a question asking the Chancellor of the Exchequer
"if he will estimate the effect on the level of the public sector borrowing requirement of the current level of unemployment in Scotland."
The Chief Secretary replied — I suspect that the Chancellor did not wish to give the answer himself — as follows:
"The current cost of benefits to the unemployed in Scotland is about £700 million. Since it is not possible to estimate the revenue forgone, the full effect on the public sector borrowing requirement cannot be estimated."—[Official Report, 27 June 1985; Vol. 81, c. 491.]
I am asking for just £2 million for Gartcosh to keep 800 people in work. Yet no assurance has been given. The coke ovens for Ravenscraig, to which my hon. Friend the Member for Motherwell, South (Dr. Bray) will doubtless refer in due course, require a mere £90 million. Given the outstanding record of the men of Ravenscraig, Gartcosh and the rest of the industry, it is outrageous that they should be denied the tools for the job in terms of new equipment and a level of investment that the Government have not so far accepted.

In common with my right hon. and learned Friend the Member for Monklands, East, I represent the town of Coatbridge, which was once described as the iron burgh, and which exported equipment for building railways to Russia, America and other parts of the world. If Gartcosh is closed — there will be a tremendous fight before any such thing happens — there will not be a single iron or steel job in my constituency. Given that all the mines have now been closed since the closure of Cardowan, Monklands, West is being reduced to an industrial desert, which I fear will exist in the rest of Scotland, if we are not prepared to fight.

In my constituency 32 per cent. of the male population is unemployed. Most of the young people who are leaving school find either no jobs available or are offered opportunities on the youth training scheme, and that is that. That is an absolute tragedy, but it will be short-lived, because, like my right hon. and hon. Friends, I believe that the construction industry, which is in temporary decline, and other industries which are dependent on steel, will find that manufacturing can resume its former place in our industrial society. It is despair at its worst when the Government base their views on the assumption that our manufacturing base will remain at its present level. I do not believe that. The men and women who have given so much to our steel industry are entitled to far more than the Government have promised tonight. Because of the determination and commitment of those people, they will succeed, as will our steel industry.

9.36 pm

My hon. Friend the Member for Monklands, West (Mr. Clarke) argued powerfully that tonight we should have been told how BSC will spend the £700 million on the necessary investment to ensure the future of the steelworks in our constituencies. My right hon. and learned Friend the Member for Monklands, East (Mr. Smith), and my hon. Friends the Members for Motherwell, North (Mr. Hamilton) and for Cunninghame, South (Mr. Lambie), who always speaks in debates on the steel industry, have all contributed to the debate. There have also been speeches from my hon. Friends the Members for Rotherham (Mr. Crowther) and for Newport, East (Mr. Hughes), and my right hon. Friend the Member for Swansea, West (Mr. Williams) will reply.

Although two Scottish Tory Members are present — they have just come in, no doubt to hear my speech — no Scottish Tory Minister is here to repeat the assurances about the Secretary of State's suit of armour, which, in his rather kinky style, he tends to keep in his wardrobe at home, but which he will dust off and bring out if the Cabinet is rash enough to consider any suggestion about the closure of Ravenscraig.

Ravenscraig will continue as an integrated steel works into the 21st century, not because it has become the symbol of the industrial survival of Scotland — although it has — nor because of the outstanding productivity records that are achieved by its workforce, which will continue, but because it is an essential element in our industrial recovery.

This afternoon I attended a conference at Chatham house on the future of information technology in Europe. The Commission's staff came hot foot from the Milan summit, where they had been contributing to the background briefing on EUREKA — the proposed European initiative on advanced technology. It is hoped that it will work in the integration of computer-aided design and computer-aided manufacturing methods. The British Aerospace representative explained the steps that British Aerospace had taken so that the airframe designers, their subcontractors and systems suppliers could work together on the aircraft design on one integrated computer system.

The other evening I was hearing about the proposed extension of that to the design of offshore production platforms. At present we have the engineering department of British Petroleum with its own computer-aided design and manufacturing system. It is designing the complete detail of production platforms on computer screens. That is then recapitulated entirely by contractors such as Brown and Root which undertake detailed design. That leads on to the production of engineering drawings for the fabricators, firms such as Motherwell Bridge that are hanging on by their teeth because of the current lack of investment. The entire complex of prime process operators, offshore operators, contractors, fabricators and steel producers is being integrated in one technology in which every square millimetre of steel has to be designed to standards which were never dreamt of in the past.

Ravenscraig is the only steelworks in the United Kingdom which can produce steel of the specifications required for Trident submarines. The same specifications will be required for the undersea completion systems that will operate in 2,000 ft of water off Rockall. These steels will be required for production platforms, undersea pipelines and for the technology that will be needed to gather minerals from the seabed in far parts of the world.

Industries that are currently in the cradle will be the basis of Britain's industrial recovery, which the Government are vandalising. The Government have no vision, no sense of responsibility and no plans for the future.

The House is being asked to approve an increase of £700 million in the borrowing powers of the British Steel Corporation. I am sufficiently old-fashioned to believe that when such a sum is asked for from the House the Secretary of State should ask for it personally and should be able to give a proper account of the plans and prospects of the industry. But what have we had? We have received a bland statement from the Minister of State. Apparently, he does not expect to receive the BSC's corporate plan before the end of July. We have had a further statement that there will be a steel council on 26 July when the future steel regime in Europe will be considered. Are not these mattes relevant to the corporation's borrowing requirements? Can the House be treated with such contempt that the Government can collect the money from us before considering policy requirements? That is no way to treat the House.

The Minister of State is saying, in effect, that he is prepared to allow the corporation to put up proposals that show no faith in Britain's industrial future. These are proposals that have already shed a destructive, morale-destroying miasma on those who have been, alas, influenced by the mutterings of the chairman and chief executive of the corporation before the Select Committee in June.

It is not sensible for a Government to give carte blanche to a major nationalised industry such as the steel industry by allowing it to make its own judgments on Britain's industrial future, for the Government to give no indication of what their views are on future steel demand, for example, and then to allow the corporation to say that if it maintains three strip mills one of them will be continuing as an act of charity. That is not the way in which to run a modern and efficient industry. That is no way in which to conduct the government of Britain.

There are two strategies before us. One is now openly preferred by Mr. Bob Scholey and his sidekick the chairman. It is to see an end to the Europricing regime, production quotas and Government subsidy. This will lead to a price war that will set the steel companies free to close whatever capacity they like to so that they can reduce the industry to a rump, which they think could then operate profitably and create a situation in which they can go off into the wild blue yonder of privatisation. That strategy would not work.

The chief executive of the BSC has so run down its research and development capability that, unless something is done urgently, it is condemned to be a low-grade bulk steel producer, unable to compete in the premium market. With closures, the BSC would be forced up to such a level of capacity working that the first stockbuilding surge would bring in a flood of imports, lose the loyalty of the customers and reduce the market share so that the BSC would find that it was falling back to the 70 per cent. level of a reduced capacity. That has been the story of the steel industry in cycle after cycle in the past 50 years. It has learnt nothing.

There is another strategy, which has been put forward most eloquently and with the greatest authority, not in this Chamber and certainly not by the Government, but in a study by the Technical Change Centre carried out for it by Dr. Darnell, a former engineering director of BSC and a widely respected veteran of the steel industry. He was the works director in the Steel, Peach and Tozer works in which the whole of the Sheffield mafia first cut its teeth in steel management, including the present chief executive of BSC.

The chief executive of BSC tried to suppress Dr. Darnell's report. Mr. Scholey wrote two letters to Sir Bruce Williams, the director of the Technical Change Centre, saying that it was against the public interest to publish this report on the future of the steel industry in Britain. The report points out that there is scope for a growth in the share of the British market and of the share that Britain has in the European steel market, but that it will come from trading up in grades of steel, in specifications, in the types of customers served and in the quality of service given to them.

The Government have set their face against this strategy by the way in which they have treated the BSC's finances. I hope that the Minister, when he is preparing for the corporate plan, which he will be receiving shortly, will read the report by Dr. Darnell. I am not even sure that the Minister knows about the report, which he should have had two years ago when it was published. It is a prime report on what should be the policy of BSC today.

The steel corporation has come through this difficult period of the miners' strike quite well. In the words of Mr. Scholey to the Select Committee:
"I think it is fair to say we emerged from the strike without commercial damage."
The mean and crafty cavil of the Minister about the damage done by the miners' strike is so much nonsense. Having emerged from that difficult period, already in the first two months of this financial year the BSC has been operating at a profit on only 70 per cent. capacity. What more can the Government expect when, in the earliest stages of industrial recovery, the BSC is already able to make a profit and is finding that, at present levels of manning, its strip product works are working flat out? What possible reason is there for saying that the corporation does not require the capacity to maintain three strip mills?

If we look into the detail of how BSC does its production planning, we find a most extraordinary story. The Government might have been utterly unsuccessful in privatising BSC but, by God, they have successfully privatised the information on which BSC tries to plan. I invite the Minister to read May's issue of Economic Trends in which there is a contribution from Mr. Astin and Mr. Brady of BSC supporting a description of the commodity flow accounts which will be produced with the aid of finance from a group of users outside the Government. These are the United Kingdom commodity flow accounts giving production, consumption, exports and imports of commodities such as steel, and in future they will be produced and financed by a private consortium— and will not be available even to the House — yet they' will use the powers of the Statistics of Trade Act 1947. They will collect prime information but not make it available for public use.

The information is so crude, however, that it does not even contain information about the steel consumption of the motor industry. It does not say how much a change in construction output would affect the demand for sections in Scunthorpe. It does not give any information about how a shift in the level of imports of Japanese cars would damage the level of demand from the strip mill division.

With that mutilated information base, BSC produces its extrapolations which would make the planners of the past such as Sir Robert Shone from British Iron and Steel Federation days turn in their graves. BSC is merely extrapolating present trends and the present defeatism of the Government. It is writing off all possibilities of industrial recovery and saying that, within that prospect, it sees a nice comfortable future for itself with just two strip mills. That is decadent, irresponsible and deplorable in any public corporation.

Of course, Llanwern and Ravenscraig will survive. Of course, there will be necessary investment in continuous casting at Llanwern and in the new coke ovens at Ravenscraig. There will be a re-establishment of serious research and development in BSC. There will be higher levels of customer service. Higher grades of steel will be introduced. All that will secure a future for the steel industry. The Government's motivation for allowing the first steps during the next few years until we can get on seriously with the job after the general election is simply that they are too scared to face the deplorable consequences of the miserable failures of their economic and industrial policies.

9.53 pm

Listening to my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) and my hon. Friends the Members for Sheffield, Hillsborough (Mr. Flannery) and for Sheffield, Attercliffe (Mr. Duffy), I became increasingly disturbed at the deviousness and evasion that seem to have surrounded the tragic destruction of the Tinsley Park unit. The closure means the loss of 800 jobs in an area where there are 56 jobless people for each vacancy. Closure was determined in December 1983 when the Phoenix proposition was first put forward. Ever since then, the steel industry has consistently denied a relationship between that closure and Phoenix. It is only now that we are discovering the truth.

My hon. Friend the Member for Hillsborough said that during a meal that he and another of my hon. Friends had with the chairman and senior members of the British Steel Corporation just a week before the closure was announced, they were told that no such closure was envisaged. That leaves us with an impression of complete and thorough dishonesty by the BSC.

The closure has, in effect, taken place. It is virtually accepted that the plant cannot be saved. In the face of that deception, how can we believe assurances from Ministers, especially when they are given with such ambivalence? The Minister has been singularly coy. He has been offered opportunity after opportunity to repeat the assurances that have been given in the country by the Cabinet Ministers representing Wales and Scotland. We are left with the impression of an inexorable and tragic logic unravelling before us.

Perhaps inadvertently, the Minister has helped to clarify the position, although I am sure that that was not his intention. He said that his objective was to return the core operation of the BSC to the private sector. A few months ago the chairman of the BSC came to speak to a meeting in the House. He made it clear that there was only one way in which the core operation could be made profitable enough to be privatised. He actually put a figure on the level of profit that he required. Last week he mentioned £200 million, but said that that might not be sufficient. When he spoke to us a few months ago he said that he was aiming for a profit of £300 million. I chaired that meeting and I asked how he could make that profit with the three strip mills. He said that he could not—he could do so only with two strip mills. He said that the three strip mills were operating at 60 per cent. capacity, so that if one was closed there would still be 20 per cent. surplus capacity for any expansion. He has put that view to Ministers also.

As Margam is already highly profitable, the two units at risk must be Ravenscraig and Llanwern. The Minister said that he would not speculate on the future of any of the works. That is fair enough — after all, he is the responsible Minister. But if he will not speculate, on whose authority was the Secretary of State for Wales speaking when he gave the impression that there was no risk? With what authority was the Secretary of State for Scotland speaking when he tried to give the impression that there was no risk?

Only last week, the Secretary of State for Wales said:
"I know of no such closure threat."
If one knows the Secretary of State for Wales, that is not much comfort, because what the right hon. Gentleman does not know far outweighs what he does know. My hon. Friend the Member for Newport, East (Mr. Hughes) will recollect that for a couple of years there was a scandal of a crumbling hospital near the right hon. Gentleman's head office in Cardiff — directly his responsibility. It was only when we started asking questions in the House that he discovered what was going on. Therefore, I am not surprised that the right hon. Gentleman does not know. Indeed, I sometimes wonder what he does know. However, we had better not speculate too far in that respect. After that statement by the right hon. Gentleman, there was the ominous point:
"But he admitted that there were problems of overcapacity in the industry."
Is it not a fact that, regardless of the corporate plan that the Minister hopes to get in July, in July last year the chairman of BSC presented his Department with a document outlining the options if the Government were to achieve their objectives of maximum privatisation, including privatisation of the core sector, as stated by the Minister? Is it not a fact that in that option document, which has been with Ministers for 12 months, the closing of one of the plants that I mentioned was envisaged? Is it not a fact that the Secretary of State for Wales and the Secretary of State for Scotland would or should have been aware of the contents of that document? Is the Minister saying that he has kept that information from the other Departments, or were the other Departments pretending that they had not had the information?

When that document was put to the Government a full year ago, the chairman of BSC was taken aside and told, "Don't expect an answer. Don't expect a discussion. There will be no talk about this until the coal dispute is over". The chariman told us that in Committee. Therefore, the document has been lying on the table. The coal dispute is now over. The chairman told the Select Committee only a week ago that the document is now under discussion.

So whom do we believe? Do we believe the chairman, in what he has twice repeated in different forms, that one of those plants is at risk? Or do we believe the befuddled ramblings of the Secretary of State for Wales and the dodging and evasion of the Secretary of State for Scotland?

After all, we are not talking about something that will be imposed by the EEC. That matter was also clarified tonight. In the past, Ministers have always said, "You have to understand: it is not us; it is the nasty Commission. It's those bureaucrats over in Brussels. They're telling us that we have to cut back. We have too much steel." But what do we discover from the Minister of State? Far from having too much, he has cut back more than Brussels asked him to cut back. He admitted that earlier. I invite him to read in the Official Report tomorrow what he said.

Therefore, if one of those plants is to go, the Minister cannot blame Brussels or say that the reason is the elimination of loss-making, because he boasted to us that BSC is already in trading surplus. But the fact is that the Government intend to take the profitable parts, sell them off as quickly as possible and leave the less profitable parts there so that they continually contract. In pursuit of their ultimate objective — the privatisation of the core sector of the industry — to to which the Minister admitted this evening, all the jobs and capacity will be lost at one of those two plants.

This is the reality of what the Minister had to say. It is confirmed by silence on one key factor. If there were one degree of truth in what the Secretary of State for Scotland and the Secretary of State for Wales are jointly saying, that neither of those plants is at risk, one would expect to hear tonight something about the level of investment that is needed at Ravenscraig and at Llanwern. That would be the assurance the House and the country might have expected. The Secretary of State for Wales has said that he can be sure that this Government would not allow these plants, on which the industry's future success and profitability depend, to be deprived of the necessary investment. This is an opportunity for the Minister of State to give that assurance. It would be a disaster for the whole of Gwent, with 17 per cent. unemployed already, if Llanwern were to close with 4,000 jobs going at the same time as 2,000 jobs are being phased out nearby at Girling.

One would have thought that, on the eve of a by-election nearby, a Government who could find the money to save army camps could find the money to revive prospects that seem to be lost in the locality. Every attempt from hon. Members to extract a promise from the right hon. Gentleman that reflects the protestation of the Secretary of State for Wales and the Secretary of State for Scotland has failed. One is left with a rather embarrassing question. Which of these three Ministers is telling the House and the country the truth? Are any of them telling the truth? It is clear from the nature of what we have heard tonight that the Government are ashamed and embarrassed about what they eventually intend to reveal and that they have no intention of revealing it this side of the by-election.

10.7 pm

We have heard a blood-chilling speech from the right hon. Member for Swansea, West (Mr. Williams). The only stage at which he became convincing was at the mention of the magic word "by-election" and then we began to see the motive for part of his speech.

The hon. Member for Motherwell, South (Dr Bray) has made some very interesting speeches. I am not sure that tonight he seemed as anxious to inform the House as to make political points. He sought to imply that the miners' strike had had no effect upon the British Steel Corporation. He referred to the fact that I had the audacity to refer to the miners as mean and cavilling. If the hon. Minister thinks that the miners' strike has had no effect on the steel corporation, let him wait seven or eight days until the accounts come out and he will be able to read about it there. It may be that the chairman of the corporation said to him, "We are resisting this strike, and because of our efforts we are a healthy corporation and we have managed to come through this, but that it has had a financial effect on the corporation nobody can doubt, and it will be demonstrated very clearly in the accounts".

I had a bit more sympathy with the hon. Member when he referred with some irritation to the fact that we have this order before the accounts are available, before indeed the corporate plan is available to the House. I understand that. But the point at which we raise the level of the ceiling on the borrowings of the corporation is determined, alas, not by the cycle of the corporate plan but by the borrowing situation of the corporation. As the hon. Gentleman, who has often come to these debates, will recall, it is not unusual for Governments of either party to have to make increases in the borrowing powers at a time when a corporate plan has not been submitted to the Government or an outline of it made available to the House.

The hon. Gentleman will also recognise that we are not, as he put it in his speech, collecting the money or spending the money. The order is permissive only. The expenditure of money will be subject to approval by the Government and subject to the procedures of the House in the normal way.

The hon. Member for Sheffield, Attercliffe (Mr. Duffy) referred to the closure at Tinsley Park, as did other hon. Members. Of course one regrets very much the loss of jobs that that closure has entailed, particularly in view of the efforts made by the work force and the management at that plant. It was certainly not a decision taken lightly by the steel corporation. But I repeat what was said before which — for reasons that were not clear, the right hon. Member for Swansea, West seemed to dispute — that that decision was not connected with the Phoenix 2 project. It was a decision which BSC had to make and wanted to make on its own account because it was losing money in that sector. It cannot be a decision made on the basis of Phoenix 2 because no decision has yet been made on Phoenix 2. The decision was made on the commercial judgment of the corporation because it thought the decision was necessary.

The point needs to be clarified. If the closure at Tinsley Park has nothing to do with the Phoenix 2 proposal, will the Minister tell us when BSC first decided that it intended to close Phoenix 2 and when BSC first told the Minister? We now know, because Sir Robert Haslam told me when I questioned him about it, that that proposal was included in the Phoenix 2 proposals submitted to the Department in December 1983. If the decision had been made independently of Phoenix, it must have been made some time before that. Yet the unions were not told about the decision until March 1985.

I do not recall the timing of the decision, but I repeat emphatically that that decision could be made and was made independently of the Phoenix 2 decision. It is one that the corporation wanted to make, regardless of whether Phoenix 2 does or does not go ahead.

One of the most important things for a person in my position to know is what options have been before BSC locally in connection with Stocksbridge, Aldwarke and Tinsley Park, the options of future sales and why this decision has been reached. Obviously I have to support my hon. Friend the Minister, but so far I have had no information as to what the options are for the basis of that decision. This is what the Select Committee would like to know, too.

The decision on Tinsley Park had to do with the costs of the plant and demand for the product. Those are the essential features. I cannot comment on the pan that other plants in the Sheffield area might play in the Phoenix 2 project. My hon. Friend will understand that that project is still very much under consideration. I will see that my hon. Friend is given a full account by the corporation of the reasons for the Tinsley Park closure, but the decision was a commercial one and not in any sense political; it was independent of any decision that might be made on Phoenix 2. It is a decision the corporation wanted to make even if Phoenix 2 did not go ahead. My hon. Friend the Member for Sheffield, Hallam (Sir J. Osborn) also referred to the new mood of confidence that he said was appearing in parts of the private sector. Listening to some hon. Members, I did not recognise the picture either of the steel industry in general or of the British Steel Corporation in particular that was being painted in the debate.

I very much agree with what my hon. Friend said, that the great thing we must not do in the steel industry, and particularly in the British Steel Corporation, is to have Governments making political decisions about the industry and all the time about particular plants. The hon. Member for Rotherham (Mr. Crowther) just dismissed Sir Robert Haslam's views and those of Mr. Scholey—they are not the owners of the business, he said—as though we did not think it was in the interest of the taxpayer to have the professional manager's views. But that must be in the interests of the taxpayer and in the interests of those who work in the industry.

Several hon. Members referred to the state of demand in the steel market. The hon. Member for Rotherham and the hon. Member for Motherwell, South thought that the Government and the steel corporation were being far too pessimistic about steel demand and very much regarded what they saw as the low level of steel production in this country as being a result of the Government's industrial policies and an utter condemnation of the Government's policies. What they seem to leave totally out of account is the fact that steel production throughout Europe in 1985 is lower than it was in 1979. They leave totally out of account the fact that there has been a structural change, and that other materials are being substituted for steel. They leave totally out of account the fact that the European Commission is forecasting that in 1990 steel consumption in Europe will be no higher than it is today.

We may not like it and we may think it is very difficult, but those are things that we have to take into account. They are things upon which it is useful to have the opinion of the British Steel managers which the Opposition simply wish to wave away.

The hon. Member for Yeovil (Mr. Ashdown) wondered whether the corporation could raise money on the private capital market. As he rightly said, that is difficult to do within the present legislative framework, although nationalised industries have borrowed on the Euro currency markets. I very much agree with his general point that we ought to blur the distinction between the public and private sectors. That is one reason why we have been keen to have the joint ventures, Phoenix 1, 2 and 3. I agree with the hon. Gentleman on that point, but I did not agree with the picture that he painted of the steel corporation being depressed and restricted and fed up with the Government's policies.

If Opposition Members think that, let them ask the management of the steel corporation. I talk with them and I know that all my hon. Friends who take an interest in the steel industry talk to the managers of the corporation. If hon. Members opposite talk to them, they will find that morale is high because people are encouraged by the fact that they have been given greater commercial freedom, that they have been able to make decisions and have brought about spectacular improvements in the productivity and profitability of the industry, and that we shall see the first accounting profit for a decade. Such things encourage people and mean that morale in the industry is high.

Inevitably, much of the debate has been about Llanwern and Ravenscraig. The hon. Member for Newport, East (Mr. Hughes) called for investment in concast at Llanwern and the right hon. and learned Member for Monklands, East (Mr. Smith) called for investment in the coke ovens at Ravenscraig. He wants £90 million invested in the coke ovens at Ravenscraig before we have had the opinion of the steel corporation. Of course, we shall consider it, but we are of the opinion, particularly when we are thinking about spending £90 million, that we might as well have the opinion of the professional managers first before making a decision about it. I agree with the comments of my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) about Llanwern and the great improvements there. There have been remarkable improvements in productivity and the people there have very much responded to the fact that they have been given greater commercial freedom. I met a number of shop stewards from Llanwern the other day and they told me that one of the best things that had ever happened to the steel corporation was the appointment of Mr. MacGregor. The shop stewards from Llanwern told me what he had achieved for the corporation.

As to Ravenscraig and Llanwern, we have made it clear that these are decisions in which the Government must obviously be involved. We have also made it clear — I did so again in the debate—that we must have the views of the BSC, and we have not yet had the corporate plan or the recommendations of the corporation. I do not believe that that is inconsistent with what my right hon. Friends the Secretaries of State for Scotland and for Wales have said. Of course they are proud of what has been achieved at the steel plants in their countries, but we must also have the views of the corporation.

If that is the case, what attitude are we to take to statements by the Secretaries of State for Scotland and for Wales? Are they pronouncements on behalf of the Government to which we should lend credence?

No one has ever said that there is a guaranteed future, for ever, for every plant in the corporation, and nothing I have said tonight has been inconsistent with what has been said by my right hon. Friends.

The right hon. and learned Member for Monklands, East is extremely agreeable and makes intelligent speeches, but tonight he made a slightly dishonest speech. He accused me of bland evasions because I did not answer specific questions about specific plants. I am sure that any Minister would do the same. But I was absolutely clear about viability and said that that was the Government's objective. The Government want the corporation to achieve enduring viability. Decisions on plants are largely for the management, although the Government wish to be involved in the Ravenscraig and Llanwern decisions.

The right hon. and learned Gentleman could not be clear about viability. He would not accept that viability was a reasonable objective for the corporation. From the way that he answered the questions that I put to him, he seemed to suggest that every decision on every closure — not just the big strip mills—ought to be made by the Government, and that such decisions would be made by a Labour Government. In other words, we would go back to the way in which the BSC was so disastrously run by the last Labour Government—a sort of Beswick review, where every decision was subject to their preoccupations with by-elections, a subject that has not been so absent from the minds of Opposition Members tonight.

It was not at all clear whether the right hon. and learned Gentleman was in favour of viability. He seemed to agree with his hon. Friend the Member for Rotherham, who seemed to want a social policy for steel. The right hon. and learned Gentleman does not want the industry run in order to create a profit and to be a wealth creator rather than a wealth consumer. That is what we want for the corporation, and that is why we want privatisation. That is a spur to the creation of wealth rather than the consumption of wealth.

All the signs are that the BSC is making substantial progress and is well on the way to being a wealth creator. That is why the finance made available by the order ought to be accepted by the House.

Question put and agreed to.


That the draft British Steel Corporation (Borrowing Powers) Order 1985, which was laid before this House on 20th June, be approved.

Supplementary Benefit

10.23 pm

I beg to move,

That the draft Supplementary Benefit (Requirements) Amendment Regulations 1985, which were laid before this House on 26th June, be approved.
At the outset I shall speak fairly briefly, and later I shall respond as fully as I can to the points that I know a number of hon. Members on all sides of the House wish to make.

As is the convention on these occasions, I shall first outline the main points of the regulations.

The first part of the regulations relates to the financial limits rather than to the time limits for board and lodging and increases the flexibility of the transitional protection arrangements that are contained in the original regulations. Those arrangements allowed for 13 weeks' transitional protection of the charge being met immediately before 29 April 1985 for people in ordinary board and lodging accommodation over the age of 25, and for those aged 16 to 25 who fell into any of the categories that are exempt from the time limits. Under the amending legislation the 13 weeks can be extended, at our discretion, for particular cases or classes of case.

The second part of the regulations extends the categories of claimants who are exempt from the time limits on boarder status to cover those young people under the age of 26 who are living with their parents or stepparents in board and lodging accommodation. We know, for example, that the absence of this exemption has been causing particular anxiety among young refugees, many of whom live with their parents in such accommodation. That was not our intention. I hope that hon. Members will be pleased to know not only that we are making this further exemption but that we have made arrangements to make ex-gratia payments to claimants who fall into this new category until the regulations come into operation.

Thirdly, the regulations also provide generally for greater flexibility in the area of exemption categories. As I said in my statement last Tuesday, we believe that our original list of exemptions generally covers those vulnerable young people who genuinely need to be in board and lodging accommodation for more than a short time. However, we want the ability to move swiftly to cover other categories, should it prove to be necessary. The regulations therefore provide for the Government to extend the list of exemptions, if it should become clear that there are other groups to whom the time limits should not apply.

I should also record that the regulations are being made under the urgency procedures so that their wholly beneficial provisions can be introduced as soon as possible. They were not, therefore, referred to the Social Security Advisory Committee before being laid before the House, but they were referred immediately after they were laid. I am glad to say that I understand that the Committee has considered the regulations and, because of their beneficial nature, has decided that it does not wish the regulations to be referred to it for report.

Part of our purpose in these further regulations is to provide additional flexibility to respond without delay to problems, as they arise, that affect non-exempt groups. We have identified two situations where we think that it would be appropriate to use this new power at once. First, we propose to extend the exemption list to cover ex-foster children living as boarders with their former foster parents, a point that has been raised by, among others, the right hon. Member for Chesterfield (Mr. Benn). Secondly, we intend to extend the list to include young people on bail where the operation of the regulations would otherwise conflict with the conditions of their bail—for example, if there is a requirement to remain in the area. These are two groups where it is clearly right, within the purpose of the policy, to exempt those concerned from the time limits.

I indicated, both in my statement last Tuesday, and in response last Friday to the Adjournment debate of the hon. Member for Livingston (Mr. Cook), that we have reinforced our guidance to local officers about the administration of these regulations, in particular to ensure that notification letters to claimants not only ask the claimant or, equally important, anybody acting on the claimant's behalf, to let the office know immediately if he thinks that he falls into one of the exemption categories but to let it know of any special circumstances that may show a need to be in board and lodging accommodation. That is not only to enable us to ensure that the regulations are administered as effectively as possible but to assist us in examining whether there are any further exemption categories that need to be covered and taking the appropriate action, if need is shown.

The hon. Member for Livingston raised a number of points in last Friday's debate, which he asked me to consider. I am pleased to be able to respond tonight to one of those points. We have asked local officers to draw up a list of places and agencies in their area, including the DHSS office, where claimants will be able to seek help and advice over, for example, finding accommodation or understanding how the exemption categories may apply to them. I hope that that news will be welcomed on both sides of the House.

I cannot respond in the same way to the other suggestion that the hon. Member for Livingston made about what might be called the administrative side — in effect, that we should communicate to such agencies the names of people to whom notices under the board and lodging regulations had been sent — for the obvious and I hope simple reason that it would not be appropriate for the DHSS routinely to send information about claimants' affairs to other bodies. I hope that the House will appreciate the difficulty that such a proposal would cause.

I welcome those relaxations, but the Minister said that if special cases warranting exemption arose they would be considered sympathetically by his Department. What time will elapse between a category arising and the finding of a solution? One of the points made by the hon. Member for Livingston (Mr. Cook) was that there could be problems with suicides and other such unfortunate events.

One of the advantages of the amending regulations and the reason why we have brought them forward is that they provide a mechanism for extending the exemption categories by enabling the Secretary of State to specify classes of case to be added to the exemption list. It is a process which can take place quickly. It would depend only on the decision-making process within the Department which would, of course, involve Ministers. I hope that that can be done quickly, if the need is shown. The decisions can be communicated quickly to the local offices.

The merit of what I am proposing is that it enables us to respond quickly. I must emphasise, so as not to mislead the House, that the power is to specify types of case that would be exempt; it does not extend to the use of discretion about individual cases. That would raise rather different legal issues.

When we introduced the new regulations in April we promised to monitor them closely and to be willing to make changes if the need were shown. These regulations are evidence that we meant what we said. That monitoring will continue through regular returns from all our offices and in other ways. In particular, we have asked the social security policy inspectorate to extend its earlier work on board and lodging and to consider also the effects of the new regulations. We have also commissioned a firm of management consultants, Ernst and Whinney, to undertake a detailed study for us of residential care and nursing homes. The study will have the following terms of reference:
"To provide information on the operation of the market in private and voluntary provision of residential and nursing care, with particular emphasis on the impact of social security payments to residents in homes."
We have asked the consultants, within that broad framework, to examine the relationship between charges and costs; cost differentials in different categories of homes and different parts of the country; and the effects of benefit levels on the operation of the market. Many organisations have expressed their willingness to assist in a factual examination of those issues, and I am sure that the consultants will receive full co-operation.

We expect a report within about six months, and intend to take account of the findings in the review of these matters which we have, in any case, undertaken to carry out within a year of the implementation of the regulations.

How much will the Minister pay the consultants?

I cannot give an estimate of that at this stage, but I shall see whether I can provide one when I seek to reply or at some later stage. It will to some extent depend upon the work involved.

When the inspectorate's work is complete, will it be published?

The hon. Gentleman will be aware that we have made it our practice generally to publish social security policy inspectorate reports. I do not wish to give a definite undertaking, but I shall consider that point sympathetically.

In conclusion, I wish to remind the House of the main reasons for the action that the Government have taken. The figures of escalating expenditure are now well known. Ordinary board and lodging rose from £52 million in 1979 to an estimated £380 million in 1984. The total of board and lodging payments, including residential care and nursing homes, rose from about £60 million in 1979 to an estimated figure of nearly £600 million in 1984. To put those figures in perspective, I make the point that they would pay for almost all the significant improvements in benefits for disabled people which are frequently urged upon me by both sides of the House. It would be hard for anyone to justify expenditure on such a scale for this purpose alongside the other pressing needs which many perceive in the social security system.

Frankly, however, cost alone was not by any means the only reason for moving in this direction. I have already referred to the study that we have commissioned by Ernst and Whinney in the residential care and nursing home sector. I ought to tell the House that some months ago we commissioned a study into the board and lodging market by the same firm of management consultants. The report, which we have recently received and which 1 am arranging to have published and placed in the Library shortly, contains some revealing points. In three of the six areas that it studied, landlords set their charges by reference to the Department of Health and Social Security supplementary benefit limits. In half the areas, there was evidence that landlords were charging higher amounts for DHSS claimants than for other residents, sometimes as much as £15 higher. In four of the six areas, a high proportion of advertising by landlords was directed specifically at DHSS claimants and, of course, many landlords acknowledged that claimants were their primary market.

Those findings are, I think, some indication — together with figures that showed an increase in Reading of 37 per cent. in the number of board and lodging claimants in less than six months — of a degree of abuse and exploitation that was widespread and on which, in my judgment, action needed to be taken. There was considerable abuse and exploitation, not only by claimants but also by landlords. There was a pattern of encouragement of inappropriate use of board and lodging accommodation and, not least, a position in which a growing number of young people were effectively trapped in that they could not afford to take work because there was no way, once they had taken a job, in which they could continue to pay for the accommodation in which they were living.

In moving to curb these problems, the Government were at least equally anxious to protect those with real needs, hence the extensive range of exemption categories and the further action that I propose to the House tonight.

I do not believe that any hon. Member seriously doubts that some action was necessary. As I said last Tuesday, the aim of our action is to strike a proper balance between curbing that undoubted abuse and ensuring that genuine social security needs are effectively met. The purpose of the regulations is to help us further that aim.

I remind the House that the debate should be restricted to the specific provisions of the regulations, which deal with the extension of board and lodging allowances for persons under 26, and to the transitional arrangements for persons in ordinary board and lodging accommodation.

10.38 pm

Mrs. Margaret Beckett
(Derby, South)